best of luck greenie. always admired the guys who went out to strike it on their own. probably one of the hardest roads to take but to the victor, the spoils!
I’m pretty sure Amazon will move it’s headquarters to Midland, Texas and the asset management and tax business will explode overnight.
Off topic, but when (not if) Google and Amazon get into the financial services business, many of us are fooked.
Wouldn’t there be a huge conflict of interest for a company whose main line of business is getting people to buy stuff they don’t really need also serving as a fiduciary for those same people?
I don’t think tech companies want to deal with all the insane baggage associated with a lot of financial services… I doubt Google will ever open an investment banking or swaps dealer operation. Yes, there is a trend of increasing automation and decreasing transaction costs, but those tend to be pushed by banks - those that are more forward thinking in particular (GS, JPM).
I’m thinking more about financial advising. Google will own the space. Maybe 10 years, maybe much sooner. It comes up at every industry conference I attend. And it scares the crap out of everyone.
Amazon maybe not so much. Google is pretty much a sure bet to do it.
i think wealth management is more of an Apple thing. “hey want some 2%/yr roboadvice with your $1500 phone?”. sure!
^ Too far off the fairway for Apple, in my opinion. But I agree with STL, I can definitely see Google getting into the space, perhaps by purchasing someone like a Betterment or Wealthfront (or SoFi, to a lesser, or perhaps different, extent) who already have a bit of traction.
well accordign to the emmy’s amazon failed miserably in terms of video og content
Google as advisors? Not sure. The AI roboadvisers crap will never work through a crash, at least not with today’s technology and a team of IAs doesn’t really seem like Google’s style. Besides, what excatly do they have to offer that JPM can’t?
Don’t see why not, Alibaba had its financial arm Ant Financial, Google and Amazon can totally own a separate business and destroy those out-dated business models.
Thing about finance is that there are so many political and reputational risks. What if the economy goes into recession, and people start to point figures at banks and financial institutions again? Reputation damage to Google will harm their other businesses, that make a lot of money. The tradeoff doesn’t sound too great. Sure, there are divisions like Google Ventures that take select investor money and internalize lots of the resulting technologies. However, once you go out and market retail financial products to thousands of unsophisticated customers, you’re opening yourself up to many new liabilities and risks.
Sounds like it’s probably for the best. Things have a way of working out in the end. Best of luck.
It would likely start out as a simple robo-advising firm. Think about how much Google knows about everyone in America. They can profile clients better than any financial institution on earth. They could recommend 529 plans for people that are searching for items relating to babies, IRA rollovers for people nearing retirement, etc. They probably even know someone’s risk profile better than the person themself. Imagine having an account at google, and you google “is the market in a bubble?” Next thing you know you get an email from Google Finance (not the website, imaginary robo firm) asking if you’d like to revisit your current allocation. It all becomes part of their ecosystem.
Most people speculate that they will enter the market and crush everyone by offering their services for free, at least for a while. They have the capital to do it, easily. Who are millenials going to trust, Google or Morgan Stanley? Once they have captured a huge chunk of market share, they could roll out their own RIA if they really wanted to. That’s a whole other discussion, but going robo? Yeah, that’s going to happen and it’ll signal a huge paradigm shift in the financial services industry.
To limit the risks you noted, they’ll probably go all passive. Think about what it would mean for active asset management firms if, five years from now, Google captures nearly all the 35 and under crowd. Sure, the real money is still with older people, but that would signal a secular shift in advising and active management. In short, anyone associated with financial advising or actively managed funds would be SOL in the long-term.
They *could* do that, but they probably won’t. There’s no reason to pursue X% IRR projects when they still think there are gains to investing in R&D for their core business. Why doesn’t Google go into other random businesses? They have lots of information on other consumer behavior too. It’s just, messy, risky, outside their expertise, and not worth the effort.
Google doesn’t always succeed either. They’ve failed at online shopping (Google Shopping) and social media (Google+). You’d think they would be great at these - much better than financial services. It’s better to just let asset management run their own fees to zero, and sell companies data and other services while they are doing that (and Google does do this).
i think google could do it if regulation is reduced like trump is planning
The point is it’s not “random” at all. It’s actually an extremely elegant fit. The goal, initially at least, wouldn’t be to make money. It would be to add more people into their ecosystem. Think Android. That was a negative NPV project but they saw the bigger picture.
I’m not saying they will be successful at financial advising. Many people will still want to talk to a person in an office down the street from them. But it will happen. I’m happy to make a bet with you. Within five years I’ll wager they have some sort of robo advising arm. Winner gets to declare victory over the other in perpetuity.
And there’s no argument to be made this would take away from R&D spending. Setting up a robo shop is amazingly easy. For Google it would cost less than they spend on lawn maintenance for their campus.
the thing about old people is they die and young people inherit. so if you cant attract the young guns your company will die.
Are there any signs that Google is going to start a brokerage? Like I said, anything *could* happen, but there’s no reason to believe that this is the thing that Google would pursue, out of many, many things. Why doesn’t Google own the whole world system of payment processing? Just because something exists and Google exists doesn’t mean Google must do everything. I’m sure Elon Musk could own 5 sports teams. Just because you can doesn’t mean you just do something.