Playbook launches an investment service for Millennials and Gen Z

By Chris Morris

April 05, 2022
Playbook launches an investment service for Millennials and Gen Z

In a world where Bitcoin and GameStop stocks are rising and falling at a dizzying rate, it’s harder than ever for novice investors to figure out where to put their money—and in many cases, that’s keeping them out of the market entirely.

David Hegarty, founder and CEO of Playbook, hopes to change that. The company that has since its launch in July 2021 helped millennials save money on their taxes is now expanding its offerings with a new service that aims to help the TikTok generation better prepare for the future.

“We try to help people understand there aren’t just two options out there—YOLO into crypto or put it in a savings account,” Hegarty tells Fast Company in his first media interview since Playbook’s funding round last October. “There’s actually a way to be smart about this.”

The service will let Playbook offer full investment accounts to users, not only maxing out their tax advantages but also helping them plan for long-term financial freedom. At the same time, Hegarty says the company will help clients establish a strong financial foundation, including an emergency fund, and prepare for short-term goals like a new car or home purchase. Best of all, the service will be automated.

It’s not without risk, though. Adding investment services puts the startup squarely in competition with big-name companies such as Fidelity, Vanguard, and E-Trade. 

Hegarty says the idea was born, in part, out of necessity. Playbook saw early on that many of its potential clients didn’t have essential investment vehicles. One-third didn’t have a brokerage account. Nearly two-thirds didn’t have the right tax advantage accounts, either no IRA or the wrong type to benefit them (e.g., a roll-over IRA instead of a Roth).

Playbook’s new service will allow users to seamlessly create those accounts to help them execute their financial goals. The company has become a registered investment adviser, enabling it to work with clients on the best financial plan for them.

It’s a big move for the company, which mostly targets customers between the ages of 25 and 40 with incomes of more than $75,000. Virtually all new users learn of the company via TikTok or Instagram. Last October, the company announced it had raised $5.6 million in seed funding from Atomic, a venture studio that also helped cofound the business.

“[Customers are] looking for a holistic solution to understand their finances,” Hegarty says. “What they get instead when they look for advice is a lot of point solutions, like ‘you have to contribute to your 401(k)’ or ‘you have to get an IRA,’ or ‘you should or shouldn’t invest in crypto.’ No one sits them down and says, ‘This is how your finances work together. This is how you build a comprehensive plan. This is how the parts of that plan work together. This is how you use investments.’”

Playbook is unique in its belief that the risk profile in the various pieces of your investment accounts should be different yet work in harmony. For instance, for a reserve fund, you want to keep a portion in savings, but because interest rates are so low, it’s advantageous to keep the rest in low-risk, highly liquid investments. In contrast, savings that are targeted for 30 years down the road can withstand higher risks.

“When other online brokers construct a risk profile for you, typically it’s one bucket into which you will put all your money,” Hegarty says. “We try to help users understand that that’s not how you should think about your finances. You should think about your finances as having a plan, and in that plan you have different buckets of money.”

The service, which costs $19 monthly, is automated and adaptive, regularly going into your account when you’re paid and pushing funds into each of those collective buckets. So if you decide you want to invest 20% of your income, it will distribute that accordingly while also ensuring the optimal goal is covered.

If you don’t have a financial foundation or reserve fund in place when you begin, the investment focus will be there. Once that threshold is met, other priorities are addressed, depending on how you ranked them.

“We always want to make sure that money is going to the best place,” Hegarty says. “Sometimes, that’s making sure you have a good financial foundation. Sometimes, that’s maxing out tax advantages for that year. Sometimes, that’s making sure that the money is going to a house or car down payment.”

Also, if you spend more some months or your income fluctuates (or even in the event of a tax code change), Playbook will adjust the amounts sent to various investment vehicles. And clients can go into the system and update life events, like adding children or changing jobs.

It’s a natural progression for Playbook, which has seen its user numbers grow steadily. Hegarty says the company currently has between 35,000 and 40,000 users, with another 50,000 to 60,000 on the waiting list. The launch of investment accounts, though, should change those numbers quickly. 

“Until we were able to offer investment accounts, when we built people’s plans and they were missing two or more accounts, we figured they would have a bad experience and kept them on the waitlist,” Hegarty says. “Now that we have investment accounts, we’re going to remove the waitlist for the vast majority of users.”


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