Fintech’s Democratization of Alternative Investments

By: Zak Boca

Fintech revolutionized the financial services industry – and is responsible for the modern DIY investor. In markets that were previously inaccessible to most, fintech armed investors with endless tools to participate. And, it’s only the beginning for the alternative investments marketplace.

Fintech’s role in traditional investments  

Here are a few ways fintech has made traditional investing more affordable and accessible:

No account minimums: For most online investing platforms, there is no account minimum. You can open an investment account online for $0. Portfolio minimums aside, investing itself has become more affordable as well. 

Using a financial advisor at a major institution typically requires a portfolio minimum, ranging from $5,000 on the low end, up to millions of dollars on the higher end.

Fractional share offerings: Most major online investing platforms offer fractional share ownership of investments, meaning if you have only one dollar to invest, you can still buy just one dollar worth of a share of stock. 

Source: Unsplash

No management fee: Investors using advisors via traditional institutions have to pay a management fee. A typical financial advisor fee is about 1% of assets under management (AUM).

But if you’re a DIY investor, there is no management fee. You’re in charge of managing your own money, and it’s entirely yours to keep.

Fintech’s role in alternative investments  

Historically, alternative investments were only offered to accredited investors, but that’s changed drastically. 

Now, even alternative investments are becoming more accessible for retail investors. Via platforms such as Coinbase, Robinhood, and more, investors can invest in fractional shares of cryptocurrency such as Bitcoin and Ethereum for cheap.

The same goes for real estate. Investing in fractional shares of real estate is possible through platforms like Fundrise and CrowdStreet. Even private equity is on its way to becoming more accessible to non-accredited investors via online technology platforms. 

Managing alts via fintech platforms 

Via alternative investment platforms like AltExchange, DIY investors can manage their alts like they do their stocks. With AltExchange, we provide real-time performance tracking, a consolidated view of investments, consolidated documents, and the ability to invite your financial advisor.

What we covered here are only the basics. Fintech has brought far more benefits to the financial services industry, with only more to come.

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