Don’t Let Your Clients’ Kids be the Next Reddit Victims

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There are times when you are called to advocacy. As a profession, this is one of them. Advisors are the stewards, the informed, the protectors, and if there is a force that stands between the next generation of investors and financial devastation, it is you.

This is a serious and important article about investor advocacy.

Online trading is the new drug of choice for the younger generations

The pandemic closed casino doors and opened sesame to a much more addictive and accessible form of gambling: online day trading. It is the new drug of choice for Generations Y and Z.

  • With 3 million new accounts opened in Q1 last year, Robinhood had twice as many new accounts opened than Schwab, TD, and eTrade combined.
  • According to Yahoo!finance, on Friday, January 9, in the midst of the GameStop frenzy, 600,000 people downloaded the Robinhood app.
  • As of last June, 32% of Robinhood users were between 25 and 34 and half of them were first-time traders.

With zero commissions and easy access to leverage, those young adults are at risk of trading their lives away, literally. Market crashes correlate with higher suicide rates. But it’s dangerous even in a booming market. A young man, distraught over a six-figure loss in his Robinhood account that he did not understand, took his life last year.

Before I had my kids, I was an adjunct finance professor at a few universities in New York City. I adored my students, their curious faces lighting up as I sketched out the Markowitz frontier on the whiteboard.

“Can you show me again, Professor Grillo?”