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Yeah, I'm a little confused at what you're offering over existing options (e.g. Wealth front, Betterment, M1). If the answer is just "it costs less" won't you raise prices when it comes time to make money? I suppose "the thing that already exists, but slightly better" is not necessarily bad.
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Sorry if this sounds uninformed, but what is the alternative? Even the bank and pensions gamble with your money, its how they move. I wish it wasn't the case either
Vanguard doesn't make money off of short term lending. They do it, but the proceeds go back to the individual funds (helps boost index tracking performance). Fidelity and Schwab both take a cut. I forget beyond that, I guess IBKR does stuff.
[1] And frankly a lot of other 'opportunities' I'm not interested in, that seem outside the John Bogle model of Vanguard helping normal people invest in the public market at low cost. I don't want to invest in off market opportunities, thanks, and it makes me lower my opinion of the company that they push it.
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> If the answer is no, you don't sell trade flows and yes, you will rebate your borrow fees, can you make a lifetime commitment that you won't go back on your word? To be honest, why would you even ask that? "Lifetime commitments" are ridiculous. It's simply not a promise that any founder or business owner could ever make. Businesses get sold, circumstances change, etc. It's better to just accept that as a risk facto…
>Businesses get sold, circumstances change Is there really no way to put a binding bylaw in incorporation papers that will survive a sale? Something like a land-use covenant, but for a corporation? I'm not sure that's necessary for this particular case, but for something like private data exposure I've been playing with the idea that it's the only way to actually trust a company with your data.
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Pfof is woefully misunderstood In general, citadel wants to pay to trade with retail investors because it knows it isn't going to face adverse selection. So it will give them tighter bid/ask ratios (this is better for the customer) than they would get if they were trading in the open market, citadel isn't going to get hosed by one of them (because there's no adverse selection) It's win win win
Yes, PFOF is woefully misunderstood but its very much not win win win. The reason its bad is because its anti-competive and gives them information that no-one else has access to. By trading against you, Citadel prevents any other potential market maker from trading with you. With less competition, the spread widens and even after price improvement, you're paying more. PFOF also tells them who they are trading against…
Your argument seems reasonable but isn't borne out empirically
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Investing is not the same as trading, which is what Robinhood primarily caters too. Also Apex is a big name in the brokerage world. They are a business to business company though, so most consumers never would have heard of them.
> Apex is a big name in the brokerage world But not big enough to have a Wikipedia page? Are you sure they're not just a big name in the financial startup/casino/scam world?
I'm actually pretty interested in what you're building. Sure, Vanguard and Fidelity are well-established giants, but they've barely moved beyond standard ETFs for decades. Having the option to tweak weightings at a more granular level and do daily tax-loss harvesting at scale seems like a genuine step forward. I also like that you're transparent about how you might eventually introduce additional revenue streams like…
Fidelity has innovated a ton and they have this exact product, though I don’t know the fees. Fidelity is very much into new fintech ideas and products.. they were mining crypto very early on.
Here is one that is $5/month: https://www.fidelity.com/direct-indexing/customized-investin...
I'm curious if Double has any advantages over this offering other than price. While I'm not personally interested in direct indexing, if I was I would absolutely be willing to pay the extra $4/month to do it at Fidelity vs some unknown startup.
> There are a number of robo-advisor products out there, but none that we know of offer direct indexing without expense ratios or AUM fees. Yeah, I'm a little confused at what you're offering over existing options (e.g. Wealth front, Betterment, M1). If the answer is just "it costs less" won't you raise prices when it comes time to make money? I suppose "the thing that already exists, but slightly better" is not nece…
+1 on the comparison to M1, and congrats on your release @JJ and @Mark
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I mean, $12/yr is not a lot, but if the platform is geared for long term investing and not trading, I'd imagine that in any given month 95%+ of accounts are doing nothing but sitting static and handing over $1.
Even if there are no trading costs, 12/y gets you one modest developer salary for every 10,000 customers. How big is the addressable market here?
But that will not pay a modest developer salary. The corporate side of FICA is 7.62%. Also add in health insurance, a retirement plan, office space, a computer for the developer ... and that's just the human side. There's all the corporate costs (e.g., servers) and regulatory filings.
The only play I can see with something like this is to ride it out and hope some established player buys you out for the tech.