From the April 2008 issue of Wealth Manager Web • Subscribe!

Too Easy

In the early days of my magazine career, I got a great deal of "snail mail" from various companies and their public relations firms. Most of it, even then, was computer generated. Some companies had even mastered the art of "mail merge," so the pieces looked personalized with my name and title. I tried to read most of them. After all, most were targeted at me and my publication, so it wasn't a waste of time to sort through the pile each day.

Then came email.

After I started getting notes and increasingly larger attachments in my electronic mailbox, I realized in retrospect that the old-fashioned mailed documents had been subject to some rigorous economics. Even with modest printing and postage costs, companies could find it expensive to send a great many PR and marketing pieces. They had to be careful about what they sent, and to whom they sent it, which is why I didn't get too much inappropriate material. It was too expensive to send a mailing to a reporter who had no interest in it.

But with email, the cost of adding one more name to the list is virtually zero. This is why I receive announcements of earnings reports on obscure over-the-counter stocks and other useless (to me) information. The attitude seems to be, "Why not just send it to everyone?"--with the result being that I read almost none of it. By making communication easier, technology has made it less valuable.

I still get letters and packages from the U.S. Postal Service as well as from UPS and other private services--just not nearly as much as before. And I pay closer attention to this diminishing pile because I know each item cost money to send, so someone thought I was worth it.

Even within this group, there's a hierarchy of technology and importance. Some are obviously form letters, churned out by a machine, costing little more than emails. In fact, these templates can lead to amusing errors: I once attended a conference to gather information for a magazine that hadn't even been launched. I left my card with various vendors, and one sent me an unfortunate form letter telling me he had "enjoyed the magazine for years." Not unless he had a time machine! This was technology run amok.

The next level includes mailings that are clearly produced on a computer, but are at least somewhat personal. For instance, a press kit may be standard, but there's an accompanying letter that notes specifically why this is useful to my magazine in particular. This wasn't a form--someone had to stop and think about what was important to me. They had to step away from automation.

The first letters I open, however, are hand-written with a real stamp. I'm lucky if I get one a week. Pen, ink and stamp--they're a complete rejection of technology and not much different from the Victorian era. Because a personalized letter like this took a lot of someone's time--and time is money--I value it all the more. It makes a statement of how important it was that somebody get my attention.

Printing is not the only area where the better technology becomes, the more low-tech, high-cost solutions become special. Think of it as a process along a curve: Old technology that everyone uses; high technology that everyone thinks is great; the acceptance of high technology that everyone takes for granted, and the return to the old technology that gains a new life because it's expensive and special.

Consider portrait painting. For centuries, paint on canvas (or, if you're Mona Lisa, on wood) was the only way to capture someone's likeness. When photography arrived, it was exciting and complicated, but soon became easy and affordable. (I have a photograph of my grandmother and her brother taken around 1905, and they were not wealthy people.) Now, everyone has photographs, but portrait painting hasn't disappeared. Because of the expense, portraits are greatly valued and considered extra-special.

And photography itself has changed. Film used to be expensive; it was costly to take a photograph. Along came digital cameras which were also very pricey. But as they came down in price, they became affordable to just about anyone. Take as many photos as you want; they're all free.

Look, too, at financial products. The stock exchange as we know it was made possible by technology. Then came all the byproducts: mutual funds, SMAs, hedge funds, ETFs--all of them made possible, and ultimately more efficient, by technology. And yet, some of the gilt rubs off. Do your wealthy clients still find SMAs "cool" now that minimums have plummeted to the point where even people of modest means can afford them (even if some low-end versions aren't as good)?

Maybe trading technology will make it possible someday for hedge fund minimums to fall from their current six-figure range to a tenth of that. Hedge fund managers may then find themselves as ordinary as digital cameras are today. On the bright side, however, they can look forward to a renaissance of sorts when machines do all our investing and they are the last humans making investment decisions. Wait and see.

Richard J. Koreto is the editor in chief of Wealth Manager.

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