Various Types of “Economies”

<p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>As recently as five years ago, few people had heard of emerging businesses like Airbnb and Uber that allow proprietors to share their personal residences and cars to generate income. This business model is now commonly referred to as the “sharing economy.”<sup> 1</sup></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>However, just as capitalism morphs, so does the concept of sharing. For example, some Uber drivers actually lease an upscale car to charge higher fares that compete with luxury driving services.<sup>2</sup></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>The Great Recession played a hand in encouraging unemployed workers to find innovative sources of income when jobs were scarce, and the sharing economy has been seen as influential in our overall economy’s recovery. It’s worth considering how we can better prepare ourselves for potential economic declines via job innovation, vigilant savings habits and protecting a portion of our retirement assets through guaranteed insurance products. If you’d like help devising a strategy using a variety of insurance products to help you work toward your long-term retirement income goals, please call us to schedule a meeting.</span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>In addition to the sharing economy, today’s world is home to a wide array of economic varieties, including:</span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>Sharing Economy</em></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>As mentioned, this model focuses on sharing or renting under-utilized assets. One of the primary concerns with this model is trusting others to take care of your personal assets. Some proprietors require an upfront deposit to help defray the cost of breakage or stolen goods. Insurance companies also have gotten into this business by developing policies for reimbursement.<sup>3</sup></span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>On-Demand Economy </em></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>This model focuses on providing goods and services on an as-needed basis. For example, in situations where a short-term rental is cheaper than buying — such as owning a car in a large metropolitan city — it can be more cost effective and convenient to use Uber transportation rather than own a car. This is true in expensive cities including New York City, Chicago, Los Angeles, and others, particularly when including expenses like gas and insurance.<sup> 4</sup></span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>Peer Economy </em></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>This economic model is based on the creation of products, delivery of services, funding and more by peer-to-peer (P2P) networks. These peer-lending platforms can help bolster economic progress, particularly in a rising interest-rate environment. For example, a small business seeking capital may be able to use an online P2P lending platform that matches borrowers to lenders. This can help a business owner acquire a less expensive loan more quickly than through a traditional financial institution.<sup>5</sup></span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>Crowd Economy </em></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>The crowd economy enlists the larger population or a subset to generate funding, information, resources and more. This particularly interesting phenomenon has infinite applications. For example, the city of Akron, Ohio, is providing CPR training to the general public in hopes that crowd-sourcing certain emergency service skills will lead to more victims getting immediate help until paramedics arrive.<sup>6</sup> Crowd-sourcing also is a good way to find undiscovered talent. Instead of hiring an advertising agency to produce promotional artwork for an annual film festival, the organizers may hold an open competition for the public, tapping local artists whose talent may otherwise go unnoticed.<sup>7</sup></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>Statistics indicate that the sharing economy and its various iterations are producing big revenues. A recent U.S. study found that on-demand workers generated more than $110 billion in the 15 largest metropolitan areas, including New York City, Los Angeles, Miami, Chicago, San Francisco and Washington, D.C.<sup>8</sup></span></p><p class=”MsoNormal”><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”>&nbsp;</span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><strong><em>Content prepared by Kara Stefan Communications.</em></strong></span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup>1</sup> April Rinne. World Economic Forum. Dec. 13, 2017. “What exactly is the sharing economy?” <a href=”https://www.weforum.org/agenda/2017/12/when-is-sharing-not-really-sharing/”>https://www.weforum.org/agenda/2017/12/when-is-sharing-not-really-sharing/</a>. Accessed June 2, 2018. </span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup>2 </sup>Ibid.</span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup>3 </sup>Matthew Wall. BBC News. June 1, 2018. “‘I bought my mum a flat just by renting out my camera kit.'” <a href=”https://www.bbc.com/news/business-44301183″>https://www.bbc.com/news/business-44301183</a>. Accessed June 2, 2018. </span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup>4</sup> Megan Rose Dickey. TechCrunch.com. May 30, 2018. “Here’s where it’s cheaper to take an Uber than to own a car.” <a href=”https://techcrunch.com/2018/05/30/heres-where-its-cheaper-to-take-an-uber-than-to-own-a-car/”>https://techcrunch.com/2018/05/30/heres-where-its-cheaper-to-take-an-uber-than-to-own-a-car/</a>. Accessed June 2, 2018. </span></p><h1><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup><span style=”font-weight: normal;”>5</span></sup><span style=”font-weight: normal;”> Craig Asano and Michael King. The Globe and Mail. May 30, 2018. “</span><span style=”color: #191919; font-weight: normal; mso-bidi-font-weight: bold;”>Peer-to-peer lending will help small businesses stay afloat</span><span style=”font-weight: normal;”>.” </span><a href=”https://www.theglobeandmail.com/business/commentary/article-peer-to-peer-lending-will-help-small-businesses-stay-afloat/”><span style=”font-weight: normal;”>https://www.theglobeandmail.com/business/commentary/article-peer-to-peer-lending-will-help-small-businesses-stay-afloat/</span></a><span style=”font-weight: normal;”>. Accessed June 2, 2018. </span></span></h1><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup>6</sup> Doug Livingston. Akron Beacon Journal. May 31, 2018. “<a title=”Akron is ‘crowd-sourcing’ CPR” href=”https://www.ohio.com/akron/news/akron-is-crowd-sourcing-cpr”><span style=”color: windowtext;”>Akron is ‘crowd-sourcing’ CPR</span></a>.” <a href=”https://www.ohio.com/akron/news/akron-is-crowd-sourcing-cpr”>https://www.ohio.com/akron/news/akron-is-crowd-sourcing-cpr</a>. Accessed June 2, 2018.</span></p><h1 style=”vertical-align: baseline;”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup><span style=”font-weight: normal;”>7</span></sup><span style=”font-weight: normal;”> Michael Beiermeister. WBKB11.com. June 1, 2018. “Thunder Bay Film Society Crowdsourcing Cover Art for 2018 Sunrise 45 Film Festival.” </span><a href=”http://www.wbkb11.com/thunder-bay-film-society-crowdsourcing-cover-art-for-2018-sunrise-45-film-festival”><span style=”font-weight: normal;”>http://www.wbkb11.com/thunder-bay-film-society-crowdsourcing-cover-art-for-2018-sunrise-45-film-festival</span></a><span style=”font-weight: normal;”>. Accessed June 2, 2018.</span></span></h1><h1><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><sup><span style=”font-weight: normal;”>8</span></sup><span style=”font-weight: normal;”> Benjamin Mann. JD Supra. May 24, 2018. “The Gigs Get Bigger: Recent Data Shows the On-Demand Economy is Growing Into New Areas.” </span><a href=”https://www.jdsupra.com/legalnews/the-gigs-get-bigger-recent-data-shows-85361/”><span style=”font-weight: normal;”>https://www.jdsupra.com/legalnews/the-gigs-get-bigger-recent-data-shows-85361/</span></a><span style=”font-weight: normal;”>. Accessed June 2, 2018. </span></span></h1><p class=”MsoNormal”>&nbsp;</p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em><span style=”background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;”>Guarantees and protections provided by insurance products including annuities are backed by the financial strength and claims-paying ability of the issuing insurer.</span></em><em></em></span></p><p class=”MsoNormal”>&nbsp;</p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.<br /> <br /> The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.</em></span></p><p class=”MsoNormal”><span style=”font-family: arial, helvetica, sans-serif; font-size: small;”><em>&nbsp;</em></span></p><p><span style=”font-size: small; font-family: arial, helvetica, sans-serif;”> AE06185066B</span></p>

Leave a Comment

You must be logged in to post a comment.