The $100trn battle for the world's wealthiest people.

"The über-rich hire all kinds of people to make their lives easier. Landscapers maintain gardens, housekeepers tidy homes, nannies raise children. Yet perhaps no role is as important as that of the wealth manager, who is hired to protect capital.

These advisers are scattered across the globe in cities like Geneva and New York, and are employed as fiduciaries, meaning they are required to act in the interest of their clients. As such, they are privy to the intimate lives of the rich and famous, who must expose their secrets so advice may be offered on, say, the inheritance of a child born of an extramarital affair. Advisers also help families allocate investments, stash cash in boltholes, minimise tax bills, plan to retire, arrange to pass down wealth and satisfy unusual wishes. A Singapore-based manager recalls being told to invest a "double-digit" percentage of a family's wealth in "bloodstock horses"—steeds bred especially for racing—a term he hurriedly looked up after the meeting.

For decades wealth management was a niche service, looked down upon by the rest of finance. Now it is perhaps the most attractive business in the industry. Capital and liquidity requirements set after the global financial crisis of 2007-09 have made running balance-sheet-heavy businesses, such as lending or trading, difficult and expensive. By comparison, doling out wealth advice requires almost no capital. Margins for firms that achieve scale are typically around 25%. Clients are loyal, meaning that revenues are predictable. Competition has crushed profits in other formerly lucrative asset-management businesses, such as mutual funds. And whereas the pools of assets managed by BlackRock and Vanguard, the index- and exchange-traded-fund giants, are huge, they collect a fraction of a penny on every dollar invested. A standard fee for a wealth manager is 1% of a client's assets, annually.

Wealth management is all the more appealing because of how quickly it is expanding. The world economy has grown at a decent enough clip over the past two decades, at more than 3% a year. Yet it has been left in the dust by growth in wealth. Between 2000 and 2020 the total stock rose from $160trn, or four times global output, to $510trn, or six times output. Although much of this wealth is tied up in property and other assets, the pool of liquid assets is still vast, making up a quarter of the total. Bain, a consultancy, estimates that the pool will expand from just over $130trn to almost $230trn by 2030—meaning that a $100trn prize is up for grabs. They expect the boom to help lift global wealth-management revenues from $255bn to $510bn.

It will be fuelled by geography, demography and technology. The biggest managers are attempting to cover ever more of the globe as dynastic wealth is created in new markets. Baby-boomers are the last generation that can rely on defined-benefit pensions for their retirement; more people will have to take decisions about how their own wealth will support them. Meanwhile, software is streamlining the bureaucracy that once waylaid wealth managers, enabling them to serve more clients at lower cost, and helping firms automate the acquisition of new ones. These gains will allow big banks to serve the merely rich as well as the über-wealthy. Firms are already climbing down the rungs of the wealth ladder, from ultra-high-net-worth and high-net-worth clients, who have millions of dollars to invest, into the lives of those with just $100,000 or so.

Markus Habbel of Bain sees a comparison to the booming luxury-goods industry. Handbags were once prized for their exclusivity as much as their appearance, but have become ubiquitous on social media, with influencers touting Bottega Veneta pouches and Hermès bags. "Think about Louis Vuitton or Gucci. They have basically the same clients as [wealth managers] target and they increased from 40m [customers] 40 years ago to 400m now," he notes. Upper-crust buyers have not been put off.

Which firms will grab the $100trn prize? For the moment, wealth management is fragmented. Local banks, such as btg in Brazil, have large shares of domestic markets. Regional champions dominate in hubs, including Bank of Singapore and dbs in Asia. In America the masses are served by specialist firms such as Edward Jones, a retail-wealth-management outfit in which advisers are paid based on commissions for selling funds. Only a handful of institutions compete on a truly global scale. These include Goldman Sachs and JPMorgan Chase. But the two biggest are Morgan Stanley and a new-look ubs, which has just absorbed Credit Suisse, its old domestic rival. After acquiring a handful of smaller wealth-management firms over the past decade, Morgan Stanley now oversees around $6trn in wealth assets. Following its merger, ubs now oversees $5.5trn.

This patchwork is unlikely to last. "The industry is heading in a winner-takes-all direction," predicts Mr Habbel, as it becomes "very much about scale, about technology and about global reach". Jennifer Piepszak, an executive at JPMorgan, has reported that her firm's takeover of First Republic, a bank for the well-heeled that failed in May, represents a "meaningful acceleration" of its wealth-management ambitions. Citigroup has poached Andy Sieg, head of wealth management at Bank of America, in an effort to revamp its offering. In 2021 Vanguard purchased "Just Invest", a wealth-technology company.

ubs and Morgan Stanley have grander ambitions. The firms' strategies reflect their contrasting backgrounds, and may in time produce a clash. Morgan Stanley competes globally but dominates in America, and is focusing on wealth services for the masses, as shown by its purchase in 2020 of e*trade, a brokerage platform. James Gorman, the bank's boss, has said that if the firm keeps increasing new assets by around 5% a year, its current growth rate, it would oversee $20trn in a decade or so.

This may be possible thanks to Morgan Stanley's existing scale. In 2009 the bank agreed to acquire Smith Barney, Citi's wealth-management arm, for $13.5bn, which helped boost margins to the low teens from 2% or so in the years before the financial crisis. Today they are around 27%, reflecting the use of tech to move into advising the merely rich. Andy Saperstein, head of the wealth-management division, points to the acquisition of Solium, a small stock-plan-administration firm, which Morgan Stanley purchased for just $900m in 2019, as crucial for building a strong client-referral machine. "No one was looking at the stock-plan-administration companies because they didn't make any money," he says. But these firms "had access to a huge customer base and [clients] were constantly checking to see when the equity was going to vest, what it was worth and when they would have access to it."

Swiss role

ubs is employing a more old-school approach, albeit with a global twist. Having taken over its domestic rival, the Swiss bank has a once-in-a-generation chance to cement a lead in places where Credit Suisse flourished, such as Brazil and South-East Asia. Deft execution of the merger would make the firm a front-runner in almost every corner of the globe. Thus, for now at least, the new-look ubs will focus more on geographic breadth than the merely rich.

In differing ways, both Morgan Stanley and ubs are seeking even greater scale. When clients hire a wealth manager they tend to want one of two things. Sometimes it is help with a decision "when the cost of making a bad choice is high", says Mr Saperstein, such as working out how to save for retirement or a child's education. Other times it is something exclusively available, such as access to investments unobtainable through a regular brokerage account.

Being able to offer clients access to private funds or assets will probably become increasingly important for wealth managers. Joan Solotar of Blackstone, a private-equity giant, says that a quarter of the firm's assets already come from individuals, and most arrive via big banks. Greater scale for wealth managers means greater bargaining power when negotiating with private-markets firms to secure exclusive deals, such as private funds for customers or lower fees. Younger generations, which will soon be inheriting wealth, are expected to demand more environmentally and socially conscious options, including those that do not just screen out oil companies, but focus on investing in, say, clean energy. A decade ago a client would tend to follow their wealth adviser if he or she moved to a new firm. Exclusive funds make such a switch more difficult.

The winner-takes-all trend may be accelerated by artificial intelligence (ai), on which bigger firms with bigger tech budgets already have a head-start. ai could be used to create three kinds of tool. The first would take a firm's proprietary information, such as asset-allocation recommendations or research reports, and spit out information that advisers can use to help their clients. Attempts to build such tools are common, since they are the easiest to produce and pose few regulatory issues.

The second type of tool would be trained on client information rather than companies' proprietary data, perhaps even listening in on conversations between advisers and clients. Such a tool could then summarise information and create automatic actions for advisers, reminding them to send details to clients or follow up about certain issues. The third kind of tool is the most aspirational. It would be an execution tool, which would allow advisers to speak aloud requests, such as purchasing units in a fund or carrying out a foreign-exchange transaction, and have a firm's systems automatically execute that transaction on their behalf, saving time.

It will take money to make money, then. The biggest wealth managers already have hefty margins, access to products their clients want and a head start on the tech that might put them even further ahead. "We are a growth company now," claims Mr Saperstein of Morgan Stanley, a sentence that has rarely been uttered about a bank in the past 15 years. "We are just getting started."

Yet the two giants are both going through periods of transition. ubs has barely begun the open-heart surgery that is required when merging two large banks. Meanwhile, Mr Gorman, the architect of Morgan Stanley's wealth strategy, will retire some time in the next nine months. The succession race between Mr Saperstein, Ted Pick and Dan Simkowitz, two other executives, is already under way. Either firm could falter. Although the two are chasing different strategies, it is surely only a matter of time before they clash. ubs is on an American hiring spree; Morgan Stanley is eyeing expansion in some global markets, including Japan.

And despite the advantages offered by scale, smaller firms will be hard to dislodge entirely. Lots of different types of outfit have a foothold, from customer-directed brokerage platforms, like Charles Schwab, which also offer their richest customers advice from a fiduciary, to asset-management firms, such as Fidelity and Vanguard, which have millions of customers who might seek advice. "Back in the day, when our programme was started, it was focused on how you help people manage their wealth using mutual funds. But the business has evolved," says Rich Compson of Fidelity. The firm's wealth arm, which oversees $1.8trn, also offers advice on ways to use individual securities, exchange-traded funds and alternative investments.

When Willie Sutton, a dapper thief also known as Slick Willie who died in 1980, was asked why he robbed banks, he replied that it was "because that's where the money is". The aphorism helps explain strategy on Wall Street, as firms race to take advantage of the $100trn opportunity in wealth management. Once the business was a sleepy, unsophisticated corner of finance. Now it is the industry's future.” [1]

1. "The $100trn battle for the world's wealthiest people." The Economist, 5 Sept. 2023, p. NA.

 

Šilumos siurbliai rodo, kaip sunku bus atsisakyti iškastinio kuro

  "Jie kabo ant ūkinių patalpų sienų, glaudžiasi virtuvės spintelėse ir knibždėte knibžda rūsiuose. Dujiniai ir alyvos katilai bei krosnys jau ne vieną dešimtmetį daro namus jaukesnius. XX a. priėmus juos gyventojams atsirado centrinis šildymas ir karštos vonios pagal poreikį, ir leido jiems nustoti kasti anglį. Bet jei norima pasiekti dekarbonizacijos tikslą, šie katilai turi išeiti iš mūsų namų.

 

     Dvylika Europos šalių planuoja palaipsniui atsisakyti iškastinio kuro pastatų šildyme, o oro šilumos siurbliai pasirodė, kaip geriausia alternatyva. Jie ištraukia aplinkos šilumą iš lauko oro, net kai jis yra žemiau nulio, ir sutelkia ją į šiltą vidaus erdvę. Šilumos siurbliai yra daug efektyvesni, nei katilai, atsižvelgiant į energijos kiekį, sunaudojamą vienam pagamintos šilumos vienetui. Tačiau pastaruoju metu jie tapo kliūčių, kurios laukia šalių, bandant sumažinti anglies dioksido kiekį, simboliu. Iki šiol žalioji politika retai reikalavo privačių piliečių pasiraitoti rankoves ir imtis didelių, žalingų pokyčių savo gyvenime. Dabar ji pradeda, ir daugeliui žmonių tai nepatinka.

 

     Erzinantis šilumos siurblių dalykas yra tai, kad jūs negalite tiesiog pakeisti dujinio katilo į siurblį – bent jau kol kas. Šilumos siurbliai yra didesni, nei dujiniai katilai, jiems reikia erdvės lauke, o 60 % Europos patalpų, kurios yra senos ir nesandarios, jų montavimas turi būti papildytas izoliavimu.

 

     Didžiojoje Britanijoje pakankamai sunku žinoti, kam patikėti geriausią ekologišką namų šildymo dizainą, kad atgrasytų visus, išskyrus pačius ryžtingiausius ir turtingiausius ekologiškus karius. Senesnių namų savininkai susiduria su sudėtingais pasirinkimais, pavyzdžiui, ar pakelti grindų lentas ir iškloti vidines sienas stora izoliacija, ar apvynioti namus daug storesniu išorinės izoliacijos sluoksniu, ko gali neleisti vietinės planavimo taisyklės. Visa tai gali greitai tapti brangiu, trikdančiu ir politiškai toksišku. Pavyzdžiui, Vokietijoje plano jau kitais metais uždrausti dujų ir naftos katilų įrengimus po visuomenės pasipiktinimo buvo atsisakyta.

 

     Ką daryti? Tikėtina, kad šilumos siurbliai, kuriuos lengva pakeisti katilais, galiausiai, pasirodys rinkoje. Tačiau net ir tada namų ūkiai negali būti visiškai apsaugoti nuo trikdžių. Mažiausia, ką vyriausybės gali padaryti, tai padaryti įvaikinimą kuo lengvesnį. Nors kai kuriose šalyse teikiamos dotacijos, padengiančios dalį išlaidų, jų administravimas dažnai yra vangus ir turėtų būti paspartintas. Tikslas negali būti įgyvendintas, jei nėra pakankamai kvalifikuotų darbuotojų, kurie galėtų atnaujinti namus; daugiau reikės jų išmokyti. Prieštaravimas tarp planavimo taisyklių ir žaliųjų taisyklių, dėl kurio namiškiai jaučiasi bejėgiai, turi būti kažkaip išspręsti.

 

     Sušvelnintos Vokietijos taisyklės, kurias parlamentas turi priimti, išmintingai suteikia namų ūkiams daugiau laiko ir prašo vietos valdžios dalyvauti jų administravime. Jie duos didelėms ir mažoms savivaldybėms atitinkamai iki 2026 arba 2028 metų parengti pereinamojo laikotarpio planus, kurie leistų šildyti ekologiškesniu būdu, nenaudojant vieno namo šilumos siurblių. Savivaldybės geriau, nei centrinė valdžia išmano savo vietinį būstą ir priima planavimo sprendimus, kurie dažnai susiduria su modernizavimo reikalavimais. Jie turi pradėti teikti pirmenybę planetai daugiau ir mažiau paisyti nimbų.

 

     Šiame epizode yra pamoka vyriausybėms. Tokio masto dekarbonizacija, kurios reikia, norint išvengti planetos nelaimės, bus skausminga. Rinkėjai dažnai prieštarauja ir kartais gali atleisti iš darbožaliąsias vyriausybes. Taigi, labai svarbu, kad politika būtų parengta, siekiant kuo veiksmingiau sumažinti išmetamų teršalų kiekį, o paskatomis paprastai siekiama įtikinti, o ne priversti. Tačiau net ir taikant toliaregiškiausią politiką, atsiras daugiau atsakomųjų reakcijų. Vyriausybės turi pasiruošti“. [1]

1. "Heat pumps show how hard decarbonisation will be." The Economist, 6 Sept. 2023, p. NA.

Heat pumps show how hard decarbonisation will be.

"They hang from the walls of utility rooms, nestle inside kitchen cupboards and hunker down in cellars. Gas and oil boilers and furnaces have been making homes more comfortable for decades. Their adoption during the 20th century brought people central heating and hot baths on demand, and allowed them to stop shovelling coal. But if the goal of decarbonisation is to be met, these boilers must go.

Twelve European countries plan to phase fossil fuels out of the heating of buildings, and air-source heat pumps have emerged as the best alternative. These extract ambient heat from the outside air, even when it is below freezing, and concentrate it to warm inside spaces. Heat pumps are far more efficient than boilers, in terms of the amount of energy used per unit of heat generated. Lately, however, they have become a symbol of the obstacles that await as countries try to decarbonise. Until recently, green policies had seldom required private citizens to roll up their sleeves and make big, disruptive changes to their lives. Now they are starting to, and many people do not like it.

The annoying thing about heat pumps is that you cannot simply swap a gas boiler for one—at least not yet. Heat pumps are larger than gas boilers, require outside space and, for the 60% of European properties that are old and leaky, their installation must come with extra insulation.

In Britain, knowing whom to trust on the best green heating design for your home is hard enough to discourage all but the most determined and wealthy eco-warriors. Owners of older houses face difficult choices, such as whether to lift up their floorboards and line their inside walls with thick insulation, or wrap their homes in a much thicker layer of external insulation, which may not be allowed by local planning rules. All this can quickly become costly, disruptive—and politically toxic. A plan in Germany to ban gas- and oil-boiler installations as early as next year, for instance, was abandoned after a public outcry.

What to do? Heat pumps that are an easy swap for boilers are likely to come onto the market eventually . But even then households cannot be entirely spared from disruption. The least governments can do is make adoption as easy as possible. Although grants covering part of the cost are available in some countries, their administration is often sluggish and should be speeded up. A target cannot be enforced if there are not enough skilled workers to retrofit homes; more will need to be trained. The clash between planning regulations and green rules, which makes householders feel helpless, must somehow be resolved.

Germany's watered-down rules, which are due to be passed in parliament later this week, wisely give households more time, and also ask local authorities to be involved in their administration. They will give large and small municipalities until 2026 or 2028, respectively, to draw up transition plans, which can allow for greener heating that does not involve single-home heat pumps. Municipalities know their local housing stock better than central governments do, and they make the planning decisions that often collide with the demands of retrofitting. They must start favouring the planet more and nimbys less.

This episode contains a lesson for governments. Decarbonisation on the scale required to avert planetary calamity will be painful. Voters will often object, and may sometimes sack green-friendly governments. So it is crucial that policies are crafted to reduce emissions as efficiently as possible, with incentives generally designed to persuade rather than coerce. Even with the most far-sighted policies, however, there will be more backlashes. Governments must prepare.” [1]

1. "Heat pumps show how hard decarbonisation will be." The Economist, 6 Sept. 2023, p. NA.

 

Kaip kuo lengviau perkelti šifravimą į naujus kvantiniams metodams atsparius algoritmus

  "Daugelis perspektyviausių pasiūlymų yra sukurti ant grotelių, matematinės koncepcijos, apimančios įvairių pasikartojančių formų taškų tinklelius, pvz., kvadratus ar šešiakampius, bet suprojektuotus į daugiamates erdves, daug daugiau tų matmenų, nei gali įsivaizduoti žmonės. Didėjant matmenų skaičiui, kyla problemų, pvz. rasti trumpiausią atstumą tarp dviejų nurodytų taškų tampa eksponentiškai sunkiau, įveikiant net kvantinio kompiuterio skaičiavimo pranašumus." [1]

1. The Race Is On To Foil a Threat To Encryption: [National Desk]. Montague, Zach. New York Times, Late Edition (East Coast); New York, N.Y.. 23 Oct 2023: A.1.

How to migrate encryption as easily as possible to new quantum-resistant algorithms

 
 "Many of the most promising submissions are built on lattices, a mathematical concept involving grids of points in various repeating shapes, like squares or hexagons, but projected into number of dimensions far beyond what humans can visualize. As the number of dimensions increases, problems such as finding the shortest distance between two given points grow exponentially harder, overcoming even a quantum computer's computational strengths." [1]

1. The Race Is On To Foil a Threat To Encryption: [National Desk]. Montague, Zach. New York Times, Late Edition (East Coast); New York, N.Y.. 23 Oct 2023: A.1.

Žala Izraeliui padaryta ir nebepataisoma

 „Hamas“ parodė, kad šiandieniniame kare (dronai, didžiulis pigių raketų skaičius, motyvuoti ir aukštos kvalifikacijos kovotojai, geri šnipai, lengvai sugadinimos sudėtingos stebėjimo sistemos) Izraelio piliečiai nėra saugūs Izraelyje. 

 Musulmonai tai mato. Jokia žala Palestinai negali ištaisyti šio naujojo Izraelio pažeidžiamumo. Žala palestiniečių vaikams, atskleista susietam pasauliui, tik padidina pavojų ir nelaimę Izraelyje.

Damage to Israel Is Done and Not Fixable

Hamas demonstrated that in today's war (drones, overwhelming number of cheap missiles, motivated and highly trained  fighters, good spies, easy damage to complicated surveillance systems) Israel citizens are not safe in Israel.

Muslims see it. No damage to Palestine can fix this new Israel's vulnerability. Damage to Palestinian children translated to the interconnected world only increases danger and disaster in Israel.