When my wife and I had a TiVo, one of the cool features was that TiVo would recommend shows we might like based on what we asked TiVo to record. But it had some glitches. We once accidentally recorded an infomercial about the LifeCall alert system. For years. TiVo thought my wife and I were elderly people who lived alone and wanted to make sure we would be safe in case of an emergency.
There isn’t a website or service out there that doesn’t offer some kind of recommendation. Different sites will use different algorithms and analysis to determine what it thinks you might want or need, but in most cases, it’s hit or miss. And usually more misses than hits.
Auto lenders have had calculators on their websites for years to help consumers figure out what their loan payments would be under different scenarios. Case in point: https://www.roadloans.com/resources/iphone-app.
But why isn’t there an app that looks at my overall financial picture and tells me what to do when it comes to buying a car. Tells me how much to put down and how long the term should be. Tells me whether a loan or lease is better for my overall financial health.
The app would act kind of like a newly released service that tells people which clothing brands will fit them best, based on their personal quirks and dimensions.
I should be able to enter my financial profile, the kind of vehicle I’m looking to buy, and be told what to do. Whether I can afford a specific vehicle. Whether I should buy or lease. Whether I should make a down payment and, if so, how large. Whether I should use a captive or bank or credit union. This seems like a natural extension of the relationship I have with my bank. A bank should be able to tell me whether it’s a good idea to buy a convertible sports car, or whether I can fulfill my long-term dream of buying a pickup truck.
I bet a pickup truck would come in handy in the event of an emergency…
Exactly.
Mike,
Good post. Banks will not provide a PFM tool like that because they do not want to be associated with a “duty” beyond “Caveat Emptor” for the average customer.
Think of a pyramid of bank customers.
For the top tier (the magic 1%), the banks have a trust department with a duty of “fiduciary advice”, you get good advice there.
For the next tier (about 20-30% of customers), the bank investment advisory areas (these are SEC licensed staff) have a duty of “suitability” which means they must offer kind of good advice as long as they disclose the fees and commissions, etc. It only applies to cusomers assets – not their liabilities.
The bottom 70% get no duty – they get Caveat Emptor. Of course, the banks would like to offer some type of general advice that sounds good (like a rewards credit card with real rewards for people that could pay off the balance every month). Some offer PFM tools but they have small print caveats that the advice is coming from someone else (not at the level that you are proposing). Or they may have a car buying service. Think I am kidding? Actually the Dodd-Frank legislation was the first legislation that did force a duty on the banks for their average customers – the duty to underwrite that a borrower could actually repay a loan! And the banks fought against that!
I called the consumer bankers association (CBA) to ask them if they would consider providing “suitability” on the customer balance sheet liability side just as it applies to the customer asset side in the 2nd tier mentioned above.
The answer from their chief counsel was “No way!” Same for the ABA.
Mike, it is too bad that you are consumer oriented. you have great ideas. In today’s upside down world of banking, you are not a candidate for a job at a large bank. At large banks, you get promoted like the guy at Regions just did. He was the consumer banking executive that represented the CBA at the first public hearing of the Consumer Financial PROTECTION Bureau wherin he tried to justify why 90% interest rate payday loans are a “good thing” for consumers! Maybe now you understand?