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Comment by TuringNYC | Hacker News Reader

I'm honestly shocked at how primitive the big firms' offerings are. For example, JPMChase's bank account is smart enough to see a payroll deposit and give you a comment modal suggesting that you invest the money with JPM's investment platform (YouInvest/whatever)

Log into the investment platform and you're back in 1993. They literally have no drip-investment style offering. They want to charge you 100bps to "manage" your money, or you get a broken/buggy online broker with barely any functionality.

Why the heck isnt JPMChase buying one of these platforms?!?

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> Why the heck isnt JPMChase buying one of these platforms?!?]]

Broadly speaking, the retail market can be segmented on two axes: net worth and involvement.

Low net worth, high involvement are day traders: they are profitable through fees, PFOF, et cetera. High net worth, high involvement doesn’t tend to exist long enough to specialise in; they’re, professionals, have better things to do or lose their money.

Low net worth, low involvement is patient capital. Not super profitable per se. But the most likely to develop into the last category: high net worth, low involvement; the money maker.

Robo-advisers targeted the third category. They got more of the first. Those not only bolted to crypto and Robinhood. They also incurred higher costs to the firm while promising less development potential to the fourth category. The actual third category participants, to a large degree, don’t need much more than was available in 1993, or at least are savvy enough not to find themselves paying for it.

>> The actual third category participants, to a large degree, don’t need much more than was available in 1993, or at least are savvy enough not to find themselves paying for it.

I'd disagree with this. In 1993, you couldnt do fractional shares, or auto-invest, or pie-based investments. In 1993, you couldnt purcahse $500/wk of BRKB/AMZN/TSLA because there was no product like that short of paying a mutual fund 150bps. You couldnt tax-loss harvest (like with WealthFront)

You can get that now with M1, FolioFN (GS), ShareBuilder (RIP). It is low investment and high-stickiness.

You're noting net work and involvement and profit, but I think stickiness is another factor to focus on.

> In 1993, you couldnt do fractional shares, or auto-invest, or pie-based investments. In 1993, you couldnt purcahse $500/wk of BRKB/AMZN/TSLA because there was no product like that short of paying a mutual fund 150bps. You couldnt tax-loss harvest (like with WealthFront)

Fractional shares are a day-trading tool. Apart from that, yes, you're citing real innovations. (Others include a dramatic reduction in trading costs and ETFs.) To the broader point, none those are unique (any more) to the robo-advisers.

>> Fractional shares are a day-trading tool.

Absolutely not, polar opposite. If i'm a buy-and-hold investor who wants to set-it-and-forget it invest auto every week, Fractional share purchase are the only real way to consistently purchase. How would you buy AMZN every pay period if a single share is more than your entire investment amount.

> How would you buy AMZN every pay period if a single share is more than your entire investment amount

Most long-term, low-involvement investors wouldn't. They'd buy an ETF. The exertion of selection effect for Amazon versus the rest of the market is a high-involvement action.

Going back to the top level, JPM's investment site, as far as I can see, cannot even repeat-purchase an ETF.

Oh, and if they wanted to invest $300/pay period into the S&P 500, note that SPY is currently at 440. https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-sp-5... so absent fractional shares, you cant...

And if you invest monthly, what do you do, buy 1 share (different amount per month)? Or do you just give up and go to Vanguard/Fidelity/etc? This is sort of my point, how is something as basic as repeat-invest not available on the world's biggest bank?

> JPM's investment site, as far as I can see, cannot even repeat-purchase an ETF

Do you mean automatic deposits and investments? That's table stakes. They offer it. They aren't advertising it because fire-and-forget is 99% of the pitch of the wealth management industry. (That they're messaging it badly is in no way challenged.)

With respect to smaller dollar amounts, the traditional answer was mutual funds. Those usually have $1 minimums. They were historically shit when it came to fees, but now typically come in below 50 bps for broad-market funds.

In 1993 the NYSE still quoted prices in 1/8's, and if you wanted to get a quote you either had to own a Quotron or call your broker.

And you'd ask your broker for a chart, and they would print a dot matrix printer version of the chart and snail mail it to you in 1993!

Are you saying m1 also offers set and forget investments? Seems like folioFn and sharebuilder arent operating anymore

Yes, M1 offers what ShareBuilder used to offer, except with community pies, etc. https://www.m1finance.com/how-it-works/invest/ You set the portfolio, set the auto-amount, and forget about it.

FolioFN got purchased by GS.

ShareBuilder was purchased by CapitalOne and flushed down the toilet immediately.

What constitutes a high net worth for these purposes?

> how primitive the big firms' offerings are

My take (as a previous employee at Betterment): Wealthfront/Betterment/et al came out to much fanfare and the promise of disrupting the traditional wealth management industry.

At first, it seemed like they were right. AUM growth was looking like a hockey stick...this caused some panic at the big firms' who hurried to launch their own offerings (this is like 2015-ish) which were minimal at best, and still mostly just "marketing products" - a thin roboadvisor veneer designed to drive users into their traditional businesses.

Over the next 2-5 years and up to now, it is becoming/has become obvious that roboadvisors are not, in fact, going to disrupt the industry and it's rather a race to the bottom in pricing with razor thin (or non-existent) margins...so the actual robos have largely stagnated and the big firms stopped investing into their own solutions.

> it's rather a race to the bottom in pricing with razor thin (or non-existent) margins

Isn't that the point of automation? Doesn't the saying go, "your margin is my opportunity"?

If you can get the volume, yea. But seems like the total robo market is smaller than everyone thought.

Agree in general, and I think they were great M&A opportunities for the big firms. Think of Banking+Lending+Investments as a natural stack over much like Photo+Music+Games+News+CloudStorage are in the FAANG world. They keep the user sticky. Once you've got Photo+Music+Games+News+CloudStorage in the Apple ecosystem, or in the Google Ecosystem, for example, you're way less likely to leave.

Yet in banking, there arent great stacks where you can keep your relationship across the board. For JPMC, an acquisition of a Betterment or WealthFront (or others) would be a drop in the bucket.

JPM have just made a $12b investment to fix that: https://www.jpmorganchase.com/news-stories/tech-investment-c...

I'm aware that these investments often go south. I've seen HSBC's foray into "Fintech" and it was rough.

That's their annual tech spend. Most of that goes to keeping the lights on. Not a lot of innovation.

They can’t compete at scale for small potato clients. They want high net worth people to work with a guy. Ie the stereotypical dentist.

Honestly it’s probably a good thing. Chase is pretty awful at basic retail banking. Really only makes sense if you live in Manhattan or something where there are like 3 mega banks in every corner.

I'm surprised to hear this take. I find Chase to be the best bank I've ever worked with -- personal accounts, business accounts, everything. Customer service is top notch. Website is great. I'd love to hear your choices for a top retail bank.

Yes, i'm in the NY area, so true on branch location issue. But how often do you have to visit a branch if you have good systems? The branch is usually for when systems fail.

Not the best lending bank, and def not the best investment platform. I'm not sure why they cant be all three (organic or m&a) given the high synergy.

I fully agree with GP, my experiences with Chase have been quite poor even in the NYC region.

Ahead of buying a home in ~2015, I was holding a lot of cash, and Chase upgraded me to Chase Private Client. Seemed good at the time, perks like free museum visits and such, and they said I could retain the status for at least a year even after reducing my account balances.

Private Client sucked. My "private banker" was irritating at best. Constant sales pressure shilling their investment products, which had a 1% management fee, on top of being a basket of a hundred different actively-managed mutual funds which also had their own high fees. Hard pass.

I looked up my "private banker" on LinkedIn and he was literally a parking attendant at his previous role.

I moved out of NY not long after this, and switched out of Private Client, although I did keep a small amount in a lower Chase tier.

A while into the pandemic, I started getting emails from Chase about how "my local branch" was closing (always some random Chase location in Manhattan). Happened repeatedly for different branches, sometimes ones I'd only visited a single time while running errands somewhere in the city. This despite the fact that when I moved out of NY many years ago, I fully updated my address in Chase's systems, and they should surely know I do not live in NY anymore.

The best banks for most individuals are almost always small regional banks or credit unions.

The credit union I use has 7% lines of credit, mortgage rates that are consistently within 5 basis points of the lowest and average hold time to an agent <3m. But… their business banking is weak and it’s not really a good place for a high net worth person.

I think big banks tend to never be great customer experiences becuase the internal incentives aren’t there. Retail banking is a sales funnel, and why would a brilliant leader want to run retail? It would be a pay cut. The “brand name” of a major bank used to mean you could cash your checks anywhere, etc. that’s all dead.

Not op, but:

The money lives at interactive brokers, the cash flows through etrade, wells Fargo has never met a mortgage it didn't want a piece of, and chase rents me a safe deposit box.

> The money lives at interactive brokers, the cash flows through etrade

Why use e-trade (or ibkr) at all in this situation? What does this whole thing mean?

I suspect you are on to something. Maybe they were waiting for valuations to return to earth? The make versus buy decision was much harder when these platforms were richly valued.

I could a lot of acquisitions in the coming months as capital moves out of growth at all costs fintech space and startups need a lifeline.

I think the "build" can be considered a clear failure at this point, it would take 10min on the JPM "platform" to see that. Not acquiring ShareBuilder was a major loss, especially given that CapitalOne purchased ShareBuilder, took the customers, and killed the platform. Not sure why the platform couldnt have been spun off to JPM (?except perhaps competition?)

GS purchased FolioFN, which was a lesser player, but still a decent platform. JPM is going to have to gulp down M1 Finance and pay for being so slow to the acquisition game <-- My prediction!

Online brokerages selling order flow are very profitable, so even the "buy" decision seems like a no-brainer given the obvious monetization route. DRIP-style investment is even stickier -- you set it and forget it. Make it part of the Premier/Sapphire tiers and people dont want to move at all.

No doubt building is always harder than it looks and it looks like JPM tried to build with Finn and stopped awhile back. GS seems to also have Marcus which is still going at least?

I wouldn't count JPM out though. I'd imagine they have been bulking up on cash by taking on debt for future acquisitions while interest rates were/have been low. They know this game well.

Now that interest rates are starting normalize - they can now go pick the best of the best them - be it HOOD, SOFI, etc. at more reasonable valuations (or at least 50%+ of their 2021 peaks).

Does HOOD at $50B make more sense or maybe just wait until it hits $8B. Plus the DAUs are more stabilized now that the hype has died down. And you get Dodd Frank compliant/audited accounting data instead of VC style EBITDA/DAU only data?

In addition they can pick based on who's app is actually the most sticky/metrics and get to see all the apps internal metrics while doing "due diligence for a potential aquisition".

JP Morgan purchased Nutmeg last year [0]

[0] https://media.chase.com/news/jpmorgan-chase-enters-agreement...

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