Recession coming? Consensus Points to “When” not “If”

Rick Telberg (@CPA_Trendlines) and I did a quick show of hands at last week’s @Accounting Show in New York. To begin our presentation, we asked audience members if they thought we were heading into a recession. More than half the hands shot up immediately and a few more were raised tentatively. That aligned with our 2019 CPA/Wealth Advisor Confidence Survey™ which found that almost half (47%) of the 300 financial advisors who responded expected a recession within 12 months--up from 33 percent who felt a recession was imminent at this time a year ago.

On Friday, the Commerce Department reported that GDP rose by only 2.1-perent in Q2, down from the first quarter’s 3.1 percent. It was the weakest quarterly increase since Q1 of 2017 when President Trump first took office. Further, the Federal Reserve Bank of New York’s recession probability chart indicated a 30 percent chance of a downturn over the next 12 months, up from 10 percent early this year. Experts say the Fed’s probability chart is heavily influenced by the inverted yield curve.

While it’s not time to run for the hills and stuff your money under a mattress, it’s pretty sobering considering the current economic backdrop: Unemployment is supposedly at lowest level since Neil Armstrong man first walked on the moon. GDP growth remains positive and stocks are just about at their all-time high--up 50 percent since 2016.

Yes, we’re savoring the longest bull market and longest economic expansion on record. But, as any gambler or elite athlete will tell you, winning streaks never last forever.
Bob Doll, chief equity strategist and senior portfolio manager at Nuveen wrote in Financial Advisor last week, that stocks are up by double digits this year, as the S&P 500 Index has climbed nearly 19 percent. “The end of the second quarter marks the fourth time that index has been trading in the 2,950 range over the past 18 months (after previously reaching this level in January 2018, September 2018 and May 2019). That means stocks really haven’t gone anywhere in a year-and-a-half,” noted Doll.


And then there’s the the yield curve, which inverted earlier this year. Yield curve inversions don’t cause recessions, but inversions have preceded every single one of the last seven U.S recessions. In fact, the inverted yield curve signaled both the 2001 and 2008 recessions about one year in advance.

Matt Topley, chief investment officer at Fortis Wealth in Valley Forge, PA told me that recently while the stock pullback at the end of 2018 was a buying opportunity, “we are now in a more precarious situation.” He said the inverted yield curve should not be ignored, “and our economy is running out of qualified workers as the jobless rate settles below 4 percent. “Amazingly we have not experienced inflation despite such a historically low unemployment rate, so the stock market continues to rise,” added Topley. That being said, he is cautioning investors to prepare mentally for “recession-size drawdowns in equities in the range of 30 to 40 percent,” but to be aggressive when stocks are on sale.

Meanwhile, The Economist’s R-word index (number of times national financial journalists have been mentioned the word recession ticked up at about the same time. Today, the yield curve suggests that a recession may be imminent, and America’s leading newspapers are discussing recessions more often than at any point since 2012, although Topley says to “ignore the headlines and doomsayers, especially as elections approach.”

Timing is the real challenge

Traditionally, we had to wait for the National Bureau of Economic Research (NBER) to announce a recession after we’ve already been feeling the pain for a, or wait for the Commerce Department to confirm that GDP had declined over the last two consecutive (completed) quarters. That’s like finding out over Halloween that it was a record heat wave in August. It’s certainly not helpful for policymakers, or more importantly for people losing their paychecks or trying to keep their businesses afloat.

As The Brookings Institution reported last month: “The NBER announced the Great Recession in December 2008, a full year after the recession started—far too late to initiate a timely monetary or fiscal policy response.” Brookings, says it’s important NOT to focus on the unemployment rate itself, but on rapid increases in the jobless rate.

Not all jobs created are worth taking

Here at HB, we’ve long been skeptical of the historically low jobless rate, because wage growth has been so meager during this 10-year expansion and because many of the newly created jobs during have been in the low to midrange of the wage scale. In fact, the Labor Depart says almost of one-fourth of those who are out of work have been looking for over six months. The standard measures of unemployment do not count the millions who are back in the workforce, but at a fraction of their former salaries. The stats don’t take into account millions of gig economy workers (young and old), plus mid-career and older professionals who are consultants and contract workers who are doing okay, but who’d rather be employed somewhere full-time with benefits.

The Brookings folks seem to agree with us: “Of course, changes in the national unemployment rate do not tell us everything we might want to know about the health of labor markets. In particular, they do not capture the extent to which workers have left the labor force or are under-employed, both of which are important for understanding the degree of labor market slack,” reported Brookings.

Recession at a 4.1% jobless rate?
As economist Claudia Sahm wrote in a new Hamilton Project at Brookings and Washington Center for Equitable Growth book, if the unemployment rate (in the form of its three-month average) is at least 0.50 percentage points above its minimum from the previous 12 months, then the economy is already in a recession. Still skeptical. Well Sahm’s Recession Indicator has never called a recession incorrectly since 1970 and is usually four to five months ahead of any other credible economists or analysts.

See helpful charts here courtesy of Brookings.

According to Brookings, the unemployment rate in November 2000 was 4.0 percent and by June of 2001, it was had edged up to 4.5 percent. While 4.0 or even 4.5 percent are low unemployment rates by historical standards, a recession had in fact begun in March of 2001, and the unemployment rate continued to rise rapidly. The Sahm indicator called this recession at the beginning of July when the unemployment data for June was released.

So here we are at a half-century low jobless rate of 3.6 percent. Whether you agree with that number or not, if the unemployment rate rises to 4 percent (still extremely low by historical standards), the Sahm index suggests a 76 percent likelihood of recession and if the jobless hits 4.1 percent – just half a percent higher than today—there’s a 97 percent likelihood of recession in the coming months.

Housing hiccups

There are also a number of sobering housing indicators suggesting it’s not a matter of “if,” but “when.” See William Emmons’ Recession Signals: Four Housing Indicators to Watch in 2019. Emmons is an assistant vice president and economist at the Federal Reserve Bank of St. Louis and the lead economist for the Bank’s Center for Household Financial Stability. “Data on single-family home sales through May 2019 confirm that housing markets in all regions of the country are weakening,” wrote Emmons. “The severity of the housing downturn appears comparable across regions—in all cases, it’s much less severe than the experience leading to the Great Recession, but similar to the periods before the 1990-91 and 2001 recessions.”

Last week, Senator Elizabeth Warren (D-Mass.) published a scathing Medium post entitled "The Coming Economic Crash--And How to Stop It." The Democratic Presidential contender pointed the finger at manufacturing slump and recklessly high levels of corporate debt—akin to the junk mortgages we saw during the global financial crisis.

“The overall numbers about GDP or the stock market are great, but they don’t reflect the lived experiences of most Americans,” Warren wrote. “Wages haven’t gone up in a generation and yet the cost of housing, the cost of health care, the cost of childcare, the cost of sending a kid to college have all gone through the roof. The middle class squeeze is real and it has gotten tougher for people over the last few years.”

Finally, a Gallup poll found that even as Americans‘ approval of the overall economy have risen, anxieties about their own personal finances have remained largely the same over the last few years.

Conclusion

Bottom line: you can’t stop a recession any easier than you can hold back the ocean. But you can make a real difference in your clients’ lives by helping them manage their finances and personal dreams when economic prosperity hits is next inevitable speed bump. For more about what your peers think about the economy, the recession and their own firm’s growth prospects, see my recent presentation of the 2019 CPA/Wealth Advisor Confidence Survey™ with the one and only Rick Telberg @CPA_Trendlines.

# Recession #yield curve #Sahm Recession Indicator  #Rick Telberg @CPA_Trendlines  @Accounting Show  #Matt Topley  #William Emmons

*** Take our latest InstaPoll: To what extent is the Inverted Yield Curve a reliable recession indicator?

Survey: Highest-Performing Advisors Earn their Media Coverage and Bylines

It was great seeing so many of you last week at the NYC @AccountingShow. Here's a link to my presentation about the findings from the 2019 CPA/Wealth Advisor Confidence Survey™ with the one and only Rick Telberg @CPA_Trendlines. Click here for the presentation.

As shown below, the highest performing advisors tend to put the greatest value on public speaking, publishing under their byline and getting quoted in the press. Blake Christian (HCVT) and Kyle Walters (L&H CPAs) have long been regular monthly contributors to Accounting Today.

Guy Baker (Wealth Teams Alliance) was recently quoted in Forbes (New Retirement Bill Is Coming: The SECURE Act -Setting Every Community Up For Retirement Enhancement). Matt Topley was quoted in US News & World Report (8 Types of Passive Investment Risk) and James Nevers (Soundmark Wealth) was quoted in Business.com (Business Insurance: How to Safeguard Your Livelihood).

  

Anthony Glomski, author of the new book (Liquidity & You) also presented at the NYC @AccountingShow with a focus on habits of millionaire CPAs and CFOs.










Cecil Nazareth, author of the new International Tax & Compliance Handbook was across town at the New York State Society of CPAs yesterday for a live presentation and webinar about international tax issues and changes post-Tax Reform. 

Meanwhile, Molly Grubb, author of the forthcoming book Build Your Dynasty will discuss Keys to Entrepreneurship at the LA Accounting & Finance Show next week.

Conclusion

Are you sensing a trend? These influencers make time in their busy schedules to speak, publish and share their knowledge regularly. Like going to the gym, they know that being consistent, working hard and having accountability partners is the only way to get results. They know there’s no secret formula, magic silver bullet or life hack for becoming an instant thought leader. Don’t let anyone tell you there is.

If you’re interested in building your thought leader muscles but don’t know where to start, reach out to us any time. We’re happy to provide you with some complimentary workouts.

# Public Speaking  #Practice Development #Wealth Advisor Confidence #Accounting & Finance Show

*** Take our latest InstaPoll: To what extent is the Inverted Yield Curve a reliable recession indicator?

Survey: Highest-Performing Advisors Do the Most Public Speaking

As we compiled the results of our 2019 CPA/Wealth Advisor Confidence Survey™, we wondered if there were any data points separating the most optimistic advisors from all the rest.  Every type of advisor seems to be more concerned about the economy, the high value of the stock market, the inverted yield curve and Trump tariffs and retaliation than they were at this time a year ago. We also saw across-the-board increases in client outreach and marketing efforts beyond word-of-mouth referrals.

But, when it came to thought leadership tactics, that’s where we started to see some separation. Take public speaking, the highest rated of the 15 thought leadership tactics we asked our nearly 300 respondents about. Two-thirds (66%) of firms that were expecting to grow by 10 percent of more in 2019 found public speaking to be “very” or “extremely” valuable. By contrast, only 60 percent of firms expecting single-digit growth considered public speaking to by highly valuable and only 54 percent of firms expecting flat or negative growth put a high value on public speaking. A similar trend followed for most of the top thought leadership tactics including publishing articles and books, getting mentioned in the press, producing videos, blogging and holding client events and webinars.

It was not until we got into the bottom the rankings that the under-performing firms placed the same value (or more) on lowe-rated thought leadership tactics such as Facebook (15% vs. 12%), Twitter (7% vs. 5%) and Instagram/Snapchat (4% vs. 1%).

Survey co-author Rick Telberg (CPA Trendlines) and I will be presenting our findings at the NYC Accounting and Finance Show on Thursday afternoon at the Jacob Javits Convention Center. Can’t make it to the show? Send me a note if you’d like a copy of the presentation.

If you’ll be at the show this week in NYC or in two weeks in Los Angeles, make sure to catch the presentations of our clients. Anthony Glomski, author of the new book (Liquidity & You) will discuss habits of millionaire CPAs and CFOs. Cecil Nazareth, author of the new International Tax & Compliance Handbook will discuss cross-border transactions post-Tax Reform and Molly Grubb, author of the forthcoming book Build Your Dynasty will discuss Keys to Entrepreneurship.

Are you sensing a trend? They make time in their busy schedules to speak, publish and share their knowledge regularly.

Conclusion

Even if the prospect of a microphone, video camera or podium makes you break out in a cold sweat, you’ve probably got more of a story to tell than you think. As with so many things in life, the more you practice public speaking the better you get. Like many of your peers, over time you may actually start to like it. Speaking is certainly one of the very best way to get yourself noticed and to attract new prospects, strategic partners and talent. What’s not to like about that?

# Public Speaking  #Practice Development #Wealth Advisor Confidence #Accounting & Finance Show

*** Take our latest InstaPoll: To what extent is the Inverted Yield Curve a reliable recession indicator?

Generalists in an Age of Specialization

In today’s hyper-competitive, Amazon-customized world, it’s tempting to think you need to be super specialized in everything you do in order to carve out your niche and build your personal brand.

We live in an age of 13-year-old professional soccer players, 17-year-old Nobel laureates, perfect SAT scores and eight-way ties for the national spelling bee championship because the folks at Scripps who run the bee ran out of challenging words. Conventional wisdom is that to attain genuine excellence in any area — sports, music, science, whatever — you have to specialize, and specialize early: That’s the message. If you don’t, others will have a head start on you.

In a world that increasingly believes you need 10,000 hours of “deliberate practice” to become competent in any type of endeavor, the last thing you want to be is a generalist who’s a “jack-of-all-trades, master of none.”

But wait. David Epstein’s highly acclaimed new book, “Range: Why Generalists Triumph in a Specialized World” takes the opposite view. Epstein argues that “breadth is the ally of depth, not its enemy” and that in many areas of life, generalists are better positioned than specialists to excel.

From sports science and business, to the arts and even the space program, Epstein believes the advantage is increasingly shifting to generalists who have broad integrative skills. These are people who become experts at pattern recognition—recognizing common challenges between industries or disciplines and bringing innovative solutions to bear.

Epstein is an accomplished researcher and storyteller who has ample data and case studies to support his views. Range is not always an easy read, but Epstein provides readers with two important reasons for thinking generalists might have an edge over specialists:

(1) Generalists are better at navigating “wicked” learning environments in which the rules and the playing field are constantly changing and not constrained by narrow boundaries.

(2) Generalists end up with better “match quality” -- the degree of fit between who they are and what they do for a career.

He argues that students who take an interdisciplinary array of science courses are better at thinking analogically; researchers with offbeat knowledge combinations score more “hit” papers; Nobel laureates in science are more likely than their less-recognized peers — 22 times as likely! — to have artistic pursuits outside their field.

Matt Topley, chief investment officer of Fortis Wealth and author of the daily blog View from the Top told me the other day that he has held the following jobs: Newspaper route, YMCA janitor, landscaper, bartender, uniform salesman, hair salon owner, bar owner, stock trader, chief investment officer, partner, chair of endowment committee, chairman of charity board and real estate investor. “Each one of these jobs brought more experience than personal wealth,” recalled Topley. “This wide disparity of occupations has given me an eclectic lens into the working world. More importantly, each and every one of these jobs I held, starting at age 10, gave me important experience dealing with, and managing, people from widely unrelated backgrounds.”

My 85-year-old father is finally pursuing the art career he started in high school. While his canvases sell for a fraction of what he earned during his “career detours” as a chemical engineer and later as a vascular surgeon, it’s the same pattern recognition, spatial relationships and endless curiosity about how things work, that keep him going strong.

Conclusion
We tend to look at the world in black and white terms, but the truth is somewhere in between. Most introverts have some extroverted traits and vice versa. Most generalists have some specialist tendencies and vice versa. What successful people seem to have in common regardless of age, gender, educational background or career path is a commitment to lifelong learning and the courage to get out of their comfort zones time and time again.

# David Epstein #Matt Topley #Henry Berkowitz, MD

Lending Money to Adult Children?

With a three-day holiday weekend upon us, millions of Americans will be fleeing to their beach houses, lake retreats or mountain cabins to kick off the official start to summer. Parades, barbecues and traffic will be the main topics of conversation, but the subject of money (or lack thereof) inevitably surfaces whenever extended families spend time together.

Most parents of means want their adult children to start grown-up life on solid financial footing. They’ll gladly help them with a down payment on a first house, startup capital for a new business, tuition for grad school or assistance with major medical expenses. But, the lines between a loans, gifts and investments are always tricky when the funds are coming from the First National Bank of Mom & Dad.

Recently, several of our clients were interviewed about this topic in the national media. Here are excerpts of the advice they shared:

Blake Christian, CPA, a tax partner at HCVT, LLP in Park City, UT said intra-family gifts can be an excellent way for parents to test their kids’ financial capabilities before they give them larger sums to control.  Even better, Christian said the tax code has many family-friendly provisions. For example, interest-free loans can be made to a family member for the purchase of a personal residence for up to $106,000. Christian also said direct medical payments to doctors, hospitals and insurance companies are unlimited and not subject to gift taxes. Further, “below-market loans can be made to family members – or others provided the rates fall under the IRS’s ‘Applicable Federal Rates’ which are published monthly,” said Christian. For April, annual rates were 2.52 percent for “demand loans” (no specified due date) and loans up to three years and 2.89 percent for loans greater than seven years.

“These types of loans are an excellent way to shift economic benefit to other family members without triggering gift taxes,” added Christian.

Instead of just giving the money away no-strings-attached, Dr. Guy Baker, founder of Wealth Teams Alliance (Irvine, CA) said the family can give or sell assets to a special trust that is set up for the benefit of children. “The trust removes assets from the estate but allows the family members to access the funds for homes, investments and even living expenses,” explained Baker. “The family patriarch can sell assets income tax free or give assets to the trust. Once the trust owns the assets, the income can be distributed to beneficiaries in either cash as income or as loans,” Baker added.

Christian said that loaning funds to kids the right way can enable parents to invest directly in family businesses or family real estate projects while shifting future appreciation to the next generation and avoid triggering gift tax or incurring more future estate tax. For example, a wealthy client recently loaned his daughter $500,000 to invest in a brewery. This allows the daughter to assist with marketing, sit on the board and develop her business skills (and allows her father to oversee the investment).

“If a properly documented loan is made to a family member and the family members ends up not paying the funds back, the lender can claim a business (ordinary loss) or non-business (capital loss) when the loan goes bad,” explained Christian. “Collection efforts must be documented, and the IRS will take a hard look, but the lender will generally be allowed a deduction if their facts are right.”

Conclusion

Remind your clients that making gifts and loans to adult children is always a tricky dance. Just make sure the money transfer has grown-up terms and obligations built in. That way, if the gift, loan or investment goes bad from the Bank of Mom & Dad, it doesn’t disrupt family harmony for years to come.

Enjoy your Holiday weekend. Get some R&R and take a moment to thank those who serve our country.

# Guy Baker #Blake Christian #loans to adult children

HB Clients in the National (and International) Media

While our President may not have a high regard for the conventional media, high performing financial advisors are using it to their advantage. In fact, our annual survey of nearly 300 wealth advisors and CPAs revealed that being quoted in the press is one of the three most effective thought leadership tactics being used today.

Nearly half (46%) of respondents to our 2019 CPA/Wealth Advisor Confidence Survey said being quoted in the press was “Very” or “Extremely” effective for building thought leadership. What’s more, 48 percent of advisors who expected double-digit revenue growth in 2019 told us that media coverage was “Very” or “Extremely” effective for them. Only public speaking and writing articles for publication rated higher.

Top 3 Tactics for Building Thought Leadership

THOUGHT LEADERSHIP TACTIC	Firms Expecting > 10% growth	Expecting single-digit growth	Expecting flat or declining growth		ALL FIRMS
Public speaking and presentations	66%	41%	53%		59%
Writing articles for publication	52%	48%	40%		48%
Being quoted in the press	48%	47%	40%		46%

Source: CPA Trendlines, The Financial Awareness Foundation and HB Publishing & Marketing Company, LLC, 2019

Here are some of the latest wins for HB clients participating in our PR Light program:

• Mark Rioboli (Director of Wealth Management, Independence Advisors, Wayne, PA) was featured in The Jerusalem Post  (18^th Birthday and Financial Independence).   
• Dr. Guy Baker (Founder, Wealth Teams Alliance, Irvine, CA) was quoted twice in US News & World Report over the past fortnight (How 6 Retirees Reached Their Savings Goals) and (How Investors Can Use Tech to Succeed).
  
• Matt Topley (chief investment officer, Fortis Wealth, Valley Forge, PA) was quoted in The Philadelphia Inquirer What are Uber, WeWork and Airbnb worth? Vanguard knows. It already owns shares in these IPO-ready unicorns.

Conclusion

You might also notice from the stats above that firms expecting to grow in 2019 were more likely than firms expecting a flat year to find value in media coverage. You can tweet, post and like till you’re blue in the face, but it’s hard to beat the impact of honest to goodness “earned media” coverage. Contact Us today if you’d like to learn more about our economical media placement service. Remember three of the most powerful words in the English language: “As seen in”!

# Guy Baker #Mark Rioboli #Matt Topley  #Press Coverage  #Thought Leadership

Are Target Date Funds Missing the Mark?

In this age of Amazon and Uber convenience, it’s tempting for many investors to take the “set it and forget it route” when it comes to retirement planning or tuition financing. In fact, defined contribution money managers reported a large jump in target-date assets under management to $1.44 trillion as of Dec. 31, up nearly 31 percent from the end of 2016, according to Pensions & Investments' annual survey.

Whether you call them Target date funds (TDFs), life-cycle funds or age-based funds, the idea is simply to pick a fund that most closely matches your planned retirement date (say 2030), sock away as much as you possibly can while working and let the fund managers do the rest. Sounds nice in theory, but in reality it’s not so easy, as several of our clients have explained recently to the national media.

Dr. Guy Baker, founder of Wealth Teams Alliance (Irvine, CA) said TDFs have been especially impacted by low bond returns. Since the investor or manager has no ability to adjust the funds, a passive investor has been the victim of what is essentially an unmanaged market. “Over time,” said Baker, “the problem should sort itself out, but for older investors, investors counting on return to retire, the eventual recovery may be too late.”

James Nevers, CFP an advisor with our client Soundmark Wealth Management (Kirkland, WA), said a TDF is a great option for most young investors whose savings are nearly entirely in their companies’ 401(k) or other retirement plan. “The issues arise when other assets are factored in due to the non-static nature of the target date funds. For instance, if an investor is trying to maintain a 70/30 stock/bond allocation and has assets in multiple accounts (other IRA’s, taxable brokerage accounts, Roth IRAs, etc.) then the ever-changing allocation in the target date fund is not going to make it easier to maintain their level of risk,” added Nevers. He said TDFs do not make it easy to adjust your level of risk as your unique situation changes. “As long as you are invested in the fund, you are subject to the fund managers discretion on the allocation,” explained Nevers.

Dr. Baker agreed: “TDFs are best utilized by rank and file investors who are unwilling to engage the services of a financial advisor. The TDFs provide a reasonable substitute. For investors who are willing to work with an advisor, it is likely the advisor will provide value over the returns achieved by a passive strategy like TDFs,” added Baker.

Conclusion

If you are going to use TDFs, Nevers said it is your responsibility “to keep an eye on the underlying allocation and ensure that the allocation is specifically what you are looking for.“ Baker said investors can duplicate a TDF fund with a calibrated assortment of equity and fixed. “The problem is percentage allocation. How much should go into which funds? When do you recalibrate? What methodology is used to make these decisions? How much risk are you willing to buy in your portfolio?” posited Baker. That’s where a good advisor comes in.

# Target date funds # James Nevers #Guy Baker #asset allocation  #risk tolerance

HB clients rock the national media in April

Results of our annual CPA Wealth Advisor Confidence Survey™ showed that once again, public speaking, bylined articles and press coverage were the top three thought leadership tactics among high performing advisors. Firms expecting double digit growth in 2019 were significantly more likely to utilize these tactics, than firms expecting single-digit growth or declining growth.

Contact us anytime if you would like a complimentary executive summary of the findings. Here are some recent wins for our clients:

  Todd Flynn, (Soundmark Wealth Management) was quoted in US News & World Report about How to Protect and Grow College Investments.

·         Randy Hubschmidt (Fortis Wealth), Anthony Glomski (AG Asset Advisory) and Blake Christian and Alejandra Lopez (HCVT, LLP) were quoted numerous times in the Resources section of a new Northeast Corridor Opportunity Zone investing site.

·         Kyle Walters (L&H CPAs) is a regular guest columnist in Accounting Today. Here’s his latest Managing Your Gunpowder.

·         Blake Christian was published in Accounting Today about Opportunity Zone Investing.

·         Anthony Glomski published a series of articles about business exit planning in CPA Trendlines.

Conclusion

Calling yourself a thought leader is easy. But doing the mental heavy lifting to write, speak and interview with confidence and relevance takes some work. There are ways to make the process easier and actually enjoyable, but just like a diet or exercise routine you need to be willing to commit.

Contact us anytime if you’d like more information about our introductory PR Light program. Let’s have a great week.

Who Needs A.I. When You Have a Stick Shift?

As the father of two teenage boys, I was intrigued by Vatsal Thakkar’s piece in Sunday’s New York Times: Forget Self-Driving Cars. Bring Back the Stick Shift.

This summer, my sons will be fighting over the use of our 2003 Subaru Forrester—the black bomber with the leaky roof, the passenger side window that never quite closes and the odometer well into the six-figures. Rarely a day goes by when they don’t remind me it’s time to upgrade them to something sensible like a Porsche, Tesla or Maserati (used of course, to save money). At which point I remind them I’ll go car shopping with them when they get a full-time J.O.B.

Besides, numerous studies show that even beat-up Subarus hold up well in accidents—even better if the car has a manual transmission like ours—which keeps the driver 100-percent engaged. Thakkar, a clinical assistant professor of psychiatry at NYU, said: “A car with a stick shift and clutch pedal requires the use of all four limbs, making it difficult to use a cell phone or eat while driving. Lapses in attention are therefore rare.” Apparently our auto insurer agrees.

I would add to Thakkar’s list the following:

• A stick shift significantly reduces the driver’s ability to text.
• A stick shift significantly reduces the driver’s ability to fiddle with the radio dial or sound system.
• A stick shift significantly reduces the driver’s ability to check their hair every five minutes in the rearview mirror.
• Since fewer and fewer cars now come with manual transmissions, a stick shift significantly reduces the driver’s ability to loan the keys to a friend—especially past curfew.

The point is that technology designed to save us from distraction can make us even more distracted. As Thakkar noted, the percentage of new cars sold with backup cameras doubled between 2008 and 2011, but the backup fatality rate declined by less than a third, while backup injuries dropped only 8 percent.
According to a report from the National Highway Traffic Safety Administration “Many drivers are not aware of the limitations” of the technology. The report also found that 20 percent of drivers had become so reliant on the backup aids that they had experienced a collision or near miss while driving other vehicles.

“The fact that our brains so easily over-delegate this task to technology makes me worry about the tech industry’s aspirations — the fully autonomous everything,” related Thakkar. “Could technology designed to save us from our lapses in attention actually make us even less attentive?”

A government study on the driving performance of teenage boys with A.D.H.D. found that cars having manual transmissions resulted in safer, more attentive driving than cars with automatic transmission. “This suggests that the cure for our attentional voids might be less technology, not more,” added Thakkar.

Technology is the future and a key “driver” of innovation, but we can’t let it become all-consuming. From the mishaps with self-driving cars to the faulty software on the Boeing 737 Max 8’s, over-reliance on technology can often turn against us.

Conclusion

I know that several of you on this distribution list are car enthusiasts. I’m sure you’ll agree that driving with a manual transmission is a lot more fun than driving an automatic. It also reduces wear and tear on the breaks and if done reasonably well, will get you better gas mileage.

My boys like to make fun of my clumsy texting, lame emojis and app-nophobia, but when it comes to cars, I’m keeping it old school. Now where can I get my Blackberry fixed?

# Vatsal Thakkar     #AI    #manual transmission  #overreliance on technology #Subaru

Survey: CPAs, Wealth Advisors Increasingly Pessimistic about Markets, Economy

                                                                                                             

CONTACT:
Hank Berkowitz
203-852-9200

Hberkowitz@Hbpubdev.com

FOR IMMEDIATE RELEASE

DC turbulence, Trump tariffs and overvalued stock market leading causes of concern. But, nation’s financial literacy gradually improving

·       Nearly 90-percent expect market correction within 12 months.

·       More than half (52%) say recession is “somewhat” or “very” likely.

·        Highest-performing firms most likely to publish, speak and do media interviews.

·        Wealth advisors are far more optimistic about their growth prospects than CPAs.

·         Millennials are the most pessimistic generation financially speaking.

·         Two-thirds of advisors (68%) believe America’s financial literacy has not improved—point finger at K-12 schools.

Norwalk, CT—March 16, 2019—Despite a record high stock market and historically low unemployment, financial advisors are taking a more cautious view of the financial landscape than they did at this time a year ago. According to the recently completed Wealth Advisor Confidence Survey^™ conducted by HB Publishing & Marketing Company, LLC in association with The Financial Awareness Foundation and CPA Trendlines, seven out of eight CPAs and wealth advisors (87%) expect at least one more stock market correction of at least 10 percent within 12 months--up from 82 percent who felt this way in early 2018. Additionally, more than half of respondents (52%) believe a recession is “somewhat” or “very” likely within 12 months, up from 33 percent of respondents who felt this way in early 2018.

Leading causes of concern were:

1. DC turbulence,
2. Trump tariffs,
3. An overvalued stock market,
4. Fears about continued interest rate hikes, and
5. Long-term doubts about the Trump tax plan.

While more than three in four advisors (77%) expect their firms to grow in 2019, the percentage that expect “double-digit” revenue growth (i.e. more than 10%) in early 2019 declined significantly to 28 percent of respondents from 49 percent in early 2018.

“Accountants are clearly turning bearish on the economic and market outlook,” according to Rick Telberg, CEO of CPA Trendlines Research. “If there’s ever been a time for investors and taxpayers to be listening to their financial advisors, this is the time!”

Nearly 300 CPAs and independent wealth advisors participated in the 20-question online survey between January and early February 2019. No premiums, sweepstakes or other incentives were offered to encourage participants to respond—just pre-publication access to the results.

Most effective advisor communication tools

As was the case in 2018, firms that communicated frequently with clients were more likely than other firms to be optimistic about their growth prospects. As was the case in 2018, the five communication channels that respondents rated “very” or “extremely” effective were:

1.      Public speaking.

2.      Writing articles for publication.

3.      Being quoted in the press.

4.      Publishing books/eBooks.

5.      Hosting webinars.

While respondents said publishing via LinkedIn had some value, most social media channels including Facebook, Twitter, Instagram and Snapchat were rated among the least effective advisor communication tools.

Nation’s financial literacy getting better, but plenty of room for improvement

Only one-third of surveyed advisors (32%) believe America’s financial literacy has improved since the 2016 elections. Nearly half of respondents (42%) believe it has remained stagnant in recent years and more than one in four (28%) believe the nation’s financial literacy is declining. Advisors overwhelmingly state that K-12 schools could make the biggest impact on improving our nation’s financial literacy—far more than any other types of educational, government or religious institutions.

“Unfortunately only 17 states require high school students to take courses in personal finance and not all teachers are financially literate themselves,” noted Valentino Sabuco, Executive Director, The Financial Awareness Foundation and co-author of the survey. “To make the situation even more challenging, many knowledgeable financial service professionals are not authorized to teach K-12 students because they don’t have teaching credentials. But, CPAs, attorneys, CFPs, wealth managers, charitable gift planners and personal investors can still make a substantial difference by joining the Improving Financial Awareness & Financial Literacy Movement,” added Sabuco.

About CPA Trendlines
With more than 200,000 followers, subscribers, and clients, CPA Trendlines is the largest independent community in the accounting profession. Its contributors are experts recognized in the profession as leading influencers, thought leaders, practitioners, professionals and advisors. CPA Trendlines provides exclusive tools, tips, trends, and guidance, plus exclusive research, insights, and commentary on the most pressing issues and fastest-changing trends. The community is dedicated to providing accounting professionals with smarter, faster, data-based decision-making to advance their careers and their organizations.

About The Financial Awareness Foundation
The Financial Awareness Foundation is a 501(c)(3) nonprofit organization whose mission is to significantly help solve a major social problem dealing with the lack of financial awareness and financial illiteracy. The Foundation serves as a nonpolitical “financial awareness advocate” for the general public, the financial services industry, nonprofits professionals and their organizations, educational institutions, municipalities, employers and the news media.

About HB Publishing & Marketing Company, LLC
Established in 1991, HB Publishing & Marketing Company, LLC is a hands-on content marketing and business development firm that helps wealth advisors, estate planners, CPAs, insurance professionals and financial industry associations dramatically improve their client communications, industry visibility, client retention and new client (or member) acquisition efforts. 

www.HBPubdev.com

50 Washington Street, 7^th Floor
Norwalk, CT 06854
(203) 852-9200

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