Exclusive: Freetrade announces job cuts of up to 15% of staff - AltFi

Sorry I did mean Bitcoin, will edit the post!

And yep, as per my earlier post…

…I’d make these a priority!

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TBH I think anything to do with shares is gambling , most just prefer to draw it up differently.

Anyone know the future with cast iron certainty ? It’s a gamble then ! You can dyor , play it safe etc but ultimately that’s like betting on a “sure thing” winner of a football match. You “should” win , but every so often events conspire and you don’t.

300 is a lot ? I worked in a major financial provider and the U.K. hq for everything only had about that many people in it (though first line support was offshore) .

Agreed!

If freetrade want to go the crypto route, that’s one thing.

…but…

There’s countless other things that could be looked after related to regular stock markets that I hope would come first.

Such as REITs in ISA, sharevoting, LISA, JISA, continuing with European expansion, more stocks. Those are the main ones.

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Also if I may…

I asked in a support chat if freetrade will be providing more feature upgrades after the news of staff cuts.

While I appreciate Freetrade needs to act in a sensible and responsible manner when spending the 30M runway funds, I’d also suggest that it presses forward with feature upgrades when, and where possible.

I’ve heard countlwess times from people on this forum phrases like “I’d join but I can’t do XYZ” or I’d use ft as my main account if they started doing xyz" or “if ft did zyx I’d definitely consider using it more, and have more reasons to tell a friend”

Once again I support the idea of freetrade doing all it can to secure a “path to profitability” but I also think when and where possible ft should also press on with adding (the cost effective) features to the platform.

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We’ve seen more features rolled out in the last 3-6 months than the 13 before, the Tech to build the EU platform was clearly a huge job. I would expect to see more features rolled out over this year.

Adam mentioned they’re going to be looking at their subscription plans in the not to distant future so they might be adding more features for that.

Sadly, that’s hardly praise.

We are still missing so many fundamental things that could have made the app competitive in the (massive) UK market.

FT management are (wrongly in my opinion) prioritising EU expansion above all else.

They should have focused on making a HL competitor instead (again IMO). The UK market is huge and so many people would move to a slick app with low fees if it could actually replace the legacy players. Instead we will just be an MVP in every market for the next 5+ years.

They focus on attracting poor customers who are going to generate little value for them. This is why our AUA is so low. No serious investor would use FT. I’m a founding investor and I don’t.

The Forex fee isn’t cheap for large trades compared to HL and they don’t offer LISA and JISA…amongst other things. They don’t even offer dividend reinvestment…which is frankly ridiculous.

They got lucky with the meme craze and attracted people who would have typically downloaded Paddy Power instead. These weren’t investors switching to the platform. They attracted a new breed of gambler with free shares and social influencer marketing.

And now here we are with slowing user growth, an effective down round and job losses…chasing profitability whilst still trying to expand into new markets.

Someone should take responsibility for these failures.

We keep being told everything is soon. Well soon is here and nothing is being delivered.

I personally wish a bank would buy them a la Nutmeg.

I hope I’m wrong but every month that passes I seem to be being proved right.

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They need to be finding ways of competing with both 212 and HL/AJ Bell/ii.

I don’t know if the European expansion was a success or not.

I personally prefer to invest in companies I know.

That will usually be mostly UK with some US and a smaller portion of EU.

Was the EU expansion the right move, I truly don’t know. I’d imagine it took some money to make it happen.

i do agree there is such a thing as an unprofitable freetrade customer. Maybe freetrade should stop appealing to customers who want to pay zero.

While of course I’d rather pay zero it’s not cost effective to the business. Ultimately we live in a world where businesses have toake money to continue to provide a service.

I suspect many others in this space will have to find ways of charging people who otherwise wanted to pay zero.

If I remember correctly shares app is starting with FX fees and there is talk Light-year might not be complely free either.

I’m not saying we need commissions but we have customers who have been with freettade for a year and paid nothing to them, ever. That ain’t profitable

It wasn’t meant as praise, more a statement of fact.

As we are heading into a new environment when they need to increase revenues, I see the cheapest and easiest way to do this is to convert people to :freetrade: :plus_:. Launch some new features that people have been calling for, JISA/LISA :wink:, with a few surprises and :freetrade: will be back on track.

I’m sure I read somewhere from either Adam or Viktor who conceded many of your points.

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When you say AUM is low. I doubt revenues are strongly linked to AUM. I suspect light-years acum is growing, but revenue is stagnant as they are operating 100% zero fee at the moment.

I think the benefits of European expansion vs improvements to Plus, comes down to Freetrades view of how many of the new European accounts will sign up to Freetrade Plus for their local equivalent of an ISA etc.

I would quite like the option of using a recurring buy / autopilot but I’m not sure how many new UK signups this would generate for Freetrade Plus, but its not a deal breaker for me. I’m primarily a Plus member for the wider range of available shares to invest in & ISA.

If the cost of maintaining a new account is fairly marginal, then signing up a large number of new EU users with say 5%-10% conversion to Plus, could bring Freetrade much closer to breakeven. This would make future fundraising much easier and significantly increase their runway. Then they can then focus on the improvements to Plus.

The difference between HL / AJ Bell is partly because they charge a % fee for holding funds, so they can focus on higher net worth individuals and make increased revenue. Freetrades no fee / flat fee + exchange rate model leans towards needing a larger number of customers to increase revenue.

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I have moved from Hargreaves Lansdown to freetrade plus…because its nearly free for me.
I intend on moving as much as i can from my general account and my Hargreaves Lansdown sipp each year into my isa. Moving the smaller investment will be very cost efficient for me but not for freetrade.
How long can they pay 3% on £4,000?
As i get 1.2% from Marcus that works out at 1.8% ie £72 plus the £3.75 a month savings on an isa from Hargreaves Lansdown. Works out at £117 so virtually free to use…for me. But what is freetrade gaining?

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You should be getting more than that from Marcus, check your account for the rate increase.

Should plus be made mandatory. Maybe that would get rid of the people who want to pay nothing.

Keep commissions off freetrade. Take away the FX fee or downgrade it to 0.15 like 212.

It’s a surefire way to get the freeloaders into paying customers.

Sure it’ll receive dislike from some quarters, agreed! But it’ll solve the problem in a few months flat.

Also plus will loose any exclusivity, and likely won’t be called plus any more. That’ll have to be part of the trade-off

I’d personally like to see more flexibility, rather than less. I don’t want to pay the full £9.99 for plus, but I’d happily pay maybe £5 for ISA + expanded stock universe, and forgo the limit orders / interest for example.

There also needs to be some improvements to how subscriptions charge in general, I think.

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That goes against the freemium model though…

Those not paying for services right now are those perhaps just starting their investing journey and will look to build wealth over time. As their portfolio grows, they could upgrade their subscription, execute larger trades and generate lots of revenue for Freetrade.
Kicking them is simply taking a very short term view IMO.
If Freetrade actually had a product capable of competing with the old school brokers (they don’t right now IMO), then they could challenge for their wealthy customers and ditch the freemium model - not something they’re in a position to do right now.

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I keep thinking football (or netball, cricket etc) fans telling the players how to play even though they themselves have never set foot on pitch (ok maybe when they were 11 years old).

The business costs ran faster than earned income growth and that lead to only one thing in an environment where funding was problematic: job cuts.

The deal here is clear. This a business that is predicated on the long tail and all the risks that involves. If you put money into the business then you should know what this means. You knew from the outset that this was no HL killer. In fact, if that had been the motive then HL would have pounced and killed the business in seconds. OTH, as a disruptive business, ala Clayton Christensen, it could usurp HL and others in the future - that would take a very long time.

There is a paradox in this business - the business is about getting everyone involved in investing. I think this is a great goal and contributes heavily to our share owning democracy. But it turns out that not everyone wants to pay “the participation fee”. IMO, if you think the “participation fee” is too much then you probably should not be investing at all in things that are a capital risk. And this in a sense (at least to me) is an uncomfortable place. Btw, if it is not clear here participation fee == the Freetrade plus fee.

As a senior (but not at that time exec) employee of a startup I remember the Sales VP complaining that the software engineers weren’t looking at their screens all the time and he was really riled that they had an eleven o’clock stand-up meeting. He didn’t focus on his job which was to make sales instead he complained that the engineering team was slack because it did not give the customer what the customer wanted. I am not sure, he really knew what the customer wanted (and was eventually duly fired). A few people coming on here screaming that for e.g. Lisa’s will make the difference simply lack Business and domain knowledge. There is no doubt that some people want LISA’s - but I am willing to bet that very few do. It is an immensely complex instrument and will require IMO considerable overhead to maintain. As a person who went out and sold things I can tell you this: people that want to buy, buy and those who don’t find excuses. Not having a LISA is not a great excuse to not be with Freetrade. If your only reason to be with Freetrade is for a LISA (and no fees etc) then you want something for nothing. It isn’t how life works.

The fact is that for most people Freetrade is a brilliant bargain.

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I don’t agree - at all.

I had hoped by now it would be a HL killer when I invested many years ago.

Who would have thought we wouldn’t have had LISA and JISA by now? Dividend reinvestment? Auto top up? None of that seems like it’s massively difficult to develop. All we’ve had is SIPP and even that is provided by a third party.

We don’t even have fractional UK shares which was THE main thing that was promised when I invested. That was the big selling point that FT would enable people to invest smaller amounts and was the first UK broker to enable it. Well where is it?

From 3 years ago:

HL isn’t some advanced trading platform. It’s still pretty basic - but offers everything most normal people need. Worse of all though is it’s cheaper for large international trades.

I had envisioned FT offering all of the above with a far slicker app to make it easy for ‘everyone to invest’ with. For me the barrier I see for the public investing is it feels complicated to do it - and the FT app did/does a great job of making it simple.

I never dreamed that 3 or 4 years after making my initial investment we would still have an app that offers so little.

But hey…at least there are 2000 people in Sweden who might be ready to invest £50…

Edit: I’m being harsh and the team have obviously achieved a lot since inception. But with all the extra funding I had hoped they would have accelerated the roll out of new features and it just doesn’t seem to be happening. Maybe I’m being too short sighted and after the international roll out the app will then grow and offer the functions I’d hoped for - but I don’t have much faith at the moment.

Edit edit: 500k+ 18 to 39 year olds have set up LISA’s. And that’s when only a handful of brokers offer it. I dispute that the demand isn’t there for it and personally know several people who went to HL for this reason alone.

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It takes long time to build a great company.

  • Hargreaves was born in 1981.
  • It took them 23 years to achieve £40m in Revenues (£42.5m in 2004)
  • Freetrade will achieve £40m revenues this year or next year. So it will take Freetrade 7/8 years to achieve what HL achieved in 23 years.
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How much funding did HL have though?

I’m guessing next to none.

probably…