As featured in The Wall Street Journal, Money Magazine, and more!

Search: compensation

Top Ten Personal Finance Start-Ups

This article was written by in Consumer. 11 comments.

The financial industry has been mostly static for centuries, with companies doing business and offering services not much different from how the companies operated for earlier generations of consumers. When there is innovation in the industry, it generally comes from smaller companies and entrepreneurs looking to fill a need that isn’t covered by larger, less flexible entities.

While today’s start-up companies are changing how customers interact with their money, most of these small business owners have the ultimate goal of selling their businesses to larger, more established companies who will then incorporate these new services if the start-up companies cannot become industry leaders without help. In the mean time, start-ups compete for funding from a growing community of investors in the industry.

Here are ten customer-facing personal finance start-up companies that could help change the way consumers interact with money. Some have already been thriving for a few years, while others are new to the industry. These are not in any particular order.

BrightScope

BrightScope401(k) plans are tough to evaluate from the plan descriptions and prospectuses offered by plan administrators to employees. Employees can’t always choose the best investment options for them due to limitations by plan administrators. Additionally, plan administrators often change available investment options and automatically transfer employees’ money from one fund to another without sufficient notification to the investors.

BrightScope lets employees evaluate their company’s 401(k) plan. If, for example, you have two job offers and you’re comparing compensation, you can take the quality of the 401(k) plan into account by researching these companies. Each company receives an overall rating as well as scores in important categories including total plan cost, company generosity, and participation rate. You can directly compare each company with its industry peers.

BrightScope

The above image shows the overall rating for MetLife. For comparison with other companies in its industry, MetLife’s score of 73 is below Morgan Stanley’s 83.8.

LendingClub and Prosper

LendingClub LogoAs technology advances, it brings manufacturers and customers closer together, often eliminating the need for companies that stand in between, adding to the cost of products and services. In some ways, the financial industry is a “middle man.” Banks take deposits in the form of savings and checking accounts, and turn that money around and lend it to individuals and businesses in need of capital. Peer-to-peer lending companies like LendingClub and Prosper take deposits out of the process; lenders can choose borrowers and lend money directly or invest in a group of loans packaged as an investment product with measured risk.

State regulations prevent peer-to-peer lending from being available to all United States citizens, and the primary concern is that customers who may not be able to take advantage of loans from a bank turn to these options where they can be charged nearly-usurious rates. For many people, however, peer-to-peer lending has provided a solution that banks have been unable to fill, whether for borrowers or investors.

Jemstep

JemstepFor your investments that are not locked in a 401(k) with limited options, like your personal IRA or your taxable investment account, the variety of mutual funds and ETFs available is staggering. And unless you work with an unbiased financial planner, it can be difficult to choose the investments that will give you the best chance of making the most of every dollar you invest.

Jemstep is like an unbiased investment adviser with an immense set of data available to help you make investing decisions. You can create a profile for yourself that reflects your attitudes about investing. Most online investment recommendation engines stop at risk and time profiles, but Jemstep goes much further. You can decide how important fees are, whether you’re looking for actively managed funds or index funds, and whether potential tax plays a role in your investing decisions.

After calibrating your profile, Jemstep can evaluate your current portfolio and offer investment suggestions that are better suited to you.

Today, Jemstep announced it completed its Series A round of financing. Start-up companies look for funding from outside sources to grow their businesses before the business generates enough revenue on its own to finance its own operations. In total, Jemstep has raised $10.5 million from early investors in order to fund product development and hire employees.

HelloWallet

HelloWalletThere’s a need for consumers to better manage their own personal finances. Over the last decade, this has been the realm of software like Quicken and Microsoft Money, but the latter has disappeared from the market and the former is increasingly seen as an outdated piece of software. In recent years, a number of companies had been developing personal finance management software for a new generation, incorporating mobile options and focusing on reporting and trending rather than reconciliation, though the depth offered could not compete with Quicken. Many of these companies have disappeared, and the apparent winner, Mint.com, was purchased by Intuit, the makers of Quicken.

HelloWallet has emerged as a new competitor for Mint.com, but while Mint.com is now free, HelloWallet charges users a fee of $8.95 per month. For the fee, you can be sure that the recommendations you receive are unbiased — companies and products do not pay HelloWallet for advertising placement within the service. The goal of HelloWallet is focused more on overall financial advice than tracking. Mint.com has moved in this direction, as well, however.

Dwolla

DwollaMerchant account service is a big business rules by large companies. Each time you swipe your credit card or debit card, a number of companies get paid in addition to the retailer from which you’re buying a product or service. Small business that need to operate on tight profit margins to compete with larger businesses suffer in these situations, because a larger proportion of their revenue is dedicated to paying these fees.

PayPal entered the marketplace and attempted to shake up the industry, offering a new way for retailers to accept credit card payments and for individuals to initiate person-to-person payments without the help of a bank. Dwolla has taken this model and, rather than relying on linked credit cards, has found away to put the focus on cash. The cash focus could be more financially responsible for a large percentage of customers.

Dwolla charges lower fees and allows users to send cash from person to person or to pay for a purchase using your phone. Customers can transfer payments using e-mail, the web, or social media applications within Facebook and Twitter. By default, the $0.25 fee is paid by the store or the recipient, though the individual initiating the payment can change this option. Transactions less than $10 are free.

SecondMarket and SharesPost

SharesPostThe buzz today is about Facebook’s imminent initial public offering (IPO) of stock. Soon, Facebook will be a public company, and investors will be able to trade shares of the company in a liquid stock exchange. For most people, this will be the first opportunity to invest in Facebook, a company that has grown significantly over the last few years. Of course, those who own part of the company already, like early and current employees, will see the biggest benefit after an IPO, assuming the company continues to grow.

You don’t have to be an employee to own and trade shares of Facebook, however. Two companies have specialized in creating a market between a small number of common or preferred shareholders — usually employees but also capital funds — with the wider audience of investors. I signed up with SharesPost (review here) last year to gain access to Facebook shares.

Occasionally, SharesPost holds an auction of shares held by investors who wish to liquidate their holding for the best price, and investors interested in buying can participate in the auction by naming the amount of shares they’d like to purchase and the price willing to pay. If there’s a match, SharesPost handles the transfer of shares. Surprisingly, the share price for Facebook’s Class B common stock has been stable over the past year, particularly given the volume of trading is significantly lower than it would be on an open market. The price has moved from $33 to $34 per share. It will be interesting to see how the stock performs on the open market.

SecondMarket is similar to SharesPost in that it creates a market for financial products that don’t have an accessible exchange for trading. With SecondMarket, you can trade public equity, fixed income and bankruptcy claims in addition to private shares.

Google Wallet and mFoundry

Google WalletWith technology changing quickly, smaller companies are able to jump on new technology. Google is not exactly a smaller company, but the company’s development operations function like a start-up. Google also has the size to buy smaller companies with innovative ideas early in their development. Google Wallet, however, was developed in-house. New technology in mobile phones makes it easier to transmit information securely in close range, and retailers are using that technology to accept payments without swiping a card. An application stores credit card information, and when a receiving device is in range and the consumer initiates the transaction, his or her device sends the information securely to the retailers.

As more mobile devices incorporate this NFC technology, contactless transactions will continue to increase. This was a hot topic in the media several months ago, and I explained why Google Wallet would not catch on as quickly as people were predicting. Today, Google Wallet is still limited to using only Citi MasterCard credit cards or Google’s own reloadable debit card.

There’s a smaller company that has seemed to penetrate this market deeper from Google. Among mobile payments, mFoundry works with banks and credit unions to develop their own applications based on the company’s technology. I’ve focused on start-up companies that face the public rather than other businesses in this article, but mFoundry does both. Mobile banking has a long road to becoming a mature and ubiquitous service, but it’s these companies that will help bring the innovative services to consumers and bigger financial institutions.

There are many other personal finance start-up companies worth mentioning, but I limited this list to ten across a broad spectrum of personal finance to keep this article interesting and not too long. If you feel I’ve missed something substantial, please feel free to share your thoughts in the discussion area below this article.

Normally, I do not allow business spokespeople to promote their companies in the comments on Consumerism Commentary, but as long as it’s relevant, I’ll allow short comments intended to note companies looking for broader exposure in the personal finance space, but I still reserve the right to edit, moderate, or delete promotional content.

{ 11 comments }

Frugal Employers Will Lose Their Talent

This article was written by in Career and Work. 15 comments.

During the recession, my employer, a firm in the financial industry, eliminated raises for employees at the Vice President level and above for one year. The company, although continuing to perform well compared to its peers, cut back bonuses and other benefits. It’s easy for employers to demand higher productivity for less compensation when the job market is stagnant and the economy is threatened.

“You’re lucky to have a job” was the prevailing attitude. Many of my co-workers had family members or knew people who were out of work during the recession, and there was a lingering fear that, particularly after some internal consolidation, any of us could be out of our jobs at any time. Some were holding onto their jobs for dear life.

PaycheckThe power balance between employer and employee is always tilted in companies’ favor, but never more than during a period when the economy is falling apart. Unemployment may be at 8.5%, lower than during the height of the recession, but this is still high, and employees are still willing to put up with cutbacks just to keep their jobs.

What appears to be a short-term gain for an employer — reducing expenses in human resources, salaries, and benefits — can be a long-term loss. The recession ushered in a period of New Frugality. Consumers used credit cards less often and companies cut back spending and hoarded cash. The corporate balance sheet was important, and companies appeared stronger by reducing expenses to ensure profits for shareholders. Employees suffered as a result, and the stagnant — or in some cases, decreasing — compensation will not easily be forgotten.

Eventually, the job market will swing in the other direction. The top talent will feel no loyalty to the company that didn’t respect its workers during the recession, and they will leave for greener pastures.

The Wharton School highlights several recent surveys, showing that the short-term gains companies achieve by neglecting the benefits of their employees will likely result in long-term difficulties.

  • 36% of workers want to leave their companies.
  • 43% of human resources managers are concerned top employees will leave.
  • 35% of companies in the United States have smaller staffs than before the recession.
  • Companies have replaced full-time staff with temporary workers.

Companies cut compensation more for lower-level employees than higher-level, because executives view the average working middle class employee as easier to replace.

A company’s employees, literally its “human resources,” are the most important assets that a company can invest in. Proper handling and training will present a great return on investment. Spending money to support and enhance the lives of and benefits for employees keeps them engaged. If an employee believes he or she was treated well and respected during a time of economic upheaval, when employees at other companies are sharing their stories of frustration, the employee is more likely to appreciate the employer.

How has your employer treated you over the past few years? Have your compensation and benefits been scaled back? Will you stay when you know it will be easier to find a job?

Photo: dslrninja
Wharton School of the University of Pennsylvania

{ 15 comments }

Boost Your Human Capital: Get More Experience

This article was written by in Career and Work. 7 comments.

Increasing your human capital is an excellent way to put yourself in a position where you’re better prepared for life’s surprises, particularly when it comes to money. I’ve written about human capital in the past, but I’m taking a deeper look into ten ways you can boost this important aspect of self-worth — beyond the concrete net worth that garners much more attention.

Although I’ve been in a wide variety of leadership roles since I was a teenager, I’m not always at ease in those roles. I prefer not to step on other people’s toes and to let those assigned leadership roles to enjoy those positions without my interference. This isn’t an approach that I recommend. Organizations don’t pick leaders, the best leaders make themselves known outside of any selection process.

More experience in the workplace

In the workplace, I understand the position that one might only want to do what is in their official job description; after all, if more responsibilities are requested, those responsibilities should demand compensation. Going above and beyond the call of duty is an important piece of getting more experience — the right kind of experience that will increase your human capital. In my last organization, many of the rank-and-file workers were interested in nothing other than putting in their time at their desk, and clocking in and out at the expected time every day. Whenever an initiative arose that required work beyond their typical scope, whether in the nature of tasks or requiring a different schedule, there was friction between management and employees.

Those least willing to put in extra effort are the first to encounter difficulty justifying their job or their salary when the company decides to cut back on salary-related expenses. Those who have shown initiative though involvement with the industry outside the company, the company at large, and the business unit, beyond the scope of their job description, are the employees who are given the first opportunities to share in the company’s successes.

You job should not be the only thing that defines you. It bothers me that in social settings, one of the first questions a stranger might ask when meeting is, “What do you do?” When a stranger asks this question, the assumption is that they want to understand what your job is, as if this were the most important thing about you after your name.

While you’re learning

In college, my classmates who took the extra initiative outside of class to gain experience in their fields had a much easier time finding jobs after graduation. They made connections in the industry, and in some communities, already had those making hiring decisions familiar with their names. As a hobbyist photographer considering the possibility of creating an alternative stream of income for myself and my future, I’ve been spending some time doing some pro-bono work for friends as I learn the ropes of the business.

There’s no need to wait until the learning process is over to start gaining experience in a field, even if this is a second or third activity outside of your primary job, and even if this is a field for which you don’t plan to end your learning process with a degree. I subscribe to the belief that a degree does not signal the end of education. Learning is a life-long process, and more education increases your human capital, as well. You can boost your human capital further by allowing yourself to gain experience at the same time you’re learning about the activity or skill.

Build bridges

Looking beyond your job, searching for ways to gain more experience can help increase your value from an employer’s perspective or a client’s perspective. The people I’ve known whom I’ve found the most interesting have found a way to bridge two different areas. For example, those in my college’s Department of Music who found a way to combine their study of music with something else, such as technology, business, or culture, seemed better prepared to stand out in the community. Standing out among a crowd is a big indication of a higher level of human capital.

The ability to be known within the community from bridging doesn’t come from just being interested in intersecting fields of study, it comes from bringing two communities together through action and direct involvement.

Getting more experience often requires stepping outside of your comfort zone. This is not easy for a lot of people, particularly those who draw strength from internal thoughts and feelings rather than external stimuli. (Jungian psychologists often call these people Introverts.) Some who are pressured to seek experience before they believe are ready are often concerned with the world discovering they are “frauds.”

There is little risk, though, so given the potential benefit of increasing your human capital, it makes sense to gain as much experience as possible.

  • Go the extra mile at your job or for your client, not only to gain more experience but to show that you are committed to being the best you can be.
  • Be a leader in your field by taking leadership roles before they are assigned to you.
  • Acquire experience in your field before you’d consider yourself “ready” by professional standards.
  • Find connections between your interests and build experience bridging the two.
  • Make your name known in your field by getting involved in public.

How do you suggest gaining more experience in your field?

{ 7 comments }

Earn More Money: Online Surveys

This article was written by in Income. 10 comments.

This is the fourth article in a series about finding methods of earning incremental income. Some people have a desire to earn more money without the available time to learn a new skill or start a new business. I’ve written about becoming a mystery shopper, selling items on eBay, and teaching and tutoring.

The key to these techniques for earning more money is understanding that trading in small amounts of time for small amounts of cash is not a path to wealth. Nevertheless, when you have ten minutes here and ten minutes there, and would otherwise would be spending the time watching television, why not optimize that time a little better?

Recently, Donna Freedman offered advice on online surveys on a visit with the Consumerism Commentary Podcast, and she prepared a comprehensive article for MSN earlier this year.

My experience with online surveys

Pen and Paper: Online SurveysA few years ago, I gave online surveys a try. During an open enrollment period, I signed up for PineCone Research, one of the more popular online survey operators. Every few days between October 2006 and November 2007, PineCone sent me an email with a link to a new survey. Completing the surveys took only a few minutes each, and when completed, the company sent five dollars per surveys to my PayPal account relatively quickly. I received new survey opportunities every few days, but I rarely completed the surveys.

If I had signed up for more companies, I would have had enough opportunities to earn more money. I decided that answering surveys was not an ideal way for me to spend my time. Completing surveys can be somewhat tedious; I compare it to data entry, an annoying task that I’ve tried to avoid as much as possible throughout my adult life. As a result of my lack of motivation, I didn’t earn very much from online surveys.

Income potential for online surveys

Anyone interested in spending a significant amount of time completing surveys can earn much more than I did. With enough time, there are enough opportunities to earn a good part-time salary. PineCone research may be one of the most popular survey companies, but they don’t always accept new participants. Be on the look-out for ads that announce the next enrollment period. In her article, Donna cites the MSN Smart Spending community with recommendations for other survey providers, including Toluna, Synovate, Lightspeed Online Research, i-Say, SurveySpot, Valued Opinions and Surveyhead.

Although I earned five dollars for each survey at the time I participated, compensation can range as low as 50 cents. You may occasionally be able to find a survey that pays twenty dollars, depending on how your profile matches a survey’s requirements. Sometimes, the unique profile aspect is as simple as being a man; most survey respondents are women, and if a company is looking for opinions from men, they may be willing to pay more or offer more opportunities.

Do you earn extra money taking online survey? What do you enjoy about these opportunities?

Photo: Senior Peter

{ 10 comments }

2011 Stimulus Package: American Jobs Act

by Flexo
Dollar - 2011 Stimulus Package

Update: The Buffett Rule, if implemented, could help pay for the American Jobs Act. As long as the public holds the general impression that economy isn’t favorable, and that’s certainly the case, for example, when unemployment is high or after a stock market crash, political leaders will propose stimulus plans to help move the country ... Continue reading this article…

34 comments Read the full article →

My Varied Job History

by Flexo

For some people, finding the right career is easy. During formative years, perhaps one skill outshines all others, directing someone to develop that skill over time. Perhaps there is one particular area that develops into a passion, and the only choice is to follow that passion regardless of the income potential. In my formative years, ... Continue reading this article…

17 comments Read the full article →

Taking a Salary Cut

by Flexo
Twin Towers, World Trade Center

In the midst of the recession, more than a few corporate executives made the difficult choice to cut their employees’ salaries. Companies whose profits depended on the health of the economy might have been at risk for bankruptcy if unable to cut costs. Reluctant to lay off employees, many troubled companies convinced the employees that ... Continue reading this article…

10 comments Read the full article →

Verizon Wireless Roaming Charges Class Action Lawsuit

by Flexo

I received a notice in the mail stating that I could receive benefits from Verizon Wireless as a result of a class action settlement. The lawsuit alleges that the mobile phone company failed to provide free roaming as part of Verizon’s “America’s Choice II” calling plan. The plan documentation stipulated that there would be no ... Continue reading this article…

1 comment Read the full article →
Page 1 of 1112345···Last »