NEWSWIRE: 8/20/18

  • Fidelity has rolled out no-fee index funds, an industry first. Expense ratios across the industry have been edging closer to zero for some time; the fact that Fidelity won the race, given its historical association with expensive star money management, is the bigger surprise. (Bloomberg Businessweek)
    • NH: Totally shrewd move by Fidelity--what's called, in supermarkets, the loss leader strategy. In fact, Fidelity generates nearly all of its earnings growth (which remains very healthy) from sources other than fund management fees--e.g., from overseeing DC pension plans, providing financial advisory services to high-end families, and acting as custodian for myriad small funds. Rather than keep championing the actively managed fund, a battle it is obviously losing to passive indexers like Vanguard, Fidelity is marking its own index down to zero to get people in the door and onto its vast platform. The move will also help its brand. During the Magellan Fund's heyday, Fidelity forged its reputation among Silent and Boomers entering midlife as active management that's worth the price. Today, Xers entering midlife don't want to pay anything to fund "middlemen" and Millennials love the idea of investing by algorithm. So by embracing "zero," Fidelity may be able to realign itself with the new generational lineup. Long term (see: "Once Again, A Nation of Savers"), the entire investment industry is going to have to derive more of its margin from personal services and less from a commoditized promise to the average saver that it can beat the average return.
  • Parents are growing frustrated with Millennial kids who would rather spend money on houseplants than on starting a family. Some are even attaching strings to future financial assistance: “If you want to use my hard-earned money to have kids, I’ll turn the faucet on full-blast. But if you’re using the money to buy yet another Epipremnum aureum, I’m cutting you out of the will.” (The Wall Street Journal)
    • NH: Joe Queenan (the author) has a long reputation for writing sardonic parodies. So when I first read this piece, I thought, OK, here's Joe doing a send-up of Millennials. I would like to trust the WSJ that this is genuine reportage. I really would. One Millennial reader had an apt reply: "Leaf us alone."
  • Companies are incorporating AI tools into the hiring process. This decision is a double-edged sword: While AI hiring could eliminate potential biases, diminishing the human role in the hiring process may mean missing out on a candidate high in intangibles such as emotional intelligence and cultural fit. (Cassandra Report)
    • NH: This trend toward robotic "optimized hiring," first introduced by Silicon Valley Xer managers, is spreading rapidly. (See: "Putting Job Seekers to the Test.") HR personnel save on expensive interview time, and the whole multi-tier hiring process is shepherded by AI-Big Data algorithms that promise to optimize employer-specified target attributes. Want friendliness? Want curiosity? Want conscientiousness? The algorithm will screen to give you whatever you want using questions having no apparent right or wrong answer. (Sample questions: Have you ever fantasized about being famous? Do you know why stars twinkle?) Millennials, who apparently have an infinite tolerance for endless and repetitive testing, don't seem to mind this new approach. As customers, after all, they are already used to dealing with companies through chatbox simulators. (See: "Ex Machina: Empathy.")
  • Reporter Robert Weisman explores religious and spiritual fluidity among Boomers. Many are returning to the traditions of their youth while also incorporating elements of different faiths: “I’m open to wherever...meaning may come from. I consider myself a lover of God and a lover of Jesus. I’m also a lover of Buddha, Mohammed, and Moses.” (The Boston Globe)
    • NH: Ever since they came of age as political radicals, hare krishnas, born-again Christians, or just outlaw easy-riders, Boomers have earned their reputation as questers for ultimate answers. In our "Fourth Turning" paradigm, they belong to the "Prophet" archetype--a generational personality that only arrives once every 80 or 90 years. Wade Roof, who wrote the definitive book on Boomer attitudes toward religion ("A Generation of Seekers: The Spiritual Journeys of the Baby Boom Generation"), says Boomers practice "serial orthodoxy," always moving from one fervent conviction to the next. Roof wrote his book in the mid-1990s. If he were re-writing it today, he would have to discuss how these journeys are continuing to transform Boomers as elders. Yes, there are the downsides--the strong Boomer urge to experiment and their weak social ties, as evidenced by surging rates (in their age bracket) of drug use, depression, divorce, and living alone. But, as this article points out, there is also the endearing side: Has any other generation ever tried so hard and so earnestly to figure the universe out?
  • Millennials now make up 24% of the nation’s unpaid caregivers, a share that has risen slightly since 2009. Given the continued aging of Boomers with high rates of chronic diseases like Alzheimer’s, this share will undoubtedly continue to rise. (The Wall Street Journal)
    • NH: As the figures below show, Boomers are today by far the most imposed-on generation of unpaid caregivers. Their parents, Silent and G.I. elders in their mid-70s and older, are in the phase of life most afflicted by disability and chronic disease. But both Xers and Millennials are beginning to share this burden.

Fidelity "Wins" the Race to Zero-Fee Money Management. NewsWire - Caregiver

  • Comcast is reportedly considering a streaming service that would pay you to watch NBCUniversal programming. This bold move to gain market share and catch up to streaming giants like Netflix illustrates the dire state of the pay-TV business. (Fast Company)
  • To stand out from the competition, Virginia-based homebuilder Miller & Smith is catering to Gen-X buyers. Its signature community is within walking distance to schools and includes dozens of customizable upgrades and optional rooms in order to accommodate multigenerational setups with kids and grandparents. (Builder)
  • A new study finds that nearly two-thirds of New York City residents who drive for a ride-hailing service do so full time. Instead of serving as an income supplement, the gig economy may be driving up economic inequality: Fully 54% of the drivers surveyed are responsible for earning the majority of their family’s income. (The New York Times)
    • NH: This NYT essay trumpets the findings of a study by the New School's Center for New York City Affairs, which in turn conveniently supports the move by NYC mayor Bill de Blasio to cap Uber driving in New York City. So this is how the empire strikes back! The taxi industry's support of de Blasio has paid off. One justification of the cap is midtown congestion in the city. Yes, congestion is a huge problem--so, mayor, why don't you deal with it rationally by (a) improving the city's decrepit mass transit system and (b) imposing, like London, a congestion charge on drivers during peak hours? Ever heard of working with markets, Bill? Another justification is the immiseration of drivers who (says the report) don't earn enough: 90% are young male immigrants with little education; many have children to support. So preventing them from working will improve their situation? Out of sight, out of mind for the traditional Democratic city pol. Sure, a minimum wage may or may not be a good idea. But if it is the way to go, why not impose it on all New Yorkers--not just those who compete with taxis? Since Uber and Lyft experience roughly 25% yearly turnover, this cap could bite soon. Stay tuned.
  • A record share of Americans (30%) say drug abuse has caused trouble in their families, an increase undoubtedly tied to the opioid crisis. Yet the shares who say the same about smoking and drinking have also risen even as rates have fallen steadily, suggesting that overall societal concern about substances is what’s changed as well. (Gallup)
    • NH: With drug overdose fatalities hitting a new high in 2017, the rising Gallup figure for drug abuse should be no surprise. The continued high figures for alcohol and cigarettes (even though the prevalence of both has been declining) is a bit more puzzling. One explanation may be the "aging" of the impact of these behaviors. Younger generations may be smoking less, but the generations who smoked the most (G.I.s, Silent, and to some extent Boomers) are now at the age where smoking takes its most conspicuous health toll--and the whole family is there to watch. Ditto for drinking. Millennials are drinking less, but many have Boomer parents who are drinking more and who are suffering the health consequences thereof.
  • In a new op-ed, writers get nostalgic about the good old-fashioned wallet. The dawn of the cashless payments era threatens to render this handy item obsolete: “If my tattered leather bifold can last a few more years I won’t have to worry about finding a new one. Everything inside it will fit neatly on my iPhone.” (The Wall Street Journal)

              DID YOU KNOW?

              U.K. Millennials Go Dry. We’ve written about how U.S. Millennial teetotalers are upending the old stereotype of the young adult barfly. (See: “Where the Wild Things Aren’t.”) Now, the same trend is emerging across the pond, where Millennials are enjoying booze-free hangouts and “dry” social events. Last month, more than 1,500 people flocked to east London for the Mindful Drinking Festival, an afternoon of alcohol-free beer tastings, “mocktail” master classes, and live music. In Britain, 16- to 24-year-olds are now less likely to drink than any other age group, which has earned them the nickname of “Generation Sensible.” A confluence of factors is dampening alcohol consumption among U.K. Millennials. Cost is one consideration: The Institute of Alcohol Studies attributes much of the decline in underage drinking to rising prices and falling disposable incomes. But the bigger explanation is a shift toward health consciousness. According to magazine editor Rosamund Dean, while previous generations idolized Britain’s boozy culture, “These days, it’s the wellness movement that is the aspiration thing that everyone wants to be a part of.”