supermoment’s mission is twofold: 1) help people become confident, sophisticated, DIY investors and 2) increase social impact by investing in underserved entrepreneurs to create new value.
Figuring out how to advance both of these together is tricky, and crazy for a humble operation like supermoment. But what’s life without ambition right?
The original idea behind supermoment was to operate as a traditional investment advisory firm using modern technology. The general thesis was, how can you leverage technology to modernize the advisory model to reduce fees, and bring services to more people, with less effort. In other words, how to make it more fair.
The tech exists. The cost structure was a problem. No matter how I sliced it, the numbers were not adding up, or at least not without being able to serve thousands of clients – fairly unrealistic as a solo artist and regulation constraints. At the end of the day, it also didn’t feel right to charge any type of fee to someone looking to invest, say, $100.
Thinking more about the traditional advisory model, the value-add to the client is really front-loaded. By that I mean working with a client to establish a long-term strategy, figure our risk profiles, and design a portfolio, is 90% of the benefit. All of this occurs up front. The ongoing services (at least for investment management), are all about checking in once a year and rebalancing the account => pretty much no effort at all, yet you are paying a sizable percentage for this service.
Let me be the first to say, though, that the upfront value can be life changing for a lot of people, as it literally will pay dividends for years (no pun intended!). But personally, I didn’t love the idea of operating a business based on charging fees to clients to manage their accounts past that.
Back to the drawing board.
Taking a step back, I came to the realization that there are really three options for people in need of investment advice right now:
- They use a robo-advisor.
- They use a traditional RIA.
- They try to do it themselves.
Each of these is problematic:
- Robo-Advisors: Lack personalization and work with a very limited selection of investments. => You are paying for the most basic form of passive investing which makes no sense really.
- Traditional Advisors: require super high net-worths, carry large fees, and typically have some restrictions on where they will put your money. => For the majority of people, this isn’t even an option.
- The DIY route: it takes time to learn, usually by trial and error. Technology is a speculation accelerant making it easy for people to develop bad habits and ‘gamble’ instead of ‘invest’. There is also the case of information overload – so many scattered resources out there, it’s difficult to pick up the signal from all the noise. => a lot of DIY investors aren’t successful.
While problematic, each option does have their benefits – automation, no minimums, smart portfolios, zero cost….
What hasn’t been solved really, is what to DO. What do you buy? How do you build a portfolio? This is the real value of an investment advisor – to help design a strategy, and how best to execute it (i.e. what to buy and in what ratios).
Technology has removed all barriers and friction to investing, giving you the ability to make $0 commission trades from your pocket, anytime. Before this was the case, brokers and advisors were able to provide some of this value to you – now that is 100% gone. So the opportunity that remains is around providing knowledge around portfolio construction. Enabling individuals to do this on their own is valuable, saving at a minimum .5% per year which adds up.
The supermoment approach.
The analysis led to a renewed focus on how we best serve individuals looking for something between a robo-advisor and a traditional advisor. In other words, how to provide the knowledge and resources to support DIY investors.
To find out what those gaps and challenges were, we surveyed a representative group of who would make up the supermoment audience. The main takeaways were:
- People want to learn
- Knowing what to buy, and how to build portfolios was a black box
- Costs for advisors are preventative
The most straightforward business model to address these needs turns out to be pretty simple and boring. => Adopt an audience supported model by providing learning content and starter model portfolios for free and monetizing through marketing partnerships.
It’s not exactly the most innovative business model, but it supports the first part of our mission in helping people become confident DIY investors.
Now let me be the first to say, I don’t love the idea of affiliate marketing – it’s very derivative and not creating a tremendous amount of new value. However, the largest upside is being able to offer products and services to the supermoment audience for free while still keeping the ‘lights on’.
But that isn’t enough, at least for me.
So what was decided is to donate 15% of any profits received from these efforts to support social impact, and financial inclusion. What this means in practice, is we will be donating proceeds primarily to the following organizations:
At the end of the day, supermoment is able to focus on what we’re passionate about -> DIY investing and portfolio construction, while driving social entrepreneurship with our charitable partnerships.
It’s not much. But it’s something!
supermoment is a passion project of Scott Janicek, an innovator, registered Architect, investing nerd, and for what it’s worth, a holder of a Series 65 license, so what you read here isn’t complete nonsense.