Original text here from Patrice Bernard (LinkedIn)
For the millions of Americans who, due to a lack of proper education, hesitate to invest (a portion of) their savings in the financial markets, Grifin offers an innovative solution that allows them to make their first investment moves in a fun way, without taking undue risks... and in alignment with their consumption choices.
The concept is reminiscent of an old initiative (from 2012 and seemingly abandoned since) by TD Ameritrade, which allowed its customers to buy shares of brands they like by scanning the barcode of one of their products (such as an iPhone to buy Apple shares). Twelve years later, Grifin revives the same idea but adds an extra layer of automation that better suits the needs of the novice target audience in both cases.
Specifically, when creating their account, Grifin app users are asked to link their most frequently used debit and credit cards through a standard open banking interface (provided by the leader Plaid). From then on, in essence, each transaction recorded on their statements triggers an investment of one dollar in the manufacturer or supplier of the purchased product (as long as it is identified and publicly traded).
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Several safeguards are in place for maximum efficiency and protection. For example, the amount associated with each transaction can be increased (up to 99 dollars), and in practice, the total is collected and transferred to the client's portfolio once a week for transaction execution. Among a myriad of options, it's also possible to set a weekly cap, pause contributions, or exclude certain stocks.
Although I believe the system lacks a formal educational approach (which should soon be introduced in the form of a learning chatbot), it inherently includes some mechanisms of good investing habits. Besides minimizing overall risk with an initial investment of one dollar, synchronizing with expenditures implicitly introduces asset diversification, conducive to reducing overall volatility.
With its unconventional model, Grifin is carving out a niche between low-cost (or zero-cost, in the style of Robinhood) trading tools, which make market access easier but are intimidating for beginners, and robo-advisors, which promise to simplify investing but whose actual operations, especially through their use of ETFs, remain opaque to most clients. There certainly is a niche for people looking to take control of their savings but unsure how to start and who would appreciate a helping hand.
