Jul 17

The psychology of spending

posted 9:00 AM Jul 17, 2012 by Peter Aceto under Retirement, Savings


I consider myself to be a pretty disciplined person. So why is it so difficult to deny that second piece of dessert? I know exactly the right thing to eat or not eat to keep healthy. I even believe I could be a nutritionist. But there is this physiological pull toward sugary treats that occasionally strips rational thinking from my brain and leaves me with a sense of disappointment.

This phenomenon makes me think of how often we all make decisions that fulfill immediate gratifications but may not be in our long term best interests (or maybe I’m just resentful of the extra mile I had to run this morning).

The fact is – it is hard to deny our impulses. Not just with food, but in all aspects of our lives and particularly spending. Yes, we all know that peer pressure is a factor. Many try to keep up with the Joneses, comparing homes, cars, clothes etc. But I think the darkest danger lurks deep within ourselves not our neighbours. In his new book The Wealthy Barber Returns David Chilton says: “The reference group you often need to be most wary of is not your affluent friends, or even your wealthier work colleagues; it’s you, yourself.”

We have a need for instant gratification. And it is so easy to spend. With innovative technology, retailers have much easier influence over our decisions. My super cool Starbucks app doesn’t even require that I carry a wallet! And based on our location, deals pop up on our smart phones that help to bypass all internal debates we need to have to make a thoughtful decision. It’s kind of like the “casino effect” applied to day-to-day spending. Pump up the oxygen, lose all sense of time, replace hard earned cash with chips and keep the gambling or spending going!

Impulse buying is the Achilles’ heel of the saver. It happens to the best of us. Although it might be a good excuse to blame it on technology, it really is our responsibility to control this impulse. I mean we all know how to control other impulses why can’t we conquer this one?

We tend to focus more on today than tomorrow and in some cases, that is merited. However, we often put immediate desires ahead of future important needs. There are of course plenty of triggers – we are bombarded with spending opportunities everyday. So even if we are able to have that internal debate about whether to buy or save, we are bound to give in sooner or later.

But let’s look at it like this: Do you realize that if you deny one $10 indulgence every week that you will save over $2,600 in 5 years and nearly $15,500 in 25 years? If you did this everyday – you know, skip a latte, pack a lunch or quit smoking – the $10 you’d save everyday would value over $18,900 in 5 years and over $108,000 in 25 years. You can actually retire a few years earlier!

Although this is all true we seldom look at it that way, but we should. And apparently, Canadians would actually change their habits, with a little help. In a new survey we commissioned at ING DIRECT, 52% of Canadians said that if they could better visualize what foregoing their daily, weekly and monthly spending on non-essential purchases would save them over the short and long term, they would in fact change their spending habits.

Based on these findings and our leadership in using technology to simplify the banking experience, we decided to create something to help Canadians do exactly that, and live better, happier lives. We added a new free feature to our leading mobile application called “Small Sacrifices” to help consumers visualize how foregoing everyday indulgences and sending them directly to their savings account can lead to big savings over the long term.

It can be especially hard to save for things that are far off, like retirement. We tell ourselves we can always start doing it tomorrow. But once we visualize how small purchases add up over time, we are more aware of the decisions, and small sacrifices, we need to make on a daily basis. It’s like putting pictures of our goals on our refrigerators.

We are faced with hundreds of choices everyday. And I strongly believe that visualizing these daily decisions, and how they affect the future, is the best approach to conquer the urge to spend.  Happy saving and good luck!

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Jul 4

The underdog advantage

posted 9:00 AM Jul 4, 2012 by Peter Aceto under Leadership


Winning the Stanley Cup is no easy task. Now imagine what it’s like for a team in a land without snow or even ice! (well, unless you drive up to the mountains) But when they finally won after 44 years of franchise history and as the last team to make the playoffs this year, the LA Kings proved that victory was that much sweeter.

I don’t know about you, but I love underdog stories! In movies, in sports, and in business – there is nothing more exciting than to see the small guy taking on the big guy – and winning. That’s what gives an underdog its power, from the stories of David vs. Goliath to Leonidas’ 300, to the Kings’ recent win, and perhaps Microsoft vs. Apple, there is an unbeatable sense of drive that fuels underdogs.

It’s an energy that no one else can see but you can certainly feel, and it’s electric. Underdogs overcome great odds through passion and determination. I wondered for a long time where that passion stems from – could it be about having something to prove?

Growing up, I had a difficult relationship with my father, which led to having a strong desire to prove myself, to be successful. I became a lawyer in a big downtown firm, worked 6-7 days a week, 14-15 hours a day and was not treated particularly well. When I was told that I would not be hired back to continue with the firm, I felt a gigantic sense of disappointment. Perhaps those experiences have become big advantages. Perhaps they led me to push that much harder and to create my own path.

Arkadi Kuhlmann, the founder of ING DIRECT had a philosophy for hiring the right people. He talks about it in his book, The Orange Code. The candidates with the perfect resumes, credentials or schools, while impressive, at times lacked the intangibles he deemed essential. He wanted those with significant disappointments in their lives, those with scars, dents and blemishes, because he believed that those tough life experiences made them hungry. Perhaps that’s what he saw when he decided to take a chance on me 16 years ago.

It doesn’t matter why or how someone becomes an underdog. What matters is that underdogs always, always have a chance to win! In fact, adapting an underdog mentality works to our advantage at ING DIRECT. We automatically feel it on a psychological level. It makes us move faster, try harder and think smarter. It’s powerful and it’s the stuff that makes things happen and allows us to replicate success.

There is a great deal of value in the connection we make with underdogs. Every villain has a hero and clearly we all want the hero to win. Think Luke Skywalker and Darth Vader.

ING DIRECT was founded to challenge the banking industry, to re-construct the process, the product and to educate consumers about making smarter choices regarding their hard earned money. Arkadi said it best “You can’t be an outlier unless you want to actually turn the tables upside down.” For 15 years, we have done exactly that. By remaining entrepreneurial and hungry, we’ve been able to find success among the giants of our industry – established businesses with significant resources and budgets, 150 years of history and oodles of market share. We love the challenge of the underdog.

But growth and success have their dangers. There’s a grain of truth in one of Andrew Grove’s famous quotations, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” Paranoia might be a little excessive, but we do need to be alert. Complacency is a big risk.

My job as the leader of ING DIRECT in Canada is to maintain the underdog mentality we started with 16 years ago, after significant milestones, more than 1000 employees and a consistent growth in market share. We simply can’t take our feet off the gas once something great has been created. But how do we maintain that electric energy that underdogs have?

Yes, we celebrate the wins – we pat ourselves on the back. But then we move on, quickly – as there is so much work still to be done. We stay nimble. We commit to persistent and positive change. We make more ideas happen. We remind ourselves of our humble beginnings. We expect team members to challenge our thinking. And we support a corporate culture of urgency.

Underdogs simply try harder. Underdogs challenge the conventional wisdom, break the rules, disrupt the status quo, and make a dent in society. Underdogs do in fact, prevail.

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Jun 15

The accountability of business

posted 9:00 AM Jun 15, 2012 by Peter Aceto under Culture


Is it Corporate Social Responsibility (CSR), Philanthropy, Corporate Giving? How many fancy names do we have for simply ‘helping people out’?

Our world is inundated with corporate talk and buzzwords – we seem to have lost the essence of what “giving” is really about. In fact, CSR has become a strategy used by businesses more because they “should”, to enhance their brand, gain market share, and build their competitive advantage. But wouldn’t that also be the result if we were authentically motivated to give? You know, the kind of giving my young kids are learning in school. The kind our parents taught most of us.

Don’t get me wrong – I’m thrilled to see an increasing number of companies adopt ways to enhance the wellbeing of others. After all, the role of business in society is much more than creating “shareholder value”. Businesses and their leaders need to remember the simple concept of being a good neighbour. Businesses don’t stand alone – we are part of an eco system, a community. We take from the community so we must give back to it. I like how Mr. Einstein put it when he said, “It is every man’s obligation to put back into the world at least the equivalent of what he takes out of it” – It is also every business’ obligation.

We’ve always believed in the importance of accountability at ING DIRECT. Not just to shareholders, but to everyone – our clients, our employees, the public and our regulators. Our focus on accountability means we need to make sure that everything we do fits with our purpose, which is to help Canadians live better lives. Sure, as a business we need to be profitable, but we also care about the difference we are making in people’s lives. The motivation to help is part of our DNA, it is our foundation, and that is what makes it easy for us to be exceptionally responsible.

Of course, we are required to publically share information about our efforts, and I find it tremendously rewarding to report on all of the great community work our team has accomplished. You will find our Statement of Public Accountability and Corporate Responsibility here. And if you read through it, you’ll see all the ways in which we have been active in Canada and each community where we live, work and service our wonderful clients.

What you might not see in the document, is the impact that our efforts have on what I believe is our most vital stakeholder group – our employees. The opinion of our employees matters a great deal to me. We spend more time at work today than ever before and we want our work to make a positive difference in the world.

As the leader of ING DIRECT in Canada, my focus has been on allowing our employees to direct the majority of our giving efforts. They decide where our resources will be allocated and who they would like to help with our time and money – because in my experience, people give 100% of their energy when they care or maybe 60% when they don’t.

Most of our over 1000 employees volunteer their time toward the causes they believe in and we as an organization back them up. Our team insists that we get out in our communities, roll up our sleeves, and pitch in. We also get our clients involved. Through social media, we have been able to engage our customers for ideas on where they feel we should be contributing.

It means a lot to us to be able to invest our time and financial support in causes that we collectively believe in. This approach has generated a great source of pride, trust and engagement among our employees. They get a sense of fulfillment from their work, a purpose as well as an organization whose values match their own. Having a stellar and authentic corporate reputation externally is crucial. So is having it internally.

Giving or CSR, if we’re going to use a term for it, is not a feel-good public relations goal or marketing strategy. It’s not about aligning your brand to the right cause either. It is a commitment an organization makes to be responsible members of the community.

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Jun 1

Parents, kids and money.

posted 9:00 AM Jun 1, 2012 by Peter Aceto under Savings


92 percent of Canadian parents believe they should be responsible for teaching their kids about money – this according to a recent survey we conducted at ING DIRECT. It’s an overwhelming number, but not at all surprising. We all want to be great parents! What’s interesting is that some of us are more comfortable talking about bullying, drugs and even sex than we are about finances.

Maybe I shouldn’t be surprised. After all, it’s not like my parents sat my brother and I down and had the money talk either. But there was a clear message in our household. I grew up with a hard work ethic that I learned from my father who was an entrepreneur. Making money wasn’t easy and spending on anything outside of the necessities was considered a special occasion. Don’t get me wrong, we did have our special occasions too. But, we were taught to be appreciative and grateful. Those are the talks and lessons that shaped our values and principles.

Times have changed, and my three children certainly have a different experience than I did. This is why it’s more important than ever to have an open discussion about money. Straight talk about where money comes from, how best to save it and how to be smart about spending it are some of the topics we chat about in our home. Luckily, my wife and I both share similar values that help us in how we raise our kids.

The fact of the matter is, the level of spending among Canadians is high, and advertisers target us in far more advanced ways than ever before. It has become so easy to spend, and the ability to window shop from our couches have desensitized us. Who knows how much more advanced we can become in reaching consumers, and particularly young children. And so, teaching kids about money at a young age becomes crucial in the development of lifelong, healthy financial habits.

We started talking to our children about money at age five. And the reality is we didn’t have a set plan as to how and when we will have “the talk”. We would easily fall in the 61 percent who feel they could be doing more to educate their kids about the basics of saving and spending. The catalyst to having the conversation is more than 50 percent of the time, a request to spend. Apps on iTunes alone provide my wife and I with 3 to 4 opportunities a week to explain the value of money.

Children are not born with money sense. They learn by example and experience. And we as parents are in the best position to provide them with opportunities to see how money is used, spent, saved and shared with those in need. But here’s the thing, “the talk” doesn’t have to be complicated. A typical conversation I will have with my now 6 year old son goes like this: Saving is good. Everything you don’t spend you save. The less you spend the more you save. Simple!

In addition, with the savings accounts we have set up for our children, they can see how interest grows, and I will tell you, a $2-5 increase over time gets them very excited! We also discuss the difference between spending on little things versus saving for something big. This is a conscious effort for us as a family, because we believe in building a foundation, a set of values that clarify the difference between needs and wants, and saving and spending.

But even with the best intentions, I realize parents can’t do it alone. 72 percent in fact consider online educational games useful in informing kids about personal finance. This is why we at ING DIRECT developed an interactive resource to guide parents and children in this discussion and enrich the learning experience about money matters. Lilsavers.ca takes kids through activities and games to teach them all about money – how to create a budget, set savings goals, invest and give to charity. Hey, mom or dad might learn a little something too!

Robin Taub, author of “A Parent’s Guide to Raising Money-Smart Kids” said it well: kids who are taught about money management at home, feel more optimistic and confident about their financial futures. I also like Robin’s approach to keeping things simple. Look for her quick tips to raising money-smart kids here.

Parents have an opportunity to define a set of values that will sustain future financial wellbeing for their children. The bottom line is, more innovative ways to lure us into spending will constantly evolve. What remains constant are the lessons our parents instil in us that shape how we make decisions about our lives, and in this case about money.

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May 15

Coffee, banking and the community

posted 9:00 AM May 15, 2012 by Peter Aceto under Savings


There’s a whole romance to the café experience, isn’t there? I don’t claim to be a coffee expert, but there’s no denying that the feeling of sitting in a café, enjoying a good cup of coffee, reading, or connecting with someone, is a great one. Coffee shops date back to the 1400s and some people claim they originated in Turkey while others say Italy. But that’s not the point.

From a cultural perspective, we can all agree that cafés act as anchors in our communities. We all know where the nearest Tim Hortons or Starbucks or other specialty cafés are. They serve as places for social interaction; to talk, write, read, connect, or pass the time.

And cafés have evolved. The way Starbucks sees it, cafés are the third place between work and home. I would imagine that with the rise of the entrepreneurial culture, that cafés are actually where people are spending time conducting their work. We certainly see that in our own cafés.

So what does coffee have to do with banking?

When ING DIRECT was first launched in 1997, we set out to create a true mainstream alternative for banking. We built a model where Canadians’ savings can grow without being eroded by fees and we proved that our model works. We thrive on being the underdog and challenging the Financial Services industry. We don’t believe in selling and we don’t believe in branches. We believe that conversations about money shouldn’t be complicated; they should be as easy as enjoying a cup of coffee with friends.

We asked ourselves, what could we do to change things?

We decided to give Savers a place to go where they can be heard and understood. Cafés are places that break down the barriers between people and their money, helping Canadians make their own financial decisions, without lineups, tellers or pens or ropes. They are not typical brick-and-mortar bank branches. Selling is not on the menu, but financial nourishment and being a good neighbour is.

Our first ING DIRECT Café opened its doors to the public in the summer of 1997 in Toronto. Although Clients could reach us 24/7 online and on the phone, they visited our Toronto Café because they wanted to see what we were all about. The second Café opened in Vancouver in October of 1998, followed by Montréal in November 2002, and Calgary in May of 2006.

And in 2011, we decided to open our 5th Café in downtown Toronto, located in a fully restored and renovated three floor heritage building. It’s a unique, community-oriented space in the heart of downtown Toronto, where we have explored new ways to challenge the conventions of banking and have stayed close to the pulse of the city. The three-floor, open-concept space supports our forward banking vision by providing an innovative approach to banking. It features free WiFi; a high tech co-working space that provides access to videoconferencing and webinar systems for small business owners to conduct their day-to-day work; a free meeting space for community groups and use of iPads to conduct banking transactions online.

The downtown Toronto Café has truly become an integral part of the Toronto community. We have always believed that everything we do must fit with our purpose, which is to help Canadians live better lives. I am tremendously proud of what we have been able to accomplish in the space. Over 161,000 people have visited the Café since its opening in April 2011. It didn’t stop there, though. Café staff also got out and got involved in the community, giving back and making a difference through volunteering. We have also hosted numerous community events dedicated to enriching our city in our free community meeting space and we are thrilled when we can showcase local retailers who live the same values we do – a program we call the Café’s Friends of Savers.

I try to spend as much time as possible at the Cafés; because the energy of customers conducting their everyday banking and entrepreneurs working away at their start-up ideas is truly inspiring. Not to mention the excellent coffee, which we’ve named ‘Savers Blend’! The simplicity of walking in, buying a cup of coffee and talking about money or anything else going on that day, is what banking should be about. It’s that trace of magic that cafés create in building snippets of community.

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