Despite the online advancements that have made investing more accessible today than ever before, many individuals feel like they don’t have access to the same investment playing field as professional investors. But innovators, entrepreneurs, and engineers across the financial services industry are fighting to change this mentality.
Jeff Cruttenden, co-founder of Acorns, SAY, and Treasury, is a part of this mission. Through his advancements in the fintech industry, he’s helped to break a number of barriers that have long kept groups of people from taking part in the market. So, I spoke with him about the progress made as a result of innovative thinking and the ways our industry can continue to lift up all investors.
Innovation is a catalyst for opportunity
Lule: One reason many people don’t invest is because they view it as an exclusive activity reserved for older adults or those who are already wealthy. How has the introduction and expansion of technology in the investment space helped to change this?
Jeff: Investing used to be something that was built up as this major decision people made later in life. It was a lot less accessible to younger people or those who didn’t have a lot of assets. These newer investment apps not only make it possible for anyone to invest right from their phone instead of having to go through a physical financial institution, but they also make investing less of this huge decision.
Now, it takes way less time and effort to start investing. But, more importantly, it takes less money — meaning you can start small and get your foot in the door sooner.
Lule: Fintech gives us the opportunity to reimagine who we’re serving and how we are serving them. When you entered this space, how did you want to expand investing and what are some of the effects you’ve seen from that?
Jeff: When I was a college student, I found that my friends who were interested in investing either weren’t or felt they couldn’t — whether because account minimums were too high, or it seemed too difficult. College students had largely been ignored by financial services companies, so when I co-founded Acorns, my team was focused on making investing accessible to this group. We wanted to make investing a smaller lift, a frictionless experience, right from your phone.
Lule: It’s incredible because innovations built to serve one group of underserved individuals tend to end up impacting far more than they even intended, and you’ve certainly seen that. How can leaders continue the work to broaden engagement going forward?
Jeff: It’s important to learn from new people entering the investing space. They provide an extraordinary opportunity to look at it from fresh eyes with a new perspective. Newer investors are often more curious, ask more questions, and aren’t going to just accept the status quo in the industry. You have to listen and also think about ways you can create products that address those questions and curiosities head on.
Accessible investing is just the first step
Lule: I used to think the barrier holding back different pockets of the population from investing was access. But the reality is, it’s so accessible and minimums are lower now. But we still see a a lack of engagement. How can we further motivate and empower people to become investors?
Jeff: We can look at two areas: Investing education and helping people see the value in investing. With education, I’ve found many people think they need to know so much and do so much research before they even begin investing. They’re terrified of making a mistake and losing money — so they end up not even starting.
Advances in fintech have allowed us to let people start investing with just a few dollars, so it’s not as scary. And once you’ve put just those initial dollars in, the motivation to learn, understand the market, and take ownership of your role as an investor grows tenfold.
When it comes to seeing the value in investing, it’s more than just the potential for long-term wealth. There’s also the component that, as an investor, you have voting rights in the companies you own. You have the power to make an impact. While that side of investing isn’t talked about as much, I think the future of the industry needs to focus on highlighting that ownership mentality vs. just the trading mentality. It’s a compelling way to help passive investors think long-term and derive even more value from their portfolio.
Lule: You know, that really ties back to people feeling like there isn’t a level playing field in the investment space. When you look at it that way, you see how there is so much value in being a passive index investor. You don’t have to be a high-flying hedge fund manager to use investing as a mechanism for long-term wealth or to access your rights as a shareholder.
We still have barriers to break
At Ally Invest, like Jeff, we’re continuously working to expand the investment landscape by learning from and listening to investors and non-investors alike. Whether that’s through lower investment minimums or simpler, user-friendly interfaces, investing should be a tool for everyone — and all people should feel emboldened to make their mark in the market.
View the conversation between Lule Demmissie and Jeff Cruttenden from Ally Invest’s Digital Conference.
Ally is committed to increasing economic mobility opportunities for all people to achieve their financial dreams.