Raphael Stevens

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    Crypto firms introduce risk assessments and finance tests in response to strict new rules in UK

    Coinbase, Crypto.com and Gemini are among cryptocurrency exchanges that are asking U.K. users to fill out risk assessments and questionnaires related to their financial knowledge.
    The measures are a response to new rules in the U.K. which require crypto companies to make clear to users the risks involved in trading cryptocurrencies and advertise their services responsibly.
    If a customer fails to successfully complete the tasks, they will be prevented from trading with their crypto account.

    CEO of cryptocurrency platform Coinbase Brian Armstrong attends a reception at Buckingham Palace, in central London, on November 27, 2023 to mark the conclusion of the Global Investment Summit (GIS). (Photo by Daniel LEAL / POOL / AFP) (Photo by DANIEL LEAL/POOL/AFP via Getty Images)
    Daniel Leal | Afp | Getty Images

    Coinbase, Crypto.com, Gemini and other cryptocurrency exchanges are warning users in the U.K. that they’ll need to start filling out risk assessments and investment questionnaires aimed at testing their financial knowledge.
    It comes ahead of tough new rules on the advertising of digital asset products in the country.

    The firms have told users in Britain that, starting Monday, they will be required to complete a declaration about what type of investor they are, and respond to a questionnaire on a range of aspects of financial services and regulation to continue using their respective platforms.
    In the customer declaration section, users are asked to select their investor profile: either a high net worth individual earning above £100,000 (roughly $126,700) annually or with a net worth of more than £250,000, or a “restricted investor” who won’t invest more than 10% of their assets. Otherwise, they cannot trade crypto.
    The financial questionnaires, which vary from exchange to exchange, require users to respond to numerous queries about what range of products the firms offer, the volatile nature of crypto asset prices and the treatment of crypto as a product by financial regulators.
    If a customer fails to complete the tasks successfully, they will be prevented from trading with their crypto account.
    Since the passing of the Financial Services and Markets Act, a major package of financial services reforms in the U.K., firms that offer crypto and a certain type of digital currency called stablecoins are now covered by the law and must adhere to the same rules as those that govern traditional financial services.

    Since Oct. 8, firms seeking to promote cryptoassets in the U.K. to retail customers must be authorized or registered with the country’s Financial Conduct Authority, or have their marketing approved by an FCA-authorized firm.
    Coinbase said the changes were made “to ensure we are meeting UK investor protection standards, which require our users to have the necessary knowledge to make informed investment decisions.”
    “This process is also part of Coinbase’s commitment to working collaboratively with local regulators so that we can best serve our users now and in the future,” a Coinbase spokesperson told CNBC via email.
    A Crypto.com spokesperson gave similar reasoning for the move, saying its changes were made “primarily to ensure customers understand the risks of investing in cryptocurrency, which is a key component of the important consumer protections being put in place by the FCA.”
    “We do not expect this to impact user activity in the UK and as always our customer service team is on hand to help with any queries,” George Tucker, U.K. general manager of Crypto.com, told CNBC via email.
    “As an authorised Electronic Money Institution and registered cryptoasset business in the U.K., Crypto.com supports and complies with the FCA’s rules and will continue to work with the regulator as we expand our product offering here,” Tucker added.

    Crypto firms in a tight spot

    Coinbase CEO Brian Armstrong has been an advocate of the U.K.’s role as a crypto hub, particularly as the exchange faces a tougher time at home with the U.S. Securities and Exchange Commission suing the firm over alleged securities law violations.
    In April last year, he told CNBC’s Arjun Kharpal that Coinbase was “looking at other markets” to invest in beyond the U.S. and was “probably going to invest more” in the U.K., given in its push to position itself as a crypto hub.
    But the new financial advertising regulations have put some crypto firms in a tight spot.
    Some crypto companies have suspended their services in the U.K. in response to the new rules. ByBit, an unregistered crypto firm, stopped services to U.K. customers, while Luno said it is halting some U.K. clients from making crypto investments. PayPal, meanwhile, said it is suspending some cryptocurrency services until it brings its crypto arm into compliance with the new rules.
    Binance, which was slapped by U.S. authorities with a $4.3 billion settlement over money laundering charges last year, tried in October to get its marketing authorized in the U.K. with a third-party firm. But it was blocked by the FCA, which at the time said it was doing so to protect consumers. More

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    Jobless rate for Black Americans declines to 5.2% to end 2023 on a positive note

    Black Americans, the group with the highest jobless percentage in the country, saw their unemployment rate dip to 5.2% last month from 5.8% in November.
    Still, that’s higher than the overall unemployment rate, which held at 3.7%.

    A networking and hiring event for professionals of color in Minneapolis, MN. 
    Michael Siluk | Getty Images

    The unemployment rate for Black Americans fell significantly in December, closing out 2023 on a positive note, according to data released Friday by the Department of Labor.
    Black Americans, the group with the highest jobless percentage in the country, saw their unemployment rate dip to 5.2% last month from 5.8% in November. Still, that’s higher than the overall unemployment rate, which held at 3.7% last month, as well as the 3.5% jobless rate for white Americans.

    When accounting for gender, the unemployment rate for Black men aged 20 and older fell to 4.6%, a big decline from the 6.3% rate in November. Black women’s jobless rate remained unchanged at 4.8% in December.
    Experts said that while the December number is a good sign, the monthly data could be too volatile to form a trend yet.
    “We would caution against reading too much into large swings in monthly data, but in general, demographic groups, including Black Americans, that had traditionally been slower to experience the benefits of a tight labor market have realized stronger employment and wage gains in the current cycle,” Andrew Patterson, senior international economist at Vanguard, told CNBC. 
    The Current Population Survey is “very noisy,” especially when looking at smaller populations, according to Julia Pollak, ZipRecruiter’s chief economist. She noted that the unemployment rate for Black Americans in 2023 ranged between 4.7% in April and 6.0% in June. 

    Among Black workers, the labor force participation rate inched lower to 63.4% from 63.7% in the previous month.

    Black Americans were hit particularly hard by the business shutdowns in the depths of the Covid-19 pandemic, with the unemployment rate for Black workers peaking at 16.8% in 2020. The overall unemployment rate hit a high of 14.7% in April 2020.
    More progress needs to be made for Black workers as they still lag every other demographic group in the U.S.
    “The unemployment rate among Black Americans staged a significant drop in December, but remains above the lower level seen last year,” Bankrate senior economic analyst Mark Hamrick said. “Still, it remains at historically low levels and still higher than the jobless rate overall and for Whites, Asians and Hispanics.”
    For Hispanic Americans, the unemployment rate rose to 5% in December from 4.6% in November.
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    Radio shows surprising resilience even in a rapidly changing media world

    Despite being one of the oldest media formats, radio has showed resilience through the years.
    Radio’s stability is in stark contrast to the rapidly declining pay TV industry, a fellow legacy medium.
    Radio does face headwinds, but top players such as iHeartMedia are positioned to lean on digital formats, too.

    Airline passengers between flights patronize the iHeartRadio facility at Denver International Airport in Denver on Jan. 19, 2014.
    Robert Alexander | Archive Photos | Getty Images

    It’s a familiar refrain: “Legacy media is dead” — unless you’re talking about radio.
    Despite being one of the oldest media formats, dating back to the 1890s, radio has maintained relatively stable listenership over the past decade. Pay TV, while newer, has faced more significant declines.

    In 2009, 92% of Americans age 12 or older listened to traditional, or terrestrial, radio in a given week, according to data from Pew Research published last year. By 2022, that number fell 10 percentage points. Pay TV penetration, on the other hand, fell 20 percentage points between 2014 and 2023, according to data firm Statista. In the third quarter of last year, the pay TV industry shrank at a record pace, analysts at MoffettNathanson said in their latest cord-cutting report.
    “Terrestrial radio has stayed steady even as other mediums like satellite radio, podcasts and Apple CarPlay have come on board,” said Guggenheim media analyst Curry Baker.
    “Historically, radio personalities and stations have engaged with local audiences,” which tend be “sticky,” Baker said. “Cable networks never really did that.”
    Radio has maintained the upper hand on many media formats partly because of its accessibility and relative lack of cost barriers. Most cars come already equipped with access to AM and FM radio at no additional cost, and according to Statista data from 2022, the majority of U.S. drivers choose to listen to terrestrial AM/FM radio over any other form of entertainment on the road.
    But radio listenership has also been bolstered by the unique ability of stations to capture local audience loyalty. Listeners tune in to hear familiar voices, such as Elvis Duran on New York’s Z100 or Ryan Seacrest on Los Angeles’ KIIS-FM. Conservative commentators have also traditionally commanded large followings on their radio shows, such as Fox News’ Sean Hannity.

    Contests and sweepstakes represent another unique draw to terrestrial radio. Major stations are known to allow listeners to call in and win prizes such as tickets to concerts or cash.
    “Radio is an interactive medium, and part of that is contesting,” Tom Poleman, chief programming officer at iHeartMedia, told CNBC. “For over half of our listeners, contesting is one of the reasons that they come to radio. Over time, contests has become more accessible with digital options like text-to-win and social media contests. Radio is also inherently social: 80% of our listeners say that they come because they trust our host to be the voices of the community.”
    iHeartMedia, which controls 860 stations across the U.S., captures an average of 250 million monthly listeners, the company said in November, the largest reach of any radio broadcaster in the U.S.

    Over-the-air evolution

    Like other legacy media, radio has faced increasing encroachment from digital audio formats, such as podcasting and streaming platforms. Radio giants such as iHeartMedia and SiriusXM have adopted podcasts and digital output as part of their business models.
    Podcasts, in many respects, function as the streaming iteration of radio, in the same way that Netflix was the streaming iteration of cable.
    Top radio companies have positioned themselves to benefit from the podcasting boom, in stark contrast to some media companies’ contentious relationship with streaming, as many have struggled to migrate their declining cable revenue to streaming.
    “There’s something about being able to focus on a human voice that is compelling,” Poleman said. “Our radio hosts have naturally become great podcasters and we weren’t surprised to see the explosion in podcasting. We feel it’s very complimentary toward broadcast radio.”
    Still, just like TV, radio faces advertising headwinds as the industry looks to recover from the Covid-19 pandemic slump, said Guggenheim’s Baker.
    In November, iHeartMedia CEO Bob Pittman noted ongoing “uncertainty” in the advertising industry. Multiplatform revenue was down 5.1% for the company year over year in the third quarter of 2023, primarily caused by a “decrease in broadcast advertising due to a challenging macroeconomic environment and a decline in political advertising,” the company said in a press release.
    Guggenheim forecasts iHeartMedia’s broadcast advertising revenue to decline about 23% for the full year 2023 when compared with 2019 levels.
    Likewise, other media companies have reported declining ad revenues within their TV units in recent months. CNN owner Warner Bros. Discovery reported a 12% drop in ad revenue for its TV segment for the third quarter of last year. Global TV ad revenue for 2023 is expected to be down 18% year over year, according to media investment firm GroupM.
    Baker also forecasts a “flat to down” broadcast revenue outlook for iHeartMedia and the terrestrial radio industry as a whole. But in the face of pay TV’s rapid decline, radio is faring well amid the broad contractions in the media industry.
    A spokesperson for the iHeartMedia noted that listening habits have changed since 2019 as more customers make the switch to listening on a digital platform, contributing to the decline in advertising revenue from broadcast.
    The representative also pointed towards the company’s growth in total revenue when compared to 2019, which factors in advertising revenue from both digital and broadcast platforms. For the third quarter of 2023, iHeartMedia brought in $953 million in revenue, they said, while in 2019’s third quarter, the company captured $948.3 million in revenue.
    “For [radio broadcasters], the hope is you can stabilize the terrestrial business enough and continue to grow the digital business to where digital growth offsets terrestrial secular pressures,” Baker said. “If you model this out, the digital business simply overtakes the legacy terrestrial business in the next five to six years.”Don’t miss these stories from CNBC PRO: More

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    Blank Street Coffee bets on subscription program to win over daily coffee drinkers

    Since its founding three and a half years ago, Blank Street Coffee has grown to 74 coffee shops across New York City; Boston; Washington, D.C.; and London.
    Blank Street CEO Vinay Menda estimates that the chain’s new subscription program could eventually account for 30% to 40% of its customers.
    The program, which has about 5,000 members, charges $8.99 or $17.99 weekly for 14 drinks.

    The exterior of a Blank Street Coffee location.
    Source: Blank Street Coffee

    Blank Street Coffee’s shops have taken over New York City as they lure in customers with cheap lattes and cold brew.
    Now the upstart chain aims to attract even more consumers who want to slash their coffee budgets through a subscription program.

    The Blank Street Regulars program, which opened to the public this summer, has drawn roughly 5,000 paying members — and another 4,000 are on the waiting list to join.
    For more than a decade, startups have turned to subscription models to generate guaranteed revenue, which can make their businesses more attractive to investors and juice their valuations. More established companies have also turned to monthly subscriptions as they try to draw regular customers looking for a deal. For example, members of Panera Bread’s Unlimited Sip Club pay $11.99 per month for “free” coffee, tea, caffeinated lemonades and fountain sodas every two hours.
    Since its launch three and a half years ago as a coffee cart in Williamsburg, Brooklyn, Blank Street has grown to 74 locations across New York City, London, Boston and Washington. The typical Blank Street location is small, with limited seating and a semi-automated Eversys espresso machine to make drinks.
    The startup has raised roughly $100 million, with backing from the likes of General Catalyst, Tiger Global and a co-founder of Warby Parker, according to PitchBook.
    As of March, the company was valued at $177 million, down from its prior valuation of $218 million roughly a year earlier, according to PitchBook. Many startups have seen their valuations decline as the Federal Reserve raised interest rates and economists worried about a recession.

    The chain has its critics. Blank Street’s rapid growth — and venture funding — have drawn grumbling and skepticism from some coffee drinkers. However, its prices have helped attract customers, especially as the cost of coffee beans soared in 2021 and $8 lattes became more common.
    In New York City, ordering an oat milk latte today will set a Blank Street customer back $5 — below the $5.45 charged by Dunkin’ or the $6.15 by Starbucks for comparable sizes. The chain’s lower overhead costs, such as the smaller square footage and fewer employees needed to make cappuccinos, help it charge cheaper prices for its coffee.
    But Blank Street Regulars, as the chain calls its subscription members, can save even more money on their coffee. Members pay either $8.99 or $17.99 a week.
    The cheaper plan covers basic drinks, such as teas, hot brewed coffee, Americanos and double espressos, while the more expensive option allows members to buy a wider range of beverages, including cold brew. To curb losses and avoid the fate of MoviePass, a movie theater subscription service that offered unlimited tickets before declaring bankruptcy, Blank Street caps the total number of drinks per week at 14, and customers have to wait at least two hours to buy another drink.
    Blank Street CEO and co-founder Vinay Menda estimates that about 30% to 40% of its customer base will eventually become members.
    “I don’t ever think it’s going to be the majority of customers,” he told CNBC.
    For now, Blank Street has capped the number of Regulars to ensure that its coffee shops and baristas don’t get overwhelmed by demand.
    “The more we can build capacity and build our stores out, the more we want to keep unlocking access for more people,” Blank Street’s Chief Product Officer Dan Hill said.
    The chain is working to improve capacity at its locations so it can accommodate those on the waitlist eventually. Those improvements include installing a second or third espresso machine so baristas can make more drinks quickly.
    Blank Street also recently launched Regulars across the pond in its London locations. For £12, or roughly $15, customers can buy any drink on their menu, with similar limitations to its U.S. program.
    The program already has a couple hundred members, according to Hill. In the U.K., Blank Street faces stiffer competition from Pret A Manger, the ubiquitous sandwich shop with its own coffee subscription program. But Menda said he thinks Blank Street’s version will win over customers who care more about coffee.
    Blank Street pursued a subscription program over a traditional loyalty program because its customers wanted an easy, fast way to benefit from visiting its coffee shops regularly, according to Hill. The chain’s relative youth gave it flexibility in designing the program.
    Hill said Blank Street is already thinking of ways to expand the program, such as adding family and group plans.
    “We don’t have to deal with the way a loyalty program that was designed 10 years ago and now has millions of members who are accustomed to the way things were,” Hill said.Don’t miss these stories from CNBC PRO: More

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    BYD’s five best-selling cars, including one edging out Tesla’s Model Y in China

    While Tesla’s Model Y was the best-selling purely battery-powered car in China for the six months ending in November, BYD accounted for four of the top 10.
    That’s according to China Passenger Car Association data cited by consumer information site Autohome.
    Here are the five best-selling BYD new energy vehicles in China, according to the data.

    BYD’s new luxury brand Yangwang is selling its first model, the U8, for more than 1 million yuan (US$160,000).
    CNBC | Evelyn Cheng

    BEIJING — BYD has overtaken Tesla again by the sheer number of new energy vehicles produced in 2023, thanks in part to the Chinese automaker’s hybrids and wide range of offerings in a lower price range.
    While Tesla’s Model Y was the best-selling purely battery-powered car in China for the six months ending in November, BYD vehicles accounted for four of the top 10 such cars sold during that time. When including hybrids, seven BYD cars made the top 10 list.

    That’s according to China Passenger Car Association data cited by consumer information site Autohome.
    Here are the five best-selling BYD new energy vehicles in China, according to the data:

    1. Qin Plus

    SHENYANG, CHINA – APRIL 01: A BYD Qin Plus DM-i sedan is on display during the Shenyang Auto Show at Shenyang International Exhibition Center on April 1, 2023 in Shenyang, Liaoning Province of China. (Photo by VCG/VCG via Getty Images)
    Vcg | Visual China Group | Getty Images

    The Qin Plus, BYD’s bestseller — the top-ranked across all new energy vehicles in China — sold nearly 400 more units than Tesla’s Model Y in the six months ending in November.
    The compact car comes in hybrid and battery-only versions. It’s part of BYD’s legacy series of cars named after Chinese dynasties. Qin Shihuang was the first leader of a unified China and known for his terracotta warrior burial site.
    Price: 99,800 yuan to 176,800 yuan ($13,942 to $24,700)

    Range: 420 km to 610 km (261 miles to 379 miles)
    For comparison, the Model Y has a driving range of 532 km to 688 km and currently sells for between 266,400 yuan to 363,900 yuan ($37,217 to $50,838) in China.

    2. Seagull

    SHANGHAI, CHINA – APRIL 18: A BYD Seagull small electric car is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China. (Photo by VCG/VCG via Getty Images)
    Vcg | Visual China Group | Getty Images

    The Seagull is a budget-priced boxy hatchback that BYD launched less than a year ago in spring 2023. The battery-only car comes in neon yellow-green, peach, black and white.
    Price: 73,800 yuan to 89,800 yuan ($10,310 to $12,545)
    Range: 305 km to 405 km (189 miles to 251 miles)

    3. Song Plus NEV

    SHANGHAI, CHINA – APRIL 18: A BYD Song PLUS DM-i SUV is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China. (Photo by VCG/VCG via Getty Images)
    Vcg | Visual China Group | Getty Images

    In third place among BYD bestsellers is the Song Plus, a compact SUV that comes in hybrid and battery-only versions.
    Price: 159,800 yuan to 209,800 yuan ($22,325 to $29,310)
    Range: 520 km to 605 km (323 miles to 375 miles)

    4. Yuan Plus

    SHANGHAI, CHINA – APRIL 18: A BYD Yuan PLUS electric SUV is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China. (Photo by VCG/VCG via Getty Images)
    Vcg | Visual China Group | Getty Images

    BYD’s Yuan Plus is a compact, battery-only SUV. During the six-month period ended in November, it sold nearly 17,000 more units than the Aion Y, a best-selling electric car from state-owned GAC Motor’s spinoff brand.
    Price: 135,800 yuan to 163,800 yuan ($18,972 to $22,883)
    Range: 430 km to 510 km (267 miles to 316 miles)

    5. Dolphin

    A BYD Co. Dolphin compact electric vehicle during a test drive in Yokohama, Japan, on Thursday, Aug. 8, 2023. BYD, the Warren Buffett-backed clean car giant, has sold 1.5 million fully-electric and hybrid passenger vehicles this year through July, half way to its annual target. Photographer: Kentaro Takahashi/Bloomberg via Getty Images
    Bloomberg | Bloomberg | Getty Images

    BYD’s small Dolphin electric car is another one of the company’s mass market vehicles that comes with the internally developed blade battery.
    Price: 116,800 yuan to 139,800 yuan ($16,317 to $19,530)
    Range: 401 km to 420 km (249 miles to 260 miles)

    Read more about electric vehicles, batteries and chips from CNBC Pro

    The blade battery helped spur BYD’s first flagship electric car, the Han sedan, to popularity.
    The Han is more expensive than most of BYD’s other cars with a starting price of 209,800 yuan ($29,310) for the battery-only version.
    While most of the company’s vehicles cost less, BYD last year also ventured into the high-end of the market with its Yangwang U8, with a starting price of more than 1 million yuan ($140,090).
    Chinese electric car startups Nio and Xpeng have both said they are planning to launch mass market brands later this year. Tesla has not yet made such announcements. More

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    State-run ‘auto-IRA’ programs aim to close retirement savings gap

    Seven states — California, Colorado, Connecticut, Illinois, Maryland, Oregon and Virginia — had created “auto-IRA” programs by the end of 2023. Others are slated to come on line.
    These programs require companies to offer a workplace retirement plan like a 401(k) or facilitate worker contributions into a state-sponsored IRA.
    More than 800,000 workers currently participate.

    Moyo Studio | E+ | Getty Images

    Roughly half of Americans don’t have access to a workplace retirement plan — but states are increasingly stepping in to fill that gap, both for residents’ wellbeing and their own.
    About 57 million people — 48% — don’t have access to a pension or 401(k)-type plan at work, according to the University of Pennsylvania’s Pension Research Council. Yet, Americans are 15 times more likely to save for retirement when they have a workplace plan, AARP Research found, and are 20 times more likely to do so if they’re automatically enrolled.

    By the end of 2023, seven states — California, Colorado, Connecticut, Illinois, Maryland, Oregon and Virginia — had launched so-called “auto-IRA” programs to try filling the 401(k) access gap, according to Georgetown University’s Center for Retirement Initiatives. Oregon was the first state to do so, in 2017.
    More from Personal Finance:More retirement savers are borrowing from their 401(k) planWhy employers can force out small 401(k) accounts once a worker leaves a jobJob data shows two kinds of workers: The ‘haves and have nots’

    What is an auto-IRA?

    Auto-IRA is shorthand for an automatic-enrollment individual retirement account. These programs require companies of a certain size to offer a workplace retirement plan of their own or facilitate payroll deduction into a state-sponsored IRA, at no cost to the employer.
    If the latter, part of workers’ paychecks would be automatically contributed — generally 3% to 5% of earnings — to the state plan. Workers can opt out.
    More than 800,000 workers participate in auto-IRAs, which hold more than $1 billion in total savings, according to The Pew Charitable Trusts.

    They save about $165 a month, on average, said John Scott, director of Pew’s retirement savings project.

    “This is a significant amount of money each month for these workers, many of whom, I’d say, have never saved for retirement in their lives,” Scott said.
    About 195,000 employers are facilitating payroll deduction into a state auto-IRA, Pew said. It’s unclear how many other companies instead opted to sponsor their own 401(k) plan or other workplace plan.
    More states are poised to bring programs online in the next few years: Delaware, Hawaii, Maine, Minnesota, Nevada, New Jersey, New York and Vermont, according to the Center for Retirement Initiatives.
    Other states — such as Massachusetts, Missouri, New Mexico and Washington — have created different programs, in which employer participation is voluntary. Hawaii’s forthcoming program is also slightly different since it doesn’t automatically enroll workers, meaning they must opt in.

    Why states are stepping in

    There’s a common thread here: A realization that people aren’t saving enough for retirement, Scott said.
    Companies have shifted away from pensions in favor of 401(k)-type plans, pushing the savings responsibility more onto workers. The typical saver age 55 to 64 has just $71,000 of 401(k) savings, according to Vanguard data.  
    All except the highest-income baby boomers are projected to fall short of a sustainable retirement income, even after accounting for Social Security, according to a separate Vanguard analysis. (High-income boomers are those in the 95th percentile by income. Their median annual income is $178,000.)

    This is a significant amount of money each month for these workers, many of whom, I’d say, have never saved for retirement in their lives.

    John Scott
    director of retirement savings at The Pew Charitable Trusts

    Meanwhile, the U.S. population is aging.
    In the 1980s, there were 3.9 working-age households for every elderly one, according to the Center for Retirement Initiatives. That ratio has since declined to about 2.5 to 1.
    Absent a policy tweak, these trends are expected to put financial stress on states. A growing pool of older adults with too little money to fund their lifestyles may mean states need to spend more on public assistance programs, for example, experts said. Working adults may also need to shoulder a greater tax burden.
    Pew estimates that state spending will rise by $334 billion from 2021 to 2040 due to insufficient retirement savings.

    Lack of 401(k) access has disproportionate impact

    Some lawmakers have tried but failed in recent years to create a national auto-IRA or similar program.
    Lack of 401(k) access disproportionately hurts certain groups, like those who work for small businesses, according to the Center for Retirement Initiatives. Access gaps are also larger among lower-income workers, younger workers, minorities and women.
    As such, participants in auto-IRAs skew female, younger and unmarried, Pew found. A greater share are people of color and have only a high school education.

    Automatic enrollment into such plans is meant as a behavioral nudge to overcome procrastination, a typical roadblock to enrolling in a 401(k) plan. About 30% of people opt out, Scott said.
    Since the accounts are Roth IRAs, they can also serve as emergency funds, Scott said. Such accounts allow investors to withdraw their contributions (but not necessarily earnings) at any time and any age without penalty, since they’ve already paid income tax on that money.

    Auto-IRA drawbacks: ‘These are not perfect programs’

    There are some drawbacks to auto-IRAs, experts said.
    For one, IRAs have lower annual worker contribution limits than 401(k) plans: $7,000 versus $23,000 in 2024, respectively. (Just 15% of savers maxed out their 401(k) contributions in 2022, according to Vanguard data.)

    Additionally, there isn’t an employer match — the “free” money workers get from companies that sponsor a 401(k) plan. About 80% of 401(k) plans offer a match, according to the Plan Sponsor Council of America.
    Auto-IRAs also don’t cover all state workers. Gig workers, for example, don’t have access. The smallest companies may not be required to participate, depending on state rules.
    “These are not perfect programs,” Scott said. “But this works. People are saving for retirement.”
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    Ken Griffin’s hedge fund Citadel posts double-digit returns in 2023, but lags the S&P 500

    Billionaire investor Ken Griffin’s various hedge fund strategies at Citadel all posted double-digit returns for 2023, but they failed to beat the broader market.
    Citadel’s multistrategy Wellington fund gained 15.3% last year, according to a person familiar with the returns.
    Hedge funds on average gained just about 4.4% in 2023 through November, according to research firm HFR.

    Ken Griffin, Citadel at CNBC’s Delivering Alpha, Sept. 28, 2022.
    Scott Mlyn | CNBC

    Billionaire investor Ken Griffin’s various hedge fund strategies at Citadel all posted double-digit returns for 2023, but they failed to beat the S&P 500.
    Citadel’s multistrategy Wellington fund gained 15.3% last year, according to a person familiar with the returns. The flagship fund had enjoyed a stellar 2022 with a 38% gain, marking its best year on record.

    The Miami-based firm’s tactical trading fund gained 14.8% in 2023, while its equities fund, which uses a long/short strategy, returned 11.6%, said the person who spoke anonymously because the performance numbers are private. Citadel’s global fixed income fund returned 10.9% last year, according to the person.
    The stock market pulled off a surprisingly strong 2023 with the S&P 500 climbing 24% on the year. Risk assets enjoyed a big relief rally as the economy remained resilient and inflation cooled, while the Federal Reserve signaled an end to rate hikes and forecast rate cuts later this year. The market also endured a regional banking crisis as well as wars in Ukraine and the Middle East.
    However, the volatility and the tricky macro environment made it difficult for certain hedge fund strategies to beat the market. Hedge funds on average gained just about 4.4% in 2023 through November, according to research firm HFR.
    Citadel is returning all of 2023’s $7 billion in profits to investors and the firm has handed back about $25 billion to investors since 2018, the person said. The financial giant has about $58 billion in assets under management.
    Citadel declined to comment.

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    Cliff Asness’ AQR Absolute Return fund gains 18.5% in 2023, boosted by value picks

    Cliff Asness’ longest running multistrategy fund at AQR Capital Management returned 18.5% last year, net of fees, according to a person familiar with the performance.
    Asness co-founded AQR in 1998 after a stint at Goldman Sachs.
    AQR has $99 billion in assets under management as of Dec. 31.

    Cliff Asness.
    Chris Goodney | Bloomberg | Getty Images

    Cliff Asness’ longest running multistrategy fund at AQR Capital Management returned 18.5% last year, net of fees, according to a person familiar with the performance.
    The AQR Absolute Return strategy, which was created in 1998, benefited the most from profitable picks among value stocks in 2023, according to the person, who spoke anonymously because the performance details are private. The fund enjoyed its best year in 2022, rallying 43.5%.

    The firm’s dedicated value strategy, the AQR Equity Market Neutral Global Value strategy, gained 20.6% in 2023, the person said. This reflects AQR’s superior stock selection as the broader Russell 1000 value index only returned 8.8% last year.
    Asness co-founded AQR in 1998 after a stint at Goldman Sachs. He and his partners established the quant-driven firm’s investment philosophy at the University of Chicago’s Ph.D. program, focusing on value and momentum strategies.
    AQR has $99 billion in assets under management as of Dec. 31. AQR declined to comment.
    The firm’s alternative trend following strategy, the AQR Helix Strategy, posted a net return of 14.3% in 2023, the person said. The gains were fueled by alternative commodity markets, such as iron ore as well as European natural gas and power prices, the person said.
    The AQR Apex Strategy, a new multistrategy fund created in 2020, gained 16.2% last year, the person said.

    Still, AQR’s various funds didn’t top the broader market last year. The S&P 500 rallied 24% in 2023, boosted by mega-cap technology names. The tech-heavy Nasdaq Composite ended the year up 43.4% for its best year since 2020.Don’t miss these stories from CNBC PRO: More