The Need for Wider Access to Financial Markets

Alexa von Tobel has consistently championed broader participation in the stock market, a conviction stemming from her own experiences. As a young entrepreneur, she recognized the barriers to entry, particularly the substantial capital often required to begin investing.

This belief was reinforced during her time founding LearnVest, a financial planning startup established in 2009 and later sold to Northwestern Mutual in 2015 for $375 million. Von Tobel, now a venture firm founder alongside Penny Pritzker, is deeply concerned about the disparity between those who invest and those who do not.

The GameStop Saga and its Implications

Von Tobel recently interviewed Robinhood CEO Vlad Tenev on her Inc. podcast, discussing the company’s mission to democratize investing. This conversation occurred just before the events surrounding GameStop and AMC Theatres, where amateur investors utilized platforms like Robinhood to significantly impact stock prices.

The resulting volatility highlighted a critical issue: a lack of financial literacy. One young investor, who experienced substantial losses, expressed a sense of detachment from the financial consequences of their actions to Vice.

Financial Education: A Critical Deficiency

In von Tobel’s assessment, the GameStop situation underscored a fundamental flaw – the absence of comprehensive financial education. While the events provided valuable lessons, the core problem remains the inadequate financial training received by most Americans.

“Equal access to the financial system must be coupled with equal education,” von Tobel stated. “Currently, financial literacy isn’t integrated into the curriculum at high schools, colleges, or even graduate institutions; the basics are rarely taught.”

Growing Importance in a Changing Landscape

The need for financial education is becoming increasingly urgent. Individuals are living longer and assuming greater responsibility for their financial security.

Simultaneously, fintech innovations, including those offered by Robinhood, have lowered barriers to entry, potentially leading to ill-informed decisions with significant repercussions.

Proposed Solutions: A Multi-Stakeholder Approach

Von Tobel advocates for prioritizing financial health alongside physical wellness. Just as medical professionals provide guidance during health crises, similar support is needed in the financial realm.

She believes a collaborative effort is required, involving several key players:

• Platforms: Providing accessible tools and resources to help users understand investment risks.
• Regulators: Offering guidance and oversight, particularly through organizations like the Consumer Financial Protection Bureau (CFPB).
• The Educational System: Integrating financial literacy into school curricula at all levels.

The Role of Regulation and Future Innovations

Von Tobel acknowledges that regulation often lags behind innovation, a dynamic currently being observed in the market. She suggests the CFPB’s guidance is essential, despite past challenges to its authority.

While hesitant to propose specific structural changes, such as a trading tax, she envisions a future where retail investors and established institutions operate on a more level playing field.

Looking Ahead: Crypto, Self-Driving Wallets, and Automation

Von Tobel is optimistic about the future of finance, believing that cryptocurrencies are poised to endure and foster innovation. She also anticipates the emergence of “self-driving wallets” capable of automating bill payments and investments.

These automated systems, driven by mathematical algorithms, could potentially mitigate financial distress by optimizing resource allocation based on individual goals. “The wallet is simply a math equation that updates every single hour,” she explained.

Von Tobel concludes, “I can’t wait for the day that this automation exists, as I firmly believe that’s the future of personal finance.”