Posts tagged “finance”

Where Credit Is Due

Magnises is a new sort-of-credit-card that evokes an ultra-elite black card. It’s not actually a credit card, though. As they describe it

Each Magnises member carries our distinctive metal membership card, which extends and enhances their pre-existing credit or debit card, and provides perks, benefits, and access to numerous high-end brands. Upon admittance, Magnises will construct a card for each new member. Magnises will then extend the magnetic signature from the member’s personally owned credit or debit card onto their new Magnises card.

Yep, that’s right. You get a metal card that looks like a credit card but simply has the credit card data copied onto it – from the credit card you already own. While there are perks, no doubt, with this card, it is not actually the thing it denotes. It’s merely a gussied-up package for the quotidian plastic in your wallet (well, maybe not your wallet, if you are reading this it’s unlikely you are cool enough to qualify).

As a species, our ability to create meaning out of almost nothing – and then charge money for the performance of that meaning – is astonishing.

For more, see

Magnises Black Card Has Its Privileges (Well, Sort Of) [NYT]

Kavita’s War Story: Managing money, oh joy!

Kavita Appachu shares her story about uncovering emotion where she hadn’t expected to find it.

Finance has never been my thing, and where possible I leave the chore of managing my finances to others. That changed somewhat a few years back when I started working for a company that makes financial software, specifically tax software. This threw me right in the middle of people’s financial lives.

What I had not realized was that while the task of managing finances may be very functional, everything else related to money and taxes is at its core very emotional. I have lost track of the innumerable times participants have poured their hearts out as they describe how they manage their finances, from the twenty-something who referred to her mom as ghetto, or the hulk of a guy who rattled off the choicest of expletives for his ex-wife. The one story that has stood out in all this is about a mom, wife and editor in Seattle.

On a rare sunny day, we pulled up to a community of condos with well-manicured yards. We rang the doorbell and my fellow researcher and I were greeted by our participant, who welcomed us into her very tastefully done home. There were pictures of the kids, family vacations, sporting events. It seemed like a happy home. The kids were at school and our participant had the morning off so she had decided to catch up on her finances, specifically her investments. We talked about the members of her household, her husband’s job, her job and their approach to financial planning. She was concerned their savings were not going to be enough for retirement and the kids’ education.

She had all her papers spread out on the dining table beside her laptop. We observed her going through the process of logging into both her and her husband’s 401(k) accounts, monitor her mutual funds and stocks and even place a sell order. Nothing out of the ordinary…and then she broke down in tears.

We were a little taken aback. She had a helpless look on her face and kept sobbing and muttering that woman, that woman. We calmed her down and then asked her if she wanted to share what was bothering her. She told us that as part of her husband’s divorce settlement from his earlier marriage he was required to pay for her stepchildren’s college. That was making a deep hole in their pockets and she was unable to save for her own children’s college education, take vacations or save for retirement. She hated the ex-wife and held her husband somewhat responsible for giving in to the ex-wife’s demands. She avoided tracking finances if she could because it was a painful reminder of her dire situation.

That was my aha moment. I had known all along that personal finances are very closely entwined to one’s life, but this really brought it home: personal finances are a mirror of your inner joys, sorrows and insecurities.

ChittahChattah Quickies

  • [from steve_portigal] Teaching Children the Basics of Saving and Spending [] – [We've explored people's attitudes and behavior around money in a number of projects. The power of education and influence at a young age is a clear takeaway from all that work, so this initiative is encouraging.] In the wake of the financial crisis and the realization that individuals share at least some blame for the bubbles, a number of people and organizations have taken up the cause of helping the next generation of grown-ups form better habits at an earlier age. Sesame entered the fray with a series of videos and other material aimed at teaching its audience about spending, saving and sharing. There is no definitive proof that any of this will make a lasting impact. “It would be 20 years before we would know the results,” said Laura Levine, JumpStart’s executive director, who served on Sesame Street’s advisory panel. But the beauty of watching young children absorb these lessons and answering their questions is that it can make you more aware of the financial examples you set.
  • [from steve_portigal] Lady Liberty Stamp Depicts a Vegas Replica [] – [A failure of traceability/transparency, when a representation of a replica is mixed in with the original. But the USPS claiming to prefer the replica is confounding (as they apologize) – does sexy trump authentic here?] The United States Postal Service has issued a new stamp featuring the Statue of Liberty. Only the statue it features is not the one in the harbor, but the replica at the New York-New York casino in Las Vegas. The service selected the image from a photography service and accidentally used the 14-year-old statue that presides over thousands of weary gamblers a week. “We still love the stamp design and would have selected this photograph anyway,” said Roy Betts, a spokesman. Mr. Betts did say, however, that the post office regrets the error and is “re-examining our processes to prevent this situation from happening in the future.”

ChittahChattah Quickies

  • What Does Your Credit-Card Company Know About You? – "In 2002 J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a “Mega Thruster Exhaust System” was pretty likely to miss paying his bill eventually. Why were felt-pad buyers so "upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores."

    The article goes on to describe how debt collectors build relationships with (rather than harass) debtors, who pay off more to the brands they have a relationship with.

  • We Are Now In The Age Of Nice – another Sunday NYT unsubstantiated trend-attempt – That amiable guys and uncomplicated sweethearts could be today’s pop heroes is one sign of an outbreak of niceness across the cultural landscape — an attitude bubbling up in commercials, movies and even, to a degree, the normally not-nice blogosphere.
  • Can supposedly-predictive quantitative market research techniques help Hollywood? – Still, is it smart to bring on pricey consultants when corporate overlords are demanding cost cuts? And what of the parade of failed attempts by consumer research firms to break into Hollywood? Few people in the industry can forget Tremor, the research firm that was owned by Procter & Gamble. It came to Hollywood in 2002, signed up with Creative Artists Agency and roped clients like DreamWorks — though its ideas often proved prohibitively expensive.

ChittahChattah Quickies

  • Henry: High earner, not rich yet – [Blogging this purely for the acronym]
    "HENRYs, an acronym we'll use to describe people whose financial situation can be summed up by the phrase "high earners, not rich yet." (I coined the term for a Fortune story in 2003 on the alternative minimum tax, or AMT, the bane of the HENRYs.) Put simply, the HENRYs are the bulwark of the professional and entrepreneurial class that drives the economy. Look in the mirror, Fortune reader, and you'll probably see a HENRY."
  • INFLUENCE AT WORK – Proven Science for Business Success – Robert Cialdini's business site for his work on persuasion
  • Robert Cialdini designs program where utility customers get smileys or frownies on their bill in comparison with neighbors – Last April, it began sending out statements to 35,000 randomly selected customers, rating them on their energy use compared with that of neighbors in 100 homes of similar size that used the same heating fuel. The customers were also compared with the 20 neighbors who were especially efficient in saving energy.
  • Coca-Cola Deleting ‘Classic’ From Coke Label – The Coca-Cola Company is dropping the “Classic” from its red labels in some Southeast regions, and the word will be gone from all of its packaging by the summer, the company said Friday. The font size of the “Classic” has been shrinking in the last decade, and the company removed it from labels in Canada in 2007.

    The language on the side of the label where it now says “Coke original formula” will change to say “Coke Classic original formula.” “Every place else in the world it is called Coca-Cola, except for in North America."

Paying for ease-of-use/trust

Yesterday’s NYT Magazine article about the check cashing industry offered an insightful anecdote about the sometimes counter-intuitive tradeoffs people make:

I met Oscar Enriquez leaving the Nix branch in Highland Park, a working-class area near Pasadena. He was skinny and just shy of middle age, with a quick grin and tattoos down his sunburned forearms. Enriquez worked in the neighborhood as a street cleaner; he picks up trash and scrubs graffiti. The job paid about $425 a week, he told me, a good chunk of which he wired to his wife, who has been living in Mississippi and taking care of her ailing mother. He told me he tries to avoid debt whenever he can. “If I don’t have money, I wait until the next payday,” he said firmly. “That’s it.” But he pays a fee to cash his paychecks. Then he pays even more to send a Moneygram to his wife. There’s a bank, just down the street, that could do those things free. I asked him why he didn’t take his business there.

“Oh, man, I won’t work with them no more,” Enriquez explained. “They’re not truthful.”

Two years ago, Enriquez opened his first bank account. “I said I wanted to start a savings account,” he said. He thought the account was free, until he got his first statement. “They were charging me for checks!” he said, still upset about it. “I didn’t want checks. They’re always charging you fees. For a while, I didn’t use the bank at all, they charged like $100 in fees.” Even studying his monthly statements, he couldn’t always figure out why they charged what they charged. Nix is almost certainly more expensive, but it’s also more predictable and transparent, and that was a big deal to Enriquez.

Banks (and phone companies, cable companies, airlines, etc.) are institutions that are not easy to use. There’s a lot of fine print, arcane legalese, hidden fees, and a general lack of transparency. Here’s someone with a limited amount of income that makes the calculation and pays a significant amount of that limited income to avoid going through that. The relationship with the bank failed for Oscar, and he’s paying money to avoid dealing with them.

We normally think of the privileged as those who buy their way out of inconvenience and hassle, but really, it’s something we do at all income levels. It’s just that our experiences frame what is and isn’t a hassle. If we’re middle class then we expect to be jerked around by Big Business because we have all our lives-as-consumers. If we’re lower class and we haven’t had those experiences, it may be less likely that we’ll tolerate them.

See what happens when you don’t listen to your consultant? Or Bad Interface Brings Apocalypse

About a year ago we worked with a client who designed and developed financial trading software. We were immersed in the arcana of this century’s financial markets, learning about Credit Default Swaps, or as they are known to the financiscenti, CDS. Our time with our client and their customers (rogueish but not rogue traders) was an educational journey into a power-oriented, confrontational, macho culture. Indeed, this organization was a rocky place where our recommendations could find no purchase.

Now, here we collectively stand with our mutual fund statements as smoking ruins in our fists and the arcana is now mainstreama, with headlines like $62 Trillion Credit Default Swaps Threaten U.S. Government Bonds as common as can be.

Two responses: i) I didn’t do it. Nobody saw me do it. You can’t prove anything. ii) We told you so.

Food as symbol of belongingness

A couple of months ago I spent a couple of weeks in London on-site with a client, meeting with different players and learning about how they did things, and how they were using the products they were developing.

This company is in the finance industry which has a pretty specific culture: high energy, male dominated, very social, very competitive. I was there as an outsider and I was obviously an outsider…strangely dressed, from “Silicon Valley” (one person I met with revealed that they had been anticipating my arrival by referring to me as Silicone Man, because, in part, they didn’t know my name), and of course asking a lot of ridiculous questions.

The trading floor (essentially rooms with rows of desks that have 3-6 monitors each) has a very hierarchical culture. For example, the young guys run out every day and bring back food for the other guys. One day I was working on the floor during lunch; the team I was with asked me if I wanted lunch, so I placed an order with two young traders from France, as they went out to Wagamama (or as they called it, Wags).

When the food arrived, one of the brokers noticed me with my bucket of noodles and announced to everyone “Hey, Steve is having lunch on the desk! Now he’s really and truly one of us!”

Being overtly included is always touching; I was struck by the power of the shared dining ritual (which in this case was simply the ordering, then we all sat at our desks with our computers and ate and worked) to delineate that inclusion.

I responded by announcing that one of the tools I use in my work is participant observation. “Oh…” he said, “We learn something new every day!”

Exchange Evolution

The photo is definitely quaint but still matches our iconic image of how trading (whatever that is; most of us have little understanding of the mechanics of markets or the activity of trading). Maybe we picture men in jackets with numbers on ’em, holding phones and throwing pieces of paper and yelling and yelling. But that era has disappeared as technology has eliminated the need for a central place. Trading takes place in distributed facilities, owned and operated by “banks” (including Morgan Stanley et al) not in centralized facilities owned and operated by exchanges. The Chron today considers the history of the exchange in San Francisco, now a gym.

A 1999 article in The Chronicle reported that only about 5 percent of the 17.5 million shares traded daily there involved personal interaction on the exchange floor.

The romance was ending. Warren Langley, president and chief operating officer of the exchange from 1996 to 1999, wrote in an e-mail that those who had devoted their lives to the exchange “really were in pain as the world of technology and telecommunications made floor-based exchanges obsolete (and made the value of their jobs go away).”

In 2001, the exchange announced a merger with the electronic marketplace corporation Archipelago, eliminating the need for brokers to interact face to face, and sold the trading floor in 2002.


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