“An Aberration in the History of Wealth Creation”

"The geeks were not supposed to inherit the Earth," writes Sean Parker,  but they have acquired a good chunk of it, One result: the rise of the hacker philanthropist. 

Will Robo Advisers Have Cyborg Clients?

Within 200 years wealthy humans will have become godlike cyber-organisms. So predicts Yuval Noah Harari, a professor at the Hebrew University of Jerusalem,

Our cyborg descendants, says Harari, "will be as different from today’s humans as chimps are now from us." Presumably their lifespans will become more or less infinite.

Well, there goes the dynasty trust market.

Protecting the Elderly: Men Wanted!

Most often, helping the elderly deal with the financial or physical hazards of aging is women's work. Daughters or daughters-in-law pitch in; sons and sons-in-law gratefully stand aside.

One exception: Brooke Astor's grandson Philip Marshall. But if Marshall attended The White House Elder Justice Forum as scheduled, he probably found himself in the minority gender, judging by this photo from the occasion.

To be fair, another photo shows three males. But even on the federal level, protecting the elderly seems to be mainly women's work.

Shouldn't men be feeling guilty?

Even HNWI's Can Be Financially Clueless

Three questions from an oft-cited quick quiz:

■ If $100 earns 2 percent per year, in five years will you have more than $102, less than $102 or $102? 

■ If the interest rate on your savings is 1 percent per year and annual inflation 2 percent, could you buy more, less or the same with your money in a year’s time? 

■ Is it true or false that buying a single company stock usually provides a safer return than the stock of a mutual fund?

As noted in the NY Times, a survey found that only one-third of Americans could come up with correct answers for all three questions.

Financial cluelessness prevails even among High Net Worth Individuals, as Jason Zweig illustrates in his discussion of wealth-management fees. An investor was paying an adviser 1.5% to manage a $5 million account. When asked how much 1.5% of $5 million was, the investor guessed, "7 thousand or 8 thousand?" 

Fortunately (for themselves if not their advisers) many HNWI's have a handle on basic arithmetic. Zweig wonders if fees based on assets under management are on the way out. What do you think?

Could the future bring a split between investment management, handled at low cost by robo advisers, and financial planning for a fee? 

Might financial planners then become quasi-professionals, charging retainers or hourly fees like lawyers and accountants?

Brooke Astor's Defenders in the News

Brooke Astor's grandson Philip Marshall and a few friends like David Rockefeller helped rescue her from the clutches of Philip's father, Anthony Marshall. Both grandson and Rockefeller are in the news this month.

Philip was disinherited (no surprise) by his father.

 David Rockefeller this month celebrates his 100th birthday. The last surviving grandson of John D. led Chase Bank to global prominence and, despite a chronic case of philanthropy, still possesses a few billion.

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Inspired by his grandmother's difficulties, Philip Marshall has launched Beyond Brooke, dedicated to the cause of elder justice. Today, according to his calendar, Philip attended the 2015 White House Elder Justice Forum.

No Tax Reform? Blame Twitter!

Congress is in no mood to tackle tax reform this year, and nothing but the election will matter next year. Mitch McConnell sees no chance of action before 2017.

According to Stan Collender at Forbes, that's way too optimistic. The earliest realistic target date for tax reform is 2019. One reason: Twitter.

"Tax reform in the 1980s took three years, and that was long before there was Twitter, LinkedIn, Facebook and all of the other social media sites. *** Members of Congress who in the 1980s had to wait for the evening news to tell voters what they had done now will be tweeting out their remarks while they are being delivered."

In short, Collender believes, the next effort at tax reform will become a social media circus.

A Masterful Ad From the Reagan Years

Republican presidential hopefuls agree, CNN reports: the greatest living president is Ronald Reagan.

Although the Great Communicator died 11 years ago, enthusiasm for the Reagan era is real, so here's a notable ad from 1985.

The skillfully crafted copy does a splendid job of selling the services of a trust bank, in this case Morgan Guaranty Trust Company. (By the 1980s, trust companies had begun to seem old hat, hence the alias, "The Morgan Bank.")

The Reagan era was probably the last in which claims of superior investment performance could be made without evoking snickers.

For those of a certain age, the Reagan Era may seem like only yesterday. Techwise, it was long, long ago. In 1985 this was a mobile phone:

Bitcoin 2.0: the End of Stock Exchanges?

Whether Bitcoin has a bright future as money is debatable, but perhaps that's beside the point. Maybe the point is innovations such as Medici:

Patrick Byrne, the CEO of Overstock.com and would-be financial revolutionary …wants to use the technology behind Bitcoin to create a securities market that exists not in any one particular place, but as a collection of data distributed across computers anywhere on Earth, with no need for the DTCC, the New York Stock Exchange or any of the other middlemen who oversee the world’s capital markets.

This new system, which he calls Medici, after the banking family that ruled over Renaissance-era Florence, would do something no other stock exchange has ever done. It would skip the centralized clearinghouse entirely, and keep track of trading, clearance, and ownership on everyone’s computers at once. It would transform processes that now depend on centralized institutions for trust, and let people instead transact directly with one another.

Why is Bitcoin's success as a money substitute debatable? Matt O'Brien at Wonkblog believes the cryptocurrency is perceived as too good a store of value:

Bitcoin's finite supply means that its price should go up, and keep going up. So if you have dollars that are losing a little value to inflation every year and Bitcoins that are gaining it, which one are you going to use to buy things with? The question answers itself, and it raises another. Why would this ever change? *** Buying things with Bitcoin would be like cashing out your Apple stock in 1978 to go grocery shopping even though you have plenty of actual cash lying around.

Once upon a time, stockholders felt safe from fraud because they possessed actual stock certificates. Then most certificates moved into depositories. Now they've largely vanished. Will investors be willing to take the next step, into cryptostocks?

Do Boomers Need an Efficient-Aging Expert?

Marc Freedman, founder of Encore and a "thought leader," worries about his fellow Boomers.

Some Boomers will be around for another half century. Many will shun retirement. They'll take on new jobs or projects, pursue long-delayed personal ambitions. Freedman doubts they can do it on their own.

In his WSJ column, Freedman suggests new rituals for graduating from the rat race, and new government interventions, such as "preview" Social Security payments.

One idea your obedient blogger finds downright scary: yet another "tax-favored" investment account. This one would provide supplementary income for those leaving big-money jobs for low-paying public service. Just what we need – another few hundred pages of IRS rules and regulations. Can't anybody put money aside in a couple of mutual funds or ETFs without government intervention?

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In the 19th century, children went to grammar school, then went to work. In the 20th century, children became teenagers and went on to high school, delaying adulthood. Freedman sees that the 21st century is creating a similar delay in later life. Teenagers still have to figure out how to cope. Perhaps Boomers can be trusted to do the same.