The LOYAL3 Blog


By | Published August 1, 2011

THE MOVEMENT to give people more control over their own money continues to advance -- and not just through our own innovative Customer Stock Ownership Plan (CSOP™) technology platform here at LOYAL3.  Dimensional Fund Advisors (DFA), founded by the index fund guru David G. Booth, has turned to its estimable board for its own innovation to democratize Wall Street.  Just a few days ago, DFA unveiled a breakthrough in the defined contribution plan space.  Board member Robert C. Merton, a Nobel laureate in economics and finance professor at Massachusetts Institute of Technology Sloan School of Management, and the company's resident scientist, announced the creation of personalized individual managed accounts that make employee investment decisions for them.  At first glance, this may not sound like progress since Wall Street already makes investment decisions that impact almost all of us -- and they have done a pretty poor job of it.  But the Managed DC (managed defined contribution) tool is individualized to meet the employee’s needs and goals  — and nags the employee if they aren't saving enough.

Mr. Merton said the plan addresses shortcomings in traditional defined contribution plans. It takes in numerous personal details about participants, from age, gender and marital status to how much they put away in 401(k) accounts and what they can expect to get from Social Security.  But it also takes an assertive role in ensuring participants to think about how much money they will need when they retire. The firm crunches all that information to determine a retirement-income target and make the appropriate investment allocations. When participants log in to their account, they see their income target and get a report card on whether they are saving enough.

LOYAL3 and its CSOP democratizes Wall Street by allowing customers to “own what they love” without paying the broker fees that eat away at their investments even when they are “buy and hold” investors.  We are investor-focused and driven to empower the 80% of American families who currently own no stock (Federal Reserve).  It’s heartening to read about other companies that are starting to pay attention to the forgotten American middle class and are thinking about helping everyone attain financial stability and not just line the pockets of the big investment firms.  We think we’re really on to something here at LOYAL3, and we’ll keep a lookout for like-minded companies to tell you about.


By | Published June 28, 2011

According to the Federal Reserve, approximately 80% of American families don’t own stock directly in companies. If you include 401Ks and Mutual Funds, the number hovers around 70%.

The question is why. We have a theory. When Opinion Research Corporation conducted a quantitative survey across the US and asked ideally how much would people want to invest in companies they knew, they average reply was $57 per month. 55% wanted to invest $25.

So if you’re someone who has $25-50 a month to invest, what choices do you have? Put the money in the bank or under the mattress? Truth is, there really are no good choices. And that’s a huge problem.

Even at the lowest transaction fees available today, less than $10, the above numbers don’t make sense given the cost per transaction as a percentage of investment. This fact, that the majority of Americans want to invest low amounts, combined with the difficulty of the standard investment process, may be at the heart of the reason.

That’s why we created our Customer Stock Ownership Plan (CSOP™) technology, to enable people to invest in companies they know and do business with, in just 3 clicks, with no fees to buy or sell stock, with investments starting at $10, regardless of the share price.

While our business is young - we recently launched with NASDAQ earlier this month - our ability to offer ordinary Americans a simple and convenient,  no-cost way to invest, is an idea whose time has come.


By | Published June 27, 2011

One of the things that's great about doing what I do is that I get to work with a number of world-class companies and help them analyze the micro-economics of a CSOP and the impact a CSOP has on a company's ROI.

We've got it down to a science and often see returns that blow hurdle rates away, in the 50-300% range - or more. It varies by industry and business model. We look very specifically at some key numbers. 

The key drivers are a company's average customer annual spend, number of customers, estimated "loyalty effect" (which averages 54% increase in spend but ranges from 21% to 101%, plus increase in referrals and tenure, among other things), conversion rates, and gross margin.

In fact, even when we analyze ROIs using treasury shares, we often see a dramatic increase in EPS, even when dilution is factored in.

Let us know if you'd like us to run your numbers. That's what we're here for!