Episode 14 of the Consumerism Commentary Podcast includes interviews with representatives from ING Direct and the American Institute of Certified Public Accountants (AICPA). Our discussion with Jim Kelly, the chief operating officer of ING Direct, focuses on the bank’s “We, the Savers” campaign and we also discuss ING Direct’s beginnings in the United States and the bank’s relationship with personal finance management software.
The podcast also features an interview with Mackey McNeil, certified public accountant and representative of the AICPA. The AICPA has developed an advertising campaign called “Feed the Pig,” meant to encourage American consumers to save more. Here’s a recent Feed the Pig commercial. In the interview, Tom Dziubek and Mackey McNeil talk about this campaign, why certified public accountants are interested in fostering better financial habits, and some tips for consumers.
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[00:00] Introduction from Flexo
[00:56] Interview with Jim Kelly, ING Direct
— [01:29] Jim’s history with ING Direct
— [02:06] “We, the Savers” and the Declaration of Financial Independence
— [02:40] Using your home as a savings account
— [06:21] Knowing the cost of borrowing
— [06:57] Investing for the long term
— [08:10] Taking care of the things we have
— [09:44] ING Direct’s relationship with financial management software
— [11:48] New features for the Electric Orange checking account
[13:38] Interview with Mackey McNeil, certified public accountant
— [14:10] The CPA and PFS designations and the American Institute of Certified Public Accountants (AICPA)
— [15:38] The “Feed the Pig” advertising campaign
— [17:27] Better financial habits for American consumers
— [19:16] Mackey McNeill’s favorite saving tips
We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.
Flexo: This is episode number 14 of the Consumerism Commentary Podcast. I’m Flexo. Today, Tom Dziubek will be talking with Jim Kelly, Chief Operating Officer of ING Direct, and principal architect of the bank’s “We, the Savers” campaign. And after the break, Tom will speak with Mackey McNeill, Certified Public Accountant from the AICPA, to talk about that organization’s campaign, “Feed the Pig.” Stay tuned. We have a great show for you today. [music]
Tom Dziubek: Welcome to the Consumerism Commentary Podcast. I’m Tom Dziubek. We’re talking today with Jim Kelly, COO of ING Direct, and principle architect of “We, the Savers.” Jim, thanks for joining us today.
Jim Kelly: Great to be here, Tom.
Tom: Now, Jim, just to clear up any confusion right off the bat, you’re not the same Jim Kelly that led the Buffalo Bills to four straight Super Bowls in the 1990s, are you?
Jim: No, sadly, that was not my doing. But he was a great player. I did enjoy his work.
Tom: Heh. Well, I guess that eliminates all my questions about the cake on no-huddle offense.
Tom: Now, Jim, I understand ING had their roots in the Netherlands, and that you helped ING come here to America.
Jim: That’s correct Tom. In 2000, ING set about to create its fifth ING Direct around the world in the United States, and they asked me to come down and try to piece together the team that would be responsible for launching the bank. We started out with a small team of 15 people, and today we’ve grown to 2,400 associates. And it’s really been a much greater success here in the United States than even we could have imagined back in 2000.
Tom: Now I understand you’re involved with a program called “We, the Savers” and one of the things “We, the Savers” attempts to do is promote financial independence. Now, I understand the “We, the Savers” has what they call a “ten point Declaration of Financial Independence,” which I want to talk a little bit about here. I’ll talk about some of the topics, and I want to hit all ten of them, but I don’t want to get far into detail because I don’t want to take up too much of your time and bore our audience to death. [laughs].
The first one you have is, “We will spend less than we earn.” That’s pretty straightforward. Number two you have is, “We will use our home as a savings account.” Now I find this interesting because with the housing market the way it is, it’s not the same investment that its been for the last 20 years or so. You know, would this still hold true like right now?
Jim: Absolutely. I think you have to look at your home as part investment, certainly the largest savings account you’ll probably ever have. But it’s also the place where your family lives and the majority of your life is spent. So you need to make sure that that’s as secure as your retirement plan or any other piece of your financial plan for the future.
Markets go up, markets go down, but the housing market over years has always gone up, and the lesson my daddy taught me many years ago was, “Land, they’re not making any more of it.” And it is a scarce commodity. We will have more people, and they will need more housing, and so it will be a good investment. It’s no different than a stock market investment from that perspective. They will go up and they will go down but over the long term they will hold their value. It should appreciate in line with any other type of investment.
Tom: Not everybody is a homeowner, is there any way you could recommend tips to people who rent.
Jim: You know, its a really smart idea to have a plan for saving money that gets you anywhere from four to eight months of living expenses in a savings account so that you can meet some unexpected financial emergency, or take advantage of another financial opportunity that might only come along once every two or three years. I hope that people would save also for a 15 to 20 percent down payment on a home.
It sounds like a lot of money, but in a starter home, you could achieve that in three years merely by saving $500 to $600 a month. That’s a lot of money for most people, but the other option of going with very little money down and going through a foreclosure or bankruptcy as we’re seeing today is really not a very good thing. It will certainly hurt you and your credit rating for years to come.
Tom: Right, and I think one of the things I believe you are trying to get to here as well is, in addition to obviously saving for a house, is I guess keeping a good idea of what you are spending on your monthly mortgage as well as your monthly rent, and just trying to make sure that you, I believe you said, that you’re prepared for any kind of unexpected surprises that pop up.
Jim: Sure. It could be medical, it could be related to a problem with your car, it could be anything, and it is important. There are tools all over the Internet that will help you track your monthly expenses, and provide great calculators for you to actually help you reduce your monthly expenses by shifting some of your expenditures and the timing of some of those expenditures. So, I encourage people to really take advantage of some of those tools.
Think about what you spend. If you buy a coffee with a name that you cannot even pronounce, does that really make sense? And certainly, if it is more than four dollars, does that really make sense? Putting those two dollars away everyday could save you $40 or $50 just in coffee alone. So, the money is there, I think most people just have to keep track of how they are spending it, and make sure that they don’t waste it.
Tom: Let’s look at some of these other items in the Declaration of Financial Dependence. You have, “We will take care of our money.” OK. “We will defend our credit-worthiness.” “We will ignore unsolicited credit card marketing.” I guess this is basically avoiding credit card companies just trying to go and hit you up and be one of their customers. “We will know the cost of borrowing,” and I believe that is related to interest rates and making sure people are aware of that?
Jim: Yes. That is the point. If you sign up for a 0% APR credit card for instance, there’s a very strong possibility that they are going to make their money somehow. I mean usually by fees or by penalties, or eventually by imposing a very high interest rate on you. I think people have to understand that all of those things make up the actual annual percentage rate on their card, and they have got to read the fine print, they have got to know what they are getting into.
Tom: Item number seven you have, “We will invest for the long term,” and you know I find this interesting as well, that has always been a good strategy and some people may be leery of doing that now because the way the market has been for the last year.
Jim: Well, you know you can always save it in something like a CD or savings account that pays you interest, hopefully keeps pace with inflation, and does not have the volatility of a stock or bond investment. That works too. I mean the point of the matter is you have to have that financial cushion and the more of it you have the better. Certainly in the long run, you are going to have a long retirement and I do not think that people understand that.
A great lesson for me is my dad, he turned age 87 today, 22 years after 65; it is really half of his working life, he has all ready lived past 65. You know, how much money will it take to live a comfortable life for 22 years? You cannot count on social security; you probably do not have a rich aunt or uncle that is going to leave you the money. You have to plan for it. You have to find that money in your savings account or in your stock investments or somewhere, you have to plan for it and put away a nest egg that will allow you to have a secure retirement.
Tom: Number eight you have, “We will take care of the things we have,” and I think that is good, that is a really point. I like that because it reminds people that the things that we wrong, maybe we do not need to replace our car every three, four, or five years and if we take care of the oil changes and the maintenance whenever they are due and take really good care of the properties that you do own, they tend to last a lot longer and you will not feel the need or you will not have the need to replace them sooner than other people who do take care of their items.
Jim: And, when you do replace them, the values can be much greater than if you do not take care of it. That is just a very straightforward basic rule, everybody should do it. Lots of us do not but you really got to think about that in a different way.
Tom: And of course number nine, “We will remember what matters.” That is very straightforward and the last one here you have, “We will be heard,” and I believe you were mentioning that making sure that our government understands what our needs are.
Jim: Well, we are going through a lot of turmoil right now and the people are pointing a lot of fingers at a lot of people but you know the reality of it is, as Americans, you have to stand up for what is important. I think once we get through these financial troubles, we are going to have to set ourselves on a new course where we are more in control of our financial destiny. We cannot be in debt to the rest of the world forever, it is just not sustainable, and all of us have a part to play in making sure we change that through our governments and through our daily action.
Tom: Jim, I want to talk a little bit about ING Direct now and I want to bring up this topic because I know it is a hot item with some of our readers. I understand that users of aggregators like Mint are reporting now they are having problems updating our account information from ING Direct and I was just curious as to what ING Direct’s policy was on connecting to personal finance management software.
Jim: Well, I know the aggregators are trying to give consumers a favor and they do provide a good service. Our big question in is this whole thing is, “Does it make sense to give your user ID and your password to somebody on the Internet?” We question that and because we do not have a shadow system, if a customer wants to aggregate, they have to give their user ID and password.
Do we know that the company that is getting that, and I am not suggesting that Mint is good or bad, but in all of these aggregators, do we know that the company that is actually collecting that data has all of the controls in place to protect that customer’s information? Well, frankly we do not and so we are very concerned about that. We believe the security of our customer’s information is our number one priority and we take steps to make it difficult for aggregators to use the basic user ID and password to get at that information.
Now what I can tell you, you know, good news for the aggregators is that probably before the end of this year, we are going to create methodology whereby customers will be able to use what we call an aggregator PIN, to be able to access just the transaction information so none of their personal information and not be able to transact on the account by using their full PIN, but there will be a secondary PIN that will just allow aggregators to access their account and actually pull down the data that they need to do their aggregations. So, it is a one-way process and it does not give them access to a two-way account access.
Tom: Well, thanks, Jim. Now, I understand too, you guys have new features coming to the Electric Orange checking account.
Jim: Well, the electric orange was created as a paperless checking account and our intent is to move checking into the online space. The industry is clearly going that way with things like Check 21 legislation and the rise of the debit card replacing the check. And we thought, well since we are new and we are starting with a checking account, why go to something dying, the paper check? Do not create that legacy that we would having to support until the very last check is written, probably 50 years from now.
So, we created this all electronic system. Actually in the next couple of weeks we are going to introduce an advanced bill pay capability that will make it even better for customers to do their bill pay online and we are really excited about it. All ready half of a million customers have signed up for Electric Orange and are using it every day. It has really been a big success for us and we are hopeful, continuing with our bill pay interface, that a lot more customers will see it as a real value added to their personal financial way of doing things.
Tom: Jim, thanks for talking with us today.
Jim: It has been great talking to you, thanks a lot.
Tom: Oh no problem. That was Jim Kelly, COO of ING Direct and principal architect of “We, the Savers.” You can find out more about ING Direct by going to ingdirect.com and “We, the Savers” at wethesavers.com. This is Tom Dziubek and thanks for joining us in the Consumerism Commentary podcast. Stay tuned after the break I will be talking to Mackey McNeill about the “Feed the Pig” campaign. [music]
Tom: Welcome to the Consumerism Commentary Podcast. I am Tom Dziubek. Here at Consumerism Commentary, our focus is personal finance. We offer tips to help save money, make money, and we also allow people to share their experiences with personal finance. Many people are not good with their finances and have difficulty making smart decisions when it comes to saving and spending their money. We are joined today by Mackey McNeill, CPA, PFS, and member of the AICPA’s National CPA Financial Literacy Commission. Mackey, thanks for joining us.
Mackey McNeill: Thank you, Tom. It is good to be here with you.
Tom: Now, Mackey, regarding your job title, I just threw a ton of acronyms out there to our audience, and I’m not sure they’re able to digest all that. Let’s start with the basics: what is a CPA, and what does a CPA do?
Mackey: CPAs are Certified Public Accountants. They are registered by their state. In other words, they are certified by the state in which they live. That means they have taken enough credentials to sit for an exam, passed an exam, and have met many other requirements. Sometimes there is an experience requirement in their state and they are certified really to do audits and give basically opinions on financial statements.
That is the traditional CPA, but in the market that we are now there are also other ways people serve in the CPA community. One of the primary ones is the PFS, or Personal Financial Specialist. The Personal Financial Specialist is a CPA, but they have said, “You know, that audit thing may not be my bag, but I really like money. I like finance. I’m good at it, and I want to help individuals achieve their goals.”
Tom: You are also a member of AICPA. What is the American Institute of Certified Public Accountants?
Mackey: Basically, it is a trade association for CPAs and they provide services like continuing education, press, support to the community, help us with understanding some of the laws and regulations that are coming out, and also provide the tools and resources to be better.
Tom: The AICPA is involved with a campaign called “Feed the Pig.” What is that?
Mackey: Well, “Feed the Pig” is the AICPA’s initiative to help 25 to 34-year-olds make smart financial decisions and live within their means. CPAs are great savers, in other words, as a community, if you study them with the demographics of money, they are communities that are people who are just naturally good with money.
And CPAs are and they have a natural habit of saving money, so they make good leaders in that role. And they have a passion for helping people save money. So, it is kind of natural that they have took this on. They saw that there was a kind of a void in the marketplace for someone to help the younger community really be better savers, so they decided to start “Feed the Pig.”
Tom: Why did the AICPA establish this campaign? We normally associate accountants with things like doing taxes, things of that ilk. Now why is the AICPA interested with people’s saving habits? Do CPAs stand anything to gain by encouraging people to be more financially responsible?
Mackey: Well, Tom, I think we all have something to gain. CPAs, as I said, are just naturally good with money. So that is one of the reasons they are in the business. So, they are role models and they are great leaders in the area of helping people understand how to use their money better, but in addition I think what happens is the CPA community, trust and ethics are there.
If you look at studies the CPA is the most trusted profession. So, what the CPAs stand to gain is a better, stronger economy, which is, I think, what we all have to gain. People say, “I am financially literate. I do not have to worry about it,” and I said, “Well guess what, if your neighbor is not, who is going to pay for your neighbor?” [laughter] You know, that is what we all have to think about. We all have to help those who are not financially literate become more financially literate. So we will have a better, more active society and a better economy.
Tom: Now as a CPA, do you see any persistent issues with your clients that you would like to focus on improving?
Mackey: Well, certainly with the boomers you see, it is not a propensity to savings. No, I think that is getting better. The recession has been a real wake-up call and that’s what recessions are. Recessions are a time that we get to reflect and see what’s working and not working in our lives. It has really I hit two group, I think, the hardest, very young professionals who are starting out they have never seen anything like this, and boomers who have put off saving, because they said, “I am never going to retire. I do not really need to.”
And they have been living on the edge with credit. Both of those groups kind of have a propensity to do that, and sometimes as a professional when things are good, in other words, when there is abundance and the economy’s expanding, it’s very difficult to explain to a client why they should save for a rainy day. [laughter] But, when there is a rainy day it is pretty east to say, “You know you need to save for a rainy day.”
Tom: Your talking about “Feed the Pig” was focusing on a certain demographic, 25 to 34-year-olds. Is there a reason why you guys are kind of narrowing your field to that age group?
Mackey: Sure, that age group shows that they have had sharp declines in savings and debt in the last 20 years, and also, what you see is if you have parents of the Depression, the Depression impacted people in a way that they took through their whole lives, and they have taught they’re children about savings and resourcefulness, and how to do things for yourself.
But the further you get away from that, I have parents of the depression, I am 53, but my parents were 40 when I was born. So, a lot of people my age do not have that, so the further you get away from that, the further you get away from any generation that’s had that kind of ethics built into the system. Of course the 24-year-olds of today have not seen that.
Tom: Right. Now are there any uncommon savings tips that Consumerism Commentary readers and listeners might be unaware of?
Mackey: Well, I will give you one of my favorites, Tom. One of them is, it is not a specific one, is to involve your family. One of the things that we, that “Feed the Pig” is about is teaching young people. You can actually do that within your family. Get your kids together and say we want to find ways as a family to save money, and if we save money as a family, we are going to save 50 percent for something fun, and we are going to take 50 percent and put toward our debt or some other objective. That way kids get to be a participant, and they get to learn the value of saving.
Some other ideas, my husband just came in the other day and said, “Wow! We have planted $2.39 worth of beet seeds and now we have a year’s worth of beet seeds.” It’s a little late to start your garden. But, if you haven’t, you can certainly get ready for next year. Gardening is a great way to save money. My husband and I have a monthly potluck, one of our main entertainment functions. We have six couples that we get together. We move around to different people’s houses. We take food and somebody decides what game we’re going to play that night. It’s incredibly cheap and incredibly fun entertainment.
Tom: Mackey, that was some good stuff. Thanks for talking with us today.
Mackey: Thank you, Tom.
Tom: That was Mackey McNeill, CPA, PFS, and member of the AICPA’s National CPA Financial Literacy Commission. You can learn more about “Feed the Pig” at feedthepig.org. This is Tom Dziubek and thanks for joining us on the Consumerism Commentary Podcast. [music]
Flexo: Thanks for listening to today’s episode of the Consumerism Commentary Podcast. We’re looking for feedback. To subscribe to the podcast, visit us at consumerismcommentary.com/pod. [music]
Updated May 7, 2014 and originally published July 26, 2009.