In an effort to engage more members of the millennial generation, Merrill Edge has partnered with Morningstar to rework the online broker’s educational content, and has launched the Investing Classroom. This content is available on the firm’s website (both desktop and mobile), and will be included in the iOS and Android apps next month.
You can get to class by clicking on Investor Education on Merrill Edge’s website, then clicking on courses. That opens the door to the Merrill Edge Classroom. All content is open to customers and noncustomers so you do not have to log in to view it.
The lessons are broken down into four categories, with more to come: stocks, funds, bonds, and exchange-traded funds. Each lesson contains a short quiz on the first page, and a more in-depth quiz when you get to the end, giving you an idea of how well you are comprehending the information. Each lesson contains four to six one-page descriptions of items, such as miscellaneous fees in mutual funds or how basic stock ratios are interpreted. Most of the lessons have a one-question quiz at the end that gets to the heart of the matter.
At the top of each main section, you’ll see a down arrow that lets you choose the sophistication of classes to peruse. For stocks and funds, there are five levels, increasing in complexity from 100 to 500 just as in many colleges. Bonds have two levels, 100 and 200, and for now the ETF section is comprised only of level 100 classes. Level 100 in the mutual fund category covers basics such as defining net asset value, while level 500 mutual fund lessons include in-depth explanations of cost basis.
Merrill Edge plans to expand the course offerings, and will add portfolio building content throughout the year.
SEPARATELY, MERRILL EDGE recently published its regular quarterly study based on internal research and client surveys. The spring report focused on the savings habits of various age groups.
Aron Levine, head of Merrill Edge, says that millennials (generally ages 18 to 34) consider the traditional idea of retirement extinct, and instead are striving for financial freedom. Levine says, “We’re seeing millennials save to live their desired lifestyle, not for an exit strategy to leave the workforce. This seismic shift of how millennials view their later years speaks to their broader mindset and perspective to redefine life’s milestones.”
According to Merrill’s surveys, 63% of millennials are saving to support their desired lifestyle, while only 37% are saving for retirement. That’s in contrast to the 55% of both GenXers (ages 35 to 52) and baby boomers (53 to 71), whose focus is on retirement savings.
One other tidbit from the survey: 13% of Merrill’s respondents are using a robo advisory service, but the figure increases to 22% for the millennial generation.
When we launched this column in 1995, a very small number of Barron’s readers invested online. For one thing, there weren’t many online brokers, and those in existence provided rudimentary platforms (at best). Times have changed. The Merrill survey says that 40% of Americans are using an online or mobile portal to manage their investments.
M1 FINANCE RECENTLY added the ability to create your own portfolio from scratch. We reviewed the site just prior to its formal launch last September (“M1 Blends Automatic Saving with Robo Advisory,” Aug. 27, 2016). At that time you could choose one of M1’s prebuilt portfolios and customize it. Now it’s possible to create your own slices for an M1 pie, which is how the firm depicts its portfolios.
M1 gives you the option of investing a certain dollar amount in a group of stocks rather than buying a set number of shares. You set up the investments you want to make, and all orders are placed in a block between 2 p.m. and 3 p.m. Central time. There are no fees for the first $1,000 invested; larger accounts are charged 0.25% annually for up to $100,000 and 0.15% for accounts over $100,000. Fees are accrued daily and billed quarterly.
SUPERMONEY, which participated in the Finovate conference I recently covered, consolidates consumer reviews of financial services. It has added the ability to search for loans that can be used for everything from debt consolidation to a large purchase. The loan comparison process starts with the simple question, “Why do you need a loan?” You then enter the details of the loan you’re seeking, and are presented with a list of potential lenders. One of the questions asked is your credit score; if you don’t know it off the top of your head, you can take a guess.
The data you enter are then matched against a database of potential lenders, which generate offers. You can sort by annual interest rate, monthly payment, and other possibilities. The lenders do a “soft pull” on your creditworthiness, which means rating agencies aren’t notified that you’re considering taking on additional debt. The site also includes reviews of lenders and other financial services companies written by end users.
Next up? An insurance marketplace.
ANOTHER INTRIGUING Finovate entry was MedPut, which is an employee benefit that provides liquidity to cover unplanned medical expenses. Employers are shifting the burden of paying for health-care expenses to employees through high deductible medical plans. MedPut provides 0% financing for health-care expenses so employees don’t have to use credit cards or drain their investment accounts to pay for high-cost procedures. The employer must enable the benefit, and the loan is repaid through payroll deductions.
Like a couple of employee benefits products we’ve seen, MedPut fills a gaping need. Being able to access low-cost cash for medical reasons could increase the use of early-stage care, helping employees use preventive medicine rather than emergency rooms. MedPut offers an alternative to setting up a payment plan with a medical provider, and the firm can also negotiate discounts with the provider on occasion. I wish I’d known about MedPut when I had a knee replacement that required me to pay my entire annual deductible in advance of the surgery.
OK, one last Finovate participant. Newchip is an Austin, Texas–based equity crowdfunding platform that integrates social media posts and has the feel of online dating. All interaction is via an iOS app for now, and the sign-up process is quick. After indicating your net worth and annual income, you’re taken to a list of industries and sectors that include advertising, clean tech, dating, social media, and technology, among many others. You are required to connect your phone contacts to the app, as it is social in nature, and when friends of yours join the platform, you’ll be able to share your notes and ratings on potential deals.
Because it’s a mobile app, and is so connected to social media, the publisher assumes it will attract attention from millennial investors. But investing in startups is necessarily a long-term play, so choose carefully.
There are two types of investments active now: startup equity and lending. There will be real estate investments on the platform at a future date. Newchip consolidates deals from several crowdfunding platforms, including GridShare and WeFunder; deals that match your preferences are displayed. Swipe right to save a deal for further perusal, and left to reject it.
Co-founder Ryan Rafols has called Newchip, “Tinder for investing.” Be sure to do your due diligence, though—a bad investment can be much harder to ditch than a bad date. Later this year, Newchip plans to launch a secondary market bulletin-board system so that investors can sell their shares to others.