No satisfaction

Would it surprise you to learn that "satisfaction with how things are going in the United States" has fallen to 9%, the lowest level Gallup has ever recorded?

Didn't think so.

But the graph accompanying the linked NYTimes article is quite interesting. Notice that the satisfaction level fell to just over 10% at the end of the Carter presidency. It reached 50% only upon Reagan's re-election in 1984, then jumped to 70% by mid-1986. The '87 stock market crash coincided with a falloff. Satisfaction was under 50% when Bush I was elected, and it plummeted to the teens again after Clinton was elected. The 50% mark would not be reached again until 1997. Eyeballing the graph, it looks like on average only 35% to 40% of Americans have felt satisfied during the last three decades. That must mean something.

Satisfaction was over 50% as recently as 2004, as it was in 2000 when Bush II was first elected, but as been in pretty steady decline the last four years.

How J.P. Morgan Tamed the Trust Companies

As author of Morgan, American Financier, Jean Strouse "lived" through the Panic of 1907. If Morgan were around today, she writes in The Washington Post, he might be thinking how relatively easy he had it. No inscrutable derivatives. And he'd probably back the bailout.

Morgan would surely note one similarity between a century ago and now: reckless "bankers" running wild. In our Credit Crisis, the culprits are (or were) highly-leveraged investment banks. In 1907, Strouse recalls, the wild and crazy "bankers" were…trust companies.

What set a match to the tinder in October 1907 was a run on New York trust companies. ••• An attempt by speculators to corner the stock of a copper company failed, and as word got out that trust companies had made loans to the speculators, people with money on deposit at the trusts lined up to take it out. The trust companies, the weakest link in the financial system, operated like commercial banks -- accepting deposits, issuing loans and financing speculative schemes -- only with no regulatory supervision or mandated reserves.

Within weeks, the panic had killed off one trust company and shaken others. Banks teetered. The credit crunch threatened to close The New York Stock Exchange. Almost single-handedly, J.P. Morgan quelled the panic. But as November arrived he was still hard at work cleaning up the mess. As Strouse tells it, the new Morgan Library, completed only the year before, was his secret weapon:

[T]he bankers had to bail out a near-bankrupt New York City, and the trust companies, source of the original trouble, weren't in the clear. Sunday night, Nov. 3, Morgan gathered 50 trust company presidents at his library, told them they had to come up with $25 million on their own and left them in a large room filled with Renaissance bronzes, Gutenberg Bibles and tiers of books. He withdrew to his librarian's office. At 3 a.m., he called in one of his sleep-deprived lieutenants, Ben Strong, for a review of a trust company's books. Strong gave his report, then headed to the library's front doors and found them locked. Morgan had the key in his pocket. No one would leave until the trusts ponied up. The presidents continued to talk. At 4:15, Morgan walked in with a statement requiring each trust company to share in a new $25 million loan. One of his lawyers read it aloud, then set it on a table. "There you are, gentlemen," said Morgan.

No one moved.

Morgan took the arm of Edward King, the head of the Union Trust, and drew him to the table. "There's the place, King," he said, "and here's the pen." King signed. The other presidents signed. They set up a committee to handle the loan and supervise the final-stage bailouts of endangered trusts. At 4:45, the library's heavy brass doors swung open and let the bankers out.

As the stock market rallied and gold began to arrive from Europe, the two long weeks of crisis came to an end.

THE MORGAN LIBRARY

The 1907 run on the trust companies drained their deposits by $275,000,000. That's comparable to perhaps $6 billion today.

The emerging competition

Be sure to read the comments to the Robert Franks article that JLM links to below. There is a tremendous amount of ill will toward "financial advisors" who don't really do much advising at all, who spout the company line and are salesmen. The emerging competition is "do it yourself," even for those who are managing a couple million dollars.

That will prove tough competition, because many people think that they can do at least as well as the market, and no one can promise to outperform the market.

Still, I think it's a dangerous approach for many. Consider this story from today's Journal, Loyalty Pays a Bitter Dividend, about a widow whose husband had a large holding of a local bank stock. Over the years, through a series of acquisitions, that morphed into a sizeable number of Wachovia shares. The Wachovia dividends provided this widow with 1/3 of her income. That's gone now.

Someone should have told her to diversify--that's the first piece of advice she would have had from any financial advisor. Actually, someone did, but she wasn't persuaded. Wachovia's dividend was too hard to replace, not to mention the significant tax cost of diversification. Her mistakes are her own, and she isn't going to be bailed out.

Stories like that help make the case that professional investment supervision does add value to a portfolio, and should help trust departments make their case.

Will Four of Five High Net Worth Investors Ditch Their Advisers?

According to a Prince and Associates survey cited by Robert Frank in the Wealth Report, four out of five investors with $1 million or more plan to pull money from their investment advisers. Only one such investor out of fifty would recommend her adviser to a friend.

Perhaps Mr. Prince caught high-net-worth investors on a really bad day – and that's not hard this year. But even if the findings are exaggerated, this sounds like a great time to follow Jim Gust's advice and seek new investment-advisory business.

Never thought I'd read this

Without a trace of irony, the NY Times concludes today's morning update on the drop in the DJIA: "Mainland China’s stock markets in Shanghai and Shenzhen are closed this week as part of a national holiday marking the establishment of China as a Communist country in 1949."

A. G. Edwards Redux?

A recent post here expressed regret that Wachovia had ditched the A. G. Edwards name when it acquired that brokerage firm. Now Citigroup is buying Wachovia's banking operations but not Wachovia's brokerage or fund units.

Will we get to see that A. G. Edwards name again?

The Man Who Shut Down Merrill Anderson

In 1977 The Merrill Anderson Company moved from 100 Park Avenue to Connecticut. Before purchasing our building in Stratford, we leased space in Westport. Our quarters overlooking the Saugatuck River were just across the bridge from Westport's library and shops. Real convenient.

Struggling over a particularly balky article one day, I failed to notice an eerie silence had descended until I opened my office door. Save for one lonely figure at the reception desk, the place seemed deserted.

"Where is everybody?"

"They went down to Baskin-Robbins. Paul Newman's at Baskin-Robbins!"

Paul Newman died September 26 at age 83. Aside from possessing the ability to shut down The Merrill Anderson Company at will, Newman was a successful race-car driver and pioneered what we now know as entrepreneurial philanthropy.

Google will take you to all the lengthy Newman obituaries in the major media. This one from the Hartford Courant is notable for including Newman's own whimsical pocket autobiography:

Paul Newman is probably best known for his spectacularly successful food conglomerate. In addition to giving the profits to charity he also ran Frank Sinatra out of the spaghetti sauce business. On the downside, the spaghetti sauce is outgrossing his films. He did graduate from Kenyon College magna cum lager and in the process begat a laundry business which was the only student-run enterprise on Main Street. Yale University later awarded him an honorary doctorate of Humane Letters for unknown reasons. He has won four Sports Car of America National Championships and is listed in the Guinness Book of World Records as the oldest driver (70) to win a professionally sanctioned race (24 hours of Daytona, 1995). He is married to the best actress on the planet, was number 19 on Nixon's enemy list, and purely by accident has done 51 films and four Broadway plays. He is generally considered by professionals to be the worst fisherman on the east coast."

Newman wasn't much for celebrity appearances around Westport. But if you ever wandered into a fund-raising lawn party at the local historical society, you might have thought the guy tending bar looked awfully familiar.

Money Disorders: Are They For Real?

Many Americans appear to take pride in their lack of money smarts. The other day a commercial for a debt-counseling firm felt it necessary to inform listeners that heavy borrowing, aka "excessive use of credit," was a leading cause of serious indebtedness. News to you?

But what if Americans aren't merely acting dumb about money? What if they're neurotic?

How to Treat a Money Disorder in the NY Times makes money manias seem endemic:

Among the problem financial behaviors identified by psychologists in recent years are: overspending, underspending (a k a Depression mentality), serial borrowing, financial infidelity (“cheating” on a spouse by spending and lying about it), workaholism, financial incest (lording money over relatives to control them), financial enabling (throwing large sums at, say, adult children who then are not motivated to support themselves), hoarding, and plenty of guilt and shame around poverty and wealth.

If country music star Wynonna Judd had not sought therapy, the Times notes, she might still own five Harleys instead of two.

Is the notion of widespread mental money disorders, such as overspending or hoarding, overblown? Before you decide, consider this comment on the national credit crisis in today's NY Times:

"Right now, players throughout the system are refusing to lend and hoarding cash…."

Should somebody call Doctor Phil?

The PTA Plan

I agree with Robert Franks, whom JLM quoted below, on the coming storm in providing finacial services to the affluent. Here's the rest of Franks' thought:

It is no wonder that multifamily offices and wealth-management boutiques are thriving. In the coming months, wealthy clients are going to be on a rampage because of the poor performances of many of their investments. Many will rightly blame the conflicts of interest between in-house product manufacturing and distribution to wealthy clients. The wealthy have plenty of choices when it comes to their business.

We believe that trust departments, especially mid-tier trust departments not affiliated with a mega bank, are uniquely situation to capture this business in the coming year. They are local, they are conservative, and most important, they are fiduciaries and proud of it. We are already getting anecdotal evidence of this phenomenon. Trust departments could telescope several years of new business acquisition into the next several months as the financial services landscape is reshaped.

We'd like to help it along. When the going gets tough, the tough start advertising, we like to say. But to undertake a marketing campaign takes too long and it takes too much money and you don't know at the beginning what it will look like at the end. Except that with Merrill Anderson's trust marketing products, none of these objections has any merit.

We'd like to bundle several of our products to sell as an affluent market penetration and realignment package (AMPRP). But I don't care for that acronym. How about the PTA Plan, or Promote Trust Alternatives Plan? Three elements: 1) expansion of in-bank marketing and referral training (our 21 Ways to Spot a Trust Prospect and Contact electronic referral programs); 2) promotion to the public with Trust & Investment Services for You and Your Familiy, 2009 Edition; and 3) outreach to centers of influence, who are being asked right now, "Who should I have handling my investments?" (we offer Estate Planning Studies and Briefs and Estate Planning Report for reaching these key advisors).

Got a better idea for naming the package?

The Battle over Trust Funds for Pets

In Rich Bitch, an Annals of the Law piece in The New Yorker, Jeffrey Toobin uses Leona Helmsley and Trouble to discuss inheritances for pets:

[T]he clear motivation underlying Leona Helmsley’s will—her desire to pass her wealth on to dogs—is more common than might be expected. Pet-lovers (many of whom now prefer the term “animal companion”) have engineered a quiet revolution in the law to allow, in effect, nonhumans to inherit and spend money. It is becoming routine for dogs to receive cash and real estate in the form of trusts, and there is already at least one major foundation devoted to helping dogs.

Leona's love for Trouble was matched, it seems, only by her disdain for almost all members of the human race. Could this be true of others who leave wealth to those who woof?

Trusts departments are thriving!

Trustupdates.com reports that seven out of ten trust institutions experienced revenue growth during the second quarter of 2008, although as a whole the assets under management declined by 4%. Mid-tier institutions, those with assets from $1 billion to $10 billion, did the best. Their growth was 8%, and assets declined only 1%.

Also noted in the report, about one-third of trust institutions are expected to increase their fees in 2008, which may also drive revenue growth.

Remember this number?

It was only last July that the Congressional Budget Office projected the cost of the loan bailout at $25 billion.

At the time I wrote:

Wouldn't that be great, if it really only costs that much to fix Fannie and Freddie? But I think the cost will be well over $100 billion, for which the CBO acknowledges there is a 5% chance.

Now we're up to $700 billion, and there's no reason to have more confidence now than there was in July.

Given the grave scope of the mismanagement, and the extraordinary costs, why isn't someone going to jail over this? Why aren't we even talking about that subject?

Robert Frank's Farewell to Citi's Sallie

In The Wealth Report, Sallie Krawcheck's ouster from Citi inspires Robert Frank to criticize the way today's megabanks run their brokerage and private-banking units:

The key to keeping rich investors as clients is to take the long view, accepting the occasional missed trade today for 20 years of steady fees later.

The “jam and cram” school of investment banking–pushing a financial product that the bank needs to sell rather than one the client needs to buy–is profitable in the short term. But it can be deadly in the long term.

It is no wonder that multifamily offices and wealth-management boutiques are thriving.

Trusts and the Turmoil

In today's Wall Street Journal, Arden Dale looks at how bankruptcies and market turmoil affect trusts and corporate fiduciaries:

A merger boom in the late 1990s resulted in the transfer of many trusts, as the acquiring company assimilated the portfolio of trusts into the one acquired.

Nonetheless, it is very important to monitor a merger or other big change at the corporate trustee. It could lead to "service changes on the ground," according to [Robert Sitkoff of Harvard]. For instance, if a merger results in the trust account being transferred to another manager, that person may be further away, less responsive or "simply less known to you," said Mr. Sitkoff.

As for the market turmoil, the bottom-line advice for trust officers is "reach out to your clients."

Baby Boomers Delay Retirement

Wage slaves thinking of early retirement are thinking again, says The Wall Street Journal.

Are those now about to retire really worse off than those who retired at the end of 1999? Many of those retirees started living high on the hog, believing the dot.com bubble would never burst.

Actually, few potential retirees are affected by the volatility of the stock and bond markets. Most will "retire" by drawing Social Security and working part-time. Less than a quarter of workers age 55 and older have put aside as much as $250,000.

Harvard 8, Yale 4

Harvard's endowment outperformed Yale's for the fiscal year ending last June, 8.6% to 4.5%. Most other endowments would have been happy to settle for either of those returns. During the same 12 months, the S&P 500 lost 13%.

"Portrait of a Wall Street Investment Banker" Sells for $17 Million

As Jim Gust reminded us recently, the contemporary art scene often seems a weird, unfunny joke: "Beanie babies for rich people."

Here's an exception – one of those rare cases when art and reality collide, producing an aesthetic statement of unintended significance and unexpected power. Damien Hirst's pickled shark just sold at a Sotheby's auction in London for some $17 million. Though Hirst originally gave his work a different title, it's real subject is obvious:

Wall Street Investment Banker as a Dead Shark

Wealth managers have the unenviable task of explaining how the financial economy jumped the now deceased shark. See Wall Street's Unraveling for Robert Samuelson's helpful summary. For this month's transition from mortgage-derivitives mess to credit-default-swaps disaster, see the WSJ's Worst Crisis Since '30s.

Death taxes and 9/11

Back in 2001, which seems like another century already, Pendyala Vamsikrishna was a software engineer working in California. His wife, Prasanna Kalahasthi, was a grad student at USC. They had been married just two years.

Pendyala was aboard the American Airlines flight from Boston that crashed into the World Trade Center. He had been returning from a business trip.

Although he was not rich, apparently Pendyala was well insured, so his death created an instant estate. That property passed to his surviving spouse, Prasanna. But she was devastated by her husband's death, and committed suicide on October 17, 2001, less than a month into her widowhood. She left notes explaining that she couldn't endure the pain of her loss.

Income and estate tax relief was extended to families of the terrorists victims. Notably, a reduced federal estate tax rate applied to the estates of those who died from "wounds or injuries" suffered during the WTC attacks of September 11, 2001 and April 19, 1995, as well as those made ill by the anthrax attack in 2001.

Prasanna was undoubtedly another victim of the terrorists. But she did not meet the requirements for the favored tax treatment claimed by her estate, a District Court has ruled. An additional $669,552.68 must be paid to the IRS as a result of Prasanna's suicide, funds that must come from the insurance proceeds paid to her when her husband suffered his fate.

I can't quarrel with the District Court's reading of the law here. There'd be no effective limit to who could qualify for tax exceptions if we let Prasanna's estate off the hook merely because it is a tragic story.

But I do think that cases such as this validate the idea that we are talking about a death tax here. Contrary to what you may read elsewhere, "death tax" is the honest name for this payment, and all the other euphemisms are political marketing.

Thought for the Day

“There is the dangerous cliché in the financial world that everything depends on confidence. One could better argue the importance of unremitting suspicion.”

-- John Kenneth Galbraith

"Value Investing" at Lehman Brothers

Clipped from an April 11 Lehman Brothers newsletter:

We have had a long-standing bias in favor of growth stocks in our global style allocation, and over the past year this has worked out well. However, we now make a case for going overweight deep value and underweight growth ….

From the accompanying report:

Value has Become Synonymous with Financials

A global universe of value stocks has become synonymous with Financials, which now comprise fully 80% of deep value stocks…. This concentration of Financials in the group has reached a peak in the past year (Figure 4).

As such, a view of value necessarily comprises a view on the Financials. We think that the sector will rally from here, that it offers extreme value compared with its history….

Take-away for marketers:

1. In the digital age evidence of investment misjudgments is easy to find, hard to hide.

2. Active investment managers should market their skills with vigor, enthusiasm…and a healthy dose of humility.

O.K. Go ahead and enjoy The Mother of All Mondays.

When the Going Gets Tough

Splashed over page one of the NY Times business section Saturday was this eye-catching graphic. Unlike almost all photos or artwork in the Times, it carries no credit line. So congratulations to Anonymous for summing up the fears and limited wisdom confronting today's investor.
The accompanying article, Ron Lieber's Memo to the Uneasy Investor, includes an off-beat suggestion from Brent Kessel of Abacus Wealth Partners:

Mr. Kessel said that if he were an estate-planning lawyer, he’d be calling clients right now to get them to address any half-finished paperwork. “Market corrections are just a foreshadowing of what death is going to feel like,” he said. “We’re all trying to avoid death. That’s what we’re wired to do as human beings.”

Trust and investment pros wishing to follow that advice should check out this WSJ item on the growing use of Directed Trusts by business owners and real-estate developers (good luck, guys!).

Money, Money, Money (and Lawyers)

The Enron settlement gives $7.2 billion to shareholders and a record $668 million (plus interest) to lawyers.

Law firms don't do quite that well with trust and estate cases. Still, billable hours can add up over the years. Gerry Beyer on his blog notes that squabbles have swirled around the estate of Tom Carvel, the soft ice cream king, ever since his death. That was back in 1990. Legal fees to date: $28 million.

The End Is Nigh?

Could Rupert Murdoch have lost his touch this late in his career? Seems an unpropitious time to launch yet another "luxury" periodical. Excessively conspicuous consumption is so last year. Yet here it is: WSJ. the magazine.

Need more extremely expensive wristwatches? How about a $5,100 stainless-steel cellphone? Doesn't your favorite bitch deserve a $10,000 canine wedding dress?

WSJ. isn't all bling bling. Designer Roland Mouret usefully points out an alternative to the hemline theory for predicting the stock market's ups and downs:

[Y]ou can trace socioeconomic trends to shoe heights. Look at the sudden resurgence of flat shoes. The market is diving, so are shoe heights.

The DJIA plunged 280 points today. Beware of more women wearing flats and sandals.

The Battle for Mrs. Astor

British writer and art historian John Richardson mingled with New York's wealthy as head of Christie's U.S. operations in the 1960s and as vice president of the Knoedler gallery in the 1970s. That background allows him to enliven a detailed retelling of the Brooke Astor saga in Vanity Fair.

It's not a pretty story – but, given the circumstances, perhaps an almost inevitable one.

Rothschild's Recipe for Wealth

“It takes a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.”

– Nathan Meyer Rothschild, 1834

Go North, Young Wealth Manager

Investment advisers who sincerely want to be rich need new clients with new money. Where to find them? North Dakota!

Oil boom is changing the landscape and finances of North Dakota, writes Phillip Sherwell in the Telegraph. America's newest Black Gold Rush is gushing millionaires. What's more, "America's least-visited state is one of just three with a budget in the black - a surplus of $1 billion for its 635,000 residents."

$10 billion for irrevocable inter vivos trusts in 2005

The summer issue of the IRS Statistics of Income includes an analysis of the 2005 gift tax returns. You might think that no one would make taxable gifts when there's a chance that the federal estate tax could be repealed (the chance was much better in 2005), and you'd be almost right. Just over $40 billion in gifts were reported to the IRS, with 97% being not taxable for one reason or another. Still, gift tax collections came to $1.7 billion from 7,664 federal gift tax returns (more than 260,000 gift tax returns were filed overall).

One quarter of the transfers were in trust, or about $10 billion. Most of these, $2.8 billion worth, were simple trusts that pay all their income each year to one beneficiary. Marital trusts were lumped in with personal residence trusts and generation-skipping trusts, and so are not included in that figure. Charitable split-interest trusts came in just under $1 billion.

More women filed gift tax returns than men.

A concrete example of disinheritance rage

Following up on JLM's observation below, here's the New York Post's coverage of the ugly publicity that has emerged over the estate of Jerry Orbach.

Don't miss estate attorney Joel Schoenmeyer's take on it.

Disinheritance Rage

Where there's a will, there's a war, reports Olivia Gordon in the Telegraph:

Lawyers from across Britain have told the Telegraph that they are handling ever-increasing numbers of will contentions. One northern firm, Brabners Chaffe Street, has reported a 200 per cent rise in the number of contested wills in the past three years alone.

While some solicitors cite high property prices, which make an estate well worth fighting over, others put the trend down to our newly litigious society and the fractured nature of modern families.

Similar trend in the U.S.? Seems likely. Even Trouble, Leona Helmsley's canine heir, couldn't hang on to most of her millions.

“Subprime” Takes the Gold

Subprime was voted the word of the year by the American Dialect Society, writes Jack Rosenthal in the NY Times Sunday magazine.

Other new terms we reluctantly became better acquainted with in 2007 include:

Liars' loans

Ninja loans (no income, no job or assets)

Jingle mail

And, of course, our personal favorite:

Exploding ARM

Financial jargon is amusing to insiders but utterly baffling to most Americans. When you communicate with clients or prospects, remember the findings of an AARP Financial survey:

Less than one-third of those surveyed said they understood the terms "basis point," "expense ratio," or "index fund" well enough to explain them to a friend or co-worker.

Prepare for poaching

Financial Planning.com is offering a 23 minute podcast called Trusts: The Next Big Thing. From the description:

Certainly you can recommend a reliable attorney to those clients needing such services. A trust company can do much of this work as well. But your clients will surely want the advisor who's led them through asset accumulation to help them through this important process. Are you prepared to be their guide?

How will the trust industry respond to this encroachment? FP points out that two developments will fuel the boom in trust business: the number of affluent household is expanding, while technological advances permit semi-custom service delivery on a mass basis. They state that the average trust has fallen from $5 million to $1 million (I remember when that was the minimum at many places, not the average)

Paine Webber Redux?

Reeling from derivatives losses and tax-shelter scandals, UBS ponders breaking itself up. At Investment News, Evan Cooper wonders if that could mean the return of Paine Webber, the venerable wirehouse UBS absorbed not that many years ago. Cooper also offers another reminder that in the financial industry, big can be bad:

The UBS problems just prove the hubris inherent in the idea of a worldwide, universal financial institution that can lend, underwrite and advise, all under one roof. Sure, you can get such creations to work, but why? The gigantic, ponderous beasts aren’t necessarily all that profitable and can create problems of international proportions.

In finance, as in so many businesses, smaller is often better. In the case of UBS, it’s why selling or spinning off the U.S. retail business (that is, PaineWebber) could work.

Maybe Nest Eggs Really Are "Worthless"

Last month we told you what the founder of The Merrill Anderson Company, an old Yankee, thought about nest eggs: "Chicken farmers can't afford to leave real eggs in the nests. They use fake eggs. Nest eggs are worthless!"

Maybe he had a point. In his 1967 Wall Street classic, The Money Game, George Goodman writing as Adam Smith tells this story:

Mr. Smith said to [his wife and children], "Our family owns IBM, which is the greatest growth company in the world. I invested twenty thousand dollars in IBM and that twenty thousand has made me a millionaire. If something happens to me, whatever you do, don't sell the IBM." Mr. Smith himself never sold a share of IBM. Its dividends were meager, naturally, and so Mr. Smith had to work hard at his own business to provide for his growing family. But he did create a marvelous estate. ***

Mr. Smith died; the IBM was divided among his children. The estate sold only enough IBM to pay the estate taxes. Otherwise the children—now grown, with children of their own— followed their father's dictum, and never sold a share of IBM. The IBM grew again, made up for what had been amputated to pay estate taxes, and each of the children grew as rich as Mr. Smith had been…. They had to work quite hard at their own businesses, because their families were growing and their only money was in IBM. Only one of them even borrowed on his IBM, to get the down payment for a heavily mortgaged house. And the faithful children were rewarded by seeing IBM multiply and grow. ***

The Smiths are now in their third generation of IBM ownership, and this generation is telling the next, "Whatever you do, don't sell the IBM." And when someone dies, only enough IBM is sold to pay the estate taxes.

In short, for three generations the Smiths have worked as hard as their friends who had no money at all, and they have lived just as if they had no money at all, even though the various branches of the Smith family all put together are very wealthy indeed. And the IBM is there, nursed and watered and fed, the Genii of the House, growing away in the early hours of the morning when everyone is asleep.

IBM truly was an investment colossus in those days. Imagine Google, Apple and Amazon rolled into one. Only the crash of 1987 dispelled the stock's aura of invincibility. (Hope the Smiths didn't sell; by the late 1990s their IBM wealth would have multiplied again.)

The first IBM PC, 1981. Photo via Wikipedia.

Many Fail to See Humor in ‘I Am Rich’

When Jim Gust rants about art, you know something's up. Something about Apple, perhaps?

Ah yes! The New York Times reports a to-do over one of the iPhone applications that Apple encourages developers to write. Apple distributes the apps, typically costing next to nothing, at its iTunes app store.

But this particular app, created by Armin Heinrich of Germany, cost $1,000. When downloaded to an iPhone, it displayed the image of a multi-faceted ruby and broadcast the message, "I am rich." That's all.

“I found that some users complain about prices for iPhone applications above 99 cents,” Mr. Heinrich said. “I regard it as art."

Apple, it seems, was not amused.

Financial Health Club for the Emerging Affluent

Citigroup has launched myFi, hoping to create a "financial wellness" service for the emerging affluent. Initially, Smith Barney clients with less than $250,000 will be encouraged to move their accounts to the new myFi call center, where they will be served by salaried advisers rather than commissioned salespeople.

Ultimately, Ron Lieber writes in the NY Times, Citigroup's wealth management unit envisions MyFi as something of a financial health club:

The idea is to use the Web, along with call center teams that will be led by certified financial planners, to help people make sense of and then improve their entire financial lives, not just their investments. The catch? You may have to be willing to pay a monthly subscription fee.

MyFi uses a “wellness” theme in its pitch. Plenty of people pay $50 or $100 a month for gym memberships or personal trainers. Shouldn’t it be worth that much to keep your finances in shape, too?

At NetBanker, Jim Bruene notes that a long-time Wall Street Journal columnist will play a role in the new venture:

myFi's director of financial advice is Jonathon Clements, a long-time Wall Street Journal personal finance writer who recently left the paper. If he can instill his pragmatic personal finance outlook to Citi's offering, it would help differentiate it from similar offerings.

Ron Lieber writes that myFi is "is still working out the extent to which it can act as a fiduciary, the standard for someone who always acts solely in the client’s best interest.

"MyFi intends to be a fiduciary as far as client investments are concerned. What isn’t yet clear, however, is how far it has to go to be a fiduciary when, for example, advising someone who needs a new mortgage."

• • •

"Darling, guess what. I'm a little bit…fiduciary!"