Notes from the Schwab Conference

The annual Schwab IMPACT Conference always provides financial advisors with a great learning experience. The recent event in Chicago was no exception. Please read on for some fascinating insights shared by this year's incredible speakers.

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When Technology Becomes Dominant

I checked Facebook this morning, bought a book on Amazon last week, and used Google throughout the day. My guess is that your experiences are similar. How have these technologies come to play such an integral role in our lives?

Digital technology allows market dominance because it makes capacity constraints irrelevant -- "a single producer with a website can, in principle, fill the needs of millions or even billions of customers." So argues the authors of the book "The Second Machine Age."

Brick-and-mortar businesses incur significant costs in expanding and maintaining a large footprint. Facebook can serve a good portion of the planet with ease. The next participant adds nothing much to Facebook's expenses. Technology allows Facebook to operate with under 20,000 employees; General Motors has 200,000. (I looked it up on Google.)

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Beer, Detroit and the Importance of Spending Less

We all know that saving money is critically important to achieving a successful retirement. The opposite side of saving more is spending less. Spending less has benefits above and beyond the ability to increase savings. 

Watch the video to find out the other advantages of spending less. You'll also find out how two of my favorite subjects -- beer and Detroit -- relate to this topic.

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Beyond Immigration -- The Importance of Migration

The divisive debate over the United States' immigration policy continues unabated. The question of who we let in our borders tends to obscure another matter that deeply impacts our economy -- the significant decline in how freely people are moving around within our borders. As a recent article in the Wall Street Journal put it: "The drop in mobility is not only keeping rural residents from climbing a ladder to better livelihoods, it is choking off the labor supply for employers in areas where jobs are plentiful."

The United States has seen a number of large migrations to places where economic opportunities existed. "The Grapes of Wrath" -- a high school favorite for English teachers -- describes in stark detail how people left the Dust Bowl of Oklahoma (due to a severe drought) to seek employment in California. I witnessed the impact of mass migration growing up in Detroit. Many of my neighbors were from the South, having left an agriculture-based economy to work in the auto factories and the businesses that arose around them as the result of the corresponding prosperity.

The mobility of the U.S. population is the lowest it's been since World War II according to the Wall Street Journal. The situation is striking because many rural areas and small towns are "in an economic funk brought on by the decline of manufacturing and farm consolidation." A troubling aspect of this situation "is that while lots of struggling residents see leaving as the best way to improve their lives, a surprising share remain stuck in place." 

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Amazon.com, Morocco and the Fluidity of Price

You probably wouldn't be surprised if a vendor in a centuries-old Moroccan souk (market) began bargaining with you over an item. But when you go on Amazon to buy pumpkin-pie spice for Thanksgiving, you expect to be paying a fixed amount. You don't consider the web to be a North African bazaar. It may, however, becoming one.

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