Robinhood's Big Lie!
by: Brendan Magee
Robinhood is getting a lot of publicity these days. Their trading application has gone viral. From January through April they added three million funded accounts, and their company has an estimated value of $11.2 billion.
The company has also gained some negative attention. Robinhood has settled with the Securities and Exchange Commission for $65 million as a result of charges that it mislead investors about the costs of trading while using their application.
That aside, the biggest danger posed by Robinhood comes from a claim they make in one of the advertisements. In the ad they claim to the public, "You were born an investor." Nothing could be further from the truth, but unfortunately many an unsuspecting investor will see the validity in that statement thinking, "What could go wrong?"
Massachusetts Securities regulators have found somethings wrong with how Robinhood is aggressively and misleadingly marketing themselves to inexperienced younger investors. Their charges contend that Robinhood is luring young investors into making risky and costly trades by making it seem more like a video game rather than alerting investors to the dangers, costs and risks of excessive trading. Unfortunately, one 20 year old never heeded any warnings and after believing he ran up debts of over $730,000 committed suicide.
The plain truth is, people are not born investors any more than they are born surgeons or professional athletes. However, they are born human which makes them vulnerable. They are vulnerable to a good story. They are vulnerable to believing something about themselves that just isn't true. They are vulnerable to wanting to belong to a crowd and will do anything to fit in. This is what Robinhood is cashing in on. They are turning the next generation of investors into gamblers without them ever suspecting it. All the while, Robinhood is cashing on on the destruction of their American Dreams.
Brendan Magee is the founder and president of Inevitable Wealth Coaching. With comment or question send an e mail to brendan@coachgee.com.
