Tying the Pieces Together : A Conversation with Ilam Mougy of Stocks Live

The following is an excerpt from a recent conversation between Nathan Richardson, Founder & CEO of TradeIt and Ilam Mougy, CEO of Stocks Live.

Ilam Mougy wanted to do more than just trade stocks on his phone. He wanted to get advice on how to pick winners and more importantly, be able to chart and track all of his investments in one place. But when he reached out to brokerages to inquire about incorporating them into his app, he found that it would need to be done manually and therefore was impossible from a development perspective.

He knew he’d need another way. The Stocks Live CEO and I sat down to to talk about the integration of TradeIt and TradingView into his app and how our API enabled him to easily integrate users’ portfolios in one click.

Nathan: Tell everyone a little about Stocks Live.

Ilam: Stocks Live is a complete mobile financial solution that helps investors pick and track winning stocks, mutual funds, ETFs, cryptos and more. We offer all the tools investors need to sync their accounts, chart their progress and even see the portfolios of top investors. We are more focused on tracking investments than trading them.

Nathan: So how does the app work?

Ilam: Users sync their brokerage accounts to the app and can track and trade within the app. Our app helps users choose investments, create charts of their progress and our scanner functionality lets them follow the exact investments of what we call ‘gurus’ — successful hedge fund managers like Warren Buffet and Ray Dalio.

Nathan: What made you reach out to TradeIt?

Ilam: I didn’t (laugh), you approached me. When I first built the app, I needed a way to seamlessly integrate users’ portfolios. But, as you know, because APIs aren’t universal from brokerage to brokerage, integrating them wasn’t possible from the development side. When we first launched, there was no way to sync the app with the user’s broker. They could go to a brokerage and open an account but the only way to track that account within Stocks Live was by manually inputting their stocks, purchase price and quantities. A daunting ask.

Someone from TradeIt found me on the App Store and approached me at a trade show, suggesting you’d be a great fit. And honestly, it didn’t take two minutes for me to be convinced, and I did the entire integration in less than a week. Now users sync their accounts once and never again, giving them one app for all their assets in one view.

Nathan: What else has the API integration allowed you to do?

Ilam: With TradeIt’s Account Opening product users can go into our Broker Center within the app, compare and contrast fees and offerings and choose who to open an account with based on what’s best for their needs. In less than five minutes and with one button, they can open that account directly in the app. This is exponentially faster than doing it on the broker website, filling out forms and waiting days for approval. It offers a value-add to the user and moreover, acts as a revenue driver for us since the brokers pay per opening.

Nathan: Talk to me about some of your results.

Ilam: Well, we’ve seen a 20% increase in app downloads and use since the sync feature integration. And there’s been an increased demand from the community around supporting other brokers. So brokerages, you all need to get on board! (laugh)

Nathan: Have there been any hiccups or struggles with the integration?

Ilam: Like any tech integration, there’s ongoing maintenance around feature upgrades, but every addition is maybe a week of work, which is nothing in the software paradigm. Your team is extremely responsive. If I get a user question, within 24 hours there’s a reply and resolution.

Nathan: As you know, we were recently acquired by TradingView, which I see as a perfect marriage of our two technologies. How has that acquisition affected your integration?

Ilam: I’m really pleased about this! StocksLive has a charting engine but not as powerful as TradingView. They have a full library of tools. Our users now have access to all the charts they need to visually view and map their investments. With the integration of TradingView, we now offer three distinct charting features: native charts, TradingView and Tradergram, our new animated charts. I’m very excited about these and no one else is doing them.

Tradergrams visually detail the journey from purchase to sale of a user’s stocks. As we know, people respond better to visual stories and without charting, investors are essentially blind. All they know is the price, but they can’t see the progress. With the addition of these animated charts, users now get both, a built-in feature and an added bonus.  

Nathan: I’m also excited to see how you’re capitalizing on these features and capabilities. Any final thoughts?

Ilam: I see the addition of TradeIt to our app as a full solution. And, there’s a synergy with TradingView and TradeIt that makes these two components vital for any investor. I’m excited to see where else we can go with Stocks Live and how we can further help our users track and trade.

The Passing of the Screen Scraping Baton

The FinTech world is buzzing with news of Plaid buying Quovo. Hats off to Quovo’s founder, Lowell, who’s built an excellent reputation in the industry for innovation, professionalism and proprietary technology to enable screen scraping. We’ve received over a dozen inquiries from partners, investors and prognosticators on what the deal means, and, while we have no insider information, we have a few thoughts given our earlier blog series on screen scraping.

There are a few lenses to look at this deal as it relates to what it means to the FinTech space and why it makes sense. We’re going to break it down based on three factors: market structure drivers, systemic reasons and direct reasons.  

Market Structure Drivers

The FinTech world is embracing APIs as the most effective way to interact between institutions, apps and developers — as PSD2 in Europe leads the way. Asian countries are already adopting API protocols. However, since the US has not developed a standard or unified protocol, we can expect more jockeying between screen scrapers and financial institutions, as we saw earlier this year with Plaid & CapitalOne. As long as the US doesn’t mandate standards, screen scraping companies are going to look to gain greater scale and leverage against the more fragmented financial institutions (when’s the last time you saw Citi, JPMorgan, Fidelity & Schwab join forces to protect customer data?).

With 40-70% of FIs website traffic coming from screen scraping companies providing access to Personal Financial Management apps like Mint, FIs have finally woken up to the need to provide secure, controlled access to their products in an increasingly unbundled and distributed world.  FIs are going to require customers to use oAuth to ensure proper security and controls, but traditional US screen scraping companies don’t look favorably on oAuth due to the user experience. The Plaid/CapitalOne battle was a preview of things to come between screen scrapers and Fis, requiring scrapers to go through the front door, not the back.  

Systemic Reasons

If you’re in the screen scraping business and do a value chain analysis, you want to own your own destiny and technology. Screen scrapers exist for a simple reason: to make it easy for FinTechs to enable their clients or customers to aggregate their data in one spot. The screen scrapers create simple and easy to use APIs that customers can integrate and these APIs use screen scraping technology behind the scenes. The technology learns the layout, data formatting and access placements for thousands of FIs, which allows the scrapers to easily enable customers to share their credentials in order to gain entry into the FI. The FI is not a party to this access, it’s a back door. Not all screen scraping companies do this themselves. Quovo did it with robust and secure technology, as do Yodlee and Finicity who often provide their technology to other screen scraping companies like Plaid and MX.    

Data security couldn’t be more paramount to FIs. As much as customers like to demonize banks, banks have done a lot more to protect customer information than big Silicon Valley tech companies. If your user name and password were breached by a portal, hotel company or social network in the last year, it’s likely that the user name and password combination was sold on the dark web. Bad actors on the dark web then run scripts testing your credentials against FIs to get access to your funds. And, while the Fis are proactively monitoring their front door, what many have found is that the bad actors run the scripts via sites using screen scraping to identify vulnerable accounts via the back door. Herein lies the rub. Screen scrapers don’t want to put speed bumps into the user journey, but FIs are requiring oAuth through the front door.  Something has to give, and hopefully it won’t be caused by a breach of your financial information.

Direct Reasons

Plaid and Quovo were direct competitors with similar offerings which could lead to downward pressure on prices. Consolidation will likely allow the combined entity to test price elasticity. Yodlee was the Grand Daddy of screen scraping. Early on, Yodlee bought Vertical One for customers, pricing power and leverage. Yodlee is now owned by Envestnet who has publicly stated that they’ve been focused on making the acquisition pay, meaning they’re increasing prices.

Plaid stated that Quovo’s offering in the wealth space was a driving force for the acquisition.  Yodlee and Morningstar® ByAllAccountsSM have a solid grip on the wealth space, however a combined Plaid/Quovo could result in a greater penetration. And, it doesn’t hurt that Quovo’s founder hails from a storied wealth management lineage, adding to his wealth sector cred.  

Finally, the brands of Plaid and Quovo resonate differently in the broader financial space. Plaid is loved by Silicon Valley FinTechs and Quovo is well-regarded by the established FIs.

In sum, while the financial terms are not readily available, the strategic fit of Plaid and Quovo makes sense — leverage, scale, reputation and technology. Just as Yodlee’s founder stepped away last week from leading his company, the baton (and screen scraping team captain) is now with Plaid’s leadership — run fast and innovate often.

What does 2019 hold for FinTech?

2018 had its fair share of disruption in the FinTech space, but for the most part, companies and investors sat out the end of the year market fluctuations and are cautiously — and perhaps optimistically — looking to 2019. The latest downturn is definitely not unexpected, and if the market continues to soften as most have predicted, we expect to see more acquisitions in FinTech, as investors tighten their belts.

Here are our thoughts on what potential market moves might include:

Chinese FinTechs make another go at the US market

As highlighted in the MIT Technology Review, the Chinese market is much more innovative and disruptive than the US FinTech Market. While the Alipay-Moneygram tie-up failed with regulators, it won’t deter the ambitions of these cash-rich companies.  Notably, Alipay, TenCent, Fosun, CreditEase and PingAn continue to be ever-present at US FinTech conferences, networking, looking to deploy capital, and tempting entrepreneurs with cash offers. Expect to see Chinese companies buying smaller FinTech companies that allow them to fly below the radar of regulators, yet buy and scale with US teams that have strong operating reputations.  

Betterment or WealthFront might get acquired by a smaller incumbent who’s looking to chase down Vanguard and Schwab’s market dominance

Wealthfront got a bump with a $75M investment earlier this year, but some claim that raising money at this stage (10 years in) is a delay tactic if they’re seeking acquisition. Perhaps a “marriage between two leading independent robo advisors is next,” claims Timothy Welsh of Nexus Strategy. He also states that “if robo advisors were going to disrupt, they would have already.” A very debatable stance, in our opinion. But if a merger isn’t in the cards, it’s certainly likely that acquisition is on the table.

The economics of “set it and forget it” firms might catch up with robos as market prices soften

Robos haven’t had to deal with a down market since their inception. As we head into 2019 and likely more volatility, how will they respond and, perhaps more importantly, how will their clients? With a down market and poor returns, will investors stick it out with a “set it and forget it” or will they just say “forget this” and move their funds back to an incumbent? And, though most robo investors are Millennials, will they be ok getting communication about downturns from their advisors solely via email or social media? More importantly for the bottom line, it will be very telling to see if an electronic relationship has the same stickiness as a personal one. According to Greg Curry, a fee-only financial advisor with Pillar Advisors in Louisville, Kentucky, “In a down market many clients need hand holding and the value of interaction with a human financial advisor can be the difference between them sticking with a well-conceived financial plan and investment strategy and making moves that are detrimental to their financial future out of fear.”

With the loss of Robinhood, APEX Clearing looks to sell

Now that Robinhood has built their own clearing system from scratch, what does that mean for APEX Clearing? The last time a major brokerage built something similar was Vanguard, in 2008. It was only five years ago that Apex claimed it was the only company that had the technology to make Robinhood possible. And while right now Robinhood Clearing will only be used on its own platform, they haven’t ruled out the possibility of commercializing it. So, what does this mean for other FinTechs? Is Robinhood Clearing the potential go-to for these solutions? Or, with Robinhood’s recent insurance snafu surrounding their checking and savings account announcement, did they tarnish themselves as a trusted platform/partner?  

N26’s move to the US from Europe will gain ground in the investment world based on their API platform approach

The German mobile bank just received the largest equity financing round in the FinTech industry in Germany to date, as well as one of the largest in Europe. According to their Americas CEO, Nicolas Kopp, they’re “a technology company with a bank license.” Because N26 was built from scratch, and their European roots means they have to comply with PSD2, they’re prepared for open banking protocols. Their design was specifically built for mobile — to be both visually appealing and user friendly, and they support/use APIs, not siloing technology for different lines of business, creating a seamless user experience. And they’ve AI-enabled their platform, allowing them to create more personalization at scale. We’re curious to see what else they have up their sleeve.

What are some of your FinTech predictions for 2019? Share them with us on Twitter using #TradeIt2019 and #FinTechPredictions


Screen-Scraping and the Halo Effect

Don’t Believe Everything You See

“Trust is a key strategic asset which creates growth opportunities and defends against competition. It allows deeper customer engagement across products and services.” – Nobel Prize winner, Robert C. Merton

We’re going to talk about screen-scraping again. Because we think it’s so important to be aware of what this means for both consumers and FI’s. You can get more background on the process of screen-scraping and what it means for the future of banking as well as the importance of API’s and innovation in our previous posts here, here and here.

One of the ways screen-scrapers are getting access to customer data is through a halo effect.

This is the foundation of the modern concept of brands. Essentially it means that when we develop a favorable impression of a brand when interacting with one partner at a firm we tend to view the whole firm in a favorable light. Our impression of that firm’s brand is strengthened. Thus creating a halo around that entire firm that is associating with the other brand.  

Screen-scrapers are using logos to build trust and credibility and then turning around and selling the data they’ve so trustfully obtained. By using the logos and trademarks from financial institutions, it engenders trust among the end users who associate the brand of Broker X with their money and the security that their financial institution provides. However, most FIs have not in fact granted permission or rights to the screen-scraper for them to use the logos in the first place. The trust of the logo makes an association for the end user, but this is an abuse of the institution’s mark and negatively impacts the end user and the institution itself.

The Anti Trust

Let’s be honest, most Americans aren’t enamored with big banks or financial institutions these days. However, seeing a logo of a familiar name in one of their finance apps will undoubtedly create a feeling of assurance that things are on the up and up; that their information is safe. As an end user, we’re putting our faith and trust in the visual association of the broker or bank brand on a third party site. And in this case, that trust is unfounded.

I Didn’t Sign Up for This

When this logo appears, it signals to the end user a perception of the financial institution’s endorsement of the technology, thus they willingly link their account. As we’ve argued in previous posts, the screen-scraper can then go in and grab their data — any of their data — and use it and sell it. These companies are selling that data many times over, charging their partners per linked user. But where’s the end user’s cut of the profit? And how many places are they selling it to?  

Millions of Customers + 1000s of Companies = Millions of Screens Scraped and Countless Data Points Up for Grabs

Screen Shot 2018-05-04 at 2.52.29 PM.pngAn Ounce of Prevention

Luckily, all is not lost. Companies like Fidelity and Ally are ensuring their information is secure and are increasingly moving towards APIs for third parties to access their clients’ data. In fact, TradeIt’s SDK specifically helps partners integrate our technology, allowing their developers to integrate faster with simple customizations. This ensures the end user that they’re protected and gives them total control over what happens to their data. By partnering with brokers to access their APIs, TradeIt only accesses the information that the broker makes available.

Here’s how it works:

  • Through a broker’s API, we allow the end user to log into their brokerage account securely.
  • We don’t view, access or retain their log-in credentials.
  • After the user consents, the broker provides an encrypted token.
  • This token will expire, and once it does, the connection is severed.
  • In order to continue to view their portfolio and/or send buy or sell orders from their favorite app to their broker, the end user will need to relink their account.

Safety First

How this differs from traditional screen-scraping is simple: we don’t retain log-in credentials and continue to access and scrape the end user’s data however we see fit. Their information is not available to us. Nor should it be. Not only is this safer in the event of a data breach, it provides true trust with the end user. We only show the logos of brokers with their permission.

Many Financial Institutions are requiring aggregators to sign agreements where the aggregator/screen-scraper is liable for the data in the event of a breach. Not surprisingly, many aggregators are pushing back and not signing these agreements (ostensibly because it cuts off their revenue stream).  

But, as we move into more transparency around banking, brokers are embracing this change. TradeIt has consent pages and end-user agreements that explicitly inform the investor that we’re accessing their data on their behalf. It’s more than just a logo, its an agreement between the broker and the third party. This puts the end user at the forefront, not on the backburner. Which is where they should be in the first place. After all, it’s their information.

In the Question of Data Control, APIs are the Answer

Abracadabra, Watch Your Data Disappear

Whoever said ignorance is bliss obviously never unknowingly shared all their data. As we mentioned in a previous post, consumer data is being screen-scraped into the ether and this creates so many issues around control and the assumption of privacy. Once your data is scraped, it’s gone. Neither the bank or institution, nor the end user has any control.

The problem, as ever with the tech industry’s teeny-weeny greyscaled legalise, is that the people it refers to as “users” aren’t genuinely consenting to having their information sucked into the cloud for goodness knows what. Because they haven’t been given a clear picture of what agreeing to share their data will really mean.

Miss Jackson if You’re Nasty

It’s all a question of control. And APIs are the answer. They offer banks and FIs the ability to control what pieces of data and how much are grabbed by a permitted 3rd party. For example, at TradeIt—from some of our brokers’ API—we see only seven days of transaction history, while others might show 30 days. Typically no one provides more than 90 days but the depth of history varies. In addition, for things like an order blotter, some brokers only provide the current days’ orders. These smaller pieces of data ensure less is shared, though what is shared is timely and relevant.

You Get My Data and You Get My Data, Everybody Gets My Data

With screen-scraping, once you provide your ID and password to the 3rd party, their bots do the scraping and can grab anything that’s available, including your transaction history and all of your accounts under that single login. For some banks or brokers—if the broker is part of a larger financial institution that offers a diverse product set—that could be your brokerage account, retirement account, mortgage, even credit card information. Most end users likely don’t realize that once they give the screen-scraper their login, they have it, and they can and will use it until the password is changed. What’s worse most of the screen scrapers don’t have trademark rights to the logos that are on their service integrations, therefore falsely leading the consumer to believe the institution approves it. In the meantime, they’ve still grabbed that data and it’s gone…to who knows where.

APIs Create a Goldilocks Solution, They’re Just Right

In contrast, most APIs are programmed to call for specific account balances since these services and endpoints are more distinct and inherently control more access to just the needed data. This is why the European Banking Federation’s position is that screen-scraping is an outdated, first-generation technology that should be replaced by APIs, which it sees as a more secure way of enabling direct access to customer data for third parties.

Not only do APIs offer a more tailored solution where you essentially get only what you need, they create a huge potential for innovation. As we demonstrated in a previous post about your data being open for business, companies like Fidelity are already showing consumers who has access to their data and allowing them to control whether or not that’s ok with them.


In Tech We Trust

Brokers need to push themselves to invest in APIs. Ever since the invention of the FDIC, FIs have been associated with trust as it relates to consumer’s money. The theory with bank robbery was that they aren’t hurting anyone since the money is insured. Except now with screen-scraping, we are getting hurt…with our privacy…or lack thereof.

As technology evolves and allows for endless possibilities, investing in methods to engender trust and yet that also support the new ways individuals want to interact with their money, track their wealth and/or use tools for better financial decisions, is vital. Brokers and FIs need to enable that, to securely open their data with controls to prevent misuse or even breaches. This is what will create real trust with their users.

Don’t Build a Wall

Firewalls and detours aren’t the answer. It’s not about closing things off, it’s about opening them up. With the new sharing ecosystem, and with millennials having more trust and more interest in tech-driven brands, FIs need to work to remain relevant. In order to do this, you need to be an active member of the ecosystem and invest in technology that supports these behaviors.

Because, while users may be content to share some of their personal info in order to use your service now, it’s only a matter of time before they realize just how much and possibly decide it’s not worth it.

“We have consistently warned our customers about privacy issues, which will become increasingly critical for all industries as consumers realize the severity of the problem.” – Jamie Dimon

Are they really getting what they signed up for, or worse, paid for? You need to provide comfort and control to your user. If you don’t, they won’t tick that agreement box and they’ll move on to someone who can.  

Unbundlings: Disrupting the Disruptors – Part 2

This is part 2 of our 3-part series on “unbundlings”. Read Part 1 here.

You Get an API and You Get an API. Everybody Gets an API.

Picture this: You’re a consumer. At your fingertips you can view rebalancing, set it and forget it, algorithmic products, monitoring, alerts, coverage calls, portfolio analysis, performance, fractional buying and other products—all via your favorite apps. That’s the world we’re headed towards. Already you see companies like Wells Fargo have a “Gateway” of plug & play APIs, and BlackRock offering their own “hackathon”. Both inviting developers to have “financial data sets at your fingertips”. Keeping your products closed is the quickest way to close your doors.


Use What You Have

In reality, most investment firms have the products and tools to do what the FinTech companies are doing, they just need to be re-packaged and exposed. BlackRock, the world’s largest Asset Manager, added more assets in the last quarter than the entire FinTech space has under total assets. BlackRock also has a powerful set of APIs that could easily be distributed onto a retail platform like StockTracker to allow their users to rebalance or set up an auto-algorithmic portfolio tool and allow them to pick any broker-dealer. It’s only a matter of time before this happens…and it will.  

Prepare for the Outcome

  • Ensure you have an API for each tool that you view as high value on your platform, such as rebalancing, auto-investing, sweeps, funding, etc.  
  • Spend less time worrying about building a Robo to compete with Wealthfront and spend more time putting your Robo into an SDK that can be put in front of consumers where they want it.
  • Partner with Asset Managers to understand the tools at their disposal to grow assets and understand their differentiators (e.g., are they a low cost provider like Vanguard or wed to an advisor network with the associated costs?).
  • Build an API Storefront of the high value items that your company believes will drive your business forward.
    • If your company’s primary goal is AUM, expose an account transfer and account funding API
    • If your company makes 40% from options, expose your Options API

Don’t expect the customers to come to you—put your best product(s) in front of them without friction.

Chasing Zero

If you’ve ever visited a financial news site, you’ve likely been bombarded with offers for “Free Trades” or “Lowest Costs per Trade”. Since the earlier days of the online brokerage industry, the competition for the lowest cost per trade has been fierce. So fierce that the two largest and grandest in the space, Fidelity, and Schwab, launched the latest fee war earlier this year which we wrote about.

You may also be aware that Robinhood, a venture-backed unicorn, is now offering “free trading” and even putting an interstitial in your log-in flow to entice you to move your assets from other brokers to them. What gives?

IMG_6920.PNG                                  IMG_6921.PNG

Mo’ Money, Mo’ Profits

While Robinhood makes money by selling customer order flow, the largest financial institutions make money having Assets Under Management (AUM.) The more money that they have under management, the more money they make. And it appears that investors have turned the screws on Robinhood to make more money given their aggressive (ab)use of competitor’s Trademarks & Logos (as seen above) to shift assets to the free brokerage.

The chart below shows just how much a brokerage can make when they have more assets under management—which is tied to where interest rates lie. In a zero interest environment, which we were between 2008-2016, it’s harder to put AUM to work, but once interest rates rise, those with the most assets win—which is why you see the financials of top public brokerages recording record profits despite lower trading volume.  

Screen Shot 2017-11-03 at 2.06.22 PM.png

No More Soft Sell

Traditionally brokerages do not aggressively push customers to move their assets from one account to another. In fact, Fidelity was the only brokerage to not charge or put a financial disincentive to do so. However, as Robinhood has taken Trump-like tactics to the brokerage industry, we suggest the only way to beat them is to “hit them back 10x as hard.”

Here are a few examples of how to do that:

Broker Full Transfer Out Fee Partial Transfer Out Fee Account Closing Fee Transfer Reimbursement and Other Offers
E*TRADE $60 $25 $0 None
Fidelity $0 $0 $50 IRAs Up to $100 fee reimbursement with $25,000 account transfer
OptionsHouse $50 $0 $0 Up to $100 fee reimbursement with $3,000 account transfer
Schwab $50 $25 $0 None
Scottrade $75 $75 $0 Up to $100 fee reimbursement with $10,000 account transfer
TD Ameritrade $75 $0 $0 Reimburse any ‘reasonable’ fee but would not provide minimum account balance nor maximum fee
Ally Invest $50 $0 $50 IRAs Switch to Ally and get up to $150 in transfer fees reimbursed.Requires $2,500 account transfer and excludes IRA


Rising Rates

Look at E*Trade, for example. ETFC had a 20% drop in their largest income generator of “interest income” and close to a 40% drop after the interest rate drop post 2008. Yikes! Their interest income earned has remained flat until the last year when for the 9 months ending 2017, they saw a 24% increase in interest income due to increased interest rates.

While the biggest driver or other income (which is still only ¼ as much as the interest income) is fees from derivatives (read: options), trading for equities is flat across the board but derivative products are increasingly important accounting for 34-50% of the volume.

In other words, with interest rates set to keep rising, companies can’t take their foot off the gas when it comes to increasing AUM. How do you plan to bring in more in the coming months and years? And moreover, what is your retention strategy once you have them? Is the race for AUM the beginning of consolidation? Or do you think that the AUM race will accelerate asset managers getting that much closer to retail customers?

The ‘Belief Profile’ Opportunity

As the investing population skews towards millennials, socially conscious investing is outgrowing its past as a niche market. To capture the loyalty of tomorrow’s investors, financial institutions should think beyond risk profiles by constructing portfolios based on their clients’ beliefs.

Investors often design their portfolio around a “risk profile,” generated by their age, income, acceptable level of volatility and long-term goals. Thinking back to microeconomics, we know that individuals get different, though ambiguous, levels of utility from the different choices they make. For a growing number of investors, returns are important, but so is having a portfolio that lines up with their beliefs. For example, if I care deeply about the environment, and my wealth manager allocates half of my portfolio to a coal company, I won’t be happy, no matter how big a return I get. If we expand this concept to all of the broad ethical concerns one can have, it follows logically that personal interests and beliefs ought to be given more consideration when determining a proper portfolio. While today’s “socially responsible” investing is quite niche, and still focused on environmental sustainability, it’s becoming more customary for investors to buy what they believe in.


As wealth management fintech firms evolve, a client’s ‘belief profile’ will take an equal seat next to his or her risk profile (Stash, imaged above, is a great example of this). While a risk profile is essentially confined to a scale from risk averse to risk hungry, a belief profile is multidimensional, using clients’ stances on as many issues as they choose to weigh in on. A client’s ‘belief profile’ could consider environmental concerns, foreign policy, gender, and even religion, enabling one’s portfolio to more closely reflect oneself. With an estimated 84% of the millennial generation interested in sustainable investing, the more accurately a manager can construct a portfolio that resonates with an investor’s beliefs, the more assets they can expect to pull in. This is precisely why giants like Blackrock and Goldman Sachs have started to offer more sustainability-concerned mutual funds and ETFs in the past few years.


Sustainable funds are certainly not a new concept. Take Calvert, which was founded in 1976 and launched the first socially responsible mutual fund. Calvert’s fund excluded companies that did business in apartheid-era South Africa. Today, Calvert offers 26 different funds. What’s sparking the reinvigorated interest in this space seems to be a combination of Millennials’ belief-driven preferences being given more weight, along with more and more companies taking an interest in sustainability. Some of the most sustainable companies (certified as such) are benefit corporations, a.k.a. B-Corps. There are over 2,000 B-Corps, including some large publically traded companies, such as Etsy (ETSY; NASDAQ) and Natura (NATU3; BVMF).

Robo advisors can play a key role in the taking the “belief-profile” to mainstream investing. With more precise technological capabilities, robo-advisors can quickly and simultaneously adapt to their client’s needs and the current state of the markets. New institutions, like Swell, provide research on publicly traded companies who stand to grow, based on social and environmental trends. It may be easy enough to say “I don’t care about _____”, but it’s hard to ignore socially conscious investments that outperform their benchmark indices. For example, since 1990, the MSCI KLD 400 Social Index has returned an average of 8.4% a year, compared to the S&P 500 index’s 7.6%.


The MSCI KLD started with the name “Domini 400 Social Index” or “DSI”

Any financial marketer can tell you that Millennials expect “personalized experiences.” Building a strategy around a client’s “belief profile” will help wealth managers deliver just that, all while making them feel good about putting their money behind their values.


Read More:

Where to Find Socially Responsible (Robo) Investing

What Is Socially Responsible Investing?

Calvert to Launch Responsibly Managed Ultra-Short Income Strategy in NextShares™ Structure

Ethical funds see jump in investment inflows


Is FinTech Failing?

No one is denying that the FinTech space is ripe with innovation. What most fail to realize though, is that mainstream media outlets tend to report on us with a survivor bias. If you look around, you may have noticed quite a few FinTech companies are going under (click here to see a piece by Benzinga that includes a slew of failed companies).

While VC funding is often cyclical, there are still many unicorns in existence. Despite not being household names, Square had a successful IPO, and Stripe, Transferwise, and Addepar all received lofty valuations. In 2016 overall, FinTech companies received $36 billion in funding across from over 1700 unique investors.


While this was a $2bN decrease from 2015 funding, the growth cycle for FinTech companies is longer. Historically, the average time for IPO or Exit looks something like the chart below. The mass “buzz” factor tends to be quieter, and the sales cycle longer.  



While we don’t deny the foundational shift against app-based ad-supported businesses, we also see big opportunities. As we deploy our SDK solution on more than 100 partner apps, these apps have seen a 3-4x boost in user engagement and awareness. This is a measurement of enabling financial institution customers to take actions on publisher apps, and these financial institutions are increasingly moving towards “action” based compensation. This is a systemic shift towards enabling technologies like ours to provide the basis for monthly recurring revenue (MRR) and action based incentives.

Net Neutrality Update

If you’ve been on the internet in the last week, you’ve probably seen some mention of protecting “net neutrality.” While the term sounds self-explanatory, it’s more important than most realize. Net neutrality is the principle that Internet service providers (ISPs) and internet regulatory entities must treat all data on the Internet equally. It prohibits internet providers from charging differently by user, content, website/application, or communication mode. John Oliver gave a spirited review of the issue. Essentially, without net neutrality, ISPs would be able to charge companies and consumers for preferred speed and access to certain sites.


Net Neutrality prevents a traffic hierarchy

In 2015, four million people petitioned the FCC to reclassify broadband ISPs to protect net neutrality. This public support was unprecedented, forcing the Commission to enact strong rules, called the Open Internet Order, in favor of a neutral internet. However, in the last couple of months, President Trump and the FCC Chairman, Ajit Pai, are looking to overturn the 2015 Net Neutrality win, despite the prevailing popularity of the rules across party lines: 77% percent of those surveyed still support the FCC’s rules. The only group pushing for a repeal is your friendly neighborhood ISPs, a.k.a. Big cable. It’s worth mentioning that ISPs aren’t exactly taking the outrage well, AT&T even tricked some customers into sending pre-written protest messages that actually are against net neutrality.

The formal “Day of Action” passed this Wednesday (7/12), but if you support better and fairer internet speeds and access, or you’re against padding the pockets of Big cable, you can still sign the actual petitions against the FFCs new proposed changes at a number of sites, these are the top 3: https://www.battleforthenet.com/ | https://www.change.org/p/save-net-neutrality-netneutrality | https://www.savetheinternet.com/sti-home

Luckily, the outcry has been successful. So far, there have been 4 million comments to the FCC, 2.5 million petition signatures, 10 million e-mails to Congress, and 500,000 calls to the FCC and Congress. With those numbers, we can see that many people out there care. However, continuing the dialogue about a free and open web is paramount for both consumers, big sites like Facebook and Google, and us here in the FinTech space.

Read More Here:

–Internet Service Providers Were Not Amused by the Net Neutrality Day of Action

–Apple’s deafening silence on net neutrality

–The net neutrality fight is on: Where do we go from here?

–How to Smoke Out Where Broadband Companies Stand on Net Neutrality