A New Decade for Ownership
When building a startup, it’s more common to be looking ahead than it is to pause and look back. Our team is constantly moving forward, working to see around the next corner and plan for a new partner, the next platform enhancement, and scaling users in tandem with those.
But as we stand at the end of the year, and the beginning of a new decade, it makes sense to reflect a bit. When we understand where we’ve been and how far we’ve come—both as an industry and an organization—we can make even bigger moves together in the year ahead.
It starts with the big picture. The thing I’m most excited about for the investment industry in 2020 can be summarized in one word: access. I believe that in 2020 and beyond we can start to see a shift in the percentage of Americans who are holding investments in the stock market.
At a glance, this may seem easy for me to say. Our team at Bumped is partnering with brands and banks to give people free stock when they spend, creating an entirely new access point to ownership, so I have every reason to be optimistic here. But even beyond the work happening in our organization, I’ve seen promising things in 2019 that make me confident the industry is ready to embrace a wider range of people in the stock market:
1. Normalizing no fee (and low fee) trading
In October 2019, I was happy to see the news that a number of massive brokerages like Charles Schwab and TD Ameritrade were reducing their commissions on online stock and ETF trading. While this doesn’t mean every entry point to the market is free, it does show that the industry has acknowledged that traditional pricing models aren’t the answer for modern investors.
At the beginning of this decade we were first meeting roboadvisors (digital-based investment firms that provide financial management with very little human guidance), for the first time. Those technological strides meant lower overhead, which meant a number of firms could take on no commission or $0 trading. At the close of the same decade, folks like Betterment and Robinhood have proven that their approach is sustainable, and a powerful way to support new investors getting into the marketplace.
So once the trading costs less, how do you help even more people own a piece of the brands they love?
2. Fractional shares no longer a rarity
The other exciting shift I saw this year was in watching more and more companies understand the importance of fractional shares, and offering their customers the chance to own smaller pieces of shares. Shortly after their fee reduction announcement, Charles Schwab also introduced their first fractional share offering. And as recently as this month, Robinhood announced that their users could now buy and sell in fractional shares.
Fractional shares are at the core of what Bumped does, so why does it matter that the broad investing industry embraces them? Because one of the biggest reasons some people don’t start investing is because they don’t have enough money to buy a full share of stock. Say a user loves a Totally Made Up Company and wants to own a piece of it, but shares are $1000 and they only have $5 to invest right now. Fractional shares can help lower that cost barrier. Using my example above, instead of having to pay the full $1000 for one share of Totally Made Up Company stock, they could pay $5 to start with and you’d still own a piece of it—a smaller piece, sure, but still: ownership. That smaller piece can also increase in value at the same rate as a full share.
When you couple fractional shares with low or no transactional cost to buy the shares, this becomes powerful in allowing more participation for a broader range of individuals. We love fractional shares because you can start owning what you love with less, and these industry shifts show that fractional shares are becoming a part of the norm.
Bumped in 2020
While those broader shifts are exciting to see, they don’t solve every problem of access. That’s why we’re more dedicated than ever in our path to ownership — working with brands and banks to reward their customers in fractional shares of stock. Access to the stock market for supporting the brands and banks they love. The chance to own shares and ETFs simply sooner, and more simply. Supportive education on what it means to be an owner.
You’ll see some big moves from our team in the year ahead — we can’t wait to share more with you soon. In the meantime, thank you so much for being a part of our community, and your excitement about what we’re building.