Tag: Fees

At the end of last year CFSI hosted an in-the-field activity designed to put participants in the shoes of underserved consumers as they attempt to complete several financial transactions. This particular FinX event shared the focus area of the Financial Solutions Lab first innovation challenge which will be launching next month, household cash flow management.

One of the day’s participants, Paul Breloff, Managing Director at the Accion Venture Lab, shared his FinX reflections with his team, and ultimately, CFSI. (Ariel Schwartz, Senior Editor at Co.Exist, also wrote about this experience in her piece “What It’s Like to Live Without A Bank Account For a Day.”) In short, Paul’s comments were powerful and confirmation that FinX is a positive learning experience for participants. He highlighted just a few of the many challenge areas that are ripe for technology solutions. Below are Paul’s notes…

On November 18, 2014 a group of about 25-30 financial service folks (a handful each of bankers, startup executives, investors, tech company reps, journalists, and nonprofit leaders) gathered in the Mission to put ourselves in the shoes of underbanked customers in the U.S. Part scavenger hunt, part ethnography, FinX was a great chance to see the bewildering array of frustrating financial options available to underbanked customers in the US who are short on liquidity, short on time, and short on attention. Here’s the limited description I got before showing up: “This experience is not your traditional workshop or walking tour of a local neighborhood. It’s an actual step into the shoes of consumers making real-time decisions about fees, expediency, time, and convenience. The 2-hour in-the-field challenge is a rare opportunity for executives of financial institutions, FinTech innovators, and nonprofit leaders to go beyond simply hearing about the challenges that consumers face, and experience the real-life constraints and options they have. With your team, you will attempt to complete financial transactions such as cashing a check, acquiring and using a prepaid card, or seeking out a small loan.”

Once we arrived, we were split into about nine teams of three, and were given a packet of materials describing our situation. We were to pretend we were on a two hour break between shifts and had to get done a variety of things before our 12:00 p.m. shift started again. We were to assume we didn’t have a bank account, and had to cash a check, get a money order, pay rent and electricity, load a prepaid card, purchase a gift for our niece, and grab a snack—this was, after all, our hypothetical lunch hour. We also had to figure out the best rate we could get on a $500 loan from anywhere we wanted, and we had to haggle with a pawn shop owner about the value of my watch (we ultimately settled that it was worth $30, which I was quite pleased with).

I was on a team with Ariel Schwartz, Senior Editor at Co.Exist/Fast Company and Ethan Bloch, CEO of a fintech startup called Digit. We got off to what we thought was a fast start, finding a pawn shop and quickly negotiating a $30 value on my watch – which I was pleased with, given the fact that it was 15 years old and not worth much to begin with. We were also in high spirits when we located a shop called Ria (a chain across the U.S.) to cash our check. It seemed like it would be quick and easy and we could get everything done at once with only a $0.99 check cashing fee – our customer service representative, safely hidden behind a plexiglass wall, encouraged us politely that this would only take a couple minutes. But alas, they couldn’t get ahold of the payer of the check to verify by phone, and AML/CFT checks on me got tripped up. (Apparently they couldn’t figure out why I lived in DC but was cashing a check in San Francisco.) We lost 40 minutes hanging around being told it would only be “three more minutes.” We were all a bit (politely) pissed off. So that didn’t work.

Next we went to an Ace Cash Express. We waited in line about twenty-five minutes (precious lunch hour minutes ticking away), but once it was our turn, we were thrilled to learn we could indeed getmost of our tasks done, but at a cost: $6 to get the $90 check cashed, a one-time membership fee with Ace, and other fees to get money onto a prepaid. Unfortunately, we couldn’t pay our rent check because their system “couldn’t find the payee.” They said this “happens all the time” and that we should “come back later.” A not-so-fantastic option if you’re working two shifts a day and still want to eat, sleep, and see your family.

Next we had to send money to a family member, so we had to find a Western Union. Thank god for our smartphones and Google maps. We were able to do it, but again, were shocked by the cost: a flat-fee of $5 to send $30 to our friend in the US, who was going to pick it up later that day. That’s the going flat rate for a domestic remittance under $50: the equivalent of nearly 17 percent! This in an era where most of us can send value via PayPal or SquareCash or Venmo for no or little cost – IF you have a bank account which can be linked for ACH transfers. Unfortunately, our family member was told when she went to pick up the money that “the systems were down” and that she should “try coming back in two hours.” Simply ridiculous; I’m really rooting for these startups to motivate some improvements in pricing and service.

On the hustle back to our 12:00 p.m. shift we had to pick up a gift for our niece. We chose a beautiful yellow hula hoop and Brazil soccer ball from the dollar store, where, thank goodness, they accepted our MasterCard prepaid card. We were running short on time so only had time to grab a coconut water and banana on the trek back to our second shift.

None of this was rigged; these were all real stores, processing real transactions with real checks and GPR prepaid cards, treating us like real customers. And it was a great experience. It made me think quite differently about the tradeoffs between fees, convenience, and dignity. As the clock was ticking, considerations of cost, quite frankly, went out the door as we desperately tried to just get things done and not show up late for our shift. In some ways, perhaps, “done is better than cheap.” Also, it was just amazing to confront the bewildering array of choices. Walking down Mission Street, there are quite literally dozens of check-cashing spots, pawn shops, big signs promising fast cash, each with its own confusing set of matrices outlining prices based on a ton of variables. Who has time for that, who really cares at some point?

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The SEC Commission has approved rules that require institutional money market funds to implement floating share values and other restrictions, such as restricting withdrawals and imposing redemption fees of up to 2% if fund assets drop below prescribed levels.  The shares would float based on changes to NAV (changes to the underlying market value of the fund’s assets).  Currently, these funds have a fixed price of $1 per share.

The rules were crafted in response to the 2008 financial crisis, when corporate lending markets seized up in response to a lack of liquidity.  The new restrictions will hopefully help maintain capital levels and keep markets operating smoothly during times of stress.

Individual Money Market Funds Not Affected

While the new floating share rules apply to institutional funds (both prime and tax exempt), they will not impact government and retail funds that are sold to individual investors. (Note that they will apply to institutional municipal money markets.)  However, provisions for liquidity fees and redemption gates do apply to all funds, both institutional and retail.

For a definition of government and retail money market funds, the SEC provides this detail via a press release on their website:

Government and Retail Money Market Funds Government and retail money market funds would be allowed to continue using the amortized cost method and/or penny rounding method of pricing to seek to maintain a stable share price.  A government money market fund would be defined as any money market fund that invests 99.5 percent (formerly 80 percent) or more of its total assets in cash, government securities and/or repurchase agreements that are collateralized solely by government securities or cash.  A retail money market fund would be defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the money market fund to natural persons.  A municipal (or tax-exempt) fund would be required to transact at a floating NAV unless the fund meets the definition of a retail money market fund, in which case it would be allowed to use the amortized cost method and/or penny rounding method of pricing to seek to maintain a stable share price.

One way this might affect individuals, is if they invest in institutional money market funds through their 401K.  It is likely that most retirement plans will choose retail money market funds as a plan option for this reason.  This will affect small and large businesses that use these accounts as short term funding for their day to day and week to week operations.  For a related article on this subject read more here.

The new rules will not go into effect immediately.  Fund companies have two years to comply with the new restrictions.

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Customer service has been a large part of a bank’s strategy to build trust among consumers. Despite the bad press banks have been receiving, their ability to provide high level customer service at branches has been an integral part of their relationship building strategy. As a customer, I’m always suspiciously pleased by the exceptional friendliness of the tellers and their interest to make small talk while completing transactions. This strategy has been an effective way for banks to get consumers to trust them, and I often find myself leaving branches feeling somewhat more popular than I was before the transaction.

However, over the past few years, two things have been happening that have increased the need for banks to promote trust outside of their customer service strategy. Firstly, with the increase in ATM capabilities, and technological improvements with online and mobile banking, fewer customers want to make that trip to the branch to complete their daily interactions. This means that fewer customers are benefiting from the highly trained branch personnel and bonding with their bank on a weekly basis.

Secondly, and more importantly, to say consumer sentiment of banks has soured over the past few years is a huge understatement. While the blame for the financial crisis will always be thrown around among banks, regulators, and consumers, one fact is clear: customers have lost trust in financial institutions. A study earlier this year by PEW confirmed this sentiment by finding that 47% of American’s don’t trust banks, and this is a serious problem considering banks are often asking customers to trust them with their life’s savings and financial decisions.

In the wake of the financial crisis, banks and financial providers have some big hurdles to conquer if they want to continue to grow their customer base and keep them happy. They need to build consumer trust again and convince people they are on their side. And having friendly branch staff might not be enough to cut it anymore.

To build trust successfully, providers need to go beyond the frontline staff and think about providing products that build consumers trust. As the Compass Principles recommend, products and services should be designed to help consumers clearly understand and derive value from their financial products and services. The marketplace today is flooded by products that aim to take advantage of consumers by charging fees or setting consumers up for failure. By providing transparent and reliable products that consumers can depend on, financial providers have an opportunity to differentiate themselves among competitors and build consumer confidence and trust for long-term relationships.

There are some great examples of providers who have integrated a sense of trust into their products. Cardtronics, one of the largest ATM providers, aims to provide relevant support to customers before, during, and after every transaction by offering transactional advice in locating an ATM and suggesting ways to reduce fees. ZestCash, an online lender, differentiates itself from other small dollar short-term lenders by allowing customers the ability to design their own repayment plans and rewarding positive repayment through cheaper loans. NetSpend, a successful provider of reloadable prepaid cards, clearly outlines its fees on its website and promotes savings by offering competitive interest rates. These kinds of product designs help signal to consumers that providers are looking out for their best interest and providing a product that meets their needs without penalizing them inappropriately.

These are only a few of many providers in the marketplace today finding new and innovative ways to build trust among customers. I encourage readers to share their own experiences and best practices for how providers can continue to design products that customers can trust.

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Many of my prospective clients come into my office either not knowing how much they are paying in investment fees or mistakenly thinking that they are receiving their investment counsel for free.  It is no wonder this occurs.  Fees are often embedded in the form of loads (either front-end when the fund is purchased or on the back end when it is sold), commissions, and expense ratios.  These hidden fees make it difficult to ascertain total investment costs for your portfolio. 

Many financial statements appear to have no fees deducted, but just because you can’t see a fee, does not mean it is not present and having an effect on your portfolio.

So how do you determine the fees you are being charged?

How much do you pay for advice? – Fee only versus Fee Based Advisors

First, if you use an advisor, you will somehow be paying for this advice.  There are many ways advisors receive compensation.

A fee “only” advisor charges a fee based on either a percentage of your total assets invested, a retainer, or per project fee based on an hourly rate.   This is the easiest and most transparent way for the client to be charged.  Furthermore, with retainers and hourly fees, large portfolios are not charged egregiously high rates just because they have higher account balances.  Note that true fee-only planners are in the minority in the financial advisory world.   Hourly, fee only advisors are even rarer.

The downside of this approach is that since the client has to write a check for the amount, behaviorally it is less palatable for him, even if the charges are far less. Ironically, this enhanced awareness of the fee, even if it is substantially lower, makes the client more resistant to paying via this method.

Fee “based” advisors are distinctly different from fee only advisors in that they can charge a certain percentage of assets AND may also receive commissions on the products or funds sold to the client.  This could be the case if your advisor who charges you 1% annually on your investment portfolio also gets commissions from the funds or positions in your portfolio or from an insurance product or annuity he or she sells you.

The ABC’s of Investment Fees

Most investors that go to a solely commissioned based brokerage are not charged a fee as a percentage of their assets. So, on the surface, it may appear that the advice they receive is “free.”   Instead, the broker will buy funds that have a built in commission.  These funds are often denoted by a capital letter after the fund.  An “A” fund has a front-end load.  Typically 4-6% of the total amount handed over to the advisor will go straight to him or her as commission.  These fees may decline at certain breakpoints, particularly if you stick within one fund family.  “B” funds have back-end commissions that normally decline over time, so it is best to hold on to these until they have expired.  C funds have level but relatively high annual expenses.  Due to these loads or commissions, load funds tend to have higher expense ratios, as well as potentially 12b-1 fees.

What are expense ratios and 12b-1 fees?

An expense ratio is the most common fee an investor will encounter.    It represents the annual operating costs of the fund.  Every mutual fund or exchange traded fund has this ratio, and, of course, you would ideally like to see these as low as possible.  For example, active funds may have expenses ratios well over 1%, whereas passive index funds may have expense ratios less than .20%.

The 12b-1 fee is also considered an operational expense and, as such, is included in a fund’s expense ratio. It ranges between 0.25-1%, but is more often closer to 0.25%.  It is primarily used as an incentive for the broker or rep to sell the fund and is paid to that broker annually.

Note that although active funds purport to “beat the market,” over two-thirds of these funds fail to beat their benchmark in any one year.   See this related article. As you can imagine, the more of these active funds you add to your portfolio, the chance of you beating the market (as represented by index funds) over many years substantially diminishes.   Thus, the increased expenses many investors pay a fund manager to “market time” or pick “winning funds” are often a waste of money.

Let’s look at an example to bring it all together:

Say I invest $100,000 in a fund with front end loads of 4.75%.  The fund also has an expense ratio of 1.13% inclusive of a 0.25% 12-b1 fee, which goes back to the broker.  At the same time, I decide to invest in a no load passive indexed fund in the same investment category.

After 5 years, assuming that the annualized rate of return for the category index is 10%, the total costs and return of the portfolio would be as follows:

 Even though the expenses for the higher cost fund were perhaps not as transparent, the ending value of the investment shows the dramatic difference.  This is why many investors scratch their head and wonder why their portfolio seems to underperform the market.

The moral of the story is costs matter, especially over long periods of time.  Over just five years, in this example, the low cost investment balance is over 10% higher.

Make sure you fully understand all of your investment costs and how you are being charged.  If future investment returns are expected to be lower than what we have historically experienced, keeping costs low is even more imperative.

If you invest in low cost funds and use a low cost fee only advisor consider yourself well-armed to defend against lower returns in the future.

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To deal with the spread of Covid 19, most countries in the world establish independent quarantine at home. As long as you have to work, study and do all the activities at home, of course household expenses continue to run. At a time like this, it’s a good idea to save money on household expenses during the quarantine period in your home. The good side of you having to stay home during the stipulation period of the Government is that you can save on transportation expenses.

Here are some ways that you can use to save your expenses as long as you have to live and work from home.

1. Turn off the lights when not in use


This simple thing is often forgotten. Did you know that by turning off one light in your home, you can save electricity. Two 100 watt incandescent lamps which are turned off for two extra hours per day can save 15 US dollars per year or around Rp245 thousand (exchange rate Rp16,354). If you want to save even more, you can switch to the type of LED lights to reduce your electricity costs. Without you realizing you also contribute to the maintenance of our earth by saving electricity. .

You can also use natural lighting during the day. Open your window, turn off the lights other than at night. If you fall asleep, don’t forget to turn off the sleep lights in your room too.

2. Turn off the water

Cover the water tap after use and before use. If you wash your hands, don’t let water run while you rub with soap. Reduce the flow of water so that the flow of water that comes out is not too much. Try to take a shower not too long. Clean your whole body parts without having to discharge water through your tap as long as you shower.

3. Pay your installments

Try to pay your installments before maturity. Fines will result in you having to pay unnecessary fees and in the midst of this crisis, you should keep your name in the relevant Financial Services Authority if in the future you need your funds not constrained in your credit score.

4. Save Food Stock

Avoid going out every day just shopping for food daily. Shop for food stock for about a week or two. You can store it in the refrigerator and freezer for food ingredients that can be frozen. Suppose you buy a potato, you can fry it dry, and store it in the freezer. Likewise, meat, fish and seafood. Make sure all your food items have been washed with soap first.

5. Stop smoking

Besides you save money on your monthly expenses, this also helps maintain your health. As much as possible you reduce smoking even quitting will be even better. You love yourself and those around you.

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Individual who own to their deficit salary which mostly doesn’t help them till their payday. So at this situation is good for the individual to go for some financial service where they easily arrange the funds for managing the various expenses. But many times it is miniature hard for the applicant in availing this due to their financial report contains poor credit tags. So for this it is good for the individual to go for the payday loans for bad credit. Through this individual on the same day can easily avail the money without any credit check or any other hectic formalities.

At times when the bad creditors want the money on the urgent basis for them this scheme has been created of. With help of this individual can easily strike their sudden expense which comes to them without any prior notice in advance. It is meant for those individual who are suffering with the bad credit scores such as bankruptcy, arrears, delays, insolvency, foreclosure, CCJ, IVA etc .with help of this the immediate can be easily acquired by the individual at the time of the desperate need of money.

Weekend payday loans no credit check is short term monetary solution which endows small financial facilities that range from £100-£1500 for duration of 14-31 days. In this individual if want to extend the reimbursement duration can do it as per their convenience by paying some scant fees to the lenders. Individual to borrow money from this should be having regular source of income for the last six months, age should be 18 years and more, should have the permanent citizenship of UK and should be having valid checking account In this individual who are interested to get fund do not require to submit any collateral against the money with the lender that makes it an affordable scheme for the individual who are tenants and non-property holders.

In this one can be able to arrange funds through the instant text loans UK via internet. This is not only easy but also fast. In this the applicant by filling a simple online application form that will not tackle much time by which also the precious time of the individual also gets saved. The individual effortless can easily apply for it without including any surplus costs. The application form is to be filled with the information like their name, age, gender, amount required, monthly income etc which is then submitted online to the lender .the lender which verifies it and if get confirmed that the form is files correctly will transfer the fund required by the borrower directly to the bank account.

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Do you want to take option of financial help in order to borrow of fast cash? Here, you can visit our financial loan website in order to get instant money. You can now visit our loan website and take the advantage of installment payday loans online so as to borrow instant money. As the name goes, these payday loans can be availed through simple online mode. Without wasting precious time consuming, you can take option of this loan. The mode of availing loan can be accessible via online mode without using paperwork.

There are few conditions in order to apply for these loans. Usually, these loans are granted to US borrowers who attained above 18 years of age. The borrowers should be having regular job. Their monthly income should be at least $1000 bucks. And he/she should have a valid bank account where online transaction can be done. To get applied for this loan, you should take help of online mode and fill up loan application form with your full details like- name, gender, age and bank account etc. Once you get the approval, the sanctioned loan amount is automatically transferred into your bank account on the same day.

An amount of instant money in the range of $100 to $1500 can be derived if you select installment payday loans online. You can use the loan amount for only few weeks. After you borrow of urgent cash in the choice of this loan, you can meet all kinds of unforeseen financial expenses. The loan amount is flexible to arrange pending bills which include- home rentals, home renovation, paying off school fees for your children, and educational purposes for your children. Therefore, this credit support is quite helpful to fight many financial expenses.

Furthermore, this small credit solution is quite helpful for bad credit people who are in need of fast cash. Without showing the past credit scores, lending companies have granted this loan to everyone. For applying this loan, you should fill loan application form with your full details like- name, gender, age and bank account etc. Once you get the instant loan approval, the sanctioned loan amount is granted to you on the same day.

On the other hand, the loan amount can be availed without pledging any kind of collateral as security against installment payday loans online. This loan is supposed to be unsecured loan designed to help many borrowers.

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Conveycing quotes in UK can be easily found out but the condition is that you should know where to look and what is the right choice. If you are thinking to buy yourself some kind of property or most important if you are planning to a get a new house for yourself then you should make sure that the property conveyancing is performed in right way. The most important thing that you should keep in mind is that the conveyancingQuotes should be absolutely genuine.

The fees that will be incurred in conveyancingdepend on various types of factors and most importantly it depends upon the amount of work to be performed. If it is your first consultation with your property buying solicitor, then it is absolutely necessary that you should ask for complete breakdown of the fees. It is advised to take at least three quotes from various companies. The expenses that you will have to pay are divided into two parts: the conveycing fees and legal costs.

The legal cost is associated with the conveyances and it basically depends upon the amount of time that these conveyances would take in order to go through all your legal do[censored] ents and attending the whole conveyancing process. However the charges vary from conveners to conveners, some charge according to the hours spent and some ask for fixed charges.

So it is very important that you compare the conveyencing fees spent in this process before making any payments. There are many companies that help you to compare conveyancing quotes with just a push of the button. And the Conveyancing Quote UK offers this opportunity as well. The solicitors that you will find on these companies will be absolutely genuine and they would have positive feedbacks front the actual customers. In fact the solicitors here are supposed to sign legal agreements to ensure that the quotes that they charge are all inclusive without any kind of hidden charges. In short this means that the price that you quote will be the price that you will have to pay. An efficient and genuine service is the one, that follows the below mentioned features

• The Solicitors should be of extremely high quality

• There should be no hidden charges

• They should not ask for any move or any kind of
legal fee

• The solicitors should have genuine customer feedback
Above all the charges, there is an indemnity fees as well.

The conveyancer sometimes states that in case of any kind of unforeseen problems, these problems will be dealt only by paying an extra charge. However most of the conveyners ask for charges of land registry in advance. The conveyancing that one has to deal in case of residential property is not as complex as the commercial conveyancing and it is for most of the times calculated on a fixed amount. There are some other factors too on which the conveyancingfees depend, for example the fees depends on whether the property is freehold or leasehold. Leasehold properties generally cost more.

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