There has to be a way to insure that people are investing safely: Zoe Financial Founder & CEO

Andres Garcia-Amaya, Zoe Financial Founder & CEO joins the Yahoo Finance Live panel to discuss the SEC’s new advisor marketing law which will allow people to find ratings on financial advisors. He also talks about how Zoe Financial aims to empower consumers to make better financial decisions.

Video Transcript

EMILY MCCORMICK: Welcome back to Yahoo Finance Live. I'm Emily McCormick. Well, the US Securities Exchange Commission has a new advisor marketing law that's coming into effect. And with this, investors will now be able to read reviews and find ratings on financial advisors. This is one step towards transparency in the wealth management industry. Here to discuss this move now, we have Zoe Financial's founder and CEO, Andres Garcia-Amaya. And Andres, thank you so much for being here with us. And just want to discuss, you know, when it comes to this new rule from the SEC, what does this mean for the everyday investor?

ANDRES GARCIA-AMAYA: Well, if you think about every other aspect of your life, you could go online and find reviews. And most of the time, that's how people validate if they're going to purchase a product or service. So I think wealth management was just maybe a decade or two behind where the rest of our experiences online are. So I think it's the right step forward in providing that transparency for the consumer.

ZACK GUZMAN: Yeah, Andres, when you look at what consumers want out there in these reviews, I mean, how do you compare? Because I feel like you might run into some apples and oranges comparisons there. So what are you seeing when people come to your platform, what they're looking for?

ANDRES GARCIA-AMAYA: Yeah, look, I think reviews and testimonials are not the be-all, right? Even when you go to Amazon and such, you see reviews that you're like, oh, that's not-- I don't necessarily didn't have that experience with the product, right? So it's not going to solve all our issues when it comes to getting validation on a product or a service. But I do think that is a step in the right direction. Because if you think about it, up till now, there was actually no way for anybody to review a service. So people were kind of taking a blind leap of faith as they were hiring someone, as there was no transparency on how that particular person worked with their clients.

EMILY MCCORMICK: Andres, over the past year, year and a half, we've been seeing this incredible interest by the retail investor into the stock market, many for the first time with the help of the stimulus checks. And many of them are turning to Reddit, TikTok, to crowdsource investment decisions. And I'm wondering what your take on this trend is and what you might tell them when it comes to wealth management and making these investment decisions.

ANDRES GARCIA-AMAYA: Yeah, look, I'm not against giving people more access to investments. I think that every wave of innovation has created pros and cons. I remember thinking about even when Schwab-- I've read about kind of like in the '70s when Schwab came about, that it was kind of like their own Robinhood, right? And there was all this concerns about people buying stocks that were novice and didn't know how to do it. And I'm sure it created a lot of potential issues for people that didn't know how to do it. But you know what it also did? It created a whole new wave of investors.

So I think there's got to be regulations. There's got to be ways to ensure that people are doing it safely. But I think it's-- a 20-year-old might have not been interested in investments if it wasn't because of these platforms that allowed them to do it.

ZACK GUZMAN: Yeah, we were talking with Goldman Sachs about that just last week in the way that more people are turning to social media, TikTok even, to get some financial advice. But I mean, if you're not comparing against past performance, right-- because we always hear past performance no guarantee of future results. But I mean, what maybe makes one financial advisor stand out from another? Is it all just about kind of building and assuring maybe some of that trust with the people they're serving?

ANDRES GARCIA-AMAYA: Right. Yeah, and I think it's, there's two different types of-- let's put it this way. A financial advisor of 20 years ago was a stock picker, right? So they were helping people try to decide between Apple and Amazon or Microsoft. But the financial advisor of the future is more like a financial therapist, right, and is someone to help guide you and your decisions and help you from not making your mistakes based on biases.

So it's not really about kind of beating the market when it comes to the services that advisors, at least in our network, provide. It's more around actually helping people make the best decisions possible for them and stay the course, rather than get kind of caught on buying GameStop or shorting GameStop because it's just kind of the hot tip of the week.

EMILY MCCORMICK: When it comes to Zoe Financial, what are some of the biggest concerns that your clients are discussing when it comes to the markets?

ANDRES GARCIA-AMAYA: Yeah, I think this is the interesting thing, right? When we speak to consumers, most of their concerns are really around their future, right? Will I be able to retire? Will I be able to save for my children's education? Not so much if Amazon's going to beat Apple in their next quarterly earnings, right? So there's a lot in the media that's kind of attached to those headlines. But the reality is that the average American is really just tossing and turning at night, trying to make sure that they feel OK about their financial future. And those are the type of questions that financial advisors could help them answer by helping them create the right goals for them.

EMILY MCCORMICK: All right, Andres Garcia-Amaya, Zoe Financial founder and CEO, thank you so much.