Late last month it was announced that Motif Investing clients will have exclusive access to IPOs led by J.P. Morgan. According to reports, Motif’s platform will allow investors to see the IPOs, indicate an interest in the offering and place a conditional offer, commission free, for as little as $250. As Motif’s CEO points out, this effectively eliminates the traditional account size and length of relationship barriers that previously made it impossible for small, individual investors to participate in new stock offerings.
This is another instance of technology democratizing production. Think 3D printing or making Hollywood quality movies with a DSLR and an iPad in your basement. But, it is also an example of an industry leading professional investment manager recognizing, accepting and collaborating with the growing DIY investment community. In working with Motif, J.P. Morgan has created another distribution outlet for a product that, if successful, should improve pricing and overall demand.
The growth of the “prosumer” investor market is unlikely to slow down particularly given the rapid advances in technology and the comfort level of younger generations with using it. Given these new market realities, it may be advisable for established financial services providers to explore synergistic strategies that embrace a more “join them” than “beat them” approach.