How can the financial industry convince the millennial generation to invest?
It’s a US$24 trillion question. That’s how much wealth those born between 1980 and 2000 will control globally by 2020, according to Deloitte.
But convincing millennials to put a portion of that money into the equity markets is no simple task. In addition to the usual reasons not to invest given by young people — such as “I don’t make enough yet” or “I have priorities other than saving right now” — this generation has lived through the Great Recession of 2008 and is carrying a historic debt burden from student loans.
As Brady Fletcher, Managing Director of the TSX Venture Exchange, notes, “Significant proportion of millennials were just graduating university and looking for their first jobs during the 2008 and 2011 market downturns, which were difficult times.”
“Now that there are new industries, like blockchain, crypto, and cannabis, using the public markets to finance the growth of these businesses, millennials are gaining first-hand knowledge of the powerful role public markets play in wealth creation.”
In addition to new industries to invest in, there are also new fintech companies putting out products designed to appeal to this generation of investors.
One such company is Voleo, which has developed a mobile trading platform that allows groups or clubs of investors to invest directly in the equity markets.
Investment Clubs Get Their Own App
Voleo’s mobile app allows investors of all skill levels to leverage their social networks and take a collaborative approach to investing.
In a nod to the fact that millennials were reared on video games, mobile communication, and social networking, Voleo employs gamification to make investing both fun and social. CEO Thomas Beattie explains, “Voleo allows users to track every decision they’ve made. This makes the learning both practical and fun. It lets you build up a Twitter-like community to gather investment insights.”
The platform allows users to share the costs and the risks of investments decisions, removing two key barriers to investing.
Once a club is formed and the group pools its resources, club members begin offering their trading ideas to the group. If the majority of the group votes to make the trade, Voleo automatically executes it for the group.
A key gamification feature built into Voleo is a “lock” function that allows users whose trades get voted down to track their hypothetical positions. If that hypothetical position would have been a profitable trade, this feature gives that member of the club “bragging rights.”
Increasing Financial Literacy
The Voleo platform also aims to increase financial literacy, which many millennials feel that they lack.
By offering a fun and social way to invest, the platform teaches investors how the equity markets work. It helps them gather insights and validate them with trusted peers. Beattie elaborates, “Voleo empowers individual investors by encouraging group investment decisions. By working as a team, users lower their costs and risks. And, hopefully, they leverage the wisdom of the crowd. Thus far, our clubs are outperforming the average of their members’ decisions by over 70%.”
In a sign that the exchanges see Voleo’s potential to attract new money into the markets, the TSX Venture Exchange in 2015, and the Nasdaq in 2017, launched trading competitions in conjunction with Voleo.
Fletcher commented, “The collaboration with Voleo predates my time with TSX Venture Exchange, but it was conceived as a way for us to engage a new audience, with the goal of reaching investors earlier in their career, and helping to build familiarity with how public markets work, how to evaluate stocks, etc. We certainly wouldn't rule out pursuing a similar path in the future.”
“Nasdaq is a strong supporter of financial literacy and our collaboration with Voleo to help retail investors understand and participate in the markets is another step forward,” said Oliver Albers, Global Head of Strategic Partnerships for Nasdaq’s Global Information Services.
Both competitions proved successful, attracting hundreds of students from across Canada and the U.S. The product won “Best of Show” at FinovateFall 2017 in New York.
A Branding Vehicle for Financial Institutions
The win at FinovateFall was a coming out of sorts for Voleo’s white-label product.
Targeted at financial institutions, the white-label app allows a bank or credit union to wrap its brand around a product that resonates with a younger generation of consumers.
Beattie is enthusiastic about Voleo’s potential as a B2B product. “Voleo gives banks and other financial institutions a turnkey mobile brand experience for their customers — it authentically builds brand loyalty. Plus, its viral nature opens up all kinds of avenues for new customer acquisition,” stated Beattie.
Next up for Voleo is a public listing via a reverse takeover of Logan Resources. The company recently closed on an oversubscribed bridge financing for $780,000, and it expects to raise $10 million as part of its go-public transaction.
From that base, the company plans to expand in both the Canadian and U.S. markets. To that end, it will soon launch a B2B site highlighting Voleo’s potential to help banks build brand equity and acquire new customers.