This headline from Bloomberg should be rather disturbing to fee-based financial advisors, though it should certainly come as no surprise: “World Wealth Down 11%”

Bloomberg writes,

The 2008 global recession caused the first worldwide contraction in assets under management in nearly a decade, according to a study that found wealth dropped 11.7 percent to $92.4 trillion…  North America, particularly the United States, was the hardest hit region, reporting a 21.8 percent decline in wealth firms’ assets under management to $29.3 trillion, primarily because of the beating U.S. equities investments took in 2008.

This is bad news for financial advisors who get paid based on assets under management.  Read the rest of this entry »

700,000 Americans abandon their traditional landline phones every month, according to the Economist, and roughly 25% of all Americans are “cell phone only.”

We’ve written in these pages before about how technological and demographic changes are fundamentally altering sleepy old industries like newspapers and college text books.  The revolution in telephony, however, is a much bigger deal involving much larger companies and a lot more money.

Like many revolutions, this one is being led by the young.  The chart below makes a vivid point: younger Americans in their 20s and 30s, who generally tend to be highly mobile (bordering on nomadic) have shunned the traditional home phone en masse, opting to use their mobile phones exclusively. In 2008, more than 40% of the “just out of college” age cohort chose not to bother with a home line, and the number has risen every year.

It’s not hard to understand why.  When you move every 6-months, transferring your home phone service can be a cumbersome drag in an era in which Americans are used to instant service.   It’s also uneconomical for a young single person to pay for both home and mobile service, especially considering that young people spend comparatively little time at home.  (Plus, an iPhone is so much cooler than a home phone, dude.) Read the rest of this entry »

Reader’s Digest, that magazine many of us most associate with the waiting room of a dental office, filed for Chapter 11 bankruptcy yesterday, the latest casualty of the worst advertising market in generations.

The Great Recession has hit the advertising industry particularly hard, and by association, the print media industry. Traditional newspapers and magazines make most of their money from advertising, not subscriptions or news stand sales. So, when advertisers quit paying…your favorite magazine or local paper stops making money.

The recession has exacerbated a trend that was already well underway. Internet news sites and classifieds (like Craigslist) have been gradually chipping away at the core consumer markets for newspapers for years. In an age in which information can be blasted around the world instantly, it is simply not economical or sensible to print, sort, and deliver untold tons of paper to the doorsteps of American homes. And it’s not just a problem for local dailies. The venerable Christian Science Monitor — considered one of the best newspapers in the world for its international coverage — decided to cancel its print edition in 2008 because its traditional model as no longer viable– and this was before the financial crisis fully hit late last year. Read the rest of this entry »

Continuing our ongoing commentary on the revolutionary transformation of the school text book industry (see prior post, and August 2009 issue of the HS Dent Forecast), we saw a headline in today’s Wall Street Journal that is worth mentioning: “Textbooks Offered for iPod, iPhones“

The Journal writes, “A provider of subscription e-textbooks for college students is making its 7,000-plus titles accessible on Apple Inc.’s iPhone and iPod Touch as interest heats up in the digital-textbook arena….  The move comes as Amazon.com Inc. is shipping its $489 large-screen Kindle DX e-reader, which is aimed in part at college students. Amazon is overseeing a DX pilot program at seven colleges this fall involving hundreds of students who will experiment with reading textbooks digitally.” Read the rest of this entry »

In the prior post, we wrote “With products like the Amazon Kindle now commercially viable, it’s questionable whether students will be using ‘hard copy’ textbooks at all five years from now. Given the expense of printing, the short time horizon of use, and, frankly, the sheer weight of most textbooks that college kids have to lug around, moving all college texts to digital editions makes a lot more sense over the long run.”

Today in the Wall Street Journal, we see that the long-term may be coming even sooner than we thought: “Amazon’s Kindle to Sell Law Books.”

This is only the beginning, of course.  But consider the potential: practicing lawyers and law students alike can now potentially kiss the late nights at the law library goodbye.  They could instead carry the entire thing with them in their briefcase.  The ease of indexing, bookmarking, and flipping back and forth between text and footnotes make it all the more compelling.And why stop at law books?  Surely doctors and CPAs could benefit from having their medical reference books and tax volumes  on the Kindle.

At any rate, change is coming, and it’s coming even faster than we thought!

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

One benefit of living through a deep recession is that the hard times have a way of spurring innovation.  A rising tide lifts all boats, but the opposite can be said of a falling tide.   During recessions, inefficient businesses and business models either evolve or die.The few exceptions tend to be in “recession-proof” industries like higher education.  But, as we’ve discussed in prior posts, this recession has had a way of rattling industries that have never before been rattled.  

One of these is the sleepy market for college textbooks. Read the rest of this entry »

A headline in today’s Wall Street Journal caught our eye today: “Debit-Card Use Overtakes Credit.”

The Journal writes, “The surging popularity of debit cards largely reflects the growing use of plastic by American consumers.  Credit and debit card purchases of retail goods and services vaulted past cash and checks in 2003.  Now the recession is giving many consumers second thoughts about their credit cards.” Read the rest of this entry »