Welcome, everyone. Welcome to the 86th episode of the Financial Advisor Success podcast. My guest on today’s podcast is Eric Roberge. Eric is the founder of Beyond Your Hammock, an independent regional application administrator, based in the Boston area, that specializes in financial planning services for high-income professionals in their 30s and 40s.
What’s unique about Eric though is the way he quickly propelled his advisory firm to $300,000 of revenue from scratch in just 5 years, with a marketing approach of talking about what he does personally in his own financial lifestyle and attracting prospective clients who want to live the same way. In this episode, we talk in-depth about Eric’s marketing process, from why he’s decided to abandon the standard approach of trying to make neutral statements in the media and always saying it depends, and instead, showing the financial decisions he actually makes. He’s published articles to share publicly about those financial decisions, including how much he spent on his recent marriage and why he’s chosen to rent instead of buying a home, living in Boston.
How Eric deals with the criticism that often comes back when you make such strong statements in public. And why Eric finds that this kind of marketing is the ultimate differentiator because anyone can write technical articles, but only you can write about your beliefs to attract prospective clients who share those beliefs. We also talk about Eric’s advisory firm itself. From the financial planning process he uses, and the way he uses eMoney Advisor to gather data before meeting with clients, to the way he implements a monthly retainer model with his clients, or as Eric puts it, an annual retainer payable monthly.
Why Eric decided to add in a separate AUM service as well and what Eric went through to survive the early years of getting his practice to the point of generating $300,000 of revenue, including spending nearly six months waiting tables on the side to make ends meet while he was getting his advisory firm off the ground. And be certain to listen to the end where Eric talks about how he ultimately figured out the exact type of ideal client he wanted to serve as a way to build his own confidence in communicating his passion for financial planning to clients. So whether you are interested in learning about how Eric grew Beyond Your Hammock to $300,000 in revenue in the first 5 years, about his unique approach to marketing to his target audience, or about his pricing model that allows him to charge effectively for a blended service model, then I hope you enjoy this episode of the Financial Advisor Success Podcast!
Bitcoin is a cryptocurrency created in 2009. Marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies.
Bitcoins is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games. But much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017.
Whats is Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
Buy on an Exchange
Many marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. But security can be a concern: bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016.
People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.
People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.
Bitcoins are stored in a Digital Wallet which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike Bank accounts, bitcoin wallets are insured by the FDIC
The anonymity of bitcoin
Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.
Bitcoin’s future in question
No one knows what will become of bitcoin. It is mostly unregulated, but some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.
SARATOGA (CBS SF) – Two suspects were arrested and Santa Clara County sheriff’s deputies were searching for a third after the group allegedly stole a computer that contained Bitcoin worth $10,000.
A family hired the three suspects to help them move out of their home in the 20700 block of Fourth Street on Saturday, according to sheriff’s officials. They agreed on a rate for moving their belongings into a truck, but the suspects allegedly demanded a higher rate about two hours into the move.
The family refused to pay more for the services, sheriff’s officials said, and the suspects proceeded to “compensate themselves” by allegedly taking a TV and an Apple iMac computer by force.
The computer was valued at $3,000 and the victims told deputies that the computer contained Bitcoin worth about $10,000, according to sheriff’s officials. Bitcoin is a form of “cryptocurrency” used in virtual space.
The suspects allegedly got away in a gray two-door Lexus SC400. Deputies received video footage of the robbery and identified two of the suspects as Yessica Barajas, 18, of San Jose and Welbar Quintanilla, 24, also of San Jose.
Deputies went to Barajas’ home and searched it for the stolen objects but were unable to find them. Barajas was arrested on suspicion of robbery and conspiracy and booked in Santa Clara County Jail.
Deputies also searched Quintanilla’s home, but were unable to find the TV and computer. He was arrested on suspicion of robbery and a parole violation.
Deputies have not yet identified or located the third suspect.
Anyone with any information about the robbery is asked to call the Sheriff’s Office at (408) 808-4431.
“Electronic personal devices have become wallets, capable of holding infinite amounts of currency,” Sheriff Laurie Smith said in a statement. “The public should take the necessary steps to safeguard their virtual property because it is vulnerable like physical property.”
Payments are made using payment instruments. Cash, for example, is a payment instrument. So too are checks. However, digital payments are not one instrument but rather an umbrella term applied to a range of different instruments used in different ways. In this section, we provide some parameters for creating this definition.
Since there is no one standard definition of a digital or e-payment, you should settle on a clear and implementable definition at the start of any measurement exercise. The subject matter is complex, but there are two key dimensions of categorization that are most important:
The nature of the payment instrument: through which means—paper or digital—are the instructions carried.
The payer-payee interface: whether the payer, payee, or both use an electronic medium in a payment transaction.
Read Step 3: Definition options to see how these two dimensions overlap in commonly used definitions of digital payments.
How to define digital payments — step 1
The nature of the payment instrument
A key first step is understanding which instruments are even available, and on what basis, in your country and how they can be grouped according to their nature. Digital payment instruments can be grouped together with respect to their underlying nature in two ways:
Narrow choice- ‘Paper’ vs ‘non-paper’: Instruments which rely on a paper-basis for authorization, such as checks, traveler’s checks, and money orders, are regarded as ‘non-digital’ and all other instruments are regarded as ‘digital’.
Broad choice – ‘Cash’ vs ‘non-cash’: Every instrument other than cash is regarded as ‘non-cash’ and therefore digital, since each usually takes a digital form at some stage in the transfer of value.
In reality, there is a spectrum between pure digital and pure physical in how most instruments other than cash are transacted over the whole transaction cycle. The choice of which definitional option to apply will depend on the purpose. For example, if you are measuring to highlight the need to transition away from existing payment instruments due to, for example, cost, then you can make a case for focusing on the broader definition (non-paper instruments). However, if you want to highlight the potential of payment flows to be digitized, you may consider checks as much closer to digital than cash, therefore including them with ‘non-cash’ in the narrow definition. In an increasing numbers of countries, paper checks are truncated into an digital message on deposit, and since they require the payer to have an account, and are also traceable, they are less like cash in these attributes and more like account-based digital options.
Note, however, that technology is challenging the boundaries of all instrument-based definitions—for example, countries like Canada are considering the introduction of digital cash, where digital legal tender is transferred directly from payer to payee in a payment transaction, and where paper and metallic currency will become obsolete. Hence a ‘cash’ transaction could be ‘digital.’
Click to access a glossary of payment terms. For a more comprehensive list, see the glossary from the international standard setting body for payments, the Committee on Payment and Settlement Systems at the Bank for International Settlements.
How to define digital payments — step 2
The payer-payee interface
The other definitional dimension to clarify is which of the payment parties, if any, use electronic interfaces. When both the payer and the payee use electronic means to initiate and receive payments, the picture is clear—this can be considered ‘pure electronic’. However, there other payer-payee scenarios which may affect where the boundary line is drawn for electronic, as shown below.
How to define digital payments — step 3
Choices to be fit for purpose
Combinations of these two dimensions can create a range of different definitions regarding a digital payment for measurement purposes. The real question is: does your definition fit your measurement objectives? To illustrate that choice, we show on the next slide two common choices of boundary definitions for digital payments. To be considered digital, both require that at least one party, whether the payer or the payee in the payment transaction, uses a digital medium to authorize or receive payment. This rules out transactions where only the intermediate parties (such as banks) exchange electronic messages.
However, the boundaries differ with respect to the treatment of checks. Under the narrow definition, checks are considered fundamentally a paper instrument which, like cash, carry high costs transactions costs. Therefore, regardless of whether the payee gets credited electronically or not following a deposit, checks are grouped with cash. In the broad definition, checks are considered to be closer to digital because they (i) are often scanned and converted to digital messages soon after deposit; and (ii) require that the payer has a payment account and is therefore financially included.
So, what’s the difference? You might prefer the narrow definition if you are interested in measuring and promoting the efficiency of payments; and all the more so, if checks are still processed manually in your country so that you can separate out their effect from cheaper digital alternatives. However, the broad definition allows you to include checks in a wider universe of formal payment payments, which may be appropriate if your interest relates more to measuring patterns of financial inclusion, for example.
Since the beginning of the digital age, pundits have hailed virtual currencies as the future of our civilization’s money. While it may be difficult to imagine a cash-less society, it’s important to understand that money is merely an agreement to use something as a medium of exchange. The function and purpose of cash is therefore assigned by our cultural and social systems, not any intrinsic value. So as our society evolves, and our physical and digital economies converge, how does our monetary system evolve along with us? Whether exchanged via virtual worlds, social games, or mobile apps, virtual currencies hold real implications for our global economy, fundamentally altering how we conduct transactions with one another.
Technological advancement has coincided with currency reform throughout human history. The advent of writing in early Mesopotamia provided new ways to number commodities, forming the basis of accounting. Machine-minted coin production in the industrial age brought England out of a reliance on precious bimetals and towards a sustainable monetary system. And the personal computer of the information age enabled more convenient transactions through e-commerce and credit card processing. We now find ourselves in a hyper-connected digital world, with start-up entrepreneurs and corporate giants all competing to shape the manner in which we exchange 21st century goods and services.
To better understand the virtual currency landscape, we might observe four broad trends emerging: mobile fiat currency, corporate value currency, virtual world currency, and peer to peer currency. Although the nuances of these categories may blend together, I draw distinctions at their core function — why and how the currency is created, circulated, and adopted.
Mobile Fiat Currency
Mobile fiat currency allow consumers to send and transfer legal tender using their mobile phone. With Square, people can pay by swiping a credit card through a plug-in device on the iPhone. Similarly, Pay Pal’s Card.ioapp scans a credit card number using nothing but the phone’s camera. Other platforms, like Google Wallet, Zong, and Isis, invest in “Near Field Communication (NFC)” technologies, which enable consumers to tap their smartphone on a reader to complete a transaction. Yet because NFC relies on consumers carrying NFC enabled phones, merchants installing NFC equipment, and complex alliances with various stakeholders, it will take time for “wave and pay” to reach mass adoption.
To really see mobile payment in widespread practice, look no further than Africa, where the lack of credit card penetration has brought mobile innovation to the forefront. One popular service called M-Pesa sends funds via text messages. Customers hand over cash to any one of thousands of participating retailers. They are then credited virtual money on their phone, which can be dispersed through SMS or exchanged back for cash at any time. As of 2010, 9.5 million people subscribe to M-Pesa and collectively transfer the equivalent of 11% of Kenya’s GDP each year.
Another type of mobile fiat currency involves “carrier billing,” whereby a consumer pays using their phone number (rather than their credit card number), and the charges are billed directly to their phone bill. By linking your phone to your Pay Pal account, you can do things like book a hotel room in under 60 seconds or buy a friend a beer with a tweet. With these services, companies stand to profit from even more frictionless payments than we have now.
Corporate Value Currency
Corporate value currencies are rewards or credits that are acquired by engaging with a company or participating in a loyalty program. There are numerous examples — Shopkick’s Kickbucks announce deals to consumers as soon as they enter a store; GetGlueprovides entertainment discounts to people who “check-in” to the shows they watch. Corporate value currencies are often associated with the gameification movement, helping people quantify their progress and unlock new achievements. Denominated in points, credits, mileage, and badges, these currencies are inextricably tied to a company’s product or service, rather than any official tender. Their value, then, has to do with demonstrating mastery, redeeming prizes, and earning freebies.
Facebook Credits, the universal currency for buying social games and applications on Facebook, has integrated with traditional promotions and deals. When you make purchases at restaurants or retailers, you can now have Facebook credits automatically deposited in your account. Facebook and American Express even have a partnership that lets users pay for exclusive virtual goods in Farmville by using their American Express Membership points. These corporate value currencies work because people perceive their value as higher than their cost. In reality, Facebook Credits cost next to nothing, about $0.10 each. But with 5.8 million people playing FarmVille and 90.6 million playing CityVille every month, Credits have become more desirable and meaningful than a standard store coupon.
Virtual World Currency
Virtual world currencies circulate within internal virtual world communities. Accumulating fictional money helps improve one’s experience of the game, whether that be by acquiring accessories, weapons, land, or $330,000 space stations. In 2009, Americans spent $620 Million dollars in the virtual world industry. Second Life, one of the largest virtual world platforms, collected $144 million in Q2 of 2009, a higher GDP than 19 countries. These massively-mutiplayer-online games (MMOPGs) are usually based off subscription fees or virtual goods sales and are designed primarily for leisure, play, and entertainment.
Buying virtual goods signal players’ social standing, showcases their virtual identity, and opens more doors for experience. Yet in-game currency takes time to earn. In World of Warcraft, “virtual workers” spend long hours performing monotonous tasks in order to accumulate gold, level up their characters, and sell the avatars for real money. Such “gold farming” raked in an estimated $3.0 billion dollars in 2009, indicating how virtual world currencies can turn into real money profits.
Peer to Peer Currency
Peer to peer currency is driven by networked communities and serve as an alternatives to centralized bank currency. It has gained momentum alongside Local Exchange Trading Systems (LETS) and time banks, which have provided complimentary currencies for the past 30 years. The most notable digital form of currency is Bitcoin, a system operated by computing networks that collectively encrypt, verify, and process transactions, almost like a Bittorrent for cash. Bitcoin has distinct advantages over banks – it’s open source, non-national, always available, stable in supply, and policed by its users rather than an organization. At the same time, a security breach in summer 2011 compromised hundreds of accounts and led to the theft of approximately $500,000 dollars worth of virtual money. Since then, Bitcoin’s biggest challenge has been to regain public confidence in its security and sustainability.
Peer to Peer currencies approach how they store value in different ways. The pricing of Ven rises and falls based on a basket of currencies, commodities, and carbon components rather than being tied to a single currency like the dollar. Ripple, a decentralized open source payment method, positions everyone as a banker; people issue credit to each other based on real-life relationships. Once again, the goal is to shift ownership of money away from centralized banks and towards everyday citizens.
Other peer to peer communities trade, swap, and barter goods and services without a medium of exchange. These “collaborative consumption” platforms range from housing, to skills, to free time, to recyclables. Swap.comis the largest of these communities, facilitating trade of over 1.5 million personal items. While there are advantages to standardized currency, collaborative consumption holds tremendous environmental promise, helping people save money, save resources, and strengthen a community through sharing.
The Future of Money
What other forms of money might we see? We may be headed towards a system that converts personal and social data into online currency. Companies today quantify and commoditize our online activity for free, but that may not always be the case, especially as start-ups develop “personal data lockers” for people to store information about themselves. If the technology takes off, we might imagine a future in which users trade their personal data to advertisers in exchange for something of value in return.
Of course, virtual currencies and e-commerce platforms have risen and fallen faster than consumers have had time to adopt them. As Microsoft’s former CTO Nathan Myhrvold prognosticated in a 1994 Wired article: “Today we have a zillion different ways of doing financial transactions. There’s cash, checks, credit cards, debit cards, wiring money, traveler’s checks … each of these has a particular point. We’re going to see that much diversity in digital money.” Indeed, each type of virtual currency affords unique advantages and disadvantages for specific situations. It is a future not of digital money, but of digital monies, and to shape it, we need to better understand where our money system has been, where it is now, and where we would like it to go next.
Aaron Smith is a Researcher with the Hybrid Reality Institute, a research and advisory group focused on human-technology co-evolution, geotechnology and innovation. Follow Aaron on Twitter @AaronSmith50
Electronic money or e-money is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.
E-money products can be hardware-based or software-based, depending on the technology used to store the monetary value.
In the case of hardware-based products, the purchasing power resides in a personal physical device, such as a chip card, with hardware-based security features. Monetary values are typically transferred by means of device readers that do not need real-time network connectivity to a remote server.
Software-based products employ specialised software that functions on common personal devices such as personal computers or tablets. To enable the transfer of monetary values, the personal device typically needs to establish an online connection with a remote server that controls the use of the purchasing power. Schemes mixing both hardware and software-based features also exist.
ECB statistics on electronic money do not distinguish between hardware-based and software-based e-money.
Directive 2009/110/EC of the European Parliament and Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions established a new legal basis for e-money issuance in the European Union.
Article 2(1) of the Directive defines an “electronic money institution” as a legal person that has been granted authorisation to issue e-money. Furthermore, according to Article 2(2) of the Directive, “electronic money” means “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions […], and which is accepted by a natural or legal person other than the electronic money issuer”. Credit institutions, as well as other financial and non-financial institutions, may issue e-money.
In order to align the ECB’s monetary financial institution (MFI) balance sheet statistics with the new definitions, Regulation ECB/2008/32 was amended by Regulation ECB/2011/12 and Guideline ECB/2007/9 by Guideline ECB/2011/13. Data complying with the revised reporting scheme are available as of the reporting period December 2011.
Data on e-money issued by euro area MFIs start in September 1997, while national data may start later depending on their date of availability. As a consequence, as statistical developments are affected by changes in the reporting population, statistical developments of euro area aggregates are affected by changes in the number of euro area countries for which e-money statistics are available.
Aggregated total issuance by euro area MFIs is available on a monthly basis, while national issuance by all electronic money institutions is available only annually.
The amount outstanding of e-money issued by euro area MFIs is included in the item “overnight deposits” on the MFI balance sheet.
The question came from one of my best friends and co-workers. I had to honestly admit I hadn’t really been buying her anything. Perhaps it was because I up until now had no money to buy anything. Perhaps it was because it hadn’t really sunken in yet that this was really happening.
“Take your stepdaughter with you and buy stuff. Let her pick the toys”
I had to admit, once again, that this advice was really good, and I was surprised I had not thought of it before. I didn’t want to wait though, so I went online and bought them both a teddybear. One of those TY bears for my stepdaughter (shocking have you can make a fortune on teddybears by simply enlarging their bloody eyes) and one bigger rabbit to my unborn daughter.
It was a peculiar moment. I was buying something for my own daughter. I suddenly had a direct relationship with her. I was picking out things for her. I had to stop and just take in that moment. Suddenly it became so very real. Have I been in denial the whole time? Was the struggle to get where I am now last winter so bad that when it was finally over, I couldn’t shake it and continued to live in a state of limbo? I don’t know. I honestly don’t know. Suddenly it was a simple question from a friend and one fluffy rabbit online bought via Paypal that made emotions just flood me. I mean, I have felt my girlfriends stumach. I’ve felt the bumps and the moves and everything. But no, a click on “pay via Paypal” did it. I was buying my daughter things. Real things for a real girl. My girl. My daughter. That silly looking fluffy rabbit is for her. I bought it for her.