Donwload your file
Financial institutions and professional financial advisers offer a host of investment services that are focused on helping their clients meet predetermined financial goals. These investment services may be customized to a client’s income levels, circumstances and objectives and focus on wealth creation and protection. Investment services include making, organizing and managing investments and may also encompass financial planning, accounting, life insurance and tax planning.
Types of Investment Services
Prior to the late 1990s, US commercial banks were forbidden by law to offer investment services. The Gramm-Leach-Bliley Act of 1999 made it legal for a bank to offer both commercial and investment services. Over the years, the distinction between commercial and investment banks has blurred. The types of investment services offered by banks include:
# Money management: The first step for any investor is to ascertain the amount of money he has at his disposal for investing and the various financial options available to maximize returns and tax rebates and minimize risks.
The Risks and Rewards of Payroll Cards
Martha C. WhiteMartha C. White RSS Feed
Dec 17th 2010 at 9:00AM
Text SizeAAA
Print this page|EmailShare on FacebookShare on TwitterShare on DiggShare on Lifestream
Filed under: Banking, Extracurriculars, Career
a woman swipes a card into a machine - payroll cardsThe era of receiving a paper paycheck is rapidly becoming as distant as the days when we relied on landlines for all our communication needs. To make things easier on workers -- and save a bundle on administrative costs in the process -- companies increasingly have been relying on electronic payment methods. Many workers now are paid via direct deposit to a checking or savings account.
But for those who don't have, can't get or don't want a traditional deposit account, the option increasingly comes down to a single choice: a payroll card, which is a reloadable debit card onto which a worker's funds are loaded. According to the nonprofit organization Consumers Union, nearly $16 billion was loaded onto payroll cards in 2007, and it's very likely that the numbers have climbed since then.
"With the advent of technology surrounding gift cards and prepaid cellphones becoming so prevalent, individuals are more comfortable accepting payroll cards," says Bob Howe, former CEO of payroll card company Directo. These cards can be helpful in that they're safer than carrying around potentially hundreds of dollars in cash and may help users avoid as much as a 3% fee charged by a check-cashing storefront. But they're not perfect, and the legal gray area in which they exist has some consumer watchdogs worried.
Sean Panizzi, branch manager at Teamtemps Personnel Staffing in Valdosta, Ga., says payroll cards were a lifesaver at his business, which employs around 700 temporary staffers who work for clients in several Southeastern states. Paper checks got lost in the mail or were sent to the wrong addresses, and they sometimes needed to be canceled, reissued and overnighted -- at considerable expense -- when a client submitted the temp worker's hours incorrectly. About a year ago, Teamtemps started offering the Global Cash Card, issued by MasterCard, to workers who didn't opt for direct deposit. Panizzi says that workers loved the option, so much so that about 50% of them now opt for the cards.
Panizzi's company did a few things right when it started issuing payroll cards, according to the consumer advocates we consulted. First, Teamtemps scouted out a card that even those without access to a bank could use without paying hefty fees. This was a crucial step in picking a card provider, Panizzi says, since the company has many employees in rural areas who would need to rely on ATMs to access their cash. (One problem with both prepaid and reloadable debit cards is that there can be high fees for users who want to withdraw cash.) Teamtemps also got information about the card translated into Spanish so workers who didn't have English as a primary language wouldn't struggle to understand how the card worked.
Another card benefit? Howe says that they're much cheaper for employers to administer than the paper checks they replace. In addition, for those Americans who are part of what watchdog groups dub the "unbanked," they can be a less-expensive option. "We were focused on the workforce that didn't or couldn't get a bank account," Howe says of his days at Directo. "This lets get them out of the world of check-cashing fees."
While this is true, the cards can come with plenty of their own fees, a prospect that worries some people like Jean Ann Fox, director of financial services for Consumer Federation of America. While the initial purchase price of the card is often borne by the employer, workers may be subject to fees when they withdraw cash at an ATM, make a purchase in a store, call to check their balance, request a paper statement or need a card replaced if it's been lost or stolen.
Prior to the passage of the Overdraft Act this July, some cards would even let users overdraw and incur hefty fees, which is like extending a short-term loan -- at a payday loan prices. Given that these cards are specifically targeted to workers who are financially unsophisticated, this could add up to a whole lot of trouble.
A big part of the problem is the relative lack of regulation around prepaid and reloadable debit cards. "Our position is that they're legally nebulous," says Angie Wei, legislative director of the California Labor Federation. "There's no oversight or regulatory framework."
# Portfolio management services: These services are aimed at investors achieving the right mix of investments, such as stocks, bonds, commodities, derivatives and CDs, depending upon their financial goals and risk appetite. Portfolio management encompasses making a choice between equity and debt, domestic and international investments as well as growth and safety.
# Retirement planning services: Once the retirement goals have been laid down, appropriate investments need to be made into pension plans, 401(k) plans and profit sharing plans. One may also need to invest into the financial and money markets to ensure a steady stream of income post retirement.
# Collective investment portfolio management: Banks offer advice on collective investments, such as mutual funds, ETFs and managed funds. One may also need professional advice for investing in hedge funds. Such funds hedge their risks via methods like short selling.
# Brokerage services: Investors need brokers to trade in bonds, stocks, foreign currency and derivatives. The brokerage services offered by banks are considered more reliable and are preferred to those offered by individual brokers.
Apart from financial goals, investors may have other priorities that financial institutions providing investment services can take into account. Such priorities may include socially responsible investing, green investing and sustainable investing.link