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

Search: google

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 }

Improve Your Child’s Cognitive Ability for Income Potential

This article was written by in Career and Work. 18 comments.

There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence.

Cognitive ability is an important part of your human capital, and your human capital measures, among other things, how likely you’ll be able to support yourself financially, particularly through difficult economic times. Cognitive ability is important because many jobs requiring intricate skills and the best careers that offer opportunities for advancement require the ability to learn and adapt, and that’s the core of cognition.

The ability for the brain to process information changes throughout one’s lifetime, and without stimulation, cognitive ability can decline. When companies like Google or SAS ask puzzling interview questions, they’re testing, among other things, cognitive ability. To be hired as a software engineer, you would need to show that you have a strong command of whatever primary programming language is popular at the time, but in an industry that changes so quickly, strong cognitive ability will show that you can learn and adapt to the changing environment.

Rubik's CubeThe key is instilling cognitive ability in children at an early enough age. As we get older, we can continue to refine cognitive ability, but only to a small extent. These tactics may no longer work for me; the best adults can generally do to keep cognitive skills sharp is to get enough sleep and exercise, and eat nutritious food.

If you’re interested in helping your child prepare for a life full of challenges, there are some tactics you can employ.

Learning a new language

As a child, I enjoyed learning languages. I never became fluent in anything other than English, but I enjoyed the process of learning the rules. As a kid, I was fascinated by languages, and spent time learning a little bit of as many as possible. Like many kids, I learned a little Spanish from Sesame Street. I learned Hebrew and tried to teach myself Yiddish. I studied Latin in middle school, was taken out of usual classes to study Greek independently, and took five years of German. I learned programming languages like BASIC, Pascal, lisp, and C. And as a younger kid, I dabbled with creating my own languages and codes.

Music and mathematics have features in common with languages, as well. Music, particularly learning to play an instrument instead of just listening to Mozart, has been shown to improve cognitive ability.

As an adult, learning a new language or a musical instrument is a time-consuming task. There are programs that help frequent travelers learn languages quickly, but you could get a bigger cognitive benefit by learning a language through a more academic curriculum or through immersion. Rather than focusing on key phrases that help you get by in a foreign land, incorporating a new language into the way you think can help keep your brain active. On the other hand, young children, even those learning their first language or languages, can often learn multiple languages concurrently without being confused. Language skills not only improve cognitive ability, but they can make someone a more marketable employee around the world or increase the chance of international success in their own businesses.

Completing puzzles

Elementary school is a great time to focus on solving puzzles whose solutions require thinking “outside the box.” I seem to remember this being called “lateral thinking” when I was younger, but I don’t know if that term is widely used today. These are the types of puzzles that stymie job applicants at companies like Google. But puzzle solving as an adult won’t have the same impact as puzzle solving when the brain is at its most impressionable.

  • Logic puzzles are kind of like the game Clue. You often have two or more dimensions to work with, and the goal is to pair each of the dimensions together based on a limited number of clues. A grid helps eliminate incorrect pairings to discover what’s correct. The more dimensions included in the puzzle, the more brain power necessary to solve the puzzle.
  • For a child, a Rubik’s Cube can be an engaging puzzle. While the answer now comes packaged with the toy, and there are numerous Youtube videos describing how to solve the puzzle in about twenty moves, the cognitive challenge is in working to find patterns of movement that move closer to the result.
  • Text adventure games open up a child’s mind to being able to control their environment. Video games have changed since I was a kid, but I enjoyed the early text adventure computer games like Scott Adams’ Adventureland. (Classic game lovers can play Adventureland here.)

Reading and writing

Reading and writing help develop important cognitive skills focused on processing information the same way they’ll need to make sense of problems as adults. Writing, particularly creative writing, improves the command of language and can help children find clarity when expressing their ideas. Writing is a skill that will easily set someone apart from the competition, as might be necessary in tough job markets. I’ve personally seen atrocious written communication among co-workers throughout the many jobs I’ve had. I will never say I’m a great writer, but these skills are lacking in my former non-profit and corporate environments.

When I compose a well-worded communication, the supervisors shouldn’t be surprised. Every employee with a college education should be able to express himself or herself somewhat eloquently.

These cognitive skills nurtured at an early age can help prepare children for financial success in life. The best careers need smart and flexible employees to take on unforeseen challenges. People often predict what the hottest careers may be one generation from now, but the specific opportunities are irrelevant if children are prepared today to handle any problem that presents itself.

What did you do as a child to improve your cognitive ability? If you have children, how are you helping them prepare for the future?

Photo: Don Wright

{ 18 comments }

Frugality Plays Role in Bringing Tech to New York City

This article was written by in Frugality. 6 comments.

Michael Bloomberg, the king-slash-mayor of New York City (will he increase term limits again to stay in his position?), has announced that Cornell University and Technion-Israel Institute of Technology will be transforming 11 acres on the southern tip of Roosevelt Island into a graduate school for technology. Classes will begin as early as next year and the first phase of construction on 300,000 square feet will be completed by 2017 and construction on 2 million square feet will be completed twenty years later.

Developing the land into a world-class graduate school will displace a hospital and some other facilities, but will generate $23 billion in economic activity and 20,000 construction, 8,000 continual operational jobs, and 30,000 jobs as a result of graduates’ activities according to Bloomberg.

A $150 million venture capital fund will provide resources to new start-ups affiliates with Cornell that promise to stay within New York City for at least three years.

With a world-class high-tech graduate program, New York City will become a tech start-up incubator, on par with Stanford University, who lost the bid for building a campus in New York City, and Silicon Valley.

Cornell’s bid for the land and the opportunity to transform New York City was assisted by a $350 million gift, anonymously given but later revealed to come from Charles F. “Chuck” Feeney. Feeney is a former Cornell student who co-founded Duty Free Shoppers Group and turned his wealth into a foundation, the Atlantic Philanthropies. With the foundation incorporated in Bermuda, its activities are not generally public knowledge, but its grants are on par with the Ford Foundation and the Bill and Melinda Gates Foundation.

Roosevelt IslandChuck Feeney has accumulated significant wealth over his lifetime, but you wouldn’t know it from watching him. When in New York, he walks and rides the subway, though he’s not the only New York billionaire to mingle with the people. He rents rather than owns a house, having parted with seven houses in a divorce settlement, but renting in New York is not necessarily an indicator of frugality by itself. He doesn’t own a car and flies coach. Feeney reportedly wears a $15 watch. Not wanting money to consumer his life, even his ownership in the business he founded was transferred to a charitable organization. Perhaps having given away most of his fortune away, Feeney has no choice but to be frugal, but his approach to money seems to be similar to Steve Jobs, the quiet billionaire next door.

Assisted by the gift from the Atlantic Philanthropies, a pledge from Bloomberg for $100 million in infrastructure improvements to the Roosevelt Island land on which the university will build the campus. Cornell will also partner with the State University of New York and the City University of New York in some capacity.

This could be an exciting time for New York City. Residents of Roosevelt Island won’t be displaced by the new construction, but patients and employees of the hospital that currently exists on the property will be. Having a University’s high-tech graduate program will change the character of the island, which was formerly known as “Welfare Island” and was a depository for prisoners.

Photo: shinya
New York Times, New York Times, Atlantic Philanthropies, Cornell University

{ 6 comments }

How to Receive Great Customer Service

This article was written by in Consumer. 12 comments.

Rather than blaming a representative or a corporate culture when discussions with a company don’t go the customer’s way, perhaps there are specific things the customer can do to encourage representatives to help. Money Magazine polled its readers and talked to experts to determine the best tactics for receiving the best customer service from companies. Many shared specific strategies they’ve employed that have led to success, whether the goal was to pay less for cable service, avoid fees or upgrade with an airline, or receive repair on a product out of its warranty period.

Be nice. Most of the stories I’ve read about receiving poor customer service could have been avoided if the customer wasn’t confrontational from the start. Direct confrontation rarely produces any result. I’ve been on the receiving end of confrontational attitudes. If someone threatens me or is verbally abusive, there is no possibility of me going out of my way to help that person. I can see why a customer service representative would not be motivated to help anyone who didn’t approach the situation calmly. Money Magazine suggests using flattery to encourage a representative to help. If you’re likable, it is more probable that someone would want to help you.

TelephoneHint you will leave. Not every company is interested in keeping every customer. Bank of America’s proposal to enact $5 monthly debit card fees made this clear: some customers are expendable. While the bank eventually reversed its position after public outrage, the damage to reputation was done. Most companies, however, do not want to lose customers.

If you hint that you have other options available, some companies will transfer you to a different representative whose only goal is to keep you, and these employees often have the authority to negotiate with you. This is how cable television companies and internet service providers seem to operate. If you can get to the retention department, and sometimes you can get there just by asking, you can cut your cable bill and perhaps receive some free extras.

Don’t give up. While some companies are flexible with their policies, they make you work for it. Low-level customer service representatives often can’t make decisions on their own, but they do serve to wear customers down so they give up before they get in touch with someone else at the company, a supervisor for example, who is more likely to be authorized to negotiate with you or provide the service you’re looking for. Even by increasing your hold time from one minute to two minutes before you reach the first level of customer service, companies count on callers to give up before they speak to one person.

If you’re patient and persistent, and you insist on talking to someone who has the authority to work with you, you will be in a better position to receive satisfaction.

Use social media. More companies have presences on Twitter and Facebook, and they’re looking to do good publicly. For example, every time I’ve mentioned Comcast on Twitter in any sort of negative manner, I immediately receive a response from a company representative who actively monitors discussions for opportunities to help. When you take your issue public, a company is motivated to address your issue in the hopes that you will retract your statement or rave about how the company went out of its way to rectify the situation.

Critical blog posts or videos, when they gain attention, can be public relations nightmares for companies. A few years ago, United mishandled and broke a passenger’s guitar. The passenger recorded a video and song titled United Breaks Guitars, and it went viral. He received an offer from United to pay for the guitars — as well as an offer from a guitar company for two new guitars for a new video.

Know what you’re entitled to. First-line customer service representatives may not know all the details of your agreement, but if you do, you can suggest solutions that fall within the terms. When you’re approaching a company looking for resolution to an issue, ask for something specific that the representative can do. Most customers, if they ask for something specific, are unaware of the options available, and a customer service representative might not be aware. If he or she is aware, the representative might not volunteer the information. By knowing what options are available according to the policy, you have an advantage.

Offer a “complaint sandwich.” This is a psychological manipulation tactic, and it works. If you start your discussion with a positive comment, move to a discussion of the issue you’d like to resolve, and end again with a positive comment, you’re more likely to receive the results you want. In my experience, this strategy is called praise-suggestion-praise. You could start a discussion by saying how much you love being a customer of the company. It’s important to be sincere and genuine, and to quickly get to the core of the matter so you don’t waste the representative’s time. After explaining your issue, offer praise again, thanking the representative and remaining positive that the two parties can agree about a resolution.

Contact the executives. One tactic that has shown to work is the “executive email carpet bomb.” Email addresses of the CEO and other important executives are often easy to find. If a general search of the internet offers no results, you might be able to use the SEC’s own tools or Google Finance’s corporate listings to find the right email addresses. Send an effective complaint letter to all the executives on your list to increase your probability of getting a quick resolution.

Have you ever received great customer service? What approaches were successful for you?

Photo: asgw
Money Magazine

{ 12 comments }

Google Wallet Not Ready for Prime Time

by Flexo

Simplification is usually a good choice for finances whenever it is available, and the bulky wallet is due for a technological upgrade, simplifying back pockets of men’s jeans everywhere. I’ve received the occasional comment about my “George Costanza” wallet; as I collect receipts from my day-to-day transactions, the leather becomes increasingly distended. Google’s first in ... Continue reading this article…

7 comments Read the full article →

Current and Historical Checking and Savings Account Rates

by Flexo

Since many banks are constantly updating their interest rates offered on savings, money market and checking accounts, this chart should come in handy. On the 1st and 15th of every month, this page is updated to show the most accurate rate information available. This list is organized in two sections. The first section includes FDIC-insured ... Continue reading this article…

2 comments Read the full article →

How to Hedge Against Gasoline Price Increases

by Flexo
Gas Pump Fuel | crowt59

When gasoline prices at the pump increased to the point where the cost was a major news item engendering backlash among the public, oil companies were sporting big profits. Consumers reacted by buying more fuel-efficient cars and traveling less, but there is another approach for investors — an approach that mimics what commodities and hedge ... Continue reading this article…

10 comments Read the full article →

Despite Big Valuations, There is No Tech Bubble

by Flexo

I’ve always been a fan of Marc Andreessen. By the time the World Wide Web came into its own, I had already been a long-time user of and creator on the Internet. Marc’s Mosaic changed the way in which the Internet was viewed. It was fascinating, and I had to be a part of it. ... Continue reading this article…

10 comments Read the full article →
Page 1 of 2912345···Last »