Greenlight, the fintech app for kids, wants to teach parents how to invest

Business
  • Start-up Greenlight is releasing an investing platform for parents that aims to teach them how to research stocks and ETFs and comes at no cost besides the monthly subscriptions users already pay, CNBC has learned.
  • Users of the service have to fill out a survey on investing timeframe and risk tolerance to get ETF recommendations.
  • Unlike other free-trading platforms including Robinhood, the company will not earn revenue from payment for order flow, the industry practice where brokerages are paid to route customer orders, the CEO said.

Greenlight Financial, the start-up that helped pioneer the fintech category of debit cards and budgeting apps for kids, is now targeting parents.

The start-up is releasing an investing platform that aims to teach parents how to research stocks and ETFs, CNBC has learned. The service comes at no additional cost on top of the monthly subscriptions users already pay.

It's the latest move by Atlanta-based Greenlight, which was founded in 2014 and is valued at $2.3 billion, to become the all-in-one financial app for families. The company began by offering debit cards for kids and teens, which allowed parents to automate allowances and chores and monitor spending. It then added savings and investing for children.

Greenlight wants to help parents set up brokerage accounts that they can use for college tuition and big unexpected expenses like repairs or medical emergencies, according to CEO and co-founder Tim Sheehan.

"Beyond helping their kids become smart about personal finance, in working closely with our families who are using Greenlight, one big thing that became clear was that saving for college is a big challenge," Sheehan said. "And then other things pop up during the course of life for a family that might cause them to need the money for different purposes."

Users of the service have to fill out a survey on investing timeframe and risk tolerance to get ETF recommendations. Beyond that, they can use the embedded Morningstar content to research ETFs and stocks to create their own portfolios. Users can set up multiple accounts for different goals.

"I do think investing is a skill and knowledge that everybody should have," Sheehan said. "Investing changed my life; it's part of the reason I started Greenlight. My dad taught me all of the things that I'm now building into Greenlight to try to help kids worldwide learn, because I know it's not magic, it's simply information, with these tools."

Greenlight will absorb trading fees paid to DriveWealth, the New Jersey-based fintech that will execute the trades, Sheehan said. It's part of the value proposition from Greenlight, which has three tiers of plans starting at $5 a month.

Unlike other free-trading platforms including Robinhood, the company will not earn revenue from payment for order flow, the industry practice where brokerages are paid to route customer orders, the CEO said.

"We don't want to gamify it, we're really trying to teach people the right way to invest," Sheehan said. "I don't want to ever be in the situation where it's not clear how somebody is making money, or how they're making money is questionable."

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