Trading Tomorrow - Navigating Trends in Capital Markets

Smarter Retail Investing with AI UX and Fractional Themes

• Numerix • Season 5 • Episode 42

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How do you reduce investor friction without dumbing down the experience? Podcast host, Jim Jockle, sits down with Eric Chu, CEO & Co-Founder, Tradesk Securities, to unpack how AI and behavioral UX can help time-pressed retail investors cut through noise, build better habits, and stay aligned to long-term goals. They dig into trust and transparency in AI-driven advice, notifications that matter, thematic trading paired with fractional shares, and the realities of building compliant, user-friendly brokerage platforms. Eric also looks ahead to a voice-first future where an AI “copilot” monitors portfolios, surfaces what matters, and explains why and how infrastructure, will shape the next wave of AI in finance. 

Jim:

Welcome to Trading Tomorrow Navigating Trends in Capital Markets the podcast where we deep dive into technologies reshaping the world of capital markets. I'm your host, jim Jockle, a veteran of the finance industry with a passion for the complexities of financial technologies and market trends. In each episode, we'll explore the cutting-edge trends, tools and strategies driving today's financial landscapes and paving the way for the future. With the finance industry at a pivotal point, influenced by groundbreaking innovations, it's more crucial than ever to understand how these technological advancements interact with market dynamics. The future of investing isn't just about access it's about experience.

Jim:

Even with the rise of mobile platforms and low-cost trading, many investors still face friction, inconsistent decision-making, information overload and tools that fail to keep up with busy lives. This is where the combination of AI and behavioral user experience UX design comes in. By blending intelligent portfolio insights with psychology-driven decision tools, platforms can reduce barriers, promote consistent investing habits and better align outcomes with long-term financial goals. To explore this frontier, we're joined by Eric Chu, ceo and co-founder of Trade Desk Securities, an SEC-registered broker-dealer reimagining the retail investing experience. Eric spent two decades in hedge funds and investment banking before founding Trade Desk, where he's focused on building AI-powered insights, behavioral design-driven tools and fractional investing infrastructure to help everyday professionals invest smarter. Together, we'll unpack how AI and behavioral UX can transform investing, reduce investor friction and open the door to a more inclusive financial future. Eric, first and foremost, welcome and thank you for joining the podcast today.

Eric:

Thank you very much. Great to be here today.

Jim:

So let's just jump in. You've described investor friction as a major challenge in retail investing. From a UX perspective, what does that friction look like for users and why has it been so hard to solve?

Eric:

Yeah. So I think I'll start from what those frictions are. Right, you know, I think, based on our experience, a lot of frictions, especially for the mainstreet common investors. Right, you know, they think the financial market is overly complex, to the point it's very overwhelming. There's the consumer, there's the customer fear, and you know FOMO, the fear of missing out on one side, and then also the fear of doing something wrong and having losses right Now. Don't get me wrong. All those are very legitimate concerns, but I think what that leads to is, you know, a lot of people, just, that's kind of led to inaction. Right, I don't know what to do, I'm afraid of doing something wrong, and then I just chose not to do things.

Eric:

Right, you know, I have, we have a lot of talks with our customers, potential customers. Those are a common pattern that we have seen. Those include very sophisticated, intellectually, very smart people. These are working professionals. Could be lawyers, you know, doctors, it professionals, people working in pharmaceutical industries, not necessarily finance, but all these people. There's a common sense where what do I do? This is an overly complex financial market with public companies, with financials, transcripts, 10ks, 10qs and all those products that seems to be constantly evolving on a daily basis, people, a lot of people. When they are not familiar with that, when they are not up to date on a day-to-day basis with the market, they feel like they're lost right. They feel like they don't know what to do.

Jim:

So I think we see a lot of those going on, but why is that so hard to solve and how are you thinking about solving those challenges?

Eric:

So I think one of the difficulties with the financial services market is you have to merge the latest technology with the consumer needs. The consumer needs and then the consumer were looking at a spectrum of customers based on their age, their experience levels, their wealth, their income, right? What have you? And what that means is, as a financial services provider, you have to take into account of all those different customers, their different backgrounds, their different scenarios, right? Different situations, backgrounds or different scenarios, right? Different situations. So that kind of adds to the complexity to come up with one unified platform that can essentially take care of, if not all of the customers, but the majority of the customer base that you're looking to serve.

Eric:

So that's one side of the equation. I think the other side of the equation it's really compliance regulations, right? Financial services, by definition, is a highly regulated industry, and for a good reason primarily to protect retail investors. We have regulatory bodies SEC, finra and then we have broker-dealers, like ourselves, that are under the regulation of these regulators, and then the regulations are constantly evolving, and then there is a lot of regulations related to products, to services, to how broker dealers will operate. So we have take all of those into consideration and and so that we can offer a service that not only meet the customer's needs, provide value to customers, but also in a regulatory compliant way. So that's kind of where the complexity comes into play.

Jim:

And what is the role of UX in that experience in terms of removing that friction?

Eric:

Yeah, ux is a very critical component of the interaction. It's probably the most important because that's where users, customers, they use to interact with. Whatever platform you're using, right, you're interacting with, you know, the UX is where customers they put in their information, they put in their input either trading or looking for some certain information or doing trades right, you take all those functionalities and then combine it with what's going on in the backend from the operational perspective, from the technology perspective, from the compliance perspective, right, and also increasingly, I think, with newer platforms like us Tradex, securities. You know, we have designed our US in a way that we kind of started not from scratch, but we started by looking at a lot of the existing, especially legacy, you know, platforms where you know are some of the pain points of the legacy platforms right, that kind of throw customers off. Right, the customers think they're either overly complex or not user-friendly, especially with the newest generation of digital native customers, the millennials, the Gen Zs, right. That's where we kind of started the design of our own platform. So we think we have come up with a solution with a user-friendly platform that the younger generation, newer generation of investors are used to, would like be appealed to be attracted to, on the one hand, and, on the other hand, we provide a lot of useful tools for customers to be able to digest information, to get to the information they want to right.

Eric:

You know tools like insider trading, monitoring, thematic trading, so on and so forth. And I think the most important is in today's age, in the age of AI. I think this is something we're super, super excited about. You know, we are in the process of putting an AI tool that sits on top of all of the other. You know tools that we have already built so that it can customer can, through very simple prompts, you know, put in the request, put in the information they are looking for, and then the AI tool, ai engine, would automatically grab the information either from the website or from customer's portfolio. What have you right? Automatically and very efficiently, very fast, and provide the information to the customers.

Jim:

You know you bring up AI and it is a overwhelming theme of everyone we talked to today, but there's a lot of surveys that show investors tend to still distrust AI-driven advice. Now, that might be bifurcated between millennials and Gen X and the greatest generation, but from your perspective, how can AI-powered UX design, whether it be through transparency, explanations or other types of trust-building features, help overcome that skepticism? Yeah, absolutely.

Eric:

So I think AI, just as we stand today, I think AI is still in the very first innings of the game, and maybe the first inning, maybe the second inning, we're still early.

Eric:

Right, you know, especially related to financial services, how to combine AI with this vast amount of information, products in financial services and to the point that it can be trustworthy, can be utilized, can provide value to most of the investors.

Eric:

I think that's one key benefit of AI is that through prompt, through adaptive algorithm by AI, it can adapt to the level of the investors, whether you are a new investor that is fresh into the market, don't even know what are stocks, options or ETFs, and then to the middle spectrum, which is investors who have been doing trading, who have been used to the market for a number of years, five, seven years and all the way to the more sophisticated investors. I think, by putting in the different questions, an AI will provide you with the answers that tailored, sort of to your level of investments. I think that's one great benefit of AI because, before AI, most of the other tools that we have seen from even legacy platforms, it's very challenging to come up with a unified UX or interface to satisfy all of those customers' needs right. You are either too simplified to the point it's not usable, it's not valuable to more sophisticated, more experienced customers, or you're overly complicated that's overwhelming to the average investor. So I think that's one key benefit for AI.

Jim:

Well, I'll give you my feature request recommendation. My biggest challenge as an investor is time. I'm busy, right, I don't have the time to sit and actively monitor every day, and I have been begging for notifications, whether it's on price targets or change in analysts or things of that nature that just say, hey, jim, do something, maybe look at something. I mean. So if you can put that on your roadmap, I'm signing up.

Eric:

Absolutely so, you know, I'm so glad that you mentioned this point. I think this is one of the key reasons myself as one of the co-founders for the firm why we started this firm. So you know a little background, right? I'm a formerly engineer and also research analyst on Wall Street for 10 plus years, you know, being on the investment banking side, which we call sell side, and also the hedge fund side, on buy side, right? These either way, right, either working at investment banks or hedge funds, this is the center of the investment world on Wall Street. You have, you know, hundreds of thousands of the best and smartest people working 12, 15 hour days, right, to come up with a research note with an edge for the investors.

Eric:

Now, unfortunately, a lot of these services, way before, even as recent as five, 10 years ago, these were essentially privileged to the institutional money managers. Just because, thinking about the resources, right, it's very expensive, to the point it's not affordable to average investors. It's just not possible. But to your point of saving time, today, with the AI engine that can cut through information, be it 10Ks, 10qs, financial statements, financial model or news items, it can cut through all those information in a matter of minutes. That me. As a former investment analyst, I used to spend probably 10, 20, 30 hours in order to manually read all of those information, but now it's easily available to a customer by just a few simple prompts. I think that's probably in the near future. In my opinion, is the most immediate value add for AI for financial services save time. So the other part of the story is again something I'm super excited about. We are putting together this AI tool that can monitor and analyze each and every single customer's portfolio. You can ask the AI questions like hey, what's going on in the market today that impacts my portfolio? What are the most important moving parts in my watch list? What are the performance of my portfolio in the last six months, a year? What are the key factors? Is my portfolio overly concentrated in one industry? Things along those lines, and in terms of monitoring, I think that's a great tool.

Eric:

I think you know one of the personally. I think one of the pain points in the market for financial advisors is, you know, financial advisors don't spend enough time with their clients analyzing their portfolio right Tracking, you know, looking at the products, looking at what's the best for their clients Rather, this time, the majority of their time. You know maybe sales, maybe marketing, maybe trying to acquire customers. You know me personally, for example. You know I get average, maybe 30 minutes per quarter from a financial advisor.

Eric:

You know, in comparison, you know AI once that's implemented, once it is a little bit more mature, essentially can work for you. Looking at your portfolio, you know nonstop, 24-7, be it important signals that need to be sent to you or weekly, monthly performance reports or what's changing in the market, what's the important things in the market that customers could potentially consider. All those are great things that can be done through AI in a very efficient way, great things that can be done through AI in a very efficient way. I think that's the area for the market, for us and for a lot of people in the market, what people are very, very excited about.

Jim:

Well, one study showed that AI-generated insights make investors almost eight times more likely to act, meaning a trade, whether buy or sell but as compared to more flat, traditional content, how are you shaping the TradeS UX and the prompts to lead to better decisions and just not more clicks, you know?

Eric:

for us our goal by design, also by regulation. We are designing our product and services, our features, so that customers can get information more easily, but not necessarily lead to trading right away, because we, as a registered broker dealer, we just cannot do, we would not be compliant from a regulation perspective. But on the other hand, customers I think we do want to solve the pain points, as we just said earlier. Customers either they are not familiar enough with the market or don't have the time to spend hours and hours of time to follow the market, doing the research. But we can provide the tool that help them save time, help them dissect the market information, help them differentiate, tell the difference between noise and important information data that they're looking for.

Jim:

I think that's what we're at Well many platforms. There's so much data right Like. I come into the office and all I do is sit and look at data, and inferring insights from data is really challenging, and a lot of platforms are overwhelming users with these dashboards. You know how does AI allow you to simplify that UX while still giving investors the insights they need to feel confident in their trading decisions?

Eric:

Absolutely so. You know, those are kind of part of the reason why I call the AI a student. In the first inning, right, you know, we, the AI. I think the idea is for AI to be able to, on the first stage, you know, save time, cut through information, you know, save all those labor for customers. But over time, you know, an AI engine works better than, say, a search engine, because AI engine can evolve, can learn from people's questions, from how people ask their questions, how people trade, and then evolve, even customize the follow-up responses for each customer. I think that's the great benefits for AI. But we're not quite there yet. But I think you know, as the AI technology is evolving, as the financial services firms are integrating, you know smarter and smarter AI and, frankly speaking, you know, as the AI picks up more learning in the background, right as we all are sleeping. I think that's sort of the direction we would like to see. You know the AI interacting with the investment world, how that is going.

Jim:

So I want to move to fractional investing. You know it's been a growing trend. We've seen a lot of fintech platforms kind of introduce that and it has removed a lot of barriers to entry but could also overwhelm new investors. How does AI driven design make fractional ownership more approachable and goal oriented rather than just confusing?

Eric:

That's also a very good question. So I think, in my opinion, fractional shares is one approach so that you know you don't have to spend as much money on each trade, right, because some of the shares, some of the companies, their share per share price is fairly high. We're talking $200, $300, if not higher, for an average investor who may only have a few hundred dollars. It's hard to invest whole shares, too many of whole shares, to the point you can diversify your portfolio or you can invest more than a few companies that you're interested in. I think that's where, traditionally, I think in the first place, a fractional share comes into place, right. But I think, with the age of AI, I would say, you know, sort of back to what we have discussed. I think people would be great for people to use AI to do the research and identify the company more efficiently and identify the investments or the companies or the industries they're interested in and then use fractional shares just as a tool to help facilitate those investments. To help facilitate those investments.

Eric:

So, as a segue sort of to one of the features that we have spent a lot of time designing at Trade Desk is, we have designed a feature called thematic trading. These customers. You can trade by industry, for example, ai industry, ev industry or aviation industry. Or say, high inflation, right, companies, that kind of hedge, high inflation, so on and so forth. You can invest by industry. On top of that, we have coupled it with fractional shares.

Eric:

So essentially, let's say, customer, you can invest as little as $50 and then you can pick one thematic trade investment theme that automatically picks 10 stocks, 20 stocks, and then spread out among your $50. And then so you set up recurring investments. It could be $50, $100 per month, per week. What have you? It fits your needs, your budget and at the meantime you don't have to pick companies, right, you can just pick a sector investment theme and then the program will automatically spread out all those based on your instruction. I think that's a good way to allow investors with limited amount of capital to invest in, not into, companies. One company, don't worry about market timing, right, and then still would be able to do things that to your liking Dollar-crossed averaging still works.

Eric:

Absolutely, absolutely. I think that's you know, to be honest with you, after you know working on Wall Street for so long, those might be one of the very few advantages for average investors, which is time horizon right, Because it's almost impossible, especially busy working professionals. Right, when you are very busy building your career in whatever profession you're in, very busy raising families. Right On weekends, taking your kids to practices. But in the meantime you want to be successful, you want to build your financial platform right, your financial portfolio to satisfy whatever you need. You know your college education, your retirement, what have you.

Eric:

But on the other hand, you know, as an average investor working in a professional, you don't have the time right. And then how do you keep up with what's going on in the market? I think one best way is dollar cost average recurring investment where you know you don't have to worry about keeping up with the daily moving news of all the different companies, all the different industries, all the policies right. But that's a unique advantage just because all those institutional investors arguably that would be one disadvantage for them because they are all either hedge funds or public listed companies, all those companies they have relatively short investment horizon. You know, if we're quarterly, monthly, it could be even shorter. Right that you know, inherently there is a benefit for individual investor, either market up or down or sideways. I mean you just keep in the market, you know, making sure that it fits into your long-term investment goal, and I think that that's one key benefit for the average investor.

Jim:

Now, given your background from banking and hedge funds, you know and you've seen how professional trading systems have been designed. You know for the most sophisticated traders. You know how are you translating those institutional lessons into the tools that everyday investors can easily navigate.

Eric:

Yeah, so those are exactly what I just kind of just mentioned. Right, you know, after walking, after seeing what's going on in Wall Street, in institutionals? Right, you know the kind of resources, people, capital, that all those institutional investors they put in as an average investor. You know how do you keep up with the market while still being successful? Right, I think that's where we designed. You know some of the features with that in mind. Right, you know recurring investments, fractional shares, thematic trading, as we all just discussed.

Eric:

Investments, fractional shares, thematic trading, as we all just discussed, right, all those, I think, centers around the idea that, as every investor, you want to have a long-term investment objective, you want to have a long-term investment horizon, and then you want to be in the market in a way that you don't have to worry about all the day-to-day noises no noise, right, uh? And? And that feels like I don't know if you're a golf, and that it feels like I don't know if you're a golf player, but it feels like a golfer that you can just tag along, a golfer that hits par every single hole. Right, you don't have to hit birdie, you don't have to go for a birdie, as long as you hit par every single hole, you would beat 95% of the golfers. So that's kind of the idea. But you've got to have a long-term horizon right.

Eric:

Even the institutional investors the majority of them, guess what? They don't beat the market consistently. You look at 10 years. I think I saw one stat that, over a 10-year period of horizon, 95% 97%, of institutional investors do not beat the market. So, as an average investor, you don't necessarily have to be the top 3%, the top 1%, in order to do well. You just, you know, make sure that you are better than the average right. That's kind of really one of the key reasons why we have designed some of the features at TradeX.

Jim:

Well, I'd say, at my club, some of the average golfers are pretty bad. So let's talk about regulators. You know, obviously they're looking very closely on how AI is shaping behaviors on investing apps. You know, from a UX standpoint, how do you design nudges and recommendations that are both effective and transparent enough to satisfy the client as well as the regulator?

Eric:

From that perspective, from regulation perspective, we have a lot of procedures required, procedures and criteria that we have to follow, For example, disclosures. Those are not for show, those are real, meaningful disclosures that for customers to understand. For example, we touched the accuracy of AI. Right A current age a lot of still is a lot of AI engines. They hallucinate, they provide non-accurate information. So we have to make it very clear to customers the AI, whatever information provided by AI tool, is for information only. You want to verify from, at know, from at least one or multiple other sources before you make an investment decision. So I think those are not, again, are not here just for show are really very, very important aspects for customers to understand and also, you know, to satisfy regulators' requirements. I think you know the regulators we are here here will follow all those regulations for a reason, for good reason, especially to protect the average investors, retail investors, because these investors, by design, by definition, are less sophisticated. That's the reason why we have designed some of the UX features in a certain way.

Jim:

So, finally, if you imagine the ideal brokerage app in five years, I'm not asking you to give away your roadmap or anything, but how can you imagine that AI and behavioral UX will make things fundamentally different from where we are today?

Eric:

UX will make things fundamentally different from where we are today.

Eric:

Yeah, I think, ideally, if we are moving along in the right direction, getting more and more efficient with AI, more and more accurate, less and less hallucination, I think, from a financial services perspective, ideally is just imagine one day you wake up in the morning, you don't even have to type anything, you just say, hey, whatever AI engine, look up, tell me what's going on with my portfolio yesterday, tell what's going on what's moving in the market today, what's the recommendation that you would provide?

Eric:

And I know that's a very kind of a little bit of an interesting area, right, but, you know, hopefully down the road, if we're looking at the future down the road, hopefully the AI by that time would have figured out all those you know, would have all those experience, right from learning, from evolvement, from evolution that has already, you know, taken care of a lot of the concerns, the issues down the road, to a point that we can utilize the AI as if you have a professional advisor, professional strategist, that's sitting next to you in your living room giving you suggestions, providing feedback on an on-demand basis.

Jim:

So unfortunately, eric. Well, first of all, I think you should name the AI engine in the future, eric. I think that'd be kind of cool as a legacy. But unfortunately we made it to the final question of the podcast. We call it the trend drop. It's like a desert island question. If you could watch or track only one trend in AI-driven investing over the next few years, what would that be?

Eric:

I would say infrastructure that's there to support AI. So I am someone who has had a lot of experience with data centers, data centers. I've been tracking data centers and also be the operator, also the CFO, cio for a very large data center, a joint venture with one of the top private equity firms in the world. I think data centers you know I understand data centers. Data centers is an infrastructure for any digital transformation, especially for AI.

Eric:

I think we have seen a lot of different trends all the way back 20 years ago First internet and then mobile computing, cloud computing, now AI and crypto right. Whatever digital evolution or evolution right, or innovations right. You cannot do any of those without infrastructure. So data center is one of them. You know chips, right. That's another industry that's very, very critical in order to support any digital transformation that's out in the market. I think I would look at that as a critical tool or angle for this AI evolution. Think of that as a sort of the gold mining era that you are providing water bottles, right. You're providing basic tools that satisfy all those people that going after the hottest area. I think those are very, very important ones.

Jim:

Eric, I want to thank you so much for your time today, your insights and a great conversation overall. Eric, thank, you.

Eric:

Thank you so much, jim, appreciate it.

Jim:

Thanks so much for listening to today's episode and if you're enjoying Trading Tomorrow, navigating trends and capital markets, be sure to like, subscribe and share, and we'll see you next time.