The future belongs to the young, goes the saying. And perhaps so, too, does the future of investing.
To that end, as reported by CNBC, J.P. Morgan has struck a deal to buy OpenInvest, which would mark its third FinTech acquisition within only the past several months. Last month, the company said it bought Nutmeg, a robo-adviser that is based in the United Kingdom, to enhance its digital banking initiatives. The Nutmeg deal follows the December 2020 acquisition of 55ip, which is a firm that helps create tax-efficient investment portfolios.
At a high level, the acquisitive pace should come as no surprise, as CEO Jamie Dimon has signaled on past earnings calls that the banking giant would look for more deals. And the increasing cross-pollination of financial services means that all types of platforms and startups are moving into the investment sphere.
OpenInvest, for its part, offers platforms and tools that can help financial advisors report and customize holdings/portfolios in what is known as ESG (environmental, social and governance) investing.
Terms were not disclosed, but the deal is expected to close in the third quarter of this year, according to reports.
Trillions of Intergenerational Wealth Transfer Dollars
OpenInvest notes in a blog post aimed at advisors that “the largest intergenerational wealth transfer in history will pass down over $30 trillion in inheritance from baby boomers to millennials and Generation X across the next few decades.” Against that backdrop, millennial earnings power will increase by almost 75 percent across the next few years, per the site.
That same blog post notes that 73 percent of U.S. millennials and Gen Zers communicate digitally with other people more than they do in person, and 70 percent can imagine a future where 100 percent of purchases are online.
“These generations grew up with the internet. Their mentality is that there is an app to solve every problem, and managing their finances won’t be any different,” OpenInvest said.
Well beyond the confines of Robinhood, Reddit and other online platforms, we’re seeing the rise of online investing that eyes apps and younger users moving hand in glove to dabble, or perhaps jump wholeheartedly, into the markets.
In just one example, as profiled by PYMNTS, Leif Abraham, co-CEO of Public.com, believes the platform model — where public communities can gather to share insights and discuss the ins and outs of investing — can democratize investing. The firm offers a social investing platform that lets users follow friends and industry experts in order to exchange investing ideas (via chat rooms and direct messaging). Users can also buy and sell fractional investments in individual stocks or exchange-traded funds (ETFs).
And in another example just this month, with a focus on investment data, SoftBank said it was leading a funding round (through its Latin America fund) that sank $28 million into the online investing platform Atom Finance, with a focus on providing institutional-level resources to the retail investing realm.
Eric Shoykhet, founder and CEO, said Atom was created “to provide unparalleled access to institutional investing resources and tools, filling the white space between overpriced, clunky institutional platforms and antiquated websites tailored to retail investors.” In part, the funding will also be used to “accelerate our B2B product integration efforts with financial institutions,” according to the release.
The investments and acquisitions align with findings by PYMNTS released earlier this month that roughly 85 percent of consumers surveyed had paid bills and banked online, which might signal a natural segue into managing investments and portfolios online as well, with the app as the digital front door.
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