I’ve always thought that Canary Wharf gets a bad rap when it’s described as soulless, and like an airport compared to The City. I’ve worked in both for years during my two decades in finance and I have to say that I actually quite like going to Canary Wharf, it’s clean, the City is grubby, the Jubilee line works, the Drain gives me earache, and you do get the impression that people actually work there, as opposed to the City where they just hang about in pubs all day (from about 11:30 after the market dies down if memory serves from my days as a stock broker). But one thing that really lets The Wharf down is the absolute absence of decent places to eat.
Case and point, there is now a different type of Birley’s on every corner for people who need to eat whilst working, but in Mayfair (the natural home of fund managers) there is the other type of Birleys, Annabel’s. It would have been nice if eToro had set up its UK base there, especially as some say social trading could be an alternative to traditional fund management.
But it’s not, because they don’t do fund management, they let you follow would-be fund managers through copy trading. It’s a fintech so the UK arm is in Level 39, One Canada Square, with other disruptive fintechs like WiseAlpha, Revolut & Stripe.
Which was annoying because I’ve known Dan for years, over a decade at least, from when I had an LCG white-label, at Investors Intelligence, so I thought we’d do the interview over lunch. But as there are no nice restaurants we went somewhere I can’t remember the name of and had some food that was fine. Fortunately, though, it’s always a pleasure chatting about the industry with Dan, who knows it inside out, and in particular hearing about why he joined eToro…
Dan, tell us why did you join eToro?
In the last few years, we’ve seen the appetite for zero-commission stock investing and crypto explode and eToro has played a major part in this trend in markets around the world. After spending 20 years working primarily in retail derivatives – a market that has remained largely the same size over this time period – the opportunity to apply my experience and knowledge to the rapidly-evolving retail investing market was too tempting to pass up. So a year and a half ago, when the CEO and founder of eToro, Yoni Assia, wanted someone to help with the UK office, it was an easy decision for me to make.
And why do you think the UK market hasn’t been growing for traders? Do you think it’s crypto? Whereas traditionally, taking a punt on a CFD or a spread bet might’ve been a gateway for first-time investors, do you think crypto is now where they’re heading?
We largely associate UK traders with the leveraged market. Stock day trading isn’t really a thing in the UK. So it’s important to recognise that leveraged trading is not for everyone. It does give access to certain financial markets in a way that other assets can’t, but these products are for a small portion of the UK investing population and I don’t see this changing anytime soon. Having said that, I think both the investment and trading industry has struggled to be deemed accessible and inclusive.
Where crypto differs in this respect is that it’s been hugely successful in creating engagement in financial markets, which is helping to educate people in the process. It has reached a new audience, many of whom are now learning about markets as a whole, something which is likely to improve their financial future.
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An example I always give is that my father has never traded stocks or invested in stocks in his life. Despite having a son involved with financial markets, it had never attracted him at all, and yet three years ago, he opened his first bitcoin position. Now he pays more attention to the wider financial market.
Did he do that with you?
No he did it off his own back! As I said, crypto has clearly attracted a brand new audience that wasn’t previously engaged in the financial markets – people who are now looking to take ownership of the direction of their financial situation.
There have been a few factors which have driven this trend – be it Covid and working from home or access to zero-commission stockbroking and fractionalised shares, which have helped to remove barriers to entry for some people.
You’ve obviously worked at a lot of places in your career. What’s been the best thing about working at eToro so far?
The level of innovation at eToro is what excites me the most and there are a few examples which come to mind here.
The range of products that we provide allows us to offer true diversification – we are the only platform that offers real stocks, crypto, indices, FX and CFDs, along with our unique CopyTrading feature.
Another great example of eToro innovation is fractionalisation. eToro was amongst the first in the UK to offer fractionalised stock, and still to this day, there aren’t many firms here that do it. It‘s interesting – most people think that the only draw of fractionalised shares is that they allow people to buy less than one share, but actually it’s that people can pay in a round number and buy, say £500 worth of stock. The mechanism of having to buy one share, two shares or three shares and work out the cost feels slightly archaic.
We are also a leader when it comes to crypto in the UK, offering Bitcoin on the platform way back in 2013.
It’s a very new way of doing things, isn’t it?
eToro is always willing to take a different approach if it means creating a better offering for our users. You can see that in the way that we’ve pioneered social investing and our CopyTrader feature. Users can view each other’s eToro profile and engage with each other in a social manner. Users can also engage with our ‘popular investors’, ask them why they purchase certain stock, what they are investing in, and then follow them or indeed copy them if they wish. No other platform enables this kind of interaction.
And what about the most challenging thing? What’s been the hardest thing you’ve had to deal with since joining eToro?
Before joining eToro, I had never operated in the crypto space and this has been an exciting challenge. This market is still in its relative infancy and until a regulatory regime is firmly in place, there is going to be some uncertainty. We are fully supportive of regulation as a business and can only see the positives from operating within a well regulated market.
And if you were to sum up eToro’s USP, what would you say that is?
There are three things. The first is social collaboration. Our platform encourages our investment community to talk to each other. It encourages information sharing.
The second is accessibility. It is incredibly easy to get access to a diverse pool of fractionalised assets once you’ve decided what you would like to trade. As part and parcel of this, we are great at providing our customers with the right information and education to improve their knowledge – through initiatives like the eToro Academy, a vast educational resource on our website.
Finally, there is the concept of copying or following, which allows people to participate without needing to know the markets inside out. You could decide that you fully believe in electric vehicles but don’t have the time to research which electric vehicle companies are the best to invest in. Our platform would then allow you to take a thematic approach and buy a basket of goods that we provide to you on electric vehicles.
What would you say is the one trait you’ve seen in the type of customers that makes money, or is there a specific tip you could give to help people be better investors or better traders in whatever market they choose?
I prefer to offer three traits as they are all of equal importance. Firstly, don’t trade simply for FOMO. Understand the asset class that you’re dealing with. Then, if there is a drop in price, it helps you to re-evaluate whether you still want to be in that asset class or not.
Secondly, diversification is incredibly important. Do not put all your eggs in one basket. Try and spread your exposure across the board. Understand that having uncorrelated assets is a very good thing for your portfolio.
And the third thing I’d say is just general information. Understand how financial markets work. Understand how exchanges work. Understand that there are risks involved and weigh up those risks with the potential rewards and then decide whether it’s right for you.
Dan Moczulski, is UK MD of eToro