How Robo-Advisors and Impact Investing Will Remake Our World

The investment marketplace, a 36 trillion dollar industry that interacts with a high percentage of wage earners, is undergoing a makeover thanks to FinTech. Today’s investors now have the opportunity to work with robo-advisors instead of (or in conjunction with) traditional financial advisors.

It could be argued that there is a certain irony in the concept of impact investing robo-advisors. After all, robo-advisors (in theory) use technology to supplant the role of the human trader, while impact investing strives to improve human life and humanity at large.

Irony aside, the presence of these robo-advisors is great news for the impact investing market. As the socially conscious sections of society grow larger and louder and the impact investing market grows and moves towards the mainstream, it will need to be able to meet the demands and interests of the larger population. Robo-advisors will be great for this and this partnership (or evolution) could help impact investing grow to a formidable force and make an even greater impact. So why are impact investing and robo-advisors such a perfect pair?

Technology is dramatically changing our world. As technology and our mindsets evolve, companies have to change to meet the new needs of their audience. Modern companies that want to thrive also have to be able to attract the largest and most influential section of the market: millennials. Both socially conscious and technologically savvy, this section of the market wants to invest in positive impact causes and wants an investment system that heavily incorporates technology.

Enter impact investing. Its late launch (2000s) means it’s still a young player in the investment field, and in some ways it seems like it would be a tough sell. If investors are just seeking to maximize their portfolio, it’s a tough sell considering impact investing tends to see smaller margins and returns that rely more on the quantification of social and environmental value. Millennials, however, want their money to make a positive impact, so they are willing to go this route. In fact, 84% of millennials say they are interested in sustainable investing. That’s a big market, if you can reach it.

One of the reasons why robo-advisors work well with impact investing is the fact that they take a smaller percentage than human advisors and this can make the investment seem more profitable. When you add in the increased access that come with the robo-advisors technology (ideal for people not tied to the 9-5 lifestyle), you can see why an impact investing robo-advisor would appeal to the philanthropic millennial.

So how do robo-advisors reach millennials? Simply put, let it be known that you understand their wants and needs and will help them in their quest to make a difference.  OpenInvest, for example, clearly sees what millennials are looking for when they seek out advisors and is marketing itself as the ideal option. By offering services like a dashboard that shows the impacts investors are having in the fields of carbon, gender, military, etc., the company is letting its clients know what is happening with their investments in a way that is much more solid than a number on the stock exchange. Plus, by offering options for the self-employed as well as traditional accounts, OpenInvest is set to play well in the changing work world.

As we move closer to midnight on the doomsday clock the importance of shrinking our eco-footprint grows. This is a notion not lost on millennials. Many are already living an eco-friendly lifestyle but also want to put their money towards the cause, literally investing in the planet’s future.

Although this may seem like an impossibility on the cold streets of Wall (or Bay) Street, times are changing and today’s investors have options.

Meet Earthfolio, a robo-advisor committed to sustainable companies and recognizing the full value of all forms of capital. Millennials choosing to invest using their platform can feel confident their money is going to good use, as the advisor system only invests in companies deemed sustainable or responsible using its environmental, social and corporate governance (ESG) criteria. With easy online access and low annual fees, it’s a fantastic option for those wanting to make a difference with their investments.

Yes, now is the time to actually use your greenbacks for green.

Investing is often seen as cold and heartless, the practice in which the rich get richer by playing stocks. If technology can remake this industry to allow more people to invest in causes that will improve society and the world at large, there is no reason to fear the introduction of robo-advisors. As we enter the era of the millennials, children who were raised with computers and a knowledge of social justice, we are going to see a shift in how the general public relates to money and how the stock market is viewed. They, along with the robo-advisors, will use impact investing to be the change we want to see in the world.

 

Do You Know How to Manage Your Money?

 

It’s said that we never stop learning. As we age, we gain new access to information and change our behaviours based on the new data we have collected. Financial skills are one of the vital areas that need to be explored and are something we can never really stop using.

Unfortunately, many of us never learn these skills and we are constantly confronted with outside forces compelling us to spend more.

Debt is now a constant presence in our society, but it must be remembered that there is a difference between good debt and bad debt. Knowing how to manage your money so you have limited amounts of bad debt is important and is one of the things that will lower your stress levels.

The question then becomes: How do we learn this?

Finances can be stressful, but your relationship to money will be much less overwhelming if you are introduced to it early and taught about its value.

Previously we’ve looked at debit cards created for the youth audience (Dojo, Osper and Pennybox, for example) and discussed how these new innovations can help parents introduce young people to the concept of money. One of the major issues though becomes how much control you give your children when it comes to how they use that money.

Some startups have seen this issue and have created solutions that help address this problem.

Greenlight, for example, lets you divide your child’s spendable money into two sections, one (Spend Anywhere) they can use as they choose and one they can only use at approved stores. By giving them freedom while also maintaining a sense of parental oversight, children can learn about spending limitations and how they should budget and manage their finances. This is probably one of the most important skills you can teach them.

It’s important to teach our children financial skills, but we need retraining too. Today’s North Americans are not saving as much as they should and, according to a study done by FINRA, nearly two-thirds are unable to pass a basic financial literacy test.

The sad reality is that many people are living paycheck to paycheck today, desperately trying to scrape by as costs increase while wages remain stagnant. If they do manage to explore a savings account, they are presented with tiny interest rates from the major banking institutions, making the process appear fruitless.

For people who want to create a nest egg, this process can be very disheartening and, if unaware of other options, they may never really be able to achieve a sense of stability.

Thanks to FinTech, the tide is turning and new options are coming up for people who want to cultivate their savings.

Startups like Beam are offering their services so people wanting to start their savings can now grow nest eggs much faster (while paying less in bank fees), getting way more value for their money. Plus, the easy online access means you can access your account at a time that suits your schedule.

Knowing you have a savings for your future or for emergencies will make so many aspects of your life easier, and this is definitely a financial area everyone should be exploring.

Perhaps the most important step we will take to ensure financial security and success is to understand blockchain. After all, having a firm grasp of its reality and potential can help us better use the new technological advancements as they come to market.

This innovative technology will keep our encrypted data secure and make our financial transactions quick and easy and is a large part of the financial metamorphosis we are currently in.

Blockchain will be one of the driving forces in tomorrow’s economy, as the potential for the technology extends far beyond just finance.

Educational institutions are recognizing how important this technology is and are starting to offer courses to educate today’s and tomorrow’s financial business workers in everything blockchain. York University, for example, has the Blockchain Hub, a centre to help foster innovation and support entrepreneurs. There is even a Blockchain University where students can learn from the leading experts in the field.

Tomorrow’s business world will be led by visionaries who know how to work with blockchain and will use this knowledge to make our world better.

Maximilien Robespierre once said that, “The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant.”

By keeping people financially unaware, the 1% have been quite successful at maintaining a banking system that benefits the wealthiest while keeping a large percentage of the population living on meager rations.

We are starting to wake up and realize the system needs changing and FinTech is how we are fixing our financial ills. Along with the right education and training, we will finally become masters of finance.

 

Riding the Cryptocurrency Wave

Cryptocurrency awareness is rising in the public sphere, thanks in part to its (currently) tumultuous presence in the stock market.

Led by Bitcoin, thanks to its meteoric rise in 2017 (1000% appreciation in value), cryptocurrency is now a real player and both the big financial players and amateur investors are exploring how to best access its value.

Its rollercoaster ride in market value, however, makes it an asset that needs serious analysis (and a strong constitution from its investors). Anyone choosing to work in (or with) the technology or invest in its elements should make sure they know and remember certain things.

The first thing to watch for is oversaturation. Although there are only a handful of cryptocurrencies that are high profile enough to have recognizable names (Bitcoin, Ethereum, Ripple, etc.), there are over 1384 cryptocurrencies fighting to gain a foothold in a $700 billion (and rising) market.

What does this mean? It’s easy to get lost in the crowd and anyone choosing to enter the field has to have a strong enough idea and business sense to conquer the competition and stand out.

Many startups aim to conquer this problem by specializing (like Donationcoin, “The cryptocurrency of charity,” or Equality Keys, a cryptocurrency aiming to change society).

Another winning move? Partner with retailers so your cryptocurrency is accepted as a form of payment. After all, an unusable currency will never take off. (Bitcoin would not have the presence it has were it not for its integration into the retail payment realm.)

Distinguishing yourself from the pack is one of the vital step on the route to success, so make sure you have a plan before you release your cryptocoin.

Another potential danger to watch for is the cryptocurrency bubble. As they say, “What comes up must come down” and those paying close attention to the market are watching for a possible breakdown in the value.

(And no, recent market losses were not the bubble bursting.)

However, if this happens, it is not the destroyer it appears to be, as there is potential that will follow the bursting of the cryptocurrency bubble.

If there is a bubble burst, it will eliminate the cryptocurrencies that don’t have strong enough utility to survive in the market and will bring in an environment that is more open to innovation and will lead to a more solid valuation.

Tomorrow’s cryptocurrency market could bring forth amazing new uses for technology and even greater returns on investment. Of course, this leads to the question of whether you should enter the market now or wait for the upheaval. This is a decision you will have to make.

Cybercrime is another major issue and naturally security is one of the major elements any cryptocurrency startup needs to explore. An unsecure wallet is easy prey for hackers and thieves and you don’t want your clients losing all their currency.

The good news is that the digital financial sphere is working on perfecting a decentralized solution using blockchain technology, making cryptocurrency a truly secure option.

Startups like Edge, for example, have developed platforms that provide the needed security and privacy for a safe digital wallet. With both security and convenience in hand, your clients will be happy and your cryptocurrency will be secure.

Cryptocurrency has a lot of potential in it as a concept and interest in the field is high and increasing and technology is making innovations possible.

This does not mean the market is conflict and problem free. Anyone choosing to explore cryptocurrency as an entrepreneur, an investor or even a user should be aware of the dangers that can arise. Cryptocurrencies face heavy competition, the risk of the bubble and security threats.

Knowing about these issues can help entrepreneurs safeguard themselves, and I do believe that as cryptocurrency grows it will mature and stabilize, becoming the safest option for our finances.

 

How Will We Improve Society in 2018?

 

It’s a new year and with that comes fresh hope for the potential the year might hold. With so much dark news, now is the time to look at the good that is happening and how those elements could make 2018 the best year we’ve ever had. We know the world is far from perfect, but we hold the potential and the technology to revolutionize our world. All we have to do is recognize where we are going as a society and make sure we are ready when we get there.

In recent years, the work world has been introduced to big data, computers and robots. With these new advances in technology, we are facing the greatest remake of the work world since the first industrial revolution. With increasing automation and artificial intelligence, job losses are guaranteed. Studies by both Oxford University and McKinsey Global Institute found that close to 50% of jobs are in danger of being automated. Although this seems like a potentially game-ending move, the reality is we can use the new situation to remake the work world for the better. The new workforce will have greater opportunity to pursue entrepreneurship or work with the new technology and the jobs it creates. Modern education will focus more on STEAM, getting people ready (or retraining them) to work in the new work environment. These new jobs working with technology come with an increase in wages, which is good news for those who choose to upgrade their skills.

As technology changes the workforce, we can also use it to better our world and society. Through initiatives like basic income, smart technology and sustainability, we have the real opportunity to make the world better for everyone. Yes, automation has the potential to eliminate a large number of jobs, but the technology behind it and the potential behind that technology can and will open up new ways to improve our world. Smart technology and artificial intelligence are truly transformative and are helping to reach people that were previously overlooked.

The blockchain is ready to track our environmental impact and we can use this technology to make more ecologically sound decisions. We have the means if we are ready to put it to use. This could be one of the most important aspects of the technological revolution. The good news is that we are already moving in the right direction. FinTech is already being explored for its ability to conserve water and promote sustainable development and if we continue down this path in 2018 we can help make a positive impact and reduce the size of our global footprint. I can’t think of a better use for modern technology.

As 2018 begins we should take a serious look at who we want to be and what we want to do this year. With just a few initiatives we could radically improve our world. Although at first it may seem daunting, these changes aren’t hard and will lead to a better tomorrow if we handle them properly. A basic income would give people the financial base needed to retrain for new careers and these new jobs can use technology to help protect the environment. How do you envision people and technology’s role in society’s best path for 2018?