I'm Going to Miss Joann (Really, Dear!)

 

The bankruptcy and closing of Circuit City stores some years ago still sticks in my mind for business analysts’ brutal assessment of the cause of its demise: poor customer service.  Commentators contrasted customers’ consistently poor experience at Circuit City with the more welcoming environment at competitors’ stores.

When I read about a store or chain of stores closing, especially if they have an outlet near me, I have a twinge of guilt that maybe I should have shopped there more.  But sometimes they just don’t sell what I want (Forever 21, comes to mind), and maybe they just don’t deserve the business because of their poor treatment of customers.  But upon learning that Joann Fabrics is soon closing all its 800+ stores, I had to think about that one.  No, I’m not a crafter; but my wife is, and I remember her excitement over shopping at a Joann store.  She’d rummage through bolt after bolt of fabric, asking my opinion of the design or material.  A very tedious experience for me, as I'm sure she noticed, but I had to admire the workers there because they seemed to love their job and be crafters themselves because they invariably would ask what my wife was making, share hints, and tell stories of their own similar projects.  That’s high-end customer service.

So where did Joann go wrong? 

It started, sadly but predictably, with debt.  In 2011 a Los Angeles-based private equity firm converted the chain in a leveraged buyout, putting the company $1.6 billion in debt and obligating it to pay exorbitant management fees.  Nevertheless, the company surged during the pandemic.  But owners assumed the boom would continue, and failed to adjust to competition—except in one notable way: they cut staff.  This caught up with them as customers experienced wait times of 45 minutes or more to have their fabric measured and cut.  I’ve been with my wife when she bought what she needed for a project.  It entailed having a clerk measure and cut from as many as half a dozen bolts of fabric; Joann is a high-touch, service-intensive business.

And perhaps that is the moral of the Joann story.  Business does not have time for customer service.  Management evaluates a grocery clerk by how fast she can check out a customer.  The call center operator’s efficiency is measured by how many calls he completes in an hour.  A doctor needs to meet standards of patient turnover during her day while also meeting clinical standards of care.  Does management really think we don’t notice this? 

Customer service is not (or shouldn’t be) a department, it’s everyone’s job at a business.  Can’t we take a few minutes to be personable?  Can’t we practice the Golden Rule?  Can’t we, as customers, smile at the worker assisting us?  Complain as we might about large, impersonal corporations taking over the world, we should practice virtue at our own level, both as employees and customers.  And let’s shop where we are welcomed, locally.

Until next time,

Roger

“Treat other people exactly as you would like to be treated by them—this is the meaning of the Law and the Prophets.” Matthew 7:12 Phillips

Generation [La] Z [y] Moves into the Workplace

 

From Fortune magazine: “Bosses are firing Gen Z grads just months after hiring them”

Generally identified as people born between 1997 and 2012, Generation Z is starting to move into the workplace, and it’s not going well.  On one level, this is quite surprising.  Reared on (if not by) the internet and advanced technology, one would think they would be the perfect fit for the high-tech workplace of today.  After all, isn’t that what public policy has aimed for, to train the tech-savvy, ready-to-hit-the-ground workforce of the future?

Then again, it’s not all that surprising.  American public education seems intent on producing a single-size widget, graduates who skillfully navigate the tech world but are aliens to a fundamental requirement of nearly every place of employment: interpersonal skills.

Other specific complaints of their (former) employers are that Gen Z’ers lack motivation or initiative (cited by 50% of the leaders who had sacked a Gen Z hire), dress inappropriately for the office, show up late or not at all for scheduled meetings, are unorganized, use language not suited for the work space, and are poor communicators.  Broadly speaking, these are all interpersonal skills; and having been weaned on screens Gen Z’ers have not mastered them.  More than half of hiring managers have concluded these college graduates are unprepared for the workaday world.  

But (hallelujah!!!) Michigan State University is stepping into the void and, according to Fortune, “is teaching students how to handle a networking conversation, including how to look for signs that the other party is starting to get bored and that it’s time to move on.”

Oh, please.  Were these students so oblivious in their social interactions from age 0 to 18 that they didn’t learn that already?  Even newborns can read human emotions and facial clues.  All that screen time must have fried their brains. 

I have previously expressed my hope that today’s students are learning some basic financial skills in school.  But perhaps that should not be my main concern.  If Gen Z lacks the ability to hold down a job—and 20% of hiring managers judge them to be incapable of handling the workload—then knowing how to save and invest wisely will prove to be useless if they haven’t earned any money to invest. 

The season for high school seniors to declare their choice of college to attend this autumn is approaching.  In my opinion, our institutions of higher education are failing us by giving more attention to entertaining students than educating them; protecting them from supposedly offensive ideas instead of teaching them the world is full of people who disagree with them and they better learn to get along.  No wonder Gen Z can’t navigate the workplace.

 If you are a parent of a Gen Z’er, and you haven’t already given them the social skills to succeed (yes, that is largely your responsibility, too) at least help direct them to a place of real learning, one that doesn’t, for example, tout the climbing wall in the student center over the percentage of their students in successful internships.  Send them off without a car or a wad of cash or wallet full of credit cards; don’t let them drown in a sea of student loans; tell them they need to get a part-time job during the school year to cover costs.  I’m not so pessimistic to believe that Gen Z is a lost generation.  But they need some guidance, and employers don’t have the time to give it—not if their new hires come in without the most basic of human skills.

Until next time,

Roger

“Having a lazy person on the job is like a mouth full of vinegar or smoke in your eyes.” Proverbs 10:26 CEV

Are You Doomed Because You Don't Have a Roth Account?

 

In my last post I lamented the confusing and often contradictory personal financial advice being handed out over the media and online.  But one piece of advice seems to be consistent across all sources: It is better to have a Roth account than a non-Roth retirement account.  In fact, if you don't have one, you are advised to start moving your money into one right away.

But is it REALLY better?

There’s no doubt a Roth account has some advantages.  In these retirement accounts one deposits money that has already been taxed and which—upon withdrawal—will not be taxed again, nor will the interest/investment gains that have accumulated in it.  In a non-Roth account the deposits are not taxed upfront, but both the deposits and the accumulated growth in the account are taxed upon withdrawal. The difference between a Roth and a non-Roth account has been likened to paying tax on a bag of seeds as opposed to paying tax on the entire harvest. 

If you start socking money away in a Roth account early in life, then you would have decades of accumulated wealth by the time retirement rolls around that you could withdraw without paying tax on it.  The rationale for opening a non-Roth account has been that it is better to have the upfront tax deduction when you are more likely to be in a higher tax bracket than you will be in retirement.  But in recent years, given the growing national deficit, the lower-tax-rates-in-retirement assumption has fallen out of favor and experts have leaned into Roth accounts as the best alternative for retirement saving.

Now comes a study from three finance professors at Providence College, published in the Journal of Wealth Management and reported by Marketwatch that claims to show most taxpayers would be better off with a traditional (non-Roth) account.  In fact, over a 45-year lifetime of saving the typical retiree will end up saving nearly 25% in tax liability by using a non-Roth account.  They even concluded “[t]hose who expect to have $1 million or less saved in retirement are not expected to pay taxes on their distributions.”

I tend to believe them (well, as much as I believe any “expert”, and only to an extent), especially given the current income tax structure in the United States and the prospect that it will continue as is for another four years. The bulk of my retirement money is in non-Roth accounts.  I’ve already withdrawn tens of thousands of dollars (hey, retirement bucket list travel, grandkids…..don’t judge me!) and have not paid any income tax on it.  And I’m not using any special tax breaks or elaborate strategies. It's the tax brackets and the historically high standard deduction.

We simply cannot know future tax rates or predict what legislation will be passed years in the future and plan our finances with any certainty about those factors.  We just do the best we can.

So once again, do not automatically accept the conventional wisdom.  Carefully consider your own situation.  And by all means do not feel you have made a mistake by stashing your retirement savings in a non-Roth account.  At least you saved for retirement, and that’s more than a lot of people can say.

Until next time,

Roger

“How do you know what will happen tomorrow?....As it is, you take a certain pride in planning with such confidence.  That sort of pride is all wrong.” James 4:14, 16 Phillips

Confused or Depressed? The State of Financial Advising

 Would you be completely baffled if you encountered this road sign while you were driving?  Would you know what to do, which way to go?

I can guess your answer, and that is why I chose this picture as a graphic illustration of today’s financial advice.  Listen to too many “experts,” read too many financial advice columns, and you will soon discover how confusing and even contradictory they can be.  Why is that so?  Why, for example, does one expert say you are financially secure in retirement if you start out with $500,000 while another says, oh no, you need $2 million?  Why does one source say you can safely withdraw/spend 8% of your retirement savings each year and still not outlive your savings, while another says 4% is the safest route, and yet another says 2.7% is the max you should be taking out annually if you want to be certain not to run out of money by the time you are age 95?

Part of the disparity is the assumptions from which each advisor works.  In the examples above, one advisor might assume that the retiree is invested more heavily in stocks than in bonds.  Another might project that the stock market will perform better than his peers would predict.  But I believe there’s more than just differing working assumptions causing the confusion.  I’m afraid that not everyone touting his financial credentials online, in print, on radio, or on television necessarily wants to give solid financial advice but is more interested in making money for himself.  And if he makes a bold prediction or goes against the flow of what most others say or foresee, he garners more attention, more television interviews, more clicks to his website because he stands out—even if what he says is absurd.  As long as he can throw some numbers around, cite some statistics, he can sound authoritative. 

This is more common that we might believe.  I read a lot of articles about personal finance, in print and online, but there are some sources I’ve simply stopped reading.  One preaches nonsense, another is transparently throwing out click-bait to make money.  What is the ordinary investor to do?

My suggestion: find a couple of reliable sources for your financial advice.  Don’t live in fear over your future financial situation.   It probably is not as dire as you are being told.  Take a moment, whatever advice you are listening to or reading, to evaluate what the source has to gain by directing you to take specific actions.  Sometimes, they just need an audience or an increase in the number of people going to their website.  But some advisors might stand to make big commissions if you do as they tell you to.  Not everyone is looking out purely for your interests.  Remembering that, having a spending plan (budget), saving regularly, and living within (preferably below) your means will be key to a secure future financially.

Until next time,

Roger

“To show partiality is not good—yet a person will do wrong for a piece of bread.” Proverbs 28:21 NIV®*

 

*Scripture quotations taken from the Holy Bible, New International Version® NIV®

Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™

 

[By the way, I took that picture on a rut-filled, unpaved mountain road to a lodge in Alaska.  It was a joke.  There was also a sign at the top of the hill that read, “Freeway Ends in 500 Feet.”]