Merrill Edge is ugly but quite functional and featured on iOS. Same with Schwab. I don't need the "millennial" UI experience when moving thousands of dollars. And that's not to say it doesn't have value - I love it for many things. I'm a happy customer of Warby Parker, Brooklinen, Joybird, and Lemonade to note a few, all of which offer slick UI's and a bit of markup for a "just works, simply" experience. I much prefer ugly/clunky yet working correctly and not fucking me over randomly with bugs when it comes to major financial stakes.
You don't need a good UI experience the same way my dad doesn't need a "fancy website thing" because he can easily call his stock broker to make the trade. But if these companies don't evolve they are going to keep losing younger millennials and beyond to Robinhood as time goes on.
As I made clear, I clearly do value UI/UX and I'm not some old person making trades over the phone (I'm 24, directly in the Robinhood demo). What I'm saying is that in this specific use case, it's not nearly as important as correctness/reliability, which Robinhood has a terrible history with. An improved UI could be a factor that would draw me away, but there are simply more important things when it comes to where to bank my savings.
Again, the point here is that there's not a huge gap that people seem to try to say there is. They have a fully working website, apps, etc. They're regularly updated and all, see UI refreshes, the usual. Trading may take 4 clicks instead of two, but it's just so much more minor than people claim.
> if these companies don't evolve they are going to keep losing younger millennials and beyond to Robinhood as time goes on
Maybe to other companies, but I think Robinhood may never recover from this. Whoever does draw these away will have to offer bank-level correctness standards in addition to the nice UX. I'd be willing to bet Robinhood had a steady stream of bigger players leaving the platform as they got older because the product is optimized for new investors, not long term financial management. Maybe that niche of new investors is all they need, but their UX won't keep those who age/grow out of that type of user IMO.
i have a vanguard account with most of my investments, with like 10% in robinhood for gambling.
the way i think about it is vanguard works fine (theres some bugs but not end of the world). but it is not optimized for timed trades. it works well enough for me to put in a big chunk of money on a recurring basis or liquidate funds for use elsewhere.
robinhood allows me to easily trade off of market emotion or do options trading.
they serve two very different markets. if i tried to trade options using vanguard i'd probably want to throw my phone against the wall.
Maybe—just maybe—we shouldn’t be encouraging the general public to trade options? Triply so with margin accounts?
This is isn’t “democratizing finance”. It’s literally just a wealth transfer from the poor to the rich. It’s putting fish at a poker table full of professional sharks backed by billions of dollars and teams of analysts, and encouraging the fish to put their life’s savings on table.
Index funds are boring as fuck, but have done more to put market returns in the hands of the average member of the public than anything in the history of finance.
I’m not saying people who want to shouldn’t be allowed to trade options. But putting the ability in the hands of anyone who has zero financial experience but can download an app isn’t helping things.
i partially agree with you. robinhood is ran by rich guys who make money when people use the app - regardless if the traders make money or not. and i agree that index funds are a great way to get exposure to the long term growth of the economy.
however, giving people the ability to trade on margin and options just like the big shops is an equalizer. robinhood wasn't lying there. the problem really is:
1) education
there's a significant inequality in knowledge. the average person isn't taught market fundamentals, theory, or the technical details of how stuff works (how does a call work? what does T+2 mean?)
2) capitalism
the market is tipped in the favor of the big guys, because currently the financial market is incentivized to keep these guys not just afloat but jacked up. big gains = everyone is happier. as such, very smart people, like physicists, are attracted to the financial sector where they are paid the big bucks to make insanely rich people even wealthier, instead of working in academia or an industry where they can contribute their abilities to bettering the entire world. i.e. working on green energy or reducing environmental impact or improving productivity
Actually the biggest reason is RH was the first to offer zero commission trading and a very simple UI. That led to a big customer base of new traders. Lots of free marketing by those newcomers on social media and the inertia of switching brokerages kept the flywheel going. This incident was bad enough to make people get over the inertia of switching, others now offer zero commission trading, so RH is going to bleed customers as a result.
The other apps may not be quite as easy to use for someone who has never traded before, but the basics of trading and options have been democratized enough that it is probably no longer enough of a moat.
It may be 'excellent' relative to competitors in "shitty old financial company app" space, but it is in no way excellent compared to a high quality phone app.
Robinhood is successful because their software is actually good. My bullish case for them would be them leveraging this capability as a way in to becoming a Fidelity sized financial competitor.
Their CEO's inability to honestly communicate with the public is hurting them though. He should have lead with their liquidity clearing house issues and directly addressed the apparent conflict of interest. He appears to either be unwilling or incapable of doing this.
They've now after the fact explained some of the clearing house issues, but they still act as if they don't understand the conflict of interest question. Just address it directly.
When Elon asked him about it he should have said something like, "I can see why people would think we'd be under pressure from the funds that buy our order flow, but we live and die by our retail reputation and would not risk that to illegally coordinate with these funds. We'd go direct to our retail customers first. That said, we were not asked to do what we did or pressured by them, we had to make choices on the fly to stay liquid and in that craziness I failed to communicate what we were doing in real time to our users - that was my failure".
Instead he mostly dodged the substantive question and came across as full of shit (only addressing the narrow aspects not really in dispute). I think this could be the truth, but when paired with him lying on TV about their liquidity issues it leads me to distrust him, and by extension the company.
I suspect the reality is something in the middle, considering what RH's customers (the funds) would want, fear of mentioning their liquidity issue causing a run, and the clearing house concern. He handled this poorly.
Well that's a long reply, and I agree with you by and large. RH has a bright future if they communicate better with their users.
Re: Fidelity, by excellent I mean: it does what I want it to do, and the UI is clear enough. To be fair, I'm an infrequent trader who mainly uses Fidelity for banking, so I don't spend much time on the app. I'm also willing to sacrifice UI flashiness for a functional service that doesn't block me from trading when I do.
[ETA: I believe there's a lot to be said, and has been said, for ugly functional UIs that outlast fancier competition. The archetype is craigslist]
It sounds like we probably agree on most things and use fidelity in roughly the same way.
I’d argue Craigslist’s design is ugly, but quite good - it’s dense/high bandwidth, does exactly what people want without fluff. It’s fast. They also benefit a lot from network effects, but even ignoring that I think the website does a pretty good job doing what it's supposed to and is easy to use.
Fidelity is ugly and bad. Hundreds of hidden menus. Many things can’t be done via the app. Some actions require a phone call. Options trading sucks.
For an example, I wanted to wire my rent. The place to do this is via transfers.
Specifically: Transfer -> to bank account -> that I do not own.
That’s the flow to wire money to an external person. It’s not obvious and buried and it can only be done on a desktop.
Automated deposits are similarly cumbersome.
The app is also quite slow and the login flow is painful.
My first thought logging into their mobile app and desktop was "Jesus Christ this is terrible". Maybe it is functional, but RH knocks UI out of the park.