Robert Cortright is the CEO of DriveWealth
Investors used to be satisfied investing at home, but technology seems to be opening up investment opportunities internationally. What’s driving that and how do you think that plays out?
US investors have always had the ability to invest globally through the US ETF market and, in the last decade, we have seen many US investors buy into “BRIC” assets through the US listed securities market. However, international investors have not had access to the US listed securities market, which offers access to global ETFs and ADRs in a liquid and relatively secure environment.
Over the last decade, emerging market individuals have built a wealth of investible assets and they are looking for a place to invest those assets as their domestic markets are becoming more volatile and continue to be limited in size and market cap. DriveWealth gives these individuals the opportunity to open a US-based, SIPC protected brokerage account and build globally diversified portfolios.
Why is it important for investors to access to international investment opportunities?
Diversification is important to every investor, but US investors have historically had the most choice. It’s important to give all investors the same choice. Diversification is one of the most important tenets of investing and goes beyond asset classes and sectors- a well balanced portfolio will give investors exposure to different geographic locations as well. With a platform like DriveWealth, investors all over the world can build globally diversified portfolios of US listed stocks, ETFs, and ADRs.
Why is it important for the institutions that service investors to provide international investment opportunities?
As I mentioned earlier, investors in emerging market economies are looking for a place to invest their wealth and the US listed securities market provides an opportunity for them to do so in a liquid, regulated environment. By gaining access to the US listed securities market through a US-based brokerage account, international investors will have the ability to build globally diversified portfolios.
Furthermore, many large international companies, such as Alibaba, are listed in the US, which means that Chinese investors cannot own Alibaba without a US brokerage account that offers the ability to trade ADRs of global companies. DriveWealth gives investors around the world this ability.
Increasingly, customers are realizing that they can get global exposure through US listed ETFs and ADRs for an affordable cost. The US stock market is becoming an attractive place for people, domestic and international, to deposit money.
Doctors don’t go into surgery without practice — but investors seem to do that. Why? Is there a better way?
Investors need to be financially educated, especially if they are investing in the US Stock market for the first time. Often, investors begin investing without practice because they simply don’t know that there are resources out there to help them. In the past, people weren’t given the knowledge and tools to invest affordably and with confidence. This is one of the reasons which DriveWealth has developed an intuitive way for people to invest.
With the release of our Passport 2.0 investing app, DriveWealth is offering fractional shares to help people build diversified portfolios over time by investing a fixed dollar amount in the companies they know. With Passport 2.0, people don’t have to be stock pickers or experts, they can invest in a portfolio over time and get the benefits of dollar cost averaging. In addition, investors will have the opportunity to invest in the products they use in their daily lives.
You’re building a global platform. For fintech companies looking to expand internationally, do you have some advice on build/buy decisions? Things you would do differently in retrospect?
Financial services is a highly regulated industry. Most fintech companies focus on product because it doesn’t require a deep, full-carrying license to operate, but the real key is distributing all the great financial services products that the US market has to offer. A strong fintech company also has strong licenses behind it. If businesses have really great financial products, they should look to partner with someone that can distribute their products.
At DriveWealth, we believe strongly that “FinTech” disruption will come thru the global retail distribution channels rather than the traditional “face to face” banks and brokerage business relying on hired registered representatives. We view ourselves as a platform where we aggregate retail investors and give them access to the best financial products. With ecommerce firms expanding rapidly in the emerging markets and clients having smartphone technology in the palm of their hands, customers will expect to have the ability to execute financial transactions with the few clicks on a mobile application.
What’s in the plans for 2016?
We will be releasing Passport 2.0 in early 2016. With Passport 2.0, investors will have the ability to invest real-time in fractional shares and create dollar-based, self-directed portfolios. If you want to start investing with $20 and own 10 stocks, for example, you can do it. The introduction of fractional shares and dollar-based investing means that our investors don’t have to be speculators. They can build well-diversified portfolios for a low, fixed cost and become disciplined investors and savers. We believe that giving retail investors globally affordable access to save and invest through their mobile phone is extremely powerful.
Also, as wealth is transferred from baby boomers to younger generations, it becomes increasing important to offer intuitive investing tools in a mobile environment to cater to the lifestyles of our mobile-first, cashless society. With Passport 2.0, younger generations of investors will be able to manage their entire financial life from the palm of their hand. Owning a Brokerage account providing access to the powerful products of the US Securities markets will be a key to their long term success.