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Looking to make a Mint in financial planning

Posted on July 1, 2010 at 10:36 am

So, top-dog personal finance website, Mint.com, just announced a further step into financial planning with some goals-based tools to help users plan financially for the future.

From the release:

Mint’s new Goals feature seeks to take the difficulty out of both setting goals and regularly tracking your progress towards those goals. With a few clicks of the mouse, you can set up a savings goal, and then use Mint.com to help you achieve that goal.

Using Goals for Saving for the Future

So, if a Mint user wanted to save for something like home improvements, they’d use Goals to:

  1. Set funding source
  2. Set goal dollar amount
  3. Blend in financing options
  4. Establish target date
  5. Specify monthly savings target

Makes perfect sense, right?

So, the move from helping people track to helping them plan is an obvious one and a good move for Mint.

And Mint’s revenue model/value proposition work well for this foray into planning.  I assume Mint will begin to gain referral fees as they recommend loans, travel services — anything that helps assist in the savings and planning process.

According to the NY Times:

The new feature comes as Mint.com is facing increasing competition in the online financial software space. New entrants like HelloWallet have started attacking Mint.com’s business model and have emphasized how they offer more financial planning advice services.

The trend

We’ve seen investment platforms begin to automate professional grade services to their client in an effort to round out their offering and attract full-service clients (see my review of E*Trade’s Online Adviser).  Now, we’re seeing personal finance sites begin to creep into the financial planning/investing/future-oriented space.

What get’s me juiced is that sites like Mint have a TON of information about their users — the type of information the investment portals and online brokers drool over.  This positions them better for a move into investing — much like the much ballyhooed-TechCrunch Disrupt-winner Betterment is focused on.

Additional Resources

  • Mint.com Expands Into Financial Planning Tools (NY Times)
  • How To Set and Track Financial Goals With Mint (Mint blog)
  • Goal Keeping Gets Easier at Mint.com (All Things Digital)

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  • Will Merrill Lynch’s new online brokerage offering make a difference?

    Posted on July 29, 2010 at 10:43 am UTC

    There’s been a lot of speculation about what or what not Merrill Lynch (now owned by Bank of United States of America) intends to do with its re-launch of Edge, Merrill’s online brokerage offering.  Here’s a quick summary of what was punted around post-announcement:

    • MorganStanley: We do not view Bank of America/Merrill Lynch’s new online brokerage product, Merrill Edge, as a serious competitor near to medium-term to Schwab and TD Ameritrade. Bank of America and Wells Fargo/Wachovia have had online brokerage products for some time and they haven’t impacted TD Ameritrade and Schwab’s ability to grow assets – clients choose to use one product over another and don’t easily switch. — Analyst, Celeste Mellet-Brown
    • FBR Capital Markets: Bank of America will need to invest hundreds of millions in technology, customer support, and branding to truly compete for new customer assets. — Analyst, Matt Snowling
    • Raymond James: It’s “highly unlikely” that Merrill Edge will cause a significant number of existing clients to leave Schwab, TD Ameritrade or E*Trade. We believe this is simply a re-branding of Bank of America’s existing online brokerage .– Analyst, Patrick O’Shaughnessy
    • RIABiz: Such access could take the form of a team of advisors who handle inquiries up to some form of a hand-off plan where customers being handled by call centers could get referred to a full-service broker as their assets grow and their needs for advice become more sophisticated. In this hand-off endeavor, Merrill Lynch could have – in one respect – an edge over Fidelity, TD and Schwab, which have been successfully handing off billion of dollars of assets from their branches to RIAs for several years.
    • Registered Rep: The idea is to convince current clients to give them the “play” money they have parked at the discounters, which can amount to substantial sums, and to capture the hearts and minds of young people who have yet to amass their wealth. We’re talking serious dollars here. At stake is a coming intergenerational transfer of wealth—the evolving wealth of today’s 87 million-strong, 20-something “millennial” population, born between 1979 and 1999. This wealth is projected to grow from $172 billion today to a staggering $13.4 trillion in investable assets (liabilities reaching a shocking $16.2 trillion) by 2030, according to internal Merrill research.

    My Take

    All of the reasons that Merrill Edge shouldn’t work (technology and service investments, channel conflict with Merrill’s financial advisors, incumbent leadership) are valid. Merrill’s 15,000 member strong advisory unit is/was a driving force for the firm and many of them view this launch as a threat to their core businesses.

    But here’s the thing: I’ve written repeatedly that wealthy and soon-to-be-wealthy investors employ a combination of full-service and do-it-yourself investment tools.  In fact, many of the brokerages are courting these types of investors with automated, professional-grade services, like E*Trade’s Online Advisor.  As the future unfurls, these types of investors will continue to use tools and services that satiate the comfort of control and the need for professional advice.  Merrill Edge plays right into this.

    This isn’t about getting a $25k minimum account and praying the account holder brings more.  It’s a foothold, but it’s also a way to hold onto wealthy clients with a lot more money under management as they oscillate moving their funds in into and out of semi self-directed tools and professional money managers.  Edge gives that money one home.

    Additional Resources

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  • Review of virtual family bank, FamZoo

    Posted on July 6, 2010 at 3:41 pm UTC

    NY Times had a short piece on FamZoo, a virtual family bank.

    The site allows families to set up “Bank Parents” using virtual savings and spending accounts to help kids learn and understand about money.  Parents can even link checklists to allowances to assure kids are pulling their weight for chores.

    There is some nifty functionality that integrates a mobile offering, as well.  Check out the video above.  The site has a free trial right now, moving to a premium version of $5.99/mo shortly after.

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  • Inching towards an investing app store

    Posted on July 6, 2010 at 10:50 am UTC

    Service and product providers in the financial field have always lamented how hard it was to reach investors.

    Sure, we could market to the investing public in a large, splashy way but it would be so awesome if we could just do a deal with the online brokers and offer our services through an investment account login…

    I know this sentiment well.  When I was running business development at Seeking Alpha a few years back, it was so clear that the best/easiest/cheapest way to reach investors with our content was directly through the likes of E*Trade ($ETFC), Schwab ($SCHW), and TDAmeritrade ($AMTD).

    This hasn’t been completely lost on the incumbent online brokers (but boy, do they move slowly!).  I’ve riffed previously on how everything is moving towards the creation of investment app stores.  Much like Apple’s famed AppStore, 3rd party service providers would be able to develop their services and products for delivery through the brokerage platform.  TDAmeritrade has a short, but growing  list of providers who are currently doing this here.

    The investment app store concept is huge and extremely valuable for everyone in the value chain:

    • Investors: Online brokerage clients no longer have to wait for the walled-garden brokers to develop their own tools and services.  Brokerages are notoriously slow in rolling out new functionality or they typically acquire it (a-la TDAmeritrade’s purchase of ThinkorSwim).
    • Brokers: No need to swell the ranks of the product dev teams.  Now, they just have to manage the API and partnerships and they get a new revenue stream.  Sweet.
    • 3rd party solutions: Wham, investment newsletters, black box trading strategies, content aggregators and others have just been invited to the party.  You can know actually technically reach the end user investor.  Don’t expect the brokerages to promote you though :-)

    So, just like the tit-for-tat we’ve witnessed for years, we shouldn’t be surprised to see that E*Trade just announced the introduction of its API and partnerships with three external firms.

    “Open API presents a world of opportunity to customers looking for a more customized investing experience and to software developers looking to create the next great investing app,” said Michael Curcio, President, E*TRADE Securities. “Our main objective is to facilitate innovation and ideas that empower customers — ultimately creating a richer investing experience.”

    Source: E*Trade Bolsters Trading Innovation with Open Application Programming Interface (MarketWatch)

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    Photo credit: Jurvetson photostream

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  • Resources about stock buybacks

    Posted on July 4, 2010 at 12:18 pm UTC

    Stock buybacks, whether you like them or loathe them, are a reality and when companies are sitting on so much cash (like they are now - almost $1 trillion!), buybacks are certainly one option for companies looking to deploy their cash hordes.

    Barron’s recently reviewed a few online resources to help investors stay on top of macro and company-specific trends.  You should read the whole article (sub. required).

    Here are a couple of their ideas and some of my own thrown in to boot…

    Stock buyback resources

    • S&P Indices Market Attributes Series — I’m not exactly sure of what that means but this page posts proprietary S&P reports into buybacks.  Good overview on their reports (like this one (.pdf))
    • The Online Investor: OLI does a good job of reporting all the buybacks in the market on a per-company basis.
    • StreetInsider: Ongoing free feed of stock repurchases at numerous U.S. traded companies.
    • Seeking Alpha transcript search: Seeking Alpha publishes thousands of free conference call transcripts.  Search for terms like “stock buybacks” or “share repurchases” and get a list of which companies are talking about them and what they’re saying.

    Academic studies of share buybacks

    Premium Newsletters using Share Repurchase Strategies

    Funds using buyback strategies

    • PowerShares Buyback Achievers Portfolio ETF (PKW)

    Read the whole Barron’s article here (sub req’d).

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  • 3 ways to crowdsource investment ideas now

    Posted on July 1, 2010 at 12:36 pm UTC

    Crowdsourcing, the collective wisdom of the crowds, has been show to have strong correlation to future results specifically in sporting events and election polling.  Here’s how Tradestreaming addresses crowdsourcing.

    Given the fact that academia stuck to its guns for SO long with the Efficient Market Hypothesis (that all information is embedded currently into a stock prices, making it really hard to ‘beat’ the markets), we’re just seeing relatively new research that is open to crowdsourcing investment ideas and some that finds that there is MAJOR outperformance.

    For example, check out the Harvard Kennedy School’s “The CAPS Prediction System and Stock Market Returns” paper that studied results of the Motley Fool’s crowdsourcing CAPS platform. Specifically, the paper looked at the difference in returns between the most highly rated stocks and the lowest rated stocks.  The paper found huge double-digit outperformance (18%).

    3 ways to crowdsource investment ideas now

    1. Piqqem: This site allows users to rate stocks on a 5 factor scale.  More importantly, Piqqem has a portfolio tool that enables users to create and backtest strategies based on the changes in investor sentiment for individual stocks.  Check it out.
    2. Motley Fool CAPS: The subject of the paper above, CAPS has evolved into the Fool’s flagship product.  Check out the highest and lowest rated stocks in the CAPS community in the Top Ten Lists.
    3. Intrade: The mother of all prediction markets, Intrade does huge business in sports betting but also has contracts on financial outcomes.  Intrade wagerers buy and sell probability contracts on Dow Jones and S&P predictions.

    Source:  “The CAPS Prediction System and Stock Market Returns” (Harvard Kennedy School)

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Tradestreaming is a community of investors learning directly from experts. I’m Zack Miller, investor, entrepreneur, and founder of Tradestreaming.com and I literally wrote the book on how to invest in the age of Facebook and Twitter. Tradestreaming is the resource I’ve created to help me become a better investor.  I believe it will help you … Continue Reading