Execution-Only Stockbroking in the Digital Age with Adam Dodds CEO Freetrade 📻


(Alex Sherwood) #1

Here’s the latest interview with Freetrade’s CEO Adam on the London FinTech Podcast. This is a great intro to / overview of Freetrade & he shares some interesting info about how Freetrade works behind the scenes :male_detective:

https://londonfintechpodcast.com/lfp105-execution-only-stockbroking-in-the-digital-age-with-adam-dodds-ceo-freetrade/


#2

Sound quality is miles better and they cover way too much in those 45 minutes. Adam might run out of things to say :slight_smile: It could be multiple podcasts. Sounds like it was recorded a few weeks ago. Lot’s of points to dive into and answers a fair few questions the community have asked.


(Tommy Lowe) #3

Cheers Alex, downloading for the way home.


(Viktor) #4

I like Mike’s (the interviewer) thought about a lot of fintechs / apps claiming to disintermediate, but they are only replacing old-world intermediaries.

It’s discussed in the context of Freetrade connecting directly to the “plumbing” of the capital markets.


#5

crypto as the “gateway drug” into getting into solid investments

Personally I don’t agree, sure people jumped on the bandwagon but that happens when things get hyped and you feel like you are missing out. Besides some of the appeal of cryptocurrency is that it’s different and detached from traditional investments and I’ve not seen anything to suggest these people have migrated onto traditional investments.

What am I missing? Any other thoughts on this?


(Vladislav Kozub) #6

Never liked (read: understood) Crypto, do not see greater value in it in comparison to stocks that produce actual products/services, do R&D, grow and produce more/better products that legitimately increase the value of the security.

But I guess when you are young and do not have big capital to risk with, you go YOLO and have a chance for few thousand per cent return or a complete loss. Or if you have 5% - 10% of your portfolio in Crypto, but have less risky stuff too.


#7

Personally I liked this analogy because it resonated with me. Exactly as you say FOMO/bandwagonning finally pulled me in and I was able to pass the “gateway” into speculative investing because the barriers to entry/frictions for crypto are lower than traditional solid investments. Anecdotally speaking, I did seek the “high” of smoking some crypto and it has led me down a path where I find myself as a Freetrade private equity investor and someone highly anticipating the app so that I can get into more solid Faang+ stocks/ETFs.

It’s early days to see whether a migration has occurred because we’re in the midst of the renaissance. But what I can say for sure is crypto has had a catalytic effect on my active investing. I was always financially literate, commercially aware and relatively educated, but actually having skin in the game came first with crypto which good lessons have been learnt from. The proportions of the population in crypto may be small but I personally see it as ringing true that a lot of young sub-25 econ/accounting/finance/math students have at least tried crypto themselves before anything else even if it may well yet prove to be a fad.


(Viktor) #8

This is one very clear trend for us, something the media hasn’t really reported on.

Crypto has made a lot of young people switched on and money aware.

I’ve been getting emails from various, sometimes very young community members who bought cryptos, made money (or more often, didn’t), and they became interested in other investments like stocks or property.

Now, from a technical point of view, you are probably right that cryptos are “different and detached from traditional investments” (although I’d argue it), but the idea is the same - you put your money into something, and ideally you end up with more money. Let’s be honest, manic investment drove the bubble, not genuine real-life adoption.

For most people, investing is not isolated to one thing. If might start in one asset class, and they become open to others.

I’m an investor, and one of my favourite threads here is investing in whisky. I started my investing with ETFs, so they were the “entry point”.

Hopefully this makes sense!


(Viktor) #9

:point_up: This, basically.

Thanks, @Diversify!


(Patrick Brown) #10

I’m no expert when it comes to cryptos, however I do have a group of friends (currently still at uni) who are very much into cryptos and who all hold differing amounts of the various currencies available.

After speaking with a few of them about their decision to buy into cryptocurrencies it became clear that the majority were as you say, jumping on the bandwagon. In fact half of them had actually entrusted some of their uni loans to one friend who was a lot more crypto-savvy in order get more returns from it.

This friend in particular said to me that when he started trading cyrptos he wasn’t expecting to make any money, he was just doing it to learn basic trading skills and to gain familiarity with, and I quote, ‘markets and shit’. He had said to me that he is interested in traditional investments, however there was massive opportunity in cryptos and it was much easier to register an account with a trading platform and start trading on crypto exchanges, but if stocks were simple and easy then he would already have money in them.

Keeping the post short – this was only a small part of our conversation, and only contains comments from 1 of the 3 friends I spoke to who are managing their own cryptos that I spoke to.

As far as cryptos acting as the gateway drug into solid investments goes, I think if this example is reflective of a wider percentage of the younger generation, it shows cryptos are being used as a gateway in pockets largely due to the massive barriers to entry and complexity of traditional trading platforms. Given he is on the waiting list for Freetrade (I made sure to give him my sign-up link), he is, as I know everyone on this forum is, very much looking forward to gaining access to stock markets via a simplified and modernised platform.

In summary, what I gathered from speaking to him was that cryptos didn’t create investors, instead it just gave individuals, who would have become investors anyway, a doorway into the world of investing.


(Viktor) #11

That’s basically a core part of our thesis, right there. :+1:


(Calum McWhir) #12

Don’t worry, you seem to understand 99.9% of cryptos perfectly. The question is which are the 0.01% - and it’s more difficult to ‘invest’ on this basis than many would have you believe.


#13

I wasn’t going to ask originally. Glad I did. Some very insightful comments.

This is what makes most ‘investments’ in crytocurrencies highly speculative.

Thank you for this. Sorry to pry but regarding the barriers to entry/frictions for crypto are lower than traditional solid investments what barriers did you find? What changed?

Thought you might have uncovered something. My original comment was looking at it from the perspectives of the Gamblers, Opportunists, and the Fanatics. Unsure how many of these would switch, but I’ll be watching a few people I’ve talked to that fit these categories and see if they change.

My observation was more about the ‘anti’ people in cryptocurrencies. Super interested how these people are targeted.

Agree. I’ve gone from Stocks, ETFs, Cryptocurrencies. And all sorts of assets in between.

That was a interesting discussion. Cheers @stephen!

The news should have shown some restraint instead of constantly re-enforcing the hype cycle which led to this and worse. They kept finding ‘experts’ who gave shallow observations. You might remember https://www.cnbc.com/2017/12/11/people-are-taking-out-mortgages-to-buy-bitcoin-says-joseph-borg.html

Thank you. Sorry to pry but did that friend mean in terms of signing up or in terms of approachability?


#14

Hey hey, I got a mention, awesome!

Always happy to talk wine/whisky - a bit out of the game at the moment but starting to feel that old excitement coming back.


(Patrick Brown) #15

He found cryptos easier to sign up to but also the simplicity of buying a currency as opposed to choosing between different investment options as he found platforms for traditional investing too complicated for a beginner to understand.


#16

No worries. The main barrier was cost not only per trade but also punitive costs for lack of trading, exiting, etc. It just wasn’t viable with the little speculative capital I had to envision making any kind of worthwhile returns commensurate of the effort of onboarding to incumbent brokers.

With crypto, the only barrier was figuring out how to get around SEPA transfer costs because of the fact that Coinbase didn’t have an active GBP account. A few YouTube video tutorials later and boom near feeless crypto trading when using GDAX. Furthermore, when your peers are hyping/talking crypto increasingly as well as BTC popping up in lecture slides it brings up the intrigue and down the inattention.

What’s changed?
First of all, before Freetrade, I discovered affordable roboadvisors such as Wealthify and Moneyfarm and I was initially set on either of these two.

Secondly, I then discovered Freetrade somehow and the rest is history.


(Jim) #17

The associated twitter feed ( LondonFintech ) certainly has some ‘interesting’ retweets. :thinking:


(Viktor) #18

It does.

I think the podcast is well-listened to and has great episodes e.g. with Tom from Monzo, Pensionbee, etc, and Mike is quite an interesting character, but if he accepts any marketing advice: it’s not useful to mix and promote personal views on your company’s channels. Your company / brand is a different thing than you.


(Alex Sherwood) #19

Just to back up Viktor’s prediction on this..

As Tenev and his co-CEO [from Robinhood], Baiju Bhatt, explain, they view cryptocurrencies as an entry point onto their platform for new traders. The theory is that new traders will come to the platform initially for cryptocurrency trading, but then expand their interests to the other more traditional assets on which Robinhood reaps higher margins.