Riscario Insider

Unemployed: How To Make Your Exit Easier On You

noreply@blogger.com (Promod) — Sun, 15 Nov 2009 02:20:00 +0000

Wed, Nov 11: Remembrance Day

Thu, Nov 12: unemployed

Fri Nov 13: Friday the 13th

Sat Nov 14: pack up and depart forever

On November 11, we look back to past heroes. On Friday the 13th we worry about bad luck. So what happens on Thursday, November 12? We look to the future and hope for good luck. Even if newly unemployed.

November 12

The day started early in Cambridge, about an hour west of Toronto. The Benefit Guys were hosting a half day seminar on The 21st Century Consumer. I was presenting How To Succeed With Entrepreneurs Part 1. I left early, skipped lunch and raced through highway/city traffic for 70 minutes to get to my downtown Toronto office for a must-attend meeting on the annual retirement roadshow. Since I have no involvement with retirement products, I didn't know why I was needed. Minutes later, I found out.

Shortly after 1pm, a Senior Vice President led me to the Rogers Room just next to the President's office. In this cosy room with a gorgeous view north to the Ontario Parliament Buildings, sat a representative from Human Resources. Uh oh ...

I was reminded that sales through National Accounts were low, expenses were high and profitability was poor. There were no prospects for a quick turnaround. So I was losing my job effective immediately. I asked if anyone else was affected but they would not say. I figured I was the only one, which was not a pleasant feeling.

National Accounts have offices across the country and include the places most people bank and invest. I spent most of my time supporting independent regional firms but was part of the National Account support team.

I was left with the HR representative to review a two page summary of statutory benefits and additional severance. The package looked reasonable for 18 years and 5 months of employment. After she left, an outplacement consultant came in to explain the services they would provide.

My emotions were jumbled but I felt optimistic about the future. Although I didn't pick the timing, I was glad to have a financial cushion while searching for new opportunities.

Then There Were None

I went back to my office to pack up. That's when I learned the whole National Accounts division was shutting down. The 1pm meeting time allowed synchronized terminations from coast to coast. In my office alone, five people --- including my boss --- lost their jobs. In a strange way, it's comforting to know that others are going through the same thing.

Unaffected employees were being told the news in a meeting. I was advised to leave before returned. I did. In the confusion, I forgot to bring my package with me. I tried phoning home but my Blackberry had been wiped clean and disabled. That's efficient.

What You Think

A lot goes through your mind when an unexpected shock hits. Deep down, I was optimistic about the future since I've invested in learning and honing portable skills. We are in the information age and knowledge age are we not?

Leaving forever isn't easy for practical reasons. If you work in a corporate environment you face the challenge of extracting your personal information from your office, computer and smartphone. Thing like

files
contacts
calendars
emails
subscriptions to print publications

Since you're likely required to leave corporate equipment when you exit the building, plan ahead. The company probably has a backup of all your files. That helps them but not you. In my case, my company notebook computer was in my car and I took it home without thinking. What a blessing.

Getting Personal Files Off Your Work Computer

As a precaution, I already had backups of my personal files on a portable hard drive and home LAN. Each day, I followed a multistep synchronization process: work computer to portable hard drive to home computer to home LAN. And vice versa. At most, I'd lose one day's files.

Online offsite backups are worthwhile too. I have yet to investigate options but will soon.

If you have a desktop computer, a USB memory key works well (unless it's blocked). Ideally, you'd keep no personal files on company equipment. That was a key reason for getting a netbook computer recently.

You can probably find instructions for copying personal information by searching online. However, you should already have a scheduled backup strategy in place.

Backup Your Contacts

As I left the meeting, my Blackberry had already been reset. The contacts, calendar and emails were all wiped out. The phone still worked but I didn't realize this until the next day.

Synchronizing contacts was a bigger problem because the Outlook Import/Export feature was disabled. It only seems to work when connected to the corporate LAN. I found this out when exporting my contacts to LinkedIn months earlier. Luckily, I routinely scan business cards and store them in PersonalBrain (reviewed earlier).

Backup Your Calendar

Calendars are a problem. Mine are entirely electronic, which meant no paper backups. While Outlook synchronizes with my Blackberry, that's of no use when you leave your equipment behind. Luckily, Google Calendar Sync can help if you use Gmail.

Change Your Contact Information

Your contact and employer information is probably in more places than you recall. Here are some:

LinkedIn
Facebook
professional directories
groups and associations
email mailing lists (if you can remember which they are)

When you're ready, post a quick status update to let your connections know you're now self-employed. For dramatic effect, I waited until the next day, Friday the 13th.

Since all my future work commitments were now cancelled, I alerted the parties affected in the near future. Why not make your exit easier on them too?

Now it's time for a sabbatical before deciding on a future direction.

Links

Podcast Episode 43 (7:26)

direct download | Internet Archive page

Three Reasons Why Financial Literacy Eludes Us

noreply@blogger.com (Promod) — Sat, 07 Nov 2009 16:52:00 +0000

Although I am almost illiterate mathematically, I grasped very early in life that anyone who can count to ten can count upward indefinitely if he is fool enough to do so.
--- Robertson Davies

Yes, we want to make good financial decisions. Yes, we have the capability. However, universal financial literacy remains beyond our grasp for three reasons

trouble reading
trouble perceiving
human frailty

Let's examine them.

Trouble Reading

About one in seven Americans can't read. About 40% of Canadian adults can't read at the level of a high school graduate. Of this group, 15% have serious problems dealing with any printed materials. Maybe they can handle Dr. Seuss, but that won't get them far in life.

Do not worry about your problems with mathematics. I assure you mine are far greater.
--- Albert Einstein

While literacy result are bad, numeracy is even worse. According to the 2003 International Adult Literacy and Skills Survey (IALLS), 55% of Canadians have inadequate math skills. Other countries have issues too. BusinessWeek reports that "Americans are functionally illiterate". The University of Michigan found that only 18% of boomers could solve a simple question involving compound interest. Unfortunately, I can't find that question to share with you.

Even if you're comfortable with words and numbers, you may make the wrong decisions.

Trouble Perceiving

Let's look at snack food and fast food. You're overwhelmed with layers of flavours and sensations: smooth/crunchy, sweet/bitter, hot/cold, hard/soft. This makes food harder to resist. We eat based on the size of the plate. If it's on the plate, we think it'll fit in our bellies. Our bellies expand to accommodate us.

Financial products are hard to compare, which complicates our decisions. What is the cost of a floating rate mortgage compared with a fixed rate mortgage? How much does your credit card really charge you in a year: annual fees, surcharges on exchange rates, interest penalties for late payments? How would this compare with other credit cards? I met someone who pays annual fee of $400 for a credit card because of perceived rewards.

We're better at perceiving change that's linear than geometric. The pattern 1, 2, 3, 4, ... makes more sense than 1, 2, 4, 8, 16, ... but the latter is closer to real life. Compounding interest works for us when saving and against us when borrowing. An interest rate of 1% compounding monthly is higher than 12% a year.

If a mutual fund earns 9% over a year and charges a Management Expense Ratio (MER) of 2%, you'd expect a net return of 7%. You'll get something different because the fund value fluctuates daily and the MER is typically deducted daily a compounding effect).

Try these challenges from earlier posts

Human Frailty

Businesses make money from our weaknesses. Naturally, they propose their products as the solutions. Napoleon Hill identified our six basic fears in 1937 and they're still with us.

Education helps us fight temptation. Discipline keeps us on track.

Financial planning involves immediate pain for long term gain. We feel the pain of saving now but have difficulty visualizing the benefits of secure retirement income decades later. We think we can start saving later, which means we lose the substantial benefits of compounding growth.

Get Smart

Ontario students will learn financial literacy from grades 4-12 starting in 2011. That's great since habits start young. However, we can change at any age. This video from accountants gives helpful basics.

You can also learn from financial bloggers, your advisors and others you trust. You just need the spark of desire to start.

Links

Adult numeracy in Canada (Canadian Government)
Financial Literacy for Canadians (fundraiser from ABC Canada)
VISA revises its financial literacy website (Jonathan Chevreau, Nov 4, 2009) | many links
Financial literacy: the time is now (BusinessWeek, July 22, 2009) | many links
Finance Minister Jim Flaherty on financial literacy
Understanding Money website (Australian government)
Should Canada invest in financial literacy? (Ellen Roseman)
Our six basic fears according to Napoleon Hill
image courtesy of Sigurd Decroos (Belgium)

Podcast Episode 42 (5:41)

direct download | Internet Archive page

Why Insurers Won't Insure You (H1N1 anyone?)

noreply@blogger.com (Promod) — Sun, 01 Nov 2009 01:43:00 +0000

You can't always get what you want.
--- The Rolling Stones

You've got the money. What you want is legal and widely available, but you can't buy it. Who would turn you away? An insurer.

This isn't because of supply and demand. After all, an insurance policy is just a printed promise. The quality of the promises varies, but there's plenty of paper to print them.

Why Refuse Motivated Customers?

Conventional wisdom says that insurance is sold, not bought. If you're interested in getting coverage, you're viewed with suspicion. Who wants to buy insurance? Maybe you know something you think the insurer won't find out.

We're self-motivated to buy insurance when we think we're likely to get a higher-than-normal payoff. If we win, the insurer loses.

Underwriters

Underwriters classify risks. Bad risks pay more if they can even get protection. You undergo a similar process when you apply for a mortgage. The higher your creditworthiness, the more you can borrow and lower the interest rate you pay. Similarly, insurers look at your health rating and your finances.

Asymmetry Of Information

What if you know something the insurer doesn't? You stack the odds in your favour. Insurance spreads risks among large groups with similar characteristics. Smokers die younger and have more health problems. Suppose a smoker pays the same price as a nonsmoker. By overpaying, the nonsmoker is subsidizing the smoker. That's unfair. Insurers try to assess each risk fairly and charge accordingly.

Fear Motivates

Since we're attentive to bad news, the media gives us plenty (unless you live a low noise life). Take the current "swine flu" (2009 H1N1 Flu). In previous years, we've warned about West Nile virus, SARS pneumonia, mad cow disease and avian flu (H5N1).

If you've had a bout with a disease, you may want to buy insurance and find you can't --- especially if you were hospitalized. The insurer may require that you wait months to show that you've recovered. By then, you may forget or lose interest. The insurer would rather turn away business than take on an unexpected risk.

Links

Keeping promises: do you care about corporate governance scores?
how swine flu affects your insurance options (Canadian Business, Nov 2009)
how your health and risky hobbies affect your insurance options (Canadian Business, April 2008)
image courtesy of Melodi T (Aukland, New Zealand)

Podcast Episode 41 (3:04)

direct link | Internet Archive page

Why Is Financial Planning Ignored?

noreply@blogger.com (Promod) — Sat, 24 Oct 2009 21:36:00 +0000

If you don't know where you're going, any road will take you there. --- Lewis Carroll

Do you plan before you start or start before you plan?

When discussing finances, some advisors feel you must have a comprehensive financial plan but most recommend piecemeal solutions. You'll find background on Million Dollar Journey where a financial planner laments that Most Financial Planners Don't Plan Finances. Read the comments too.

Some financial planners get overzealous. They feel their way is the "right" way and look down on other advisors. You see similar divides in the Mac vs PC camps and the Microsoft vs Google groups. How unproductive.

Can you save for retirement without knowing how much retirement income you need? Certainly. You might not save the "right" amount but you're moving in the right direction.

Planning To Fail
Here are the problems with financial plans

they are expensive
they are boring
they are wrong

But they are better than nothing. You'll guess wrong on critical assumptions like investment returns, inflation and how long you're likely to live.

No Customers
You'll find financial planners who would eagerly prepare financial plans for a fee. They have trouble finding paying customers. A financial plan typically costs $750 to $5,000 plus ongoing maintenance plus tax . Do you get your money's worth?

You wouldn't pick a laser eye surgeon solely on price, but what about a financial planner? Are you paying for the expertise of the planner, as you would for a surgeon or are you paying for the hours they spend developing the plan? How can you judge the quality and relevance of the plan?

Slow and Painful
Financial planning is much like visiting your doctor for a physical. You answer questions, submit to tests and then get told to eat better, sleep more and exercise more. You already knew that. Will your behaviour change even if you're heading for trouble?

To get a financial plan, you sit down with a financial planner and perhaps an assistant who takes notes. You answer questions for what feels like hours ... and is. You leave your financial records (e.g., tax returns, bank statements, insurance policies, investment statements, etc). The assistant inputs the data into financial planning software (generally an Excel spreadsheet) which the planner reviews. Weeks later, you come back to review the plan, which may induce drowsiness. You'll find out what's wrong with your financial life and get recommendations in a thick, nicely bound report. By coincidence, your financial planner can often sell you the suggested products (their main source of revenue). You'll likely buy because you've already spent so much time and perhaps money too.

Because the process is painful, you probably won't get a plan from another advisor for comparison. You're less likely to switch advisors later. So financial plans are an effective business tactic.

Financial plans can be tough to grasp and we're in a world where financial literacy is a concern. Basics like how compound interest works aren't well understood. We're not known for making rational decisions either.

Ways to Pay
You can pay for financial plan in several ways

money: which may be refunded if you buy the recommended products (like a refundable deposit)
no fee: the advisor gets paid for selling the recommended products (which creates a potential conflict of interest)
free: as a reward for being a large customer (you're already paying for other services and this is a way to coax you to buy even more)

How Plans are Developed
Like tax returns, financial plans are developed using software. You'll find three categories

sophisticated commercial grade: e.g., FP Solutions, Naviplan (can be difficult or cumbersome to use)
simplified: generally point out deficiencies with your insurance or investments (which the planner can help you rectify); might be unique to the firm
proprietary: developed by the planner but not as well tested as commercial grade software

I've had FP Solutions Business Edition for years. This is extremely sophisticated tool costs $1,335 a year (plus tax). Since I didn't know how to develop financial plans, I got training (live, webcast and prerecorded). I rarely use it, though. I offered to develop free financial plans with advisors but got no takers. Zero.

Evidently, life goes on without financial plans.

Secrecy
Financial planners boast about their financial plans, but they're reluctant to show them. They certainly don't want competitors to see. Why this fear? A finished plan doesn't look distinct. I've seen dozens. They're generally

printed in colour on nice paper (though internal drafts may be in black & white on cheap paper)
include graphs and tables
in nice binders or bound with Cerlox or wire spines
have an executive summary because of the length
dozens of pages (though most of the content is generic)

You can't see the wisdom that went into developing the plan. You just see the printed result and wonder about the value.

The Real Reason

In the classic book Selling The Invisible, Harry Beckwith points out that our "financial" matters are private and sensitive. Also "planning" sounds tedious and difficult. Acting on the plans shackles our freedom. Now combine "financial" and "planning". Is it any wonder that financial planning and financial planners get ignored. What do you think?

Links

Podcast Episode 40 (6:59)

direct link | Internet Archive page

Why You Can't Know What You Want

noreply@blogger.com (Promod) — Sun, 18 Oct 2009 00:06:00 +0000

Don't it always seem to go,
That you don't know what you’ve got
‘Til it’s gone.
--- Joni Mitchell, Big Yellow Taxi

You can't get what you want

Till you know what you want.

--- Joe Jackson

Joni and Joe are both correct but there's another aspect: You can't tell what you want until you know what's available.

Some people try but they're cheating themselves. This is often when they're looking for the cheapest price today. In the prior post, we looked at why you can't (and don't) buy on price.

You can't decide without knowing your options.

An Example

Let's look at a concrete example: buying a computer. Here's a page from a old Best Buy flyer. Click on it to enlarge and take a look. Using only this ad, which computer would you pick?

You might buy based on

price: low, medium or high
brand
features or benefits
screen: size and resolution
performance: CPU speed and memory
portability: weight and size
intended usage: might pay more for business-grade
product life: more expensive might reduce the need to replace the computer

As you look at the ads, notice what's generally missing: weight, battery life, thickness and screen resolution.

What you think you want, may not be what you buy or what satisfies you. That's what happened when I bought one of those new-fangled all-the-rage netbooks.

Case Study

I thought netbooks were interchangeable and bought primarily on price (not from Best Buy).

I got an HP Mini 110 for $50 off. The price was fair, but I quickly found that what I got wasn't what I wanted. I got annoyed by the bilingual keyboard (a pet peeve), trackpad buttons on the sides instead of the bottom, the lack of Bluetooth, the weak wireless antenna, and the poor resolution anti-glare screen (1024x576).

Next, I spent a bit more for a Dell Mini 10v. This eliminated the problems with the HP but added three new ones

wrong screen resolution: 1024x600 glossy instead of the advertised 1366x768
a three hour battery instead of the previous six hours (assuming one hour per cell)
heat: runs too hot, which can't be good for the components or your lap

Finally, I got the Dell Mini 10, costs the most but eliminates the issues above:

screen resolution: 1366x768 (a real joy)
battery: 6 hours (estimated)
metal case: more rugged
low heat: uses a more expensive Atom Z chip in place of the usual N processor
no moving parts: more durable

The Surprise

Here's the big surprise with the Dell Mini 10: complete silence. Portable computers are generally quiet but the spinning hard disk and cooling fan make some noise. I paid an extra $130 for a 32 GB solid state hard disk (SSD) made from memory chips instead of the usual spinning 160 GB magnetic hard disks. Frigid winters, humid summers and foreign travel are tough on delicate mechanical devices. Even if nothing goes wrong, there's the worry that something could. What do you do then?

The multi-touch trackpad is a "free prize" that did not affect my purchasing decision but is very satisfying to use.

Lesson Learned

The point here is not to keep spending more because your needs are probably different. The lesson is that I didn't realize how much I valued silence before. There's no way I would have bought the Mini 10 at the outset because I didn't know what I wanted or how much I'd pay for it.

You've probably had similar experiences. We don't know what we want until we know what is available. We can't know.

Links

Podcast Episode 39 (5:42)

direct link | Internet Archive page

Why You Can't (and Don't) Buy On Price

noreply@blogger.com (Promod) — Sat, 10 Oct 2009 18:55:00 +0000

Today we're looking at prices from free to crazy.

The High Price of Free

We're getting the Toronto Star newspaper free for six weeks. This isn't a gimmick where you pay for Saturday and get Monday-Friday for free. We're getting the paper Monday through Saturday with no obligation. What a hassle. We glanced through a few issues but now the paper piles up in the recycling bin unread. Free has a price: time.

You probably get lots of free email that you don't read but which doesn't annoy you enough to unsubscribe. You probably gave away personal information to get the freebies. The Internet is basically free, but your behaviour gets tracked anonymously through cookies.

You can get library books free but popular titles have a waiting list and a seven day nonrenewable loan period (at least in Toronto). You pay in time, again. Television is free with commercials or ad-free with paid subscriptions.

There's nothing wrong with free, but you pay in some way. If lunch is free, count on listening to a sales pitch.

Different Prices For Nearly The Same

Have you noticed netbooks, the cute, light, inexpensive portable computers? Most models have nearly identical specifications thanks to pressure from Microsoft and Intel to cap the capabilities. For instance, Microsoft is chopping the maximum screen size from the current 12.1" to 10.2" for Windows 7.

Despite the similarities, you'll find surprisingly large differences in usability, design and quality. Unless you buy solely on price.

Think about macaroni & cheese. Prices differ when the ingredients differ. Real cheese costs more than simulated, powdered stuff. You'll also pay more in a restaurant than at home.

The Same Price For Very Different

Houses of the same price differ too. One place may have plenty of washrooms but use cheap carpet instead of hardwood. Or the kitchen may wow you but the guest bedroom may be the size of a large walk-in closet. Or the house may be perfect but on a major, noisy street.

Advisors

Advice differs because the advisors vary in quality. Professional designations and experience are often measures of quality. But not always. Either could be dated or irrelevant.

It's very difficult to identify the best advice since you're dealing with an intangible. Better ingredients usually mean better results, but some people can burn water.

Water Water Everywhere

Tap water is essentially free. That's the source of Coca-Cola Dasani and Pepsi Aquafina, but those brands cost more. Often more than soft drinks, which have the added cost of additional ingredients. If you like spending even more, there's Fiji natural artesian water and glacier water (which we drank free atop the Athabasca Glacier in Alberta).

It's all H₂O but if the choices were placed in front of you, which would you pick? Which would you want to pick?

Even if you normally drink tap water, what do you do when you're parched and there aren't any water fountains around? Price matters but so do many other factors. We don't always pick free or the cheapest.

Links

Podcast (4:11)

direct link | Internet Archive page

How Effective Are Tax Auditors?

noreply@blogger.com (Promod) — Sat, 03 Oct 2009 22:30:00 +0000

No one wants to get audited. Not even the tax auditors. But they get audited too.

The Auditor General, Sheila Fraser, looked at how the Canada Revenue Agency (CRA) audits Small and Medium Enterprises (SMEs). Despite 5,600 staff focusing on these businesses, earlier problems remain. As taxpayers, we want compliance with the rules to ease our tax burdens, which vary considerably by province, especially for entrepreneurs.

We're talking about big dollars. The CRA estimates there aren't many tax cheaters but those abusers cost us plenty. About $12.7 billion in unpaid tax according to their 2006-07 Annual Report. Of that, about $2.5 billion relates to SMEs.

Overall, the Canada Revenue Agency (the Agency) has made unsatisfactory progress in addressing the recommendations we selected from our previous reports for follow-up.
--- Auditor General, March 2009 Status Report

Sheila found the "taxman" fares poorly in

taxing the underground cash economy (targeted by 1,000 CRA staff): "about half of its underground economy audits over the past five years did not detect unreported income"
auditing too many low-risk files

Auditing The Wrong Files

The CRA "has difficulty demonstrating that it is selecting and auditing small and medium enterprises of high risk or priority."
--- Auditor General, March 2009 Status Report

The CRA uses computerized risk assessment to classify tax returns by the potential tax recovery into four categories from low to high. That makes sense.

However, the CRA focuses on low-risk files where they expect a $0 tax recovery. This is like targeting drivers going 0-10 above the speed limit but ignoring drivers zooming past at 50+.

In the last two fiscal years, the CRA audited 87,000 SMEs. Of these, 13% were tagged as high-risk and brought in 41% of the total tax recoveries. However, 56% of the audits were on zero or low-risk files and brought in 39% of the total tax recoveries.

"Available auditors may lack the experience necessary to do complex high-risk files and therefore audit lower-risk files."
--- Auditor General, March 2009 Status Report

What's going on? Among other explanations, CRA says their auditors are better suited to doing low risk audits. Also, audits do turn up problems even where tax recoveries are low. This is like a "broken windows" approach: tackle minor crimes like speeding and littering to prevent bigger crimes.

The CRA does not know why high-risk files bypass audits because the human screeners who make the ultimate decisions aren't required to document their reasons. Screeners favour their own judgement over computerized risk assessments. Human judgement leads to inconsistencies.

The Right Staff
During the Tax Roundtable in the 2008 CALU conference, a CRA official reported difficulties filling two senior vacancies in the Ontario audit unit. Why? The pay scale starts at $40,973 and caps out at $110,779. The private sector pays better. Also, tax auditors would rank among the least prestigious professions. Want proof?

At a party, announce that you're an actuary and people will leave you for fear of boredom. Say you're a tax auditor and watch them bolt even faster and go further away.

Cheaters

The study found that most people know little about the implications of tax cheating, and concluded that more communication would encourage better compliance.
--- 2007 public opinion research by the CRA

Honest taxpayers suffer. Cheaters prosper and encourage others to follow. Until they're caught. Let's see what happens.

Links

Auditing Small and Medium Enterprises by Canada Revenue Agency (Auditor General, March 2009 | 40 page PDF)
2009 Auditor General's Reports Released (KPMG)
Biography of Auditor General Sheila Fraser (about.com)
Mope, Gloat or Move: How tax compares by province
Surviving an audit: two lies and three tips
photo courtesy of Adam Ciesielski (Capetown, South Africa)

Podcast Episode 37 (5:45)

direct download | Internet Archive page

Three Steps To Keeping Financially Solvent

noreply@blogger.com (Promod) — Sat, 26 Sep 2009 22:27:00 +0000

It is hard for us without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.

--- Joseph Cassano of AIG on their credit default swap business (Aug 2007)

Well, a house of cards was never built for shock
You could blow it down in any kind of weather.
--- Dire Straits, Solid Rock

Julie Dickson addressed a sold-out audience at the Actuaries' Club of Toronto this week. She's the Superintendent of Canada's most important regulator, the Office of the Superintendent of Financial Institutions (OSFI). Her remarks were informative, interesting and have relevance for you. OSFI oversees the federally-regulated banks, trust companies, insurance companies and pension plans.

Julie was accompanied by my first actuarial boss, Stuart Wason, now a Senior Director at OSFI. We haven't met in years. During my summer job at Crown Life, I learned plenty from Stuart and Henry Essert. They inspired me to pursue my actuarial career. I'm in their debt and haven't thanked them enough.

Offend the tax department and you can appeal all the way to the Supreme Court. Offend OSFI and your company risks swift intervention. Don't expect much sympathy either.

Actuaries would be well served to sit up and take notice of the speed at which risk management expectations are changing.
--- Julie Dickson

OSFI's mandate is solvency: ensuring that financial institutions have enough capital to weather financial storms. How? By predicting the unthinkable, setting high standards, and intervening early. This process works wells in protecting the public and the politicians. Here only one financial services company cuts dividends (but they cut them in half).

You can protect your own financial solvency as you follow the four steps in wealth management. Let's look at three ways

predict the unthinkable
follow high standards
forget bailouts

Predict The Unthinkable

Your challenge as actuaries is to learn from the past but like your motto says, you need to "see beyond risk".
--- Julie Dickson

We underestimate risk, especially during periods of stability. Also, we fear the wrong risks. So we don't prepare for storms and get shocked when the tide reminds us that our castle was made of sand.

We can't predict and prepare for every disaster but we still benefit from planning.

We can look at different "what if" scenarios, especially the bad ones we like to ignore.

Suppose a car accident confines you to a wheelchair for life. What happens to your savings, your ability to work and your future earnings?
Suppose you're forced to retire five years early due to a layoff or ill health. What happens to your retirement income?
Suppose you live an extra 10 years or earn lower returns after tax and inflation. Would your money last?

You can examine your current and projected financial situation more regularly with your financial advisor. Ideally one who know how to stress-test your plans. Maybe you're following simple "rules of thumb". Changing conditions can make them obsolete. In Dumb Money, Daniel Gross identifies four simple but incorrect assumptions that leading to the financial crisis in the US.

Yes, we can over-prepare but we're more likely to do too little.

Follow High Standards

Life is going to be more challenging for "experts", and a premium will be placed on how well you can explain such things as actuarial reserves and capital.
--- Julie Dickson

Raise the bar on your risk management. Picking better quality investments does dampen the returns (the perennial risk vs reward quandary) but the chances of potential problems drops too. Diversification helps diminish risk too.

Canada trusts actuaries to apply principles, which requires judgement. The US prefers rules, which makes compliance easier to monitor. Since rules don't change quickly, companies can follow the letter of the law without following the spirit.

Forget Bailouts

You can take on extra risk if you've got someone to bail you out. Maybe you've got a kind rich aunt. The financial sector turns to us taxpayers. Without market discipline, companies can take undue risks with impunity. That's where we rely on the regulators.

We face four key financial risks: outliving your savings, dying too soon, getting sick and getting disabled. What are you doing about them now while you can? You are your own regulator (unless you have a spouse).

Links

The dangers of visiting OSFI's website
Text of Superintendent Julie Dickson's speech (PDF | Sept 23, 2009)
OSFI website
Only one Canadian financial services company cuts dividends (Reuters, Sep 24, 2009)
Fearing the Wrong Risks (with examples)
Finance Minister Jim Flaherty on the Economy and Financial Literacy
Keeping Promises: Do you care about Corporate Governance scores?
Our four key financial risks
The four steps in wealth management
photo courtesy of Simon Bond

Podcast (6:10)

direct link | Internet Archive page

How Advisors Fool You (and what you can do)

noreply@blogger.com (Promod) — Sun, 20 Sep 2009 00:00:00 +0000

You can fool some of the people all the time, and those are the ones you want to concentrate on.
--- George W. Bush

We're surrounded by companies and people who want to make money by fooling us. Look anywhere. The fine print taketh away. Restrictions apply. Supplies are limited. Previous investment performance is not indicative of future returns. Object magnified to show the fine detail. Limited time offer. Some terms and conditions apply. See dealer for details. Subject to credit approval. Excludes Hawaii and Alaska. New customers only. Subject to change without notice. May not be as illustrated. Penalties for early termination. Batteries not included.

We respond by becoming skeptical and cynical. We don't believe the claims and we don't know who to believe.

Congratulations! You Won $1,000,000.00

Did you ever receive a letter saying you won a million dollars? The first time, you might have believed. You at least wanted to believe. Did you tell someone excitedly and have them laugh at your gullibility? As you dug deeper, you realized the fine print said that's how a letter to you might look if you won by entering the contest. The fine fine print showed that your chances of winning were basically zero and that the contest was running for months and months. You also noticed the bulk mail stamp.

Won't get fooled again.

One To One

Folks are basically decent

Conventional wisdom would say
But we read about the exceptions
In the papers every day
--- Rush, Second Nature

Companies likely meet the letter of the law but perhaps not the spirit. You can find countless examples of shocking behaviour in Ellen Roseman's blog and at Consumerist. When you're dealing with an advisor, it's tough to gauge how much they know and if they truly have your best interests at heart.

I see life insurance proposals that are incomplete to the point of being misleading. Or assumptions distort the results. Or apples get compared with mangoes. Or no comparison is made with other options. Or the fine print has been left out.

Your Solution

You're not helpless. Here's what you can do: ask for a copy of the details.

Even if you don't think you'll understand them. Even if you're not planning to get a second opinion.

You're really after the advisor's reaction. Is the advisor willing to comply? If not, what are the "reasons"? How long does the advisor take to reply? Did you really get what you requested? Were pages left out?

Be sure to ask for this information by email along with a copy of what you've already been shown. What the advisor does may delight or disturb you. At least you'll know now.

The fine print taketh away. So does the lack of fine print.

Links

How to evaluate a proposal from an advisor
image courtesy of Miroslav Nagy

Podcast (3:47)

direct download | Internet Archive page

Toodledo does more than Remember The Milk

noreply@blogger.com (Promod) — Sun, 13 Sep 2009 02:22:00 +0000

You can't risk forgetting tasks. Maybe you’re a student back in school or a business wrapping up your fiscal year. Either way, you need a system to remember.

Last year, I looked at web-based task managers and picked Remember The Milk (see The Friendly Way: Remember The Milk and Everything Else). This year, I didn’t renew. What happened?

I switched to Toodledo instead. Here’s why.

Remember The Milk (RTM)

RTM feels friendly. You almost feel like organizing. The clean interface deceives you with its hidden power but never feels intimidating. You can even use RTM offline with Google Gears and synchronize when you’re back online. You can add tasks by email, voice (using Jott or Dial2Do), or your iGoogle homepage. You have access via your mobile phone. Some features are available only in the Pro version which costs a modest $25 US/year --- peanuts for you but bananas for mascot Bob T Monkey.

So why switch?

Subtasks
In real life, a task may have several steps or subtasks.

Say you want to brush your teeth but can't. You ran out of toothpaste because you didn't use an organizer before. You first need to buy toothpaste. Maybe you floss before brushing. Here's your task list

Brush teeth
a. buy toothpaste
b. floss

Get the idea? A simple sequential hierarchy helps.

RTM users have asked for subtasks since 2005. Nothing has been done and there's no workaround. Other organizers have subtasks, which puts RTM at a competitive disadvantage, but nothing was done last year.

If you’ve ever managed a project, you know there are tasks within tasks within tasks. For a big project, you might use Microsoft Project, but that’s excessive for most of us.

Enter Toodledo
What a weird name. It’s easy to say but hard to read and type toodledo.com. Your eye sees “too”, “led” and “do” but tooledo isn’t the name. Maybe the creators were being clever and converted “to do” into “toodle do”?

Get past the name and you’re confronted with a cluttered, ugly interface. It looks like the work of engineers rather than designers. Yet there isn’t a handy search box to help you find tasks easily. Functionality over elegance.

But what functionality! Toodledo has subtasks if you upgrade to Pro for just $14.95 US/year. Here's their comparison of To Do lists.

Toodledo has a timer which helps you track time painlessly. You may have allocated 30 minutes for something and find that your estimate was grossly off. This sytem lets you see how much time you really spent. You can't access tasks offline, but there's a workaround: you can print your tasks as a booklet by folding a normal page in a clever way. You can create goal chains, a technique Jerry Seinfield uses to keep writing jokes.

Which Suits You?

You can use most features of web-based task managers for free. This helps you pick the right one for you. Do you prefer Remember The Milk, Toodledo or something else?

Links

The Friendly Way: Remember The Milk and Everything Else
Comparison of online organizers (Toodledo.com)
Jerry Seinfield's productivity secret (lifehacker.com)
Getting Things Done (GTD): Three Big Lessons
Faster: How to deal with the rat race

Podcast (4:57)

direct link | Internet Archive page

Reasons To Stop Avoiding New York City

noreply@blogger.com (Promod) — Sun, 06 Sep 2009 01:04:00 +0000

The city streets burst at their seams
And flood the earth with people's dreams
— Stan Ridgway, Our Manhattan Moment

The search for opportunity pulls some west towards Los Angeles. Others are drawn to New York City, the topic of this post.

The Unforgettable Fire
In 1987, I went to the United Nations to see The Unforgettable Fire, paintings made by survivors of the atomic bombs that struck Hiroshima and Nagasaki. This haunting art inspired U2's earlier album of the same name.

Back then, even Manhattan didn't feel safe enough. Times Square felt decrepit. The subways were sprayed with graffiti. Aggressive panhandlers would ask you for money inside stores. The radio casually reported that a gang doused a homeless man with gasoline and set him ablaze in Central Park. One street looked inviting and the next frightening. Add crowds, noise, grime and smells. Contrast that with my hotel where an attendant handed you soap, hand lotion and a cloth towel.

Yet the appeal of the Big Apple remained. I thought of moving there and had the opportunity through the generosity of Metropolitan Life. However, I wanted to finish my actuarial exams first and stayed in the Ottawa office.

I like the rush
The pushing of the people --- I like it all so much
Such a mass of motion --- do not know where it goes
I move with the movement
--- Peter Gabriel, I Have The Touch

You could find the best of the best and the worst of the worst in Gotham. Sometimes within walking distance.

Now

I moved to Toronto in 1991 and now have a family. I wanted them to experience the magic of New York City but had concerns about the impressions. So we waited until now. Manhattan feels much safer. Here's why:

genuine improvements
greater police presence, including video surveillance
experience with big city life

Improvements

New York City feels cleaner. There's less graffiti, fewer panhandlers, cleaner buses and subways, less noise ($350 fines for honking). The air is reasonably breathable. The smells lingered in some areas due to humidity but the wind and rain from two hurricanes freshened the air during our week-long visit.

Security

Video cameras spy everywhere, inside and outdoors. You'll find airport-style security at many attractions. Police are everywhere too. You'll find about 36,227 of New York's Finest. Compare that with 9,976 for Los Angeles and 5,710 for Toronto. It's unnerving to see some police with rifles, helmets and bullet-proof vests. The "fix broken windows" approach works: punish minor crimes to reduce larger crimes.

Big City Life

I grew up in London, Ontario. This city had a population under 200,000 and is midway between Detroit and Toronto. Those cities seemed so intimidating. Who would want to live in such busy, crowded places? Who would want to breathe polluted air and spend hours upon hours travelling?

Bigger cities have their appeal, though. While life is tougher, there's so much to do and see. Some survive. Others thrive. The rest leave.

He cried out in his anger and his shame
I am leaving, I am leaving, but the fighter still remains
--- Simon & Garfunkel, The Boxer

Living in a larger place like Toronto changes you. The city has 2.7 million residents, the largest city in Canada and 5th largest in North America. You get used to the buzz of round-the-clock activity. With 8.3 million residents, New York City has taller buildings, bigger museums, larger crowds and greater contrast between wealth and poverty.

Your reaction to New York City will depend on where you've lived. We found the transition fairly easy and returned home more confident.

If I can make it there,
I'll make it anywhere.
— Frank Sinatra, New York

Links

photo courtesy of William Pickard
visiting B&H Photo/Video (on this current trip)

Podcast (5:36)

direct link | Internet Archive page

Animal Care Beats Human Care

noreply@blogger.com (Promod) — Thu, 20 Aug 2009 02:08:00 +0000

I'm glad you came to see me to get this off your chest.
Come back and see me later - next patient please.
--- Dire Straits, Industrial Disease

A visit to your doctor can make you feel like a number. My recent Executive Physical was conducted professionally but I felt valued mainly for my wallet. Next patient please!

Is animal care any better?

We took Callie, our pet rabbit, to the Small Animal Clinic at the University of Guelph (about an hour west of Toronto). She needed a thorough examination. Callie is our first ever pet. She's been with us for five years and started facing medical issues. Regular animal doctors don't understand rabbits well.

The Clinic

Most patients in the waiting room were dogs with a few cats. That's unnerving company for rabbits and birds, but all animals were well-behaved. After a brief wait, we went to a special room used mainly for birds and exotic critters.

Strange but True: An older man blocked the entrance to the examination rooms. A doctor asked him if he'd move but he refused. Maybe he thought this was funny but no one laughed. When he started moving, he tripped over his dog's leash and fell hard on his back. This was funny but no one laughed.

Dr. Froment asked detailed questions about Callie's background. This took about 20 minutes and covered areas such as medical history, behaviour, symptoms, diet and changes. The private room away from predators helped Callie relax. Next, the doctor got his stethoscope and conducted a brief medical examination (about 10 minutes).

To help Callie feel secure, Dr. Froment put her in her travel cage and took her for a detailed examination. We returned to the waiting room were the man who fell was getting medical attention. He'd been moved to a corner so the clinic could continue functioning.

Diagnosis

We returned to the examination room about 50 minutes later. Callie's examination took longer than expected and included at least one more doctor and surgeon. Dr. Harrison now joined Dr. Froment to explain the diagnosis. She had a rabbit with a similar medical condition. We learned that Callie had several life-threatening conditions and could not be treated. The results came as a shock. We were offered additional testing, but this was not recommended. Our options were discussed over a 30 minute period. We weren't rushed, but time wasn't wasted either.

The doctors treated Callie in a caring way. They were not focused on our wallets. Excellent "bedside manner".

Comparison

Here's how the animal examination compared with my executive physical

doctors more caring and compassionate
team of specialists (at least two doctors and one surgeon)
valuable insights (e.g., we didn't know that rabbits are masters at hiding their symptoms)
clearly understood the patient
sensible, understandable recommendations

In this case, animal care wins. Your mileage may vary. Have you had a similar experience?

Links

Is an Executive Physical worth the bother?
photo courtesy of Jyn Meyer

Podcast Episode 32 (4:15)

direct download | Internet Archive page

The Least Prestigious Professions

noreply@blogger.com (Promod) — Fri, 07 Aug 2009 11:05:00 +0000

War will exist until that distant day when the conscientious objector enjoys the same reputation and prestige that the warrior does today.
--- John F Kennedy

Just because you're trusted doesn't mean you warrant prestige. Neither does fame or wealth. This shows in a new Harris Poll released this week. The results might surprise you.

Regrouping
For brevity, we'll lump the 23 professions and occupations together and call them professions.

HarrisInteractive separates Very Great Prestige from Considerable Prestige. Here we'll combine them into a single category called Prestigious. This simplification may cause the results to differ from the published poll.

The Most Prestigious Professions
Here are the five most prestigious professions, starting at the top

Doctor (84%)
Firefighter (83%)
Scientist (79%)
tie: Nurse or Military Officer (78%)
Teacher (73%)

We place high value on caregivers (doctors and nurses), protectors (firefighters and military officers) and teachers (teachers). Why are scientists ranked so high? Maybe we love lab coats?

Let's now turn to the bottom of the list.

The Least Prestigious Professions

There can be no prestige without mystery, for familiarity breeds contempt.
--- Charles de Gaulle

At the bottom of the prestigious professions, we find

real estate agent/broker (19%)
stockbroker (24%)
4-way tie: accountant, actor, entertainer, union leader

You might be surprised to see accountants listed here. They are the most trusted financial advisors. While valuable, they have as little prestige as a union leader. Actors and entertainers can achieve great fame or great wealth but they don't save lives the way doctors and firefighters can (except in the movies).

Links

Podcast (3:17)

direct download | Internet Archive page

How Seth Godin Sparks Your Flame of Insight

noreply@blogger.com (Promod) — Sat, 01 Aug 2009 11:37:00 +0000

"I'm just here to learn."

Learning is fine. Listening is good. Consensus is natural.

But initiating is rare and valuable and essential.

How often do you or your brand initiate rather than react? How often do you tweet instead of retweet? Invent rather than exploit?

--- The Initiator Seth Godin's blog July 31, 2009

What you do and know you may assume others do and know. Take Seth Godin for example. He's become an important part of my life yet I keep meeting people who haven't heard of him. Yet.

Seth Who?

Seth helps us market better. Since we're all in marketing, we can all benefit. You may have heard of his books, which include Purple Cow, All Marketers are Liars, Small Is The New Big, Free Prize Inside and Permission Marketing.

You can learn marketing by reading, courses, seminars and doing. That's not enough. We need ongoing reminders and up-to-date ideas. Otherwise, the helium escapes from our balloons and we crash back into our comfort zones.

Seth uses an unusual mechanism to help us soar: blogging. He has over 3,000 posts. Not tweets, but actual blog posts. He's currently ranked ranked #9 on Technorati but teams write all the blogs with more readers. Seth writes everything himself (just like me). No guest writers or collaborators. Since he grew up in Buffalo, New York, he's even heard of Canada.

Why Does A Blog Matter?

I've listened to most of Seth's audiobooks (most recently, Meatball Sundae twice) and have read several too (most recently, The Dip).

However, I only subscribed to Seth's blog a few months ago. You'll find a new email daily including weekends. At first, this was too much. Now it's not enough because each post packs insights to help you improve. The length varies. Most posts are short and easy to understand. They generally arrive early in the morning.

The Subtle Effect

You can blow out a candle,
But you can't blow out a fire.
Once the flames begin to catch,
The wind will blow it higher.
--- Peter Gabriel, Biko

At first, reading a daily blog post feels like work. You're behind with yesterday's and there's another one waiting in your inbox. I saw the ideas at the wrong time of day, generally when getting ready to do something else. Now, I read the posts when I have time to reflect or need a jolt of inspiration. This works well. Like coffee without the caffeine. Or a vitamin-infused fruit smoothie without the calories.

Leading By Example

As you read Seth, you see how remarkable he is. He could easily earn more money but doesn't. Why? I've pondered this often and concluded this: he feels he has more than enough and isn't out to take all he can get. His blog has no advertising. He doesn't do paid endorsements. When he links to specific products any revenue goes to charity.

You end up feeling that Seth shares the best of what he knows for free. This makes him authentic. You don't feel he's conniving to squeeze you for money. He's certainly building his reputation, which gets him requests for keynote presentations and consulting assignments. He sells books, which is the main way he can earn money directly from us. He could easily have a paid monthly newsletter but doesn't. He could easily tour the speaker circuit but doesn't. He could easily conduct regular seminars but doesn't. Instead, he blogs, which helps more people in ways he can never truly know.

When I have an idea, my brain automatically asks two questions:

What would Seth do?
What would Seth say?

I've been offered rewards worth hundreds of dollars as thanks for posts I voluntarily wrote. The money would help offset my costs (books and audiobooks aren't free). I've declined to avoid the appearance of self-interest but recently introduced Google Ads.

Having Seth as another conscience gets annoying but in a good way.

How You Benefit

Do you want to improve as a person? Do you want to advance in your career? Do you want to grow your business? Do you want to motivate others to change? You get valuable insights from Seth in these areas and many more. You feel empowered and energized.

How Do You Help A Mentor?

They say you can't take it with you,
but I think that they're wrong.
'Cause all I know is I woke up this morning,
and something big was gone.
--- Bruce Springsteen, Terry's Song

When someone helps you, you want to help them (unless you're a mooch). What can you do to help Seth? I puzzled over this.

Give Seth's books away or encourage others to get them (buy or borrow from the library)
Use Squidoo, a free site Seth started for us to share information with others (you create your own web pages)
Participate more on Triiibes, the free closed community related to the Tribes book

For reasons I can't explain, the answer came from listening to Terry's Song yesterday. I'm telling you about Seth, someone you may not know about. Yet. Why not check out his blog and subscribe? See if you improve and feel compelled to help others the way only you can. Once the initiatives start, the flame takes hold and you can't stop.

Links

Podcast (7:21)

direct download Internet Archive page

Is An Executive Physical Worth The Bother?

noreply@blogger.com (Promod) — Sun, 26 Jul 2009 11:38:00 +0000

A normal medical examination identifies normal medical issues. Specialized tests may identify other problems while minor and manageable.

Multiphasic Screening
Pretend you're an employer. An employee who goes for a medical test costs your company hours of productive work and you may also pay through group medical benefits. What if that employee needs more tests? The costs add up. And you've got other employees.

Sometimes a medical problem isn't discovered until the condition has progressed. It's now too late for prevention and treatment gets costly (time, money, productivity).

Imagine if a tractor trailer filled equipped for diagnostic medical tests came to your building. Employees could get a battery of tests quickly and inexpensively. They would appreciate your concern for their well-being. Solving medical problems early could save lives and save money too. Right?

During the summer of 1982, I investigated the costs/benefits of onsite medical tests at Crown Life --- my first actuarial job. In those pre-Internet days, gathering information took more than a quick web search. Here's what I discovered. In the United States, group medical insurance cost about $1,000 per employee per year. Would investing another $70 a year in multiphasic testing save employers money?

No. Here's why.

the tests missed low probability/high severity conditions (too expensive or invasive)
if problems were found, employees were reluctant to get treatment (just as we're reluctant to eat better and exercise more)
if employees got treatment, the employer's current medical expenses went up

Now

Medical science keeps improving. To explore the state of diagnostic testing, I went for an executive physical examination. I've wanted to go to a concierge medical clinic for years to detect potential medical issues early.

The Process

After booking an appointment over the phone, I received an email giving the address and instructions to fast for 12 hours. There was a link to an online stress questionnaire which took about 20 minutes to complete. The results print in a miniscule blue font (say 6 pt). Not only do you strain your eyes reading the tiny words, you waste colour ink. If you said you wanted to spend more time with your family, you'd get a recommendation saying you should spend more time with your family. Obvious stuff. I brought the results with me but no one even mentioned them.

The clinic is in a nice office tower in downtown Toronto. After changing into exercise clothing, I signed a disclaimer and authorized the release of results to my own doctor.

Here are the steps.

sign a disclaimer
measure height/weight/waist
collect blood/urine
snack (end of fasting)
test vision, colour blindness and glaucoma
measure lung capacity (you expell air from your lungs through a tube for as long as you can)
discuss results with a doctor
more testing by the doctor (blood pressure, thyroid, etc)
brief discussion with the doctor
measure resting heart rate (you lie down and have probes attached to your arms, chest and legs)
complete feedback form, change and leave

The whole process took 2.5 hours. There's soooo much waiting, which reduces the benefits of having everything-under-one-roof. Maybe waiting leads to better test results. Maybe the length helps you feel like you got value for the money.

Surprises

To my surprise and dismay, there were no other tests. Not even a treadmill, which is what I wanted most. There wasn't even an option to purchase that test or any other. I also wanted to know how my body's biological age compares with my chronological age. Am I closer to the body of 40 year old or 60 year old?

There was plenty of time to talk to the doctor but not much to discuss. He was pleasant but I had no way of gauging his skills and I doubt we'll ever meet again. Last summer, a common toe ailment caused me months of agony. Treatment took visits to six doctors (including three specialists). That shattered my faith in the medical profession. Best to stay healthy. I listened politely but am more likely to believe a Google search than a doctor. Dilbert fans may in interested in the ordeal Scott Adams endured while struggling to regain his voice.

There was no report or handout of any kind. Maybe that comes later. I didn't think to ask, but no one told me.

Non-surprises

No medical problems were found. I was advised to exercise more (aerobic and strength) and consider a personal trainer. My snugger-than-ever pants tell me that already. I've been walking 45-60 minutes most evenings for several weeks and am starting strength training tomorrow.

Worth The Bother?

Visiting the clinic was certainly more pleasant than going to my family doctor with the crowded waiting room and noise. The tests were similar to those your regular doctor performs or orders.

There was no "wow" moment that made the experience memorable. The clinic felt like an expensive hotel. You're well treated and in pleasant surroundings. But you expect that. You paid for that.

Nothing bad happened but not nothing was exceptional either. These days average is not enough. I don't know if I'd bother going back. I prefer my regular doctor over strangers doing similar tests in a fancy clinic.

Links

An executive physical can change your life. (Fortune, June 2006)
Executive physicals: a critique (Chicago Tribune, October 2008; based on the New England Journal of Medicine)
Executive Physical has unnecessary side effects (Dr David Lipschitz, 2008)
Speechless: Dilbert creator's struggle to regain his voice (Wired, July 2009)
Six doctors (mis)treat one toe

Podcast (7:21)

direct download | Internet Archive page

Me an actuary? Seven questions from a student

noreply@blogger.com (Promod) — Sat, 18 Jul 2009 23:36:00 +0000

"I am 19 and good at math. I would like to learn more about the actuarial profession. Could I take a moment of your time to ask a few q?" --- Vicki

Sure. Since there aren't many actuaries around, I get questions regularly. Most come from work-age people who want to know if they should switch to an actuarial career. Generally not. Passing the actuarial exams takes years and few succeed. If you do, you've probably got too little experience for your age and are harder to train. Most actuarial students have the advantage of starting their careers fresh out of university with several exams already passed. They know how to study. They have momentum. They have energy. They appeal to employers.

Even Warren Buffett thought of becoming an actuary. Without the benefit of my wisdom, he ended up as a billionaire instead. I can't help everyone.

What About Students?

We can do magic in these times.
Be what we want to be.
--- Joe Jackson, Nineteen Forever

Vicki asked seven questions from her perspective as a 19 year old looking for a career choice. You can learn more about actuaries from the links at the bottom of this post. An actuarial career is well worth considering. You do challenging work, get paid well and have many opportunities. However, you are in a narrow field that few outsiders understand.

Forbes looked at the best jobs for graduates through 2016.

The careers with a lot of opportunity require a lot of skills.
--- Lawren Shatkin, 200 Best Jobs for College Graduates

Perhaps no job in the top 10 illustrates that fact better than an actuary.
--- Forbes

Here are the top 5 based on starting income in $US:

actuary ($48.8K starting income with only 3,245 annual openings but growing by 23.7% annually)
network systems and data communications analyst ($40.1K)
market research analyst ($33.3K)
sales agent in financial services ($30.9K)
sales agent in securities and commodities ($30.9K)

Actuaries have evolved to remain in demand. Forbes notes "With margins thinner, actuarial accuracy is more necessary than ever to companies and the global economy."

Caveat

Average people are in the majority but they're not in demand.
--- Seth Godin

The world keeps changing. We're unlikely to work for the same company for our entire career. We must be self-reliant and keep aquiring new portable skills to stay relevant. Do read The Dip by Seth Godin to understand why you need to become the best in the world and how you can. I just re-read The Dip and it's still on my desk. Malcolm Gladwell writes about the 10,000 hour rule in Outliers. Also a must-read book. You might want to read Talent is Overrated by Geoff Colvin, which is still on my to-get list.

How do you answer mainstream questions when you have a nontraditional position and come from an older generation? I started my actuarial career at Metropolitan Life in 1984. That's 25 years ago. Life happens fast. My perspectives may not be meaningful for today's generation.

Let's get to the questions.

Q: What's a marketing actuary?
Me :)

Actuaries get labeled as technicians and aren't an obvious source for marketing expertise. Until mid-2005, I worked as a product actuary with 10 staff, a prime corner office and a gorgeous view. Now I work in the field helping advisors help their clients.

"Marketing" and "sales" get used as synomyns. Let's contrast them with help from Seth. Selling uses techniques to overcome our naturally reluctance to buy. Marketing tells stories that spread. I know didly about selling but have a lifetime of experience in detecting underlying needs and finding simple, elegant solutions.

When people think of life insurance, they think of low cost temporary coverage. They don't ask if Warren Buffett would "buy term and invest the difference". There's little understanding of the unique tax planning opportunities that permanent life insurance provides: tax-sheltered growth, tax-free income and a tax-free death benefit. You can even get tax deductions when borrowing to invest using the market value of the insurance as collateral. I help fill this void with tools such as this blog.

Here's the reality. Advisors are experts in selling. That's not wrong but they face big hurdles. They aren't experts in the inner workings of the complex products they use. They don't know they "why" behind product designs, which insiders rarely disclose. Since advisors get paid commissions, their credibility suffers. They aren't perceived in the same category as professionals such as doctors, lawyers and accountants. For financial advice, the wealthy trust their accountants. However, accountants received limited training about the tax advantages of life insurance and have the usual suspicions about the motives of commission-driven advisors.

Actuaries have deep technical knowledge, credibility, and strict codes of professional conduct. Combine that with clear, accurate, simple explanations. Now you have a marketing actuary who can connect parties that doubt one another. So clients can reduce their financial risks and get peace of mind.

Q: How do you like working at your company?

Lots since that's how I became who I am.

Working for a company has pros and cons (as does working for yourself). You learn the benefits of discipline and even bureaucracy. I've done budgeting, performance appraisals, disaster recovery plans and run projects. This skills help in many ways and I'm thankful that I had the opportunity to acquire them. I'm also thankful for the opportunity to switch from a traditional product actuary to a new role for which I initially lacked the skills. You don't know if you'll sink or swim if the lifeguard won't let you go into the water.

Q: What type of work do you do?

I help people live up to the light inside them. When I had staff, I quickly found that people are where they are because of who they are. Now I accept that and focus on those who want help.

If you're flexible, you can acquire valuable new skills. I watched what others wouldn't do or didn't like to do. Then I learned to fill those gaps. This creates better teams, keeps your mind fresh, and increases your value. I've built up diverse skills over the years by doing the new.

You'll go far by building skills in communication (written, verbal), time management and getting along with others. People will like you and like working with you.

Q: What's a typical day like?

I plan by the week. A typical week consists of

occasional presentations to groups of advisors (generally in the mornings)
meeting advisors individually (may include lunch)
preparing proposals for specific cases (generally in the afternoons)
accompanying advisors to meetings with accountants and clients
answering emails and phone calls
developing or improving marketing material

I spend hours of personal time in self-development: reading, reflecting and writing.

Q: What's the organizational structure like?

Layers and layers. As a product actuary, I reported to a Senior Vice President who reported to the President. I learned plenty about how senior executives think and act.

Now, I'm layers down in a larger organization and rarely see the President (though we are on a first name basis from my previous role). If I cared about titles, you could say I've been demoted. I'm actually happier, though. I no longer have staff to manage or regular meetings to attend or budgets to prepare. I have considerable control over my schedule, what I do and who I help. With fewer distractions, I focus much better.

Q: What do you enjoy most about your work?

Meeting clients and advisors. Working in a head office, your main face-to-face contact is with colleagues. While that is comforting, you get into routines. Working outside, you dont know who you'll meet or how you can help them. You get to exercise more creativity. Your actions matter. If you can quickly build rapport with strangers, your life will be good. As an introvert, I did not know if I could until I tried.

Q: What do you dislike most about your work?

Clerical tasks like filling out expense reports. Overnight travel means time away from my family. Eating with advisors means eating more and exercising less.

Links

what is an actuary?
should you switch to an actuarial career?
Warren Buffett's tough career choice: actuary or billionaire?
Malcolm Gladwell's Outliers: mastery + opportunity > talent
Thoughts on The Dip by Seth Godin
How to be good (Thicken My Wallet)
College majors that will get you a job (Forbes, Jan 2009)
Best jobs for new college graduates now (Forbes, Jan 2009)
illustration courtesy of arte ram

Podcast (11:28)

direct download | Internet Archive page

Buying A Video Camera: Can We Trust The Experts? (Sanyo Xacti FH1 vs Canon Vixia HF series)

noreply@blogger.com (Promod) — Sun, 12 Jul 2009 11:08:00 +0000

How do you make the right decision about a product you know little about?

Hot water heaters: tank or tankless? Capacity?
Video cameras: flash or hard drive or tape? HD or SD? Which specs matter?

Would you rather have Hyundai or Honda, Magasonic or Panasonic, Samsung or Sony? These days, brands mean less because so much manufacturing is outsourced. Think of electronics and clothing. You’ll find many internal similarities among products. The Innovator's Dilemma describes four stages in product evolution: our focus shifts from functionality to reliability to convenience to price.

We've been looking for a video camera. We don't know much about them and wanted to make the “right” choice. We got our last one 15 years ago ─ a $1,300 Sony Hi-8mm that broke down within two years. Do video cameras now work well enough that brands are interchangeable? And do they work sell enough that they don’t break down as quickly?
Online reviews gush over the Sanyo Xacti VPC-FH1 for true high definition (1080p at 60 frames per second vs 1080i at 30 fps), eight megapixel stills, great lowlight resolution, and a reasonable price.
You’ll find plenty of information online but the choices get confusing when looking for a compact, convenient video camera. For under $300 dollars, you can get a Flip Minio or Ultra with HD. For $600, you can get better quality and more capabilities. For $900, you get even more. How much is enough?

The Camera Store
I rarely go to stores but I wanted to see the video camera before buying. I checked online and found a retail store to visit. It took 10 minutes before a sales rep was available. I asked to see the Sanyo FH1, which was hidden away, not on display. The rep recommended Canon: better optics, longer history, optical image stabilization and a 24 Mbps capture rate (Sony and Panasonic max out at 17 Mbps). Apparently, a higher capture rate means smoother recordings.

The rep implied that Sanyo warranted no further discussion. Surprisingly, he couldn't answer basic questions about the Canon

what resolution are still photographs? (a mere 3 megapixels ─ worse than a cheap digital camera)
can the output be saved directly to MP4 H.264? (I was told yes but the answer is no)
how do you edit AVCHD the format Canon uses? (Not easily ... time-consuming ... benefits from specialized commercial software)

The rep didn't know about a special Canon bundle with a battery and case until I showed him the store flyer he gave me. Strangely, this case has no room for the battery. Style over substance. The case for our ancient Sony kept falling over, whether empty of full. Can a company that can’t make a good case really make a good camera?

Let’s look at prices. The Sanyo FH1 costs $630 Canadian. The Canon Vixia HF200 costs $750. The rep recommended the $900 Canon Vixia HF20 which includes 32 GB of memory. The other models came without memory. Naturally, I was encouraged to get a pricey extended warranty. The costs kept adding up.

I left the store more confused than when I entered. Canon seemed choice but I didn’t want to spend that much.

More Research
I did more research online and found the Sanyo FH1 even performed better than Canon’s 2009 top-of-line Vixia HF10. Reviews identified two main drawbacks in the FH1: electronic image stabilization (which is less apparently less effective than optical image stabilization) and the lens cap is not built-in. There was excellent information at camcorderinfo.com and thoughtful comments ─ 53 pages worth.

I decided to buy the FH1. Sanyo Canada sets the list price at $600. The retailer I visited charges $630. Who would pay more than list? Dell charges $600 but had a sale price of $550.

I felt some obligation to reward the personal service at the retailer I visited (not sure why). They have a price match guarantee but exclude Dell. Why? Dell has no physical stores and has a different price structure. This was irrelevant to me. This retailer sells online too and probably sells more cameras than Dell. I ordered from Dell, saved $80 and got free delivery two days later.

Canon, Panasonic and Sony
At this time, neither Canon, Panasonic nor Sony sell a HD video camera with 1080p resolution for under $1,000 (if at all). The best they do is 1080i (which has hard-on-the-eyes interlacing). Remember the flicker you saw on cheap computer monitors with picture tubes years ago? That's interlacing. These companies save files to AVHCD format which is inconvenient for novices and requires additional software to edit.

Better specifications don't translate into better performance. Canon’s 24Mbps capture rate doesn’t lead to better results than the 16-17 Mbps used by Sony and Panasonic. Yet the rep gave that as the reason to pick Canon.

Some specifications mislead and confuse. You’ll find capture rates in Mbps (megabits per second) and the speed of memory cards in MBps (megabytes per second). One byte is eight bits. You’ll see manufacturers claim they have “1920x1080 Full HD Recording” without telling you this resolution uses interlacing and is only 30 frames per second. Sneaky.

Sanyo is hardly perfect. They are delaying sales of the pistol grip Xacti HD2000 in North America until they clear out inventory of the old HD1010. The FH1 deliberately has no jack for an external microphone but costs $100 less.

The Shopping Experience
When buying, consider nontraditional sources like Dell and Amazon ... it's your money. You can buy without going to a store unless you're tactile or have special issues that require a physical inspection (e.g., difficulty moving certain fingers).

Even if you buy in store, you won’t find the perfect product. We’re demanding but we adapt.
Visiting stores chews up time. It's difficult to try products. You're pressured to buy extended warranties. Selection is limited. Items may be out of stock. The service is inconsistent.

Shopping online is different. You can waste lots of time doing research. You can't try the products but you can find out what others think. There’s no pressure to buy extended warranties. You’re more likely to find items in stock and you have access to a much larger selection.

Lessons Learned
The experience of buying a video camera shows that the masses know more than a speciality retailer. I was sceptical before. What’s more, the masses have your best interests at heart. They aren’t taking money out of your pocket. Professional reviews help, but reader comments from around the globe can provide even deeper insights.

Links

Review of Sanyo VPC-HD2000 [similar to the FH1; many helpful reader comments] (camcorderinfo.com)
Review of Sanyo VPC-FH1 (Amazon.com)
Hot Water Heaters: Tanks or Tankless (Ellen Roseman)
photo courtesy of Goran Anicic

Podcast Episode 27 (10:20)

direct download | Internet Archive page

Popularity Contest: The “best” Money Blogs

noreply@blogger.com (Promod) — Sun, 05 Jul 2009 00:34:00 +0000

The delicate balance between modesty and conceit is popularity.
--- Max Beerbohm

Anyone who is popular is bound to be disliked.
--- Yogi Berra

The Globe and Mail has been running a contest to pick what they call the best of the money blogs. Selected prominent financial experts (including Canadian Capitalist) picked their favourites. That's great. We save time when people we trust make recommendations for us.

Consensus is difficult to reach. We can't even agree on tea (black or green?) or the way to prepare it (boil the milk and teabag with the water or add them later?).

There are few cases in which mere popularity should be considered a proper test of merit. --- Edgar Allan Poe

What is “best”? Best is subjective. Best is meaning less (meaningless?) since we are so diverse and have access to so much. We’re fickle too. I really like Thicken My Wallet but haven’t read in weeks because I’m not notified of new posts via Twitter. With so many pulls on our attention, we easily forget.

Asking For Votes

Focus on the user and all else will follow
--- among the 10 things Google has found to be true

Some Twitter users ask followers to retweet their posts. As if we’re too dumb to realize we can do that. Some non-nominees feel they should have been included in the contest. Some nominees are asking their readers to vote for them. Just like politicians. Surveys of trust, ethics and honesty repeatedly put politicians near the bottom. Why emulate them?

There’s a subtler way: tell readers there’s a great list of blogs for them to sample. This puts your audience's interests in the forefront. When they view the list, they’ll see the option to vote. Without pressure.

Yes, you can ask directly for what you want. That’s not the only way or the best way. Readers are volunteers. They willing volunteer their scarce attention. They’d willingly volunteer their votes. Without being asked directly.

Best In The World

If you want to be the best, why not be the best in the world? You can. Seth Godin describes the why and how in The Dip, which I re-read this week and continue to highly recommend.

Back to the contest. Congratulations to the winners and nominees!

Links

The Best of the Money Blogs (Globe Investor)
Thoughts on The Dip by Seth Godin
photo courtesy of Robert Aichinger

Podcast Episode 26 (3:36)

direct download | Internet Archive page

The Effect of Banks Selling You Insurance Online

noreply@blogger.com (Promod) — Sat, 27 Jun 2009 11:50:00 +0000

Rules that restrict a consumer's ability to access information about insurance don't make sense, and it's certainly not in the consumer's interest to try to put new roadblocks in place. --- Canadian Bankers Association, June 2009

Isn't it nice to know the bankers are looking out for you?

The Canadian Bank Act prohibits the sales or marketing of insurance in branches. Naturally, independent advisors like this but banks don't. Now banks can sell insurance online because a website is technically not a branch. That's great news for banks because most Canadians already bank online --- 53% in 2008.

Let's look at what banks are likely to do online and the effect on you.

What Would Banks Sell?

Banks can now integrate links to their insurance offerings into their main bank websites. That's gold. This is much like Microsoft making Internet Explorer the default web browser in Windows. You could still install other browsers but most users didn't bother. The arguably superior Netscape Navigator browser eventually got destroyed. In a similar way, the banks will get lots of insurance traffic.

What would you buy online? Probably simpler products that don't require the expertise of an advisor. Perhaps term life insurance. If you have questions, you could probably phone a call centre to get answers.

For tax planning with insurance, you probably want to meet a qualified advisor in person. However, you may want to do some research online. You won't find much. Perhaps the banks will help here.

As we've seen in the past, banks dominate and take over entire sectors. Remember the days of separate trust companies and stock brokerages? Some banks now own insurance companies too. The sun continues to rise.

Who Suffers?

Independent advisors face the biggest challenges. Research routinely shows that families are underinsured. Independent advisors have difficulty reaching them. Insurance sales are labour-intensive, which encourages advisors to focus on larger cases and more expensive types of insurance which pay higher compensation. This is not meant as a criticism, but a reflection of economic reality.

Banks argue that they could help the underinsured if only they could sell insurance in their branches. After all, who doesn't have an account with a bank? Banks have systems and procedures to handle small, low revenue transactions like selling GICs. If you want to invest $1,000, an independent advisor would spend more in time and gas than they could earn. You might prefer to transact online because your time is also valuable. That's where large organizations have a huge advantage.

Big Deal?

Banks already sell insurance through subsidiaries conveniently located near their branches. If you invest with a bank-owned stock brokerage (e.g., BMO Nesbitt Burns, CIBC Wood Gundy, RBC Dominion Securities, ScotiaMcLeod, TD Waterhouse), you may already have been approached. I help insurance specialists at these firms as well as independent advisors every day.

Do You Win?

As a consumer, you probably win as the insurance companies and independent advisors react. You may have concerns about your privacy and how the bank uses information about your health, though. You may feel pressured to buy insurance as an implied condition or getting a mortgage, say. Don't count on lower prices. Banks are better at making money for their shareholders than saving money for their customers. Aren't most businesses like that?

Perhaps insurers will help advisors create meaningful websites to give you online alternatives. Maybe more advisors will --- alone or as part of teams --- build useful websites and send you meaningful emails. Here "meaningful" means genuinely helping you in a non-self-serving way. There's too much fluff that teases but doesn't help: you are asked to contact the advisor without knowing enough to gauge whether you think they can help you.

I'm currently running a four part series to help advisors implement eNewsletter campaigns that genuinely help you and comply with anti-spam laws.

When insurance and banks are mentioned in the same sentence, opinions vary. You can get different perspectives from the links below. Your comments are welcome.

Links

Bank websites may sell insurance (Globe & Mail, June 10, 2009)
Bank websites can sell insurance (Canadian Insurance, June 9, 2009)
Video: Insurance Turf Wars (BNN, June 12, 2009)
Why aren't more advisors online?
Don't buy insurance from banks (Ellen Roseman, April 2009)

Podcast Episode 25 (5:43)

direct download | Internet Archive page

How "Do Not Spam" Laws Help and Hurt You

noreply@blogger.com (Promod) — Sun, 21 Jun 2009 01:53:00 +0000

There are people who would like to get rid of minimum wage. But we have to have it, because if we didn't some people would not get paid money. They would work all week for two loaves of bread and some Spam. --- Chris Rock

We don't want to be paid in Spam (canned, spiced ham) or pained by spam (emails we didn't agree to receive).

Canada is the lone G8 country without anti-spam legislation, and in 2007, was ranked number six in a list of top 10 worst countries for originating spam.
--- Canadian Lawyer

In 2008, Canada ranked #4 on the Spam by Originating Country list, according to Cisco. Spauhaus, a nonprofit that tracks spam, doesn't include Canada in the top 10. The United States "wins" in each survey.

Better To Give Than Receive

Let's not quibble over which country spews the most spam. Let's turn to us, the recipients. We can take precautions by using anti-spam filters and email services that weed that garbage out. Gmail and Kaspersky Internet Security work well for me.

Like the Do Not Call lists which prevent unsolicited phone calls, Do Not Email rules are a great idea. Some argue that honest small businesses can get hurt inadvertently. How?

Let's look at an example. Financial advisors who serve you well are already send you timely, meaningful email. They have your permission and won't be affected by the new rules. In practice, very few independent advisors send out email or newsletters, which creates opportunities for their larger competitors.

If you can't be contacted directly, advisors might to advertise to you or attract you in other ways. Ads in old-world media --- tv, radio, newspaper, flyers, billboards --- aren't targeted and get lost in the clutter. Money gets wasted as the wrong people get interrupted.

Targeted online advertising can work well. Think of Google Adwords. You get unobtrusive ads related to what you're seeking at exactly the right millisecond. Nice. Unless you use adblockers like the free Adblock Plus for FireFox. Then you're on your own Do Not Advertise list.

A Better Way

There's an even better way. Advisors can create quality content. Say you want to know what Warren Buffett thinks about buying term life insurance. Type in "warren buffett term insurance" in Google, Bing or Yahoo. You'll get links to my 2007 post that currently ranks higher than BBC News, Bloomberg, CNBC, Marketwatch.com, Wikipedia and even Berkshire Hathaway (where I pulled Warren's profound quote).

Discovery trumps advertising any day. Discovery is free. Any advisor can make themselves easy to find. Advisors then switch from annoying pest to welcome guest.

Why Aren't More Advisors Online?
Books are the last bastion of the old business model—the only major medium that still hasn't embraced the digital age. Publishers and author advocates have generally refused to put books online for fear the content will be Napsterized. --- Clive Thompson, Wired 17.06

We go online for information, but meaningful objective financial information can be difficult to find and hard to understand (especially for the life insurance strategies the wealthy use).

Advisors are reluctant to put meaningful information online. They're afraid that competitors would steal their best ideas. In contrast, authors and bloggers share their best to get read. Recently, Darren Rowse posted 31 Days To Build A Better Blog day by day for free at Problogger. Then he started selling a nicely formatted, expanded ebook, which some (like me) bought for the convenience.

The mystique that advisors create works against them because you can't gauge the quality of what they offer without getting personally involved --- a big commitment of your time and a loss of privacy.

Not all unsolicited email is bad. You lose when something valuable doesn't get through. Do Not Spam laws will protect your privacy. What's next? How about saving trees with Do Not Junk Mail rules?

Links

Annoying Pest or Welcome Guest? The Do Not Call List
Future of Reading in a Digital World (Clive Thompson, Wired 17.06)
Canada introduces anti-spam legislation (Canadian Lawyer, June 1, 2009)
Official Q&A for Anti-Spam Legislation Q&A (Industry Canada)
Industry braces for "do not email" legislation (advisor.ca, June 19, 2009)
The 10 Worse Spam Origin Countries (spamhaus.org, updated daily)
Cisco Spam by Originating Country in 2008 (marketingcharts.com)

Podcast (5:48)

direct download | Internet Archive page

The Three Major Obstacles to Growth according to Brian Tracy

noreply@blogger.com (Promod) — Sat, 13 Jun 2009 21:23:00 +0000

The more you learn, the more you can learn.
— Brian Tracy

And the more you can earn.

Brian Tracy spoke live in Toronto at a private fundraiser this week. My son Jeevan wanted to attend and so did I. We talked to Brian briefly afterwards. I thanked him for teaching me about affirmations in the early 1990s in The Phoenix Seminar.

If you've seen Brian live, you know how entertaining he is. A spoonful of humour helps the lessons go down. Brian dishes out spoon after spoon, lesson after lesson.

Brian identified three major obstacles to growth

the comfort zone
learned helplessness
the path of least resistance

Naturally, he shared solutions too.

The Comfort Zone

Did you exchange a walk-on part in the war for a lead role in a cage?
— Pink Floyd, Wish You Were Here

Getting into our comfort zone is much like sliding into a warm bath. Soooo tempting. So difficult to leave. How much time do we spend on Entertainment vs Education? For many, that's not pleasant to contemplate. I see many people who aren't more capable now than last year, five years ago or 10 years back. So much wasted potential.

How much do we spend on our mobile phones and cable/satellite tv? Probably much more than on educational material. Ignoring the cost, consider the time spent. This can be scary.

Move out of your comfort zone. You can only grow if you are willing to feel awkward and uncomfortable when you try something new. — Brian Tracy

We can escape the gravitational lure of our comfort zone by having a Big Hairy Audacious Goal (BHAG). This phrase was coined by Jim Collins and Jerry Porras (authors of the classic Built To Last). Here are examples from Wikipedia.

Learned Helplessness

I think I can. I think I can. I think I can. I know I can.
— The Little Engine That Could

If you say "I can't", you're thinking like a victim. You're giving up internally. You're not betting on yourself. In this phase, we tend to surround ourselves by other losers. The joy of shared misery.

There are lots of examples. A baby elephant tethered to a pole tries to break free but can't. An adult elephant can escape but doesn't try.

thanks, for the trouble you took from her eyes
I thought it was there for good so I never tried.
--- Leonard Cohen

Sometimes we need help to escape from our chains. We might even have the key, but didn't know.

The Path of Least Resistance

Water takes the easiest route. Like water, we're lazy too. Unfortunately, what's valuable doesn't come easily.

We can break the habit of laziness through repetition of something worthwhile. Good habits take as much effort to acquire as the bad ones. Brian reminded us that we all work on commission: we're paid in proportion to our results. We want to add more value.

Brian was also promoting iLearningGlobal.tv (iLG) a website offering videos, audio and ebooks on a monthly subscription. There's also an affiliate program if you're looking for ways to make more money. Thankfully, there were no demonstrations or pressure to join. This made us more interested but we left without making a firm decision.

Brian Tracy is well worth seeing live. You'll laugh. You'll learn.

Links

event details (meetup.com)
official website (briantracy.com)
Brian Tracy quotations (sparkinsight.com)
Learning from Brian Tracy Live (May 2007)
Why do Brian Tracy and Stephen Covey use Overhead Transparencies? (marketingactuary.com)

Podcast (5:03)

direct download | Internet Archive page

"The Snowball" rolls into Warren Buffett

noreply@blogger.com (Promod) — Mon, 08 Jun 2009 01:31:00 +0000

How much do you know about Warren Buffett's life? My family knew primarily of his staggering wealth. We knew little about his older business partner, Charlie Munger, or Astrid, the companion his wife Susie found for him.

In The Snowball: Warren Buffett and the Business of Life, Alice Schroeder paints a captivating, detailed portrait of the man and key people in his life. The audiobook read by Kirsten Potter runs 37 hours and took three months to finish. This extended listening enhanced the experience and made Warren feel like a part of our lives.

Biographies provide valuable insights into interesting lives. Warren authorized this one and participated. Does that mean the whole story is rosy? No. If there were two conflicting views of a happening, he asked that the less flattering version be used. Alice reveals many blemishes in her quest to help us understand him.

Much of Warren's appeal comes from his wealth. As a person, he's unusual. He brought Moody's manuals on his honeymoon. He doesn't eat a balanced diet and doesn't like to try new food. He neglected his family. He doesn't live a lavish life.

He made investment mistakes over the years. For example, he bought shares in waning textile company Berkshire Hathaway and had an agreement to sell them for $11.50. When the deal got changed to $11.375, he bought the company in retaliation and to his detriment.

Born At An Early Age

Warren focused on making money during childhood. At age 6, he started selling chewing gum. He got inspired by a book called A Thousand Ways To Make $1,000. That's $1,000,000. While in high school, he earned more than his teachers by delivering newspapers. He understood that a dollar today multiplies over the years through the magic of compound interest. This made him reluctant to spend. This made him reluctant to donate until his death, since he wanted to leave a larger sum.

Warren recognized the role luck played. He knew his life would have been very different if he were born at another time or in another country. He wanted to help others who were not as lucky at the Ovarian Lottery. He preferred giving advice over money.

Warren improved over the years. He made the world better for small investors. He supported Main St over Wall St. His actions encouraged better corporate governance. He stuck to his principles for decades.

Legacy

Warren helped make the world better. What more can you ask? He's changed the world of philanthropy. He doesn't want his name on buildings or scholarships the way many others do. He's happy to donate to The Bill and Melinda Gates Foundation with the stipulation that his annual contributions be spent that year.

The Snowball won't make you a billionaire but you will be richer. Highly recommended (especially the unabridged audiobook).

Links

Warren Buffett's Tough Career Choice: Actuary or Billionaire?
A Thousand Ways To Make $1,000 (Motley Fool)
How Warren Buffett Made His First Dime (Parade, Alice Schroeder)
Does Warren Buffett "Buy Term and Invest the Difference"? (most read post of 2008)
Does billionaire Seymour Schulich help you "Get Smarter"?
Richard Branson: When Your Servant is Your Master

Podcast (13:04)

Bonus: includes interviews with Jeevan and Sharmila, who also listened to the full 37 hour audiobook.

direct MP3 download | Internet Archive page

Tips to Bulletproof Your Job (inspired by Stephen Viscusi)

noreply@blogger.com (Promod) — Sat, 30 May 2009 23:00:00 +0000

Work is a popularity contest, and the harsh truth is that when jobs are being cut, the guy who keeps his job is the one the boss likes best. --- Stephen Viscusi

You'll find lots of job advice these days. Earlier, we looked at three recommendations from the Harvard Business Review. Today we're looking at Bulletproof Your Job, a new book by Stephen Viscusi. Catchy title. Nice cover. No government funding. And the dust jacket states the four simple rules in eight big, bold words:

be visible
be easy
be useful
be ready

You'll find many good ideas. The table of contents does not show the full list of 50, which is annoying. The book is blunt. Some actions help you get ahead at the expense of others.

Bulletproof Your Job is current enough to mention LinkedIn and Facebook but not Twitter. The content helps you in any economy but has the most appeal during a downturn. You'll benefit most if you work in a corporate environment. You'll get value in other situations too, including sales.

Rather than repeating points from the book, I'll share thoughts on the four suggestions from my real world experience.

Be Visible

Q: Why do men prefer beautiful women over brainy women?
A: Because men see better than they think.
--- Unknown

Familiarity is your powerful ally in building relationships. If you can't see your boss regularly due to travel or location, stay visible by phone and email. This is not the same as meeting in person but much better than fading from memory. When you do more than your clients and colleagues expect, they are more likely to mention you to your superiors.

You also want to be on the radar of people outside your company. Create, complete and update your profile on LinkedIn. Associate with people who have the potential to hire you or recommend you to people who can hire you. You want to do this now not when you're looking for a job.

Be Easy

Maybe in some other lifetime you won't fit.
And if you don't fit, you're fit for nothing at all.
--- Joe Jackson

Back in 1984, when I graduated from the University of Western Ontario, the job market stunk even for actuarial students. Of the 17 graduates, only four found jobs. Three of us had the top grades. The fourth had average grades but looked good, was very likable and the only one with a BMW. Over the years, he had difficulty passing the 10 actuarial exams and disappeared. Neither likability nor technical skills are sufficient on their own.

Some workers are a hassle to have around but not enough of a pain to dismiss. During a downsizing, they go first. The displaced are miffed to see others who seem less capable (to them) survive. Attitude and likability matter that much.

After a downsizing, fewer remain. So there's less tolerance for keeping annoying or negative employees. You don't want to travel with someone who keeps asking "are we there yet?" It's easier to get rid of the squeaky wheel than to keep applying oil.

Be Useful

How can I be useful, of what service can I be?
There is something inside me, what can it be?
--- Vincent van Gogh

See how far you get by being useless. Some employees have a strong sense of what their job entails. They rebel when you ask them to do something necessary but outside their job description. Say photocopying, testing software or answering the phone. Ask them to learn something new and they are reluctant. Ask them to change how they do something and they're reluctant. These people find themselves on the short list when staff reductions are imminent. They don't understand when notified that their services are no longer required. How can they get booted out? After all, they were doing their job.

Be Ready

Most people have the will to win,
few have the will to prepare to win.
--- Bobby Knight

Remember Y2K when the whole world seemed ready to collapse? Did you stock up on cash, bottled water, food and batteries? That's being prepared.

In a work environment, you prepare yourself for emergencies by setting aside savings or having a secured line of credit. You can prepare for opportunities by improving your skills: strengthening your weaknesses and learning totally new things. You demonstrate what you know when you help others

An Easy Start
Here's an easy way to get started: social media. As an experiment, build a following on Twitter. Blogging is even better but takes more work. You can even be anonymous if you're insecure.

If you're willing to use your real name, add value on LinkedIn. Answer questions in your areas of expertise. Join relevant groups. As you practice, you'll have a higher profile, be easier to deal with, more useful to others and better prepared for whatever comes.

Links

official website (bulletproofyourjob.com)
Employable: Three Lessons from a Popcorn Farm
Losing Your Livelihood: Insuring Against The Risk (based on the Harvard Business Review)
Should you switch to an actuarial career?

Podcast (6:43)

direct download | Internet Archive page

Does billionaire Seymour Schulich help you "Get Smarter"?

noreply@blogger.com (Promod) — Mon, 25 May 2009 00:23:00 +0000

The sequel to Bruce Willis' Die Hard is Die Harder. So isn't Get Smarter the sequel to Get Smart, the 2008 movie that grossed $230 million US? Maybe you're old enough to remember the 1960s TV show about inane spy Maxwell Smart.

Get Smarter isn't a movie. Get Smarter isn't about improving your memory or intelligence. Get Smarter is a 2007 book with lessons for business and life from a wealthy Canadian. Seymour Schulich, then a 67 year old billionaire, targeted the 20-40 crowd.

Canada now has 18 of the world's 793 billionaires according to Forbes (in $US): ranging from David Thomson & family with $13B to Michael Lee-Chin with $1.0B.

You probably got lots of free, unsolicited advice from "wise elders" like your parents. You can get more from self-help books. If you think that wealthier means wiser, you can read books by or about billionaires like Richard Branson, Donald Trump, T Boone Pickens, Bill Gates and Warren Buffett. Does the world need one more?

Schulich Who?

You can find out more about Seymour Schulich on Wikipedia. Although a billionaire, Schulich got support (money?) from the

Canadian Council for the Arts
the Ontario Arts Council
the Ontario Book Initiative
the federal Book Publishing Industry Development Program

Was this taxpayer support really needed?

There are oddities you rarely find in a book. For instance, how long has Schulich been married? The Introduction says 38 years but the dust jacket says 37. If you forget an entire 365 days, would your spouse keep you until the next anniversary?

Here's another. The Introduction says that many books have "two or three main ideas" but Schulich wants readers to get "twenty to thirty ideas". Quantity over quality? The back cover quotes a reader who finds that most books have "two or three usable ideas" but this book has "twenty to twenty-five great insights". How convenient. This is similar to the odd self-promotion for Daniel Gross' Dumb Money.

You'll find incomplete statements that beg questions. Schulich says he drove the same car for 11 years but doesn't say what car. If it's a Honda Civic, kudos to him. If it's a Rolls Royce or Maybach, shouldn't it last? Does he have only one car? Is he usually driven by a chauffeur, which means he drives little? He also says he's lived in the same house for 30 years but maybe it's a magnificent mansion that's continually renovated. We don't know. Maybe he has multiple properties.

The government involvement and oddities made me cringe. Attention to detail and authenticity are keys to credibility. For your benefit, I read the entire book but skimmed Appendices II - IV.

Lessons Learned

You'll find valuable lessons in Get Smarter. The cartoons are nice. The chapters are short and easy to read.

Here are nine points that stood out

know your edge: as Seth Godin says in The Dip, "Average people are in the majority, but they're not in demand."
use reciprocity, the first of Robert Cialdini's six universal principles of influence
you won't get truly wealthy if you're paid for your hours rather than your results: read Timothy Ferriss' thoughts on how much you really earn
inflation erodes the buying power of your savings but helps you as a borrower: lock in your debt for years when rates are low
there are no overnight successes: read Outliers by Malcolm Gladwell to understand the importance of the "10,000 hour rule"
be the promoter (and contract-writer), not the promotee
givers set limits because takers won't
the United States has 5% of the world's population but 70% of the lawyers; these lawyers take 3% of the GNP while the profits of the S&P 500 companies total 6% of the GNP
"Fusion power will power all cars electrically and power all homes."

If you're ages 20-40 and haven't read many books, you may find that Schulich shares many treasures. If you want to benefit from government support too, get smart: get Get Smarter from your library. If you want a laugh, watch Get Smart. The movie's funny and so is the TV show.

Links

Seymour Schulich biography (Wikipedia)
Get Smarter website (www.gettingsmarter.ca); out of date
Get Smart (2008) movie (IMDB)
Get Smart (1965) TV series (IMDB)
Richard Branson: When Your Servant Is Your Master
Warren Buffett's Touch Career Choice
Your Life Expectancy Exceeds 1 Billion Seconds
The World's Billionaires (Forbes, Mar 2009)

Podcast

direct download | Internet Archive page

Jim Flaherty on the Economy and Financial Literacy

noreply@blogger.com (Promod) — Sun, 17 May 2009 22:54:00 +0000

If meetings could solve the economic crisis, it would be over by now. --- Jim Flaherty on the many international meetings he's been attending

Finance Minister Jim Flaherty addressed CALU for the third consecutive year, earlier this month. He spoke the day after his boss, Prime Minister Stephen Harper. Flaherty spoke off script, which made him more interesting. His triplets are already 18 months old. Sometimes strangers call his boys "three twins".

Flaherty reminded us that a year ago there was concern that oil would reach $200 a barrel. The world is now in the midst of its first synchronized global recession, which Canada joined in the fourth quarter of 2008. We hate getting left out!

Canadian Differences

Since Canada still has a strong financial sector, other countries are looking at emulating the "boring" Canadian model. What sets us apart? Flaherty said:

effective implementation of regulations (regulations without monitoring mean little)
reasonable risk-taking
regulation of investment banks (which were acquired by commercial banks, which The Office of the Superintendent of Financial Institutions (OSFI) regulates); in the United States, investment banks faced less scrutiny and contributed to Dumb Money
no housing crisis (mortgages are not tax-deductible as they are in the United States); also mortgages are insured when borrowing 80% or more of the value of the property; the government purchased about $56 billion worth of mortgages to help banks stay liquid

Internationally, fixing the banks is crucial. In Canada, Flaherty sees access to credit as the main issue. The situation is improving and banks can still raise equity here. The government is spending to improve infrastructure as the Prime Minister described. The government has an increased appetite for risk. The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) are lending accordingly.

We lack a national securities regulator. Flaherty called this an international embarassment. Why does a country of 35 million people have 13 regulators?

Other Good News

Politicians like to remind us of the good they've done. Flaherty remains proud of the Tax-Free Savings Account, which he still considers the centerpoint of his previous budget. The TFSA has been well received and benefits from what Warren Buffett calls the miracle of compound interest.

Financial Literacy

What if you don't understand compound interest or other basics? Flaherty wants to increase basic financial literacy. For example, what happens if you only pay the monthly minimum balance on your credit card? He asked CALU for help. At an evening reception, I spoke to Flaherty about this initiative, gave him my business card and volunteered to participate.

I talked to fellow blogger Canadian Capitalist over dinner. We both felt that anyone who wants to learn already can. Financial bloggers already help freely and would be willing to do more. The new Canadian Money Forum is a great resource started by CC and Million Dollar Journey. You can ask your questions and get thoughtful answers at no charge from a friendly community that cares.

Links

Seven in a Row: Prime Minister Stephen Harper Live Again
Dumb Money 2009 (a US perspective)
Secret 7: The Best Tax Sheltering In Canada
The Original And Overlooked Tax-Free Savings Account
Live from CALU 2008: Jim Flaherty, Stephen Harper, Mark Carney, Michael Ignatieff
Why Jim Flaherty wants to boost our financial literacy ( Edmonton Journal | Feb 2009)
Speech by Jim Flaherty to the International Conference on Financial Education (May 2008)

Podcast

direct download | Internet Archive page