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RobinHood Tried And Failed. Entrepreneurs, Build A Simpler Investing Platform For Millennials And Gen Z

When you talk to Millennials and Gen Z adults about investing, their answers, and confidence, are all over the place. This article here, Bit Coin there, throw in some meme stocks via social media and maybe add Robinhood to the conversation mix. That is not the answer. Robinhood announced another 23% layoff of employees yesterday; that comes on top of a 9% layoff last quarter. What was supposed to be the great savior of investing for the next generation of investors is failing. Why? Well, Millennials and Gen Z are challenging populations when it comes to investing.

Millennials and Gen Z for all their savviness about technology, still are not confident or knowledgeable about investing. According to a Yahoo Money article that referred to a Pew Research study, only 37% of millennials feel knowledgeable about their investments. According to a March 2021 survey by, Gen Z investors were nearly five times as likely to report that they get financial advice from social media as adults aged 41 and over, with 28% turning to friends and online influencers for guidance. They are not willing to invest the time and education to grow and protect their money but are turning to social media and influencers for critical advice. Now we know why they invest in meme stocks or based on ‘whispers’ by friends and yet know so little about the company, the industry or the trends. Why is this so convoluted and complicated? Don’t they know about passive investing?

If you look at the rise of passive investing over the past 30 years, why aren’t more Millennials and Gen Z investors just choosing market index funds that just follow the Dow, the NASDAQ and the S & P 500? Don’t they want decent returns with average market risk and no worrying about individual stocks? Why not just own shares of 500 of the biggest companies traded on U.S. stock exchanges in one fell swoop and sleep at night?

You could if you simply invested in an S&P 500 index Exchange Traded Fund (ETF), which simply tracks the performance of 500 of the largest stocks weighted by market cap that trade on the Nasdaq and the New York Stock Exchange (NYSE). Sound simple? It is. According to the investment firm, The Motley Fool, over the past 30 years, the S&P 500 index has delivered a compound average annual growth rate of 10.7% per year. That’s a pretty good yearly return and you don’t even have to know any of the 500 companies in the index. A recent Los Angeles Times article cited that passive investing using ETF’s or mutual funds is now up to a 43% market share.

So, Robinhood has tried to target these emerging investment populations and is really struggling. Other early market entrants like Betterment and Wealthfront were both sold in recent years to larger investment firms. Overall, with billions of venture capital investment over the past 12 years, the market share of these new robo-advisors is still less than 10% of the overall investment marketplace. So the opportunity for innovative or disruptive entrepreneurs is massive. You just need to design an easy to use platform that a six year old could use.

Keep the following attributes in mind, listed below, to design a much simpler approach to investing for Millennials and Gen Z; one that does NOT involve educating them or even allowing them to trade stocks. At all. Forget about what they want, give them what they really need. A simple investing platform based on risk or return.

Time. These two population groups are smart about a lot of things but they simply are not investing the time required to learn about investing. So, design something so simple, it takes up very little of their time.

Simple. Keep the new investment platform so simple by only allowing them to perhaps deposit their money and make two choices, based on either risk or expected return weighted by risk. That’s it. Allow no trades. Simply invest their money for them in the best passive market ETF indexes.

Knowledge. Build the new platform with the architecture of an onion. That is, build it in layers where the first layer is the investment platform and if no one moved beyond that layer, they would be fine. For people who want to learn more, allow them to self-select their investment education modules. Do not write investment articles based on fads, trends, recessions or boom times. Just provide simple, straightforward education.

Mobility. This new platform has to be so simple, they can run their entire investment portfolio from their smartphone. That gives them anywhere and anytime access. Even though you really want them to simply do nothing.

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