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Both money market accounts and high-yield savings can help you earn up to 200 times more interest, and either one is a smart place to keep cash

Fri, 02/21/2020 - 3:28pm

Money-market accounts, like high-yield savings accounts, are a popular and expert-recommended vehicle for storing cash you'll need in the short-term.

In fact, there's no real difference in the function of money-market and high-yield savings accounts, according to financial adviser Ric Edelman. "It's merely marketing schtick," he told Business Insider.

What is a money market account?

Both types of accounts typically come with low or zero monthly fees; relatively high interest rates, often around 2%; are FDIC insured up to $250,000; and are smart options for storing savings you want to grow, but also keep safe and easily accessible. Money-market accounts are not to be confused with money-market funds, which are a type of low-risk investment.

Regardless of the bank or credit union, both money-market and high-yield savings accounts are subject to the federally mandated limit of six withdrawals or transfers per statement cycle, which includes bill pay, transfers to another bank account, cash withdrawals, and, for some money-market accounts, debit purchases and checks.

The clearest difference between the two types of accounts is the debit card and check-writing capabilities that come with some money-market accounts. High-yield savings accounts can only be accessed online or through a bank branch.

Money-market accounts also may require minimum balances of $2,500 to $10,000 or more to earn the highest interest rate available, while you can open a high-yield account with as little as $1. If the balance falls below the minimum, you'll incur a fee.

The money-market account that's right for you will depend on your financial goals. But money-market and high-yield savings accounts are not either, or. You can have both, if you like, and even multiples at the same bank.

There are dozens of money-market and high-yield savings accounts to choose from with varying interest rates, minimum balance requirements, and access capabilities. Before you shop around, know what you plan to use the account for. Whether it's an emergency fund, a down payment fund, or other financial goal, pay attention to the balance requirements and fees.

While the purpose of keeping your savings in one of these types of accounts versus a traditional checking or savings account is to earn higher interest rates, which could help your money grow exponentially, choosing the bank with the top interest rate isn't always the smartest decision.

Interest rates fluctuate based on the Federal Reserve's benchmark interest rate, so the rate you begin with likely isn't set in stone. You're already making a wise decision by putting your excess savings in a high interest-bearing account, so the most important thing is to avoid fees and make sure your money is there when you need it.

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WeWork's US president — and Adam Neumann's friend — will leave days after the firm's new CEO joins

Fri, 02/21/2020 - 3:25pm

  • Arik Benzino, WeWork's head of US, Canada, and Israel, is leaving, sources told Business Insider.
  • His departure comes during the first week on the job for CEO Sandeep Mathrani. 
  • Mathrani named a new chief operating officer on Thursday, and more executive shake-ups are likely on the way. 
  • For more WeWork stories, click here.

WeWork's head of US, Canada, and Israel is leaving, sources told Business Insider.

Arik Benzino joined WeWork in August 2017, according to his LinkedIn profile. A friend of Adam Neumann's from Israel, Benzino was one of the few executives who stayed long after the controversial founder's September ouster.  

Benzino did not respond to a request for comment.

It's not immediately clear if anyone will replace him.

"We are grateful to Arik for his contributions to the company. He has graciously agreed to help with the transition, and we wish him well in his future endeavors," a WeWork representative said in a statement.

Benzino, who is based in New York, was also on the board of Laird Superfoods. In January 2019, WeWork led a $32 million funding round for the health-food company, which was founded by a professional surfer. After WeWork's tumultuous autumn, Laird Superfoods bought out WeWork's stake, and no one from the company remains on the board, a Laird representative said. 

Benzino's departure comes at the end of the first week of CEO Sandeep Mathrani's tenure. Mathrani has already named a new chief operating officer, his first major executive appointment.

More shake-ups at the top are likely to come. Even before Mathrani joined, WeWork had two open executive roles — chief financial officer and head of real estate. 

Last week, WeWork's head of enterprise sales left the company abruptly, Business Insider previously reported. WeWork is looking to replace his role.

Have a WeWork tip? Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a nonwork phone, email at, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

SEE ALSO: WeWork just announced a new COO in its first major hire under new CEO

DON'T MISS: Insiders told us why new WeWork CEO Sandeep Mathrani is the guy to pull off one of the most difficult turnarounds Silicon Valley has ever seen.

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NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.

Over 5 million people will see their car insurance rates rise in the first half of 2020 — but even more will see their rates fall

Fri, 02/21/2020 - 2:25pm

Car insurance rates are constantly changing, and it's always nice when they're working in your favor. Luckily, nearly 8 million Americans renewing their policies in the first half of 2020 will see their car insurance rates drop slightly. 

According to this data, more Americans will see changes work in their favor than against — about 7.7 million Americans across the US will see their rates decrease, while about 5.6 million Americans will see increases when they renew their policies. 

Before changing rates, car insurance companies must submit proposed changes to state and federal regulatory boards. Business Insider gathered data on proposed car insurance rate changes through S&P Global Marketing Intelligence and the National Association of Insurance Commissioners, looking at about 1,100 proposed rate changes slated to take effect in the first half of 2020. 

Where are rates changing? 

Kentucky, Louisiana, and Kansas drivers will see the most broad changes. In Kentucky, 1.5 million drivers will see their rates fall by an average of 5%. Just over 1 million Louisiana and Kansas drivers will see their rates fall by an average of 1.6% and 1.9%, respectively. Other states where many drivers can expect to see changes include Michigan, Arkansas, and Mississippi. 

Of the 5.6 million Americans who will see rate increases when they renew their policies, just over a fifth are South Carolina drivers. About 1.2 million drivers in South Carolina, or about 20% of the state's population, can expect to see rates increase by an average of 6.7%. Other states with big changes include Illinois and Indiana, with over half a million drivers affected each. 

Why do car insurance rates change? 

Car insurance rates increase and decrease often, as insurance companies deal with changing costs of medical care and car repair, for example, and a constantly changing numbers of accidents. Insurance companies can also change their underwriting process, or the process for evaluating a driver's risk of an accident and determining their cost of coverage. Car insurance rates are also largely influenced by state laws and policies, and when state laws change, car insurance prices can, too. 

Car insurance rates are highly individual, and can vary widely based on factors like your age, gender, driving history, credit score, and more. Not every driver's rates will follow the trends. However, if your rates are on the rise, it may be worth comparison shopping for coverage. Get quotes from several different insurance companies, and compare the offers to find the policy with the most coverage types and highest limits for the lowest premium. 

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Elon Musk's rocket company SpaceX is reportedly seeking close to $250 million in new funding at a $36 billion valuation

Fri, 02/21/2020 - 2:24pm

SpaceX is seeking close to $250 million in fresh funding at $220 per share at an about $36 billion valuation, according to a report by CNBC's Michael Sheetz

The move comes as Elon Musk's aerospace company is pushing forward on a handful of ambitious projects. On Tuesday, Engadget reported that SpaceX was planning to send private citizens to space as early as 2021. 

SpaceX did not immediately respond to a request for comment. 

Earlier this month, Bloomberg reported that SpaceX Chief Operating Officer Gwynne Shotwell said the company was planning to spin off and pursue an initial public offering for its Starlink internet business, which hopes to provide internet service via a network of satellites orbiting in space. 

Founded in 2002, SpaceX has raised a total of $3.6 billion in funding as of January, according to PitchBook.

Its most recent funding round in January raised $314 million from ADM Ventures and the Ontario Teachers' Pension Plan, valuing the company at $33.4 billion, up slightly from $33.09 billion before the deal, according to PitchBook — and about $3 billion less than the reported February valuation.

In January, SpaceX launched its Crew Dragon space capsule atop its Falcon 9 rocket in a crucial safety test for the capsule. SpaceX plans to eventually use the Crew Dragon spaceship to send astronauts to space.

SEE ALSO: SpaceX just launched and intentionally exploded a rocket for NASA in a vital safety test of its Crew Dragon spaceship

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Slack spikes 8% after Uber decides to use the chat app for its 38,000 employees (WORK)

Fri, 02/21/2020 - 1:29pm

Slack just landed another big exclusive account.

The popular work-chat app surged as much as 8% in early trading Friday, to $29.70 per share, after Uber said it would use Slack across its workforce of 38,000 employees, Business Insider's Paayal Zaveri reported.

It's a big win for Slack, which has had heavy competition from other workplace platforms such as Microsoft Teams. Uber and Slack also have a history: In 2016, the ride-hailing company decided to use a platform called HipChat, saying Slack wasn't able to keep up with its needs.

But Slack has since made strides, and Uber has been a customer of the platform since 2019, Zaveri reported, citing a source familiar with the matter.

On February 10, IBM also said it would roll out Slack to all of its 350,000 employees. IBM had long been Slack's largest account, and the two companies' partnership began in 2016.

Read more: A simple trading strategy has historically made investors an average of 21% in just 6 days. Here's how Goldman Sachs says you can replicate it.

Winning large accounts such as Uber and IBM bodes well for Slack, Wall Street analysts covering the company told Business Insider. The company has a consensus price target of $26.58 and 11 "buy" ratings, eight "hold" ratings, and three "sell" ratings from Wall Street analysts, according to Bloomberg data.

Shares of Uber fell as much as 2% in intraday trading on Friday. Slack has gained 22% year-to-date through Thursday's close.

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I bought a condo with a subprime loan in 2004, but refinancing my mortgage means I now have cheap, stable housing in the Bay Area

Fri, 02/21/2020 - 1:29pm

  • My wife and I didn't have much money when we started looking for a house to buy in the San Francisco Bay Area. Owning our own home seemed like an impossible dream, but first-time homebuyer's assistance helped us make it happen.
  • We purchased our house with a subprime mortgage that would have crushed us if we'd had to keep paying it long term, but we were able to refinance for a fixed-rate loan right before our original loan was set to change rates.
  • Buying property when you don't have a large down payment is a bet that your income will go up enough to make the mortgage affordable over time. Our bet has paid off — our mortgage is less than Bay Area rents, which gives us stability in a volatile housing market.

My wife and I made the decision to try to buy a house in 2004 out of fear. We didn't have much money saved up, but the housing market in the Bay Area was getting hotter every month and we were afraid we would be priced out forever if we didn't buy then. 

Buying a home was a longshot. I was a self-employed artist and my wife worked for a nonprofit that served children. Our bank accounts were thin and our combined income wasn't going to impress a mortgage lender. But I believed that, even if it was a stretch at first, buying a home would give us security. And it has.

It's not easy to make the winning offer when you've got very little to offer

We bought our home during the glory days of the subprime mortgage. Buying a house with little or no down payment seemed like a great idea. After all, everyone else was doing it. 

In reality, it wasn't so simple. We got outbid every time we placed an offer. Houses that seemed to be in our price range ended up selling for much more than the asking price. 

Then we got a lucky break. We heard about an opening in a cohousing complex. The condo was smaller than we had wanted and the price tag was $80,000 above what I thought we could afford. But the process was in our favor. Who we were was more important to the community than our bank accounts. And the price was fixed, so there was no bidding war.

Scrambling for a down payment

Buying a condo that was well above what we could afford forced us to get creative. 

First, we approached our current landlord. We offered to move out so he could sell the building unoccupied. That would fetch him a higher price, since we lived in San Francisco where rent control rules make it hard for new landlords to evict existing tenants. In return, he would give us a buy-out. He agreed.

Then we asked both sets of parents if they could gift us money toward our down payment. Both agreed. After that, we had about $30,000 toward a down payment. But that still left us with a mortgage that was $50,000 too high. 

A city program came to our rescue. Our condo met the requirements for the city's first-time homebuyer's assistance program, and our income met the program's requirements. We were able to get a silent second mortgage equal to 2.5 times our down payment. 

Our second mortgage accrues interest (at a rate tied to the rate of our first mortgage), but we don't have to pay anything toward the second mortgage until we sell the property. At that time, we have to pay back the principal plus the accumulated interest or the appreciation on the city's share of the property (whichever is greater).

That brought us to $75,000. Our first mortgage would only be $5,000 over the goal I had set. We would be able to afford the payments.

Refinancing for better terms

The only mortgage we could qualify for was a subprime, interest-only loan. The first two years were affordable because we only paid the interest portion of the mortgage payments. We paid nothing toward the principal and got no equity during this period. At the end of two years, we would start paying down the principal — and the payments would go up by 30%. It wasn't a great deal, but it was the only deal we could get at the time.

We weren't allowed to refinance until after the interest-only period ended. So, toward the end of the two years, we applied for a refinanced mortgage from our credit union. We were able to get into a better loan right as our first loan became unaffordable. Our new loan was a 30-year fixed-rate mortgage. 

We were lucky. Many people who took out subprime loans ended up in foreclosure. In the end, I'm grateful for that loan. It enabled us to buy at a time when we might not have qualified for a more traditional loan. And, after two years of regular payments, we had gained enough credit to get a better mortgage.

Our new loan's interest rate was 7%. Within a few years, interest rates dipped well below that, but the real estate bubble had burst and our house was worth less than we owed. Then the HARP loan program was introduced to help homeowners whose mortgages were underwater like ours. We were able to refinance and bring our monthly payments down substantially. 

Refis do have downsides. Origination fees got rolled into our loan and increased the principal. In addition, each time we took out a new 30-year mortgage, we extended the amount of time we would spend paying off the loan. 

On balance, however, refinancing has been a plus. It's allowed us to take advantage of lower interest rates and better financing terms and that has helped make our mortgage less of a financial stretch.

After 16 years, the bet has paid off

A lot has changed in the 16 years since we bought our little condo. We survived the recession and our home has now increased in value. We refinanced one last time, this time with a 20-year mortgage. My wife and I also earn more and our monthly mortgage payments are lower, so we can afford to pay extra toward the principal. Plus, Bay Area rents have gone up astronomically, so our monthly mortgage payment of less than $1,500 seems like a really good deal. 

We have managed to survive 16 years in a one-bedroom condo without killing each other. We would like to have a bit more space, but our financial adviser counseled us not to buy a larger home. That would make us house rich and cash poor, a common problem in the Bay Area.

In addition, under the terms of our second mortgage from the city, we don't have to pay back the loan if we live in our home for 30 years. That's a big incentive to stay put.

Once all our loans are paid off, in about 15 years, our monthly housing expenses will be just utilities and HOA dues. The gamble we made when we bought our condo will provide us with an affordable place to live in the Bay Area after we retire. That reward is worth the risk we took when we bought on a hope and a prayer.

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This new startup just nabbed $8.5 million from Sequoia Capital and others to help companies map out their power players

Fri, 02/21/2020 - 1:27pm

  • The Org, a startup that wants to map out companies' org charts, just nabbed $8.5 million in funding.
  • The round was led by Sequoia Capital, with participation from Balderton and Founders Fund.
  • As its database grows, The Org's co-founders Christian Wylonis and Andreas Jarbøl are focused on launching a premium offering for professional users like recruiters, salespeople, and journalists.
  • The startup is also exploring job posting functionality and building out its news feed.
  • Click here for more BI Prime stories.

Corporate titles are vague — organizational charts even moreso.

The Org wants to draw it all out, and it just nabbed $8.5 million to grow its corporate structure database platform.

"If you go on LinkedIn, for example, and you search for Airbnb employees, you're going to get a list of like 20,000 people," Christian Wylonis, co-founder and CEO of The Org told Business Insider. 

"It's really hard to understand what role they have and how senior they are, and where they sit in the structure," Wylonis said.

Using publicly available information like press releases and company websites, as well as crowdsourced and self-reported titles, the startup can map out a company's leadership hierarchy from the CEO all the way down to junior employees.

The Org currently has 16,000 companies in the database. By the end of 2020, it hopes to have 100,000.

While the majority of The Org's data is currently sourced from automated feeds of publicly available information, the portion of data coming from users is growing, Wylonis said.

For the crowdsourced information, a user must register with a valid company email to place themselves and others on a company's chart.

Co-headquartered in New York and Copenhagen, The Org was founded by Wylonis and CTO Andreas Jarbøl. The Series A round was led by Sequoia Capital (Airbnb, Klarna, Stripe), with participation from Balderton (Depop, GoCardless, Revolut) and Founders Fund (Affirm, Palantir, Oscar).

An alternative to LinkedIn searching

The Org is free to use, and registration only requires a corporate email if a user wants to contribute to a company's chart. Otherwise, anyone can register and browse various org charts and related news feeds on the site.

In 2020, Wylonis is focused on launching a premium product aimed at recruiters, sales people, journalists, and other professional users. That's how The Org, which is currently pre-revenue, will make money, Wylonis said.

And while not all companies want their org charts distributed publicly, Wylonis said that there are certain benefits to The Org's platform versus one like LinkedIn, which is harder to verify and control.

"Of course there are a few companies, say Apple and bigger companies like that, that aren't super thrilled about their org chart being publicly available," Wylonis said. 

"But 99% of companies actually really like our concept because they get more control over their team information on The Org than they get on LinkedIn."

And the more reliable the data, the more valuable it is to recruiters and salespeople. 

"They're interested in understanding the decision-making hierarchy, and they're also interested in executive changes," said Wylonis.

A human resources software salesperson, for example, would be interested to know if a company hires a new head of HR, who may be looking for new software or systems.

Jobs, news, and a premium product

Beyond a premium product, Wylonis said, the startup is focused on two more product growth areas: jobs and news. 

"Jobs is clearly something that we're interested in doing, it's very natural," said Wylonis. The Org will be exploring ways for companies to post open positions for free on the site.

News, another focus area, would primarily cover executive changes across the startup landscape, especially those that wouldn't necessarily be covered by larger news organizations, Wylonis said.  

While The Org currently does have some news content, it's 2020 hiring will include more staff to create and monitor content.

SEE ALSO: Silicon Valley and Wall Street are betting you'll want to travel now, pay later. Here are 10 ways startups, banks, and airlines are tapping in to millennial wanderlust.

SEE ALSO: Here's how 44 insiders at powerful banks, buzzy startups, and big investors are thinking about financial innovation — and why the term 'fintech' may be on its last legs

Join the conversation about this story »

NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.

A look at the real estate of the 6 leading Democratic presidential candidates, from Mike Bloomberg's 11 luxury properties to Pete Buttigieg's modest $125,000 Indiana house

Fri, 02/21/2020 - 1:25pm

  • On Wednesday, six Democratic presidential candidates debated in Las Vegas.
  • They all have very different homes, from Mike Bloomberg's five-story Manhattan townhouse to the historic Indiana house Pete Buttigieg bought for $125,000.
  • Here's a look at each candidate's properties.
  • Visit Business Insider's homepage for more stories.

From Pete Buttigieg's $125,000 house in Indiana to Mike Bloomberg's five-story Manhattan townhouse, the 2020 Democratic presidential candidates who debated in Las Vegas on Wednesday have vastly different homes.

Six candidates — Joe Biden, Bloomberg, Buttigieg, and Sens. Amy Klobuchar, Bernie Sanders, and Elizabeth Warren — stood on the debate stage, while two others, Rep. Tulsi Gabbard and Tom Steyer, didn't qualify but remain in the race.

The value of Bloomberg's multiple homes in places like New York, Florida, Colorado, and London is estimated to exceed $100 million, while Biden's and Warren's real-estate holdings are worth about $5 million each, Katherine Clarke reported for The Wall Street Journal earlier this month. Sanders owns about $1.7 million worth of real estate, while Buttigieg's home was valued at about $230,000.

Here's a look at each of the six leading candidates' properties.

SEE ALSO: Michael Bloomberg is the richest person ever to run for president. Here's how the former New York City mayor makes and spends his $64 billion fortune.

DON'T MISS: Bernie Sanders has made $1.75 million in book royalties since 2016 — but he's still one of the least wealthy US senators. Here's what we know about his finances and assets.

Biden and his wife are worth an estimated $9 million, according to Forbes. They own two homes.

Source: Forbes

Biden's main residence is a lakefront house in Wilmington, Delaware, that he and his wife built after buying the property for $350,000 in 1997.

Today, the home is likely worth at least $2 million, Stephen Mottola of Long & Foster Real Estate told The Journal.

The Bidens also own a vacation home in the coastal town of Rehoboth Beach, Delaware.

They bought the three-story home on the edge of a state park for $2.74 million in 2017, The Journal reported.

According to Forbes, Bloomberg has a net worth of over $60 billion, making him the wealthiest presidential candidate. He owns at least 11 properties around the world.

Source: Forbes

Bloomberg has the most expansive real-estate portfolio of all the Democratic candidates. He primarily lives in New York City, where he owns a townhouse and multiple apartments.

Bloomberg's main home is a five-story townhouse on Manhattan's ritzy Upper East Side that he bought in 1986 for $3.5 million. At the end of his last term as mayor, the billionaire spent at least $1.7 million renovating the home. Zillow estimates its value at $17.7 million.

Bloomberg bought up units in the neighboring brownstone and tore down walls to combine the spaces with his primary home, The New York Times reported in 2009.

The former New York City mayor also owns a fifth-floor condo at 610 Park Ave., a Trump Organization development, that he bought in 2000 for $3.8 million, Will Bredderman reported for Crain's.

At one point in 2013, Bloomberg owned a whopping 14 properties worldwide, with homes everywhere from New York to London to Bermuda.

Bloomberg owns a home in the Hamptons that he bought for about $20 million in 2011.

The Southampton estate includes a 22,000-square-foot Georgian mansion built in 1910 that has 11 bedrooms and eight bathrooms, Curbed reported in 2011.

Bloomberg also owns a waterfront home in Bermuda.

While he was mayor, he flew one of his private jets down to the island about twice a month, his neighbors and friends told The Times in 2010.

Bloomberg bought and demolished a waterfront house there, replacing it with a $10 million home three times as large, The Times reported.

According to Bermuda's Royal Gazette, Bloomberg was still a part-time resident as of 2019.

In London, Bloomberg owns both a townhouse and an apartment. In 2015, he dropped $25 million on a seven-bedroom house that was once home to the writer George Eliot, The Journal reported.

The Chelsea townhouse became Bloomberg's second home in the city; he had owned an apartment on Cadogan Square for years.

Bloomberg owns a four-bedroom condo in Vail, Colorado, at Vail's Mountain Haus ski resort.

According to New York magazine, the condo is in a 72-room, hotel-like building with maid service, concierge service, and indoor and outdoor whirlpools.

He also owns two properties in Westchester County, New York.

According to a report by The Real Deal, Bloomberg bought an 1820s farmhouse in North Salem for $3.6 million in 2000. He also owns a home in Armonk, a suburb in Westchester County where the median home value is over $1 million.

Bloomberg owns a nearly 14,000-square-foot home in a popular wealthy enclave for equestrian enthusiasts in Wellington, Florida.

He bought the 5.8-acre estate in 2016 for $11.8 million, according to The Real Deal. Bloomberg's daughter Georgina is an accomplished equestrian.

Buttigieg has a net worth of about $100,000, according to Forbes. He owns one home.

Source: Forbes

Buttigieg has the lowest estimated net worth of all the 2020 candidates. According to Forbes, he lives in a 2,500-square-foot neoclassical house in South Bend, Indiana, with his husband, Chasten.

Buttigieg was the mayor of South Bend from January 2012 to January 2020 and is often referred to as Mayor Pete.

Vogue's Nathan Heller reported that the white house on the riverside "is one of the nicest in the city and serves as a reminder of South Bend's distance from the coasts: The mortgage payment, according to Buttigieg, is about $450 a month."

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According to Forbes, Buttigieg bought the home about a decade ago for $125,000. It was vacant at the time, so he had to refurbish it.

Source: Vogue

Klobuchar has an estimated net worth of $2 million, according to Forbes. The Minnesota senator's real-estate portfolio consists of two homes.

Source: Forbes

Klobuchar and her husband own "modest homes" in Minneapolis and Washington, DC, Vogue reported.

Source: Vogue

Both homes are in nice neighborhoods. According to a Washingtonian report, their home in Washington, DC, is on the border of Capitol Hill and NoMa.

According to Zillow, the median home value in NoMa is about $450,00, while the median home value in Capitol Hill is about $870,000.

Source: Washingtonian

Sanders is worth an estimated $2.5 million, according to Forbes. He owns three properties in Vermont and Washington, DC.

Source: Forbes

The Vermont senator and his wife bought a four-bedroom house in Burlington for $405,000 in 2009 and got a $324,000 mortgage, according to The Journal.

Source: Wall Street Journal

In 2016, Sanders and his wife bought an 1,800-square-foot house on the shore of Lake Champlain for $575,000.

Jane Sanders told The Associated Press that to buy the home, the couple sold Jane's share in her family's longtime vacation home in Maine to her brother for $150,000, borrowed some money from Jane's retirement account, and used an advance from a book Bernie was writing.

The couple also owns a one-bedroom townhouse in Washington, DC.

The home, which Sanders bought in 2007 for $489,000, spans roughly 900 square feet and sits just a few blocks from the US Capitol, The Journal reported.

Warren has an estimated net worth of $12 million, according to Forbes. She and her husband own two homes: one in Cambridge, Massachusetts, and one in Washington, DC.

Their primary residence is a blue Victorian-style house in Cambridge that they bought in 1995 for $447,000, according to Forbes.

Zillow estimated that the two-bedroom, 3,728-square-foot house is worth $3.1 million today.

In 2013, Warren bought a two-bedroom condo in Washington, DC, for $740,000.

The 1,400-square-foot apartment is in Penn Quarter, a historic neighborhood that borders DC's Chinatown.

I got hit with a $10,000 tax bill this year, but my 3-prong money management strategy meant it wasn't a problem

Fri, 02/21/2020 - 1:20pm

  • After filing my taxes this year, I got hit with a surprise bill for just over $10,000 from the IRS.
  • I didn't panic, though, because I'd planned ahead for my taxes as part of my three-prong money management strategy that covers taxes, retirement savings, and just about everything else.
  • Whenever I get paid by a client for freelance work, I immediately set aside 30% in a high-yield business savings account for taxes, another 10% in a retirement savings account, and the remainder stays in my business checking account to pay business expenses, give myself a salary, and anything else.
  • Using multiple accounts helps me keep the money separate and ready for any surprise bills — like the latest one from the IRS.
  • See Business Insider's picks for the best high-yield savings accounts »

I've made a lot of financial mistakes in my personal life. Luckily, I sorted most of these out by the time I started my freelance business. I use budgeting software (You Need a Budget, to be specific) to budget for my business just like I do for my personal finances, and it's been a lifesaver in more ways than one. 

Take, for instance, when I got hit with a surprise IRS bill for $10,034 after doing my tax return this year. That sucks. But, I already had far more than that saved in my tax savings account, so I'll be able to pay it with no problem and still have money left over to top off my other retirement accounts and pay off the last bit of my student loans.  

All too often I hear other freelancers lament not being able to pay surprise tax bills, and not having enough retirement savings. It doesn't have to be that way. 

All you need is a simple system, a budgeting program, and the discipline to spend a couple of minutes sorting out your income as you get paid. Trust me, if I — the most scatterbrained of people — can do it, so can you. Here's what I do. 

Tax savings: Set aside 30% in a high-interest savings account

Unfortunately, like all things in life, the government gets its due first. 

If you had an employer, they'd take a cut of your paycheck before you get paid. Now, you're your own employer, so let's make sure you do the same thing. 

I log into my high-yield business bank account at least every few days. Develop a schedule for yourself; once a day, once a week, etc … Mark it on the calendar until it becomes a habit, or use an app like Todoist (also handy for planning your day as a business owner). 

If I see that I've gotten any new client payments, I tally them all up to get the total amount. Then, I multiply it by 0.30 to shave off 30%. This amount gets transferred into a separate savings account that I've set up just for tax savings. 

When I have to pay my quarterly taxes, I transfer the required amount back into my checking account so it's ready to go. 

By the end of the year, I've usually saved up quite a surplus beyond what I've paid out in taxes. I do this deliberately because I never want to get caught with a tax bill I can't pay. Thus, I save a bigger percentage than I think I'll owe in taxes. This is where having an accountant estimate a good savings rate can really come in handy. 

Retirement savings: Set aside 10% in a retirement account

As fun as freelancing can be, I don't want to do it forever. Someday I'd like to retire. 

That's why I also set aside 10% of each paycheck for retirement. I note the amount just like with my tax savings, and once a month, I deposit the monthly total into my Vanguard SEP IRA. 

You can deposit an even larger slice if you want, but since I have an odd business structure as an LLC partnership with my husband, I'm limited to that amount with my SEP IRA. You can also opt for another self-employed retirement account, like a SIMPLE IRA or a Solo 401(k). 

My paycheck: Set aside 60%

What's left over in my checking account is for me. Now that I know I have my present tax obligations and my future needs taken care of, I'm comfortable paying out the rest to myself. 

In truth, I get slightly less than 60%, because I also use this chunk of money for my monthly business expenses, including transcription fees, my Skype subscription, and accounting fees. I also save up for other expenses, like attending conferences or annual subscriptions. 

However, as a freelance writer, my overhead isn't much. After I budget out for these items each month, the remainder gets lumped into a "Distributions to ME!" category, and at the end of the month, I deposit it into my and my husband's personal account as my paycheck. 

I'll revise my percentages for next year

For most of my five-year freelance writing career, this system has worked pretty well. I've always had a surplus in my tax savings account by the end of the year, and so I treat it as a bonus. 

This year was a little different. Since my husband recently graduated and moved into the working world, our combined income was higher and we forgot to adjust accordingly. Thus, I was faced with every freelancer's worst nightmare: a surprise tax bill of $10,034. 

No sweat, though. Thanks to my system and over-saving for my taxes, I had more than enough in my tax savings account to pay the rogue tax bill, and then some. I still got to pay myself my "bonus," and I didn't need to worry about going into debt again. 

At the same time, I also faced another problem: I over-contributed to my SEP IRA. It also wasn't a big deal since I only had to withdraw the extra money plus the earnings, but it was a hassle and a few extra hours of work to figure out. 

However, I'd still prefer not to have that high tax bill next year, and not have to worry about fixing an over-contribution to my SEP IRA. So, I'm adjusting how I divvy up my paycheck. 

Rather than a 10/30/60, retirement/taxes/distributions system, I'm going to save more for taxes and less for retirement. I'll split things up 7/33/60. That way, if I haven't contributed the maximum to my SEP IRA by the end of next year, I can more easily top it off than take it out. 

It's still a work in progress, but it's the best system I've found to ease my financial anxiety and make sure I have all my bases covered. It only takes a few minutes to run through this routine each week, and the results are well worth it. 

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A lawyer who spent 18 years fighting the IRS says avoiding the bureau's questions about your taxes makes everything worse

Fri, 02/21/2020 - 1:20pm

  • After 18 years as the National Taxpayer Advocate, Nina Olson retired in 2019.
  • In an interview with the Wall Street Journal last year, Olson said the worst mistake any taxpayer can make is not responding to a notice from the IRS.
  • If you receive a letter from the IRS, follow the instructions provided. If you don't, Olson said, the IRS may "ramp up enforcement."
  • Check out Business Insider's picks for the best tax software »

For nearly 20 years, tax lawyer Nina Olson was tasked with policing the Internal Revenue Service on behalf of American taxpayers. 

Olson retired in 2019 from her post as the National Taxpayer Advocate, reported the Wall Street Journal's Laura Saunders. It was been Olson's job to identify pain points within the IRS and propose solutions to modernize its system, which she called "a Rube-Goldberg contraption built on 1960's architecture that's ripe for disaster."

Over the last 18 years, Olson "made some 40 recommendations enacted by Congress and persuaded the IRS to make hundreds of administrative changes," Saunders wrote. Still, Olson says the IRS has a long way to go. Too many Americans are confused by taxes and scared of the enforcers, she said, and it can lead to even more problems.

"They're afraid of the IRS and don't act," Olson told the Journal. "The worst thing someone can do when an IRS notice comes is nothing. Take it from me: If you get a letter, call the IRS. If the agency doesn't agree with you, find out your rights. If you don't act, they can ramp up enforcement."

According to the IRS website, receiving a letter or notice in the mail from the organization doesn't always signal disciplinary action. Most commonly, it's in regards to "changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return." Moreover, it doesn't always require a follow-up call. If it does, the number to contact will be on the letter or notice.

"I was in private practice for 27 years, and I can tell you that if you ignore the IRS, it pops up at the worst point in your life," Olson added.

Unfortunately, the IRS is not well-equipped to handle customer inquiries efficiently, Olson said. "The IRS is walking away from actually conversing with taxpayers," she said. "This past filing season, only 33% of callers got through on the telephone line dealing with compliance issues like liens and levies. Those who got through waited an average of 41 minutes."

She continued: "I've proposed a Taxpayer Anxiety Index to identify points at which taxpayers get anxious, such as when a refund is held or the IRS threatens a lien. At these points the agency should be able and willing to have conversations."

It's important to remember that the IRS prefers snail mail. If you're receiving a phone call from the IRS that you did not initiate, in which the person is asking for your Social Security number or money, it may be a scam

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THE DIGITAL BANKING ECOSYSTEM: These are the key players, biggest shifts, and trends driving short- and long-term growth in one of the world's largest industries

Fri, 02/21/2020 - 1:02pm

The banking industry is in the grips of an identity crisis. Leaders of the world's largest banks — such as Citi, BBVA, and Goldman Sachs — have begun describing themselves as technology companies with banking licenses.

However, this description is still aspirational. Executing the vision will require billions of dollars in investments, the restructuring of teams, a reimagining of the entire banking technology stack, and the adoption of a far more customer-centric business view. 

The stakes of failing to transform are high: Accenture projects that 35% of all bank revenues could be at risk from more tech-savvy competitors like fintechs as soon as 2020 for incumbents that fail to up their game.

As a result, a wave of digital transformation is now sweeping the banking industry, as incumbents shore up against consumer demand and competitive pressures. Major banks have already announced multibillion-dollar, multiyear digitization projects: By 2021, global banks' IT budgets will surge to $297 billion, up 14% from $261 billion in 2018, according to Celent.

Many incumbent banks are opting to decrease their branch budgets and networks and reinvest their resources in digital channels such as mobile instead to cater to current consumer preferences, and are enlisting the help of tech-savvy software vendors to modernize their tech stacks from top to bottom as part of this process.

In the Digital Banking Ecosystem report, Business Insider Intelligence explores the incumbent banking landscape as a whole, and the third parties banks are calling on to help their transition to digital. We then take a closer look at the three biggest drivers for incumbent banks' digitization push: digital-native competitors like neobanks and Big Tech companies; changing consumer behaviors and banking channel preferences; and a growing array of cybersecurity threats.

Lastly, we examine what incumbents are already doing today to transform themselves into digital-first organizations to compete in a customer-centric, data-driven global economy, and how they are learning to meaningfully measure the progress of their transformations. 

The companies mentioned in this report include: Acronis, Amazon, Ant Financial, Apple, Ario, Banco Galicia, Bancorp, Bank of America, Bank of England, Barclays US Consumer Bank, BBVA, BNP Paribas, Caixa Geral de Depositos, CaixaBank, Capital One, China Construction Bank, Citigroup, Citizens Bank,, CSI, Dave, Detroit Fintech Bay, Deutsche Bank, Diasoft, Emirates NBD Bank, Finastra, Finn AI, Finxact, First Direct, FIS, Fiserv, Flagstar Bank, Forcepoint, ForSee, Forward Networks, Geezeo, Gemalto, Goldman Sachs, Google, Grab, Hello Bank, Help Systems, HotJar, HSBC, IBM, ICBC, Infosys, ING, ING Direct, Intesa Sanpaolo, Jack Henry, JPMorgan Chase, Kenna Security, Lloyds Bank, Lyft, Midwest Bank, Mission Bank, Monzo, N26, Nationwide, NatWest, nCino, ObserveIT, OnDeck, Openbank, Osano, Personetics, PNC, RBS, Reciprocity Labs, Saga, Santander, Sberbank, Square, Starling Bank, Strands, Tanium, Temenos, Tencent, Thomson Reuters, Thought Machine, Tink, TSB, Uber, United Income, US Bank, Wells Fargo, Zelle, and Zopa. 

Here are some of the key takeaways from the report:

  • Incumbent banks are intensifying their digitization efforts in the face of changing consumer demands and growing competitive pressures.
    • The number of US consumers considering switching banks in the next 12 months increased by 86% from a year before, from 6.9 million to 11.9 million, per Resonate, with consumers citing the need for better digital banking services and more personalized products and tools as major motivators.
    • Meanwhile, tech giants like Google and Amazon are poised to grab up to 50% of the $1.35 trillion in US financial services revenue from incumbent banks, per McKinsey, leveraging their tech expertise to lure away customers.
  • Legacy channel usage is steadily dwindling, while digital channel usage is firmly on the rise. This turn to digital is being accelerated by younger, tech-savvy generations like millennials and Gen Zers quickly becoming banks' largest addressable market.
    • Once the most widely used banking channel in the US, branch use will drop at a compound annual growth rate (CAGR) of -2.01% between 2019 and 2024, per Business Insider Intelligence projections.
    • Meanwhile, mobile banking, the least-used banking channel in 2008, is expected to grow at a CAGR of 2.83% between 2019 and 2024, the highest among all channels. 
  • To digitally transform, banks need to join forces with partners, enemies, and frenemies alike. Vendors will be key to the modernization of banks' IT, with specialists catering to each layer: 81% of banking executives surveyed by Finextra and the Euro Banking Association cited working with partners as the best strategy for achieving digital transformation goals. Banks' growing IT budgets reflect their changing priorities: By 2021, global banks' IT budgets will surge to $297 billion, up 14% from $261 billion in 2018, according to Celent.
  • Banks' digital transformations are already well under way, and incumbents are making massive changes to the way they operate and plan for the future to compete in a digital economy. They're doing this by embracing digital-ready innovation models; adopting new business models like open and direct banking; and reorienting their tech stacks around the digital customer experience.

In full, the report:

  • Outlines the incumbent banking landscape and its components, and the structure of the banking tech stack and the vendors supplying each of its layers.
  • Explains the biggest drivers behind banks' digital transformations, especially the rise of tech-savvy competitors, shifts in consumer behaviors, and a growing number of cybersecurity threats.
  • Highlights the steps banks are already taking to turn themselves into digital-first, data-driven, and customer-centric organizations. 
  • Evaluates the progress incumbents have made towards digitization, and how deeply they've embedded themselves in the emerging cross-industry digital banking ecosystem.

Interested in getting the full report? Here's how to get access:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Sign up for Banking Pro, Business Insider Intelligence's expert product suite tailored for today's (and tomorrow's) decision-makers in the financial services industry, delivered to your inbox 6x a week. >> Get Started
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  4. Current subscribers can read the report here.

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Zillow lost millions flipping houses in 2019. But here's why it's betting this fast-growing business will bring in $20 billion in the next few years.

Fri, 02/21/2020 - 1:02pm

  • Zillow Group's revenue more than doubled in 2019 from a year earlier to $2.7 billion. This surge was driven by Zillow's home-flipping business, which was launched in April 2018. 
  • While Zillow continues to grow its home-flipping business, it is not yet profitable. The company lost roughly $5,000 per home sale on average in 2019, taking into account holding costs, selling costs, and interest expense.
  • CEO Rich Barton said that the company is expecting to expand iBuying into 26 markets by mid-year but will focus most of its energy on increasing share in the markets it already operates in.
  • Zillow has predicted that this business could bring in as much as $20 billion in annual revenue in a few years. It also projects that once the business reaches scale it could deliver an adjusted EBITDA margin of 200 to 300 basis points.
  • Visit Business Insider's homepage for more stories.

Zillow Group's fast-growing house-flipping business brought in a surge of new revenue in 2019, showing the booming growth potential for so-called iBuyer model. 

But the company also said that it lost money on every house it sold, highlighting the challenges for operating a pure iBuyer profitably. Zillow, known for its online search engine for home info and Zestimate home pricing estimate tool, has billed the push into home-flipping as a way to round out its real estate offerings to touch every part of the buying and selling process. 

iBuyers purchase homes with all-cash offers and quick timelines, renovate and repair the home, and then sell it at a profit. Opendoor, a SoftBank-backed company valued at $3.8 billion, was the first iBuying company, but has attracted multiple competitors. Zillow Offers launched in April 2018 in Phoenix, Arizona, the home of the iBuying phenomenon

And Zillow's venture-backed competitors raised almost $1 billion in equity in 2019.

Opendoor raised a $300 million Series "E-2" round in March which included funding from General Atlantic, SoftBank, Lennar Corporation, Fifth Wall, GV (Google Ventures) and Khosla Ventures. Offerpad raised $75 million in March from an unnamed investor. Knock, which isn't a strict iBuyer but shares characteristics with the category, raised $400 million in January in a Series B round that was led by the Foundry Group.

Publicly traded competitor Redfin also introduced its own iBuyer in the first quarter of 2017, though it didn't announce the program until its IPO filing in June of 2017. 

But as we've reported, house-flipping is a low-margin business and profitability is closely tied to market conditions and the ability to shave off operational costs. Zillow has begun to offer adjacent services, like title and escrow, and also has a mortgage business. All of these adjacent businesses may help to increase Zillow's margins in its Homes business. 

Zillow reported that it lost on average $5,026 per home it sold in 2019, which takes into account holding costs, selling costs, and interest expense.

The company on Wednesday evening reported that its overall 2019 revenue was $2.7 billion — more than double its 2018 revenue of $1.33 billion.  Zillow Homes alone took in $1.37 billion in revenue in 2019, after bringing in only $52 million in 2018. 

Zillow's venture-backed competitors raised almost $1 billion in equity in 2019. Opendoor raised a $300 million Series "E-2" round in March which included funding from General Atlantic, SoftBank, Lennar Corporation, Fifth Wall, GV (Google Ventures) and Khosla Ventures. Offerpad raised $75 million in March from an unnamed investor. Knock, which isn't a strict iBuyer but shares characteristics with the category, raised $400 million in January in a Series B round that was led by the Foundry Group.

While Zillow Homes made 4,313 sales in 2019, the service is not yet profitable. After interest, sales, and holding expenses, Homes lost roughly $5,000 dollars per home sold. Zillow's 2019 net loss was $305.4 million, with Homes contributing to the bulk share of losses. The company's 2019 adjusted EBITDA was $38.9 million.

"We expect to improve the overall margin percentage of Homes on an annual basis," Allen Parker, Zillow's CFO, said on a fourth-quarter earnings call on Wednesday.

Zillow has rapidly expanded in the iBuying world, likely aided by the brand's existing popularity among home buyers and sellers. The company only sold 177 homes in 2018 across four markets. Those sale numbers increased almost 2500% in 2019, as the company expanded into 21 markets.

On the latest earnings call, CEO Rich Barton said that the company is expecting to expand iBuying into 26 markets by mid-year but will focus most of its energy on increasing its market shares in the markets it already operates in.

The fourth quarter of 2019 was the biggest quarter for Zillow Homes yet, with revenue of $603.2 million that is a 57% increase to the third quarter. That's more than $100 million higher than the company's outlook for the quarter.

The company's Q1 2020 outlook expects Homes revenue to increase to $675 million-$700 million. 

In its 2018 earnings report, Zillow Group wrote that in three to five years, Zillow Homes will purchase 5,000 homes a month and bring in $20 billion in revenue. It predicts that its internet, media, and technology (IMT) business, which is its largest non-Homes revenue source, will bring in only $2 billion.

Premier Agent, Zillow's lead-generation and agent-partnership business, makes up the largest portion of IMT's revenue, which also includes Zillow's advertising and rental listing business.

The company's shareholder letter predicts that once Zillow "achieves scale," individual homes will deliver an average return on homes sold, before interest expense, of 4%-5%, and the Homes segment's adjusted EBITDA will achieve a margin of two to three percent.

The current losses are within the range Zillow has predicted since launching the product: between a negative 2% to a positive 2% margin.

SEE ALSO: Here's how real-estate startups like SoftBank-backed Opendoor find new markets for buying up houses and flipping them at a profit

SEE ALSO: These 12 real-estate tech startups are transforming the financials of homeownership

SEE ALSO: Divvy, a rent-to-own startup for homeowners, grabs $43 million in fresh funding — including from home-building giant Lennar

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US business activity falls for the first time since 2013 amid the coronavirus outbreak

Fri, 02/21/2020 - 12:52pm

  • The IHS Markit purchasing managers' index fell 3.7 points to 49.6 on Friday. The index measures composite output at factories and service providers.
  • Any reading below 50 signals a contraction. Friday's PMI marks the first contraction in US business activity since 2013. 
  • The deterioration in PMI "was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions," said IHS Markit economist Chris Williamson in a statement.
  • Read more on Business Insider.

Business activity in the US contracted for the first time in seven years as the spread of coronavirus weighed on manufacturing and service companies. 

The IHS Markit purchasing managers' index fell 3.7 points to 49.6 on Friday, slipping below the key 50-point mark that signals a contraction. The last time the index, which measures composite output at factories and service providers, fell below 50 was in October 2013 in the midst of a US government shutdown. 

The index is the first major US economic indicator to show the impact of coronavirus, which has killed more than 2,200 people and infected more than 75,000 in just a few months. On Friday, the 30-year US Treasury yield fell to a record low of 1.89% and US stocks declined after the negative reading. 

The deterioration in PMI "was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions," IHS Markit economist Chris Williamson said in a statement.

Read more: A simple trading strategy has historically made investors an average of 21% in just 6 days. Here's how Goldman Sachs says you can replicate it.

Friday's reading also marks the first time in four years that output from the service sector has fallen, driving the negative result. At the same time, manufacturing production also ground to an "almost halt" due to a near-stalling of orders, Williamson said. Total new orders fell for the first time in a decade, and GDP growth slowed to 0.6% in February from slightly more than 2% in January, according to the report. 

Still, the February survey also showed a "notable upturn" in business sentiment about the year ahead. This reflects "widespread optimism that the current slowdown will prove short-lived," Williamson said. 

Companies also showed increased hesitation around spending due to worries about a potential slowdown in the US economy and uncertainty about the outcome of the 2020 presidential election, according to the report.

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The Bank of America Premium Rewards card offers valuable statement credits, but it's even better if you already bank with BoA

Fri, 02/21/2020 - 12:42pm


The Bank of America® Premium Rewards® Visa® credit card offers an interesting combination of rewards and benefits. The card gives you 2 points per dollar on travel and dining and 1.5 points per dollar on all other purchases. It has a $95 annual fee, but includes travel credits worth an average of $125 per year.

If you qualify for Bank of America's Preferred Rewards program, your points are amplified by 25% to 75% once you enroll. That means you can get up to 3.5 points per dollar on some purchases with this card. You can redeem your rewards for cash back, gift cards, and travel. Here's a deeper look at how the Bank of America Premium Rewards card works and who should seriously consider signing up.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back.

Earning and redeeming rewards

The word "rewards" is built right into the card's name, so you know you're going to get something back for every dollar you spend. The base rewards rate for the Bank of America Premium Rewards card is 2 points per dollar on travel and dining and 1.5 points per dollar everywhere else.

The 1.5 points per dollar rate for non-bonus purchases is pretty good, and the restaurant and travel bonus rate is roughly on par with similar cards. But if you are a loyal Bank of America or Merrill customer with high combined balances across both, you can get better rewards that make the card a serious contender.

If you're a Preferred Rewards program member and have up to $50,000 in combined deposits, you get a 25% added bonus on your credit card rewards. With at least $50,000, you qualify for a 50% boost. With $100,000 or more, you join the Platinum Honors tier and get a 75% bonus.

If you're not a Bank of America/Merrill customer with at least $20,000 in combined deposits, the card's rewards are about average. But with the added bonus for Preferred Rewards, it jumps toward the top of the pack for rewards cards with annual fees around $100.

Redeeming for cash back gives you 1 cent per point, which is the best value and probably the best redemption for most users. That means that you can get up to 3.5 cents back for every dollar you spend, factoring in the Preferred Rewards bonus.

Read more: Bank of America Premium Rewards card review

Can you use the travel statement credits?

Even without factoring in the rewards points, you could justify the annual fee for the Bank of America Premium Rewards card with travel statement credits. It gives you two different credits that could be worth as much as $200 in a year.

  • Every year, you get up to a $100 credit for airline incidental purchases. This includes things like baggage fees, upgrade charges, in-flight purchases, and airline lounge admission fees.

  • Every fourth year, you get a credit for up to $100 to cover the application fee for Global Entry or TSA PreCheck. If you travel regularly, you should definitely take advantage.

That makes the credits worth an average of $125 per year. That's already $30 more in benefits than the annual fee if you take full advantage.

Click here to learn more about the Bank of America Premium Rewards card » Do you value the card benefits?

The Bank of America Premium Rewards card includes travel insurance and purchase protections on par with other rewards cards. For purchases, the card gives you a purchase security benefit (damage/theft protection for 90 days on new purchases), an extended manufacturer's warranty, and return protection for 90 days.

For travel, the Bank of America Premium Rewards card includes trip delay coverage, trip cancellation and interruption insurance, lost and delayed baggage insurance, a rental car collision damage waiver, and other perks.

Trip cancellation and interruption coverage is my favorite credit card protection. It can cover changes to flights or extra hotel nights if a flight is delayed or canceled for weather, among other scenarios.

The card also includes roadside dispatch. While you may have to pay for some services rendered, the benefit could be good enough to save you money by skipping the auto club membership.

Have you explored other options?

The Bank of America Premium Rewards card is similar to the Chase Sapphire Preferred Card and Capital One® Venture® Rewards Credit Card in many ways. If you are not a loyal Bank of America customer who can take advantage of the rewards bonuses for Preferred Rewards program members , either of these cards could be a good alternative.

Like the Premium Rewards card, the Chase Sapphire Preferred card has similar benefits. It earns 2 points per dollar on travel and dining purchases, 5 points per dollar on Lyft rides, and 1 point per dollar everywhere else. Chase Ultimate Rewards points can be more valuable for travel than Bank of America points, so the winner between the two depends on how you prefer to redeem your rewards. 

The Capital One Venture card doesn't have quite as many benefits as the Bank of America Premium Rewards card, but it gives you 2 miles per dollar everywhere, and points are more flexible for travel. A big advantage is the Purchase Eraserthat allows you to easily redeem Capital One miles for travel purchases you made with the card.

Who should sign up for the Bank of America Premium Rewards card?

The Bank of America Premium Rewards card does a good job of rewarding loyalty. Bank of America's Preferred Rewards program benefits include bonuses on savings accounts, credit card rewards, fee and interest rate discounts on loans and investment products, and free ATM transactions.

If you take full advantage of the card's statement credits and rewards, you'll come out ahead with this card. But the people who will get the most value out of this card are dedicated Bank of America and Merrill customers, since they can get an added rewards bonus of 25% to 75%. If that sounds like you, carrying this card could be a great choice.

Click here to learn more about the Bank of America Premium Rewards card »

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Why Morgan Stanley, which has 15,000-plus financial advisers catering to the super-wealthy, is buying a discount broker known for its talking baby ads

Thu, 02/20/2020 - 9:34pm

  • Morgan Stanley said on Thursday it planned to buy E-Trade in a deal set to close in the fourth quarter.
  •  Morgan Stanley is making a big play for smaller, Main Street customers it's long tried to reach, through E-Trade's self-directed brokerage platform and stock-plan administration business.
  • The bank is also making its first foray into the registered investment adviser (RIA) business, a fast-growing corner of the wealth management industry that Goldman Sachs pushed into last year with United Capital. 
  • Business Insider spoke with analysts and sources familiar with the deal about why Morgan Stanley was interested in E-Trade for $13 billion, or roughly $4 billion more than E-Trade's market cap on Wednesday.
  • If the E-Trade buy goes through, wealth and investment management will contribute some 57% of the Morgan Stanley's pre-tax profits, excluding possible cost-savings as a result of the deal. That means the Wall Street firm has seen a massive reshaping in its businesses over the past decade. 
  • Visit BI Prime for more wealth management stories.

Morgan Stanley, the white-shoe New York investment bank best known for advising high-net-worth clients and bringing companies public in high-stakes deals, is making a landmark attempt to head down-market.

The firm on Thursday said it planned to buy the brokerage E-Trade, best known for users' self-directed stock-trading and its commercials featuring a precocious, stock-trading infant, for $13 billion. 

The largest takeover by a large US bank since the global financial crisis places a final point on years of investor speculation around when, not if, E-Trade would be acquired. That speculation has ratcheted up considerably since brokerage giants Charles Schwab and TD Ameritrade said last November that they would combine. 

The need for sheer scale and appealing to customers as a one-stop shop for their financial needs has become critical for wealth management and brokerage firms in recent years as a new generation of customers have grown accustomed to commission-free or dirt-cheap prices for services, from stock-trades and investing to advice. 

Sources familiar with the deal told Business Insider that Morgan Stanley is making a play for the smaller, Main Street customers it's long attempted to reach through E-Trade's self-directed investing platform and stock-plan management business. Meanwhile E-Trade does not have financial advice services, a business in which Morgan Stanley, with some $2.7 trillion in client assets, is a giant. 

With E-Trade, Morgan Stanley is also venturing into the registered investment adviser (RIA) space, a fast-growing corner of the wealth management industry that Goldman Sachs pushed into last year with its United Capital purchase.

"The firm has made movements down-stream; this is another step in that direction," Jennifer Butler, director of asset management and brokerage research at the industry research firm Corporate Insight, told us. "This will solidify Morgan Stanley's place in the workplace solutions and retail investing space."

The all-stock deal, a premium of around $4 billion to E-Trade's market cap on Wednesday, is expected to close in the fourth quarter and lead to some $400 million in cost-savings.

Morgan Stanley advised itself on the deal, according to a person familiar with the matter. JP Morgan Securities served as the lead financial adviser to E-Trade on the deal, another person familiar with the matter said, while Skadden, Arps, Slate, Meagher & Flom acted as outside legal counsel to E-Trade.

E-Trade's stock-plan administration users may one day need Morgan Stanley's financial adviser army

One of the reasons Morgan Stanley went in for E-Trade was to capture the customers — everyday employees at companies around the US — who use the brokerage's stock-plan administration platform. For 2019, E-Trade reported $296 billion in total assets under its corporate services umbrella, bringing in a record $24 billion in assets last year. 

"They've had a killer business for a long period of time," Morgan Stanley chief executive James Gorman said of the stock-plan administration business on a call Thursday morning to discuss the deal with analysts. 

The bank had already pushed further into that business with its $900 million Solium Capital purchase that closed last year and brought in some 1 million participants. That business was re-branded as Shareworks by Morgan Stanley. Prior to that purchase, the firm's stock-plan administration business covered some 1.5 million employees across 330 corporate clients, including Microsoft and Ford Motor, the Wall Street Journal previously reported. 

This opens up the business to more customers who may one day build up more wealth and need Morgan Stanley's force of 15,468 financial advisers to manage their money as lucrative wealth management clients.

Together, the firms estimate they will now have 4.6 million stock plan participants and oversee some $3.1 trillion in client assets overall. And if the deal closes, Morgan Stanley's combined wealth and investment management business will become even more meaningful to the overall firm than it has in recent years.

E-Trade's self-directed investment platform is also another channel that could ultimately refer clients to wealth managers. It had nearly 5.2 million retail customer accounts in January, according to the latest figures. Total retail and adviser services assets totaled $387 million.

They've had a killer business for a long period of time

Once the E-Trade buy goes through, wealth and investment management will contribute some 57% of the Morgan Stanley's pre-tax profits, excluding possible cost-savings as a result of the deal.

That marks a massive reshaping of the Wall Street bank. In 2010, the divisions together contributed just 26% to the bottom line, Morgan Stanley said in a statement about the E-Trade deal. 

Morgan Stanley is not the only firm increasingly relying on its wealth management arm to drive growth as other volatile areas, like trading, have come under pressure across Wall Street. Big names like Goldman Sachs, Credit Suisse, and UBS have done the same, and Business Insider reported last month that Silicon Valley Bank, which has for decades been a lender for technology executives and founders, is looking to build out its private banking and wealth advisory units.

Gorman also tried to emphasize that the deal would not disrupt financial advisers' work. A person familiar with the matter told us the deal was not so much about cost-savings as it was about making a strategic move in the market.

"I don't think financial advisers will view this as a situation where they're competing with an internal channel," Michael Foy, senior director of the wealth management practice at J.D. Power, told Business Insider.

A risk to existing clients, though, could be in what's drawn them to E-Trade in the first place, Foy said. It was long seen as a cheap, independent stock-trading option that struck gold in day-trading customers during the dot-com boom.

That sheen could possibly wear off when the two brands merge, Foy said. A recent J.D. Power survey of customers' brand perceptions placed Morgan Stanley at one extreme, embodying the meaning of "full-service" wealth management, while E-Trade was at the opposite end. 

Morgan Stanley's foray into the fast-growing RIA world, but not a 'primary motivator'

Another piece of E-Trade's business is its RIA custody business, a fast-growing industry outside of the traditional wirehouses of UBS, Wells Fargo, Merrill Lynch, and Morgan Stanley.

"It's an obvious push into the RIA space," Will Trout, global head of the wealth management research practice at Celent, a division at consultant Oliver Wyman, said in an interview. 

However, E-Trade's RIA segment, overseeing some $20 billion in assets, is tiny by industry standards. And it "wasn't the primary motivator of the transaction," Gorman said on the call earlier with analysts. 

E-Trade, which recently moved its headquarters from New York City to New Jersey in an effort to cut costs, two years ago closed on a deal to buy independent adviser custodian Trust Company of America (TCA) for $275 million. E-Trade has around 410 in-house financial consultants of its own.

"They've been presenting themselves as the good guy, RIA-friendly alternative to what appears to many RIAs as a Schwab-TDA beast," Trout said, adding that the whole deal appears to be a play for the mass-affluent market so many wealth management players are after.

The Credit Suisse analyst Craig Siegenthaler, for his part, said he was curious about whether Morgan Stanley will "keep an independent RIA platform under its roof which may not mix well with its own employee channel." He added that having the two businesses side-by-side, referring to the new RIA channel and its own force of thousands of advisers, may "add a layer of complexity."

Another dimension to the competition mounting around firms in the brokerage business, which includes Connecticut-based Interactive Brokers, is the expansion of so-called "breakaway" advisers and adviser teams exiting big wealth managers like Wells Fargo and forming their own independent firms.

Since firms like Fidelity, Schwab, and E-Trade all have business lines catering to that growing segment, they're competing for independent advisers in what's become a crowded space.

Total assets under management associated with advisers' exits from wirehouses reached a record $190 billion last year, according to Echelon Partners, an investment bank focused on the wealth management industry. 

"RIAs are expected to continue to expand their footprint, taking assets from broker dealers and large wirehouses," the firm said in a recent report.

Throughout the course of deal talks, the takeover was referred to as Project Eagle, the Wall Street Journal reported.

The outlet also reported that the deal talks began in late December, weeks after the Charles Schwab-TD Ameritrade deal was officially announced. Gorman, who was appointed chief executive in 2010, said on a call with analysts that he'd thought about executing the deal for the firm before.

The E-Trade plan is not the first time Morgan Stanley has attempted to step into the business of managing money for regular customers. In 1997, the firm said it would buy Dean Witter, a retail stock brokerage then aimed at smaller customers.  

"Morgan Stanley saw Dean Witter as the perfect pipeline from Wall Street to Main Street," the New York Times said in a February 1997 article detailing the deal. "With thousands of salespeople in many cities and towns, Dean Witter was just the ticket."

SEE ALSO: Charles Schwab expects branch closures and job cuts when its TD Ameritrade deal goes through. Here's a look at exactly where the 2 brokerage giants have the most overlap.

SEE ALSO: Morgan Stanley is looking to add 1 million wealth clients by wooing young startup workers who are paid a lot in stock

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TECH COMPANIES IN FINANCIAL SERVICES: How Apple, Amazon, and Google are taking financial services by storm (AMZN, AAPL, GOOGL)

Thu, 02/20/2020 - 7:03pm

Tech giants are set to grab up to 40% of the $1.35 trillion in US financial services revenue from incumbent banks, per McKinsey. Three of the largest US tech companies — Apple, Google, and Amazon — are particularly encroaching on financial services and threatening incumbents with their size and ability to attract massive, loyal user bases.

Apple is deepening its financial services play as a means of invigorating revenue, and its expertise could make it a legitimate threat to legacy players. Google's platform-agnostic approach, wide international penetration, and top talent position it as a hub with unrivaled global reach beyond just consumer payments. And Amazon — which has eaten up market share in every industry it's touched, and now has its sights on financial services — could swiftly undercut legacy players.

In The Tech Companies In Financial Services report, Business Insider Intelligence will examine the moves that Apple, Google, and Amazon are making to gain a larger foothold in the global financial services industry. We will then detail each tech company's threat to incumbents and outline potential next steps based on their existing moves in the financial services sphere.

The companies mentioned in the report include: Apple, Amazon, Google, Goldman Sachs, Mastercard, Barclaycard, Citi, Chase, Capital One, Paytm, and PhonePe.

Here are some key takeaways from the report:

  • Apple's expertise in consumer-facing tech products makes it a legitimate threat to legacy players. Its next move could be a debit card or PFM app, both of which would be cohesive with its existing offerings.
  • Google's money movement and commerce services form a payments hub with unrivaled global reach. Google could pursue global expansion by modifying its offerings in other markets like it did in India, pursuing Europe, and even delving into digital remittances.
  • Amazon is an expert disruptor — and it has its sights set on the financial services industry next. Amazon could develop checking and savings accounts, bring Amazon Pay in-store, and white-label its Amazon Go store technology to deepen its financial services footprint.

In full, the report:

  • Outlines the threat posed by Apple, Amazon, and Google to legacy financial players.
  • Identifies each tech giant's strengths, weaknesses, opportunities, and threats moving further into financial services.
  • Discusses each company's moves in financial services and their anticipated next steps in the space.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of tech companies in financial services.

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These 5 factors are transforming the payments experience for both consumers and businesses

Thu, 02/20/2020 - 6:02pm

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5 reasons your car insurance rates may be rising

Thu, 02/20/2020 - 5:23pm

Car insurance pricing is elusive — there's no publicly available formula for the way a car insurance company calculates your premium, and each company does it differently. It can feel sometimes like premiums are arbitrary, especially when you see an increase in the amount you pay every month.  

While sometimes price changes can be caused by something as simple as an adjustment to the company's underwriting policy, they might be in reaction to factors beyond an insurance company's control. Everything from a natural disaster to a sudden change in state law could spell increased costs for insurance companies, and eventually, increased costs for drivers, too. 

It's worth noting that insurance companies are regulated by state agencies, and in order to change premiums, each car insurance company has to go through approvals and regulatory processes. That change could be slow — it may take insurance companies months to get their changes approved and on drivers' quotes.

While you may be notified about rate changes, you may not be — each state has different laws on when consumers need to be notified of rate changes before renewing their policies, if at all. Some states require no notice, while others only require notices for rate changes over a certain percentage. 

1. State laws 

Car insurance companies have to comply with state laws. When laws change, insurance rates can, too. 

Michigan has one of the most stark examples of just how much laws affect premiums. A 1973 law required all drivers in the state to have personal injury protection coverage with no limit as a part of their auto insurance policy. Generally, each type of coverage listed in a policy has a limit that it will cover, generally $25,000, $50,000, or $100,000. In Michigan, however, this coverage, also called PIP, must have no limit to meet the state's minimum coverage. 

That's made car insurance in this state incredibly expensive — the Insurance Information Institute ranks it as the fourth-most expensive state in the US for car insurance. 

State laws, like Michigan's PIP law, have a big impact on the premium you see listed on your quote. Often, these changes come without warning. If there's been a change to laws in your state, it could be behind your rising car insurance premium. 

2. Insurance companies change the way they assess your risk

Insurance companies go through a process called underwriting for every person they insure. Underwriting looks at the likelihood that you'll file a claim and incur a loss. Along with a few other factors, car insurance companies price your policy based on this likelihood.

But that process is constantly changing. Insurance companies sometimes use new technology in their underwriting process, changing the way an insurance company looks at you and the risk you pose. Additionally, when car insurance companies are paying for more accidents, they're spending more money. To recoup those costs, each drivers' cost of coverage rises. 

Car insurance companies are constantly changing the way they look at risk and at the drivers they insure, so you might find that the formula isn't in your favor the way it used to be. In this case, shopping around could help you find a company that's more affordable for your history and circumstances. 

/* Business Insider / Auto Insurance Content Pages */ var MediaAlphaExchange = {    "data": {       "zip": "auto"    },    "placement_id": "RxLRBKtcQejwbKRhebUT0f87Cp5b7w",    "sub_1": "why-car-insurance-rates-rise-increase",    "type": "ad_unit",    "ua_class": "auto",    "version": 17 }; 3. Natural disasters can raise rates

After Hurricane Harvey hit Houston, Texas, about half a million auto insurance claims were filed, according to the New York Times. The Texas Department of Insurance estimated that car insurance companies faced $2.7 billion in losses. Car insurance costs went up, with Texas indicating hikes of about 8%

From California wildfires to East Coast hurricane activity, premiums can see spikes after natural disasters. Where there's widespread damage, there will also be an increase in insurance claims. More insurance claims mean greater costs for the insurance companies, and that money has to be made back somehow. Generally, that's in the form of rate increases for drivers.

4. The cost of medical care drives auto insurance increases

The car isn't the only thing covered by car insurance — passengers and drivers are, too. Medical care is a big part of car insurance coverage. As the cost of medical care is rising, car insurance rates have to adapt to include this expense. 

Between 2008 and 2017, nonprofit research group Health Care Cost Institute estimates that the cost of an emergency room visit had increased by 176%. Similarly, from November 2006 to November 2016, the US Bureau of Labor Statistics reports that car insurance prices have increased by 50%.

With costs of healthcare on the rise, car insurance companies are struggling to keep up with the increasing costs of care. Raising rates is one way they keep the costs at bay. 

5. Car parts are getting more expensive, and cars are becoming more complicated

The safety features designed to keep drivers out of accidents are actually costing insurance companies more. As automotive technology becomes increasingly complex, the costs of fixing vehicles, or purchasing new vehicles after a loss, are on the rise.

While a fender bender used to mean a simple dent repair at the body shop, it can now involve detailed work like repairing delicate sensors. As cars become more complicated and expensive to repair, car insurance rates are climbing steadily as well. 

Totaled cars are also more common. Tim Zawacki reports for S&P Global's Market Intelligence, "With the cost of auto parts rising at a faster rate than car prices, companies have observed incremental increases in claims where the vehicle is deemed to be a total loss." As more cars are totaled and car prices rise due to increasing tech features, car insurance companies are funneling more money towards replacing cars than in the past. 

What's the best way to avoid rising auto insurance rates? 

It's important to remember that car insurance rates are highly individual — not everyone's car insurance rate will follow the trend. Car insurance companies have any number of reasons to raise rates on an individual level, and oftentimes, changes to your driving history, credit score, your car itself, and many other factors can play a role. 

If your auto insurance rate is starting to seem high, it's worth shopping around for coverage. Take an hour to gather quotes from a variety of different auto insurance companies, and compare their offerings. For a starting point, see Business Insider's list of the best car insurance companies of 2020

Look at the coverage types, limits, and the premium to find the best policy for you. You'll want to find the policy with the most types and highest limits of coverage, with a premium that fits your budget. 

Sometimes, rate hikes are simply unavoidable. But, there still may be companies that price your policy more affordably than your current policy, and it's worth looking around to see if you can beat your price. 

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Amid demand plummets linked to the coronavirus, airlines project that this could be their worst year since the global financial crisis

Thu, 02/20/2020 - 5:19pm

Flight cancellations caused by the coronavirus outbreak will likely lead the global air transport industry to shrink for the first time since the global financial crisis of 2008 and 2009, a trade group warned.

The International Air Transport Association, otherwise known as the IATA, said on Thursday that it expected to see global air-traffic demand fall about 4.7% from levels it previously predicted for 2020. That would represent a 0.6% global contraction in passenger demand for the year.

The bulk of that impact is expected within the Asia-Pacific region, where IATA said it forecasts a staggering 8.2% year-over-year reduction in demand. That translates to a $27.8 billion revenue loss — $12.8 billion within the China domestic market alone.

"This will be a very tough year for airlines," Alexandre de Juniac, CEO and director of IATA, said in a statement. "Airlines are making difficult decisions to cut capacity and in some cases routes."

IATA previously projected industry-wide growth of 4.1%.

The projections come as global airlines have canceled thousands of flights to mainland China, Hong Kong, and the region due to plummeting demand caused by coronavirus fears, which made operating the flights commercially unviable.

US airlines have canceled most flights until late April, while China's airlines have reduced their schedules to bare-bones service. Hong Kong-based Cathay Pacific has said it plans to cut its global capacity by 40%, and its capacity to mainland China by 90%.

The expected fallout goes beyond airlines — the US travel industry predicts a loss of more than $10 billion due to the virus.

SEE ALSO: The coronavirus is slamming the US travel industry, with experts predicting it will wipe out more than $10 billion in spending from Chinese visitors

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Leaked memo: Crux Informatics, a data startup backed by Goldman Sachs and Two Sigma, is warning its ex-employees not to talk to reporters

Thu, 02/20/2020 - 4:51pm

  • Crux Informatics, which raised tens of millions from Goldman Sachs, Two Sigma, and Citi, has overhauled its executive and technology teams since it was founded in last 2017, as outlined in a recent article by Business Insider.
  • After the article ran, Crux sent a memo to former Crux employees who had signed severance agreements telling them that the startup "will not hesitate to enforce its legal remedies" if former employees share non-public information or disparage the company. 
  • Binding non-disclosure agreements from former employers have been under pressure thanks to #MeToo scandals. California introduced a law in November of 2018 that banned settlement agreements from disallowing people from speaking out about harassment or discrimination. 
  • Visit Business Insider's homepage for more stories.

Former employees of Crux Informatics received a stern warning on Valentine's Day.

The startup backed by Goldman Sachs, Two Sigma, and Citi sent a memo on Friday stating that former employees who had signed severance agreements could be sued by the data company if they were found to be speaking with journalists or making online comments about the company.

The memo, which was viewed by Business Insider, was sent by the firm's CFO Marie Sonde following a story written by Business Insider on the firm's changes to its executive and technology teams, including the closure of its San Francisco office, over the last 18 months. 

The memo notes that Business Insider did not publish "confidential" information in its story, but that "they made it clear that former employees of Crux had divulged to them information that Crux would consider to be confidential."

The firm did not disclose in the memo what query from Business Insider this was related to and declined our requests to comment.

"Crux is taking this opportunity to remind you of your obligations to Crux as spelled out in your recently executed Severance Agreement and Release. This includes your obligation of confidentiality with respect to the disclosure of all nonpublic information concerning Crux and its clients as well as your obligation not to make any false, disparaging, derogatory or defamatory statements online or otherwise," the memo reads.

"Relaying non-public information or making disparaging comments, even anonymously, is a breach of those agreements and obligations and Crux will not hesitate to enforce its legal remedies if it becomes aware of such a breach."

A broader push against non-disclosure agreements and settlement arrangements that limit a former employee's ability to speak publicly has grown, mainly as a result of the #MeToo movement. California passed a bill in November 2018 that does not allow settlement agreements to limit a person's ability to speak out against past harassment or discrimination. 

Crux's memo stated that the Business Insider story was "instigated by former Crux employees," which is inaccurate. The firm did not respond to request for comment as to why this was included in the memo.

The memo told former employees approached by journalists, consultants, and analysts to direct them to the firm's head of marketing Pablo Cerrilla. 

SEE ALSO: Two Sigma, Goldman, and Citi invested $41 million in data startup Crux Informatics. But the past 12 months has seen the startup churn through execs as it looks to solve Wall Street's data woes.

SEE ALSO: The alt-data industry is having growing pains after its sudden glow up — and insiders are looking at new pricing models and unlikely customers

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