What Journalism Has In Common With Stockbroking

I'll dispense with the preamble. What journalism has in common with stockbroking is this:

An old model which was well established and profitable is transitioning with a lot of pain to a new model, which everyone is still trying to figure out.  

The old model was comfortable and cushy (for those at the top). The new model is a major change, culturally, psychologically and commercially, and it is not yet - but one day will be - profitable.

Sira Anamwong/freedigitalphotos.net

Journalism:

Another month in Australia, another horrible rupture for Fairfax. If I was a journalist I would probably write "the embattled Fairfax". After already pruning itself back in 2012 and again in 2013, this week the company announced it will cut the equivalent of 120 full-time jobs from its newsrooms.

That's a lot of journalists. It's hard to imagine the company even has that many jobs left to spare. (And according to staff, they don't).

And I really feel for Fairfax. Not only because I love The Age and am a subscriber who reads it every day, but because I think in very difficult circumstances they have been forging an evolution towards an online model quite well.  

New media is great. But blogs and tweets and news fragments do not fill the gap left by traditional newspapers. New media still needs journalists to write the stories, and "citizen journalists" just aren't as good.




Of course, we will get used to it. Just as we have got used to the passing of great puns in headlines (largely gone in favour of SEO), and elementary grammatical and syntax errors in broadsheet news (now that sub-editing, like everything else, is outsourced to cheap workers overseas). We got used to those things, and the world didn't collapse.

So, there is no choice - citizen journalists it shall be, and the real journalists will find work somewhere, somehow, in this new cacophony. Not all the ones being let go now, unfortunately, but future ones will.

Somehow I don't think either the paid subscription model used by most newspapers and journals online now, or the Buzzfeed model, will be the lasting profitable solution.

I wonder what it will be?

Stockbroking:

Stockbroking has always been a world of boom and bust, but ever since the 2008 crash and the Great Recession that followed (or still follows), it's been all bust. The stockbroking model as it was before then has truly broken and is never coming back. That's probably even a good thing.

Since 2008, it's been impossible to squeeze money out of traditional stockbroking. The margins are too thin; no one wants to pay for brokerage and research when they can get what they need online.

In Australia the ASX has piled more and more compliance obligations on brokers, and ever-higher liquid capital requirements to guard against insolvency collapses. In classic Law of Unintended Consequences style, the result has been an explosion of "shadow brokers" - small and nimble dealing and advisory businesses that range from serious, ethical companies with management and due process, to guys operating out of their loungerooms with, let's just say, less than that.

In the last decade that I worked in broking operations, I watched these companies come and go, the same people moving from license to license and company to company in a never-ending scramble to find some way to make money. Most of these people are straight up, love broking and just want to make money for their clients and themselves - but the landscape is unforgiving.

So now everyone knows the future is "online". The future is "robo-advice" (less risk of non-compliant customer management or advice), and "fintech".

But what is the best kind of company to run? What's the best service to offer: advice to customers, or services to dealers? How do you innovate and create a solution, and not be copied by a thousand imitators with the same access to the cloud that you have?

Time will tell.



I'd love to step 5 years into the future and see what's happening in both journalism and financial services. My guess is both will be profitable, but not exactly in ways people are building them now. The future will come up with something else.



Disclaimer: I work in FinTech and love it.   :)

Great idea!

My daughter M has a cunning sort of cleverness about her that I am sure will serve her well in life. When she uses her powers for good, she comes up with some smart stuff.

Here are three of her recent ideas - two just from today - that I think are pretty good:

• Sweets van:  Like an ice-cream van but selling sweets, like lollies (candy) and cakes

• Digital devices (cell phones, tablets, etc) that are charged by the energy in your body

• A high-powered hot-air fan that dries and warms your body as soon as you step out of the shower

I told her today that she comes up with some pretty good ideas. She said, "Well, that's because I want a lot of things in my life that I don't have."

I guess all inventions come from wanting things that don't yet exist.  The more I think about it, the more I want the third one too.

How to fix financial advice

The financial advice industry is broken. Scandal after scandal has made this obvious.  Where can you go for quality, impartial, appropriate advice? Not this venerable investment bank. Not this retail bank. Not this retail bank either. And likely not anywhere else, unless you accept what seems to be the 50/50 odds that you will get good advice anywhere.

The problem?

Bad apple advisers, yes. But the problem for the industry as a whole?

Complexity, combined with a manual, subjective process.

The world of personal and wholesale financial investment has become too complex for individuals to manage alone, too complex for regulators to police it at the advice level, and too complex for financial advice firms to manage their advisers with the rigor and detail obviously required.

As someone who has worked in broking operations for many years, I can attest that there are, in fact, many good, skilled and decent advisers out there. They work hard for their clients and take pride in their work. But finding them is the problem. If you do not have high net worth, you are not likely to meet them.

I think the solution is to move the industry online, in the way insurance has. More recently, retail legal services have started to move online as well.

Broking already works reasonably well online. Yes, brokerage firms need to be very careful with their algorithms and constant monitoring and tinkering is required. But running a ComSec is a hell of a lot easier and ultimately more viable than running a JB Were.

I see a future - within a very short time, if a royal commission into financial advice goes ahead and accelerates things - where financial products are almost exclusively sold online, and "advice" is algorithm-based. Clients will enter their details and answer a questionnaire to set their profile and financial goals and determine their risk tolerance, and they will be guided towards simplified products that will serve them as well as anything on offer now. Every year, for their investments to continue, clients will be prompted to re-identify themselves and re-assess their investments.  This whole vetting and profile setting process would work much better, and be less risky for firms as well. Compliance obligations around client assent to advice, client receipt of terms and conditions, and client identification are many times easier to manage online, as is record keeping and retention. Algorithms can monitor advisor-client activity and commissions. An iSelect-style model would encourage good competition and keep offerings simple and transparent.

Canny advisers should get in now, work with a web developer and a compliance expert to set up a website, then approach APRA and ASIC and suggest the mutual benefits of support for this product.

It's well beyond time. Retail customers cannot be any worse off than they are at present.

Words for Wednesday: The Recession and the Future

It's been a while since I've done a Words for Wednesday, but this week's words inspired me, and also I can not often resist a rhyming challenge.

'Words for Wednesday' is a writing prompt held by Delores at Under the Porch Light.
Use some or all of the week's words, write a poem or a story or part of a story, and visit Delores' current week's prompt to let her know you've joined in.

This week there were two lists; I chose the rhyming one:

trepidation

stagnation

depreciation

domination

acclimatization

corroboration 

Here is my effort:

The Recession and the Future

The GFC caused wide stagnation

Unemployment, depreciation

The end of the US domination

Of economic occupation

Now things are getting better, slowly

So they say, though here in lowly

Mortal world it doesn’t seem so

Money’s tight and jobs are more so

We read the news with trepidation

Stories lend corroboration

To fears and predeterminations

Nothing seems in moderation

Is it a question of familiarisation?

What’s the secret of acclimatization

To economic deprivation

And social want and dislocation?

We hope for better, kinder days

A future mapped in better ways

We wait and wonder what will follow

When today becomes tomorrow.

Tomorrowland

When I was a kid my favorite ride at Disneyland was It's a Small World, but my favorite of the four lands was Tomorrowland.

Tomorrowland entrance 1967
Tom Simpson/Flickr CC

Tom Simpson/Flickr CC

ATIS547/Flickr CC

Loren Javler/Flickr CC

Loren Javler/Flickr CC

Space Mountain was awesome - and the first proper roller coaster I liked.

The Monorail was kind of cool, though I never really understood the grown-ups' enthusiasm for it.

The People Mover was fun, because it took you past (or through) all the other good stuff.

But my favourite ride in Tomorrowland was the Adventure Thru Inner Space.


I loved every minute of it - from sitting enveloped in the blue, egg-shaped chairs, to entering the dark tunnel and being "miniaturised", even the huge creepy eye "looking" at us through the telescope. For a kid steeped in afternoon reruns of The Twilight Zone, and who loved science and daydreaming, it was perfect.

ATIS547/Flickr CC

I loved waiting in line and seeing the riders go into the telescope and then come out tiny at the other end:

ATIS547/FlickrCC

Yes, on our first time there I asked my parents if those were the real people...

ATIS547/Flickr CC

Recently all this came back to me, suddenly, when I read an article about retrofuturism (you know the sort of thing: The Jetsons, houses under glass domes, meals in pill form, flying cars, etc). That shiny, happy, optimistic vision of the future reminded me of Tomorrowland.

My kids and I often talk about the future, as I started a kind of game with them about a year ago, where we imagine what cool things will exist in the future, and what their lives will be like. We talk about driver-less cars, working whatever hours you want, making meals at the touch of a button, flying to work with a jet-pack, things like that.  It's a lot of fun, and I do think kids should always be excited and optimistic about the future.  Kids these days can sometimes seem cynical and somewhat pessimistic, which may be a function of the times they're living through, or perhaps they always were. We do underestimate how canny kids are after all.

"The Future" by A 

I showed the kids the Corning video A Day Made of Glass on YouTube and they (and I) were in awe. We talked about how their houses in future would be like this, or at least partly like this, and I made no mention of the fact they'd probably have to be rich to have it, or that they might not ever be able to buy a house at all, or that even at best this vision of the future, like all others have ever been, is likely completely wrong.  We do also discuss whether some of these things - like flying cars - will ever really happen, or it they are too impractical, and to what degree we can or cannot imagine the future.

But mostly we just let our imaginations go and talk about what cool, awesome, labour saving inventions they will have when they are grown up.

Kids should see the future as a world of awesome and enriching possibility.

Sunday Selections #174

It's time for Sunday Selections!
Sunday Selections is a weekly meme hosted by River at Drifting Through Life. 

The rules are very simple:-

1. post photos of your choice, old or new, under the Sunday Selections title

2. link back to River somewhere in your post

3. leave a comment on River's post and visit some of the others who have posted and commented: for example:

    Elephant's Child

    Andrew at High Riser

    Gillie at The View From Here

    

Here is this week's collection of orphan photos:

Most evenings the kids spend half an hour or so in their rooms before bedtime, and then I come in and read a chapter of a book to them before they go to sleep.  During the reading, both pets come in to whatever room I'm in and settle themselves somewhere cosy. 

Harry

Tia

After many weeks' dedicated practice, M has mastered the Rainbow Loom, and has learned how to make the more complicated 'charms' via YouTube tutorials:

gymnast

ice-cream sodas

A prefers writing and drawing. After we all watched the Back to the Future movies together last weekend, she drew a picture of "the future".  As you can see, we will have flying cars and hoverboards, but kids will always play with dolls.

The Future