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The Trillion Dollar FinTech Opportunity

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This was Dara Albright's opening presentation delivered at the FinTech Revolution cocktail event in New York City on November 15, 2016 illustrating how FinTech is on the verge of dislocating the $14T retail retirement market.

Published in: Economy & Finance

The Trillion Dollar FinTech Opportunity

  1. 1. The Trillion Dollar FinTech Disruption New York City November 15, 2016
  2. 2. © 2016 Dara Albright Media, All Rights Reserved @ToTheStoics @DaraAlbrightMedia www.Linkedin.com/in/DaraAlbright Speaker, writer and influencer on topics relating to Market Structure, New Issues, Fintech, P2P and Crowdfinance. About Dara Albright DaraAlbrightMedia.com
  3. 3. © 2016 Dara Albright Media, All Rights Reserved “Our mission at FinTechREVOLUTION.tv is to produce innovative and entertaining financial content that makes personal finance and retirement planning not only easy to comprehend, but alluring to the average consumer. Only by truly engaging the populous can we even begin to narrow national wealth gap and thwart a looming retirement crisis.”
  4. 4. © 2016 Dara Albright Media, All Rights Reserved Investors 28% Financial Services Providers 32% FinTech Providers 16% Platforms/Robo 17% Media 7% Retail 35% Angel / VC 45% Institutional 20% Investment Bankers 52% RIAs / FAs 23% CPAs 11% Analysts / Economists 14% Who’s With Us Tonight
  5. 5. “We are in the midst a worldwide FinTech revolution that is changing the way we invest, raise capital, borrow, lend, pay for goods and services and save for retirement. It is reinventing currency, democratizing the flow of capital and giving rise to an entirely new generation of tech-centric financial leaders”
  6. 6. And it is about to displace the $14 Trillion Retail Retirement Market
  7. 7. © 2016 Dara Albright Media, All Rights Reserved The Mutual Fund + Retail Retirement Accounts = A true Love Story In 1980, the mutual fund industry was valued at $135B and comprised of just 564 funds The Strapping Mutual Fund The Shy & Reserved Retirement Account In 1980, the retail retirement account industry was in its infancy. The combined IRA and 401(k) industry was valued at just $25B
  8. 8. © 2016 Dara Albright Media, All Rights Reserved President Reagan signs the Economic Recovery Tax Act on his California Ranch on August 13, 1981 The Matchmaker
  9. 9. © 2016 Dara Albright Media, All Rights Reserved In 1981, the 401(k) was born out of a tax loophole and the IRA was essentially made UNIVERSAL by raising the tax-deductible contribution to $2,000 for all working taxpayers - regardless of whether or not they had an employer sponsored plan. The retail retirement vehicle suddenly becomes VERY attractive to the mutual fund industry
  10. 10. © 2016 Dara Albright Media, All Rights Reserved Next thing we know, the mutual fund & combined retail retirement industries got married and together ballooned into multi-trillion dollar markets
  11. 11. © 2016 Dara Albright Media, All Rights Reserved $241B $636B $1.3T $2.6T $3.7T $4.8T $7.3T $385B $900B $1.7T $2.4T $3.1T $4.7T $448M $2.5B $17B $47.6B $134.8B $495.4B $1.1T $2.8T $6.9T $8.9T $11.8T $15.6T 0 2 4 6 8 10 12 14 16 18 1940 1950 1960 1970 1980 1990 2000 2010 2020 Trillions IRA Assets 401k Assets Mutual Fund Assets 1 9 8 1 Today the mutual fund industry is valued at over $15 trillion and is comprised of over 9,500 funds. The combined retail retirement market is valued at approximately $14 trillion. © 2016 Dara Albright MediaSources: Investment Company Institute, Cerulli Associates, US Dept of Labor, IRS Statistics of Income, Federal Reserve Board
  12. 12. © 2016 Dara Albright Media, All Rights Reserved This legislative change dislocated America's entire retirement infrastructure and simultaneously created the most remarkable asset distribution channel in the history of finance… until now
  13. 13. © 2016 Dara Albright Media, All Rights Reserved Like the 1980s, we are once again witnessing significant legislative changes, technological advancements and ideological investing shifts – all in unison The 1980s • The PC revolution was in its infancy • Discount brokerages were on the rise and beginning to invest heavily into technology to make retail investing cheaper & easier • Asset Shift – capital moving into funds, especially bond funds • Mutual Funds were the only diversification game in town for retail investors TODAY • The app revolution is in its infancy • Marketplace Finance & Digital Apps are proliferating – making alternative micro-investing cheaper, simpler & more accessible • Asset Shift - capital shifting from mutual funds & ETFs to alternatives • Micro-investing Technologies is establishing more proficient diversification strategies for retail
  14. 14. © 2016 Dara Albright Media, All Rights Reserved But this time with the marriage between a new generation of “non-exchange traded alternative mutual funds” and “modernized hi-tech retirement vehicles” HISTORY IS REPEATING Non-Exchange Traded Alternatives: • P2P Notes • P2B Products • P2RE Products • New Crowdfinanced Offerings Modernized “Hi-Tech” Self-Directed IRA
  15. 15. © 2016 Dara Albright Media, All Rights Reserved The Financial Services Industry is in the Early Stages of its Greatest Transformation Yet • It is being driven by: • Quest for yield • A legislative movement to broaden access to alternative products • Advancements in FinTech, particularly in micro-investing technologies and tools • Changing investor sentiment (fueled by a growing disdain for conventional assets, traditional investing and essentially, “the system”) #RETAILISRISING
  16. 16. © 2016 Dara Albright Media, All Rights Reserved For years, the smart money has been flocking to alternatives
  17. 17. © 2016 Dara Albright Media, All Rights Reserved This is Where the Yield Lives!
  18. 18. © 2016 Dara Albright Media, All Rights Reserved The Rules Are Changing Again
  19. 19. © 2016 Dara Albright Media, All Rights Reserved A New Universe of Alternative Investment Products for the Masses
  20. 20. © 2016 Dara Albright Media, All Rights Reserved Despite the growing demand for alternative assets, the vast majority of retirement assets remain disturbingly under-diversified in traditional IRAs and in employer-sponsored defined- contribution plans.
  21. 21. © 2016 Dara Albright Media, All Rights Reserved THE CHALLENGE & THE OPPORTUNITY • Retail investors don’t typically invest with cash they have lying around in checking and savings account. Instead, they invest with retirement dollars. • A self-directed IRA is needed to invest in alternatives. The self-directed IRA infrastructure was not built to handle a large volume of actively-traded traditional assets. • You can’t use 1970s technology to distribute and custody assets that are being created and accessed with 2016 technology • If technology is making new asset classes accessible, diversifiable & affordable, then it is technology that must be used to custody them.
  22. 22. © 2016 Dara Albright Media, All Rights Reserved A NEW GENERATION OF INVESTMENT & RETIREMENT PRODUCTS ARE EMERGING
  23. 23. © 2016 Dara Albright Media, All Rights Reserved NEW FINANCIAL LEADERS HAVE EMERGED More attractive fixed-income alternative products are garnering to mainstream attention “FinTech will enable all segments of society around the world to get all forms of services without discrimination.” – Ron Suber Ron Suber, President Prosper
  24. 24. © 2016 Dara Albright Media, All Rights Reserved LEGISLATION IS BEING USED TO ENGINEER NEW ALTERNATIVE INVESTMENT PRODUCTS FOR THE MASSES “With new crowdfinance legislation and cutting- edge micro-investing technology, the entire alternative asset universe now has an unprecedented opportunity to penetrate the $14T retail retirement market.” Brian Korn, Head of Digital Finance Practice Manatt, Phelps & Phillips, LLP
  25. 25. © 2016 Dara Albright Media, All Rights Reserved “The StreetShares community brings together business owners in search of funding (particularly veteran owned businesses) and investors looking for both financial and social returns. In the end, business owners get the best deal possible, and investors earn a solid return while supporting American small business - everybody wins.” Mark Rockefeller, Chief Executive Officer StreetShares A NEW RETAIL ALTERNATIVE PRODUCT UNIVERSE IS DEVELOPING Attractive & meaningful fixed-income alternative products are emerging
  26. 26. © 2016 Dara Albright Media, All Rights Reserved NEW PROFIT PARTICIPATION MODELS ARE DEVELOPING “Crowdfinance is finally making fan-based entertainment financing a realty and providing an opportunity for fans as well cast & crew to participate in production revenues.” Gene Massey, Founder MediaShares
  27. 27. © 2016 Dara Albright Media, All Rights Reserved THE MASSES ARE GETTING EDUCATED James A. Jones, President IRAeXchange
  28. 28. © 2016 Dara Albright Media, All Rights Reserved THE MODERN SELF-DIRECTED IRA HAS ARRIVED Retirement vehicles more conducive to today’s investing market are being introduced ISCP technology is changing the game by making it simple and affordable for retail investors to use their retirement dollars to micro-invest across platforms and asset classes. Todd Yancey, Chief Strategy Officer Investor Services
  29. 29. © 2016 Dara Albright Media, All Rights Reserved - 1 2 3 4 5 6 7 8 9 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Trillions SDIRA Assets P2P Assets This is the first time since 1981 that an emerging asset class has been able to “marry” a retirement vehicle and tap into the retail retirement market Will the marriage between P2P and the “modern” self-directed IRA balloon in multi-trillion markets?
  30. 30. © 2016 Dara Albright Media, All Rights Reserved @ToTheStoics @DaraAlbrightMedia www.Linkedin.com/in/DaraAlbright Speaker, writer and influencer on topics relating to Market Structure, New Issues, Fintech, P2P and Crowdfinance. About Dara Albright Thank you! Let’s connect: DaraAlbrightMedia.com

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