Merlin Investor – Democratizing finance and making conscious investing a reality for everyone

In the dynamic landscape of finance, Merlin Investor emerges as a trailblazing company with a profound mission—to democratize financial inclusion and revolutionize investment planning towards conscious investing. With a commitment to making financial tools accessible to all, Merlin Investor introduces an innovative platform that encompasses market insights, investment planning, and portfolio tracking. This visionary Fintech company is not just about transactions; it's on a quest to empower every retail investor, regardless of their financial knowledge or investment experience. Merlin Investor's user-friendly interface and comprehensive features are designed to cater to a diverse audience, ensuring that investing is no longer confined to a select few but becomes a seamless experience for everyone.

Moreover, Merlin Investor goes beyond the conventional by offering a cutting-edge white label technology. Financial Institutions can leverage this solution to elevate their digital platforms, capturing the attention of the new generation of retail investors.

In an exclusive interview with CIO Bulletin, Guido Petrelli, Founder and CEO of Merlin Investor shared insights about how his company is providing a holistic investment experience—all in one place.

Interview Highlights

Q. Can you share the story behind the founding of Merlin Investor? What inspired the establishment of the company, and how has the vision evolved over time?

Merlin Investor originates from my personal need and experience that spans over 20 years as a retail investor. Opening my first brokerage account in my teenage years with minimal financial or investment knowledge, it initially served as a hobby with the hope of generating extra pocket money. As I progressed into adulthood and began working, I relied on financial advisors to manage my investments. However, I observed that my personal investments yielded better returns or incurred fewer losses compared to the performance delivered by the professional management I was paying for. This realization prompted me to take matters into my own hands.

Thanks to my university degree in Business Administration and Finance I earned in the meantime, I recognized the importance of developing a diversified and balanced investment strategy before executing any trades. I understood that the key to financial success lies not just in the trading tool itself but in the thoughtful design and implementation of an effective investment strategy. This led me to create intricate, time-consuming, and frustrating spreadsheets. However, the realization struck that there should be a better, more accessible solution for everyone.

In my search for a comprehensive tool that could meet my requirements for market insights, investment planning, and performance analysis, I was surprised to find a lack of suitable options. While numerous trading platforms emerged, they primarily focused on the trading experience rather than holistic investment management. Believing that many other retail investors faced the same challenge, I embarked on the journey to build the product I envisioned. Thus, Merlin Investor was born.

Q. Can you provide a brief overview of the products or services offered by Merlin Investor?

Our platform serves as an educational, strategizing, and tracking tool tailored for retail investment planning and management, catering to the new generation of retail investors. From its inception, the vision was to create an easy-to-use platform that complements, rather than substitutes, any trading platform. It was designed to accommodate all types of retail investors, irrespective of their financial knowledge or investing experience. The platform is flexible, allowing users to work with various asset types, delivering a customizable and scalable experience aligned with each investor's specific needs and learning curve.

Whether investors are experts or beginners, managing their funds or someone else's, the investment cycle remains the same. The process is simplified into four main steps. The first involves studying the markets by accessing multiple sources of information to make informed decisions and identify assets of interest.

Subsequently, users create multiple investment strategies to analyze and balance various risks associated with investing, such as asset allocation, industry, country, currency, and custodian risks.

This diversification and risk balance follow a fundamental rationality that must be addressed to build long-term positive results, which is "don't put all your eggs in one basket," and when you invest, you have different baskets to consider. After analyzing top-down and comparing strategies, users select the one that aligns with their risk profile before moving on to the execution of the strategy. While several trading platforms already cover this third step, the fourth and final step involves tracking performance and rebalancing risks as necessary.

The Merlin platform comprehensively addresses steps one, two, and four, positioning itself as the ideal companion to any trading platform. Its goal is to deliver a complete and conscious investing experience all in one place.

Q. Merlin Investor emphasizes the idea of educating and empowering anyone to create their own investment strategy. How do you believe it sets Merlin apart in the industry?

If we look at the world of investing, banks and financial advisors often formulate investment strategies tailored to the products they aim to promote. Unfortunately, these strategies are frequently constrained by the limited range of products they wish to place. Additionally, many active retail investors, despite having the ability to trade various assets across numerous platforms, often fail to execute based on a diversified and balanced plan. Instead, they engage in a series of spot trades, leading them to lose control of the overall investment landscape.

This approach, characterized more as gambling than strategic investing, can result in catastrophic losses and missed investment targets. A survey conducted among active retail investors from Gen Z and Millennials revealed that approximately seventy percent of them were investing without a plan. The remaining participants were compelled to strategize using spreadsheets, like I used to.

Further analysis indicated that over eighty percent of the surveyed population expressed a willingness to be educated and learn more to become their own financial advisor. It became evident that they lacked an easy-to-use educational tool for market insights, strategies creation and risk analysis. The market, dominated by complex and expensive platforms designed for experts, failed to cater to the needs of this demographic.

This realization fueled the vision behind the Merlin platform – a tool designed for the new generation of retail investors. The "Strategies Playground" available within our platform serves as an educational hub, empowering and providing users with the necessary tools for creating, analyzing, comparing, and back-testing investment strategies, through a gamification of the entire process. In addition, the “Inspiration” section allows to navigate multiple source of information, to access educational materials. Here we also include social networks, as we surveyed more than sixty percent of GenZ and Millennials relies on social network influencers for investment education.

I believe this unique approach of a safe and unbiased playground is what sets our company apart in the industry.

Q. Merlin Investor is also marketing its technology as a white label product to Financial Institutions. What are the advantages and benefits for banks in offering the Merlin platform to their retail clients?

From the early days of retail trading platforms, the industry focused on providing a tool for autonomous buying and selling of assets, aiming to benefit from trade commissions. The strategy was to encourage as much trading as possible, as the fact that clients would make or lose money from their trades wouldn't yield any direct and quick benefit to the banks. What I believe they failed to realize was the long-term impact of such an approach, as the ability to trade without supporting financial education combined with the absence of a complementary solution for investment planning and risk management may backfire on them.

Let me articulate on that by using an analogy. Let’s assume we run a horse riding stable, and our sales strategy only focuses on renting horses without providing any training to inexperienced riders. Initially, when anyone is interested in trying horse riding, our sales will increase. However, our inexperienced clients will eventually start falling down and hurting themselves due to the lack of proper training. The most likely outcome will be that our clients become scared and stop riding, resulting in a decline in sales. Moreover, even if our clients were the ones riding the horse, they may seek compensation from us, claiming we had the responsibility to teach them how to ride, not just rent out the horse to them. I believe this is the risk the banking industry faces if they don't quickly complement the trading experience with educational and investment planning tools.

To succeed, they cannot simply replicate and provide access to the same wealth management tools used by experts, as young and novice investors will find them too complicated, meaning the bank won’t fulfill its purpose. Such a preamble is necessary to understand the benefits the Merlin platform delivers to financial institutions, and the underlying rationale is easy to comprehend. If financial institutions expand their offerings by focusing on educating the new generations, they will create more conscious and skilled investors. More conscious and skilled investors will deposit more and trade more, enabling banks to increase benefits from the spread on deposits (the difference between the interest rate they pay for deposits and the interest rate they receive on loans) and from an increase in their trading commissions.

In addition, banks that don't adapt quickly will face a further threat from basic banking services. If clients are forced to rely on other trading platforms where they can find a better and more complete investment experience aligned with their specific needs, they may stick with traditional banks only for basic banking services, such as a bank account or a debit card. However, what if the same platforms they use for trading also start offering the same basic banking services (as it’s already happening)? It's very likely that traditional bank clients will decide to consolidate their overall needs with one player, potentially leaving traditional banks for good and moving everything to neobanks. That’s why we see several benefits for traditional banks in adopting the Merlin technology, as well as for neobanks to continue building on the entry barriers they created.

Q. In the context of acknowledging risks in trading, how would you approach educating and guiding investors to make conscious and informed decisions without stifling their entrepreneurial spirit?

The first point I want to clarify is that we don’t advise, we don’t take custody of investors’ money, and we don’t invest on their behalf. What we do instead is educate retail investors about the importance of having an investment strategy. We empower them with the right tools so that they can make their own educated and informed choices based on their beliefs. That’s why I personally don’t see the risk of stifling their entrepreneurial spirit; in fact, we enhance it.

The reason we took such an approach is that the new generations are seeking independence from the traditional financial system to build their own financial future. They require the banking industry to shift from the role of financial advisor to that of technology provider. If it weren’t the case, we would not have seen trading platforms booming all over the world. So, it’s the starting point of the revolution we’re seeing in the retail investing space. Unlike older generations who were fine having financial institutions or advisors to manage their investments, while accepting they were going to pay a management fee not linked to the final results, the new generations don’t accept this. They claim to take the driver's seat.

Q. Are there any plans for expanding into new markets or introducing additional products/services? How does Merlin Investor foresee its role in the future of finance?

From the very beginning, we set up operations in NAFTA and EMEA. This year, we expanded into MENA following strong interest from the banking industry in the region. This interest is driven by a high percentage of the young population and financial institutions eager for new technologies to meet evolving local demand. Looking ahead, we will consider further expansion into APAC, as there we see a user base sharing the exact same values and needs.

In terms of our role in the future of finance, our long-term goal is to become a global player for personal finance and retail investing technologies the banking industry can trust and rely on. We aim to evolve and seize the opportunities arising from the financial revolution happening worldwide. Still, we plan to stick to our early core principles, helping the new generations take full control of their finances and succeed in building their own financial future through innovative solutions and with a high degree of independence.

Q. What is your final message to CIO Bulletin readers, as well as your current and future clients/customers?

I personally believe that we have already passed the tipping point – the ball is already rolling, and it won’t stop. The ultimate result is the transformation of the investment and wealth management industry as we knew it. That’s why my final message would be not to waste time fighting this trend by sticking to old habits and biases. Instead, acknowledge the change and embrace the opportunities that are emerging. Do so through a quick process of transformation that must be based on the use of innovative digital technologies.

History teaches us that when the environment and conditions around us change, we either evolve or face decline, regardless of how strong we think we are. So, think long-term and prepare in time; otherwise, it may be too late by the time you realize that something must be done.

About | Guido Petrelli

Guido Petrelli serves as Chief Executive Officer of Merlin Investor. Prior to establishing Merlin, Guido served for almost 15 years as the CFO and COO of a multinational automotive company, with a primary focus on scaling operations globally.