GlobalFintechSeries Interview with Joshua Levin, Co-founder at OpenInvest

GlobalFintechSeries Interview with Joshua Levin, Co-founder at OpenInvest

Joshua Levin, Co-founder at OpenInvest dives into the impact of investment technologies and how they’ve led to a change in the role of human advisors and customer relationships in today’s marketplace. Catch the complete QnA:



Can you tell us a little about yourself, Josh? How did you venture into being a fintech entrepreneur and how did the idea for OpenInvest come about?

I’ve been in the sustainable finance / ESG world for the last 15 years, including six years at the World Wildlife Fund (WWF) where I managed the Sustainable Finance Program. I hold a BA from Harvard and an MBA from NYU Stern, where I was a Reynolds Fellow in Social Entrepreneurship.

I’ve always been very passionate about mainstreaming values-based investing. I saw that the ESG investing space wasn’t moving fast enough, and there was a need for a hardcore technology player to help accelerate things. I was fortunate to team up with two co-founders who had spent the previous decade at the world’s largest hedge fund (Bridgewater) leading tech teams to build out key systems across automated portfolio management, risk control, trading and analytics. Together, we established OpenInvest, one of the world’s first venture-backed Public Benefit Corporations.

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OpenInvest makes it easy for advisors to help their clients invest according to their personal values. Clients can, for the first time, truly measure and see their impact, divest-invest, easily participate in shareholder resolutions, and more.

How has the platform evolved over time? We’d love to hear about Portfolio Diagnosis, what are some of the other near-term innovations that users can look forward to?

OpenInvest launched our first product in 2016 – a dynamic custom indexing platform that has really changed the way people invest. Since that time, the most popular feature of our technology has been the way we report back impact to advisors and their clients. And that is how our most recent service, Portfolio Diagnosis, began to take shape back in 2017.

If anything good is to come out of the pandemic, it’s that society’s values and priorities are changing. Now more than ever, people want to make their voices and values heard through their investments. They also want to have a deeper understanding of the resulting impact. It is the perfect timing for the rollout of Portfolio Diagnosis – this is the ESG service everyone wanted but didn’t know to ask for.

With Portfolio Diagnosis’ comprehensive data and tangible impact metrics, it’s finally easy for any advisor to give their clients an intuitive, meaningful, and accurate snapshot of how their investments are impacting the world around them. For example, an investor can learn that their investments translate to a number of trees planted, an amount of carbon not emitted into the atmosphere, hours of lives saved from not supporting cigarette companies, or that money did not go into corporations that support the NRA.

We look forward to expanding the power of the OpenInvest platform into new countries, as well as rolling out additional causes that give advisors and their investors more choices in their investments.

With the changing needs of businesses and individual users: in what ways do you think investment management platforms will evolve with time to serve business needs and individual needs better?

The ESG investing industry is set to reach $45T in total assets by the end of 2020 (JP Morgan) and is one of the fastest growing segments of asset management. The surge is driven by consumers’ desire to invest with a conscience and is enabled by advancements in the information economy, allowing us to better understand the companies we choose to invest in.

Also, take millennials and Gen Z, which account for nearly half of the US population. It’s estimated that they will inherit $24 trillion of wealth from their parents and grandparents by 2030. According to recent reports, 90% of zoomers think that climate change can be slowed – and they want to help!

It’s clear that values-based investing will become even more mainstream and top of mind for investors of all ages. Yet, solving for ESG demand, and certainly tackling the upside opportunity, requires mass customization to each client’s unique values. It also requires providing experiences, impact reporting, and storytelling – i.e. deep engagement.

These practices are alien to traditional asset management and would blow out their overhead. Thus, solving for ESG fundamentally requires deployment of new, scalable technologies and business practices. The development of dynamic custom indexing and real-time account-level transparency and reporting tools thus become essential building blocks for modern wealth management.

For ESG investing to gain mass adoption, it needs to become more accessible. One example of how OpenInvest is democratizing values-based investing is with a new solution called OpenInvest Models. Models are a seamless, ready-to-use thematic ESG solution that reflect common value sets and include impact reporting, but with lower price points and without option overload.

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Can you talk about some of the most exciting (recent!) innovations in investment tech / investment management platforms? 

About five years ago, there was a fear that technology may overtake an advisor’s job. However, the reality is turning out to be quite the opposite. Technology is disrupting asset managers (note the current ETF price war), while new tooling is making human advisors the star of the show!

Tools such as Dynamic Custom Indexing essentially push rules-based product manufacturing down to an advisor’s fingertips, unlocking deep account-level customization, and allowing them to integrate the product with the planning process. The result is providing better solutions for clients, while putting clients into products no one else can compete with.

Breakthrough technologies like Portfolio Diagnosis are going to make both ESG more mainstream and relatable, while opening up new avenues for client prospecting, by helping advisors optimize their clients’ portfolios while giving them unparalleled insight into the impact of their investments.

How are you seeing companies change the way they rely on and use fintech and especially investment tech during this Covid-19 pandemic? 

Adapting to the new normal during COVID-19 has prompted financial companies to creatively provide more value and be more agile than ever during this unprecedented market uncertainty. From engaging with clients virtually to assuring their investments are well-positioned, setting up personalized conversations brings a lot of client satisfaction and retention for advisors.

Overall, large wealth and asset management platforms are making an unprecedented push into new digital solutions at every level.

Given the overview of what fintech looks like today in 2020 and this evolving space: how would you describe this market over the next decade?

There is a transformation going on in the asset management industry from a product business to a service business. ESG investing is really just the vanguard, and the catalyst to catapult the industry further in this direction.

Ultimately, expect to see a transition into a “post-fund world.” Much like the compact disc in music turned out to just be a stepping stone to digital streaming, the ETF is a stepping stone to digital streaming of strategy delivery. Trading costs have gone to zero, so there is no longer a need to pile millions of people into cookie-cutter products, when each client has her own unique goals, situations, and values.

The implications of this are significant. For example, we will continue to see more power moving downstream in the value chain, towards advisors and their platforms, and away from asset managers. This will look and feel like vertical integration, ultimately to deliver a better client experience. Just as digital streaming of music collapsed the music, the record, and the record store all into a single device (your phone), the same type of vertical collapse will occur in asset management, in order to provide a superior experience to the advisor-client relationship.

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OpenInvest is a YCombinator and Andreessen Horowitz-backed startup powering the post-fund future.

Joshua is the Co-founder at OpenInvest

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Paroma Sen178 Posts

Paroma serves as the Director of Content for GlobalFinTechSeries, SalesTechStar and TecHRseries. She was a Senior Features writer and Editor at MarTech Advisor and HR Technologist and has worked as a lead content marketer and developer for various B2B publications and tech firms.


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