So this week one of the US darlings of fintech – Robinhood – surprised us all by closing their British doors before they had even opened and told the 250,000 on their waitlist that they would not be opening in the UK. Citing a desire to focus on core US operations. Hmmm.
As challengers to the Establishment they made their name in the States by offering free basic trades – making money from cash balances, margin loans and other ‘sideline’ activity.
But the platform’s had a tough run – systems problems in February froze some of their clients out of markets on some of the most volatile days of the year and a class-action lawsuit looms. Lots of their clients lost money making bets on a quick recovery in the oil price (which weirdly went on to fall beneath zero in April, leaving a trail of destruction in its wake). And last month a 20 year old user took his life after what is believed to have been an awful misunderstanding that he had lost $700,000 in an ‘options’ bet gone wrong. (Options are a risky product which gives you turbo-charged exposure to a share’s price movements with a limited spend. If the share goes up you make loads, If it goes down you lose loads.)
Investing has had an adrenaline shot over the last few volatile months, attracting hundreds of thousands new investors to markets for the first time, showing behaviours more like Dick Whittington than Robin Hood.
Yesterday home-grown AJ Bell released their Q2 results. Non-advised customers invested £800 million in the 3 months to June (that’s 60% more than this time last year). Client numbers grew by 12% in 3 months. And the number of trades were more than double those placed last year. This sort of behaviour has been reported by all the major UK platforms.
What’s clear all round is that our reaction to March’s crash has been nothing like our reactions to previous crashes. We’ve been animated, spotted opportunities and piled on in.
I’m in two minds about all the fintech firms which gamify investing and make it sexy. Of course it’s more exciting to buy shares in businesses we like and know. My kids love it when I tell them they own a bit of Samsung and Apple in their Junior ISAs. (“What – like 1% or something?” DREAM ON! If you think of Apple as a person, you would own about one-millionth of one eyelash!) Revolut tries to appeal to potential customers by telling them they can own shares ‘From Apple to Tesla to Zoom.’ Trading 212 shows the logos of Starbucks, Nike, Snapchat, VISA, GAP, Mercedes Benz, Facebook and more on their homepage.
But there’s no escaping the fact that good investing is about diversification and all those other Boring messages.
However. It’s also true that many fintechs are challenging on price AND leading the charge on clear, engaging apps AND broadening the appeal of investing. If you were disappointed that Robin Hood didn’t stick around to fight the evil UK Sheriffs, and you want to see what commission-free trading looks like, check out Freetrade, Revolut or Trading 212.
I opened a test account with Freetrade a few months back. I put in a tenner and then bought Just Eat on the basis it was the only share I could find which cost less than £10! It appears this was a very successful stock selection basis as I sold the share earlier this year (we trade on all our test accounts so we can capture the real-life customer experience which we share with you in our Best Buys tables) and am sitting on £12.78 in my test account :0)
As well as testing accounts ourselves, we also go out once a year and ask you guys – the investors – which services you rate the highest. Thanks to all of you last week who voted in our Investor Choice Awards. If you have time and are yet to vote please have your say. We’ve had over 1,500 votes so far and have extended the voting period to make this really representative.
I’m tired as we head into the weekend. Yesterday was Day One back in the office for most of Team Boring. The trains were empty. Oxford St deserted. The office was a ghost town. Small shops shut. After 4 months in the countryside the air felt dirty. But how great to see the team back in 3-D! To chat about plans and have ad hoc questions and comments flying around the office. Someone even cried to her horror as we started one meeting (and I don’t think it was because I was being an a-hole!) It was just quite moving to be back, connecting and chatting. We’re having 2 ‘collaboration days’ a week for now and we’ll see how that goes. Slowly slowly.
Have a great weekend everyone
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