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Filled Under: Financial

Financial regulators may limit forced arbitration

EW YORK — Suing your bank or debt collector might be getting a whole lot easier.

The Consumer Financial Protection Bureau is considering new regulations that would severely
curtail a contentious practice called mandatory arbitration, which is when consumers are forced to
take disputes to a third-party mediator instead of to court. Consumer advocates have long argued
that it does a disservice to people who have disputes with banks, credit-card issuers and other
financial services.

Many Americans don’t know that, buried in the fine print, they’ve agreed not to bring lawsuits
against banks or other financial institutions if they have complaints over issues such as disputed
charges on their checking accounts or credit card bills.

Instead, they’re required to go through a binding arbitration process. Consumer advocates say
these arbitrators are often biased and routinely rule against consumers. If a customer loses an
arbitration ruling, oftentimes it cannot be appealed.

The goal of forcing disputes to be arbitrated instead of litigated was to streamline and lower
the cost of resolving disputes that customers had with financial services.

But what started off as a good idea became corrupt over time, critics say. Companies who did not
like how an arbitration firm ruled could shop around, giving arbitration companies a reason to rule
in favor of the companies who hired them.

The proposal follows years of scrutiny by financial regulators, state attorneys general and
consumer financial advocates.

“Companies can sidestep the legal system, avoid big refunds and continue to pursue profitable
practices that may violate the law and harm countless consumers,” said Richard Cordray, director of
the CFPB, in a statement.

The proposal is the first step toward restricting the practice. The regulator is likely to face
stiff resistance from the financial industry and the CFPB’s critics in Washington.

“Forcing consumers to hire expensive lawyers and go to trial rather than use a low-cost dispute
resolution system harms the very low and middle income consumers the CFPB should be helping,” said
Rep. Jeb Hensarling, R-Texas, who is chairman of the House Financial Services Committee.

The CFPB’s proposal does not ban arbitration, which is legal under the Federal Arbitration Act
of 1925. Instead, the new rules would allow disgruntled customers to sue banks or other financial
companies through a class-action lawsuit, even if they’re subject to arbitration agreements.

Financial companies will still be able to force individuals to settle disputes through
arbitration, though those cases are less common. Many disputes are also resolved outside of the
formal arbitration process.

Another proposal would force companies that continue to use arbitration to submit those claims
to the CFPB, so the agency can make sure the process is fair to customers.

If a group of bank customers found they were victims of unfair practices at their bank, under
the new rules they would be able to pursue a class-action lawsuit.

Now, customers can be bound to use individual arbitration to resolve disputes, even in cases
where many individuals were victims of the same practice. For consumers, pursuing individual
lawsuits is typically a drawn-out and expensive process.

“It is simply impossible to have an effective group claim where the vast majority of consumers
have all lost their right to have their day in court,” Cordray said.

Arbitration experts say that allowing class action lawsuits to go forward is in essence a
de-facto ban on arbitration because the service, which is typically paid for by the bank, becomes
less cost-effective.

“If I was a consumer advocate against arbitration … I would be popping those champagne corks
right about now,” said Alan Kaplinsky, a consumer financial services lawyer with Ballard Spahr.

Is the world heading for its third global financial crisis?

For Ilan Goldfajn, chief economist at Itau, Brazil#x2019;s largest private bank, and a former deputy governor of the country#x2019;s central bank, sorting out the budget deficit will be crucial to bring investment back into the country.

  • AEP: Brazil reduced to junk as BRICs facade crumbles

#x201c;You have to adapt to the new reality, and the new reality is that terms of trade are different. Commodities are very different. You can either accept or deny this. If you accept it then you have to tailor your budget to different prices. Oil in Colombia, copper in Chile, iron ore in Brazil: all the commodity producers just have to realise it#x2019;s a different business now.

While attempting to spend your way out of trouble is not recommended, targeted infrastructure investment that could raise growth in the short and medium term, is.

Peru declared a public holiday on Friday to coincide with the IMF annual meeting. The main reason? To keep cars moving in a city where traffic jams are notorious. I think the traffic in Lima is even worse than Bogota, jokes Cárdenas.

So what lies in store for the countries that do not adjust? #x201c;They will end up like Brazil,#x201d; says Goldfajn. #x201c;Brazil basically denied the reality for four years. The diagnosis was: something is happening, the government is not stimulating enough, we are not spending enough, there is not enough credit, there are not enough public subsidies so we should just push, push, push.

#x201c;But in the same way Brazil benefited from the boom, it now has to deal with the bust.#x201d;

Holy Grail of global growth

The dilemma now facing emerging markets has posed a bigger question: where is growth going to come from now that the emerging market engine is stalling?

Maurice Obstfeld, the IMF#x2019;s new chief economist, said last week that the #x201c;holy grail#x201d; of robust global growth remained #x201c;elusive#x201d; #x2013; six years on from the Great Recession.

The IMF said the risk of recession had increased in many regions since April Photo: IMF

Central banks around the world have cut interest rates more than 600 times since Lehman Brothers collapsed, yet this has not been enough to secure the recovery.

Obstfeld#x2019;s predecessor, Olivier Blanchard, who retired from the post at the end of last month, is more upbeat than the tone of the latest IMF health checks suggest.

  • Five charts showing why its time to worry about the world again

Blanchard is used to hearing the Financial Stability Report forecasting the end of the world every six months. #x201c;At this stage, I#x2019;m not very worried. Sure, the baseline is unexciting. Sure, there are risks, coming from the real economy or the financial sector. The nature of the risks keeps changing. But I don#x2019;t think at this stage the risks are larger than they have been in the recent past,#x201d; he says.

Blanchard is particularly calm about China, and says claims that economic growth could be slowing to an annual pace of between 2pc and 3pc are not based in fact. He says the IMF spent a lot of time talking to Chinese policymakers over the summer.

Navigating college financial aid options pays off

When Joyce Montag began visiting colleges with her daughter Angela, she was stunned by the costs and what the family would be asked to contribute.

Her daughters preferred school, Davidson College, a private liberal arts college in North Carolina, where tuition, room and board cost $60,119 a year, told the family that it could offer no aid.

“I was in sticker shock,” said Montag of Slippery Rock.

A friend, David Collins, who recently retired from St. Vincent College after four decades in college admissions and financial aid, jumped in to help. He talked with Angela, learned about her interests, and came up with several schools he thought might be a good fit.

In the end, Angela fell in love with one of Collins suggested choices and secured a full scholarship to Juniata College, a small liberal arts school in central Pennsylvania that costs $51,740 a year to attend. She earned a degree there and went to law school at the College of William Mary in Williamsburg, Va., on a partial scholarship. Today she is senior counsel to Netflix.

Collins loves to hear stories like that. Its the reason he started offering free financial aid counseling to those looking to find a college that will meet their needs at a cost they can afford. He said he wants to help families negotiate what can be an opaque and difficult course to receiving financial aid.

“I have had a great career. I have a passion for college counseling, and now that I have time, I want to give something back,” said the 63-year-old, who lives in Unity.

At this time of year, when students are applying to colleges and parents are reeling from the skyrocketing cost of higher education, tapping the wisdom of experts like Collins who know the intricacies of the financial aid maze is crucial.

The College Board, a website that offers tools to those getting ready for college, said $238.3 billion in grants, scholarships, federal work study dollars, loans and tax credits were awarded to students in 2013-14. And $10 billion in private loans was given out. Making sure students get a piece of the money available is what Collins has set out to do.

“Theres definitely a need for that,” said Greensburg Salem High School guidance counselor Laura Klipa, because comparing and contrasting financial aid packages can be daunting.

“They dont know the ins and outs of how to go after money students dont have to repay.”

The federal Education Department recently started collegescorecard.ed. gov, an online tool to eliminate some of the confusion about college costs and benefits for families with children in college. Colleges are required to post on the site net price calculators to help families estimate costs based on income and other circumstances. But experts say many families are foundering.

“It can be a very confusing and intimidating process for certain students, especially those whose parents arent as financially savvy as some and havent gone through it themselves,” said Megan McClean, a director at the National Association of Student Financial Aid Administrators.

Who gets what and how much debt a student incurs can vary dramatically from one school to the next. Experts say its critical that families do their homework, ask questions, ask colleges if they can increase their aid offers, weigh alternatives, and remember that the sticker price colleges quote for tuition can be misleading. Some of the confusion can be from how a particular college handles financial aid.

“There are so many gotchas, so many things that can skew your thinking,” Collins said.

Collins cited a few examples:

o Packages that make it appear mandatory that parents take out loans for their children.

o Work study that appears to directly lower tuition but is part of an aid package requiring the student to find a job on campus.

o Some schools deduct from aid packages the money a student brings in from outside scholarships. For instance, if a student gets a $1,000 Elks scholarship, that amount is deducted from a students financial aid package.

o Large grants offered to freshmen for only one year.

As families search for help with financial aid, experts stress that high school guidance offices are a good place to start.

At Canon McMillan High School, guidance counselor Karen Rubican has developed an online site where she and others post links to scholarships. Rubican keeps an eye out for ways to help a student fill the gaps on college finances, as well as for information to ease confusion about aid.

“I troll Twitter for scholarships. Ive found lots of links there,” Rubican said. “I just found something on CollegeRaptor.com — ‘Everything you think you know about college scholarships is wrong — that might help some families.”

Klipa and Rubican urge families to take advantage of free advice whenever they can. The counselors invite representatives from the Pennsylvania Higher Education Assistance Agency to their schools twice a year to advise families on college finances and help them fill out federal income disclosure forms used to determine aid awards.

Mark Kantrowitz, publisher of Edvisors.com, who has testified in front of Congress about financial aid several times, said families should begin planning for college early, focus on net price, rather than sticker price, and always include a school in their planning that can be afforded without any financial aid.

Kim McCurdy, a PHEAA Higher Education access partner who provides services to Allegheny County schools, said thats the same advice she gives to families to help them avoid last-minute problems. She steers them to MySmartBorrowing.org, an online financial planning tool PHEAA has developed.

“I still get a phone call every summer from a parent who owes $10,000 to their students university, and they cant afford to send them. We really want to avoid that kind of thing,” she said.

Debra Erdley is a staff writer for Trib Total Media. She can be reached at 412-320-7996 or derdley@tribweb.com.

Financial Fridays: It’s Financial Suicide To Own A House

I am sick of me writing about this. Do you ever get sick of yourself? I am sick of me.

But every day I see more propaganda about the American Dream of owning the home.

I see codewords a $15 trillion dollar industry uses to hypnotize its religious adherents to BELIEVE.

Lay down your money, your hard work, your lives and loves and debt, and BELIEVE!

But I will qualify: if someone wants to own a home, own one. There should never be a judgment. Im the last to judge. Ive owned two homes. And lost two homes.

If were to write an autobiography called: My life — 10 Miserable moments owning a home would be two of them.

I will never write that book, though, because I have too many moments of pleasure. I focus on those.

But I will tell you the reasons I will never own a home again.

Maybe some of you have read this before from me. I will try to add. Or, even better, be more concise.


Everyone has a story. And we love our stories. We see life around us through the prism of story.

So heres a story. Mom and Dad bought a house, say in 1965, for $30,000. They sold it in 2005 for $1.5 million and retired.

Thats a nice story. I like it. It didnt happen to my mom and dad. The exact opposite happened. But…for some moms I hope it went like that.

Maybe Mom and Dad had their troubles, their health issues, their marriage issues. Maybe they both loved someone else but they loved their home.

Heres a fact: The average house has gone up 0.2% per year for the past century.

Only in small periods have housing prices really jumped and usually right after, they would fall again.

The best investor in the world, Warren Buffett, is not good enough to invest in real estate. He even laughs and says hes lost money on every real estate decision hes made.

Hes a liar also. So I dont know. But thats what he says.

Theres about $15 trillion in mortgage debt in the United States. This is the ENTIRE way banks make money.

They want you to take on debt. Else they go out of business and many people lose their jobs.

So they say, and the real estate agents say, and the furniture warehouses say, and your neighbors say, its the American Dream.

But does a country dream? Do all 320 million of us have the same dream?

What could we do as a society if we had our $15 trillion back? If maybe banks loaned money to help people build businesses and make new discoveries and hire people.


Let me tell you the qualities of a good investment:

a. Its not the bulk of your net worth. Good investments are usually part of a diversified set of investments you make in your life, including the investment you make in yourself (acquiring more skills, having more experiences, etc).

b. It doesnt require heavy debt. (see above, ie $15,000,000,000,000)

c. You can get your money back when you need it.

From hard experience I know when I needed money most, its exactly at those moments I cant get it. The house cant get sold.

And the bank that was so friendly lending the money, starts calling within 12 hours of not getting their check. And then starts suing me.

Usually when I make an investment, Im not the one getting sued. Except when I buy a house.


No, renting is like making money. And I will tell you how.

Lets say you want to buy a $500,000 house at a 6% mortgage.

You put $200,000 down.

The entire house would rent for about $2,500, give or take. So thats 80 months or almost eight years worth of rent you just gave to the bank in a single check.

Do you ever get that bank money back?

No, because after mortgage debt (most of which cannot be written off in taxes), property maintenance, and taxes (which go up with inflation and are almost never considered in the price of the house), closing costs, buying costs, title insurance, property upgrades, etc. the homeowner might spend close to $1,000,000 in the lifespan of the house. Or twice that.

So instead of writing that $200,000 check in one day (as opposed to spreading rent out over eight years and the landlord is in charge of all maintenance, taxes, etc so you dont have to deal with it), you could invest in yourself.

Can you get more than 0.2% a year investing in yourself?

I hope so. Simple example: If you take two or three courses in a month on WordPress development, you can take freelance jobs making $5,000 a month.

I know 14 year olds doing that. Illustration, ghostwriting, 3D rendering, are other skills you can learn. And many more. There are 1,000 ways to make more.

How much do those courses cost? Often nothing. But definitely less than a mortgage.

Every investment in the world is judged by its SAFETY VERSUS ALTERNATIVES. A house investment is not safe versus the alternatives.


The average house owner owns their house for 4.5 years. Some own for much longer, some own for less. Thats just an average.

4.5 years is not roots.

Why do people move? Because jobs are no longer as stable as they once were.

And they are no longer in one or two cities but all over the country or world.

So the original reasons for owning a house (a guaranteed easy commute into an urban area where the jobs are) are no longer valid, as demonstrated by the increasingly short lifespan of house ownership.

This is a trend that is continuing forever.


The other day my sink broke. How come? Because hair falls out in the shower, stuff gets put in the toilet that shouldnt go there, food gets caught in the pipes, and a million other things.

My house is 150 years old. It used to be a hotel. Things break. Pipes crumble in the hands of the plumber.

I email the landlord, who calls a plumber, who gets new pipes that are paid for by the landlord. The landlord wasnt expecting it but thats what they signed up for.

Meanwhile, I read a book on the couch in the other room.

The same thing when Hurricane Sandy came over the river. People were canoeing in the street outside my house. The water filled two feet in my house.

This is the first time in 100 years the water got this high, the landlord told me. So he ripped up floors, cleaned out mold, fixed furniture, and took care of it.

This time I was upstairs reading a book.


Some people like to know where they will be in 30 years. They feel comfort in that.

When you rent, you never know if you will be kicked out eventually or if the house will get sold and you have to move.

So there is no judging here. But I like flexibility in my life. I like to know I can move. And in my area, so many houses are for sale, I always know I can find a good place to rent.

And with so many houses for sale, I know those people are stuck while I am not.

Will it always be that way? No. Things cycle. But America has a tendency to overbuild. And then people overbuy. And then rentals are available.

I always look at rentals. Right now there are better houses for less rent available within a mile of my house. But I like my landlord and house and I dont blow a good thing if I have it.

I live right on the river and can watch the leaves turn green and in the summer there are giant parties in the park next to my house.

And on Sunday nights they show movies outside next door and the whole town shows up. I watched Bladerunner.

But I still want the ability to pick up and move at a moments notice if I want to. Freedom makes me happy.


Many people like to own real estate because of the word real. It feels more real than money.

Or stocks. Or bonds.

I get that. It is real. And in America, nobody can take your land from you if you own it.

But not many people own their land. The bank owns it. Hence the $15 trillion in debt.

And people will never own it (the 4.5 year average thing).

But this is a judgment call again.

I like to know I can live out of a single bag. Ive been doing that all my life.

When I moved to NYC I lived out of a garbage bag. Before I got married I lived in a dive hotel. After I got divorced I lived in the same hotel.

I like feeling like I could lose everything and survive. Maybe this is why I have lost everything sometimes. But its also how I keep surviving and learning more each time.

This will sound corny so please skip to the next part: but property rights are not real.

Loving who you are and where you are and what you are doing is the only thing that is real.

Live in your heart and not your home and you will never feel lonely or the need to establish roots.

Share that love with the people around you. And then, they also, will feel less need for roots.

That is the best investment. That is the best return on investment. That is the best home to live in.

The America Dream has us chained us to the land so they can feed us like pigs in a trough with debt, with factory/cubicle jobs that we cant escape because its so hard to move (until they kick us out with 2 weeks severance), with forced friends in our neighbors, with supposed roots for our kids even though the statistics show those roots are a lie.

Freedom is more important than a dream.

Everyone has the story. They have bought and sold three houses and made money on each of them.

I believe them. Perhaps many people are phenomenal investors.

Others live in a good, secure neighborhoods that they want their kids to grow up in.

I believe those people also. But Ive also seen the pain theyve gone through when jobs were not as stable as they thought or marriages are not as stable as they thought and that mortgage wouldve been nice in their hands instead of in the banks hands.

We need a little bit of breathing room in order to survive when the noose is put around our neck.


You can rent. Just like some houses are bad and some are good, some landlords are better than others. Like anything that is an important life decision, it takes research.

You can find roots with a good landlord. You can even paint the house and knock down walls and do whatever you want.

If you believe in housing as an investment, there are companies that just own houses that you can invest in on the stock market.

So you get all the benefits of a long-term investment in housing and get your cash out in five seconds if you need it.

But what should you do with all of that extra cash you have if you dont own a house?

Maybe nothing. Having cash is a nice thing. It reduces stress.

But also you can invest in yourself. Or companies that are growing.

If companies arent growing, I can tell you that housing prices will go lower. Because housing prices depend on the stability of employment.

By definition then, companies will always grow faster than housing, in aggregate.

Average income for people age 18-35 has gone from $36,000 to $33,000 in the past 20 years, while debt has increased 100x. Not good.


Theres something called investment bias. Your brain thinks, Ive just made the biggest investment of my life so it must be right.

Your brain loves you. It doesnt want you to think it made a bad decision for you. Its scared you wont use it anymore.

So it tells you, that $200,000 down was the best decision you ever made. Everything else involves flushing money down the toilet, or no roots, or no stability! So its hard to consider the alternatives.

Its a lot of work to own a house also. Have you ever spent time in the Death Star? I mean Home Depot. That place is huge. And I only need that one special color of paint.

But where is it? The stormtroopers at Home Depot are never around when you need them.

And what about that snake that can clean my toilet. Where is it? And how do I use it? And is it gross? Why do they call it a snake?

Its no wonder that plumbing is one of the highest paid professions in America.

And how long does it take to paint a house. Or who do I go to? And will they overcharge me if they pave the driveway?

Did I calculate that into my total cost of owning a house?

I like to sit in the garden area of Home Dept. Theres thousands of flowers and plants and it smells like dirt.

To be honest, thats the closest I will ever get to hiking — sitting in the garden area of Home Depot.

Im pathetic. And I flush my rent down the toilet. And I dont have roots. And I refuse to fix my toilets or shovel my driveway or deal with my flooded basement. All I like to do is read.

And one day Ill move. Maybe next to an ocean. And take a walk on the beach. Last week, a friend told me the sun sets in the West.

Maybe one day Ill move to California. Five years until my youngest graduates.

Ill sit on the porch and watch the sun set and have cash in the bank (I hope) while someone is fixing my toilet.

When the sun has 15 minutes yet to live that day, maybe I will feel like Im falling in love.

Poloz Says Canada Financial Risks Are Subordinate to Inflation

Bank of Canada Governor Stephen Poloz highlighted the challenges central bankers face in dealing with financial stability issues, arguing monetary policy should be the last line of defense and the problem is better handled by regulators and industry players.

Speaking in Lima, Peru, Poloz acknowledged Canada’s rising house prices — particularly in Vancouver and Toronto — have been fueled by historically low borrowing costs and the sector remains a key risk to the Canadian economy. Still, the bank needs to be focused on its inflation target, like it was when it lowered interest rates twice this year.

“We knew that easing policy would have implications for financial stability,” Poloz said in a speech Saturday to the Institute of International Finance, during meetings held by the International Monetary Fund. “However, we also knew that those concerns had to remain subordinate to the primary mission of achieving our inflation target and getting our policy back in the zone where the risks are balanced.”


We are proud to announce the addition of Steve August a Certified Financial Planner to our firm.

Our clients need and deserve to work with people of high integrity, character and ethical standards.Steve meets all of these requirements. It’s a pleasure to welcome Steve to our financial planning team.

Financial Advice Just for Women Might Seem Like a Great Idea. Here’s Why It’s Not.

Female-focused financial advice might seem like a cant-miss business proposition. When a group of academics led by Sendhil Mullainathan at Harvard University set out to study how brokers treated clients a few years back, they discovered all sorts of malfeasance: making unnecessary changes in portfolios, putting clients in high-expense funds when lower-cost ones were available, and more. Some bad broker behavior was significantly more likely to impact prospective female clients. Not only did the advisers surveyed ask women less detailed questions about their salaries, expected career paths, and hopes for future economic prospects than they did their male peers; advisers were also more likely to demand women turn their funds over to their care before they doled out the first word of advice. The papers authors suspected that many in the financial community considered women to be either more docile or gullible than men.

When Financial Advisers Move, Should Clients Follow?

Some financial advisers take as long as two years to negotiate and prepare for a job change. But their clients don’t usually have that much time to decide whether to stay put or follow, out of fear of a gap in which their portfolios won’t be closely monitored.

In making the decision, investors should keep one thing in mind: While the adviser’s move may result in better service or other advantages for clients, as advisers invariably…

USAA Enters Financial Health Fray with ‘Financial Readiness’ Score

USAA, a banking innovation leader, is using technology to help members to think and act on a topic many ignore: financial planning.

On October 1, the San Antonio financial services firm rolled out financial assessment scores that any member can obtain after they fill out a 10-minute online survey and provide information like income and age. In addition to scores — which range from 0 to 100 points and can change as quickly as daily — members receive advice on how to improve the number. They also receive alerts when their scores change for life events like moving or having a baby.

USAAs initiative comes as ever-more issuers are publishing credit scores — some in online banking. USAA, for instance, lets members with a credit card see their credit scores when they login to their accounts.

But the new consumer metric, called financial readiness scores, is strikingly different and rare in the banking industry.

Credit scores, after all, are a measure of someones ability to meet financial obligations based on past performance. The new scores are viewed as a way for members to gauge their progress toward financial goals from budgeting to saving for retirement.

Lea Sims, assistant vice president of USAAs enterprise advice group, believes financial readiness scores are even more personal than credit scores. Rather than being used to underwrite a product, they are inward-facing scores that illustrate the members own risk.

A financial readiness score is about you and for you only, said Sims.

The latest feature represents part of a trend of a newer digital battlefront and increasingly popular vernacular: financial health.

There are numerous services (think Moven and Digit) that have been working on in-your-face banking experiences to motivate people to become more informed of their digital money with a taller order to change behaviors. And the idea of making available a financial health score has floated around for at least several years.

A startup called FlexScore, for instance, has software that spits out financial assessment scores, advice and peer group comparisons. Moven, a maker of online and mobile banking software banks can white label, has been testing a score called cred internally and plans to roll it out to consumers next year. And KeyBank announced it is partnering with HelloWallet in March so its interested customers could get a financial health score based on survey questions and transaction data.

People love tracking themselves, said Ben Jackson, director of prepaid advisory service at Mercator Advisory Group. Its why FitBit is such a big deal.

Jackson sees the newer metric as sparking consumers curiosity about how they are doing financially — with limits. Just as some people dont weigh themselves, the experience wont be for everyone.

And there are hurdles to address. Beyond determining what defines financial health, institutions need to educate consumers on what the new score means, and eventually, deal with issues such as irritated consumers who believe their scores are inaccurate. Keeping consumers engaged in the experience that could feel daunting or depressing is also a major consideration.

So much depends on execution, said Jackson.

Whether or not scores help motivate people to plan ahead, they are the latest manifestation of firms working to address a societal problem.

According to research the Center for Financial Services Innovation published in April, 57% of the country (138 million people) lack financial health — a number that includes those making near the median income and some higher-income households.

Its not a niche problem anymore, said Jennifer Tescher, president and chief executive of CFSI.

Inside USAAs Financial Readiness Score
USAA has been piloting the metric with members for about a year as it works to get more members — especially younger ones — planning their financial future. Early feedback shows members are reaching out to the institutions advisors (which are free) on how to improve their scores. These advisors have access to the financial readiness score web pages so they can pick up where members left or view the results for continued conversation. And yes, some of the automated suggestions do relate to products USAA sells.

USAAs methodology crunches data like income and life stage to analyze a members risks in areas like debt, retirement savings and budgeting. The score itself is derived from a survey that a logged-in member fills out. He can also link in outside bank accounts to feed the algorithm, while information the institution already has on a member will be pre-populated.

Whereas FlexScore generates a score of up to 1,000 on a standalone app, KeyBank and USAA are using a scale of 100. There is no peer comparison yet (which KeyBank and FlexScore offer) but USAA includes a social community aspect so members can discuss the score online. It also lets members get their score from inside their online accounts.

The financial services group for military members and their families sees the score as a way to engage millennials and Gen X members on their financial futures and through the channel on which they rely: mobile.

Not everyone wants to call in or has time to call in, Sims said.

Financial Literacy in Saudi Arabia: Room for Improvement

DUBAI, UAE, October 11, 2015 /PRNewswire/ —

When making a major financial decision, do we have the knowledge required to make the best decision possible? According to the latest survey by Souqalmal.com , the #1 financial comparison website in Saudi Arabia, 61 percent of Saudi residents did not know the difference between reducing and flat rate, an important aspect to consider when selecting a loan.

(Logo: http://photos.prnewswire.com/prnh/20151007/274873LOGO )

Factoring in the type of rate you are being offered by the bank can determine the real cost of your loan. While a flat rate appears to be lower as it calculates the profit on the entire loan amount, the reducing rate calculates your repayments on the outstanding balance of your loan and not the entire amount.

Ambareen Musa, CEO of Souqalmal.com said: Education plays a vital role in helping consumers know their financial rights and obligations. As the first financial comparison site in Saudi Arabia, Souqalmal.com helps consumers compare financial products offered by banks in the Saudi Arabia. Financial education has been an integral part of our existence and allows us to raise the level of transparency and awareness to allow users to better understand their choices and commitments.

When it comes to understanding their credit history, the survey revealed that 52 percent of Saudi Nationals admitted that they did not know about the credit report provided by SIMAH (Saudi Credit Bureau). When it comes to Expatriates, this number rose to 72%. Understanding ones credit history is a key component of financial education as it allows Saudi residents to keep a close eye on their level of debt and their ability to take on anymore. SIMAH is one of the longest established credit bureau in the region and is used by banks for their credit decision. The regulations in Saudi Arabia sets the Debt Burden Ratio (DBR) for the consumer at 33%.

The Souqalmal.com survey revealed that only 22% of Saudi Nationals would turn to their bank for financial advice as a first point of call. This percentage declined to 14 percent for expatriates – A clear sign that there is an opportunity for banks to become more of a trusted advisor and build stronger relationship with their customers. Family and friends took the first position in giving financial advice to Saudi residents (36 percent) followed by Internet search (24%).

Also contrary to the common perception that cash is the most popular choice of payment in Saudi Arabia, of our survey sample approximately 60 percent of Saudi Nationals have credit cards in their wallet – an encouraging number for SAMA who has been doing a lot of effort to promote plastic and electronic payment and reduce cash. Credit cards were mostly used to shop online (31 percent) followed by paying for daily expenses (25 percent) and when travelling outside Saudi Arabia (23 percent). This is an indication that cashless payment is gaining traction compared to previous years and is being increasingly accepted by consumers. For those who did not have credit cards, the main barrier was concerns around security hence the importance of setting financial literacy guidelines to help Saudi residents understand their finance options.

Musa, added: Saudi Arabia has been one of the strongest economies not only in the MENA region but also globally with a young, highly connected and growing population. The opportunity for us to bring more transparency in the banking sector through our financial education portal is very exciting.

About Souqalmal.com:

Souqalmal.com (Souq al Mal is Arabic for money market) is the #1 financial comparison site in Saudi Arabia allowing users to compare credit cards, loans, accounts and insurance products.

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Josiane Assaad, Head of Content

SOURCE Souqalmal.com