Remember how Goldman did all that research on Millennials and concluded that they suck and are terrible?
Turns out the annoying beliefs and habits of the next generation are actually already being used against them by some canny young entrepreneurs.
Take it away, Business Insider...
A new generation of millennial investors is coming of age with money to save. But one problem for Wall Street is that many of these millennials still have scarring memories of the financial crisis that make them wary of investing.
"They don't trust the stock market," Goldman Sachs determined in a survey, which highlighted that a mere 18% of millennials thought the stock market was "the best way to save for the future."
Poor dears. Is there anything that can be done to change their "minds?"
Vest, a Y Combinator-backed startup, wants to change that by offering an easy way for investors to both see and lower risk on a particular stock.
To do this, Vest uses a type of financial product called an option, a contract that protects you from a certain amount of risk.
Oh yeah, those notoriously risk averse options trades.
How does Vest intend to get risk-averse, financially shell-shocked Millennials to sink their money into a financial instrument that is almost synonymous with risk?
Well, apparently by deeply understanding their target audience.
Millennials cannot stand losing, hate doing anything that they can't pretend to have invented, and would really prefer not to be hassled with busywork.
Vest has them sooo covered...
"Basically you buy a contract that says if a stock goes below a certain level, the contract will make up for the losses — not you," Vest cofounder Karan Sood told Business Insider. He describes it as taking out insurance on a particular stock.
Pretending like this is a win/win... Check.
This type of financial contract is not new, but Sood hopes his company will be able to make it available to people who aren't necessarily sophisticated investors. He plans to do it by making the interface simple to understand.
Framing the whole thing like they kind of just invented options... Check.
First, you choose how much risk you want to take — how much the stock can go down. Then you have to pay for the option contract. You can pay a straight fee on the stock trade, essentially paying up front, or you can put a cap on how much money you can make if the stock goes up. And then Vest does all the math behind the scenes to make it happen.
Saying "Sit back while we do all the math"... CheckMATE!
This Vest is like the Coachella of investment startups.
What's the fee structure, you might be asking?
Vest makes money by being set up as an investment adviser. The company charges a fee of 0.5%, annualized, on the assets you invest through the platform. Vest doesn’t take a commission on a per-trade basis.
And potential clients can buy in for only $500.
This Sood fellow is basically betting that he can charge low fees and still make serious profits because enough Millennials out there are eager to play the market but are simultaneously too naive or lazy to learn how to buy stocks and execute stop-loss orders.
Somewhere in lower Manhattan, Lloyd Blankfein feels a great disturbance in the force. A new apprentice has revealed himself.