(Sifted) - Wealthtech platforms are beginning to look at how couples and families manage wealth as a group, whether they’re building pots of money for a home, retirement or to give to their kids when they grow up.
“Heavy fintech users are getting older, their lives are getting more complicated and they’re getting to a point where they have more wealth, or they’re inheriting more wealth, so they’re going to demand more robust products than perhaps what they got before,” says Katherine Salisbury, cofounder and co-chief executive of Qapital, a Swedish-born, New York-based startup that has created a user-friendly savings app for couples as well as individuals.
The last 18 months have seen a big rise in wealth management apps and platforms in Europe, with younger generations increasingly engaged in where, and in what, they place their money.
“Heavy fintech users are getting older and they have more wealth, so they’re going to demand more robust products”
Yet in the latest Sifted report Salisbury says that, to date, there has been little invested in the couples wealth management sector: less than $10m in the US compared with billions in non-couples businesses. “It seems as though people haven’t really tackled this,” she says.
‘Community’ wealthtech
Another key trend in the coming years could be the growth of platforms focused on the community side of investing and wealth creation, especially those that can offer a bit more protection and authority than the likes of free-for-all Reddit-based investment forums.
Recent years have shown the power of democratised wealthtech, with the rise in social media-inspired investment strategies.
However, this comes with inherent risk, opening up opportunities for platforms that can channel this social aspect of investing in a more controlled way.“
There is always a risk when you invest in stocks, whether it’s through an adviser or by yourself directly,” says Benjamin Chemla, chief executive and cofounder of Paris-based social-first retail investor platform Shares, which was founded earlier this year and raised $10m in seed funding in August.
“We have a financial crime department, we have a support team, we have a compliance department”
Investors using Share can make trades, manage their portfolios and discuss investments while also receiving detailed market insights.
“If you think about a platform like Shares, we’re building a social media, for sure, but within a trading platform that’s fully regulated,” says Chemla.
“Each of our users will have to go through a verification process to verify their identity,” he adds. “We have a financial crime department, we have a support team, we have a compliance department, and a third of all our funding is invested towards building a safer and secure place.”
Challenging times ahead?
After a period where most retail investors can feel pretty good about their returns, some involved in the wealth management industry are now predicting a more challenging period ahead, with profits harder to come by and investment strategies increasingly important.
“NFTs, Dogecoin, meme stocks, the Robinhood bros, all of that stuff is fun while there’s a bull market, but it’s going to be brutal when there’s not”
This could be damaging for younger retail investors, in particular, who have generally only known the good times. “Post-Covid, are we going to see inflation rise, and what does that ultimately mean for this kind of low interest rate environment? I think that could fundamentally change a bunch of stuff,” says Matt Ford, a partner at VC firm Mouro Capital.
“In a bull market, lots of strange things happen. NFTs, Dogecoin, meme stocks, the Robinhood bros, all of that stuff is fun while there’s a bull market, but it’s going to be brutal when there’s not,” adds Michael Meyer, managing partner at Middlegame Ventures.
Meyer says that when the tide goes out lots of rocks will be exposed, “and it will be a very unpleasant time”. Though when that might happen is unclear, he adds, since there has been excess in the market for a number of years.
Still, “anything that is focused on individual investors who have not ever experienced a bear market is going to be extraordinarily ugly,” he says.
“The far-out on the risk spectrum in the crypto world will be sharply curtailed, far-out in the alternative asset world, where you’re allowing individuals access to that, will [also] be sharply curtailed. I do think the Robinhood market will be severely impacted by a correction,” he adds.
By Kit Gillet
5 November, 2021
