4 ms·

this is a good explanation too, and from a local. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-broker

by basch 7y ago

this is a good explanation too, and from a local. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... The writing was on the wall for E-Trade. Banking is in an ebb of consolidation. E-Trade and TD Ameritrade had to sell once Interactive Brokers / Schwab started that game of dropping commission. They didnt add enough other value besides stock trading. They are a component to a larger banking suite. I have to think Wealthfront and Betterment are targets now too. I have to think American Express is still a viable target as well. The next thing empires SHOULD be looking at, is overall life management software. Personal Capital, YNAB. I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. Instead of showing you the balance of each account, it would show you how much you have, how much you need in the future, and how much you can spend today. And then automatically apply extra cash to the best spots, and automatically use credit and pay it off. Using credit AS part of the budget process. Not completely dissimilar from Singapore's Central Provident Fund.

lotsofpulp 7y ago
> Banking is in an ebb of consolidation. All businesses are consolidating due to economies of scale and low marginal costs from automation and computing power. > I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. There are numerous differing laws for each kind of account and required disclosures. You also can’t have joint tax advantaged retirement savings accounts.
- basch 7y ago
  >All businesses are consolidating And a lack of trust busting. Government deregulation, cheap cash, big exits. >There are numerous differing laws for each kind Thats why I said an abstraction. All the underlying accounts exist, but are hidden behind a layer. You can peak in and see individual balances, but thats not how the data is presented to you. You dont interact with it and make decisions based on the components. You set parameters, percentages, and targets, and it autobalances the rest. It would need to be able to tap into employer 401K's to make holistic decisions, doing something like blooom combined with automatic tax efficient fund placement. Automatic output of tax documents. Automatic HSA tagging. Scan and digitize receipts. Maybe even a more advanced "invest the hsa, keep track of the receipts, set targets for optimal reimbursement (potentially years down the road.)" There is so much innovation space left on the consumer experience side of banking. Like Personal Capital, I have to think Credit Karma is an attractive buy as well, getting into life management: a bank that does your taxes for you, that comparison shops your auto insurance. Personal Capital, Credit Karma, M1, Blooom, Angieslist, HomeAdvisor, and TrueCar would be a really slick bundle if some VC wanted to make an Office 365/AdobeCloud of life management.
ghaff 7y ago
Yeah, I've been meaning to consolidate accounts for a while now and just haven't gotten around to it. There was value in the E-Trades and Ameritrades when their commissions were a lot lower than Fidelity, etc. So even if you had an account with one of the traditional brokerages for 401ks, etc. it made sense to have an Etrade account for various personal stock trading. That's not true any longer and there's at least some mental overhead to tracking multiple accounts.
- basch 7y ago
  Fidelity having IRA, HSA, and a 2% cash back Visa (Citi and Paypal are Mastercard for 2%) is a really attractive bundle.
  - nytesky 7y ago
    Why do you value Visa over MC?
murph-almighty 7y ago
>I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. I think it'd be complicated to regulate from a risk perspective. Checking and savings accounts get insured by the FDIC, how do you insure a large pile of money invested practically everywhere in varying risky scenarios? You'd need to at least create a boundary between "FDIC-insured low interest funds" and "your results may vary but will probably be fine" funds.
- basch 7y ago
  that would still exist, you just wouldnt see it from the UI/dashboard that you interact with day to day. There would be risk parameters, not dissimilar to the "find your risk tolerance" type wizards today. the important part being to eliminate too many choices. the more choices people have, the more chances they choose a suboptimal one or panic and choose nothing. (paradox of choice.)
- fossuser 7y ago
  Haven Money was an attempt at this (startup a friend/former coworker started to tackle this), but they recently sold to credit karma. https://havenmoney.com/ https://havenmoney.com/ It was a cool idea - basically they'd auto invest some portion into a total market index, pick the best rates for things in your 401k, etc.
  - celticninja 7y ago
    And credit karma was itself acquired recently.
- hakfoo 7y ago
  I think there's a related product out there. Think of the traditional baby boomer era story-- "Dad brings home the paycheque, Mom does the budget." Give me Mom as a service. Don't let me touch my full salary, just what's left after a responsible adult has done with it. Let me plug in every account I have, and set up rules like * Pay the rent on the first cheque of the month and the electric company on the second * Pay credit cards in full up to a total of $1200/month; if beyond that pay towards the highest rates first while still covering minimum balances * If there's a break in of cash flow, draw down from savings to $500 to retain the current pay rates, then drop payments on all accounts to minimum. * Leave $150 per week from cash flow where I can withdraw it for petty cash. * Anything unspoken for is sent to an automatic purchase of (broad index fund|treasury debt|Pokemon cards) on a weekly basis After a few years of using the account with $150 per week on it, you check the statement and see that the money that Mom-as-a-service has withheld from you is enough to buy the entirety of Alberta.

by basch 7y ago

lotsofpulp 7y ago

> Banking is in an ebb of consolidation. All businesses are consolidating due to economies of scale and low marginal costs from automation and computing power. > I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. There are numerous differing laws for each kind of account and required disclosures. You also can’t have joint tax advantaged retirement savings accounts.

basch 7y ago
>All businesses are consolidating And a lack of trust busting. Government deregulation, cheap cash, big exits. >There are numerous differing laws for each kind Thats why I said an abstraction. All the underlying accounts exist, but are hidden behind a layer. You can peak in and see individual balances, but thats not how the data is presented to you. You dont interact with it and make decisions based on the components. You set parameters, percentages, and targets, and it autobalances the rest. It would need to be able to tap into employer 401K's to make holistic decisions, doing something like blooom combined with automatic tax efficient fund placement. Automatic output of tax documents. Automatic HSA tagging. Scan and digitize receipts. Maybe even a more advanced "invest the hsa, keep track of the receipts, set targets for optimal reimbursement (potentially years down the road.)" There is so much innovation space left on the consumer experience side of banking. Like Personal Capital, I have to think Credit Karma is an attractive buy as well, getting into life management: a bank that does your taxes for you, that comparison shops your auto insurance. Personal Capital, Credit Karma, M1, Blooom, Angieslist, HomeAdvisor, and TrueCar would be a really slick bundle if some VC wanted to make an Office 365/AdobeCloud of life management.

ghaff 7y ago

Yeah, I've been meaning to consolidate accounts for a while now and just haven't gotten around to it. There was value in the E-Trades and Ameritrades when their commissions were a lot lower than Fidelity, etc. So even if you had an account with one of the traditional brokerages for 401ks, etc. it made sense to have an Etrade account for various personal stock trading. That's not true any longer and there's at least some mental overhead to tracking multiple accounts.

basch 7y ago
Fidelity having IRA, HSA, and a 2% cash back Visa (Citi and Paypal are Mastercard for 2%) is a really attractive bundle.
- nytesky 7y ago
  Why do you value Visa over MC?

murph-almighty 7y ago

>I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. I think it'd be complicated to regulate from a risk perspective. Checking and savings accounts get insured by the FDIC, how do you insure a large pile of money invested practically everywhere in varying risky scenarios? You'd need to at least create a boundary between "FDIC-insured low interest funds" and "your results may vary but will probably be fine" funds.

basch 7y ago
that would still exist, you just wouldnt see it from the UI/dashboard that you interact with day to day. There would be risk parameters, not dissimilar to the "find your risk tolerance" type wizards today. the important part being to eliminate too many choices. the more choices people have, the more chances they choose a suboptimal one or panic and choose nothing. (paradox of choice.)
fossuser 7y ago
Haven Money was an attempt at this (startup a friend/former coworker started to tackle this), but they recently sold to credit karma. https://havenmoney.com/ https://havenmoney.com/ It was a cool idea - basically they'd auto invest some portion into a total market index, pick the best rates for things in your 401k, etc.
- celticninja 7y ago
  And credit karma was itself acquired recently.
hakfoo 7y ago
I think there's a related product out there. Think of the traditional baby boomer era story-- "Dad brings home the paycheque, Mom does the budget." Give me Mom as a service. Don't let me touch my full salary, just what's left after a responsible adult has done with it. Let me plug in every account I have, and set up rules like * Pay the rent on the first cheque of the month and the electric company on the second * Pay credit cards in full up to a total of $1200/month; if beyond that pay towards the highest rates first while still covering minimum balances * If there's a break in of cash flow, draw down from savings to $500 to retain the current pay rates, then drop payments on all accounts to minimum. * Leave $150 per week from cash flow where I can withdraw it for petty cash. * Anything unspoken for is sent to an automatic purchase of (broad index fund|treasury debt|Pokemon cards) on a weekly basis After a few years of using the account with $150 per week on it, you check the statement and see that the money that Mom-as-a-service has withheld from you is enough to buy the entirety of Alberta.