The successful attempts of big banks to manipulate LIBOR, a key interest rate benchmark, are in the headlines again as the European Union became the latest entity to fine miscreants in this sordid tale. This Wall Street Journal graphic provides a solid overview of allegations and files in this ongoing tale.

At this point, the facts are pretty well known and they aren’t the subject of my post. What I’m more interested in considering is will the fines and headlines make any difference to potential future scams around interest rates and with other financial instruments? And what does it say about our financial system that such headlines have become almost routine, not really prompting much outrage?

You can probably see where I’m going. First of all, I don’t think the fines are going to make any difference in terms of deterring future bad behavior. For the largest financial institutions, it seems to me that these fines have just become another cost of doing business. After all, it’s just money and they make plenty of it. And it’s easy enough for top brass to blame rouge employees, traders or whomever rather than take responsibility for the imbedded cultural attitudes that make this type of behavior the norm in just another day at the office. Their reputations aren’t great anyway, and it’s just another black mark that will be quickly forgotten as the news cycle moves on to the next Miley Cyrus video.

Secondly, I see this behavior as more typical than not of our financial system. As the most recent financial crisis showed, governments are willing to do just about everything and anything to keep the financial system up and running, even when it is demonstrably corrupt. Tough regulations, even when they are actually proposed, end up either being watered down so much that they don’t mean much or enforced with so little vigor that they might as well not be on the books. Financial institutions have been fined for so much bad behavior at this point, everything from this scandal to illegal foreclosures and so forth, that it just doesn’t mean anything.

Onto the next scandal…

As a person of the liberal persuasion, I never needed much convincing that health care reform was a good idea. As someone who is single and self-employed, it’s been an even easier sell, especially as I’ve seen my individual premiums go up significantly during the past several years, to the point where I am currently paying $622.80 a month for a high deductible plan that doesn’t seem to cover much of anything.

I know that’s the point of high deductible plans, that they have…well…high deductibles. But I never got much benefit of the trade-off, which is supposed to be lower premiums. That’s because as a self-employed person on the individual market with a pre-existing condition, I had only option when it came to health insurance. That was to convert my post-divorce COBRA insurance into an individual policy, which I did a little more than two years ago, after my three years of COBRA expired.

So I wasn’t particularly upset when I received a notice from Highmark Blue Cross/Blue Shield a couple of months ago that my insurance policy was going to be cancelled. I was hopeful that I could find something better for at least the same price, if not less, through the Health Insurance Marketplace created by health care reform. As a resident of Pennsylvania, which does not have its own exchange, I was going to go into the federal exchange.

So, shortly after Oct. 1, I went to and like so many others, couldn’t create an account. I was able to look at some policies and was encouraged to see that my costs were likely to fall. Like so many, I followed the saga in the news about the snafus with the site, which have been significant. Because of those issues, I didn’t try again until this week to access the site and create an account.

Over the course of several hours over several days, I was able to create an account and compare plans. I ultimately chose a gold plan that reduces my costs by $187.95 per month and gives me better benefits than what I had before, including:

  • Co-pays for doctor’s visits and prescriptions, which I have to pay for out of pocket now until my deductible is met
  • Co-pays for tests and emergency room visits, which I also now have to meet my deductible before getting any coverage
  • Lower out of pocket maximum

Although my overall deductible is higher — $1,500 vs $1,000, the co-pays really mitigate that because I am a healthy person who typically doesn’t consume a lot of care. I’m also getting dental coverage, which I haven’t had since my divorce; to be fair, I haven’t looked into it, but one major benefit of is that it is easy to find, compare and buy insurance.

My experience may not be typical. I make too much money to qualify for subsidies, which simplifies the process. But, as one of the millions of Americans for whom health care reform was set up, I’d have to say it’s a success. From my POV, it’s been worth the few hassles and although the site shouldn’t have been so buggy in the first place, it’s working as advertised for me and thousands of others.

I really disagree first of all with those who believe healthcare reform wasn’t necessary and secondly, with those who believe the bungled set up of the site completely undercuts not only healthcare reform but the Obama administration. Nonsense — of course, it should have been handled better. But it’s working and the fixes will continue to help it function more smoothly and over the next months and years it will fulfill its promise, which is to extend health care choice to millions of Americans. Count me in.

As the global financial crisis unfolded, the enmeshment of a wide variety of financial services firms with each other was a major factor in it’s ultimate impact on the economy. From brokerage firms to mortgage brokers to asset management companies, it seemed like everyone had a role to play in magnifying the scope of the crisis.

Risk spread like the proverbial stone thrown into a pond, touching businesses, consumers and governments in virtually all corners of the globe. That’s why it seems to make sense to me that government regulators — in this case the Financial Stability Oversight Council — are examining all types of systemic risk and focusing on asset management firms, now that it has worked its way through banks and related firms such as American International Group and GE Capital.

Needless to say, asset management firms disagree, the Wall Street Journal reports. These firms, including Fidelity, PIMCO, and others are lobbying members of Congress and the Department of the Treasury in an effort to discredit a report from the Office of Financial Research (the research arm of the Financial Stability Oversight Council) that identified asset management firms as a potential systemic risk factor that should be targeted for stricter regulation.

As one of the millions of US taxpayers who ended up financing the bailout from the aforementioned financial crisis and who is a participant in an economy that is still limping along due to the after effects of it, I’m a firm believer in quantifying and constraining systemic risk where possible. In this juicy report, the Office of Financial Research makes a very credible case for extending the mantle of systemic risk regulation to at least some of the largest asset management firms.

Here are some of the issues they outline that could imperil the financial system, creating the need for some type of systemic risk regulation:

  • Reaching for yield: the tendency of asset managers to seek higher returns through riskier assets
  • Herding: the tendency of asset managers to crowd into popular asset classes
  • Competitive pressures that incentivize managers to take risks to improve performance
  • Redemption risk in volatile markets that may result in heavy redemptions by investors in falling markets
  • Increasing use of leverage and derivatives that may impact funds in unexpected ways during a market crisis
  • Potential failure of asset management firms
  • Concentration of risks or risky activities within a asset manager or even a specific fund
  • Interconnectedness and complexity of risks in firms’  business activities, products and services

I’m sold, but that’s not the end of the story. The report points out that asset management firms can transmit risks across the entire global financial system via exposure of creditors, counter parties, investors and market participants to an asset manager or activities of an asset manager. In addition, these risks and activities have the potential to cause disruptions via fire sales when asset prices are in a free fall.

None of this should be shocking to anyone who was paying attention to the last financial crisis. It seems like common sense to me that the largest firms that engage in these kinds of activities should be subject to additional regulation and supervision due to their potential risks to global financial stability.

I, for one, certainly don’t want to wait to find out what elevated risks asset management firms pose by waiting until the next financial crisis. I’d rather see them contained and evaluated today.

American cities are toast

Posted: November 12, 2013 in Uncategorized


From The Wall Street Journal to the Pew Charitable Trusts, pundits are proclaiming what anyone who lives in or near a big city already knows: big cities are in a seemingly irreversible decline, and no one has the will or desire to do that much about it. Detroit, which is messily making it’s way through the municipal bankruptcy process, is just the tip of the iceberg.

The forces that are pushing big cities to the brink of — and into — financial insolvency, aren’t new, but they seem to be accelerating, putting more pressure on cities at a time when fewer resources are available. Here’s an overview:

  • Falling tax revenue
  • Rising pension and benefit costs
  • Cutbacks in state and federal aid
  • Cash flow issues
  • Declining revenue

Detroit was the first domino to fall, and it’s likely that due to the reasons above and others, we’ll see other municipal bankruptcies in coming years.

Cities are on the ropes due to several macro trends, which include:

  • Flight of the affluent and well-educated to the suburbs.
  • Fragmentation of municipal and county government systems in most states, including my home state, Pennsylvania
  • Globalization, which has savaged the industries that once made their homes in cities such as Erie, PA, my home for the past 14 years
  • The 2006-2009 housing bust and financial crisis.

Let’s take a poll. How many of you reading this live within the borders of a major city? Not me — I was unwilling to entrust my children’s education to the mercies of the city school system and squeamish about higher property taxes. I live in the biggest city outside of Erie, PA, Millcreek Township, which is beginning to experience some spillover of the problems endemic to Erie.

Erie isn’t included in the Pew Report because it isn’t big enough, but it’s problems are typical of its larger cousins. As industry drained from the city due to globalization and the suburbs beckoned the more well-to-do, Erie became the home of the poor and the non-profit hospitals, colleges as well fulfilling its role as the seat of city and county government.

The large non-profit organizations, while taking up at least some of the employment slack of the former industries, are by nature exempt from taxes. The city has made deals with a number of them to make payments in lieu of taxes to help offset the costs of fire and police protection, among other municipal services, but those payments fall far short of what a for-profit entity would pay in taxes. I’m sure this is a story that is repeated throughout the country.

Fragmentation of government is a plague in many states. In Pennsylvania, there are countless cities, towns, townships and boroughs. Each one has it’s own set of elected officials, municipal departments, etc. and citizens with their own self-interest. In Erie, although the region’s cultural resources are predominately located in the city, it’s extremely difficult to get other neighboring municipalities to support the Zoo, the Symphony, etc. even though everyone in the greater metro area benefits. This is just one example of how municipal fragmentation hurts cities.

Globalization and the financial crisis have wreaked havoc. Industry has moved offshore and as the housing market has fallen, property tax receipts are in decline. Governmental austerity on the state and federal level has led to cutbacks in aid to cities. And the promises made to municipal workers are increasingly difficult to fulfill and sustain, because cities simply do not have the resources to make good on or extend these promises.

As voters and beneficiaries of the cultural resources of cities, we need to do what we can to stem the decline of our cities before it’s too late. To that end, we need to encourage and actively support efforts at municipal consolidation and press elected officials in our suburbs to do more to fiscally support our ailing neighbors.

The 9 Lives of Content Marketing

Posted: October 26, 2013 in Uncategorized



There are many ways that content marketing is uniquely suited for the age of the internet and the fragmentation of the mass media. It provides anyone interested in building a platform with the means to establish thought leadership in an area of expertise, potentially attracting clients and customers via a wide variety of distribution methods. 

What I find the most appealing facet of content marketing is the leverage it provides — the nine lives, if you will. When you create a piece of content marketing, whether that’s a commentary, white paper, case study, blog, article, video, podcast or whatever, you’ve fashioned content that yields a multiplicity of uses beyond that original piece. A more complex white paper or commentary could have four, five or even nine lives beyond the original, while a blog post might just have two or three.

The exact number of potential uses for original content is only limited by your imagination. For example, a 2,000 word white paper could be rewritten and repurposed in the following ways:  

▪   Blog posts

▪   Videos or podcasts

▪   Slideshows using stock photos

▪   Social media campaigns in LinkedIn, Facebook, Twitter or Pinterest

▪   Email marketing campaign

▪   Newsletter

And that’s just one white paper. If you map out a content marketing strategy around a specific area of thought leadership, you can create a plan for several white papers, articles or commentaries related to each other that can build on a specific service, product or area of expertise your company possesses, and emphasize the unique value proposition that you bring that differentiates you from your competitors. 

Such a strategy, when executed in a disciplined manner, can build on itself and increase hits on your website, the numbers of social media followers, subscribers to your blog and newsletter as well as your search engine rankings. Rome wasn’t built in a day, and it will take time to design, create and execute a leveraged content marketing strategy, especially if you’re starting from scratch, but it’s well worth the effort. 

Content can live forever and by creating content marketing campaigns around specific objectives and areas of thought leadership, that content can be leveraged, crafting lasting marketing that is ultimately bigger than the sum of its parts.

The ROI of Content Marketing

Posted: August 17, 2013 in Uncategorized

I just spent a couple of months promoting an investment strategy that’s based on return on investment, and it’s gotten me thinking about the investments that all of us make in terms of our businesses, our relationships and the decisions we make every day about where to invest our time and energy. That lead me to a conversation with Brian Lauzon, managing principal at Advisor Assist, about what return on investing in marketing really means.

You have to have some idea of an ROI in this area, because without it, you can just throw money at various marketing strategies and not see much in the way of a return. But, like any other investment, you have to be intentional about what you are doing, create a strategy and execute that strategy over time and give the strategy time to work before you decide whether it’s working or not.

And that’s the rub. All too often, financial services companies and financial advisors throw something at the marketing wall and hope it sticks and complain when they don’t get anything back. That could be a direct mail piece, an email sent to prospective clients, a new website, a white paper, a webinar, whatever. Without refining the message, creating a campaign and consistently executing that campaign over time, the results won’t happen. And even then, the results may not be in the form that’s expected or come at the precise time you hope they will.

Think about it just like you would think about your investors or your clients. If I invested in your mutual fund or hired you to manage my portfolio for six months and then pulled my money out, saying that I hadn’t gotten my expected return, you would likely tell me that I hadn’t given it enough time. You’ll tell me that your strategy is a long  term strategy and six months is just too short of a time to decide whether the return is worth the investment.

Just so! I’m just saying that just as you have to give investment strategies enough time to work to gauge whether they are effective — or not–  you have to do the same with marketing strategies.

Of course, whatever marketing you are doing should be tied to an actionable plan, specific goals and a targeted audience. Then, If you then intentionally create content and promote that content, your strategy will have legs.

And that’s another critical aspect of content marketing — great content lives forever. House it in the right place, promote it effectively and the results will eventually come. Maybe not today or tomorrow or even in a year. But if you build it right, they will come…

All bets are off in the race for financial services AUM in about five weeks, when hedge funds and private equity companies formally gain the right to market directly to potential clients. That’s when the provisions of the JOBS Act that lift the ban on hedge fund and private equity advertising become effective. These rules were formally approved about a month ago by the federal Securities and Exchange Commission.

There’s been a lot of speculation about exactly what hedge funds and private equity companies will do when they can advertise and market, which could be anything and everything including:

  • Celebrity endorsements
  • Billboards
  • National advertising campaigns
  • Direct mail and email solicitation
  • Fancy dinners, conferences and seminars

It’s all likely, but what hasn’t been discussed as much is the impact of the entrance of extremely well funded entities who are set up to compete with financial advisors, financial services companies and asset managers for a limited pool of high net worth, ultra high net worth and institutional assets. There’s a limited pool of these assets, and competition is already fierce among companies that have the right to directly market and advertise today.

Imagine what it’s going to be like in a few years when extremely well funded hedge funds really get their arms around what they can do and hire the brightest and the best Mad Men to formulate and execute a marketing strategy for them. While all healthy financial services firms have money to burn to a degree, hedge funds charge fees far in excess of what other asset managers can charge and they also have the ability to lock up AUM so that it can’t flow out in the same way that it does with mutual funds and financial advisors.

If you are currently seeking to gather AUM, you better watch out. These guys are coming and they have the ability to suck all the air out of the room so that there is even less space for other messages. In an already noisy atmosphere, it will be even harder for potential clients to distinguish your message from all the others out there.

That means if you don’t have a clearly defined ideal client type and a plan to attract those clients to you, you better get moving. Time’s a wasting…..