Should brand fans be able to own a piece of their beloved brands, without any middlemen taking a cut? That’s the premise of Loyal3, which offers consumers a Customer Stock Ownership Plan (CSOP) where small amounts of stock can be bought directly from publicly traded companies via Facebook or a website. E.F. Hutton, are you listening?
The pitch, on their website: “LOYAL3 is built on the simple and yet profound principle that people care more about things they own than things they don’t. We offer a revolutionary web and social media platform that enables public companies to sell their stock directly to customers from their Facebook page or website in just 3 clicks, creating more loyal customers.”
As Reuters notes, users can invest from $10 to a maximum of $2,500 per company per month. By leveraging consumer devotion for companies planning to go public, Loyal3 acts as broker. “People love Target and Coke,” says Barry Schneider, CEO of Loyal3. “Why aren’t more of them owners of those brands?”[more]
One of the first CSOP partners is Fifth & Pacific Companies Inc. (formerly Liz Claiborne Inc.), the $1.5 billion company that owns such brands as Juicy Couture, Lucky Brand, Kate Spade and Jack Spade. Here’s how it works: users set-up a Loyal3 account and via F&P’s site or Facebook page, buy small shares at market value in increments of $10, $25, or $50. Dividends are reinvested, CSOP shareholders can sell at any time and F&P covers all trading fees.
The bond between brand and consumer is Loyal3’s mission. “Consumers are well-positioned to assess which companies to invest in,” Schneider asserts, “because they know from experience the brands that have superior products and services.”
The San Francisco startup is made up of parent company LOYAL3 Holdings, Inc; platform and service developer LOYAL3 Labs, Inc; and the cash and securities handler LOYAL3 Securities. Their mission, creating more investors, is not built on educating those investors, but rather on democratizing access to stock by lowering the barrier of entry for companies and their customers.
A word of caution from Fast Company, “In a weak economy, people who can’t afford a well-rounded portfolio may be better off opening a 401(k), or saving.”
“It’s believed 80% of Americans don’t have access to the stock market, usually because of the intimidation factor. Many of us have no idea where to find a ‘trading for dummies’ tutorial and even if we did, we would likely still feel as though we’re missing some important point that would eventually cost us our life savings,” notes the Credit Dad blog.
“This fee free program is still in its infancy, but there is something very attractive about having a minimum investment of just $10. It has the potential to change the financial sector as a whole in the U.S.”
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