SVA Thesis Week 3: Problem Statement + Entho Planning

Topic of This Week’s Post

This week’s goal was to:

• Select your thesis topic and create the initial problem statement
• Create your users and personas
• Interview 2 participants

Topic & Problem Statement

Well, if you read my last two posts you will not be surprised that I have chosen investing/saving as my thesis topic!

What struck me during my first two weeks of discovery is that this is a very complex and broad space. Talking with users be important, of course, but I will also need to do some serious studying to get a better handle on the following:

• How the stock market works
• How the money manager and Robo-advisor industries function
• Tactical investment strategies
• An in-depth understanding of the competition in the banking and brokerage space

This excites me. I love some good desk research 😏 , and I’m super motivated to gain a holistic understanding of the investing world.

In writing my first problem statement, I purposely kept is broad — I don’t want to silo myself into a specific segment of investing at this juncture:

The Millennial generation has less median and mean wealth than any
similarly aged cohort between 1989 and 2007.

Many economic, behavioral, and demographic headwinds contribute to Millennial’s unfavorable financial standing, but two workplace trends, in particular, have forced Millennials to become more financially savvy than their predecessors if they are to maintain their pre-retirement standard of livingin retirement:

• Corporate America now favors defined contribution plans over defined benefit plans, shifting much of the employer’s planning burden and investment risk to the employee.

• Millennials face higher probabilities of doing “gig-economy” work than previous generations. Gig economy workers are half as likely to have access to conventional retirement savings mechanisms.

To combat these trends, we must increase the awareness of personal investment vehicles and make it easier to set up and contribute to a diversified investment portfolio. Doings so would increase the percentage of Millennials who can maintain their pre-retirement standard of living in retirement.

Although the statement is super broad, I did put up some specific guardrails to keep me on track:

• I will focus on the Millennial user group
• I will focus my efforts on investing strategies and options within the context of the workplace

Here’s a little visual to better explain my operating space:

User Personas

Similar to my problem statement strategy, I kept the aperture of my ethnographic research lens wide open. It will be valuable to speak with all of the stakeholders in the workplace ecosystem as well as domain experts within the investing field.

This week’s personas are rough and dirty. As the project progresses, I will continue to refine my learning objectives and personas based on my field research.

Initial Learnings

My first two interviews were with participants close to my inner circle. My father, who has preached the importance of investing since I was a child, and my fiance’s brother who works in commercial real estate.

Below are the findings from my initial conversations:

John (My Dad)

I had a fascinating conversation with my Dad; he will be a valuable asset throughout my thesis.

A great tidbit from over conversation was when he talked about his “Ah-ha investing moment.” He was 32, and was introduced to a couple of managed mutual funds at work. He was struck by their performance and realized that he knew very little about the stocks he was currently investing in. This prompted him to create his first diversified investment model, which he would go on to nurture and refine for the next 30+ years.

When I asked why he didn’t create a strategy earlier, he said:

“I was too busy at work, I was working 120 hours a week. I didn’t have time to research individual stocks, it just wasn’t possible”

According to him, this is extremely common amongst his friends. People don’t want to put in the time to learn how to create a portfolio strategy because they’re too obsessed with their careers. What ends up happing is that you “meet a guy” who “knows someone” that picks stocks and you buy the equities he recommends without doing your diligence.

Later in the conversation, he stated that having a strategy means nothing if you’re not contributing to it — saving is the real name of the game.

Adam

My chat with Adam also produced some interesting insights. His opinions and experience with investing align with the research I’ve done to date:

• All of his friends use Robinhood
• No one really knows what they’re doing, they’re just picking stocks

A quote that really struck me from our conversation was:

I don’t think people are confused on how or where to invest money but they are confused on how to invest for the long term. People haven’t figured out how strategies.

Boom, connective tissue between my two interviews! Technology has democratized the investing world; It’s extremely easy to buy a stock these days. Learning how to create a proper strategy, on the other hand, is still a white whale.

I’m looking forward to investing this lead in future interviews and exploring how Robo advisors are currently tackling this problem.

See ya next week!