The Financial World's Next Big Thing: Financial Advisors' Daily Digest

by: SA Gil Weinreich

Summary

Heard of blockchain yet? It is likely to revolutionize financial transactions and hopefully reduce my (and others’) tax-filing burdens.

Dollar General’s got some depressing data on Americans' declining incomes, emboldening the low-end retailer to target even upper-middle-class Americans.

Behavioral finance expert challenges idea that retirees can live on just 70% of pre-retirement income, while others argue that “simple math” says they can.

Imagine an unhackable electronic clearing system that eliminates the need for exchanges. Untold billions would be saved in recordkeeping and trades could take place instantaneously without needing three days to clear. That's but a tiny potential gain from "blockchain," a revolutionary electronic spreadsheet that ear-to-the-wall banking analyst Kurt Dew believes will soon make financial transactions easier and cheaper. How soon?

"It is my firm conviction that whether you know it or not, within five years, and possibly as soon as one year from now, you will use blockchain on a routine basis every day."

His you-read-it-here-first introduction to this as yet largely unknown element of fintech gets the mind thinking of possibilities. Just yesterday, at the behest of my tax preparer, I encountered difficulty finding (for purposes of a charitable tax deduction) records of transaction details of a used car I purchased, which I donated in 2015. Reading Dew's report, I could readily grasp that financial reporting headaches like this could be made to disappear with blockchain. What implications do you see?

SA contributor Ian Bezek addresses some important issues in his daily briefing. In particular, he offers an economic explanation for today's highly populist politics in the U.S., whose source of all places is Dollar General (NYSE:DG). The low-end retailer feels it can move up the economic chain to include even the upper middle-class since all but the very wealthiest Americans have faced declining (in real dollars) or stagnating income.

"I'd also note that Dollar General highlighted that 60% of Americans have less than $1,000 in savings. That's really quite an amazing stat. More than half the country is an unexpected medical expense or job loss away from a serious financial crunch," he adds.

On another topic, Bezek offers some thoughtful commentary based on comparative international equity returns, questioning whether it is sensible to bet on stocks for the long run.

Wells Fargo Asset Management, for its part, has some questions about bonds for the long run, specifically warning that investors searching for yield have taken on more risk than intended in the fixed-income portions of their portfolios.

Also of interest to advisors:

A behavioral finance expert writes in The Wall Street Journal that advisors may be misleading people in suggesting they can get by on 70% of pre-retirement income, because the 30% cut in lifestyle would be too traumatic.

Interestingly, AdvisorShares' Roger Nusbaum was one of those who has argued that 70% - or even less than 70% of pre-retirement income is all that is needed. He didn't delve into BeFi, citing "simple math" instead.