Lazy Man and Money

Goodbye Bank of America, Hello USAA

by 4 Comments

If the title wasn’t exactly clear, I’m changing my banks. This post is actually quite a bit overdue. I had been gradually doing it for a couple of years now. I would have written about it earlier, but I didn’t realize it until recently. That’s how gradual the change has been.

It’s not that Bank of America has done anything in particular to lose me as a customer. I know many were upset by their announcement to charging fees on debit card purchases (though Bank of America changed its mind on the fees). I wouldn’t have been affected by it since I rarely use my card as a debit card. It comes down to the fact that USAA is a better fit for me and my family.

What sets USAA Apart

The first thing that comes to mind is customer service. I know everyone has their favorite companies when it comes to customer service, but in almost every case it seems anecdotal. I could show you ten bloggers and each of them would have a favorite web hosting service – and a lot what they’d talk about would be the customer service. With USAA, it close to unanimous that their customer service is the best. What I like the most is that when I call I get the person’s direct extension in case I need to call back or follow up.

The other thing that sets USAA apart is that they actually give you money back at the end of the year if they have any left over. I know that sounds odd. I don’t have the full explanation unless it is this Wikipedia entry, but my wife has multiple times gotten a check back at the end of the year. (Since she is the sponsor of the account, more on this later, I don’t have the full details of what they sent for the both of us. When it’s money in my favor, I tend not to ask too many questions.)

It’s taken me a little while to embrace USAA. When I first looked into it, I was curious about the brokerage accounts. I compared them to Zecco who had been offering free trades at the time. I didn’t see their rates as being competitive. However, Zecco has since started to charge for most (if not all) trades now. The gap has closed to where the customer service and the ability to have my savings, checking, insurance, brokerage, and IRAs in one place far outweighs a couple of dollars a year I pay in putting my Roth IRA money to work in an ETF.

Recently, I was able to consolidate the 401ks from three old jobs into one Rollover IRA. I can’t tell you how much simpler it is to be able to log into one web site and see it all.

Why I may keep Bank of America

While USAA is great for any number of reasons, I still see a need for my Bank of America account. It’s not that I have any allegiance to Bank of America, but that I feel the need to have a bank in the real world – one with branches and people who I can talk to face-to-face. There are a couple times where this has come handy – usually when I need to have a certified check of some sort.

In some ways my banking has become a little microcosm of my business. It is 90% done through the Internet, but 10% done in the real world. I don’t see that changing any time soon. USAA gives me a bank that has the online tools that match my business.

So Bank of America, this isn’t really good bye like I said in the title. We can still be friends. I am just looking for more out of my banking relationship.

(Though it might seem that USAA sponsored this post. They have not. I just really like them and I think you will too. That is if you meet the eligibility requirements which typically require some military connection.)

Lehman Bankruptcy, Bank of America/Merrill Lynch: What Can We Learn Here?

by 6 Comments

I try to take a couple of weeks of vacation outside of America and Wall Street explodes. Lehman is filing for bankruptcy. Bank of America is buying Merrill Lynch. I don’t even need to get into American Insurance Group losing a third of value. It will teach me to get away from it all in isolated resort in Phuket, Thailand. I should be sipping Singha’s by the pool now, but I found myself drawn to the financial news.

One analyst on BBC World was asked about Lehman’s reported bankruptcy filing. He made a great point they don’t have a steady stream of deposits – and they don’t enjoy the same Federal protections. This is in contrast to companies like Bank of America and Citigroup who are much more diversified. It is this diversification that is allowing Bank of America to buy Merrill Lynch. Once again, we are reminded the value of diversification. Interestingly the next question was about whether it’s no longer worth it to “focus on one thing and do it well.” The analyst kind of panned the question. I would have said that it’s great to be focused in a popular area when times are good. When times are bad, it can be trouble.

Doesn’t that bring up an age old dilemma – is it better to diversify or focus? In many instances, I believe in diversifying. For investing, I think it’s just a certainly the way to go. When it comes to income streams, I believe in diversifying as well. Perhaps, I don’t give focusing it’s due. When it comes to being really successful, it seems that most do it by focusing on a few things and being the best at them. Aerosmith lead singer, Steven Tyler, says that anything worth doing is worth doing right. I mention that example, because he’s one of the best in the world at what he does. More than ever before, I’m reminded that diversifying seems to lead to a safety and possibly an average to above average lifestyle, while those looking for more may be better off focusing – just be prepared to end up bankrupt in your quest for greatness.

Apologies to SmartyPig

by 9 Comments

On Friday I went a little off the handle reviewing SmartyPig’s registration process. I got frustrated by the many security steps that I had to take before finally getting locked out because my information didn’t match the information in Equifax/SmartyPig’s database.

What I should have said is that many online banking security systems are not user friendly nowadays – and it’s not their fault. The fear of identity theft has driven everyone including regulators to more and more stringent standards. What confuses me is that not every bank has the expansive security process. I have accounts with Bank of America and TD Ameritrade. These account have thousands of dollars in them. These companies are worth billions of dollars – how can they not be required to implement these security systems? It makes no sense that a smaller start-up like SmartyPig, with a business plan that would lead to smaller accounts, should have to be more secure (and I don’t buy that they want to have this process in place).

Back in 2004, I worked for a company that created cell phone applications that utilized the GPS in some phones. It was a tremendously difficult business as only a small subset of phones were GPS enabled, and cell phone carriers didn’t want allow customers to install these applications on their phones (because they’d be the one that would get complaints if it didn’t work out). It was a frustrating time for the whole industry. I feel for SmartyPig – it seems like a similar situation to me. The comments from others showed that these extensive registration/login processes are frustrating customers. It’s not to the same degree, but when you are required to frustrate people, you are facing an uphill battle.

I don’t know if it came across on Friday, but I was particularly critical of SmartyPig. I had hoped to give them a review that would help them advance their product. It appears they will be taking my suggestion to reword the requirement of a driver’s license to include a state issued ID. I would like to see them be able to take a passport ID or a military ID in absence of those as well. Overall it’s a minor issue as most adults will have required ID. You’ll notice I stressed “adults” there. It would seem to me that the SmartyPig service would be popular amongst teens saving up for their first car or a video game system. Yet this target audience likely doesn’t have the state IDs necessary to sign up. I’m sure the SmartyPig team knows this and are looking at ways to address the youth market.

In the coming days and weeks, perhaps I’ll be able to set up an account manually and give a full review of the service.