Rumor has it Google’s looking at getting into the financial biz. A few humble suggestions.
I read yesterday morning you all down at the big campus might be considering a foray into investment management or a brokerage or, well, who knows. That’s great! It’s a fine industry, and Google’s track record of innovation could mean exciting things for investors.
But I thought, as someone who also cut my teeth during the dot-com boom in the Bay Area, I might give you a little unsolicited advice. I’m sure you’ve already got Top Googlers on the case, but the financial industry is a funny place, and has a few potholes you might want to be ready for.
So without further ado, here are four things I think you should keep in mind, whether you’re looking to start a brokerage, a financial advisor shop, a money manager, or heck, why not a bank?
1) Fiduciary Is A Big Word
It may only have nine letters, but it’s the most important word in finance. I’m a longtime and loyal Google customer. I think you do right by your customers over and over again. But when you enter into a fiduciary relationship with your customer, it’s a whole different ball game.
What it really comes down to is that people are irrational when it comes to their money. I know I’ll jump onto a cool new Internet tool, or email platform or cellphone operating system just because it’s cool and different.
If that new shiny thing turns out not to be awesome, or if the company making it goes out of business or just turns it off, it can be annoying, but it’s not the end of the world.
Heck, we here at ETF.com lean on Google to run our email system, and when it occasionally borks for half an hour, it’s a pain, but it’s not the end of the world.
You don’t get that kind of free pass when it comes to looking after people’s money. In technology, there’s the idea of “9’s,” as you know. How many “9’s” to the right of the decimal place can you be off? A “four nine” system sounds pretty awesome. It means 99.9999 percent of the time, you get it right.
In finance, there really are no nines. You don’t get to mess up a client's $1 million account. That customer could have millions of dollars at stake, and if you let them down, they won’t just leave, they’ll sue you and win. That’s true if you’re a broker, a fund manager or really anyone in the chain of custody for client money.
The irony here is that Google may be better at some parts of this than the industry is currently. As it stands now, most online brokerage and bank accounts are protected by weak passwords, but I use two factor authentications to log in to Gmail to check on my fantasy football team.
Security in finance should be a much bigger issue than it currently is—just witness the endless cavalcade of credit card system breaches exposing all of our bank accounts to fraud, month after month.
So please, take it seriously, and you’ll be doing the whole industry a favor.