OpenInvest: Robo Advisor Based on Personal Values 2017 Date：2017-08-14 15:47:16 Silicon Valley is the world's most developed fintech center and also the centre of business model innovation. In July this year, we went to Silicon Valley to conduct field research on more than a dozen fintech startups founded during 2015 and 2016, and brought back special reports for you to analyze the latest developments in the global fintech industry. Company Details Company Name: OpenInvest Founded: 2015 Headquarters: San Francisco, California Founders: Phillip Wei, Conor Murray, Joshua Levin Funding Round: Seed Funding Amount: $3.25M Category: Robo advisory investment company Target: Customize comprehensive portfolios based on personal values Investment advisers are those who receive compensation by providing investment advice. They are responsible for investor education, comprehensive needs analysis, interpretation of investment management reports, and adjusting investment programs. As such, investment advisors play a crucial role in specialist wealth management services. Until recently, however, real investments in accordance with personal values have been impossible because the cost of customized services has been very high. There are several reasons for this: Investment reasons: Many investment advice tools include producers in climate polluting industries, weapons companies, private prisons, and so on, which may not match the will and value of investors themselves, and therefore cannot be fully customized. Hidden cost problems: The investment process has not been transparent. The potential costs of Exchange Traded Funds (ETFs) and mutual funds, as well as other common hidden costs, lead to high investment costs. Low flexibility: Many investment companies don’t let customers invest, transfer or sell at anytime or anywhere, and because the flexibility is low, customers are unable to make changes according to their wishes. OpenInvest was set up to address these challenges. OpenInvest has a unique background which allows the company to employ its pre-existing software to create index funds which track markets and allow real-time access for customers. Business Model OpenInvest is an automated investment advisory institution that builds portfolios based on the users’ concerns. The company makes customized portfolios for hundreds of investors in based on their financial situation and personal values. The platform enables investors to easily invest in companies that meet their values, for instance, in companies which support the fight against climate change, discrimination, weapons and Trump, and protect LGBTQ rights, support feminism and other critical issues. In April 2017, the company secured $3.25 million in seed funding led by Andreessen Horowitz, Abstract Ventures, Daniel Scrivner, Flat World Partners and others. After investors set up an account and select their concerns (including reducing carbon emissions, canceling funding for Dakota pipelines, preventing deforestation, reducing fossil fuels, supporting LGBTQ rights, opposing big tobacco companies, preventing Donald Trump, ending gun violence, supporting refugees, supporting women’s rights in the workplace and other issues), the platform gives the information of companies which are in line with investors’ values to investors. Then, after investors answer some finance-related questions and invest a minimum of $3000, the platform will provide the most suitable long-term portfolios and give its analysis. The account is held by the company's partner, Tradier Brokerage. During the investment, the company charges 0.5% of annual fee based on market conditions. Innovation OpenInvest introduced a model of Socially Responsible Investing based on the traditional robo advisor model, and embodies personal values in equity investment. Socially Responsible Investing has developed rapidly in recent years and had reached a total investment of $6.25 trillion (U.S. dollars) in 2014 which was a 67 percent increase over the previous year. The company is a public welfare company with many public concerns (such as the ten concerns described in the Business Model section), and its users can choose from 66 companies and that are consistent with their personal values. Q&A Below is our interview with Joshua Levin, Co-founder of OpenInvest: Q: Why do you choose passive index investment model? A: We hope that the selected stocks can reflect the changes in index, and we do not want to exceed the performance of the market. The final alpha of investors is probably between 0.9 and 1.1. Q: Are your investors only interested in socially responsible investments? A: Yes. In the past, only institutions can participate in social investment, and individuals have no access to it. We want to make a B2C model that provides every individual with an independent investment opportunity which completely reflects their personal values. Q: If you transfer positions for each investor, then would you pay too much for brokerage? A: In fact, we do not charge by the number of transferring positions. We are charged by volume at wholesale brokerage rates at one-time.