My first real job involved reading a lot of sell-side research, and I’d regularly call up analysts to get their thoughts on particular stocks, industries, and sectors. I haven’t done much of that in the past four years, and boy does it seem like analyst research has changed.
That’s one thought that occurred to me as I read Bank of America’s latest Thematic Investing research note, which (drawing on the work of Thomas Frey) features a list of ‘unusual jobs’ we may see in the future, including:
Extinction Revivalists: people who revive extinct animals. Gravity Pullers: the first wave of people to unlock the code for influencing gravity. Time Hackers: if we think cyber terrorists are a pain, it will seem like nothing compared to those who start manipulating the time fabric of our lives. Time Brokers / Time Bank Traders: where do you go when you run out of time? Naturally, to the time-bank, and take out a time-loan. Clone Ranchers: raising “blank” humans will be similar in many respects to cattle ranching. But once a clone is selected, and the personality download is complete, the former clone will instantly be elevated to “human status.” Amnesia Surgeons: doctors who are skilled in removing bad memories or destructive behavior.
If some of these jobs seem familiar to you, it might be from science fiction books and movies, in which – and I do want to emphasize this – these experiments do not tend to work out well.
Okay, so some of these jobs sound a little silly. But here’s the research team’s takeaway:
Overall we think many jobs of the future have not been invented yet… However, anticipating these jobs is crucial to allow workers to adapt their skillset with the relevant education for the workplace of tomorrow. In the age of disruption, workers must be prepared and flexible to meet the unpredictable changes in the labour market.
It’s a fair point. Still, I wouldn’t worry too much. If your kids don’t get trained up on the jobs of the future, they can always hire a time hacker to help them give it another go.
Stack vs. silo
Speaking of the future, Bob Veres’ fascinating post ‘The Transformational Decade Ahead for the Planning Profession,’ published by Advisor Perspectives, is well worth reading. One of the topics he addresses is the sorry state of advisor technology:
For the last 20 years, our profession has experienced a slow progression of siloed software (CRM, financial planning, portfolio management, document management), each silo adding new features incrementally.We’re all accustomed to slow progress and more of the same.
Veres goes on to credit Joel Bruckenstein and Spenser Segal with the insight that:
The future tech stack will put all client information in a single data warehouse, with different programs pulling out whatever data is needed for client contacts, online report generation – and for some interesting things that we don’t do now…One example is home mortgages; the advisor’s data center contains each client family’s mortgage rate and monthly payment. The software goes out on the web, pulls in mortgage rates, and a simple algorithm compares what every client is paying with what they could be paying if they refinanced. If the rate could be improved by a certain percentage, the algorithm notifies the advisor, and the advisor notifies the client…The proactive nature of this service, where the software checks for client opportunities, is poised to make advisory firms more valuable to their clients.
And if doesn’t, and you instead end up spamming your client with meaningless information scraped from the bowels of the internet until they’re ready to fire you? Well, then it’s time to call up your local amnesia surgeon.
An heir cut?Dying may soon become less lucrative.
Warren Buffett famously wrote that ‘our favorite holding period is forever,’ and this may indeed be an amiable goal when it comes to shares of good companies. The trouble is that, to quote a somewhat older writer, ‘dust thou art, and unto dust thou shalt return.’ So what happens when our infinite holding period outlasts our finite life?
The answer has long provided an ironic exception to Benjamin Franklin’s observation that nothing is certain except death and taxes: capital assets receive a new basis at the time of death, meaning that the appreciation escapes federal taxation. The rationale for this treatment has to do with an interest in equalizing taxation between community property and common law states (read this paper for the gory details) but it has since become one of the most significant loopholes in the entire tax code.
It’s a loophole that provides outsized benefits to the estates of successful entrepreneurs and executives. Bloomberg reports that when Steve Jobs died, ‘the step-up in basis could have saved his family more than $750m in taxes.’ Looking somewhat morbidly over at Jeff Bezos, Bloomberg notes that his $180bn gains in Amazon shares would escape taxation should he die today – but the bill could be in the neighborhood of $70bn if Biden’s proposal to raise the capital gains tax is passed intact as well.
Indeed, the change would only affect wealthier families, since the first $1m in capital gains are excepted.
Now, there is no guarantee that any part of the proposal will pass. But Morningstar’s Christine Benz writes that the proposal is a ‘wake-up call to take a closer look at highly concentrated positions in your portfolio.’ She also provides the following planning tips, which are worth quoting at length:
In addition, changes to the step-up and capital gains tax rate embellishes the case for fully funding retirement accounts before turning to taxable accounts [since] retirement accounts are unaffected by these changes…Charitable giving of highly appreciated assets is also a way to tax-efficiently divest of assets that have the potential to be subject to higher taxes down the line…Finally, proposed limitations on the step-up underscore the importance of maintaining scrupulous cost-basis records, especially for taxable accounts. While investment providers began to report cost-basis information directly to the IRS in 2010, the onus is on investors to maintain records for assets purchased before that time. If you hold such assets in your portfolio, use the step-up proposal as an impetus to check up on your records and make sure they’re readily accessible to your loved ones.
Indeed, the need to track down how much was paid for certain assets – work which the step-up loophole makes unnecessary – may pose a massive practical issue. As Forbes reported:
It can be difficult to keep track of an asset’s cost basis, which is one reason why the current rule exists... The same is true for dividends and interest that’s reinvested in a portfolio.That may sound daunting, which is why Ed Slott, a certified public accountant (CPA) and well-known retirement expert, is dubious any such bill will ultimately pass.“It’s a tax record-keeping nightmare,” said Slott. “It’ll be impossible to figure out the basis, both original cost and improvements, for Grandma Moses’s home.”
Saving billions is one thing. But avoiding going through your grandmother’s attic? That’s priceless.
This article originally appeared on CityWire.
