Investing Gets a Makeover: eTrade Drops Baby for Spacey
E*Trade Financial Corp. (NASDAQ:ETFC) is getting a makeover, and along with it, so is the public face of retail investing. E*Trade’s iconic talking baby, who championed the idea that investing is so easy even a baby could do it, is being replaced by Kevin Spacey, who will perhaps champion the idea that investing in the stock market can be as dangerous as going into business with Frank Underwood from House of Cards.
If you’re unfamiliar with the E*Trade talking baby, it’s worth a moment to get to know him, even if he’s walking out the door. The baby’s pitch was two fold: one, you should be investing, and two, you should use E*Trade to do it because it’s fast, easy, and cheap. The baby embodied a bullish, optimistic, and somewhat carefree attitude about investing.
The logic is pretty straightforward — everyone from mom and pop to Warren Buffett agrees that investing is critical to wealth growth, and that easy and cheap is the right path for most investors — but the attitude is outdated. The baby’s attitude seems a little off base in the wake of the financial crisis, which wiped out about $8 trillion worth of paper wealth in the United States.
According to a study by Lemma Senbet at the University of Maryland and Amar Gande at Southern Methodist University, equity wealth in the United States fell 40 percent between January and October 2008. These losses jaded many retail investors and sobered a lot of the financial industry, creating a disconnect between the baby’s attitude and the attitude of real investors.