In this Spotlight feature, we talk to Eric Yim, Founder of the Riser Financial Education course about why boosting financial literacy is so important, how millennials are starting to ask more questions and why he’s making his sister do the course.
Can you tell us a bit about Riser Financial Education and how it works?
Riser Financial Education is an online course and investing tool for people who want to invest in the stock market. We’ve built the course based on interactions we’ve had while coaching real people through the process, people who have never before put their money into the markets. We divided the course into seven lessons, each trying to accomplish one specific task (kind of a step-by-step guide). Take, for example, diversification: a student watches the short videos on why we need to diversify and how he/she can diversify effectively. Then he/she can use the tools on the site to get the job done.
So, why an online course? What do you want to achieve by setting this up?
I personally have been involved in the finance world for a while and have interviewed a lot of people, both in and out of the industry. Two key issues emerged: financial advisers were having more trouble attracting new customers while people who were just starting to invest found the process overwhelming.
While these ideas seem quite disparate, they can be boiled down to a simple idea: people are just asking more questions and thinking for themselves. And that’s a good thing. They want to know why and not just be told, “This is the best for you.”
We hope that, by going through a course like ours, either: a) they will know enough to handle their own finances or b) they will know what’s going on and have productive conversations with their financial adviser.
What makes it different from other courses out there? Are there any similar programmes?
There are many courses that can teach people about the stock market. Broadly, they can be separated into two classes: 1) courses from universities (i.e. Coursera), and 2) courses put up by individuals (i.e. Udemy).
We’ve found that university courses make you feel super smart! But when people get to implementing the material, they find that the information was too theoretical. It’s not practical enough.
Then for individual courses, it’s hit or miss. I believe there must be some great ones out there, but often they target a specific skill or do not take someone from beginning to end. It’s harder for a person to know what to look for.
There is also a lot of great information people have access to such as investopedia.com and seekingalpha.com. Plus, I’ve seen brokers like Fidelity offering more educational features.
One thing about our course is that we wanted to combine university aspects with practical aspects. So we want people to feel smart (like they really know how it works) and also provide everything they could need to make decisions. It’s not just a course, but also when people want to do a calculation or look for a fund, for example, it’s right there in front of them.
What has launching and developing this course taught you about millennials and their attitudes towards finance?
I’m a millennial too! I’m an older millennial, but it checks out (Star Wars reference). And I think the main difference is that we want to know why. I suspect (although I’m probably not old enough to really know) that previously, people could say, “I’m the car guy; you can trust me with your car,” or, “I’m the finance guy; let me handle your
finances.” Now information is out there, so if we millennials want to do everything ourselves we can, or at the very least, we can double-check whether it’s being done right.
Secondly, millennials are keen to ‘invest in a cause’. Sometimes we will forego some of the “expected returns” if it is for a company that we believe in. I was surprised to see this even among my friends in finance who are forced to always look for performance in their day jobs. With their own money, they have their own values.
What are the key issues facing millennials as far as financial services are concerned and what would you suggest as solutions?
I’m probably in the minority on this one, but I’m not a big fan of robo-advisers. With millennials wanting more freedom of choice and more transparency, the industry is popping up with new robo-advisers. Robo-advisers (it’s the term people in the industry use) are basically investment tools or apps where you can fill out a survey and have your investments allocated automatically. Then they help you visualize what’s going on in your portfolio. They do make it easy to get into the market: the apps are easy to use, people can start saving and investing right away. But then users may choose portfolios that are not right for them. The portfolios are often built up based on how the initial survey and back-end programming was set up. For example, is the user getting the right amount of risk exposure? And small differences in a portfolio make a huge difference over the years.
For those who do use them though, I’ve seen a lot of these apps come with educational resources. So make use of those. Also, you can see what funds your money was put in when you use the apps. So you can search on the fund maker’s site (or often Yahoo Finance) what companies the fund is made of and what the fund’s strategy or purpose is.
What else can we do to improve financial literacy among millennials?
You know it’s funny. I’ve been doing stocks for a long time. And I’ve also been helping my older sister with her finances. However, all the while, my younger sister was completely oblivious… until she started thinking about buying a house. Then, we start talking, and she suddenly starts to say, “OMG, I’ve been doing money wrong this whole time.” Now, I’m making her do my course. So, I’d say learning is the first thing. And probably, if you are reading a financial blog, you’re way ahead. The next step is talking to people around you.
Can you tell us a bit about your background? What inspired you to set up Riser Financial?
Here’s the fast version: Northwestern University in engineering, teaching in Japan, tiny bit of aerospace engineering, day trader for a Chicago firm. I then went back to Northwestern for a Masters because I wanted to start a company (after watching too much Shark Tank). I didn’t know that it would necessarily be in finance. At school, I had a lot of mentors who helped me explore ideas leveraging my background. It makes complete sense now: teacher + trader = financial education. And also, yes, I’m a math nerd!
How well do you think millennials are coping financially?
We millennials are crafty. You can see that with the popularity of apps like Robinhood (a trading app that makes it easy to test the waters). People are willing to experiment: I see a lot of people go out and say, “Ok, let me just buy one stock and see what happens.”
I also didn’t know until recently about the awesome online community of people sharing their stories. It’s encouraging people are learning from each other. Information is there. Access is there. It’s true some start with more than others, but now more than ever, we have opportunities to build wealth. And we can build it together.
Find out more about Riser Financial or sign up to the course here