Unified Security And Fiduciary - Revision history

AzraelBrown at 03:04, 23 April 2007

2007-04-23T03:04:04Z

AzraelBrown at 19:09, 17 February 2007

2007-02-17T19:09:22Z

AzraelBrown: /* Managing Consumer Debt */

2007-02-17T18:38:08Z

Managing Consumer Debt

AzraelBrown at 18:32, 17 February 2007

2007-02-17T18:32:27Z

AzraelBrown at 17:07, 17 February 2007

2007-02-17T17:07:28Z

New page

The banking, investment, and insurance industries perform many of the same tasks, in extremely different ways, and all have spent many years struggling to remain profitable and relevant despite the limited amount of money customer actually have to move around. Eventually, a single industry, the Unified Security and Feduciary, will provide streamlined services taken from and combined out of the various related duties of their competing industries.

== Current Status ==

Banks, investment services, tax preparation companies, payroll services, insurance companies have made and broken affiliations, purchased and sold each other, consolidated and eliminated services and products for many years. Each has taken opportunities to buy other companies, in hopes of building a 'rounder' bill of services, but quite often finding out that the selling company was only profitable at the selling price. [https://www.bcbsnd.com/ Blue Cross and Blue Shield of North Dakota], under the umbrella name [https://www.noridian.com/ Noridian], purchased numerous area insurance and financial companies during the 1990s, only to reduce, eliminate, or liquidate the majority of them by the mid-2000s. Until companies like Noridian can turn their business into one unified process, there will be little opportunity for profit or valuable services for customers.

== The Core Of Unified Security And Feduciary ==

Ultimately, people turn to financial services for two reasons: handle their non-cash finances, and protect their assets for the future.

Despite the ubiquity of electronic transactions and banking, [http://finance.families.com/how-to-live-without-a-bank-account a large part of the US] exists without using any sort of banking services or [http://www.naswca.org/Councils/PSWEP/Kuehl.htm insurance]. While this is possible, it creates a number of problems, creating the market for asset management and protection.

← Older revision		Revision as of 03:04, 23 April 2007
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	However, the component accounts I describe already exist -- they are just not used in the way I describe. Once some inventive company decides to step forward and re-evaluate the structure of their products, then the insurance, financial, and investment industries will begin to become more efficient, with a greater value to their customers.		However, the component accounts I describe already exist -- they are just not used in the way I describe. Once some inventive company decides to step forward and re-evaluate the structure of their products, then the insurance, financial, and investment industries will begin to become more efficient, with a greater value to their customers.
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		+	[[Category:Essays]]

← Older revision		Revision as of 19:09, 17 February 2007
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	By building assets rather than paying significant amounts of fees for the privilege of living off the assets of large corporations, consumers will live more reliably on their own income without overspending or running into trouble when tragedy strikes in the form of large expenses or loss of income.		By building assets rather than paying significant amounts of fees for the privilege of living off the assets of large corporations, consumers will live more reliably on their own income without overspending or running into trouble when tragedy strikes in the form of large expenses or loss of income.
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		+
		+	== Insuring Savings And Investments ==
		+
		+	The problem appears to be obtaining these assets in the first place. A customer cannot borrow against a savings account that he has not contributed to. It seems that borrowing funds is the only way to start.
		+
		+	Borrowing can still occur, but with so many assets in the hands of the public, borrowing can occur between individuals. While, today, a person can borrow $500 from a friend without the backing of any financial institution, the lender has no way to ensure they will be repaid.
		+
		+	You may begin to see our pattern: Cash set aside to be used for a purpose, and stop-loss coverage prevents loss. If a parent has amassed $10,000 in their automobile spending account, they can lend $3,000 to one of their children, who will then pay interest. This interest rate is higher than if the account owner borrowed from themselves -- the additional interest pays for insurance protecting against default on the loan. Poor borrowers get poor credit ratings, which makes them a higher insurance risk, and their interest rate increases appropriately as risk increases.
		+
		+	As [http://www.prosper.com/ Prosper.com] demonstrates, individual lending is an easy-to-understand and easy-to-manage process. There is also a demand for it as an alternative to buying stocks and bonds. In the case of new business investment or large loans, numberous customers could take a small amount from their indivdual spending accounts and pool it as a single loan, dividing up the interest between each contributor, and benefiting from a single stop-loss premium cost. As long as the profit from interest exceeds the self-payment interest (or the possibility of interest-free withdrawls less than a certain percentage of reserves), the customer can increase the value of their own savings accounts, reducing the amount they need to contribute to their insurance each month. A well-invested portfolio of savings accounts could, theoretically, be self sustaining, covering contributions and stop-loss coverage entirely off of interest.
		+
		+	== Management Of Accounts ==
		+
		+	The Unified Security and Fiduciary becomes reduced to a saving-account institution and a stop-loss underwriter. These two types of accounts can be as simple or complex as needed, but they boil down an immense number of products into two simple archetypes. Customers place money in accounts, which needs to be tracked and transferred, and risk and loss are calculated and paid for. By unifying these within a single institution, time delays in transferring funds is negligible, even compared to modern ACH transactions. A large number of transactions can be handled by phone or over the internet.
		+
		+	The personal banker, therefore, becomes a more complex job -- although, with the attempts at one-stop shopping by financial institutions many personal bankers already perform many of these tasks. Personal bankers would be required to consolidate the tasks of a banker, insurance agent, and investment broker. It would be a far less complex than with today's standards, because only one institution -- the company who employs the banker -- is the only company to deal with. When I worked for Noridian, despite the consolidation of several life and health insurance companies, the "unified" company still had separate underwriting, claims, and marketing departments. This was necessary because the ''types'' of insurance were so disparate that they could not be easily blended. Insurance policies have been kludged and augmented to cover innumerable possibilities, rather than reduction to a simple form that could be managed centrally.
		+
		+	With basic structure for saving and insuring, advising customers on finance management becomes a matter of evaluating the need and consulting an underwriter for risk, regardless of which direction the money is moving. Customers could choose to have their investment or borrowing automated, or managed by their banker, at an additional cost, but at the benefit of a trained individual and less time devotion to money management.
		+
		+	== Getting There ==
		+
		+	It is unlikely that any one bank could buy an insurance company and change to my proposed Unified Security and Fiduciary. Maintaining existing accounts, as it is now, is too costly a prospect to try and convert to this new type of account.
		+
		+	What will need to happen is for one of the basic industries to step across the line, creating new financial products that augment their existing products. A bank may offer to insure savings accounts, an insurance company may allow customers to 'bank' funds in their insurance policy against claims, and stockbrokers could offer insurance against loss on investments. Each of these would meet resistance from the old-guard as being too great a risk. Heavy regulation will make this difficult, if not impossible.
		+
		+	However, the component accounts I describe already exist -- they are just not used in the way I describe. Once some inventive company decides to step forward and re-evaluate the structure of their products, then the insurance, financial, and investment industries will begin to become more efficient, with a greater value to their customers.

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 == Managing Consumer Debt ==
-Current consumer debt is insanely overstrained.  People no longer own anything -- all is covered by one debt or another, and advertisments on television advice taking out new debts against assets to pay off other debts.   All cash that employees earn is divided up between insurance, car payment, rent, credit cards, and what's left over is used for the barest of living essentials (if they're lucky; others use credit cards for all purchases and repay them later).    Credit cards and debt can be handy for large-cost purchases and casual spending, but the customers get very little ''value'' out of these accounts.
+Current consumer debt is insanely overstrained.  People no longer own anything -- all is covered by one debt or another, and advertisments on television advise taking out new debts against assets to pay off other debts.   All cash that employees earn is divided up between insurance, car payment, rent, credit cards, and what's left over is used for the barest of living essentials (if they're lucky; others use credit cards for all purchases and repay them later).    Credit cards and debt can be handy for large-cost purchases and casual spending, but the customers get very little ''value'' out of these accounts.
 While basic lending can never be eliminated, giving the public incentive to create savings accounts is a turn-around for the finance industry.  While checking account ownership is low, savings is even lower.   Banking reserves are devoted primarily to liquid checking accounts, reducing the risk they can take on loans, increasing interest rates and fees to make up profits and losses.

@@ Line 1: / Line 1: @@
-The banking, investment, and insurance industries perform many of the same tasks, in extremely different ways, and all have spent many years struggling to remain profitable and relevant despite the limited amount of money customer actually have to move around.    Eventually, a single industry, the Unified Security and Feduciary, will provide streamlined services taken from and combined out of the various related duties of their competing industries.
+The banking, investment, and insurance industries perform many of the same tasks, in extremely different ways, and all have spent many years struggling to remain profitable and relevant despite the limited amount of money customer actually have to move around.    Eventually, a single industry, the Unified Security and Fiduciary, will provide streamlined services taken from and combined out of the various related duties of their competing industries.
 == Current Status ==
@@ Line 5: / Line 5: @@
 Banks, investment services, tax preparation companies, payroll services, insurance companies have made and broken affiliations, purchased and sold each other, consolidated and eliminated services and products for many years.  Each has taken opportunities to buy other companies, in hopes of building a 'rounder' bill of services, but quite often finding out that the selling company was only profitable at the selling price.   [https://www.bcbsnd.com/ Blue Cross and Blue Shield of North Dakota], under the umbrella name [https://www.noridian.com/ Noridian], purchased numerous area insurance and financial companies during the 1990s, only to reduce, eliminate, or liquidate the majority of them by the mid-2000s.  Until companies like Noridian can turn their business into one unified process, there will be little opportunity for profit or valuable services for customers.
-== The Core Of Unified Security And Feduciary ==
+== The Core Of Unified Security And Fiduciary ==
 Ultimately, people turn to financial services for two reasons:   handle their non-cash finances, and protect their assets for the future.
 Despite the ubiquity of electronic transactions and banking, [http://finance.families.com/how-to-live-without-a-bank-account a large part of the US] exists without using any sort of banking services or [http://www.naswca.org/Councils/PSWEP/Kuehl.htm insurance]. While this is possible, it creates a number of problems, creating the market for asset management and protection.