Banks, Wealth Managers and Fintech Disruptors Vie to Create ‘Goldilocks’ Retail Product

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What You Need to Know

  • Only 55% of American are invested in the stock market.
  • Banks, wealth management firms and brokers are building better tools to democratize access to markets.
  • The winners of the race will be those that focus on educating and empowering clients to make smart decisions.

Retail investor interest in the stock market is surging as the Dow Jones Industrial Average and S&P 500 continue to book record closes.

Yet, for all the stories of millionaires next door and armchair speculators securing their retirement nest eggs with smart investments, just 55% of Americans are currently invested in the stock market.

For the rest, many of whom are younger people and minorities, the idea of setting up a retirement investment account or trying to time the market on the next GameStop frenzy is a  foreign notion.

Democratizing Investing

The nation’s retail banks, wealth management firms and online brokerage firms recognize this challenge and have been trying for decades to come up with the right formula to democratize investing for everyone.

Some, like Robinhood and Wealthfront, have targeted younger investors with a focus on easy access to trading or digital advice. Others, like Charles Schwab, Vanguard and Fidelity have skewed a little older with a focus on retirement savings. Meanwhile, retail banks have been aggressively expanding their advice channels, trying to become the hubs of their customers’ financial lives.

Taking a page from all three strategies, Goldman Sachs’ consumer banking brand recently stepped into the fray with the launch of its Marcus Invest offering.

By incorporating robo-investing tools pioneered in the fintech space with a suite of consumer-friendly offerings that have already been resonating with customers, Marcus has been making a compelling case.

Marcus entered the market in 2016 as an online bank with a focus on no-fee personal loans. Delivering a user-friendly digital experience backed by a well-respected institutional brand, Marcus quickly won fans.

By 2019, it had become the top-ranked brand in our Personal Loan Satisfaction Study and in 2020 it came in a close second. Our customer experience data showed strong performance on ease of self-service and an innovative brand image. It also had the highest Net Promoter Score in the category for two years running, which suggests strong customer advocacy.

Competitive Options

But Marcus is hardly alone. Chase also has been making a big push in this space, leveraging its JPMorgan brand equity to launch the new YouInvest solution, allowing customers to research, trade and manage their online brokerage accounts with direct connectivity to the Chase Mobile App.

This seamless integration between banking, investing and mobile has been a winner with customers. In fact, the Chase Mobile app was named the top wealth management app in overall customer satisfaction in our 2020 Wealth Management Mobile App Satisfaction Study.

Others, including Bank of America, Morgan Stanley, Edward Jones and Ally have been making moves in this space as well. The Morgan Stanley acquisition of E-Trade and Edward Jones’ announcement that they are pursuing a banking license are two of the clearest signals yet that the space is evolving quickly.