Sharesies: The platform levelling the playing field for a new generation of investors

Plenty has been written about the new trends which have sprung up over the past year and a half, but in the financial realm, it’s hard to look past the meteoric rise in popularity of investing during the COVID-19 period.

Hundreds of thousands of Australians have flocked to the share market for the first time in recent months. In fact, research shows that 1.43 million people placed at least one trade in the 12 months to May 2021 - nearly double the amount recorded before the pandemic.

First-time investors aren’t the only new participants in the market though. A number of new online share trading platforms have also sprung up in Australia, catering to a new generation of investors with platforms that offer: a) low brokerage costs b) access to domestic and international markets and c) lower barriers to entry.

And that’s where Sharesies comes in.

Based in Wellington, New Zealand, Sharesies has on-boarded 430,000 investors to its platform since launching in 2017, and it recently made the trip across the ditch with a roll out on the Australian market in April.

So what’s Sharesies all about? As co-founder and director of Sharesies Australia, Brooke Roberts describes, they’re on a bit of a mission to make investing more accessible by lowering costs and simplifying the ‘jargon’ surrounding investing.

“When we started Sharesies four years ago we spent six months doing pure customer research before we started. Being an investor felt like something that was so unattainable because, while 99.5% of people wanted to be an investor, they felt like they were priced out.

“We’ve helped drive that change and remove those barriers so that you can invest with any amount and it's as jargon-free as possible. We’re creating a comprehensive platform that’s for everyone.”

The new wave of investors

As you’d expect from a customer base of that size, the investors that use the Sharesies platform come from a variety of age groups. But Roberts says there’s been real enthusiasm from younger investors wanting to get into the market.

“It’s a range of ages and stages that are getting into investing. On our platform we’ve got people up to 97 years old, but there’s definitely a groundswell among the younger generations who are getting access and then taking home the idea of investing to their families.”

This is not surprising given what we know about the makeup of new investors. For instance, a report released earlier this year by research firm Investment Trends found that as many as one in six investors who entered the market for the first time in the 12 months to March 2021 were under the age of 25.

And this trend seems likely to continue according to Sharesies’ own research, which found that 59% of Australians aged 18-34 were likely to start investing in the next five years.

What’s driving these new and, in many cases, younger investors to put their money into shares, exchange traded funds (ETFs) and other securities though? According to Roberts, there are a number of factors.

“There are a bunch of things at a macro level. Interest rates are low so money in a savings account doesn’t really feel like you’re getting ahead. It’s also really hard to get a home, so people are thinking about how they can build their wealth in a way that they can access it outside of super.”

“I think that, plus the technological advances and with the economic environment we’re in, a lot of people have got interested and they can have access to this thing which has been locked away and been quite opaque for a while.”

Bringing down the barriers

The idea that many Australians have traditionally felt “locked out” of investing is by no means inflated, as Sharesies found that 48% of people don’t think they have enough money to start investing.

On most platforms, investors will need to hit a minimum purchase amount in order to buy shares and other securities. This threshold is generally around the $500 mark, but it can stretch into the thousands of dollars - sums which aren’t insubstantial for budding investors. 

But as Mozo Senior Research Analyst, Mitch Pollard, says, new entrants to the market have made a point of lowering this threshold.

“A lot of the newer platforms have introduced lower investment thresholds and lower pricing, which is a win for investors wanting to make smaller trades because they can invest $500 or $1,000 without it being eaten into by a $20 brokerage fee.”

“In Sharesies' case, their brokerage rate for amounts under $3,000 is 0.5% of the trade. So on a $1,000 trade, they charge $5 brokerage, which is among the lowest fees for that investment amount among the share trading platforms we track in the Mozo database.”

Cost is not the only barrier Sharesies is seeking to lower though.

As many investors will attest to, the terminology and processes involved in placing a trade for the first time can feel quite daunting. As can actually choosing what to invest in. In fact, Sharesies found that 52% of Australians believe that investing is confusing.

According to Roberts, that’s why the aim for Sharesies is not just to be a brokerage platform, but rather a ‘wealth development platform’ where users can research and better understand the investment process.

“Removing price barriers and reducing those fears that were traditionally there with investing - like the sense that you could never know enough because it was hard to get access to information - are areas we’ve tried to help with, to make investing more accessible and affordable for more people,” she says.

A matter of interests and values

They say it’s important to ‘write what you know’, but how about investing in what you know about? Well, it seems to be true to some degree at least, as many of the investors using Sharesies are putting their dollars into companies and investments that they know about, use and which line up with their values.

“We’ve seen that people really care that their money is making an impact, but they’re also investing in line with what they know, love and have experience with too,” says Roberts.

“For example, in Australia and New Zealand we’ve seen a lot of interest recently in the national carriers Qantas and Air New Zealand, where investors may be thinking about getting that opportunity to travel again.

“Tech stocks like Tesla, Afterpay and Zip have obviously been popular too, because these are brands which people know and are interested in. And we’ve also seen that exchange traded funds (ETFs) are a key part of people’s portfolios.” 

Sharesies is also determined to ensure that it can meet the expectations of its values-driven customers, as well as those set by itself as a business. 

In 2019, it became the first company in the financial services sector in New Zealand to be certified as a B Corporation, which means it meets a number of standards set by nonprofit organisation B Lab around environmental performance, public transparency, and legal accountability.

“Fundamentally we’re a business that wants to be a force for good,” says Roberts.

“We really care about why we exist and as part of that, we also care that people have choice. We want to help build people’s confidence and give them the motivation to help build their portfolios through education, blogs and the other great stuff that we offer.”

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