Feb 1

Buyer Beware – Things to consider when buying mutual funds

posted 9:00 AM Feb 1 by Peter Aceto under Mutual Funds


One of my goals with my blog this year is to invite guest experts from our business to share insights on their area of expertise, and what ING DIRECT is doing to help change the conversation around money in Canada. My first guest blogger is Silvio Stroescu who leads our mutual fund team. Silvio and his team are particularly busy at this time of year, RSP season, helping to coach and educate clients about mutual funds. Did you know that mutual funds are the most popular investment for RSPs? How much do you know about the mutual funds in your portfolio?

Raise your hand if you wake up in the morning thinking about which mutual fund to buy.  It’s not something that’s on most people’s radars, yet close to two-thirds of Canadians invest in mutual funds as part of their retirement portfolios.  The reason most of us end up investing in mutual funds is because they are sold to us.

We don’t buy mutual funds with the same level of consumer vigilance we show when buying our cars or our homes.  This is alarming when you consider that these investment buying decisions have an enormous impact on our quality of life right when we need it the most.

We are not experts in every aspect of our lives, which is why we visit mechanics, see doctors or call a plumber. With over 6,500 mutual funds available, picking the right mix for our portfolio seems to be about as easy as picking a winning lottery ticket.  So, it’s no surprise that Canadians tend to outsource the mutual fund buying decision to an “advisor”.

The challenge is that most advisors we depend on to help us make investment decisions are salespeople caught in a glaring conflict of interest.  They are compensated by fund companies based on the mutual funds they sell.  Mutual funds with higher compensation for the salespeople translate to higher fees for us as investors and inflict a burden on our retirement goals.

There are plenty of straightforward and cost-effective investment options to satisfy our retirement portfolio needs and we don’t need to be financial experts to understand them or buy them.  To ensure we take the advice that is right for us as investors, we just need to be more engaged in our investment buying decisions and be aware of the options available to us.

For many people, investing the time today to understand the value they are receiving from their advisors, and investments could allow them to retire a few years earlier (see chart 6). Make sure you know exactly how much you pay your advisor, and for your mutual funds, on an annual basis. Do you feel the cost is justified based on the advice and other financial planning (i.e. estate or tax planning) you are receiving, and the return of your investments? You don’t need to be a financial expert to answer these questions. But what you uncover will make you a more educated and engaged investor, which we can guarantee is in your best interest.

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Jan 16

DIRECT Talk with Peter Aceto: Keep Calm and $ave On

posted 9:00 AM Jan 16 by Peter Aceto under Retirement, Savings


I’ve been thinking a lot about how often we’re reading stories about personal finance and money in the media. It’s something that’s dominated news coverage around the world for several years now given the economic conditions and increased willingness of people to incur debt. This year is shaping up to be no different. As the leader of a company whose sole focus is helping people save money and achieve better financial wellbeing, I support more attention being paid to the topic.

What I wish I’d see less of are stories about how to beat the stock market and ones with headlines that make saving for retirement sound impossible. Everyone’s individual situation is different, but the one piece of advice I bet could help most everyone is to keep saving or start saving in some way – be it $10 a week or $100 a month, and to keep your finances simple – simple enough for you to understand and to manage on your own.

I know it doesn’t sound sexy or sophisticated, but I can guarantee that it works. It has for many of our close to two million clients, especially those who have taken some simple steps to build their savings effortlessly through an automatic savings plan, or stretched their savings further by avoiding or reducing unnecessary and excessive fees for financial products.

At this time of year particularly in Canada, the market is flooded with voices, opinions and advice on everything from picking mutual funds to RSP contributions and what products deliver the best tax savings. I hope ING DIRECT’s voice stands out to Canadians. I hope we can help put things in perspective, eliminate some of the confusion and anxiety around saving money, demonstrate we offer a different choice and advocate the importance of saving without making it seem impossible.

I’m personally committed to reaching as many Canadians as I can to spread this message. I want to be part of your conversations about money, and encourage you to reach out to me via this blog, my Peter Aceto Facebook page www.facebook.com/savingsceo or on Twitter @CEO_INGDIRECT, to start a dialogue about achieving greater financial wellbeing in your life.

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Jan 3

HELOC – let the Orange shine through

posted 9:00 AM Jan 3 by Peter Aceto under HELOC


We surveyed Canadians recently on their top personal finance concerns going into 2012. Not surprisingly, 1 in 5 Canadians are most concerned about the amount of debt they have. A recent report from Stats Can found that Canadian household debt has reached an all-time high of 153% to disposable income. With interest rates at all-time lows, this shouldn’t come as a surprise. What concerns me most about all of this is the type of debt Canadians are holding and whether they have a plan in place to pay it off.

One of the smartest ways to hold debt is through a home equity line of credit (HELOC). It’s a revolving line of credit that’s secured against the equity in your home, and the interest rate is normally quite low, compared to other lines of credit, loans, and obviously, credit cards. The thing is HELOCs have gained a bad rap in recent years.

We’ve heard countless examples of how HELOCs are sold irresponsibly by financial institutions – where they essentially push more credit on people than is required, requested, or that they can afford. On the other side of the coin are some people who have misused HELOCs, essentially treating their homes as ATMs to finance depreciating assets like big screen TVs, cars and even their purchases at the Beer Store versus home renovations or unexpected repairs.

We’ve been thinking about HELOCs for a long time at ING DIRECT. We know many of our clients are refinancing their mortgages to gain access to more credit, which can be expensive from a legal perspective, and works against their plans to pay down their mortgages as quickly as possible. We also know that HELOCs are a great invention, but that many products currently on the market incent people to take more than what’s needed and hold onto their debt for longer than necessary, affecting their ability to pay it back.

It seemed like a perfect opportunity for ING DIRECT to get involved. Like we’ve done in other categories we saw an opportunity to create a lending product that has features and is sold with the client’s best interest in mind and that makes business sense for us too.

We’re proud of our new home equity line of credit, launched just a few weeks ago. As with all of our other products this one has some unique and orange features that capture the true essence of a HELOC and that allow our customers to access credit affordably, use it only when needed, and to pay it off as quickly as possible.

ING DIRECT’s HELOC is not linked to an ATM card, which means it requires a sober second thought to access the credit and makes it less accessible for non-essential purposes. Our staff won’t be incented to provide more credit than is needed or requested. We’re helping clients set up a regular fixed payment plan up front so that they can pay it off faster, and not get trapped into making only minimum payments. And of course, like all of our products, our HELOC is well-priced, meaning clients save on interest, helping to accelerate the payback.

We’re making our Orange version of the HELOC available to Canadians because we believe that when needed and when used responsibly, it can be a smart addition in helping Canadians to manage their financial well being.

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Dec 15

A year of voices demanding to be heard

posted 9:00 AM Dec 15 by Peter Aceto under Savings


There are a lot of words that could be used to describe 2011, boring not being one of them.

Around the world, people have demanded change, heads of state have fallen, bailouts have come and gone, and sadly, debts have continued to rise. I’m a big believer in leading by example, which is something we didn’t always see in 2011.

2011 was a big year for ING DIRECT. We continued to stick to our Canadian Charter of Financial Independence – a list of 10 guidelines designed to help Canadians take control of their own financial wellbeing. They are basic when you think about it: for instance, knowing the true cost of borrowing, investing for the long term, and paying down debt – advice that, in many ways, is as applicable to the current global economic situation as it is to managing one’s own financial wellbeing.

This year also saw the birth of the Occupy Movement, a reaction to the economic inequality felt by many in the wake of the global financial crisis. Initially based out of Wall Street, Occupy protests popped up in cities across Canada and the world. And actually, if you look at #10 on our Charter, there’s one thing ING DIRECT seems to share in common with the Movement, which is the notion that:

10. We will be heard: Our representatives in government and the corporations we deal with need to know that we are paying attention. If we’re silent, we’re accepting the status quo. Through change we believe we can make things better for all…

For years I’ve asked friends, family and strangers alike, “If you could change one thing about your bank, what would it be?” Nearly every time I get the same response: “the fees.”

While reducing banking fees in Canada still has a long way to go, ING DIRECT celebrated two major milestones in 2011 which were quite opposite in nature – instead of charging people more in fees, we paid our $5 billionth dollar to Canadian savers in interest and charged them $0 dollars in fees on their savings and we launched THRiVE Chequing – a no-fee daily chequing account. I couldn’t be prouder of both.

Looking ahead at 2012 it’s hard to know what the coming year will bring, but this much is certain – we will continue to listen carefully to our customers and make sure that ING DIRECT gives Canadians the power to save and the choices to do it on their terms.

 

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Dec 1

The hardware is nice, but culture is what counts.

posted 9:07 AM Dec 1 by Peter Aceto under Culture


For the past two years now, ING DIRECT has been singled-out as one of Canada’s 50 top employers. We were also just named one of the top 10 Most Admired Corporate Cultures in Canada by Waterstone Human Capital.

Other than looking impressive on our office walls, what do these awards actually mean? That our employees love where they work? That ING DIRECT is one of the best companies in Canada to work at? Or simply that our culture is admired by our employees, the industry and our peers?

Personally, I think it’s a combination of all three.

Award panels look at companies from many different perspectives before handing out any hardware. From where I sit, I think we’ve been fortunate enough to win a few culture-based awards because we really do value culture. We operate our business transparently as if the world can read our emails; we’re not hung up on titles; and we encourage people in every corner of the company to contribute and be innovative (which has actually generated hundreds of ideas over the years).

Whether you realize it or not, every company has its own corporate culture which is shaped by the organization’s attitudes, beliefs and norms. Much like a well-thought out business plan, companies today are beginning to realize just how important a strong and distinct culture is to its bottom-line and business success.  Knowing what that culture is, ensuring it aligns with your business’ vision and goals and moulding it to achieve the outcomes you desire is one of the most under recognized management tools around.

When we launched the bank 15 years ago we knew that culture was one of the things that could set us apart, aside from our unique business model and value-based products. Our business was built on the premise that a strong and distinct culture could drive a more engaged workforce, better meet client needs and increase business results. Every new hire, employee promotion, leadership development program, performance review and coaching session adds to the foundation of our successful orange culture and great work force.

If you look at some well-known Silicon Valley companies (and this infographic from Mashable on perks at Facebook et al) you’ll see that clearly others are making big strides to keep talent in their organizations and to make coming to work fun. Some of these “perks” are slightly over the top, mind you, but it does show an emphasis on creating and sustaining workplace culture. This is something I believe we will need to see more of in Canada in the next two to three years, if businesses are to remain competitive globally.

As ING DIRECT’s CEO, helping sustain an admired culture is one of my top priorities. Companies that make it a priority will be the big winners in the future.

 

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