All in one (app) and one for all

Nick Nicolaides, the chief executive of online trading platform Pearler, pulls back the veil on the future of online investing – and the behaviour of investors.

Over the past several years, online apps have broken traditional barriers to accessing the sharemarket. Thanks to advances in technology, new investors can now access the ASX with a few clicks (or swipes). The cost also pales in comparison to what it was under conventional brokers, and parcel sizes are more accessible than ever.

Unsurprisingly, this new investing landscape has spawned a range of online neo-brokers in Australia and abroad. However, many have sought to lean into our nation’s speculative culture. As a result, many first-time Aussie investors experience trading as a gamble rather than a considered investment.

On the other hand, it’s become much simpler to make ‘boring’ investing choices. Exchange traded funds (ETFs) have challenged the idea that someone needs to be a finance expert to grow their wealth, and that picking stocks is the only route to success. In response, a growing number of young Australians are investing in lowcost index funds at regular intervals.

While these two tribes of online investors have their marked differences, they do share one thing in common. Feeling disenfranchised with the ‘old guard’ approach, they have turned to blogs, forums and social media for self-education. With each passing year, this trend grows, and it can’t be reversed at this point.

Investors want control

Given the momentum of their growth, self-directed apps will triumph over robo investing and managed funds in the near future. Within these winners, those that offer the most control will come to dominate the market.

Australians love and deserve control, and tomorrow’s leading apps will deliver a spectrum of it – whether that involves picking an investing theme or building a portfolio from scratch. This layout will sit seamlessly alongside purpose-built tools and advice that save investors time, reduce friction and minimise the number of decisions they need to make.

The lines between media, education, content and investing products will also blur until they are one. It will no longer be enough to provide a cheap and sleek app; most market players nailed these offerings in the past five years. Young investors have come to view community and educational content as an investing cornerstone and, with the passage of time, the most popular platforms will create entire online ecosystems that meet this need.

Using the Pearler app as an example, let’s say you want more detail on a specific ETF:

• You would start with the fund page itself, enhanced with data showing traditional metrics, such as industry exposure, top holdings and total returns, alongside how many investors had it in their portfolio, what its most recurring matches have been or what template portfolios it’s included in.

• From here you might browse template portfolios and notice that a few similar ETFs are repeated across them, so you add them into our ETF comparison tool, which helps you compare the fund to similar ones or others in your portfolio.

• Then you could be shown a few of the blogs or community conversations in our general advice forum that mention the ETF.

• After a while, when you’ve done enough reading, you play around with one of the many self-directed calculators that help you consider everything from investment duration or frequency through to compound interest or franking credits. When you’ve got a handle on what is possible in the long term, it’s time to sit back and think.

• Then you hit ‘play’ on one of our podcasts that’s been tagged as relevant; as you listen to it, you read the podcast

notes that redirect you back to the explore/invest page where you find the ETF you started with.

By this stage, you’ve been on your own journey, you’ve considered important details, done some calculations, heard from the real-life experiences of others, been challenged and entertained – whether you’re ready to invest or not, you’ve grown in this time, and you’re a step closer to becoming a confident informed investor.

In this case study, you ticked all the behavioural boxes – and did it without leaving the app. Any platform that doesn’t grow to meet this demand will watch as investors flock elsewhere.

Faster, smarter tools

It’s not here yet, but the future of AI-driven personal advice is a few steps closer. This advice will stem from an AI-powered companion that learns about your habits and goals, then adapts to prompt your next steps. This could range from leaving enough for the next bill to suggesting a YouTube finance video, and everything in between.

For compliance as much as technological reasons, this change will happen slowly. However, as the regulatory environment evolves, we will see tools that are faster, smarter and better at cultivating financial literacy.

The future is an ever-shifting landscape, but if apps understand their investors, they’ll meet their needs when required.

Nick Nicolaides works on delivering investing technology built from the ground up for long-term, passive and sensible investing, pairing it with education, community and guidance that helps people stick to their plan, even though the day to day may be tough or even boring. Before launching Pearler, he worked as a portfolio and asset manager in the private markets space after beginning his career in investment banking.