BELLEVUE, Wash. -- Having more in common than most may think, ShareBuilder Corp. and Wal-Mart Stores Inc. have come together to make investing easier for those new to investing and at the same time, put a dent in the nation's dismal savings rate.
Launched April 27, ShareBuilder's "Easy Investing" service was presented to Wal-Mart customers and employees. In many ways, Easy Investing is the ShareBuilder service in its regular form and at usual prices. The differences are the standard program costs $8 instead of $12 per month, and investors get four instead of six pre-paid purchase transactions. The "Advantage" recurring investment program costs $16 instead of $20 per month, and investors get 16 instead of 20 pre-paid purchase transactions. Customers are also presented early with ShareBuilder's Money Market Investing or Stock Market Investing. ShareBuilder's regular format takes users right to a page to buy stocks or exchange traded funds. Wal-Mart employees get a $25 reward for opening and funding an account.
"It was clear from the beginning that we shared the vision of wanting people to save," said Stephan Roche, vice president of ShareBuilder and general manager of the company's Small Business Group. "It's about lowering the barrier to entry."
Roche said Wal-Mart and ShareBuilder have had "conversations that go back a few years", but the retail giant made a definitive approach in 2006 to partner. Wal-Mart wanted to clear an alternative path for those customers that just want to put money into a money market fund as a way to get started, understanding that later they'll be likely to adopt more of a stock investing strategy, according to ShareBuilder.
Roche would not provide figures on the number of Easy Investing accounts that have been opened so far, but did say the numbers have exceeded their expectations. The program is only available online at http://www.walmart.com/catalog/catalog.gsp?cat=592357.
"We've made no secret of the fact that we're going to work hard this year to offer our customers a portfolio of financial service products that offer them real savings," said Alfredo Padilla, a Wal-Mart spokesman. "At Wal-Mart, we want to help customers begin to save by lowering the barriers to entry."
Padilla said Wal-Mart customers have saved more than $345 million a year in "basic money services."
The alliance is considered to be one of Wal-Mart's first expansions into financial services since dropping its effort to start an industrial bank. In March, the store withdrew its July 2005 application for an industrial loan company charter from the FDIC shortly after saying it would revise leases with in-store banks and credit unions. The application submission caused controversy with credit unions, banking groups and legislators who were all concerned that Wal-Mart eventually would open branches of the ILC in its stores, allowing it to dominate the financial
Through alliances with other providers, Wal-Mart currently offers a store-branded credit card, check cashing and money orders, wire transfers and bill-payment services. Currently Wal-Mart has agreements for leased space with more than 350 financial institutions, including credit unions, which have 1,300 branches in Wal-Mart stores.
Roche said credit unions, which he emphasized largely contributed to ShareBuilder's growth when the company launched in 1999, will continue to be a primary focus. In addition to serving more than 100 credit unions, ShareBuilder also has partnerships with banks, and companies such as Costco, Sallie Mae, Continental Airlines, and Delta Airlines.
"I think the credit union industry knows ShareBuilder and has trusted ShareBuilder over the last seven years," Roche said. "They should know we adhere to the same high standards of our customers and prospects in terms of providing the same vision for investing. Hopefully, that will ease any potential anxiety."
Meanwhile, with the U.S. personal savings rate in the negative range for eight consecutive quarters and what ShareBuilder feels is the lack of attention being focused on the "emerging investor," the partnership can go far in impacting both areas.
"Targeting younger investors or people otherwise new to investing, we built our service on the premise of eliminating the barriers to investing and making it simple and understandable," Roche said.