Amyx

Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

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Why Not All Financial Advice Is Equal

Financial advice means different things to different people. Many think financial planning refers to day-to-day budgeting and cash flow management, i.e., balancing your checkbook. Others believe it’s referring to investing your money in stocks, bonds and mutual funds. Or if you listen to the financial services firms, financial planning is referring to retirement.

According to the Financial Planning Association and the Certified Financial Planners Board of Standards, financial planning is defined as the process of meeting your life goals through the proper management of your finances. Life goals can include reducing debt, buying a home, saving for your child’s education, planning for retirement, saving for a major purchase, safeguarding against premature death, disability or long-term care, minimizing taxes, and managing impact from job changes. So you can see that financial planning is a holistic way to look at your entire life. It’s all the major financial decisions that affect your family.

Unfortunately, not all financial advice is equal. There are many online sites that convey that they do financial planning when in fact they focus on one area only, it lacks the robustness and depth and/or it can’t give you regulatory compliant advice (oversight by SEC, FINRA, and Insurance Administrator). The online landscape is highly fragmented, ranging from simple calculators that do basic future value calculations, single goal tools that focus on budgeting, debt or banking and can’t give real advice to online investment advisors that only look at investments and ignore comprehensive financial planning such as retirement accumulation & distribution planning, risk mitigation, estate planning and tax minimization. And most sites require tons of data entry.

Then there are the traditional financial advisors and planners. They charge exorbitant fees, that’s assuming that they will even take you on as a client. Most financial advisors are Investment Advisor Representatives (salesmen) that focus solely on investments. If you need help with estate planning, they will refer you to estate planning attorneys. If you need help with insurance, they will refer you to an insurance agent. This goes for banking, tax and other needs outside of investments. In other words, even the offline financial advisors do not practice comprehensive financial planning as defined by the Financial Planning Association. So don’t believe that all advice is same, as they vary drastically in terms of breadth, depth and compliance.

What differentiates Amyx is that we combine the best of the tools with compliant, holistic financial planning advice & implementation to provide an entirely new experience.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.


What We Believe: Social Cause

We have a higher calling. The founding values of Amyx are first and foremost about social cause:

·      Empowering families to prudently manage their holistic finances

·      Putting families first to build a stronger society

·      Helping families to become financially independent

·      Decreasing income inequality between the poor and the rich

·      Reducing dependence on government entitlements

Amyx is about building strong families. We believe that when we help equip families, they in turn shape our society. We believe that the grass-roots work we are doing is more powerful and sustaining than any fiscal, monetary or government public policy.

We have a global perspective. The concept of family transcends culture, nationality, race, creed, color, and religion. Families can be found in every continent. Some struggle with the very basics — clean water, food, and shelter. Our mission is to have an impact on families and children around the globe so they too can build a brighter, stronger future. We are committed to allocating our resources to improve the lives of people around the world.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.


What We Believe: Choice


What happened to the notion of choice? What choice is there if you don’t want to work with a financial advisor? None that is a true, viable alternative.

Online discount brokers don’t offer investment advice; they are simply a trading platform. It’s up to you to sort through the thousands of investment choices to come up with the right mix of investments. Confused with the myriad of choices and options, many find themselves doing little to nothing. Studies show that from 401(k) to brokerage accounts, most investors don’t have a clue as to what they are doing. Their results, statistically, trail far below market indices and are rarely well diversified to reflect their risk-reward profile.

Budgeting sites, online calculators, and financial blogs cannot give SEC/ FINRA and Administrator compliant advice as they are not a licensed Investment Advisor, Financial Planner or Insurance Agent. In addition, these sites do not have the rigor nor the domain (CFA, CFP, CPA) expertise to render sophisticated advice.

The inherent biasness of advice has worsened since the 2007 – 2009 financial crisis.  Due to market consolidation, only a handful of large banks dominate the industry.  Less competition means less choice and less consumer leverage. Similar to trends with health insurers, when only a few large companies control market share, these financial advisors are emboldened to flex their market power by increasing fees and premiums without your permission.

We believe that choice is integral to a healthy free-market. Ultimately choice benefits you. Amyx is a customer-centric alternative to brick and mortar financial advisors. We are properly licensed to give holistic financial planning advice, possess the CFA and CFP best practices and knowledge to give you quality advice, personalized advice on your terms. 


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.


What We Believe: Change

We believe that change in financial services is over due. The balance of power is out of equilibrium. What happened to customer advocacy and customer rights?

Financial advice should not be opaque, biased, and expensive. It’s time for the people to take control of their financial management for themselves without being dependent on misaligned professionals. We can no longer be at the mercy of financial advisors.

20 years ago if someone were to tell you that people no longer needed to work with CPAs to prepare their taxes, would you have believe it? Or that paper newspapers and books may become obsolete one day? These are a few examples of how disruptive innovations change the very landscape and even our consumer buying behavior.

We believe that change is upon us. Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Amyx: disrupting the financial services industry by shifting the power to the people.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.


What We Believe: Putting Your Interests First

From financial advice, mortgages to credit cards, we find that financial services firms put their profits above the interests of their customers. Bernard Madoff, Allen Stanford, Raj Rajaratnam, Goldman Sachs, AIG, Societe Generale, and Bank of America to name a few.

Financial advisors are no different; they are simply the agents of these firms. It’s about their bottom-line. From tiers of hidden fees at every layer of financial product creation, distribution, retail to the final sale; breakdown of fees from assets under management fees, retainers, hourly fees, minimum fees to commission; to how financial advisors gouged clients with less than a $1 million in investable assets, the status quo advice model is about extracting the most money from each and every client. According to Forrester’s annual Customer Advocacy survey, clients indicate that their financial advisors do not have their best interests in mind.

At Amyx, we believe in putting your interests first. We believe that when we do what’s right for the customer, we as a society win. To make this a reality, we have had to completely dismantle the existing way of doing business. As explained in Why The Traditional Financial Advisor Model is Broken, we first removed the cost structure of providing advice offline and then as described in How Can Amyx Help Me?, built our holistic advice solution from ground up to promote customer advocacy, unbiased advice, transparent products, lowest pricing, performance, greatest value for the least effort, automated progress and alerts to always watch your back, and highest security to give you confidence.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.


Why The Traditional Financial Advisor Model is Broken

In order to fully appreciate the cost of delivering financial advice, it’s important to look into the cost structure of the traditional brick and mortar branch operation. A typical branch office with independent or captive financial advisors will have the following in common – a commercial office space to conduct business, support staff, office equipment and supplies, software and data services to generate advice, and countless business-related expenses. Whether the financial advisor works as an independent contractor, employee or operates his own practice, these structural costs of doing business are priced into the cost of your financial advice.

Let’s assume that this financial advisor has 100 clients and is supported by a paraplanner and an office assistant. Below are line item expense categories that give a low and high range in annual costs:

Removing one-time and/or replacement costs such as leasehold improvement, desks and furnishings, and computers and equipment, we arrive at a range of $310,650 to $645,600 per year. Dividing those figures by the number of clients gives us $3,107 - $6,456 per client. Given the high overhead, per my article How You’re Gouged When You’re A Non-Millionaire, it becomes more transparent as to why financial advisors will not take on clients that generate less than $10,000 to $20,000 in fees per year.

The $3,107 - $6,456 per client cost does not take into account transaction fees (purchase fee, redemption fee, exchange fee), periodic fees (management fee, account fee) and other operating expenses charged by product manufacturers, distributors, and finally the financial advisor.

So you can see that the cost of doing business is incredibly expensive for a brick and mortar financial advisor or planner. Like any business, they have to pass down the cost to the customer in the form of fees. Given the fundamentals of a traditional financial advisory business paradigm, it’s difficult to squeeze the margin to give you the best pricing.

What makes Amyx so disruptive is that we throw out the physical office model out the door. We’re able to deliver highly personalized advice at the lowest cost structure through the Internet. We don’t have the overhead of skyscrapers, national saleforce, branch offices, rep. salaries and fixed costs. Our paradigm allows us to take the fat out so you keep more.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

Is This You?

This is Michael. He’s 39 years old, married with two children. He and his wife both have a Master’s degree. Michael is a senior manager at work.

Michael loves new gadgets and technology. He was the first in his peer to get an iPhone and now an iPad. He keeps track of all the coolest apps on his smartphone and on the Internet. Aside from email and text messaging, he finds Facebook and Twitter to be a great way to stay connected with his friends and fans. For Michael, it’s all about being first. He’s a trendsetter. When someone wants to know the latest, coolest thing, Michael’s the man.

For Michael, there’s nothing more important than being in control. He doesn’t want someone telling him what to do. That’s why he uses TurboTax to file his taxes; Mint (Intuit) to track his budgeting; and trades on a discount brokerage site. 

When he and his wife were just starting out, they didn’t have a lot of money to save. Some 14 years later, things have changed. Their investable assets have recently surpassed $250,000. When he had little money, it was perfectly fine trading stocks in an ad hoc way but now that their wealth is growing, he’s feeling the pressure to get some professional help. But the last thing he wants to do is to pay an arm and a leg to those greedy financial advisors to manage his money. No way. But what’s his alternative?

As a husband and a father, Michael feels responsible for the welfare of his family, including financial management. He has a 401(k), IRA, brokerage account and savings and checking accounts but he’s not absolutely confident that he’s doing the right thing. He’s got a few mutual funds in his investments but he’s not entirely sure that he’s optimized. Looking back the last 10 years, much like the general public, he lost money during the post-dot.com and the Great Recession. He’s made some money but because of some poor investments, overall, he has been losing money. 

Deep inside he knows that there’s more that he can do to protect his family and to build wealth but he’s not entirely sure how to go about it. Michael intuitively knows that he probably needs more life insurance to protect his family in the event of a premature death but he’s not sure how much he needs and what type of insurance is right for him. 

With his children in fourth grade and second grade, he worries about estate planning and guardianship. Because his work requires him to be on the road often, every time he gets into a car or on a plane, Michael crosses his fingers. But what if something were to happen to him or worse to both he and his wife? The thought sends chills up his spine. Who would take care of his kids? Would they love his children as much as he does? What about their religious, academic, and moral views? Would they be able to manage his finances properly to ensure that resources are available to his children?

Michael and his wife are also feeling the pressure to start saving for their children’s education but what’s the right savings vehicle that has the best tax advantages, flexibility, investment options and performance. Browsing the Internet, he found hundreds of 529 savings plans and pre-paid plans and after awhile it got to be overwhelming. Plus the prospect that his children need some $350,000, each, for undergraduate education is paralyzing.  How does his get started?

In terms of taxes, Michael knows that he could do more to minimize his tax exposure but he’s not clear on the nuances and tax implications of his investment choices and family planning. He just knows that taxes creep into everything from his paychecks, investments to estate planning but without becoming a CPA, how will he know all the ins and outs?

And as a man, the last thing he wants to do is to admit to someone that he needs help. God forbid that someone finds out that he’s not really on top of his family finances. Michael needs a solution that he can manage, anywhere, anytime with confidence.

Amyx is a customer-centric alternative to financial advisors and planners. We give you the control to make informed decisions about your holistic financial planning needs. Find out how Amyx can help you: http://bit.ly/js1ZSK


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

How You’re Gouged When You’re A Non-Millionaire

Financial advisors often require a minimum opening balance in order to establish an advisory relationship. If the required minimum balance is not maintained, the customer is charged various fees for failing to meet the requirements and then eventually pushed out of the firm.

Below is an actual asset based fee schedule from a financial advisory firm.  Notice that the fee schedule for less than $200,000 is not listed because they don’t want those small accounts. Many financial advisors will not work with households who have less $250,000 - $500,000 in investable assets.


We decrypted the tiered fee schedule so that you can easily see how the percentages translate into nominal dollars.

The rows highlighted in red represent the less desirable clients. From financial advisors’ perspective, unless they can generate at least $20,000 in client fees, you’re not a profitable client. Referred to in the industry as the “book of business”, financial advisors don’t want to have thousands of small clients that they have to service for little incremental gain. They prefer to work with a few ultra high net worth clients and fire the rest.

The non-millionaire clients are regarded as pests that suck up their time and bombard them with questions and annoying phone calls. Clients fall under two categories – 1) revenue generating and 2) non-revenue generating. If you have less $1 million in investable assets, you fall under category two.

The fees don’t stop there. Below is screen shot of a brokerage fee schedule from a prominent financial advisory firm. Asset account fees, retirement account fees, brokerage fees, margin loan fees, transfer fees, delivery fees, stop payment fees, wire transfer fees, replacement fees, document retrieval fees, safekeeping fees and other miscellaneous fees can be found. And with most clients never digging through statements or reading the fine print fee schedules, financial advisors are more than happy charging you these fees.

Online discount brokers, on the other hand, are geared toward the do-it-yourself investor. They don’t offer investment advice; they are simply a trading platform. It’s up to you to sort through the thousands of investment choices to come up with the right mix of investments. The problem is that most people never get beyond the research. Confused with the myriad of choices and options, many find themselves doing little to nothing. Studies show that from 401(k) to brokerage accounts, most investors don’t have a clue as to what they are doing. Their results, statistically, trail far below market indices and are rarely well diversified to reflect their risk-reward profile.

So what is a viable customer-centric option?

Amyx.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

How Can Amyx Help Me?

For households with less than a $1 million in investable assets, what is a viable alternative to the expensive financial advisory relationship that puts their interest first? Amyx.

Amyx is a customer-centric alternative to financial advisors & planners.

Unbiased

We are unbiased because we don’t manufacture products. We don’t underwrite our own mutual funds, ETFs, annuity or insurance products and then distribute those products through our salesforce. Rather think of us as the Amazon of financial products. Based on your needs and suitability, we lay out the options with full transparency for you to decide. We don’t favor one company over another. We simply give you the facts.

Wholesale Pricing

At every lifecycle of a financial product, from creation to final sale to an end customer, financial services firms generate revenue at every stage.  Amyx changes all that by eliminating the middlemen. You can now buy direct from product manufacturers to avoid the distribution, retail and advertising layers. Think of us as the wholesale of financial products. In many cases, buying from us is cheaper than buying from the product manufacturers (who sell through captive agents & reps to retain a fatter commission for themselves) because we don’t have the overhead of skyscrapers, national saleforce, branch offices, salaries and fixed costs. We take the fat out so you keep more.

Performance

Standard & Poor comes out every year with their Indices vs. Active Fund Scorecards. Since the scorecard inception, every year, passive or index funds have beat the majority of active funds. So then the obvious question that arise is why are we continuing to invest in actively managed funds, including separately managed accounts, wrap accounts, discretionary accounts and other active forms of investing? And fees of active funds are clearly higher, as much as 50% more than passive index funds.

We focus on asset allocation & index investing, not chasing the latest hot stock tips. That discipline allows you to lock in the upside while minimizing the downside. And unlike most brokerage firms, we actually watch your portfolio and proactively alert you when you drift from your recommended asset allocation.

No Effort

With Amyx, there’s almost no effort. Through our sophisticated proprietary algorithm we are able to automatically generate a holistic picture of your financial planning needs without you entering mounds of data.

This is a huge departure from the systems used by financial advisors to dumb calculator sites. Our system does all the hard work so you don’t have to. After the initial setup, it’s on complete auto-pilot. From there, using our machine learning algorithm and predictive intelligence, we anticipate your potential future needs, be it expecting a new baby, new home, new car, better school district, college savings for kids in grade school, etc.

Always Watching Your Back

Our customer-centric solution is always on, 24x7. The system is on complete auto-pilot. We push out regular progress reports and alert you to improve your situation. You don’t have to lift a finger or update your data because we do it for you. We’re always watching your back so you don’t have to.

Locked Down

We provide bank-level security. Amyx maintains high standards in technology to ensure the safety of your data.

·      24/7 system logging and intrusion monitoring

·      24/7 physical security at our redundant Tier 1 data centers, including highly restricted access via biometric scanners, closed circuit TV monitors, and windowless facilities

·      Amyx always transmits all data information securely using 128-bit SSL encryption

If you’re tired of your status quo financial advisory relationship, sign up to be notified when Amyx beta launches later this year.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

Why My Financial Advisor Fired Me?

Kathy received a call from her financial advisor one afternoon indicating that she was fired as a client. To give some background, Kathy has been a client of this nationally recognized brokerage firm since 1994. During that time she’s had the same financial advisor. Her financial advisor over the years got to know her as a person, sent her birthday best wishes and witnessed major life milestones in Kathy’s life. So after 17 years, one would expect a deep level of loyalty. Not so.

The last few years of recession have decimated her portfolio and with her involvement in a new startup, she has had to draw income from her brokerage account to sustain her living expenses. Recently, her account value fell below the “less than desirable” amount.  That’s when she received a call from her financial advisor. “Kathy, I noticed that your account value has dropped below $100,000. I need you to pay a minimum fee of $8,500 if you want to continue working with me. If you can’t or aren’t willing to pay the minimum fee, then I would have to ask you to go to another firm.” After 17 years of advisory relationship, Kathy found herself dumbstruck with no words to utter back.

As she shared her story, she spoke in a tone of disbelief and hurt. Just because her assets fell below $100,000, she got the boot from this financial advisor that she has been doing business with for almost two decades. And the worse part of it is that this unspoken policy is the same at every other firm. Where is she to go? Who will take her as a client? If you don’t have at least $1 million, your financial advisor let’s you know that you’re a second-class citizen. Their message to you is a loud and clear “go away”.

Amyx was created to specifically serve the less than $1 million account clients. We value you as a total person. You’re not just a social security number. You are your own unique person with complex needs and big dreams. Amyx is here for you, always putting your interest first.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

Meet the Jones

This is David & Sally Jones. (Their names have been changed to protect their identity.) They are the proverbial middle class. They own a large home in the suburbs, drive a SUV, and shuttle their older child to soccer and swimming practices. David earned $90,000 a year working as an IT manager at a mortgage company. Sally works part-time at a nearby hospital in customer service.

When his mortgage company went into bankruptcy shortly after the financial crisis, he found himself without a job. Since 2008, he has been unable to find another job. He has long since run out of unemployment benefits. Without sufficient income to pay their mortgage, they tried for months to modify their home loan with their lender with no avail.  They eventually lost their home to foreclosure. Now they live in a two-bedroom apartment in a less desirable part of town. Sally’s part-time income is barely enough to cover their food expenses.

“I never thought that I would be in this situation. I was making good money and I thought I was in a secure position in my IT role. My wife and I are in total shock. It feels like a bad dream that I can’t wake up from,” David shakes his head in disbelief. “We’ve had to pull our kids out of activities and paying [for] grocery is a constant struggle. I don’t know when this nightmare is going to end,” says Sally.

Since his unemployment, David was forced to tap into his retirement savings. Before the financial crisis, he had about $50,000 in his 401(k) and $25,000 in his brokerage account. After the market crash, his accounts plummeted by 60% and never recovered.

Through his work, he was introduced to a financial advisor a few years back. Before the recession, he grumbled about the high fees that his financial advisor charged. During the market crash, his financial advisor was of no use. “He told me to hold on so I didn’t sell when the market started tanking. A few months into the recession, he told me to sell my holdings and go into couple of stocks. Well, not only did my paper losses become real losses but I also found myself in poor investments going nowhere. In the meantime, I had no choice but to continue to draw down my savings to cover our living expenses,” sighs David. “I wish I had good advice that I could trust. In hindsight, I realized that my financial advisor was only watching out for his interest, not mine. I wish there was a way that I could have protected my family from these unforeseen situations.”


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

 

The Rich Are Getting Richer and The Poor Poorer

The Big Picture

According to economists Richard Burkhauser, Jeff Larrimore, and Kosali Simon, their findings show that while the rich have been getting richer for the last 30 years so too have the poor and middle class. “The bottom line is [conventional wisdom] asks what’s been happening to private personal income over time and they are right if you look at that for tax units, things do not look very good for the middle class,” Burkhauser commented. “But if you take other things into account, the reason the country has not gotten in a civil war is because things are not that bad. This isn’t a zero sum game, where one group wins at the expense of others. The growth in productivity of Americans in the top twenty percent of tax units increased the size of the economic pie sufficiently to register major gains across the entire distribution of after-tax income.”

But It’s Not Without Income Inequality

Tyler Cowen, Holbert C. Harris Chair of economics as a professor at George Mason University, believes that much of America’s income inequality is the result of compensation in the financial services industry. Cowen argues that the current state of finance means the rich do get richer at the expense of others. “Extraordinary profits are made by spotting an incorrect price and trading on this. But not everyone can get rich this way. There is only so much money to be made in any one arbitrage opportunity. The first person who acts gets the biggest piece of the pie.” This was witnessed during the subprime mortgage asset bubble, the buildup and the eventual burst. Goldman Sachs & John Paulson made a killing by betting that the subprime market would implode.

Another reason why the finance sector pay comes at the expense of the poor is that there are distortions in the financial services industry that creates moral hazard. Government bail-outs and guarantees encourage excessive risk taking where the rich get all the upside and the poor and middle class bear the downside by being more adversely effected by recessions.  As of 2011, who’s left holding the bag? The poor and middle class. The subprime meltdown that triggered the Great Recession was the direct result of “too much upside with too little downside” mindset of financial advisors. People lost some $19 trillion in household wealth from June 2007 to March 2009.

And more recently, the wealthy have only gotten richer while the poor have gotten poorer. During the market abyss of 2008 when Fortune 500 company stocks spiraled down to near penny stock pricing, most middle class fled the market to park their assets in safe harbors such as Treasuries, money market and gold. The super wealthy on the other hand, with ample cash on hand, doubled-down and bought severely undervalued stocks at $1 - $5. When the stock market roared back to pre-free fall pricing, some made as much as a 1,000% return in less than a year. The middle class, on the other hand, witnessed their retirement and investment assets decline by some 40 – 60%. Since many middle class did not receive good financial advice, they did not reenter the stock market in time to participate in the rally; they lost money on the way down and never recovered when the market went back up.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

  

Forrester Research on Customer Advocacy

In Forrester’s recent annual Customer Advocacy rankings, 33 percent of customers of financial services companies disagreed with this statement:

“My financial provider does what’s best for me, not just its own bottom line.”

The financial services firms that rated lowest on the answer to that question are, in order:

• HSBC

• Citibank

• Fifth Third Bank

• TD/Commerce

• Capital One

• Chase

• Bank of America

According to one customer, he commented “Their fees are astronomically high and their advisors are less knowledgeable than your local mom and pop financial planner.  They under performed the market every single year I was with them and tried to lie about the performance to trick me. They pretend to have a global advantage but really they have absolutely nothing.”

“Given the mistrust and anger that consumers currently have toward the financial services sector, customer advocacy has never been more relevant,” said Forrester Research Vice President and Principal Analyst Bill Doyle.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

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What’s The Right Capital Requirements for Banks?

FDIC Chairman Sheila Bair is warning the banking industry against trying to water down financial regulations in the wake of the recent financial crisis. Regulators argue that the higher capital requirements will help make the financial system more stable but banks are complaining that such requirements would restrict their ability to lend.

At a recent financial conference, JPMorgan Chase CEO Jamie Dimon stated that there is no longer any reason to crack down on Wall Street. “Most of the bad actors are gone,” he said. “[O]ff-balance-sheet businesses are virtually obliterated, … money market funds are far more transparent” and “most very exotic derivatives are gone.”

As Robert Reich, Professor of Public Policy at UC Berkeley reminds us, “Someone should remind Dimon that a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy. Remember, Jamie? The Street’s antics required a giant taxpayer-funded bailout.”

So what is the right level of capital requirements? Basel III international regulators are negotiating how much above the agreed minimum of 7 percent large international banks should hold. Some believe Basel participants will settle on requiring banks to hold an additional 3 percent in capital. Some proposals go as high as 20 percent.

Just to give you some perspective, for homeowners, a common guideline for debt-to-income ratios is 33/38, 33 percent for maximum monthly housing cost and 38 percent if you include other liabilities. In other words, banks will not lend you more than 38 percent of your income. That puts your “reserve” income at 62 percent.

As another benchmark, for businesses, upper acceptable limit of the debt-to-equity ratio is usually 2:1, with no more than 1/3 of debt in long term. In plain English, instead of looking at capital requirements as a percentage of total risk-bearing assets, this ratio disciplines businesses to not exceed their debt ratio more than a third of their shareholder equity, a much smaller figure than total assets. (Shareholder equity is calculated by subtracting total liabilities from total assets.)

So how is it that households and businesses are held to a much more stringent leverage guideline than banks? If anything, based on their past track-record, financial conglomerates have a higher propensity for risk-taking, at our expense. Especially banks should be subjected to a higher capital requirement to subdue their risky behavior.

In a study by economists Beltratti and Stulz, they show a connection between better stock price performance during the financial crisis and higher capital requirements for banks. The researchers compared banks in 20 different countries for their stock price performance both before and during the 2007 – 2009 financial crisis. Using a variety of measurements, they concluded that banks that faced tougher capital requirements during the housing boom saw their share prices rise far more modestly than less tightly governed banks. Once the crisis hit, however, banks with higher capital requirements did not see their stock values plunge like other less restrained banks. The economists concluded that banks with higher capital requirements and more independent boards were able to ride out the crisis better.

The banks want us to believe that tighter regulation is no longer needed and that higher capital requirements will choke the economic recovery. Economics reminds us that individuals and entities are motivated by self-interest. Bankers are no different. It’s about their self-interest, not our interests. 


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 


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Customer Service is Lip Service

So if you’re paying an arm and a leg for your financial advisory relationship, what are you getting in return? Certainly performance is suspect. So are you at least getting outstanding customer service? 

According to Forrester Research, customers rated most banks and financial services firms low on customer satisfaction.

The concierge Wealth Management team model where you have a single point of contact with access to specialized tax, investment, insurance, and estate planning experts are only reserved for the premier ultra High Net Worth clients, aka Private Bank and Trust Services. The red carpet treatment unfortunately is not available to the rest of the 99% of the population, meaning you and I.

As you drop from three digit million, two digit million to single digit million, the level of service and resources dedicated to your account plummets. If your investable assets are less than $1 million, they begrudging service you, limiting contact to one or two reviews per year; quarterly reviews if your advisor is relatively new and looking to build up his book of business or you’re delegated to a junior staff member.

Sure you get a birthday card or an occasional phone call about a market opportunity but the reality of the advisory practice is that a financial advisor can manage hundreds of clients. If they give the impression that they are familiar with your family and your personal matters, it’s only because they maintain a detailed log of all conversation in their client relationship management (CRM) systems. So the next time you call in, on the other side, your advisor is pulling up your record and reading the notes from your last conversation to give you the impression of a personal relationship. Birthday and anniversary reminders are automatically triggered by their CRM and calendaring systems.

What you perceive as a meaningful human relationship is based on a mirage. So if you’re not paying for customer service, what are you paying for? To help your financial advisor or insurance agent live the good life… at your expense. And for that, they thank you.


Disrupting the financial services industry by shifting the power to the people. We believe that change in financial services is over due.

Amyx is on a mission to take back control from financial services, to eliminate the middlemen and to give unbiased advice. We are a new way of doing business with you at the helm. Amyx is about empowering the people. Amyx is about change.

Add your email to be invited to our private beta launching in late 2011. Unless you speak up, nothing will change.

 

Save Your Spot.

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