Investments

Trigger Looks To Bring Hedge Fund Tools To Everyday Investors

Making it easy for the as-yet-uninitiated investor to jump into the market — or perhaps, more accurately, wade in slowly — has been a focus of a variety of FinTech innovators over the last several years.

Most of those startups have focused on the novice millennial — those individuals who lack the funds or financial security to jump into the high-priced world of financial advisers or stock trading at $10-a-pop. The solutions offered are mostly aimed at taking the costs that act as a barrier to investing for those individuals out of the marketplace.

Robinhood achieves that by literally just zeroing costs. Specifically, it allows customers to buy and sell U.S.-listed stocks and ETFs with $0 commission. (It makes its money by accruing interest on uninvested customer cash balances; in the future, it will also charge fees for customers who upgrade to a margin account.)

Acorns, on the other hand, focuses its attention on micro-investing and is designed around the premise that small investments made early and left alone will grow and turn into big piles of money later, as long as they’re properly invested. You know, the “mighty oaks from little acorns grow” theory. Acorns takes small deposit amounts from investors and aut0-deposits said funds into brokerage accounts that buy into a group of exchange-traded funds.

“Young people can keep growing their account in small amounts through lots of different sources,” Acorns CEO Noah Kerner noted in a recent interview. “With micro-investing, anyone can start growing wealth.”

And while that claim may turn out to bear fruit (or more acorns), former day trader and Trigger Cofounder Rachel Mayer noted that it perhaps contains within it a small hole in logic. The world of early-entry investment is well-suited for younger users who are really, really just starting out (and are thus comfortable letting their microfunds auto-trade as they do with Acorns), but for the slightly better capitalized investor interested in being a little more hands-on, making good rational choices in the market is actually quite tough. Robinhood can make the cost of trading low, but regular investors may very well not know how to make decisions in the market.

Mayer observed — in the midst of a sabbatical at Cornell to pursue a graduate degree — that, outside the world of day trading, she didn’t have access to Bloomberg terminals or all the other data streams she was basing buying and selling decisions off of. Mayer also realized it’s really hard — possibly impossible — to make good trades without the ability to read the right signals.

And with that observation, a business idea was born: an app that would inform users of certain triggers within their investment portfolio that are usually linked to action.

Trigger alerts can be set around four main scenarios: 1) when a stock reaches an all-year high/low; 2) when a major macroeconomic event occurs (a Fed rate change, for example); 3) when corporate fundamentals change (big dip and spikes in revenue, for example); 4) when an item in a customer’s portfolio reaches a certain return or loss level.

The app also contains a social media element. Users can search the app for what other users are setting their triggers around and what triggers are currently trending within the site.

“As of yet, the site is only working as an alert system, meaning Trigger can tell our customers when to take certain actions based on the rules they’ve outlined but the customer still has to physically make the trade themselves.” That, reportedly, is changing quite soon, however. “In the next month or so, we will be adding a way to place orders through a Trigger alert.”

Mayer further noted that, by the end of the year, Trigger is aiming to have auto-trading functionality built in, meaning users can set their accounts to respond automatically when Trigger events occur.

And that, she noted, is just the beginning of the hopes for what Trigger can do for the everyday investor.

“The longer-term goal is to allow a much deeper level of granularity into the kinds of Trigger events our users can set, so the Trigger is not just looking for specific announcements but specific phrasings in announcements.”

In an interview with Fast Company, using the Fed rate change as an example, Mayer noted that future Triggers will be able to “read” the announcements more closely for users.

“Did they drop ‘patient’ from paragraph three? Or is it a dovish or hawkish term from that statement?” she posits. “We could construct Triggers on that in the future.”

The future, of course, is based on recruiting enough potentially interested investors to start using Trigger to scan the digital tea leaves. And that is something of a challenge, since app retention rates are so incredibly low. A great idea may not be enough to break through the din.

“I think the biggest hurdle we had to overcome in the early planning was the question about how we get this into the hands of actual users, since there are literally 100 million competitors looking to do the same thing.”

Trigger’s solution to that hurdle? It doesn’t want to compete with brokerages and banks; it wants to help them. And by the end of 2016, it will have opened up its API so those banks and brokerages can build Trigger’s tech directly into their own products.

“What we would like to do is partner with these brokerages, because they, at the end of the day, have a combined 50 million brokerage accounts.”

Trigger has a long way to go, of course, and it’s been out in the wild for less than a week. But it has an interesting idea and perhaps a useful tool for the large and ascending crush of millennials that everyone is trying to woo. And wooing them one investment brokerage at a time.

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