The main problem of brokerage applications is the conflict of interest of investors and developers. Investors are looking for a way to make money efficiently, and app owners are looking for a way to increase revenue and earn commission.
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The U.S. Senate approved President Joe Biden’s administration’s $1.9 trillion pandemic coronavirus economic recovery package. (Source)
For most taxpayers, Biden’s plan calls for direct payments of $1,400 per person. And a family with two children and an annual income in the neighborhood of $100,000 would receive a check of $5,600.
The $1.9 trillion amount corresponds to about ten percent of annual U.S. GDP.
The broker will not know your investment goals
We often do research on mobile apps, and before that we study the audience. Sometimes during such research we get insights that are not directly related to the product. Diving into the topic of fintech, we found that bank brokers in the pursuit of new investors are not listening to their clients. They are trying to retain them by actively engaging them in trading and playing on their desire for profit. Meanwhile, most clients don’t want to become active traders and are looking for long-term investments on the exchange. We found out what’s wrong with brokerage apps and how to fix it.
Now top forex brokers take care of the client and help them build a portfolio. The client answers questions about personal preferences, and the broker tells them what instruments are appropriate for investment.
What’s not? The broker finds out how much a person is willing to risk their money in the stock market and recommends securities based on that. But personal risk appetite has nothing to do with the investor’s goals, because there can be several of them. For example, to find a substitute for a deposit and to invest in bonds and at the same time to speculate in stocks. Suppose a client is given a moderate risk profile and offered to buy the most popular stocks of large companies. The investor is inexperienced in trading and buys the stocks offered by the broker and they fall in value. The client understands that this is not what he needs and leaves the market disappointed. His fears are confirmed.
What to do? Such an approach is unprofitable for a broker in the long run. In order for newcomers to become loyal customers, improve their financial literacy, and, over time, make more trades, they need to be offered what they want from the beginning. To do this, instead of risk appetite, it’s better to find out the client’s goals. There can be many of them. For example, one part of the capital is for saving for retirement, another for experimenting with stocks and IPOs.
Manual trades instead of automatic ones
What’s wrong? Beginning investors are far from financial markets. In most cases, they want a mixture of independent decisions and trust management. Part of this problem is solved by exchange-traded investment funds, which offer to buy a part of a ready-made portfolio. But this format is not always suitable for investors: they may have other goals.
What to do? A broker can offer a ready portfolio of instruments that match the client’s goal and capital. The user may accept, reject or switch securities. The portfolio can be assembled automatically. For example, the client transfers a part of his salary once a month and the broker offers him to buy securities from the list that the user has confirmed in advance. One-click – the transactions on the list are made.
How to choose the best broker for yourself?
On https://tradersunion.com/ website recommends paying attention to the following company parameters in order to choose the best broker for your needs: Licenses, Trading conditions, Customer support, Reviews of traders.
Increasing anxiety instead of calming
What’s wrong? Maybe the client will make a few rash trades and bring the broker a commission. But if the application is associated with unpleasant excitement, the user will soon not want to return to it.
How to fix it? The solution is to allow the investor to customize the interface himself. For example, remove the charts from the main screen and allow the person to disable the “rise and fall” arrows in the list of securities in the settings.
I started investing about six months ago and completely disagree with the article. The points described did not bother me at all, and they are somewhere at the end of the list.
If a person is investing, he should clearly understand what it is and be prepared for drawdowns, should make his own decision on what to buy, etc.Tom