Northwestern Mutual Purchases LearnVest

Northwestern Mutual Life Insurance and Financial Services have been in business for close to 160 years.  It’s a stable insurance company that recently purchased LearnVest for close to $250 million.  LearnVest has technology Northwestern Mutual needs to prospect, service, and acquire more young clients.  Northwestern Chairman John Schlifske indicated there is still a gap between what consumers really want and what financial companies provide.  Northwestern Mutual will try to fill the gap by delivering financial securities in a different way.  Most established insurance companies do not have a strong young professional client base one of LearnVest’s strengths. Young professionals are looking for a modern way to budget their finances.  Northwestern Mutual acquired LearnVest because their financial education will complement Northwestern Mutual’s existing services.  LearnVest has close to 1.5 million users and their basic resources are free with an option to purchase a financial planner for $299.  The planner is unique because it provides personal advice regarding budgets, investing, spending, and much more.

Northwestern Mutual’s recent purchase of LearnVest has raised culture clash questions.  The purchase to increase technology capabilities makes sense but LearnVest is unique because it provides unbiased planning services.  This is the reason why they acquired 1.5 million users.  The unbiased service can easily change to Northwestern Mutual taking over and selling life insurance, disability insurance, and a variety of investment products that existing LearnVest users will likely be turned off by initially.  Also, the acquisition of LearnVest may have been too expensive because the number of users that pay for LearnVest’s premium financial planning service is low.  There are also questions regarding the total number of financial planners LearnVest actually has because the numbers keep changing.

Even with the concerns LearnVest is special because of its younger client base.  They struggle with debt, budgeting, and setting up 401(k) accounts.  Most stable insurance and investment companies do not have young clients mainly because they focus on middle to older aged adults. (The ones with the most money)  LearnVest will become a subsidiary of Northwestern Mutual with the founder Alexa von Tobel CEO and chairman of LearnVest board.  Northwestern Mutual will work with LearnVest to establish a stronger relationship with their clients from start to finish addressing all of the equations and stages of their financial lives.  Users that sign up for a free account to LearnVest will have the ability to analyze personal goals such as the total amount of time expected to pay an existing credit card debt and my budget setup tab to calculate what’s left over after inputting fixed costs and flex spending.  The must read tab has well written articles on how to save money and common traps that reduces a person’s wealth.  LearnVest is an alternative to Mint where both provide money management tools anyone can use for personalized financial planning needs.  To learn more click on the link provided.  www.LearnVest.com

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Who Pays the Most For Car Insurance?

Young men pay the most for car insurance because statistically speaking they are the riskiest drivers.  Gender plays a role along with many other factors when your insurance premium is calculated.  If you are 20, single, and male you will pay about 22% more than a female who is 20 and single.  If the 20-year-old man is married the insurance will be lower because the assumption is males that are married tend to be more serious.  Married males drive carefully because they may want to start a family and are more responsible.  Statistically, male drivers get into more car accidents, drive further distances, and get more speeding tickets.  Women have many fender benders and higher rates of non-injury accidents for age groups over 25.  Teenage girls are also known to text or talk more while driving.  Auto insurance premiums will drop for both genders as they get older and if you have a clean driving record.  The age of 26 is when biased prices stop because both men and women drive more carefully as they age.  Vehicle insurance costs for both decreases the most from ages 45 to 60.

The type of car you drive also plays a factor on your insurance premium.  The more expensive the vehicle the higher the insurance cost.  Every type of car and model has performance reviews insurers pay attention to.  The lower the safety rating the higher the insurance.  To lower your insurance premium stay away from the color red, specialty, luxury, and sports vehicles.  Cars with low insurance are easy to repair and have lower amount of claims.  Pay attention to your credit score because poor credit ratings means higher risk.

If you’re a teenage male and don’t fit the biases listed above by insurers the best ways to reduce insurance premiums is to get good grades and by proving it.  Maintaining a B average should provide an auto insurance discount.  If you receive few tickets and no car accidents should also qualify you for good driver discount.  Always opt for traffic school if you do receive a speeding ticket and purchase car alarms for more insurance discounts.  In 2014 the average annual cost to pay for car insurance was around $910.00.  This does not calculate every coverage drivers may sign up for and will likely vary from where you live.   In the end men pay about $15,000 more over the course of their life than women for vehicle insurance.  It’s best to shop around every couple of years because pricing policies will vary for insurance companies.

Tax Refunds to Your Prepaid Card

Some taxpayers select the option of a prepaid card to receive their tax return instead of traditional government checks or direct deposit into bank account(s).  Does it make financial sense to opt for the prepaid card?  Most financial experts say it depends.  If you already have a bank account and do not need the extra cash for day-to-day expenses then select government checks or direct deposit.  Direct deposit is preferred because it’s more secure than a check.  It’s the most convenient way for E-filers because the money should be received within 14 days after filing federal returns.  Taxpayers prefer direct deposit because they have options to send the entire funds to one account or separate them to several accounts with a free transfer of charge.

Prepaid cards should be used for taxpayers without a bank account that need the income quickly to pay expenses or to allocate for future projects.  Prepaid cards are convenient budget helpers for people that overspend on day-to-day expenses.  The income from the tax return may leave barely any for over spenders to use for future projects of renovating their house, fixing their car, or for vacation.  Prepaid cards do eliminate the possibility of lost checks but the fees end up reducing the total amount of the tax return.   The fees alone are the reason why it’s best to shop around for the best-prepaid cards.  Taxpayers do not need to select prepaid cards from IRS or major tax preparers such as TaxAct, Jackson Hewitt, Turbo Tax, and H&R Block.  Most prepaid debit cards will have an account and routing number so picking the ones with the lowest fees is the best option for people without a bank account.  Taxpayers can also cash their check using cash checking services, but the fees are often more than prepaid cards.

American Express New Game Plan

American Express Company (AmEx) has decided to end its partnerships with Costco Wholesale Corp. and Jet Blue Airways Corp.  The terms of the partnership with Costco were changed in ways that increased the risk with little return.  Walking away makes sense to some for AmEx because credit card loans are the riskiest form of loans that can easily turn into losses if the economy slips into a bad recession.  Costco had a 15-year partnership with American Express, but will end up signing contracts with Visa and Citigroup.  Costco accounted for 10% of AmEx’s cards and about $80 billion of spending in 2014.  American Express had been known as the card to have for the wealthy and well-traveled, but the allure of the card is dwindling because competition is intense.  Citigroup in particular is known to hire experienced executives away from American Express.  American Express will have to overcome many challenges for the next couple of years to maintain long-term revenue.  US cardholders are partnering with one another and the rewards are getting better for rivals especially when they offer lower annual fees.

American Express is not winning any favors with consumers either.  AmEx charges merchants more per-transaction fees than their competitors.  The agreement AmEx has with their merchants is one that forbids them to encourage customers to use competitor cards such as Visa or MasterCard.  As a result, retailers have been accused of persuading their customers to use something that costs more and is not in the best interests for them.  A federal judge in Brooklyn ruled anti-trust laws were violated.  American Express will appeal because they pay much more to merchants than their rivals.  They think it leads to “premium” authority to dictate processing fees.  If the appeal is not successful, it will just add on to their losses.

To generate additional revenue annual fees and interest rates will increase for some of AmEx’s products.  AmEx and Charles Schwab will work with one another to co-brand cards and a new loyalty program called Plenti will be introduced.  Points gained can be spent on a variety of retailers and AmEx gold card holders will see additional benefits of gaining more points and a travel service.  The Plenti rewards program is intriguing because it’s independent of the current rewards program offered by AmEx.  What makes Plenti special is that customers can use Visa, MasterCard, or other competing cards to participate in the program.  Shoppers do not need the AmEx card.  1,000 points is equal to $10 in savings and the points can be redeemed from a list of participating companies such as AT&T, Macy’s, Rite-Aid, Hulu, and more.  Companies have incentive to participate in the Plenti rewards program because they can share customers.  If customers already shop at Macy’s and have rewards or other discounts they may use the rewards points gained from Plenti to shop at Rite-Aid instead.  This should generate new business because customers may be more inclined to try other stores if they have benefits from where they already shop at.

Why Switching Banks May End Up Costing More

Consumers may want to change banks for a variety of reasons.  Most decide to switch because of unexpected fees, higher interest rate accounts, and poor customer service.  However, switching banks may end up costing you more while leaving you with a headache.  Before making the switch always weigh the pros and cons because sometimes the best move is not making a move at all.  No one enjoys getting hit with unexpected fees especially in a bad economy.  Unexpected fees are the number one reason why people switch banks, but it’s not always the banks fault.  Banks usually always credit the account if it’s something they did.  Not fully comprehending the limits to your accounts and skimming through the fine print will result in unexpected fees.  If you do decide to close, there are fees for closing accounts too early.  When you open an account it needs to stay open for a certain amount of time usually 90 days to avoid any fees.  Early close out fees can range anywhere between $25 to $55.  Even after your accounts are closed not properly linking your direct deposit can reopen closed accounts resulting in more fees.

The lure of higher interest rates can cause people to switch banks.  Pay attention to what the benefits are for the account.  Do they offer any free/discounted checks, no monthly maintenance fee, online bill pay, unlimited check writing?  It’s best to read the minimum balance requirements, monthly debt transactions required, monthly maintenance fees, returned item fee, if they offer overdraft protection, and non-affiliated ATM usage fee to make sure the high interest account is appropriate for you.  Maintaining all of the requirements to keep the interest account may be more work than what you realize.  Plus there is the added stress of building a solid relationship with another bank.  This can be helpful when applying for loans sometime in the future.

Poor customer service is another reason why people switch banks.  Always think twice especially if it does not happen often.  A bad experience or two will happen anywhere you go where there is customer service.  This includes restaurants, movie theaters, retail clothing stores, car dealerships, etc.  Proving a point is counterproductive if you already have beneficial features to your accounts other banks do not offer.  Switching to credit unions will have disadvantages as well.  Credit Unions are known to have high overdraft fees, limited options for users on their websites, fewer branch locations, and questionable brokerage services if at all.  Credit Unions customer service and unexpected fees will be the same as established banks.  Having accounts with one bank is preferred because it suggests financial stability and familiarity with whose working.  Loyalty can aid customers with negotiation when they get hit with fees.  Financial emergencies do occur and banks will be more lenient if they do not happen often.

Kraft and Heinz to Merge

The major news for today is the merger of Kraft Foods and Heinz to create the 3^rd largest food and beverage company in North America and 5^th largest in the world. It will be called The Kraft Heinz Company and will have an estimated value of $28 billion in revenue while Berkshire Hathaway and 3G Capital will invest another $10 billion as part of the deal. 3G Capital and Warren Buffett will control 51% of the new company and Kraft shareholders will control 49 percent. The cash dividend received to shareholders will be $16.50 per share.  The co-headquarters will be in Chicago and Pittsburg. Kraft CEO stated “This combination offers significant cash value to shareholders and the opportunity to be investors in a company very well positioned for growth…..” Warren Buffett worked with 3G Capital in the past to acquire Heinz and helped finance Burger King’s purchase of Tim Hortons.

Big mergers such as this will always raise many questions. Where will the growth come from? Both are inorganic food companies selling products to consumers that changed their tastes mainly to healthy organic unprocessed food.  U.S. food makers including Kraft and Heinz have struggled to develop new products to reflect the change in preference.  Many of Kraft and Heinz products for sale are packaged processed food. The Kraft Heinz Company will have to innovate and make products more to consumer preferences for them to build their client base especially if they are looking to expand overseas. Another concern people have is will there be any layoffs?  Mergers typically come with layoffs. Mature companies look for opportunities to cut costs and mergers will lead to employees leaving. There is no indication for any layoff plans in the future, but don’t be surprised if they do. 3G Capital is known as a fierce cost-cutter when they acquire companies.

Kraft brands are in 98% of households in the United States. Many speculate the merger was because Kraft wants to sell more products overseas. Heinz can help with international expansion because it has close to 61% of their business overseas. The Kraft Heinz Company will seek “international expansion of Kraft brands through the Heinz platform.” The merger is important to us as consumers because The Kraft Heinz Company will not have as much competition as it did before the merger. This may give them the ability to charge higher prices for their products without much resistance from consumers.  Mergers are always tricky because it is difficult to determine how customers will react. Will the Kraft Heinz Company be able to retain their existing customer base, maintain relationships with their suppliers, and hire new personnel to help grow their business?

Iris Authentication Technology to Reduce Vehicle Thefts

Statistics indicate auto theft has been declining in the U.S. and is significantly less than any other time since 1960.  National Insurance Crime Bureau reported 699,594 vehicles were stolen in 2013 a reduction of 58% from 1991 of $1,661,738.  The most common types of vehicle theft are not returning rental vehicles, fraudulent financing, acquiring duplicate keys illegally, and VIN switching.  Honda Accord, Honda Civic, Chevrolet full-size pickup, and Ford full-size pickup are the preferred choices for thieves that often end up in the black market.  Increased efforts from law enforcement and innovative technology have had a positive impact on vehicle theft.  The ability for law enforcement to have access to remote surveillance cameras, bait cars, and automated license plate readers all helped to bring the statistics down.  Even with the reduction more efforts are being made to prevent the financial loss vehicle owners have to overcome when their car is stolen.

To reduce the statics even further, eye-reading technology has been developed to prevent vehicle thefts in the U.S. and abroad.  EyeLock is a New York based company that partnered with Voxx Electronics to develop an iris scanner capable of preventing a vehicle from starting unless the scan is matched to the driver’s iris.  The iris scanner called “Myris” will be installed in the vehicles visors and rear-view mirrors.  The purpose is to start the vehicle only if the driver is validated.  The new technology will increase the level of vehicle security while the authentication process will take less than five seconds to complete.  The iris scanner is special because the likelihood of another individual that has the same iris as yours for a single eye is 1 in 1.5 million while both eyes is 1 in several trillion.  The “Myris” scanner will use both eyes to validate the driver consisting of 240 unique properties.  The scanner will also be able to customize personal vehicle settings based on the driver including seat and mirror positions.  Up to five registered users can have access to the one vehicle using eye-reading technology.  New cars will be able to have the iris authentication feature within 4 years making it more difficult for vehicle theft.  The one major hassle for the new technology will be valet parking.

The 2015 Jeep Wrangler is the first to incorporate eye-reading technology which has also been used in a 3D-printed car displayed in the 2015 North American International Auto Show.  The iris scanner is currently being explored to help insurance companies detect fraud easier and for fleets.  Managers in trucking companies may use the technology to monitor their drivers.  They want to make sure their employees are the only ones driving company trucks instead of someone else.  The technology will improve operational efficiency as well because it will produce mileage reports and be able to spot drivers who are on the road for a longer period of time than what’s preferred.

The Rise in Streaming Music

In 2014 the revenue from streaming music beat sales for CD’s.  US streaming music had $1.87 billion as compared to CD sales of $1.85 billion.  Only one track for 2014 sold more than 5 million units: Pharrell Williams “Happy,” selling 6.45 million units.  The overall music industry revenue remained flat at around $7 billion the same for the past couple of years, but what changed was how consumers listen to their music.  CDs were replaced by digital downloads over the years, but now streaming music looks to replace both.  Streaming music has increased 29 percent from last year consisting of paid subscription outlets and internet radio services.  It was the only one in the music industry that grew in 2014.  Downloading music still generates the most amount of money close to $2.58 billion in the music industry, but it has decreased 40 percent since 2013.  For downloading music most consumers purchase their songs from places such as Amazon’s Digital Music, Apples iTunes Store, eMusic, and Zune.

The increased use of streaming music has resulted in many unhappy artists.  Most do not like the changes in the music industry because the amount of money received from streaming is not as high.  Recording artists like receiving royalties from the sale of their CDs, tapes, and vinyl.  Streaming is mostly for consumers because of the access to many songs at cost efficient monthly subscriptions.  Artists and musicians on the other end don’t see many benefits.  Taylor Swift pulled all her music content from streaming service Spotify citing her albums will get hurt from future sales.  She isn’t alone because Pandora was criticized recently by singer Bette Midler for receiving only $114 from more than 4 million plays.  Singer-songwriter Prince is known to have a love/hate relationship with YouTube while Garth Brooks, The Beatles, and Pete Townshend refuse to have their content played on any streaming services.

If you’re looking for the best streaming service provider then most typically go for Pandora, Spotify, Google Play Music, and Tidal.  Users that subscribe to Pandora (www.pandora.com) can listen to their favorite music add free.  The Music Genome Project will scan your favorite artists to locate your favorite songs or music that’s similar at $4.99/month.  Spotify (www.spotify.com) is a bit different but quickly catching up to Pandora with its subscriber growth mainly because it operates in over 50 different countries.  Pandora is more popular in the U.S.  However, Spotify is known for a large music library, superb tools for customized playlists, and radio feature to stumble upon quality music.  Google Play Music (https://play.google.com/store/music?hl=en) is best known to be able to store up to 50,000 songs free.  Your favorite songs can be streamed from the web, iOS device, or Android.  Finally, Tidal (www.tidal.com) offers unlimited streaming to more than 25 million tracks that is compatible with Android and iOS devices.  They also have over 75,000 music videos with most of them in HD.  It’s $19.99/month with a 7 day free trial and is known to provide CD quality music.

Uber and Lyft Face More Regulations

Uber was founded in 2009 and is now in 277 cities worldwide.  It has gained popularity along with other ride sharing companies such as Lyft because consumers can order a ride through their phone instead of standing near street corners and waving their arms.  Ride sharing companies are often less expensive than traditional taxi and limousine companies.  The rise in ride sharing companies resulted in taxi and limousine companies demanding the same safety and insurance requirements for everyone.  New Jersey lawmakers are now considering a bill to enforce background checks for all drivers including ride sharing companies such as Uber and Lyft to ensure valid licenses and to have state vehicle inspections.  If the bill gets passed drivers from all transportation companies will need permits from the Motor Vehicle Commission to operate their business in New Jersey.  Independent free-lance drivers will need to pay thousands of dollars a year in insurance and meet safety requirements similar to taxis and limousines.  Hundreds of Uber supporters protested on the State House steps where lawmakers were reviewing the bill.  The non-unionized drivers working for Uber state the New Jersey’s Transportation is better because of the increased competition.  If the regulation bill gets passed many Uber drivers in New Jersey can not afford to operate.  Lawmakers in New Jersey proposed the bill to establish more accountability for both passengers and drivers.  It’s a safety measure to ensure all passengers are in a vehicle that is properly insured and licensed by a qualified driver.

Should independent drivers of ride sharing companies follow the same rules as taxis and limousines?  It’s a heated debate that has strong points on both sides.  It does seem lawmakers want to have every transportation company follow the same rules and regulations as taxi and limousine companies.  The disagreement in New Jersey is not unique because other states such as Maryland, Oregon, and Michigan are all dealing with the same issues.  More states are requiring transportation companies to follow vehicle-for hire regulations and to pay county fees that taxi’s and limousines follow.  In New York City Uber vehicles outnumber yellow taxi cabs.  The number of registered Uber vehicles is 14,088 compared to 13,587 yellow cabs.  Critics of ride sharing companies argue they save more money by not conducting thorough background checks and only paying for basic insurance at their passenger’s expense.  As more transportation regulation bills get passed (it’s expected) the competition will be more intense among taxis, limousines, and free-lance independent drivers.

Facebook Moves into Mobile Payments

Mobile payments are the transfer of money that is performed using a mobile device. Mobile payment solutions are on the rise used by financial institutions, credit card companies, and internet companies. It’s an alternative form of payment to send money to people that first gained attention from Asia and Europe. Now many U.S. companies are implementing mobile payments to provide another form of payment consumers can use in their daily lives. Users that have Facebook’s instant messenger can send money to their friends if they link their debit cards to the service. You can instantly send money to people known as “peer-to-peer payments.” The new payments feature started on Tuesday but can take months before everyone on Facebook has access. Once available, Facebook users will be able to open a message, tap $ icon to enter an amount, and tap Pay to send the money across instantly. The payment feature will be for a Visa or MasterCard debit card. Based on where one banks, the funds should be available within one to three business days. The new payment feature will be available for Android, iOS Messenger apps, and the messaging section of Facebook’s website.

Security is always a concern for mobile payments and it’s the primary concern for Facebook’s messenger payment service. Identity fraud will inevitably take place because the social network is used by millions of people. Hackers will do their best to get into people’s accounts and gain access to their debit card numbers. Facebook is aware of the security concerns and considers security as their top priority. They utilize secure systems that have layers of software and hardware protection that meet and exceed industry standards. The payment systems are separate from other parts of the Facebook network and their anti fraud team will monitor and control it carefully. Facebook is also in a tricky situation because it has a good relationship with PayPal that is in the payment business. Facebook does not want to burn any bridges and Stevie Davis the product manager for the company is downplaying the situation by saying the goal is just to make the messenger “more useful, excessive, and delightful.” Facebook wants to add more features to their messenger system while also monetizing on their ads. It is expected PayPal will continue to have a healthy relationship with Facebook.

PR company Walker Sands surveyed 1,400 consumers and found the use of cash has been declining among people. An estimated 59% surveyed carry less than $20 in their pocket. There is more demand especially from the younger generation to use mobile payment systems. However, only about 19% aged 46-60 said they would consider using mobile payment systems. Facebook has been interested with payments and messaging for a long time now. David Marcus who previously held the position of eBay’s payments subsidiary PayPal was recently hired to Facebook to “build something new and meaningful at scale.” There are about 500 million monthly active users to Facebook Messenger as of November 2014. This is a big opportunity for Facebook to capitalize on peer-to-peer payments that is essentially different from Apple Pay, Google Wallet, and Samsung Pay. Facebook is more about using their messenger system to conveniently pay your friends while other big tech giants are focusing on using their payment systems to make purchases at actual retail stores. If the payment system is a success Facebook will broaden their services for users to purchase products directly from their advertisers.