Secondary Marketing, Broker Delivery, Outsourcing Products; Conv. Conforming News; Rates, Inflation, and the Fed
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Secondary Marketing, Broker Delivery, Outsourcing Products; Conv. Conforming News; Rates, Inflation, and the Fed
By: Rob Chrisman
5 Hours, 35 Min ago
For anyone attending the California MBA’s Western Secondary starting this weekend, here’s a challenge too good for any tennis players to pass up. Augie Del Rio, CEO of Gallus Insights, and I will play doubles against anyone Sunday afternoon from 2-4PM across the street from the Waldorf. The loser of 2 out of 3 sets pays $500, the winner gets to decide the charity. First two to email Augie snags the opportunity. (I don’t know Augie’s skill level, but I am old… it’ll be like shooting fish in a barrel.) Speaking of the Western Secondary Market Conference, the California MBA uses the financial resources derived from this to support advocacy efforts in Sacramento. No “lobby rats!” If you’re going, sign up. Support the organization! (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Hear a short chat between Robbie and me on the Western Secondary Conference and its impact over the years on the industry.
Lender and Broker Software, Products, and Services
Even if you haven’t entered the world of online dating, no doubt you’ve heard the phrase “swipe right.” Online dating profiles provide a person’s quick summary and those viewing can swipe right in hopes of a match and the chance to learn more. Similarly, Mobility Market Intelligence (MMI) has released its new LO Quick Profiles tool, providing a summary of an LO’s production and top referral partners, allowing lenders to evaluate LOs based on real-time, accurate transaction history. With the click of a button, you can view production volume metrics including loan production volume, transaction types, loan types, top buy-side & list-side agent partners and top regions based on performance. MMI’s LO Quick Profiles also arm recruiters with the concrete performance data they need to decide whether or not to “swipe right” on potential candidates. Learn more about your potential matches with MMI’s LO Quick Profiles today.
For independent mortgage banks coping with shrinking production volumes and rising costs per loan, outsourcing accounting is an elegant solution to what’s become a very common challenge. Whether you have no accounting expertise in-house or you have a new team with no mortgage experience, you can tap the Richey May Client Accounting and Advisory Services (CAAS) team for the support you need. This team is stacked with mortgage industry experts who can tailor your solution to meet your most pressing needs in a volatile time, with no training needed. Need help transitioning to loan level accounting? Need a fully outsourced function? You got it! Need industry training for your controller? We can do that. In this article, Richey May’s expert Kim Dittmer answers all your most frequently asked questions around outsourced accounting as a mortgage bank.
“Brokers can now shop, lock, and deliver on one platform that seamlessly connects brokers, lenders, and originators. In this market, hustle is everything. You can’t afford to waste a single deal… Or a single minute. That’s why ReadyPrice has launched its innovative new Shop, Lock & Deliver loan exchange platform, designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders, and all on a single platform, at no cost to brokers. It’s the industry’s most powerful universal delivery portal, and it’s already helping thousands of brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Come check us out today.”
Capital Markets and Secondary Marketing Products
“The author Charles R. Swindoll wrote: ‘The difference between something good and something great is attention to detail.’ At Optimal Blue, we echo that spirit in our CompassEdge pipeline hedging and loan trading platform, which has the most granular and accurate real-time position and gain/loss reconciliation tools available. At a time when every basis point matters, you can’t afford a black box approach to these critical aspects of monitoring and improving your hedge performance. CompassEdge analytics provide the ability to drill down on the loan and trade level, with interactive tools that are also integrated with real-time pipeline and market data. Other systems just can’t match the analytics performance that is at the core of CompassEdge. You deserve detailed information and insights to improve financial performance. With margins razor thin, why settle for something less than great? Speak with one of our capital markets experts to learn more.”
“After little movement within the Secondary technology space, there have been a lot of new and exciting updates recently. Between new product and pricing engines, new API capabilities, transition to new hedge management firms, the sunset of GinnieNet, and massive shifts in servicing, the need for strong technology and data experience within the Secondary department has never been greater. Combine this with M&A, a flurry of branch movement, a loss of talent due to RIFs and Secondary Manager transitions, there is no rest for the weary. Junior staff is now suddenly senior. New technology partners and platforms are rolling out for the first time in 5-10+ years for many and pipelines are in transition from platform to platform. 2023 is the year of ‘do more with less’ for those in Secondary leaving technology as the platform to streamline processes, maximize revenue and minimize risk. Matchbox is the only consulting company that can translate Secondary requirements into new technology offerings and workflows to ease the transition for companies. From assisting in Ginnie Mae SFPDM programming and testing to protecting locked pricing and COCs to implementing new technology partners or even building a suite of automated workflows via APIs, matchbox has all aspects of Secondary Marketing/Capital Markets support covered. We’ll even find some margin crumbs along the way so contact Frank Fiore to discuss your Secondary needs today.”
Conventional Conforming Changes
The FHFA acts, and the Government Sponsored Enterprises follow. The GSEs act, and aggregators follow. The aggregators act, and lenders follow. News announcements have slowed somewhat, but let’s see who’s doing what.
FHFA released a report providing the results of the annual stress tests that Fannie Mae and Freddie Mac (the Enterprises) are required to conduct under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Freddie Mac implemented changes to edits and feedback messages in Loan Closing Advisor® on August 8 to assist you as you prepare and test for the Uniform Closing Dataset (UCD) Phase 3B Critical Edits transition. Access release notes and updated resources to help guide your critical edits transition from the Loan Closing Advisor webpage and UCD webpage.
Freddie Mac launched CreditSmart® Essentials free financial education curriculum in Spanish. Expanded content, design, and platform to better meet the needs of Spanish-speaking consumers to help bolster educational efforts around the importance of building, maintaining, and using credit.
Pennymac is aligning with Freddie Mac’s Project Assessment Request (PAR) enhanced capability, announced in Bulletin 2023-15. Details are available in Pennymac Correspondent Announcement 23-52
Capital Markets
Yes, inflation is coming down somewhat. Yes, the FDIC driven sales of mortgage-backed securities prompted by the bank failures earlier this year are wrapping up. But mortgage rates haven’t done much on the downside. Let’s dive into why.
Last week’s economic data was focused on inflation, which remains well above the Fed’s preferred 2 percent target. Consumer prices rose during July at both the headline and core levels although the gains were widely forecasted. While core inflation was 4.7 percent over the prior twelve months, the last three months’ annualized gain slowed to 3.1 percent, an encouraging sign that the annual rate will continue to fall. It is encouraging to see inflation continue to ease without a significant contraction in the overall economy, increasing optimism that the Fed may achieve its desired soft landing. While costs for shelter and services continue to put upwards pressure on overall inflation, goods prices have been contracting. Core goods declined 0.3 percent in July, the largest monthly drop since March 2022. Costs for more expensive items, where consumers typically rely on financing, such as cars and household furniture, contributed to the decline in prices. Additionally, the percentage of small businesses reporting the need to increase prices fell to 25 percent in July, the lowest percentage since February 2021.
Mortgage and Treasury rates, however, rose after the release of a hotter than expected Producer Price Index (PPI) report for July on Friday. The report showed headline and “core” (ex-food and energy) PPI (actual 0.3 percent, expected 0.2 percent) were a touch on the high side. Core PPI accelerated to 0.8 percent year-over-year from 0.2 percent in June, representing the first sequential increase in 13 months.
To sum things up, the much-anticipated consumer inflation report on Thursday showed that the headline and core consumer price index was unchanged from June, bolstering bets among market participants that the Federal Reserve would hold off on further rate hikes. But hotter-than-anticipated producer inflation data on Friday played spoilsport for risk-on appetite, with both the headline and core producer price index for July rising from the previous month. Still, the overall picture points to a slowdown in inflation, and has even led to hopes of disinflation. There is a rising consensus among traders that the Federal Reserve will be able to deliver a so-called “soft landing.”
This week? The U.S. Census Bureau will issue the July Retail Sales Report, which is forecast to show a slight acceleration from the pace seen in June. Traders will also be watching the release of Federal Open Market Committee Minutes from the Fed’s July meeting for more clues on the direction of interest rates after the July CPI print calmed some nerves. Throw in some regional Fed surveys, business inventories, housing market data, industrial production / capacity utilization, as well as leading indicators, and that’s the week. Scheduled Fedspeak is currently light, though the minutes from the July 25/26 meeting will be released on Wednesday. Pertinent to mortgages, MBS Class B and C 48-hours are on Tuesday and Thursday. The week gets off to a quiet start with no scheduled economic releases of note today, and we begin the week with Agency MBS prices roughly unchanged from Friday night and the 10-year yielding 4.15 after closing last week at 4.17 percent. (Back in October the 10-year hit 4.34.)
Employment
“Stronghill Capital, LLC, an Austin, TX-based Wholesale and Correspondent Lender is hiring! If you are an Account Executive with 3+ years of experience and an existing book of Correspondents and/or Brokers that you want to introduce to a dynamic company with a responsive management team that strives to provide world-class service levels, sharp price execution, and is committed to building the Non-QM ‘private money’ space, contact Matt Brammer. As we continue to expand, we are open to discussions throughout much of the United States.”
“Feel like you’re on an island? If you’re a business manager leading a hardworking staff and want more strategic guidance and additional resources to thrive, look no further. Nations Lending offers a full suite of tailored support for Producers. Our marketing services include social media management and personalized content creation, including video editing support, all at no cost to you. We also offer LO-friendly programs like Direct Submit, which allows loan files to be submitted directly to Underwriting, and ACE (Accelerated Competitive Edge) Approvals, our comprehensive preapproval program saving you time. If you’re interested in excelling with a company that is credited with multiple awards, including three-time Inc. 5000 winner, eight-time winner of Scotsman Guide’s Top Mortgage Lenders, and three-time winner of Top Workplaces for Millennials by Fortune Magazine, then join our family. Become part of our nation and mission to make ‘home loans made human™’ and visit Nations Lending to learn more.”
The Department of Housing and Urban Development (HUD), in Washington DC, has an executive level vacancy for a Director of Single-Family Housing Program Development. The person selected will direct and manage three divisions: Home Mortgage Insurance Division; Valuation Policy Division, and Program Support Division. The Divisions share responsibility for the development of policy related to origination of single-family FHA-insured mortgages and loans. All applications must be received via USAJOBS.
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If you live in San Diego and want help putting together a financial plan, managing your investments, planning for taxes, or valuable insights on other parts of your personal finances, a financial advisor could be right for you.
Things have really changed over the past decade: more and more people are hiring financial advisors because they’ve got the financial savvy and experience that most of us don’t have to vastly improve our financial situation.
The best financial advisors in San Diego offer high levels of customer service when helping you make the best financial decisions. Here are the best financial advisors in San Diego you may want to consider for your financial advising needs.
What’s Ahead:
Overview of the best financial advisors in San Diego
Bull Oak Capital
Bull Oak Capital is a firm recognized with multiple awards and high ratings across many review platforms. The fee-only, fiduciary financial advising firm focuses on financial planning and portfolio management.
According to the Bull Oak Capital website, the firm works with working professionals, soon-to-be and current retirees, and business owners, among other clients. Led by Ryan Hughes, this small team brought in excellent reviews on Yelp, Facebook, Angie’s List, and Google. To start with Bull Oak Capital, you’ll need at least $1 million in investable assets not including real estate.
Address: 4747 Executive Dr Suite 1010, San Diego, CA 92121.
Phone number: 858-999-3550.
Creative Capital Management
Creative Capital Management is a fee-only, fiduciary advisor with a focus on business owners, working professionals, individuals, and families. The firm offers a range of planning and portfolio management services including estate planning, insurance, and tax planning.
While the firm doesn’t have a ton of online reviews from customers, those it has earned are generally very positive. The firm has a strong track record with more than 35 years in business.
Address: 8880 Rio San Diego Dr #1150, San Diego, CA 92108.
Phone number: 619-298-3993.
Define Financial
Led by Taylor Schulte, Define Financial is a fee-only, fiduciary financial planning firm. This unique advising firm works exclusively with adults 50 and older with a focus on retirement planning. That includes a look at investments, taxes, and cash flow in retirement.
Define Financial has won awards from reputable publications including Investopedia, San Diego Magazine, and Financial Advisor Magazine. The firm earns great reviews on Yelp, Google, and Facebook and holds a top A+ rating from the Better Business Bureau.
Specialty: Retirement planning for ages 50 and older.
Address: 12526 High Bluff Dr #238, San Diego, CA 92130.
Phone number: 858-345-1197.
Dowling & Yahnke Wealth Advisors
Dowling & Yahnke is one of the largest asset managers in San Diego when measured by assets under management. Trusted with more than $4.7 billion in client funds, the company offers a very wide range of financial services including investment management, financial planning, charitable giving, and retirement planning.
Founded in 1991, Dowling & Yahnke has more than 1,200 clients and operates as a fee-only, fiduciary advisor. It earns excellent reviews on Yelp, Google, and other platforms.
Address: 12265 El Camino Real UNIT 300, San Diego, CA 92130.
Phone number: 858-509-9500.
GuidedChoice Asset Management
GuidedChioce is the largest investment manager in San Diego with over $14 billion in assets under management. The financial planning and portfolio management firm offers digital apps and tools to help you manage your investments.
Many end-customers of GuidedChoice have their assets at GuidedChoice held through an employer-sponsored retirement plan. The high tech firm has placeholders on its website for new financial advising products launching very soon. Founded in 1999, GuidedChoice works with clients nationwide.
Specialty: Retirement planning.
Address: 8910 University Center Ln #700, San Diego, CA 92122.
Phone number: 888-675-4532.
Physician Wealth Services
Led by Ryan Inman, Physician Wealth Services is a financial advisor with a focus on doctors and the medical community. While the team is based in San Diego, they work with doctors nationwide.
The fee-only, fiduciary financial planning firm offers a roadmap for first-year clients to get a grasp on their finances before building a long-term financial plan. The firm holds more than $11 million in client assets under management.
Specialty: Medical professionals.
Address: Virtual/online-only.
Phone number: 619-304-0777.
Pure Financial Advisors
Pure Financial Advisors is one of the largest financial advising firms in San Diego with more than $2.2 billion in assets under management. Pure Financial Advisors offers investment management and financial planning services with a focus on financial education for its clients. The large fiduciary, fee-only planning firm has four locations across Southern California and runs regular events and classes to help you upgrade your financial IQ.
Address: 3131 Camino Del Rio N #1550, San Diego, CA 92108.
Phone number: 619-814-4100.
Rowling & Associates
When looking for reputable financial advisors in San Diego, you’re sure to come across Rowling & Associates. The fee-only, fiduciary planning firm offers wealth management, financial planning, and tax planning and preparation services.
The firm offers several specialized services including sustainable investment advising, estate planning, life insurance advice, planning for stock options, and tax planning for charitable giving.
Investors with at least $187,500 in investable assets.
Rowling & Associates
Investments, taxes, financial planning
Families and professionals looking for a sustainable (ESG) investment portfolio
How I came up with this list
There are many high-quality financial advisors in San Diego. This list is based on a combination of sources and factors. Major areas reviewed include customer reviews, assets under management, and services offered.
Fee-only, fiduciary financial planners
All advisors on this list offer fee-only financial planning services and act in a fiduciary capacity. That means you know exactly what you’ll be charged, there are no conflicts on interest due to commissions from third-party investment companies, and the advisor agrees to always work with your best interests in mind.
Strong reviews and positive customer feedback
While many factors of financial planning and investment advising are subjective, consistently positive customer reviews are a good indicator of a high-quality firm. I looked at reviews on Yelp, Facebook, Angie’s List, Google, and the Better Business Bureau, among other sources. I also read many top advisor lists and award winners from both local and national publications.
Broad services offered for diverse backgrounds
Whether you have just a small nest egg or millions of dollars to invest, there’s a financial advisor in San Diego that could meet your needs.
What questions should you ask a financial advisor?
Financial advisors are paid professionals who help people manage their money. Through financial planning, wealth and investment management, tax planning and preparation, and other services, financial advisors play an important role in the finances of many households. If you are unsure about your investments, need help reaching financial goals, or just want a second set of eyes to confirm you’re making wise financial choices, a financial advisor could be right for you.
How can you help me improve my personal finances and investments?
Financial advisors may offer some specialized services or take a more general approach to your finances. Here are some of the most common financial advising services you’ll find:
Investment management – Investment management, sometimes called wealth management, is a service where advisors pick investments for you or help create your investment strategy.
Financial planning – With this service, advisors help you review your finances and create a plan for savings, investments, and spending to help you reach your financial goals.
Tax preparation – Some financial advisors offer tax services including planning to minimize taxes and preparation so you don’t have to worry about it yourself.
Are you a fiduciary advisor who avoids conflicts of interest?
Fiduciary duty means a financial advisor (or other professional) is obligated to put your best interests above their own. That means they are required to give you the best financial advice even if they make less money. As discussed above, working with a fee-only advisor helps avoid these conflicts. Choosing an advisor that also acts as a fiduciary helps ensure your needs are taken care of in the best way possible.
What are the costs of hiring a financial advisor?
Financial advisors can charge in several ways. The best type of advisor is a fee-only financial advisor. That means they are only paid predictable fees by you. In some cases, advisors can be paid in a way that creates a conflict of interest.
Some financial advisors receive commissions from investment or insurance companies for selling their products. While this could line-up with client needs some of the time, advisors under this model have an incentive to put your money into funds that might not be the best for your financial goals.
A fee-only financial advisor only charges client fees as an income source. Advisors under this pricing model avoid the conflicts of interest and can genuinely put your financial needs first.
Fee-only advisors often charge fees per meeting, per hour, or annual or monthly fees for ongoing support and services. For investments, many advisors charge a fee based on total assets under management.
Summary
Financial advisors are not required, but many people feel better or get a positive experience from working with a financial professional. While you don’t need an MBA or finance degree to manage your finances, many people simply feel more comfortable knowing a financial professional is looking out for their money.
The best financial advisor in San Diego is someone who will help you make the right financial choices, feel confident that your money is working for you, and answer all of your money questions. This list of the top financial advisors in San Diego is the best place to get started.
The Jefferson Avenue commercial district in Buffalo, New York, is anchored by a supermarket.
There are dozens of other businesses and services along the 12-block corridor — a couple of bank branches, a library, a coffee shop, gas stations, a small plaza with a dollar store and a primary care clinic and a business incubator for entrepreneurs of color.
But Tops Friendly Markets, the only grocery store on Buffalo’s vast East Side, is the center of activity. More than just a place to buy food, pick up medications and use an ATM, the store is a communal gathering space in a predominantly Black neighborhood that, for generations, has been segregated, isolated and disenfranchised from the wealthier — and whiter — parts of the city.
Which explains how it came to be the site of a mass shooting on a spring day in May of last year. On that Saturday, a gunman, who lived 200 miles away in another part of the state, drove to Jefferson Avenue and went into Tops, and in just a few minutes killed 10 people, injured three and inflicted mass trauma across the community.
It is a scenario that has sadly, and repeatedly, played out in other parts of the country that have experienced mass shootings. But this one came with a twist: The gunman’s intention was to kill as many Black people as possible.
To achieve that, he specifically targeted a ZIP code with one of the highest percentages of Black residents in New York state. All 10 who died that day were Black.
“The mere fact that someone can research, ‘Where will the greatest number of Black people be … on a Saturday morning,’ that’s not by chance,” said Franchelle Parker, a community organizer and executive director of Open Buffalo, a nonprofit focused on racial, economic and ecological justice. “That’s not a mistake. It’s a community that’s been deeply segregated for decades.”
The day of the shooting, Parker, who grew up in nearby Niagara Falls, was driving to Tops, where she planned to buy a donut and an unsweetened iced tea before heading into the Open Buffalo office, which is located a block away from Tops. The mother of two had intended to complete the mundane task of cleaning up her desk — “old coffee cups and stuff” — after a busy week.
She saw the news on Twitter and didn’t know if she should keep driving to Jefferson Avenue or turn around and go back home. She eventually picked the latter.
When she showed up the next day, there were thousands of people grieving in the streets. “The only way that I could explain my feeling, it was almost like watching an old war movie when a bomb had gone off and someone’s in, like, shell shock. That’s how it felt,” said Parker, vividly recounting the community’s collective trauma in a meeting room tucked inside of Open Buffalo’s second-story office on Jefferson Avenue.
Almost immediately following the May 14, 2022, massacre, which was the second-deadliest mass shooting in the United States last year, conversations locally and nationally turned to the harsh realities of the East Side and how long-standing factors that affect the daily life of residents — racism, poverty and inequity — made the community an ideal target for a white supremacist.
Now, more than a year after the tragedy, there is growing concern that not enough is being done fast enough to begin to dismantle those factors. And amid those conversations, there are mounting calls for the banking industry — whose historical policies and practices helped cement the racial segregation and disinvestment that ultimately shaped the East Side — to leverage its collective power and influence to band together in an effort to create systemic change.
The ideas about how banks should support the East Side and better embed themselves in the neighborhood vary by people and organizations. But the basic argument is the same: Banks, in their role as financiers and because of the industry’s history of lending discrimination, are obligated to bring forth economic prosperity in disinvested communities like the East Side.
I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.
Chiwuike Owunwanne, corporate responsibility officer at KeyBank
“Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that,” said The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity, a four-year-old enterprise focused on racial, geographic and economic health disparities. “But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.”
To be sure, banks’ ability to reverse the course of the community isn’t guaranteed — and there is no formula to determine how much accountability they should hold to fix deeply entrenched problems like racism. Several Buffalo-area bankers said that while the Tops shooting heightened the urgency to help the East Side, the industry itself cannot be the sole driver of change.
“There are a lot of institutions … that can certainly play a part in reversing the challenges that we see today,” said Chiwuike “Chi-Chi” Owunwanne, a corporate responsibility officer at KeyBank, the second-largest bank by deposits in Buffalo. “I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.”
A long history of segregation
How the East Side — and the Tops store on Jefferson Avenue — became the destination for a racially motivated mass murderer is a story about racism, segregation and disinvestment.
Even as it bears the nickname “the city of good neighbors,” Buffalo has long been one of the most racially segregated cities in the United States. Of the 114,965 residents who live on the East Side, 59% are Black, according to data from the 2021 U.S. Census American Community Survey. The percentage is even higher in the 14208 ZIP code, where the Tops store is located. In that ZIP code, among 11,029 total residents, nearly 76% are Black, the census data shows.
The city’s path toward racial segregation started in the early 20th century when a small number of job-seeking Black Americans migrated north to Buffalo, a former steel and auto manufacturing hub at the far northwestern end of New York state. Initially, they moved into the same neighborhoods as many of the city’s poorer immigrants and lived just east of what is today the city’s downtown district. As the number of Blacks arriving in Buffalo swelled in the 1940s, they were increasingly confronted with various housing challenges, including racist zoning laws and restrictive deed covenants that kept them from buying homes in more affluent white areas.
Black Buffalonians also faced housing discrimination in the form of redlining, the practice of restricting the flow of capital into minority communities. In 1933, as the Great Depression roiled the economy, a temporary federal agency known as the Home Owners’ Loan Corporation used government bonds to buy out and refinance mortgages of properties that were facing or already in foreclosure. The point was to try to stabilize the nation’s real estate market.
As part of its program, HOLC created maps of American cities, including Buffalo, that used a color coding scheme — green, blue, yellow and red — to convey the perceived riskiness of making loans in certain neighborhoods. Green was considered minimally risky; other areas that were largely populated by immigrant, Black or Latino residents were labeled red and thus determined to be “hazardous.”
“The goal was to free up mortgage capital by going to cities and giving banks a way to unload mortgages, so they could turn around and make more mortgage loans,” said Jason Richardson, senior director of research at the National Community Reinvestment Coalition, an association of more than 750 community-based organizations that advocates for fair lending. “It was kind of a radical concept and it has evolved over the decades into our modern mortgage finance system.”
The Federal Housing Administration, which was established as a permanent agency in 1934, used similar methods to map urban areas and labeled neighborhoods from “A” to “D,” with “A” considered to be the most financially stable and “D” considered the least. Neighborhoods that were largely Black, even relatively stable ones, were put in the “D” category.
The result was that banks, which wanted to be able to sell mortgage loans to the FHA, were largely dissuaded from making loans in “risky” areas. And Buffalo’s East Side, where the majority of Blacks were settling, was deemed risky. Unable to get loans, Blacks couldn’t buy homes, start businesses or build equity. At the same time, large industrial factories on the East Side were closing or moving away, limiting job opportunities and contributing to rising poverty levels.
“Today what we’re left with is the residue of this process where we’ve enshrined … a pattern of economic segregation that favors neighborhoods that had fewer Black people in them and generally ignores neighborhoods that had African Americans living in them,” Richardson said.
Case in point: Research by the National Community Reinvestment Coalition shows that three-quarters of neighborhoods that were once redlined are low- to moderate-income neighborhoods today, and two-thirds of them are majority minority communities.
Adding to the division between Blacks and whites in Buffalo was the construction of a highway called the Kensington Expressway. Built during the 1960s, the below-grade, limited-access highway proved to be a speedy way for suburban workers to get to their downtown jobs. But its construction cut off the already-segregated East Side even more from other parts of the city, displacing residents, devaluing houses and destroying neighborhoods and small businesses.
As a result of those factors and more, many Black residents have become “trapped” on the East Side, according to Dr. Henry Louis Taylor Jr., a professor of urban and regional planning at the University at Buffalo. In 1987, Taylor founded the UB Center for Urban Studies, a research, neighborhood planning and community development institute that works on eliminating inequality in cities and metropolitan regions. In September 2021, eight months before the Tops shooting, the Center for Urban Studies published a report that compared the state of Black Buffalo in 1990 to present-day conditions. The conclusion: Nothing had changed for Blacks over 31 years.
As of 2019, the Black unemployment rate was 11%, the average household income was $42,000 and about 35% of Blacks had incomes that fell below the poverty line, the report said. It also noted that just 32% of Blacks own their homes and that most Blacks in the area live on the East Side.
“Those figures remain virtually unchanged while the actual, physical conditions that existed inside of the community worsened,” Taylor told American Banker in an interview in his sun-filled office at the center, located on the University at Buffalo’s city campus. “When we looked upstream to see what was causing it, it was clear: It was systemic, structural racism.”
Banks’ moral obligations
As the East Side struggled over the decades with rampant poverty, dilapidated housing, vacant lots and disintegrating infrastructure, banks kept a physical presence in the community, albeit a shrinking one. In mid-2000, there were at least 20 bank branches scattered across the East Side, but by mid-2022, the number had fallen to around 14, according to the Federal Deposit Insurance Corp.’s deposit market share data. The 14 include four new branches that have opened since early 2019 — Northwest Bank, KeyBank, Evans Bank and BankOnBuffalo.
The first two branches, operated by Northwest in Columbus, Ohio, and KeyBank, the banking subsidiary of KeyCorp in Cleveland, were requirements of community benefits agreements negotiated between each bank and the National Community Reinvestment Coalition. In both cases, Northwest and KeyBank agreed to open an office in an underserved community.
Evans Bank opened its first East Side branch in the fall of 2021. The office is located in the basement of an $84 million affordable senior housing building that was financed by Evans, a $2.1 billion-asset community bank headquartered south of Buffalo in Angola, New York.
Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that. But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.
The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity
On the community and economic development front, banks have had varying levels of participation. Buffalo-based M&T Bank, which holds a whopping 64% of all deposits in the Buffalo market and is one of the largest private employers in the region, has made consistent investments in the East Side by supporting Westminster Community Charter School, a kindergarten through eighth-grade school, and the Buffalo Promise Neighborhood, a nonprofit organization focused on improving access to education in the city’s 14215 ZIP code.
Currently, Buffalo Promise Neighborhood operates four schools. In addition to Westminster, it runs Highgate Heights Elementary, also K-8, as well as two academies that serve children ages six weeks through pre-kindergarten. Twelve M&T employees are dedicated to the program, according to the Buffalo Promise Neighborhood website. The bank has invested $31.5 million into the program since its 2010 launch, a spokesperson said.
Other banks are making contributions in other ways. In addition to the Jefferson Avenue branch and as part of its community benefits plan, Northwest Bank, a $14.2 billion-asset bank, supports a financial education center through a partnership with Belmont Housing Resources of Western New York. Meanwhile, the $198 billion-asset KeyBank gave $30 million for bridge and construction financing for Northland Workforce Training Center, a $100 million redevelopment project at a former manufacturing complex on the East Side that was partially funded by the state.
BankOnBuffalo’s East Side branch is located inside the center, which offers KeyBank training in advanced manufacturing and clean energy technology careers. A subsidiary of $5.6 billion-asset CNB Financial in Clearfield, Pennsylvania, BankOnBuffalo’s office opened a month after the shooting. The timing was coincidental, but important, said Michael Noah, president of BankOnBuffalo.
“I think it just cemented the point that this is a place we need to be, to be able to be part of these communities and this community specifically, and be able to build this community up,” Noah said.
In terms of public-private collaboration, some banks have been involved in a deeper way. In 2019, New York state, which had already been pouring $1 billion into Buffalo to help revitalize the economy, announced a $65 million economic development fund for the East Side. The initiative is focused on stabilizing neighborhoods, increasing homeownership, redeveloping commercial corridors including Jefferson Avenue, improving historical assets, expanding workforce training and development and supporting small businesses and entrepreneurship.
In conjunction with the funding, a public-private partnership called East Side Avenues was created to provide capital and organizational support to the projects happening along four East Side commercial corridors. Six banks — Charlotte, North Carolina-based Bank of America, the second-largest bank in the nation with $2.5 trillion of assets; M&T, which has $203 billion of assets; KeyBank; Warsaw, New York-based Five Star Bank, which has about $6 billion of assets; Northwest and Evans — are among the 14 private and philanthropic organizations that pledged a combined $8.4 million to pay for five years’ worth of operational support, governance and finance, fundraising and technical assistance to support the nonprofits doing the work.
Laura Quebral, director of the University at Buffalo Regional Institute, which is managing East Side Avenues, said the banks were the first corporations to step up to the request for help, and since then have provided loans and other products and education to keep the program moving.
Their participation “is a signal to the community that banks cared and were invested and were willing to collaborate around something,” Quebral said. “Being at the table was so meaningful.”
Richard Hamister is Northwest’s New York regional president and former co-chair of East Side Avenues. Hamister, who is based in Buffalo, said banks are a “community asset” that have a responsibility to lift up all communities, including those where conditions have arisen that allow it to be a target of racism like the East Side.
“We operate under federal charters, so we have an obligation to the community to not only provide products and services they need but also support when you go through a tragedy like that,” Hamister said. “We also have a moral obligation to try to help when things are broken … and to do what we can. We can’t fix everything, but we’ve got to fix our piece and try to help where we can.”
In the wake of a tragedy
After the massacre, there was a flurry of activity within banks and other organizations, local and out-of-town, to respond to the immediate needs of East Side residents. With the community’s only supermarket closed indefinitely, much of the response centered around food collection and distribution. Three of M&T’s five East Side branches, including the Jefferson Avenue branch across the street from Tops, became food distribution sites for weeks after the shooting. On two consecutive Fridays, Northwest provided around 200 free lunches to the community, using a neighborhood caterer who is also the bank’s customer. And BankOnBuffalo collected employee donations that amounted to more than 20 boxes of toiletries and other items that were distributed to a nonprofit.
At the same time, M&T, KeyBank and other banks began financial donations to organizations that could support the immediate needs of the community. KeyBank provided a van that delivered food and took people to nearby grocery stores. Providence, Rhode Island-based Citizens Financial Group, whose ATM inside Tops was inaccessible during the store’s temporary closure, installed a fee-free ATM near a community center located about a half-mile north of Tops, and later put a permanent ATM inside the center that remains there today. And M&T rolled out a short-term loan program to provide capital to East Side small-business owners.
One of the funds that benefited from banks’ support was the Buffalo Together Community Response Fund, which has raised $6.2 million to address the long-term needs of the East Side.
Bank of America and Evans Bank each donated $100,000 to the fund, whose list of major sponsors includes four other banks — JPMorgan Chase, Citigroup, M&T and KeyBank. Thomas Beauford Jr., a former banker who is co-chair of the response fund, said banks, by and large, directed their resources into organizations where the dollars would have an immediate impact.
“Banks said, ‘Hey, you know … it doesn’t make sense for us to try to build something right now. … We will fund you in the work you’re doing,'” said Beauford, who has been president and CEO of the Buffalo Urban League since the fall of 2020. “I would say banks showed up in a big way.”
Fourteen months later, banks say they are committed to playing a positive role on the East Side. For the second year, KeyBank is sponsoring a farmers’ market on the East Side, an attempt to help fill the food desert in the community. Last fall, BankOnBuffalo launched a mobile “bank on wheels” truck that’s stationed on the East Side every Wednesday. The 34-foot-long truck, which is staffed by two people and includes an ATM and a printer to make debit cards, was in the works before the shooting, and will eventually make four stops per week around the Buffalo area.
Evans has partnered with the city of Buffalo to construct seven market-rate single family homes on vacant lots on the East Side. The relationship with the city is an example of how banks can pair up with other entities to create something meaningful and lasting, more than they might be able to do on their own, said Evans President and CEO David Nasca.
The bank has “picked areas” where it can use its resources to make a difference, Nasca said.
“I don’t think the root causes can be ameliorated” by banks alone, he said. “We can’t just grant money. It has to be within our construct of a financial institution that invests and supports the public-private partnership. … All the oars [need to be] pulling together or this doesn’t work.”
‘Little or no engagement with minorities’
All of these efforts are, of course, welcomed by the community, but there is still criticism that banks haven’t done enough to make up for their past contributions to segregating the city. And perhaps more importantly, some of that criticism centers on banks failing to do their most basic function in society — provide credit.
In 2021, the New York State Department of Financial Services issued a report about redlining in Buffalo. The regulator looked at banks and nonbank lenders and found that loans made to minorities in the Buffalo metro area made up 9.74% of total loans in Buffalo. Overall, Black residents comprise about 33% of Buffalo’s total population of more than 276,000, census data shows.
The department said its investigation showed the lower percentage was not due to “excessive denials of loan applications based on race or ethnicity,” but rather that “these companies had little or no engagement with minorities and generally made scant effort to do so.”
“The unsurprising result of this has been that few minority customers or individuals seeking homes in majority-minority neighborhoods have made loan applications … in the first instance.”
Furthermore, accusations of redlining persist today, even though the practice of discriminating in housing based on race was outlawed by the Fair Housing Act of 1968.
In 2014, Evans was accused of redlining by the New York State Attorney General, which said the community bank was specifically avoiding making mortgage loans on the East Side. The bank, which at the time had $874 million of assets, agreed to pay $825,000 to settle the case, but Nasca maintains that the charges were unfounded. He points to the fact that the bank never had a fair lending or fair housing violation, no specific incidents were ever claimed and that the bank’s Community Reinvestment Act exam never found evidence of discriminatory or illegal credit practices.
The bank has a greater presence on the East Side today, but that’s because it has grown in size, not because it is trying to make up for previous accusations of redlining, he said.
“Ten years ago, our involvement [on the East Side] certainly wasn’t what you’re seeing today,” Nasca said. “We were looking to participate more, but we were participating within our means and our reach. As we have grown, we have built more resources to be able to do more.”
Shortly after accusations were made against Evans, Five Star Bank, the banking arm of Financial Institutions in Warsaw, New York, was also accused of redlining by the state Attorney General. Five Star, which has been growing its presence in the Buffalo market for several years, wound up settling the charges for $900,000 and agreeing to open two branches in the city of Rochester.
KeyBank is currently being accused of redlining by the National Community Reinvestment Coalition. In a 2022 report, the group said that KeyBank is engaging in systemic redlining by making very few home purchase loans in certain neighborhoods where the majority of residents are Black. Buffalo is one of several cities where the bank’s mortgage lending “effectively wall[ed] out Black neighborhoods,” especially parts of the East Side, the report said.
KeyBank denied the allegations. In March, the coalition asked regulators to investigate the bank’s mortgage lending practices.
Beyond providing more credit, some community members believe that banks should be playing a larger role in addressing other needs on the East Side. And the list of needs runs the gamut from more grocery stores to safe, affordable housing to infrastructure improvements such as street and sidewalk repairs.
Alexander Wright is founder of the African Heritage Food Co-op, an initiative launched in 2016 to address the dearth of grocery store options on the East Side, where he grew up. Wright said that while banks’ philanthropic efforts are important, banks in general “need to be in a place of remediation” to fix underlying issues that the industry, as a whole, helped create. (After publication of this story, Wright left his job as CEO of the African Heritage Food Co-Op.)
Aside from charitable donations, banks should be finding more ways to work directly with East Side business owners and entrepreneurs, helping them with capital-building support along the way, Wright said. One place to start would be technical assistance by way of bank volunteers.
“Banks are always looking to volunteer. ‘Hey, want to come out and paint a fence? Want to come out and do a garden?'” Wright said. “No. Come out here and help Keshia with bookkeeping. Come out here and do QuickBooks classes for folks. Bring out tax experts. Because these are things that befuddle a lot of small businesses. Who is your marketing person? Bring that person out here. Because those are the things that are going to build the business to self-sufficiency.
“Anything short of the capacity-building … that will allow folks to rise to the occasion and be self-sufficient I think is almost a waste,” Wright added. “We don’t need them to lead the plan. What we need them to do is be in the community and [be] hearing the plan and supporting it.”
Parker, of Open Buffalo, has similar thoughts about the role that banks should play. One day, soon after the massacre, an ATM appeared down the street from Tops, next to the library that sits across the street from Parker’s office. Soon after the ATM was installed, Parker began fielding questions from area residents who were skeptical of the machine and wanted to know if it was legitimate. But Parker didn’t have any information to share with them. “There was no outreach. There was no community engagement. So I’m like, ‘Let me investigate,'” she said. “I think that’s a symptom of how investment is done in Black communities, even though it may be well-intentioned.”
As it turns out, the temporary ATM belonged to JPMorgan Chase. The megabank has had a commercial banking presence in Buffalo for years, but it didn’t operate a retail branch in the region until last year. Today it has four branches in operation and plans to open another two by the end of the year, a spokesperson said.
After the Tops shooting, the governor’s office reached out to Chase asking if the bank could help in some way, the spokesperson said in response to the skepticism. The spokesperson said that while the Chase retail brand is new to the Buffalo region, the company has been active in the market for decades by way of commercial banking, private banking, credit card lending, home lending and other businesses.
In addition to the ATM, the bank provided funding to local organizations including FeedMore Western New York, which distributes food throughout the region.
“We are committed to continuing our support for Buffalo and helping the community increase access to opportunities that build wealth and economic empowerment,” the spokesperson said in an email.
In the year since the massacre, there has been some progress by banks in terms of their interest in listening to the East Side community and learning about its needs, said Nicholas. But he hasn’t felt an air of urgency from the banking community to tackle the issues right now.
“I do experience banks being a little more open to figuring out what their role is, but it’s slow. It’s slow,” said Nicholas. The senior pastor of the Lincoln Memorial United Methodist Church, located about a mile north from Tops, Nicholas is part of a 13-member local advisory committee for the New York arm of Local Initiatives Support Coalition, or LISC. The group is focused on mobilizing resources, including banks, to address affordable housing in Western New York, specifically in the inner city, as well as training minority developers and connecting them to potential investors, Nicholas said.
Of the 13 members, seven are from banks — one each from M&T, Bank of America, BankOnBuffalo, Evans and KeyBank, and two members from Citizens Financial Group. One of the priorities of LISC NY is health equity, and the fact that banks are becoming more engaged in looking at health disparities is promising, Nicholas said. Still, they have more work to do, he said.
“I need them to think more on how to strengthen and build the economy on the East Side and provide leadership around that, not only to provide charitable things, but using sound business and banking and community development principles to say, ‘OK, if we’re going to invest in this community, these are the types of things that need to happen in this community,’ and then encourage their partners and other people they work with … to come fully in on the East Side.”
Some bankers agree with the community activists.
“Putting a branch in is great. Having a bank on wheels is great,” said Noah of BankOnBuffalo. “But if you’re not embedded in the community, listening to the community and trying to improve it, you’re not creating that wealth and creating a better lifestyle for everyone.”
What could make a substantial difference in terms of banks’ impact on the community is a combination of collaboration and leadership, said Taylor. He supports the idea of banks leading the charge on the creation of a comprehensive redevelopment and reinvestment plan for the East Side, and then investing accordingly and collaboratively through their charitable foundations.
“All of them have these foundations,” Taylor said. “You can either spend that money in a strategic and intentional way designed to develop a community for the existing population, or you can spend that money alone in piecemeal, siloed, sectorial fashion that will look good on an annual report, but won’t generate transformational and generational changes inside a community.”
Banks might be incentivized to work together because it could mean two things for them, according to Taylor: First, they’d have an opportunity to spend money in a way that would have maximum impact on the East Side, and second, if done right, the city and the banks could become a model of the way to create high levels of diversity, equity and inclusion in an urban area.
“If you prove how to do that, all that does is open up other markets of consumption all over the country because people want to figure out how to do that same thing,” Taylor said.
Some of that is already happening, at least on a bank-by-bank case, said KeyBank’s Owunwanne. Through the KeyBank Foundation, the company is able to leverage different relationships that connect nonprofits to other entities and corporations that can provide help.
“I see this as an opportunity for us to make not just incremental changes, but monumental changes … as part of a larger group,” Owunwanne said “Again, I say that not to absolve the bank of any responsibility, but just as a larger group.”
Downstairs from Parker’s office, Golden Cup Coffee, a roastery and cafe run by a husband and wife team, and some other Jefferson Avenue businesses are trying to build up a business association for existing and potential Jefferson-area businesses. Parker imagined what the group could accomplish if one of the banks could provide someone on a part-time basis to facilitate conversations, provide administrative support and coordinate marketing efforts.
“In the grand scheme of things, when we’re talking about a multimillion dollar [bank], a part-time employee specifically dedicated to relationship-building and building out coalitions, it sounds like a small thing,” Parker said. “But that’s transformational.”
City National Bank has agreed to pay $31 million to settle a U.S. Justice Department lawsuit alleging racial bias in its home mortgage lending in Los Angeles County.
The government’s complaint, filed Thursday in Los Angeles, accused the bank of violating federal housing and banking discrimination laws by avoiding loans to buyers of homes in neighborhoods that are majority Black or Latino.
City National Bank is the largest bank headquartered in L.A., but just one of the 11 branches it has opened in the county over the last 20 years is in a predominantly Black or Latino neighborhood. The county’s population of nearly 10 million is 49% Latino and 9% Black.
From 2017 to 2020, City National Bank maintained just three of its 37 branches in majority Black and Latino neighborhoods, the complaint said.
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The bank relied on “relationship managers” to generate home loan applications from existing customers, who were predominantly white, the government alleged, and it failed to act on internal reports showing it risked running afoul of fair lending laws.
Other banks serving L.A. County received more than six times as many loan applications in Black and Latino areas, the government found.
City National Bank denied breaking discrimination laws, but said it agreed to settle the case to avoid prolonged litigation.
Under the proposed settlement, which was filed simultaneously with the complaint and requires court approval, the bank would provide $29.5 million in home loan subsidies to borrowers in Black and Latino areas, including interest-rate cuts and down-payment assistance.
Assistant Atty. Gen. Kristen Clarke and U.S. Atty. Martin Estrada announced the agreement at Second Baptist Church Los Angeles in Historic South Central, one of the city’s oldest Black churches. Nobody from the bank participated in the event.
“Through this agreement, we’re sending a strong message to the financial industry that we will not stand for unlawful barriers when it comes to residential mortgage lending,” Clarke said. “We will not stand for unlawful modern-day redlining.”
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City National Bank released a statement saying it supports the Justice Department’s efforts to ensure equal access to loans regardless of race.
“At City National, we are committed to ensuring that all consumers have an equal opportunity to apply for and obtain credit,” it said.
Founded in Beverly Hills in 1953, City National Bank has deep ties to the entertainment industry. It was acquired in 2015 by the Royal Bank of Canada.
As part of the settlement agreement, City National Bank has agreed to spend $500,000 on advertising targeting residents of Black and Latino neighborhoods and $500,000 on a consumer financial education program to enhance their access to credit.
The bank also said it planned to open a new branch in a majority Black or Latino neighborhood and ensure that at least four loan officers are dedicated to serving those areas.
Atty. Gen. Merrick Garland launched a program in 2021 to step up enforcement of housing discrimination laws. It has yielded $75 million in relief to borrowers in Houston, Memphis, Philadelphia, Newark and Los Angeles.
If you are one of the more than 25,000 homeowners who is/was going through bankruptcy and have/had a mortgage with Chase, you might be owed some compensation.
Earlier this week, the megabank reached a deal with the Department of Justice’s U.S. Trustee Program (USTP) to compensate victims of so-called robosigning allegations.
As a result of the settlement, Chase will be required to pay out more than $50 million to affected homeowners through cash payments, loan forgiveness, and mortgage loan credits.
Chase actually admitted to improperly signing more than 50,000 payment change notices (under penalty of perjury), whereby the person who signed it didn’t actually review it for accuracy.
And in 25,000 cases, the notices were signed in the names of other employees, or even employees who had no longer worked for the bank. If this isn’t the definition of robosigning I don’t know what is.
The bank also acknowledged that it didn’t file timely, accurate notices of mortgage payment changes or timely, accurate escrow statements.
The Department of Justice warned other servicers to take note that the U.S. Trustee Program will continue to police their practices and make them pay if they find similar faults.
What Affected Homeowners Can Expect in Compensation
Those affected by the actions of Chase will be compensated in a variety of different ways.
For about 400 homeowners who received inaccurate payment increase notices, Chase will provide $22.4 million in credits and second lien forgiveness.
For more than 12,000 homeowners whose payment increases or decreases were not filed in a timely manner, Chase will pay $10.8 million through credits or refunds.
Another 18,000 homeowners who did not receive accurate and timely escrow statements will receive $4.8 million in credits for taxes and insurance.
Additionally, more than 8,000 homeowners whose escrow payments may have been applied in an inconsistent manner will be paid approximately $600 per loan.
Lastly, Chase will have to contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and provide support for the Credit Abuse Resistance Education Program.
Chase has also agreed to make the changes necessary to ensure these problems don’t reoccur. This includes updating technology, policies, procedures, and internal controls.
For the record, taking part in this settlement doesn’t affect the rights of homeowners to seek relief against Chase in other ways.
If you think you may be one of the 25,000 homeowners covered by this settlement, you may contact Chase at 866-451-2327.
Introducing Inside Voices with Kristin Messerli, a new interview video series hosting by Messerli, who’s research on NextGen homebuyers helps to inform tomorrow’s generation. She is also author of NextGen Homebuyer Research and a speaker and educator.
Today, she interviews Yanely Espinal, the Education Outreach Director for NextGen Personal Finance. She shares what every leader needs to know about reaching Gen Z, and the moment that made her decide to devote her career to personal financial education.
As a child from an immigrant family, financial literacy was not something that was discussed at home, and Yanely struggled with personal finance as she entered adulthood. Conversations about personal finance can be something that starts at an early age, she says, to alleviate societal pressure and achieve confidence.
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Yanely: I was really struggling myself with my personal finances because I’m first-generation American. I’m a daughter of immigrants. My parents are from the Dominican Republic. And so we grew up in a very traditional household. They pretty much were cash only for everything. And my parents never really had bank accounts, or debit cards, or credit cards, or anything like that.
And so we never talked about money. And when it was time for me to go off to college, I remember my parents being like, “Okay, sweetie, you better go and get some scholarships because we don’t have any money to give you to pay for college tuition.” And being that we’re low income, I did qualify for a lot of grants and I did qualify for PELL and a lot of different programs that did cover a lot of it, but there was still so much that I didn’t know about the cost of college and how to fill out your FAFSA and how to get additional scholarship dollars. And long story short, I got really lucky and I got a full scholarship to Brown University because they had a special program for low-income students, and there was just a pot of money that was meant for some of the neediest families to be able to graduate without student loan debt.
So I was in that program. Shout out to the Sidney Frank scholarship program at Brown. It was a great experience. And what that meant is that I dodged the whole student loan experience because I never really had to take on student loans, and I never had to compare interest rates or understand what it means to take on loans like that. So when I got to college, I wanted to have a laptop and I wanted to have name brand clothes and shoes, and I wanted to get Starbucks and go to the movies with my friends. And so I got my first credit card when I was in college, and that was my first entry point into the world of personal finance. I didn’t know what it even meant to use a credit card. I had no idea. And yet, I was swiping my little credit card up and down campus, buying everything, and it got out of control really quickly.
I went from $1,500 to $20,000 by the time I graduated, and I didn’t have anybody to explain to me how the compounding interest works, and how it was really growing and getting out of control. So I held onto that secret. And when I graduated and once I became a teacher, I realized this doesn’t make sense. My paycheck is not enough to pay all my bills, help out my family, get transportation to my job, pay for lunch, and also pay off these credit cards. So that was when I picked up a book about money and my real kind of education was a self-education, learning about money myself through reading books. And then later I decided, “You know what? I love teaching, but I think I want to teach specifically about financial literacy because it’s something that I never got myself when I was in school.”
Every year, Vanguard publishes a mammoth report called, “How America Saves,” sharing data from Vanguard’s 4.9 million employee retirement accounts (401(k), 403(b), etc).
Let’s take a peek at the data and see how you compare. Are you saving enough?
Savings Rate
The median deferral rate in 2022 was 7.4% of salary from the employee, plus another 3.9% from the employer.
Not bad! Remember, this data does not account for any other types of savings (IRA, taxabale brokerage, HSA, etc).
Ideally, a total savings rate is at least 15%. Even better at 20%. Anything above that and you’re killing it! So, 11.3% into a retirement account is a solid savings rate. Good work, America!
Based on Vanguard’s subjective (but quite reasonable) opinion, roughly 40-50% of Americans are “saving effectively” via their employer-sponsored retirement accounts.
Average Balance
The average (mean) participant balance in 2022 was $112,572, and the median balance was $27,376. That’s down ~20% from 2021 – not a big surprise, considering market performance in 2022.
This skew of mean >> median happens a lot in financial data! A few big fish drag the average up, but affect the median much less. About 60% of participants have an account less than $40,000, while 12% have accounts larger than $250,000.
But wait! Despite this “skew,” we still need to face the fact that the average person only has $112K saved for retirement?! That’s way too low. And scary! …right?
We need to pause. This is a prime example of the famous quote:
There are three kinds of lies: lies, damned lies, and statistics.
Why? Because significant retirement savings exist outside of 401(k) and 403(b) accounts. The median participant in this study is 43 years old and the median account age is seven years old. Those numbers don’t jive! How can a 43-year-old only have a seven-year-old 401(k)?
Answer: they’ve switched jobs and rolled their old 401(k) into IRA accounts. That’s what I did!
I would appear in this study as a 33-year-old with an 18-month-old 401(k), with an approximate balance of $15,000. The study would not be aware I used to have a 6-figure 401(k) at my old job that I rolled over into an IRA when I switched careers at the end of 2021.
Participation
While plan participation is growing year after year (nice!), the sore spots are obvious: poorer, younger, and less tenured workers are saving less than their richer, older, more experienced counterparts.
This isn’t surprising at all. But it’s all the more reason for widespread financial education. Share The Best Interest with a friend in need!
Target Date Funds
A whopping 83% of all participants used target-date funds, and 71% of them had their entire account invested in a single target-date fund in 2022. In total, 63% of all invested dollars were invested in target date funds.
Target-date funds are a good (sometimes great) solution for 99% of you. They are typically priced fairly (I’d like them priced lower, but I won’t quibble) and the automatic age-based allocation removes many potential allocation errors.
In fact, if a Vanguard investor holds only one fund in the 401(k) or 403(b), it’s almost guaranteed to be a target date fund. On the whole, that’s a good thing.
And to an amazing degree, participants are using age-appropriate target-date funds exactly as Vanguard would have intended.
Gliding Toward Retirement
Are investors holding the right amount of stock exposure as they age?
Yes! It’s reasonable for investors to glide down from ~80-90% stocks in their 30s to ~50% stocks near retirement.
But the most enlightening aspect of this table is how fearful investors were in 2005 (in the aftermath of the Dot Com bubble bursting) and 2010 (after the Great Financial crisis). Young investors were only 60% stocks!
Market history would tell us that’s unwise. But written history would remind us of the pain investors feel when they lose money, and the conviction they feel to “not get burned again.”
It’s an important reminder for all you readers. Don’t put yourself in a position where your amygdala convinces you to “sell to survive.”
Getting the “Match”
The “match” in a 401(k) plan is free money from your employer, and virtually always worth pursuing. The majority of participants are getting their full match (left), and even more so when the retirement plan automatically bumps up savings rates year after year.
Automatic Enrollment
The #1 reason people don’t save in their 401(k) plans is because they don’t sign up in the first place. Gah! There is no substitute for lost time!
Thankfully, more and more employers are utilizing automatic enrollment, so their employees start saving from Day 1.
Trading
The best investors are either dead or have forgotten their passwords.
The next best are single women. Then married women, dragged down by their husbands. Then married men, dragged up by their wives. And last are single men, left alone to their devices.
Why?
Trading. Men trade more than women, jumping on winners and abandoning losers after it’s too late. Hence, they underperform.
But on the whole, investors are doing a good job “staying the course.” The data below shows that most investors are looking at their 401(k) balances less than once a quarter. The more you obsess, the more likely you are to act…and shoot yourself in the foot.
If you’re a man, invest more like a woman. If you’re a woman, invest more like you’re dead. Stop trading!
If you have any questions about your workplace retirement plan, send in a question to The Best Interest!
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For many people, a financial advisor is a key ally in helping you reach your financial goals. While most savvy people under 30 should be able to handle their finances on their own, many opt to hire a financial advisor to get access to personalized advice from a financial expert.
If you live in San Francisco and want help from a local financial advisor, you’ve come to the right place. The best financial advisors in San Francisco are standing by to help you create a financial plan, choose the best investment portfolio, and put you on track to reach your most important financial priorities. Keep reading for a list of the best financial advisors in San Francisco.
What’s Ahead:
Overview of the best financial advisors in San Francisco
Typical fees: The fee is quoted as an annual percentage fee, and is billed quarterly by taking the value of your assets at the end of each calendar quarter and applying one-fourth of that annual percentage fee.
Bingham Osborn & Scarborough Wealth Management, better known as BOS, is an investment and financial advising company for individuals with at least $3 million in investable assets.
The fee-only firm advises clients with a holistic approach that looks at all aspects of the client’s finances. BOS works to build long-term investment portfolios using a data-driven approach that incorporates taxes and other factors.
Burgess Financial Planning
Contact: 415-525-1041 or [email protected].
Services offered: Financial planning and investing advice.
Assets required: $3 million in investable assets.
Typical fees: $480 fee for an initial planning meeting.
A smaller shop, Burgess Financial Planning is a boutique firm with just one planner. Sean Burgess is a CFP and Registered Investment Advisor. He is a fiduciary (that means he always puts your best interests first) and doesn’t have any minimum required level of assets to get started.
Burgess charges a $480 fee for an initial planning meeting. If you decide to work with Burgess Financial Planning long-term, investment fees are charged based on assets under management. This firm earns an impressive 4.5-star rating with 35 reviews on Yelp.
Founded in 2014, Citrine Capital is a fee-only wealth management firm with a focus on the Bay Area’s high-tech community. Entrepreneurs, business owners, and startup employees will likely feel at home with this firm.
Citrine Capital works to organize client finances in a way that helps them reach financial goals, mitigate taxes, and manage wealth for long-term needs. Fees start at $7,000 per year for clients with a net worth below $1 million.
Typical fees: $290.00 per hour for financial planning.
Located across the Golden Gate Bridge in Corte Madera, Financial Connections offers financial management, investment management, and other services to Bay Area clients. The fee-only firm doesn’t take any commissions or compensation from large investment fund providers.
The firm’s team acts as fiduciaries project-based financial planning. For those with long-term and unique needs, you can sign up for a concierge service to plan for specific needs. Its investment management product comes with either customized portfolios or robo advisor-style modeled portfolios.
Typical fees: $300,000 to $400,000 annual minimum fee.
Founded by Kathryn Hall in 1994, Hall Capital Partners is a large financial planning firm with more than $30 billion in client assets under management. It exclusively works with high-net-worth clients, many of whom hold eight-figure and nine-figure portfolios.
If you have that kind of wealth, the $300,000 to $400,000 annual minimum fee isn’t a huge deal. But for most of us peons with merely tens or hundreds of thousands, or even assets in the low millions, Hall Capital Partners probably isn’t going to work for you. If you just made it big time from your company’s IPO, however, it could be worth giving Hall Capital Partners a call.
Morling Financial Advisors is an investment manager and financial planner founded in 1999. Suitable to high-tech Silicon Valley, Morling Financial Advisors has its own app for clients to log in and view their account details.
Financial planning services start at $300 per month. Investment management services start at 1% for those with under $1 million in assets and go down to 0.60% for those with $10 million and up.
Paragon Financial Planning
Contact: 510-227-5354 or [email protected] or [email protected].
If you are in Oakland or Alameda, the office of Paragon Financial Planning may be convenient for you. Paragon Financial Planning is a small office led by Samantha N. Dinh, a Certified Financial Planner.
She’s doing something right, as Paragon Financial Planning earns perfect five-star ratings after 34 reviews on Yelp. Dinh offers financial planning, investment management, and insurance services through her company.
Summary of the best financial advisors in San Francisco
Those looking for no minimums and an affordable advisor
How I came up with this list
This list of the best financial advisors in San Francisco is based on several sources.
They are fee-only planners
Financial advisors on this list don’t earn from shady commission deals. They are all fee-only planners where you know what you will pay upfront and can rest easy that there are no major financial conflicts of interest.
They are fiduciaries
Fiduciaries are legally required to put your interests first. It’s a good idea to only work with a financial or legal expert who acts in a fiduciary capacity.
They earn good customer reviews
Before adding a financial advisor, I checked out reviews on multiple sites including Google and Yelp, and public lists of awards given to San Francisco financial advisors.
They work with a wide range of clients
Top advisors from this list may be a good fit for people from all financial backgrounds, whether they have $1,000 to invest or $100,000,000. While every financial advisor on this list isn’t the right fit for every reader, there should be an advisor that meets the needs of most people looking to get started with a financial advisor.
Remember that not all people need a financial advisor. Resources like those available here at Money Under 30 could give you all you need to make good financial decisions without the added cost of a finance professional. Ultimately, it’s up to you and your comfort level with your finances to decide if you would benefit from the services of a San Francisco financial advisor.
What questions should you ask a financial advisor?
How can you help me with my finances?
A financial advisor is a licensed financial professional with the expertise to help you manage various parts of your finances. That can include creating a financial plan, managing your investments, or a fully hands-on advising experience where they handle most of your day-to-day finances. Some focus on taxes, some focus on specific types of business owners or employees, some work with anyone.
There are many types of financial advisors. The one thing they all have in common is a business built around helping you manage your money.
Why should I hire you instead of doing it myself?
A financial advisor is best for someone who isn’t confident that they are making the right financial decisions. Most people don’t get much financial education at school, if any. That means unless their parents taught them about money, they could be just making best guesses around major financial decisions like saving for retirement or buying a home.
If you want help creating a financial plan or having your plan double-checked by a professional, a financial advisor could be right for you.
Are you a fiduciary?
A fiduciary is a type of financial advisor that is obligated to put your interests first. That means they are not allowed to put your money into a fund that isn’t aligned with your long-term goals and needs.
Ideally, you should only ever work with a financial professional that acts in a fiduciary capacity.
What services do you offer?
Financial advisors can offer a range of services. Here are some of the most popular services you can find from a financial advisor.
Financial planning – Reviewing where your money is today and how it influences your future is important. With financial planning services, advisors help you chart out the right savings and investments to reach your goals.
Investments –If you don’t know the difference between a stock, bond, and ETF, this service could be very valuable to you. Some financial advisors help you set up your portfolio to manage yourself. Others will manage it for you long-term.
Taxes – Financial advisors may be able to help with tax planning and tax savings strategies. Not all advisors offer tax services, but it’s an extra perk and could allow you to manage all of your money needs in one place.
Consulting –As well-versed financial pros, some advisors also offer business consulting services with a focus on financial management.
What are the costs of hiring a financial advisor?
If you are hiring a financial advisor, it’s important to ask them how they get paid. That’s because financial advisors can charge fees in different ways. They could also make money in ways that give them an incentive to suggest investments that are not in your best interest.
Fee-only financial advisors are only paid by client fees. This is the best type of financial advisor to choose. I would argue that it’s the only financial advisor relationship that works toward the client’s best interests.
Fee-only advisors may charge monthly or annual fees, hourly fees, or fees based on the size of your portfolio. Rates and services can vary, so it could make sense to shop around before choosing a financial advisor.
Some financial advisors are paid commissions by insurance companies and investment firms for selling their products. This is a major conflict of interest. Under this scenario, advisors may be paid to funnel your money into mutual funds or other financial products that are not in your best interest.
Summary
San Francisco and the Bay Area are home to some of the most successful companies in the world. But it’s also one of the most expensive places to live. A financial advisor can help you make the most of your money and keep it working to help you reach your financial goals.
By choosing a fiduciary financial advisor that works as a fee-only advisor, you should be in good hands. This list of the best financial advisors in San Francisco is a great place to get started.
Michigan State University Federal Credit Union said this week that it will make its first-ever expansion outside of Michigan by opening five branches in Chicago next year.
The $7.5 billion-asset credit union in East Lansing said the institution’s strategy has been to locate branches where its members live, and more than 10,000 Michigan State University students and alumni now reside in Chicago.
“Many MSU alumni move to Chicago post-graduation,” President and CEO April Clobes said in an interview. “In addition, the incoming MSU student class has a high number from Illinois.”
The branches will be located in the Lakeview, Lincoln Park, Wicker Park, Gold Coast and Old Town neighborhoods.
Clobes said MSUFCU has been evaluating the Chicago region for some time, and the right mix of retail locations near where its existing and eligible members reside became available.
Post-covid, there were more available location options to consider, she said.
MSUFCU is the second largest credit union in Michigan behind only the $12.4 billion-asset Lake Michigan Credit Union in Caledonia.
MSUFCU has offered services digitally to members outside of Michigan for many years, including selling mortgage products in 18 states across the country.
But Clobes said physical locations grow membership and existing member balances faster than digital services alone.
“Our members and eligible members are able to do all of their business with the credit union online, yet when we move into a market, the members appreciate having a branch location for complex transactions and financial education,” she said.
Whether digital or physical, credit unions need to be able to differentiate themselves to their members and ensure they have the product mix and delivery channels.
While members make nearly 2 million visits a year to MSUFCU branches, they log in to its mobile app 36 million times a year.
“Their branch visits are purposeful for when the member would like to be assisted by our team versus self-serve. Physical locations help to support a growing community through employment and economic activity as well,” Clobes said.
Michael Fryzel, a Chicago attorney and former chairman of the National Credit Union Administration, called the entry into the Chicago market by Michigan State University FCU an “excellent move.”
“The potential exists for substantial membership growth for the credit union. There are thousands of MSU graduates and family members who live and work in the city and surrounding suburbs,” Fryzel said.
Michigan State University FCU has more than 350,000 members. Clobes said historically when the credit union adds a branch to a digital-only region, it grows about 30% in both balances and new members in that area.
She anticipates the Chicago market will see similar growth.
“Our annual new member growth is between 5% and 6%, and we anticipate that moving to a new market area will help us maintain this level of membership growth through better retention of existing members as well as attracting new eligible members,” Clobes said.
So will the Chicago expansion serve as a springboard for moves into more out-of-state markets?
Clobes was noncommittal.
The credit union already has plans for growth in new markets and in the areas it already serves in Lansing, Traverse City Grand Rapids, Oakland County and metro Detroit.
“We will evaluate the success of these locations to determine possible additional locations in the Chicago suburbs,” she said. “While we are moving into the Chicago market, we are still branching throughout Michigan where our members are concentrated without a convenient branch location.”
MSUFCU’s plans continue the broader industry pattern of credit unions continuing to build branches. There were 20,694 branches among federally insured credit unions in March 2023, up 87 branches from a year ago, according to recent data from the National Credit Union Administration.
Where do you go to get breaking news headlines, personal finance news and opinion, and advice and commentary on what you should do with your money — all in one place? Twitter, obviously.
It’s easy to sign up for an account if you don’t already have one. However, it can be difficult to figure out which accounts are actually worth following. I’ve compiled a list of my favorite financial Twitter accounts to follow to get you started.
They are a mix of styles, backgrounds, and financial philosophies, so you get a balanced flow of information and tons of new ideas.
What’s Ahead:
1. Broke Millennial – @BrokeMillennial
Follow @BrokeMillennial for – Advice on getting ahead. Lowry provides lots of information in her feed that you can apply to your own situation while learning more for the future.
Erin Lowry is a speaker and writer helping you to #GYFLT — get your financial life together. A financial and opinion writer for sites such as Bloomberg, USA Today, and Time, Lowry writes about Millennial finance topics such as investing (not “saving”) for retirement and student loan debt payoff. She’s the author of the BrokeMillennial series and a book by the same name: Broke Millennial: Stop Scraping By and Get Your Financial Life Together (TarcherPerigee, May 2017).
Lowry is focused on providing actionable advice to Millennials looking to improve their finances. Her Twitter feed is conversational, as most of her writing is, as well, and she takes polls and shares links to pieces aimed to help the average person get a handle on budgeting, retirement investing, saving, and more.
2. Forbes – @forbes
Follow @forbes for – Business and investing news and headlines. Knowing what’s going on in the larger world of finance is useful, especially when making decisions about work or your 401(k). If a wave of layoffs is hitting a certain industry, or particular stocks are skyrocketing, there could be real-life effects for you, and Forbes helps keep you informed.
Of course, Forbes is the media company/magazine known for its coverage of business news, investing, entrepreneurship, and other financial information. Forbes is well known for its definitive lists, such as the 400 Richest People in America, the World’s Billionaires List, and the Best Colleges in America.
The official Forbes Twitter account broadcasts news and headlines to 16 million followers, providing a steady stream of information about the intersection of money, politics, and Wall Street, among other things.
3. Julia Carpenter –@juliaccarpenter
Follow @juliaccarpenter for – Tweets that you know came from a real person. A lot of Finance Twitter is very singularly focused, beating the drum of “invest! Invest! Invest!” But there’s more to a full life, a life well examined, and Julia’s feed also seeks to bridge the gap between one human and another.
Julia Carpenter is a writer at the Wall Street Journal, covering topics involving money. One such column for the @WSJ is titled How Covid-19 Derailed My Financial Goals, which is a too-real subject for many of us.
She’s also the author of a daily newsletter called A Woman to Know and has written and done much work centered around the topics of women, work, and pay. Julia Carpenter and Bourree Lam (see below) also teamed up together to create a six-week Money Challenge to help you get your finances in order during the pandemic.
Calling herself a “writer, reporter, [and] lady about town,” Carpenter’s Twitter features not only insightful links about topical personal finance stories, but also some relatable memes, humorous retweets, and not a few mildly alarming news articles.
4. Bourree Lam – @bourreelam
Follow @bourreelam for – Good quality link curation of stories from across the Twitterverse. For example, if you’ve ever wondered The Real Cost Of Coronavirus Micro-Weddings or How to Think Long Term With Near-Zero Interest Rates, give her feed a follow.
Bourree Lam is the Personal Finance Bureau Chief at the Wall Street Journal. In August, she and Carpenter launched a six-week email course designed to challenge your knowledge, shape up your finances, and get you back on your financial game.
Lam also has written for Refinery29 (including their hugely popular Money Diaries series) as well as the Atlantic, and frequently touches on topics related to work and women.
5. Business Insider – @businessinsider
Follow @businessinsider for – Wide-ranging business and financial news, especially as it intersects with politics and the law. Whether you need to know how a new tax law might affect your bottom line or just want to keep up with business headlines, Business Insider is a good Twitter account to add to your “following” list.
Featuring original in-depth reporting on business and finance, Business Insider is a must-follow account. New stories run the gamut from The 64 Emojis Coming to Your iPhone in 2021 to articles about mass layoffs triggered by the novel coronavirus, and nearly everything in between.
Next to their focus on finance, Business Insider touches also on politics, technology, retail, and “executive lifestyle,” which puts particular focus on the life and times of C-suite movers and shakers, which may be aspirational for you (or not).
6. Ramit Sethi – @ramit
Follow @ramit for – Common-sense advice and real-talk truths about managing your money. Follow his feed to shake up some of your core ideas about money and learn to think about it in a new way, especially if you don’t have a lot of it. You’ll learn to ask the $50,000 questions instead of the $5 questions.
Known for his best-selling book I Will Teach You to Be Rich, Ramit Sethi has been offering solid personal finance for years. My favorite piece of advice from Sethi? Just buy the latte. No one is going broke from coffee. Stop focusing on something that will save you fifty bucks and focus on things that can save you fifteen hundred — like insurance, fees, and other big-picture things. Then you can also work on the other side of the coin, so to speak, which is increasing your income.
Sethi also answers questions from readers, shares their stories, and offers advice and personal takes on issues.
7. NPR’s Planet Money – @planetmoney
Follow @planetmoney for – Entertaining but educational looks at the forces that shape our financial world. Their Twitter feed contains links to their podcast stories, but they also share clips from their TikTok. (And if you ever thought, I really don’t need to see an NPR version of TikTok, just give it a chance. Planet Money’s TikTok boy, Jack Corbett, makes weird, surreal, fun, and somehow still informative TikToks).
If you enjoy podcasts, deep dives, and explainers, you’ll like NPR’s Planet Money. Planet Money is a podcast, and their goal is to make learning about the economy interesting.
Here’s how they describe it: “Imagine you could call up a friend and say, ‘Meet me at the bar and tell me what’s going on with the economy.’ Now imagine that’s actually a fun evening.”
Luckily for everyone, they deliver.
8. Tiffany Aliche, a.k.a. The Budgetnista – @TheBudgetnista
Follow @TheBudgetnista for – Inspiring words and links that will get you pumped up to live your best life and finally take control of your financial freedom. Don’t worry, the real-life advice is there, too, such as this interview with NPR where she talks about how exactly to curb your stress spending (easier said than done in a pandemic).
Tiffany Aliche is the best-selling author, speaker, and financial educator known as The Budgetnista. She’s taught hundreds of thousands of people how to manage their finances, structure their budgets, and save up for their dreams.
Aliche runs the Live Richer Academy, an online collection of financial education courses, and also co-hosts a podcast called Brown Ambition. Her goal is to help everyone unlock access to life-changing information about money.
9. Michelle Singletary – @SingletaryM
Follow @SingletaryM for – A refreshing perspective. Singletary’s Twitter feed touches on topical issues surrounding personal finance, including taxes, race, and politics, and includes links to important articles, including her 10-part series for the Post called Sincerely, Michelle. Singletary isn’t afraid to be frank about the forces that affect and influence how we all deal with money.
Michelle Singletary is a personal finance columnist for the Washington Post. Her Twitter Bio shares her take on money: “if debt were a person, I’d slap it!”
Singletary is also an author, having written The 21 Day Financial Fast, a book about resetting your financial habits. Her method works like a juice cleanse: strip everything down to the bare essentials, then slowly add back in only the things that work for you.
10. Consumer Financial Protection Bureau – @CFPB
Follow @CFPB for – News you can use. The CFPB’s Twitter feed will tell you how to protect your finances during the coronavirus, what your rights are during debt collection, and how to avoid specific scams (among many, many other things).
Also known as consumerfinance.gov, the Consumer Financial Protection Bureau was created to help make markets and financial products work for American consumers, not the other way around. They provide resources for people to learn about the laws that affect financial products and empower them to make decisions.
The CFPB publishes guides, Q and A’s, and videos about money, especially where federal rules come into play. It’s aimed at a consumer audience, making it a useful way to learn about the legalities that actually affect things like credit cards and bank accounts so you don’t get tripped up.
Summary
If you want to expand your knowledge of personal finance, catch the latest news, be inspired, and talk to like-minded people, you can do all that on Twitter, if you follow the right people. Join the conversation and learn more about money on your journey to building a richer life. (Don’t forget to follow @MoneyUnder30, too!)