Riscario Insider

REACH YOUR GOALS WITH PICK FOUR FROM ZIG ZIGLAR AND SETH GODIN

promodcares@gmail.com (Promod Sharma) — Sun, 29 Jan 2012 01:02:00 +0000

Goals, goals, goals. Many systems help you reach them. By experimenting, you'll select or create system that suits you. To succeed, you need to get started and keep going.

Seven Habits

Over the years, I've used elements of the Seven Habits system (and used to buy the paper-based calendars in the days before smartphones). With this approach, you plan by the week. We have many roles (e.g. parent, employee, spouse, student).

You schedule the relevant ones for the week into your calendar. For instance, as a parent you may want to help your child practice a speech on Tuesday evening from 7 PM to 8 PM. As an employee, you may allocate 1 PM to 4 PM on Thursday to catch up on email. Once you schedule the essentials, other activities fit around them. (For more, see Scheduling your priorities the Seven Habits way)

Getting Things Done

Several years ago, I started using the Getting Things Done approach to get things out of my head and into a system I trust.

I'm using PersonalBrain (see review) to track for big things. The drawback is that I can only use it on my Windows computer. There's no edit/sync with Android or iPad.

For To Do items, I use Toodledo for a web-based repository that's connected to Pocket Informant on my Android phone and iPad. I have the Pro version so that I can create subtasks. This works well.
For client-related items I want to track long term, I use a web-based CRM system, Batchbook. There's overlap but that's manageable. (for more, see Three big lessons from Getting Things Done)

What's Missing

My current approach is 100% independent. No one else is involved and the goals are private. Some goals slip ... but at least no one else knows.

Pick Four

Enter Pick Four. This is Seth Godin's update of Zig Ziglar's low tech process for reaching goals over 12 weeks.

Pick Four combines three elements

a mind dump of your life goals (like Getting Things Done)
identifying roles and goals (like The Seven Habits but for the full 12 weeks, not week by week)
peer support

Most of the workbook is a diary in which you make notes about what you did for each goal each day. You also mark whether what you did was enough.

Form A Team

Amazon sells these workbooks in four packs. We paid $30, which works out to $7.50 each.

At the time of writing, the US price is $20. In Canada, the price is $135.04, which must be a mistake.

The inviting open-me cover looks reminds me of Dr. Seuss and Tim Burton. The paper looks cheap because it's not smooth or bright white. Looks deceive. The paper is good quality. I'm using a gel pen and ink doesn't bleed through the paper.

Rules

I'm in a quartet of high-calibre participants I met recently. We barely know each other but are all committed to meeting our goals. When you're working in a team, members must agree to (obvious) rules like maintaining confidentiality and keeping commitments.

Why 12 Weeks?

Twelve weeks feels right. That's long enough to achieve reasonable goals but short enough to motivate. By the end, we should have built habits that

keep us from quitting those goals
encourage us to set more goals

What's Missing?

Pick Four is only paper-based. I'd much prefer an iPad app. That saves trees and helps with privacy. As with a diary, I wouldn't want anyone looking at what I'm writing.

Since the spiral binding is on the left instead of the top, writing on the left-hand pages is tougher for neat freaks. Maybe there will be more options in the future. Since I don't like throwing things away, I'd like an iPad version that lets me print to a PDF for archiving.

You only get five days per week. That gives you two days off. I like that but would prefer a seven day calendar to be consistent with today's lifestyles. For instance, you might have goals that include weekends but that doesn't mean you're a workaholic.

Picked Four

Here are my goals:

Ask for business (3 times a week): I make myself available to clients who decide on their own that they'd like my services. That's pressure-free but not proactive.
Exercise (3 times a week): I turned 50 last year and must pay more attention to my body. This category also includes sleeping earlier.
Declutter (daily): don't ask. I've got stuff piled up on flat surfaces. I have closets and boxes filled with stuff I'll never use and would have trouble finding.
Ship video (once every two weeks): this involves getting better with editing and talking to the camera without my mind going blank.

Each goal is a stretch and was reviewed by a peer mentoring group and my Pick Four goalmates.

I'm on Day 2 and will report back in 12 weeks on April 21, 2012.

Podcast 153 (hmm)

direct download | Internet Archive page | iTunes

PS Don't wait for my findings. Keep working on your goals.

CAN AN ADVOCATE SERVE TWO MASTERS?

promodcares@gmail.com (Promod Sharma) — Sat, 21 Jan 2012 19:38:00 +0000

In a game of strategy, you can’t play on both sides at the same time. If you switch allegiances, who can trust you?

Near the end of 2011, I had an epiphany. I realized that I wasn't putting your interests first as well as I could.

Product Design

When I designed health and life insurance products for a decade, I knew there were compromises that boosted profits.

Example (skip if you don’t like statistics): universal life might have a contingent bonus that rewards you if your investment returns are high. For instance, you might get a 2% bonus if you earn 5% in a year. That looks appealing but research showed the bonus would only pay 60% of the time. That reduced the projected payout to 1.2% (= 2% rate x 60% probability). To cover costs, the investment loads were increased by 1.2% (say from 1.8% to 3.0%).

I was okay with this because other insurers had similar designs and sales were made through independent advisors. Buyer beware looks fair when you have an impartial advisor with the will and skill to help you make sound choices. I didn’t realize that advisors also suffered from the plague of innumeracy (low financial literacy).

One For All

When I spent 5 years helping top advisors sell insurance, I saw a more troublesome issue. Since I was working for an insurance company, I could only promote their offerings. No company in any business can have the best product for every situation. That's because companies make different compromises. For instance, clients at younger ages or buying smaller policies may be charged more to subsidize older clients buying larger policies. Why? There's more competition for the wealthy, which means better prices for them.

Representing a single company creates a conflict between what you’ve got and what's best for the client. I rationalized. I was supporting independent advisors who could deal with different companies. They decided what to offer their clients and I was there to help them. Never mind that compensation or other incentives might influence the recommendations. Since the advisors were really salespeople, they were not required to put your interests ahead of their own (see the insurance loophole).

All For One

Since 2009, I've been saying that I've been serving you directly, bypassing the salespeople. At least that’s what I said. That wasn't 100% correct. In some cases, I was still collaborating with advisors to serve their clients. This is often called “splitting cases” since the revenue gets shared. That looked like a win/win:

advisors had clients but needed more credibility or expertise
I had both but, as a startup, needed more clients

This time, I had access to products from different companies, which allowed the better solutions to be presented.

There was a bigger problem.

Oh No

Since the advisors "owned" the clients, I had to meet their interests first. This lead to conflicts since I would not concede. Too often, these advisors wanted to sell products with

more coverage than necessary
higher compensation than conscionable, or
strategies with more sizzle than substance

There was reluctance to provide after-sales service, since revenue came primarily from new sales.

Example: You know mutual funds have high investment expenses. You may not know — but probably guessed — that investments inside life insurance have high investment expenses too. This is normally hidden, but I told you in 2008 (see two drawbacks of investing in life insurance). A salesperson might not feel compelled to inform you but an advocate for you must ...

What if an advisor doesn't provide full disclosure? There's the sin of omission. It's not the same as telling a lie but now the onus is on you to pose questions you might not think to ask. Even if you do, what answer can you expect?

What's worse than fooling a client? Fooling their tax advisor into recommending a strategy. When clients find out what happened — which may take years — the tax advisors get blamed since they were more trusted.

Conundrum

Do you see my conundrum? Serving you with life and health insurance is my calling. It's the only thing I've done in my entire career. This is not my Plan B or Plan C.

How could I serve two masters, the salespeople and you?

I couldn't find a way to overcome the troubling conflict of interest. There's a time to take sides. That's why I've stopped sharing cases with advisors who make their living by selling health or life insurance.

I've terminated every single arrangement by the end of 2011. I can't serve them and you.
I choose you.

Podcast 152 (6:51)

direct download | Internet Archive page | iTunes

PS I still collaborate with hand-picked specialists like accountants, lawyers, fee-only financial planners, investment-only advisors and employee benefit specialists.

THE WORD ADVISORS IMPLY BUT DARE NOT SAY

promodcares@gmail.com (Promod Sharma) — Sat, 14 Jan 2012 13:04:00 +0000

There’s nothing wrong with selling but salespeople don't want to be seen as salespeople.

Impressive titles like "advisor", “consultant”, "planner" and “specialist” sound better even though anyone can use them (more examples). Designations look impressive unless you explore and conclude they are sales-oriented too.

Regardless of title, advice has little value if biases (real or perceived) are built-in. Surveys routinely rank advisors among the least trusted professions.

Fiduciary

Do advisors use the word "fiduciary" to describe themselves? A fiduciary is legally required to put your interests ahead of their own. A salesperson does not have that burden. Buyer beware.

Becoming a fiduciary is not the answer. If something goes wrong, even fiduciaries can have trouble proving they acted properly. That's the consequence of hindsight, selective memory and emotion. Lawyers play a role too.

Advocate

What about “advocate”?

An advocate is on your side. An advocate educates you. An advocate makes a stand in public — even when that conflicts with their industry. An advocate points out what the fine print really means to you. Seller inform.

An advocate isn't a rebel who wants to "tear down the walls from the inside" and tell-all. An advocate wants to make improvements within the system. That takes more skill but leads to better, faster results for you. Experience as an insider helps an advocate help you.

What's stopping advisors from becoming advocates for you? They may already belong to organizations which are advocates for them.

Proof

Anyone can call themselves an advocate but no one can prove they are one.

At best, an advocate can demonstrate they are on your side with their actions. Since an advocate could get corrupted, look for

what they’ve done in public, and
what they continue to do in public.

What’s done in private doesn’t count since there’s no public scrutiny.

When Turtles announces a return to the "original recipe", you might wonder if that’s because they tried to sneak in cheaper ingredients … and lost. When Fido mobile announced “now easier to speak to a real person”, perhaps that’s because they cut service … and lost. There was a time when Enron was trusted. Before the financial meltdown, long-established companies like AIG were considered solid too.

Advocacy might be a ploy but that’s tough to fake for years.

Price

A salesperson often works for "free", which means for sales-based commissions, bonuses and other incentives. How does an advocate get paid? Probably by charging for the advice. Would you pay?

“Fiduciary” is a scary word for advisors and “salesperson” is scary for you. “Advocate” looks ideal. Just make sure you select a real one.

Podcast 151 (4:21)

direct download | Internet Archive page | iTunes

PS Are an advocate for whoever you serve?

YOUR FAVOURITE POSTS OF 2011

promodcares@gmail.com (Promod Sharma) — Sat, 07 Jan 2012 13:30:00 +0000

Welcome to 2012. As usual, let's start by reviewing what you read here on Riscario Insider in 2011.

Overall

After nearly five (!) years, blogging feels like a normal part of life.

The Top 20 Posts

Normally, we only look at the top 10 posts. As in 2010, five of the ten are repeats (this time #1-4, 7). To show more variety let’s look at the top 20 instead.

Here's what you read most.

Insurance was the most popular top with six appearances (#2, #11, #13, #15, #16, #19). Napoleon Hill made the list three times (#3, #10 and #12). Actuarial items are there three times too (#5, #17 and #20).

Work A Peek

Here are the 2011 posts categorized for your convenience.

Career

Various

Insurance

Financial

The Top 5 Podcasts

If you prefer, you can listen to podcasts. Here are the top five.

Does billionaire Seymour Schulich help you "Get Smarter"? (#1 in 2010)
"The Snowball" rolls into Warren Buffett (#2 in 2010)
The three major obstacles to growth according to Brian Tracy (#4 in 2010)
Outliers by Malcolm Gladwell: Mastery plus Opportunity trumps Talent (#5 in 2010)
Warren Buffett’s touch career choice: actuary or billionaire

The Top 3 Countries

You read from 138 countries (up from 128).

United States: New York, Chicago, Los Angeles, San Francisco, Houston (#2 in 2010)
Canada: Toronto, Vancouver, Calgary, Ottawa, Edmonton (same order as 2010)
United Kingdom: London, Kensington, Manchester, Edinburgh, Lambeth

For the first time, the US is the leading country for traffic. For 2007-2010, Canada was #1.

Sources of Traffic

Search engines: 69% (up from 43%)
Referring sites: 14% (down from 22%) [main sources: LinkedIn, Taxevity, Twitter]
Direct: 17% (down from 20%)

For the first time, social media is the main source of referrals.

Keywords

Here are the top keywords typed into search engines to get here.

7 habits of highly effective people quotes (#1 in 2010)
seymour schulich (#2 in 2010)
quotes from 7 habits of highly effective people
seven habits of highly effective people quotes
career change actuary
the 7 habits of highly effective people quotes
warren buffett life insurance
quotes from the 7 habits of highly effective people
napoleon hill
6 basic fears

Notice the variations of "7 habits" and "quotes"? Different paths lead to the same destination.

Browsers Used

Internet Explorer: 37% (down from 44%)
Firefox: 25% (down from 32%)
Chrome: 20% (up from 12%) [was 2% in 2009]
Safari: 14% (up from 9%) [was 2% in 2009]

Operating Systems

Windows: 76% (down from 83%)
Macintosh: 12% (up from 11%)
iOS: 7% (up from 3%)
Linux: 1% (down from 2%)

Screen Resolution

1280x800: 19% (down from 20%)
1024x768: 12% (down from 18%) [was 35% in 2008]
1366x768: 12% (up from 5%)
1440x900: 8% (unchanged)
1280x1024: 8% (down from 13%)

Mobile Devices

In 2011, 9% visited with mobile devices (up from 3.5%). Apple devices still rule (76%) followed by Android (18%) and Blackberry (5%). The iPhone is the most popular device (25% of mobile visits) followed by the iPad (20% and the longest visits).

Podcast Episode 150 (9:45)

direct download | Internet Archive page | iTunes

PS Back to regular posts next week

THE MOST SPECIAL TIME OF YEAR

promodcares@gmail.com (Promod Sharma) — Sat, 24 Dec 2011 22:25:00 +0000

It's Christmas Eve. Whether you celebrate or not, snow makes today special and there isn't any.

As a child, Christmas was the most special time of year. It wasn't our festivity but we celebrated just the same. There was joy in the air. People were happier. Everything was delicious and nothing had calories. The decorations looked wonderful. The snowmen, the lights, the sounds, the stockings, the cards, the music. Pa, rum, pa, pum, pum. Me and my drum.

The joy and wonder. Santa Claus is coming to town! The magic even changed Scrooge and The Grinch.

Wonder

We had an artificial tree with shiny silver branches. Like any good child, I believed in Santa and was rewarded. How did he get in when we had no fireplace and the chimney led down to the furnace?
Since the real Santa was busy at the North Pole preparing for his annual visit, he sent mall Santas to get our wishes. This was more convenient than writing a letter in those pre-email days. Plus we got a sweet treat. Joy to the candy canes! The lineup was worth the rewards.

We had a black & white TV with one over-the-air channel. This was in London, Ontario. That was fine. We watched uplifting old black & white classics. Year after year.

Boxing Day

When I became a teen, Boxing Day mattered more than Christmas. On December 26th, I'd head downtown to Sam The Record Man where everything was on sale. This was the time to buy imports or expensive back catalog records (yes, the vinyl ones). The popular titles were discounted at other stores.

In those days before websites and home computers, you couldn't do your “Boxing Day” shopping on December 24th or 25th. Now we can. What "progress"! Can’t we get any break from shopping? We have to rely on our self-control, which can be weak.

If you still like shopping in person, Best Buy and Future Shop now open at 6 AM on Boxing Day. Even 7 AM was too early.

I remember lining up in 2001 to get our first digital camera: a Fuji FinePix 6800Z with a body designed by Porsche. Having photos felt important since 9/11 ended innocence a mere three months earlier. The normal price of $1,000 was now reduced to $700. That was for 3.3 megapixels, shutter lag and a noticeable pause between shots. A 64 MB memory card was pricey but necessary accessory. The “good old days" weren't for gadget lovers. The store only had four but I got one and still have it.

Hot Chocolate

As a child, we never needed to travel for Christmas because we were already together. When I started working, travel added stress because the weather was unpredictable whether driving or flying. Sacrifices.
We didn't have global warming concerns in those days. Since we were in a snow belt, we could count on lots of the white stuff. That's a wonderful excuse for hot chocolate.

We didn't have treats regularly. That made the shortbread cookies and boxes of chocolate so much more delectable. This year we have Costco sized boxes that last months.

Why Not?

We live in such a complicated world. On this day in 2008, we were at the hospital emergency ward. We deserve to remember lighter times at least once a year. This is the best time because so many others are looking back and enjoying too. We also have time to think and try new things. Since the New Year is about to begin, this is also a great time to act on new resolutions.

Will it snow tonight?

More than once, we've gone to bed with green grass and awakened to snow. There's such a lull when you open the door. Snow dampens the sounds and makes the day even more special. Even the shoveling is fine when you return to a nice warm house with delicious aromas wafting from the kitchen.

This is the final post of 2011.

The best to you and yours during the holidays.
May your 2012 be swell, swell, swell!

Podcast 149 (6:05)

direct download | Internet Archive page | iTunes

PS If this post is just nostalgia talking, I'm still listening. How about you?

KEEPING PROMISES: CORPORATE GOVERNANCE 2011

promodcares@gmail.com (Promod Sharma) — Sat, 17 Dec 2011 22:34:00 +0000

Corporate governance is a measure of how well companies are run and keep their promises. The Globe and Mail has done an annual study for the last 10 years. Here are some of the biggest scandals: Enron (2001), Worldcom (2002), Nortel (2003), Parmalat (2003), Tyco (2005), HP (2006), RIM (2006-2007) and Olympus (2011). Do you remember why? For highlights, check out this slideshow.

We last looked at the 2007 rankings. It's time for an update.

Lots has changed since 2007. That's when the iPhone was introduced. That novelty is gone and the devices are commonplace. Not all changes have such happy evolutions.

We have endured financial turmoil. Major companies have had difficulty keeping promises. Countries too. Financial services are especially important since they are intangible. You can't touch the return on an investment or feel the quality of an insurance policy by holding the contract.
Canadian companies have proved resilient. That’s a sign of being well-run. The regulators deserve credit for setting high standards and ensuring they are enforced.

Trends

The best 15% of boards did well before Enron and would have done well without any reforms. The 70% in the middle have benefitted most from the governance revolution, and the 15% at the bottom are unchanged.
— TD Bank chairman Brian Levitt (Corporate Canada sees a quiet revolution in governance)

Corporate governance has improved. We’ll focus on financial services. In 2007, only 12 companies scores 80% of more. Now there are 16, despite the tough times and higher standards.

Rankings

Here are the five highest ranked companies in financial services:

Manulife (#2 overall, down from #1 in 2007)
Scotiabank (#4 overall, up from #18)
Sun Life (#7 overall, up from #8)
tie: BMO (#10 overall, down from #5) and TD Bank (#10 overall, down from #3)
tie: CIBC (#12 overall, up from #18) and Industrial Alliance Insurance (#12 overall, up from #21)

The Bottom

As in 2007, Power Corporation of Canada is at the bottom at #237 (a drop from #178). This group owns companies like Canada Life, Great-West Life, Investors Group, Investment Planning Counsel, Mackenzie Financial and London Life.

For more details, click on the table. You’ll find much more about corporate governance on the Board Games 2011 microsite. The University of Toronto prepared the data at the Clarkson Centre for Business Ethics and Board Effectiveness. How do you fit that on a business card? You can download the full results in a spreadsheet to do your own analysis.

No Guarantees

We can't predict the future until tomorrow becomes yesterday. That doesn't make us helpless. We can take steps to put the probabilities on our side. You might want to support larger companies which rank high in corporate governance — especially leaders in 2007 and now. Thanks to competition, you rarely pay more but get extra peace of mind. What’s the downside?

Even well-run companies may have products with poor promises. For instance, you’ll find pitfalls in mortgage life insurance and investments with high expense loads. You might do better as a shareholder than a customer.

Corporate governance is also a way to gauge whether your advisor is putting your interests first. If you were sold or shown products from companies with low scores, did you get tires with less tread? On a warm sunny day, you won't notice the difference but freak storms strike. When the roads get treacherous, it's too late to change your tires.

Nothing stops companies from scoring high on corporate governance. Do they? Nothing stops advisors from recommending those companies. Does yours?

Podcast 148 (6:39)

direct download | Internet Archive page | iTunes

PS How good are you at keeping your promises?

WHAT ARE YOU DOING ABOUT YOUR HIGH INVESTMENT EXPENSES (MERs)?

promodcares@gmail.com (Promod Sharma) — Sat, 10 Dec 2011 22:34:00 +0000

We're not ostriches and in winter there's no soft sand to hide our heads. We might cover our ears with hats or wear headphones but we can't pretend we don't know what's going on around us.

Still, we love fooling ourselves and doing nothing while we’re being harmed slowly. Like lobsters in a pot.

In honesty, can you claim you don't know that Canada has extremely high investment expenses? Especially after this week’s extensive media attention?

Compound interest is the secret ingredient in investment growth. The Management Expense Ratio (MER) is the enemy. Yes, we need to pay something but the more we pay, the worse our returns. Since the MER is often deducted on a daily basis, the effect of the cost is compounded too. The damage builds over time. Plus, in absolute dollars, you pay more as your investments grow.

The Facts

Let’s start with research and reports from credible sources.

Morningstar Global Fund Investor Experience (Mar 2011)

“Canada is the only country [out of 22] in the survey with TERs [Total Expense Ratios] in the highest grouping for each of the three broad categories [equity funds, fixed-income funds and money market funds] … These costs cannot be explained by pointing to unique features of the Canadian fund market.” (page 22)

“Positively for fund investors, sales and media practices are excellent and disclosure is very good. Unfortunately, these benefits are counterbalanced by steep taxes and the highest fund costs found in this survey … Nor does it [Canada] offer fund investors the protection of a board of directors.” (page 24)

“ … the Canadian funds community is the only funds groups to claim last year’s Global Fund Investor Experience report was methodologically flawed in its treatment of fund expenses … A final claim is made that Canadian mutual fund costs should not be compared to those of the United States, because the U.S. marketplace is much larger and therefore enjoys greater economies of scale. This argument has some merit, but it does not explain why Canadian fund expenses are significantly higher than those in other countries with modest population bases, such as Belgium, Australia, Sweden, Norway, and Hong Kong, to name a few.” (page 58)

Here's a link to the full report (PDF)

Financial Post

Jonathan Chevreau wrote: “I doubt any objective advisor would counsel against buying the iShares ETF through a discount brokerage though my bet is quite a few would counsel against buying Investors [Group] Dividend Fund for the simple reason it’s overpriced … when a far cheaper alternative exists. It’s beyond me how the firm can countenance this stance while also trying to wrap themselves in the rhetoric of their alleged efforts to improve financial literacy. — OK, Investors Group, now the gloves are off on your financial literacy stance (Dec 1, 2011)

“Has there been a sea change in consumer attitudes to fees and the dramatic contrast revealed by the surging ETF industry? Or are we so helpless as investors that we willingly turn over 2.7% in management fees to companies like Investors Group to make our decisions for us?” — The MER Debate (Dec 6, 2011)

Investment Executive

“Outside of deposit accounts (held by 90%), affluent Canadians are most likely to invest in mutual funds (held by 56%). This is one of the highest levels of mutual fund ownership of all countries surveyed.” — Affluent investors in Canada rely on professional advisors: survey (Dec 8, 2011)

The Globe and Mail

“The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) complained that under the current regulatory environment, there’s limited price competition and demanded that Ottawa look into the high cost of investing. Federal Finance Minister Jim Flaherty said he would ask the Senate national finance committee to investigate.” — Canadian Investors ‘gouged’ by fees (Dec 5, 2011)

“Given that Canada has some of the highest mutual fund fees in the world, we are used to seeing fees of 2.4 per cent and higher. Investors Group, however, stands out among fund companies in Canada because their fees often hit around 2.7 per cent. This is but one of the red flags.” — Investors Group mutual fund fees among the highest in Canada (Dec 6, 2011)

“It is beyond pathetic that no mutual fund company in this country wants to make low fees a key part of its marketing pitch to investors. Our fund industry abides. It’s insular, complacent and arrogant. It too often charges high fees for lame funds that investors buy through advisers who provide no advice.” — The no-gouge way to better investing (Dec 7, 2011)

Canadian Labour Congress (CLC)

An online calculator shows what happens when you invest a lump sum of $10,000 and earn a compound return of 5%. With a mutual fund charging 2.5% guess what happens after 30 years? You have under $21,000 and your advisor has over $22,000. This is a win/lose and you’re on the wrong side.

After 45 years, the results continue to compound against you. You have less than $30,000 and your advisor gets over $60,000.

With low fees of 0.5%, you win. After 45 years, you have over $72,000 and your advisor gets less than $18,000. Don’t cry for your advisor. You aren’t their only client and the investment was entirely yours.

Disagreement

The Canadian investment industry doesn’t see a problem. Surprised?

They argue that we lack economies of scale. That makes for sense for physical things like installing fiber optic cable or paving roads. An investment is an electronic transaction, and computations keep getting cheaper.

Another argument is that you're paying for advice. Perhaps but there are questions too

how good is the advice? what are the objective measures of quality? what are the penalties for bad advice?
how much are you paying?
how much does the advice cost? Is this cost dropping?

Has your advisor ever told you how much you pay for their advice? In the world of for-fee advice, you would. Since that model is rare, you probably don't know.

How meaningful is advice without guarantees or penalties?

If you've been burned by bad investment advice before, do you still believe your advisor has a magic crystal ball? Do you believe you get the same quality of advice as the big investors like pension funds, insurance companies and banks?

If you're not getting amazing advice, maybe your best option is to lower your costs.

Why Hide?

Why is the cost of advice hidden from you? Maybe that's because you wouldn't pay for the advice if you saw the bill. Maybe you would demand more for your money or demand to pay less for what you are getting. Maybe you’d look for better advice even if that cost more. After all, most advisors are close to average, which impairs the advice they are capable of offering.

The Real Purpose Of MERs

I've been to nonpublic seminars where investments are introduced to advisors. There's a standard pattern. The presenter shows how the new investment team beats the gang that just got turfed. We see carefully-constructed examples of amazing past returns that no one actually achieved. Advisors are shown the point-of-sale material. Who needs skill when you’ve got nice coloured charts? The best is last: slides on how high the compensation is. Now go out and sell sell sell!!!

I've never seen a slide that shows the portion of the MER intended for advice. As an investor, have you?

A big portion of the MER is a sales commission. Advice is the cost of making the sale, an attempt to show the expertise of the advisor.

The MERs are high because we continue to buy. Would lower MERs increase the investment manufacturer’s market share? Probably not because of buyer inertia and since competitors can quickly copy. It's like gas prices. There are different chains but the prices match. You get a sense of the margins when you see how much less Costco charges for gas.

Unbundle

Bundles often have compromises that boost profits. Who really eats the ketchup chips in the variety pack? How good is the headset that came with your smartphone?

When you invest, you pay for advice and administration (including transactions and record keeping). You won't know how much unless the components are separated. You might then be surprised and decide to do something. Not now, but later. Until then your inertia costs you a bundle.

Podcast 147 (12:37)

direct download | Internet Archive page | iTunes

PS Remember that tax hurts too …

WHERE DOES YOUR INSURANCE ADVISOR GET ADVICE?

promodcares@gmail.com (Promod Sharma) — Sat, 03 Dec 2011 22:09:00 +0000

"The Canadian life and health insurance industry is witnessing some dramatic developments. Barely a day after Standard Life’s announcement that it would discontinue its individual life insurance and critical illness products, there is word that Sun Life Financial has dismantled its long term care insurance (LTCI) specialist model."
— advisor.ca (Nov 30, 2011)

Following that article, this exchange took place on LinkedIn.

Promod Sharma: For years, I've seen insurance advisors struggle to understand the different types of products: life insurance vs living benefits (disability, critical illness, long term care) vs investments. Clients lose when they aren't offered products which are suitable and well-configured. Having experts certainly helps but has a cost ...

Byren Innes (LinkedIn profile): Agreed. Unfortunately we live in a very complex product world today even though the 'product' shelves are much narrower than the past. As many advisors broaden their own offerings it becomes increasingly difficult to understand - not just the basics but the specific and sometimes complex and subtle details. I'm waiting for a smart entrepreneurial firm to step up and fill this gap. Who will it be?

To date, Byren’s challenge has gone unanswered. This post proposes solution.

The Past

When your condition exceeds your doctor's expertise, you get referred to a specialist. You get better care and doctor avoids malpractice issues. Insurance works differently. Advisors need no real training. Once they pass a simple multiple-choice exam they are free to work on cases beyond their capabilities.

Since insurance advisors are commissioned salespeople, their primary goal is finding prospects. That tough role gets well-rewarded. When advisors elect to get technical help they have three choices:

insurers
intermediaries, or
independents

Each source has pros and cons. As Bob Dylan said, you gotta serve somebody. That's true even when you think they are serving you.

Insurers

Insurers provide free support. The price is right but the advisor then has an obligation to sell that company's product. Say bye to independent advice.

Since insurers are cost-conscious, they hire average specialists. Despite the impressive credentials, you get average advice. These experts often have "field experience". That means they failed at selling and are happy to get a salary and employee benefits instead.

Intermediaries

Managing General Agents (MGAs) are the intermediaries between the insurers and the advisors. The larger organizations provide internal support. This can be better than what's available from the insurers. Recommendations can now be independent but there's an indirect cost: the advisor usually gets lower compensation.

This model looks good. There's no upfront cost to the advisor, which is ideal since not every case closes. However, advisors often begrudge the cost. For reasons I've never understood, they'd rather get 100% of nothing or compromise with the free support from insurers.

Independents

Some technicians realize they can't sell and some salespeople realize they can't do the technical work. They form formal alliances or work together on selected cases.

These technicians can be very good but they aren't cheap. They typically get a split of the revenue (e.g., 25%-50%). No sale means no money, which may tint their advice.

To show their value, technicians tend to make matters look more complicated than they really are. If they simplify, the advisor might soon realize they can use free or cheaper resources.

The Ideal

Can an advisor who tries to do everything be great at anything?

The ideal is to have a team of independent specialists. Each masters their niche and gives referrals outside their expertise.

In practice, few advisors specialize because that means leaving "money on the table". For some reason, that's a problem. The other challenge is trust. Advisors want you to trust them but they have immense difficulty trusting other advisors.

An Extra Step

Commission-based sales create conflicts of interest. The solution is for you to pay for each service even if you decide against proceeding.

Is this radical?

You already pay your lawyer and accountant for their services. You pay a home inspector even if you don't buy the house. What do you think?

Podcast 146 (6:15)

direct download | Internet Archive page | iTunes

PS Just because advisors can get help to sell you a policy doesn't mean they have help to provide ongoing service.

INCOME REPLACEMENT: A GUIDE TO DISABILITY INSURANCE

promodcares@gmail.com (Promod Sharma) — Sat, 26 Nov 2011 23:17:00 +0000

In this week’s Globe and Mail, Preet Banerjee investigates the financial aid available to the disabled. I’m quoted. The interview took place via Bluetooth while I was driving to the sold-out Toastmasters conference. (There, Jonathan Holowka and I showed ways to turbocharge clubs with social media.)

Disability is a dreary subject and you avoid buying insurance, but the topic is popular this week. Advisor.ca, has articles to help salespeople clear the sales hurdle and pitch disability coverage. There is even a script for them to use on you. If you start getting contacted in the near future, maybe that’s why.

This post gives you more insider thoughts about disability insurance, which is sometimes given the glitzier name of income replacement insurance.

Statistics

There are many eye-popping statistics about the high risk of disability and how long income can be lost. Here is a recent video from PPI Solutions.

You probably know people who are disabled at least partially.

Differences

Death is something an actuary can calculate fairly easily and accurately. Predicting who will become disabled is not so easy. It is a calculation based on chance.
— New York Times, April 2011

Life insurance pays a fixed amount upon death. Critical illness insurance pays a fixed amount upon diagnosis of a covered illness. Within reason, you decide how much coverage you want.

Disability insurance is different. It only replaces a portion of your lost income. If you were able to replace your full income and get indexed benefits, where is the financial incentive to return to work? If the economy is bad and layoffs are pending, getting disabled may look like an exit strategy.

To counter abuse, insurers have ongoing checks to make sure you still qualify. With life and critical illness insurance, you're only checked at the time of the claim.

Disability has subjective elements. Insurers have leeway in deciding who qualifies for benefits. There are three key ways to getting your claim paid.

Nortel

You can't rely on disability protection from your employer even if you pay the premiums. We already looked at the two types of coverage you may have but can't own.

Nortel is a sad example. Instead of getting real insurance, the company decided to insure employees themselves. Since Nortel is bankrupt, their promises mean nothing. The disabled lost their benefits. If real insurance were used, then benefits would have continued. If the insurer failed, Assuris protection would step in.

In British Columbia, the government is not paying legislated benefits to thousands of disabled people.

If you can't rely on an employer or government, can you rely on yourself? If you don't have your own DI coverage, you are your own insurer. Since you cannot tell if you're going to become disabled or for how long, self-insuring can prove very costly unless you're independently wealthy.

Problem

Statistics Canada reports that 1 in 7 Canadians are disabled. The rates increase with age. Not only is disability common during your working years, the benefits could be paid until age 65 and might even be indexed. While the protection is worthwhile, it's pricey. It has to be. That’s why some people buy critical illness insurance instead. That's valuable coverage but hardly a substitute.

The perceived problem is that you can spend lots of hard-earned money on insurance and never get a long term disability. Isn't that better than having a claim? You had peace of mind and your health.

Podcast 145 (hmm)

direct download | Internet Archive page | iTunes

PS Relying on your employer for your pension is also risky. Defined benefit plans are becoming rare in the private sector and we're living longer than ever.

IS THE BEST ADVICE FREE OR FOR-FEE?

promodcares@gmail.com (Promod Sharma) — Sat, 19 Nov 2011 14:32:00 +0000

The answer depends on where you're getting the advice and the business model of the advisor. When a billionaire sells advice via a seminar, I'm skeptical. Why not show generosity by giving the information away for free? The Khan Academy does and is changing lives.

For-Free or For-Fee?

There are many places you can go to get a free financial plan. If they sell mutual funds, count on the proposal including mutual funds (instead of cheaper ETFs). If they sell insurance, count on a recommendation to buy some (and probably not cheap term).

Even if you pay, there may still be biases. If they sell investments, you may be encouraged to move your portfolio to them. Do that and they may even waive their fees for the plan. The result is the same as if you got a free plan. Their real model might be asset accumulation.

However, the criticism may be unwarranted. Time and expertise cost money. A monkey will work for peanuts but maybe you don't want a hire a monkey.

For-Fee

What about for-fee planners? We're reluctant to hire them when we can get free plans elsewhere. They may also get compensated for the investment or insurance sales that arise from their recommendations.

The optics vary.

To appear independent, they may send you to someone else in their firm. In the bank-owned world, the investment advisors make referrals to the insurance specialists and share in the compensation. Management may get incentives to ensure both groups to work together.

In private firms, revenue can be shared too. Let's say an accountant sets up a company with a planner, investment advisor and insurance advisor. All revenue could go to this one-stop shop and get shared through the ownership structure.

For-fee planners often establish informal affiliations. They could get paid for the referrals they give by getting referrals in return. That's reciprocity. Buyer beware again.

Other Sources For Free Advice

If you're getting advice from someone who doesn't sell financial products, you may be getting good advice. Bloggers, journalists and authors can be excellent sources. They make their money in other ways.

Retirees may have valuable advice if they've kept their knowledge current and can connect with younger generations. Former insiders are another source but find out why they left. If you sense they were booted out for poor performance, they have biases.

If they're giving free advice, how much are they putting online? If none, they may have difficulty learning new skills. Perhaps they don't have much to say that would withstand public scrutiny.

The Sellers

You could get good advice from someone who's selling but you might not. If the advisor only sells mutual funds, will you get any recommendations to buy low-cost ETFs?

When Paid Advice Doesn't Pay

I've met advisors who wanted to give unbiased paid advice but they couldn't create a viable business model. So they added commission-paying elements like investments or insurance.

You're not keen to pay when you can get free advice elsewhere. This says the for-fee advisors haven't been able to show value for your money. To compensate, some will give you lengthy financial plans that are mainly fill-in-the-blank templates. There's more value to you if that content is online, hyperlinked and kept up-to-date. You could then get a much shorter plan — maybe one that fits on a single page and has clear action steps.

The Dilemma

Even if you're paying for advice from someone who's really good, they probably sell something related and get rewarded for referrals. Without those subsidies, the advice would likely cost you more.

The Biggest Problem

The biggest problem with free advice is compliance. Or rather, your lack of compliance. We place less value on what's free even when we agree. Here's the paradox. If you pay, you're more likely to value the advice, act and get the benefits. You then get more than your money's worth.

Podcast 144 (4:59)

direct download | Internet Archive page | iTunes

PS What do you think of my free advice?

THE HORROR OF ROGERS “ULTIMATE” INTERNET

promodcares@gmail.com (Promod Sharma) — Sat, 12 Nov 2011 16:12:00 +0000

How is your Internet access these days? We “upgraded” to Rogers’ priciest Ultimate plan 1.5 months ago and have periodic problems. The speed is inconsistent and access has been intermittent the last three days. I can’t even run SpeedTest.net. The usual steps of unplugging/replugging the equipment hasn’t helped.

Here’s another example of the risk of innovation.

Previous Plan

Our Hi-Speed Extreme Plus plan had downloads of 25 Mbps, maximum 125 GB. In August, we got upgraded to 32 Mbps and 150 GB for a few days. The faster speed made a noticeable difference and seemed "just right". In September, that became our normal plan ... except now everything seemed sluggish.

What happened?

We had a rental wireless modem for $7 per month. The range was lousy compared to our previous wireless N router. As a compromise, we turned the Rogers gear into a wired modem and connected to our own wireless router. We’ve done this for years. It works well but we were paying Rogers for wireless services we were not using and did not need.

Costco To The Rescue

While vacationing in the US in late August, we bought a Motorola Docsis 3 modem, the fastest available. The price was $75 at Costco. After returning home, we tested it for several days. The results were excellent ... until I returned our rental modem to Rogers. Service slowed down. I thought this was due to the back to school crowd or technical problems. We waited patiently for weeks.

Consequences

I called Rogers and found that we'd been put on an ancient plan with 18 Mbps and 95 GB/month. We're still paying the same $70/month but losing 14 Mbps and 55 GB per month! That's crazy. By upgrading, we ended with less. Using convoluted logic, the rep explained we weren’t paying more because of price hadn’t gone up.

This was the consequence of returning the Rogers equipment. We were not told at the time. We could only get the previous service if we were willing to pay an extra $7/month to rent Rogers equipment we clearly didn't need.

Fastest

I asked if I could upgrade to Ultimate which is 50 Mbps and 250 GB per month. This costs $100/month plus $7/month wireless modem rental plus tax. In the past, this plan required digital cable. That's a nonstarter since we don't even have a TV: we use Netflix, mobile devices and a projector.

This time, I was told that I could upgrade and did. We couldn’t get the published plan, though. We’re on a faster backbone that isn’t available everywhere. The rep put us on an unadvertised plan: 75 Mbps and 200 GB/month. Faster is better but why chop usage by 50 GB? Google is piloting 1000 Mbps and unlimited usage via fiber optics. That’s forward-thinking.

Rogers Ultimate is inconsistent as others have reported. Sometimes great. Other times sluggish. Maybe it’s time to call tech support again.

Speed Tests 75Mbps?

VIEW SLIDE SHOW

DOWNLOAD ALL

Podcast 143 (4:53)

direct download | Internet Archive page | iTunes
PS How is your Internet access these days?

THE RISK OF FINANCIAL INNOVATION

promodcares@gmail.com (Promod Sharma) — Sat, 05 Nov 2011 22:45:00 +0000

Innovation gets overrated.

In the financial world, innovation may not be in your best interest. What looks “new and improved” may be worse. A bicycle is more stable with square wheels but (a tad) tougher to pedal.

What's wrong with solving underlying problems with proven strategies? Do you want to be among the first to use a new parachute? If your goal is peace of mind, then no.

We have the same six basic fears that Napoleon Hill identified in the 1930s. We have the same basic solutions. Why? Because they work.

Innovation is a sales strategy.

Risks

Governments are getting more aggressive in collecting tax and less lenient in making exceptions (example). Do you want to become a test case? You reduce your risks when strategies are backed by at least two major companies. This may mean waiting. You’ll still need to use your judgment. Mortgage life insurance has major pitfalls no matter how many banks sell it.

Mistakes are most likely when a new strategy is introduced. The unintended consequences can't all be known because … they're unintended.

Introducing rabbits to Australia seemed like a good idea in 1788 (Wikipedia). The subsequent innovations were a rabbit-proof fence (1901) and then the fatal myxomatosis disease (1950). There’s now a vaccine for pet rabbits but usage is illegal in Australia. That’s a lot of unneeded innovation. Rabbits never asked to go to the land of the kangaroo.

The tax rules could be misinterpreted or misapplied. If the innovation goes wrong, the accountant usually gets blamed. That’s the downside of being the most trusted advisor. If they are compensated to approve the strategy, their advice may be biased. Unless they accept incentives, their natural response is to skeptical, even of sound strategies. That can lead to suboptimal results like advice to "buy term and invest the difference" (you lose the opportunity for tax-sheltered growth) or invest only in fixed-interest investments (you save your capital but may fall behind in after-tax after-inflation returns)

Safe Innovation

In the world of life insurance, there hasn't been much innovation in years. In the 1990s, universal life insurance became the dominant product, displacing whole life. In recent years, whole life has resurged because universal life isn't as universal as the marketing implied. Advisors do more work since you make the investment decisions. This requires more care and more skill. It's easier to sell whole life

The last major new strategy was "10-8" leveraging (now 9-7). That's from the late 1990s. CRA expressed concerns in December 2008 with threats of audits. The insurers continue to stand behind the strategy and no major accounting firm has withdrawn their support. Even so, CRA has created enough uncertainty to frighten some clients and accountants — and collect more tax.

The Real Change

Products don't change much. The major differences are in the packaging. These take the form of "strategies" (which don’t change much either). Internally, they might be called "wrappers" since the same basic products are underneath the shiny new skin.

Then And Now

When I was designing products and strategies, more seemed better. That's because advisors crave the new. Innovation was a way to get their attention. Accountants were also shown the new stuff for the same reasons.

You might watch reruns on TV or go to session after session on a topic of interest, but advisors were reluctant to attend the same presentation again. They craved the new. Many would have invested their time more productively by re-learning strategies they saw before. As the 10,000 hour rule demands, mastery takes time. Mastery takes practice.

Innovation doesn't matter much to you. As a client, you don't know what's “new and improved”. You're buying now. You're unlikely to "trade up" to the new model three years later. Even if the features are better, you'll face higher prices because you're three years older and you'll need to go through underwriting again. Guess if the criteria will be more lax? Don't count on stronger guarantees either.

Podcast 142 (5:57)

direct download | Internet Archive page | iTunes

PS Outside the financial world, new usually means improved. Would you want to buy last year’s gadget?

HOW CRA IDENTIFIES ISSUES THAT CONCERN THEM (AND THEN YOU)

promodcares@gmail.com (Promod Sharma) — Sun, 30 Oct 2011 19:31:00 +0000

You have a better probability of finding Sasquatch than a taxpayer eager to pay more tax (unless you're in Warren Buffett's locale). We hunt for effective tax strategies but our savings reduce what the government collects. Win/lose or lose/win.

Canada Revenue Agency (CRA) interprets the tax laws to identify potential under-payers. If you make the list, they’ll let you know. You can appeal their decisions and ultimately the courts decide who is right. CRA has a huge advantage since few are willing or able to go to court.

INSIDERS

How does CRA operate? Two insiders shared their insights at a CALU technical session last week:

Susan Gulliver worked at CRA for 36 years — her last 23 in Aggressive Tax Planning. She spent 15 years on the GAAR (General Anti-Avoidance Rule) Committee. She's now a Senior Tax Advisor at PricewaterhouseCoopers.
Dan Rivet has been at CRA for 17 years. He's on the GAAR Committee. He is the Manager of the GAAR, Inter-Provincial Tax Avoidance and Technical Support Section. How do you fit that on a business card without abbreviations?

I spoke to both briefly. In 2009, I met Donald Bowman, the former Chief Justice of the Tax Court of Canada. I need an autograph book!

Identifying Issues

How does CRA identify the issues which concern them? There are five key ways:

requests for rulings
conducting regular compliance audits and finding practices of widespread concern
attending conferences and seminars
reading published articles
participating internationally; e.g., in the OECD and the Joint International Tax Shelter Information Centre (JITSIC)

These sources are certainly reasonable. Let’s explore further.

Ruling Requests

If you ask for a ruling, you might change your mind and withdraw your request if you sense the decision might be unfavourable. While ignorance can be better than knowing for certain, CRA does not forget. Withdrawn requests go to the GAAR Committee for review. Lesson: If you'd rather not know, don't ask.

Ruling requests could be misused. Apple and Samsung are busy suing each other and already have 21 lawsuits pending around the world. Let’s turn to tax strategies. Suppose your company is a laggard losing sales to competitors or a leader staving off competition. Maybe you could get request a ruling anonymously (e.g., through a lawyer?) and withdraw your request to trigger a GAAR review. That’s nasty but might work, if structured properly.

Public Sources

CRA has been accused of not understanding industry practices, violating the 5th habit of the highly effective: seek first to understand and then to be understood.

Professionals require continuing education credits to maintain their designations (100 hours every two years for actuaries). Why not attend industry conferences and seminars? CRA staff are doing that and reading articles. While this may look like snooping, the purpose is to learn.

There are also internal courses. Some advanced courses are taught by outside instructors who don't have biases or conflicts of interest. That’s ideal. If you rely on financial advice from commissioned salespeople, be wary (e.g., read the wealthy reveal how their advisors fail them).

Outcome

We might not like what CRA does but now we have a better understanding of the inner workings. Before using a strategy that looks “too good to be true”, ask yourself how CRA may react (and these 13 questions). Happy tax planning!

Podcast 141 (5:23)

direct download | Internet Archive page | iTunes

PS Has your opinion of CRA changed over the years?

THE WEALTHY REVEAL HOW THEIR ADVISORS FAIL THEM

promodcares@gmail.com (Promod Sharma) — Sat, 22 Oct 2011 21:34:00 +0000

Wealthy clients keep getting interviewed about what they want from their advisors and aren't getting. The advisors keep getting reminded but do they change?

Survey Says

The ideal advisor ...

discloses fees: 94%
understands your life and financial goals: 94%
engages in open and honest dialogue: 84%
has professional designations: 77%

You probably agree. These findings are from a new informal survey of 40 wealthy investors. The results may also apply to other types of advisors.

The most interesting results are quotes from the participants. We’ll look at the main issues raised

Transactional

If your advisor is focused on making money today, you won't get much attention unless you're buying now. Your past purchases won’t entitle you to ongoing service or attention. That’s short-sighted but does happen.

Here are quotes from the survey

"He doesn't take the time to explain things thoroughly" [expedient; may not know how]
"He provides responses that I think are general to his client list" [cheaper than personalized attention; the responses might be prepared by the advisor’s firm, which makes them even more generic]
"There's not enough contact." [cheaper to ignore those who aren't buying]
"There's lack of communication." [cheaper, may lack communication skills. especially when writing]
"I'm just a number [to my advisor]" [and that’s not Number One]
"She acts like she has no time for me" [why are you paying her?]
"She doesn't get back to me when I have a question" [why are you paying her?]

If you get more service at Starbucks, you’ve got a problem with your advisor. You are paying your advisor directly or through hidden fees. You deserve to get what you’re paying to get.

SalesY

Advisors can be salesy because they are typically paid based on what they sell

"I get too many emails" [This comment may mean too many messages of the wrong type. If your advisor uses social media, you decide what you want to receive and how often.]
"There's a conflict of interest between how they are paid versus my best interest (life stage, fit, superiority of product, personalized to my needs, etc)" [why do you tolerate this?]

Be alert for hints of conflict of interest. More revenue for your advisor means less benefits for you. Advisors are not fiduciaries required to put you first.

Service

"I'm not able to reach him in difficult times" [why do you tolerate this?]
"He may retire before I am finished with his services" [You’re paying but your advisor decides how long to keep you? That’s backwards.]

If your advisor shows no concern for your future well-being are they treating you well today? Like everyone else, advisors do retire, get sick, die and get disabled. A well-run practice will have plans in place for these contingencies.

Learning

More quotes

"He doesn't learn from mistakes"
"He justifies his actions as "unforeseen events""

You’ll easily find advisors who are slow to learn and quick to shift blame for bad news. By staying and paying, you are condoning their actions. Maybe you’re not learning. There may be a gap in your expectations and what your advisor can realistically deliver. That’s a communication problem.

Communication

"He does not always speak in layman's terms."

You'd expect communication to be a core skill, especially when Canadians suffer from innumeracy (financial illiteracy). Skills vary. Some advisors seem brilliant ... but are difficult to understand. Some are clear but … have nothing to say. Practice helps both extremes.

Advisors can hone their communication skills from listening to writing to speaking at Toastmasters. That's an ideal environment to get feedback on the clarity of their messages.

Communicating clearly takes more skill. The first step is having a detailed understanding and the next is to simplify. Do you recall The Seven Habits of Highly Effective People by Stephen Covey? That's the second half of 5th habit: seek first to understand then to be understood.

Understanding

You'd hope that advisors understand you. That's the first half of 5th habit: seek first to understand then to be understood.

If you aren’t confident that your advisor understands you, how can they truly help you. There are oodles of advisors but only one you. They need you more than you need them.

We've discussed advisors before. The simple answer is that the ideal advisor has three elements: chemistry, credentials and generosity. What do you think?

Podcast 140 (6:25)

direct download | Internet Archive page | iTunes

PS Advisors would serve you better if they read the Seven Habits and applied them.

THE PERFECT SMARTPHONE: BYE BYE BLACKBERRY. HELLO ANDROID AND iPHONE

promodcares@gmail.com (Promod Sharma) — Sun, 16 Oct 2011 19:40:00 +0000

Have you given up on Blackberry after this week’s outages?

Even the backup systems failed — hardly what Steve Jobs would call “buttoned up”. According to eWeek, “RIM couldn't have mismanaged customers' expectations more poorly if it tried.”

My family ditched all RIM products last month due to other failings. Our decisions may help you upgrade too.

The Perfect Smartphone

The perfect smartphone would combine the iPhone’s ease of use with Google’s cloud-powered data management and Blackberry’s keyboard. That’s not available but there are reasonable substitutes.

Why Bye Bye?

As a Canadian, I'm supposed to be a loyal and rabid Blackberry user. I've had three over the years and never liked them.

In 2003, I had an excellent an excellent mobile solution:

a Motorola P280 mobile phone which I tethered to my laptop for mobile Internet access
a Palm Tungsten C organizer with a hi-res 320x320 colour touchscreen

I got "upgraded" to a monochrome Blackberry with horrible screen resolution and disappointing phone quality. Two steps back.

The next model had colour but was thick. The scroll wheel broke twice. Still no touch screen. I had problems synchronizing emails with Microsoft Outlook. This never got resolved fully and may not have been RIM’s fault entirely.

Bold 9700

When I left the corporate world in Nov 2009, "Blackberry" still meant "business". I got the just-released, limited-supply Blackberry Bold 9700.

The trackpad was a huge improvement over the scroll wheel but I've had continual problems.

Battery: The battery didn’t last the day if I made phone calls. What good is that?
Calendar: Google powers my mail, calendar and contacts. The sync with the Blackberry got progressively worse. In recent months, entries made on the Bold had to re-input online.
Contacts: Contacts didn't sync well either. I had numerous multiple entries and no simple way to merge them.

The web browsing is painfully slow and the screen is miniscule. And still without the touchscreen I used to have in 2003. RIM introduced new Blackberries in August but they aren't impressive. I'm not willing to risk more misery. These days, smartphones require apps (contrary to outlandish statements from RIM). That's where Apple and Android shine. The LinkedIn app came last to Blackberry last.

iPhone or Android?

Since I'm a big iPad fan — my first-ever Apple product --- I wanted to get an iPhone. The problem is the keyboard. There isn't one. I don't like typing on the screen even with an iPad. I wrote this draft using an external keyboard.

The biggest problem is with the iOS email client. It's not great even with this week’s release of iOS 5.
The final problem is with apps. I'm used to the ones on my iPad. Some are universal, which means I could use them an iPhone too. With Android, I'd need to find new ones. That's time consuming.

The Winner

I decided to get the Motorola Droid 3 (called by XT860 by Bell Mobility). It has a physical keyboard with a separate row for numbers — extremely useful.

The phone can be turned into a WiFi hotspot, which means I can (and did) ditch my MiFi device.

The biggest advantage is tight integration with the Google apps I use daily: mail, calendar and contacts. I'm planning to use Google+ more. I especially like the way photos get uploaded instantly (but don't go live until you approve them).

The bonus? Voice quality. I've had numerous voice-only mobile phones over the years. I found that Motorola had the best voice quality. I’m happy this time too. Even Skype works well, which saves on mobile minutes.

Copycats

Here's what the rest of my family got and why:

Jeevan (son) - Samsung Galaxy S2: the latest, greatest, fastest (21 Mbps), biggest screen (4.3")
Sharmila (wife) - iPhone 4: most like her new iPad 2

We are all happy … for the time-being.

Podcast 139 (6:00)

direct download | Internet Archive page | iTunes

PS If you're upgrading your smartphone, what are you picking?

RIP: STEVE JOBS “BUTTONED UP”. HAVE YOU?

promodcares@gmail.com (Promod Sharma) — Sat, 08 Oct 2011 12:00:00 +0000

When they built you, brother,
they turned dust into gold.
When they built you, brother,
they broke the mold.
— Bruce Springsteen

How fickle we are. How quickly we forget.

We were terrified by 9/11 but now it's 2011. This week, we're shocked by the death of Steve Jobs. Next time, something else will jar us.

Each time, we Think Different for a bit. We're tempted to do something that matters but life gets in the way. Our most vivid memories fade. Routine returns to rule. We become part of the conforming crowd in the ‘1984’ commercial. But only with our consent and inaction.

Talk

We love talking but talk alone doesn't improve our lives. Or the lives we care about. We must act. We're surrounded by uncertainty. Each breath could be our last. Let that knowledge empower us. Not immobilize.

Steve

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

Steve Jobs died at 56. He had pancreatic cancer and stepped down from running Apple just weeks ago. His death still came as a shock around the world.

Steve was relatively young. He could get the best health care in the world but his $6.7 billion couldn't buy him good health. Isn't that a valuable lesson?

As a Buddhist, Steve would have a theoretical understanding of mortality. In 2004, cancer gave him a personal perspective. He saw that his own life was finite. He shared his experiences at Stanford in 2005. His speech is well worth (re-)watching or (re-)reading … after you finish this post.

Buttoned Up?

"My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes."
— Steve Jobs (2005)

Is your life "buttoned up" now while you have time to prepare? Steve didn't need health insurance to cover his hefty medical bills or disability insurance to replace his lost income. Steve didn't need life insurance to provide for his family. Few of us can say the same.

Suppose Steve wanted insurance. Too bad. You can only get coverage when you don't need any. You buy insurance with your good health.

Unless your health is improving, waiting until tomorrow is always worse than applying today. Getting approved can take months. If your health changes while you're waiting, you may be required to pay more — if you're even insurable. I'm working on a case right now where no coverage is available at any price.

Steve did more than button up for his family. He also took care of Apple. That’s called succession planning and is easily mangled, especially by small business.

Inevitable

"No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it."
— Steve Jobs (2005)

We keep seeing the importance of planning but seeing isn't doing. We can focus on our circle of influence. Do what you can, while you can.

Yes, there's always tomorrow, but not necessarily for us. That's why what we do today matters so much. The winter chill is on the way. Are you buttoned up?

Podcast 138 (5:06)

direct download | Internet Archive page | iTunes

PS Steve, thanks for making our lives better.

RIP: WHAT HAPPENS IF YOUR INSURANCE ADVISOR DIES?

promodcares@gmail.com (Promod Sharma) — Sat, 01 Oct 2011 13:30:00 +0000

Last time, we wondered if your advisor is sleeping on the job. Let’s explore the extreme. What happens to you if your insurance advisor dies?

Not much.

Your policy is a contract with the insurer. They'll keep their obligations as long as you pay your premiums. Default actions take place if you die without a Will. Ditto for your advisor. Your policy may be an "orphan" until another advisor takes over.

Replacement

If the new advisor paid to buy the block of business, there is an incentive to sell more insurance to current clients. In a way, the new advisor bought a client database and some residual income. The real revenue comes from new sales.

If you don't already know the new advisor, there's not much advantage to using them. The dead advisor's firm might even get rebranded, which removes links to the past you may have valued.

What if the new advisor got the business for free? Again, the real revenue comes from new sales.

Premature Death

Anyone can die unexpectedly. That's the reason for insurance. If your advisor passes away prior to age 60, a successor may not be in place. If the advisor worked for an insurance company ("captive agent") or bank (an employee), the transition is easy. Ditto if that advisor worked as part of a team and you were served by different team members. The challenge is with an advisor who served you solo — even if they were part of a team.

Normal Death

Since advisors help you prepare for the future, you'd expect them to have succession plans in place well before retirement. You might be surprised ...

There are many reasons planning gets ignored. Here are some

death seems so far away
the current business is not well-organized or well-maintained (hard for anyone to takeover or agree to a high purchase price: outdated systems, lack of modern marketing using social media)
the seller feels the business is worth more than buyers are willing to pay
the seller feels the business will be worth more next month, quarter, year, … (as with real estate)
the seller is unwilling to let go (wants to remain involved, which can create conflicts)

Also, agreements fall apart. There's the whole problem of trust. There needs to be a smooth transition where the seller introduces the buyer to current clients and the buyer becomes the primary contact. This process can easily take years.

The Seller's Fear

The seller faces a fear: the buyer could take some of the best clients without completing the sale. During this phase, revenue is likely increasing since the clients are getting more attention and opportunities to buy. Relationship are also shifting to the buyer.

The Buyer's Fear

The buyer faces a fear too: the seller could change the sale date, terms or price (because the business is likely growing). There's also the problem of liability. What if the seller has lousy files, provided poor service or sold the wrong products? The buyer probably has the liability for what was done before.

When the seller is retiring, the clients could easily be of retirement age too. Maybe they have all the insurance they're ever going to buy. Their children may have their own advisors. The buyer may not get or retain as many clients as anticipated.

Legal agreements are designed to prevent these kinds of games but lawyers are expensive. I have seen situations where the sellers have taken advantage of the buyers — using them as cheap labour to revitalize the business and then not completing the sale.

Relax … At First

You don't need to worry about squabbling between the buyer and seller since your contract is with the insurer. However, your service may suffer during the transition.

Afterwards, count on attempts to sell you new coverage.

It's tough to sell consumer products you wouldn't buy. That's why asking advisors about their own coverage won't tell you much. Since they buy at a discount, they will likely have plenty. Instead, ask your advisor: "What happens to me if you die today?"

Podcast 137 (5:25)

direct download | Internet Archive page | iTunes

PS Be especially wary if you're encouraged to replace old products with new ones.

RATE HIKES: IS YOUR ADVISOR SLEEPING ON THE JOB?

promodcares@gmail.com (Promod Sharma) — Sat, 24 Sep 2011 17:12:00 +0000

Is this the start of a bad trend? September is the official Life Insurance Awareness Month with ambassador Lamar Odom. October is the unofficial jack-up-the-rates month. This also happened last year.

Scope

Premium rates for guaranteed life insurance products, which already have increased by 8%-10% this year [2011], recently have been boosted by up to 12% by some insurers. Another wave of premium hikes is expected to hit next spring [2012].
— Investment Executive, Sep 23, 2011

Life insurance premiums are going up again for permanent plans with level insurance rates which are typically guaranteed for life. The reasons are the same as last year plus a desire to increase ROIs. According to industry watcher, Byren Innes “any publicly traded carrier will jump at a chance to pad its margins”. External factors make ideal scapegoats.

Once again, the instigator is Manulife. The new rates take effect at 5:01 PM on October 14, 2011.

On average, the level COI [Cost Of Insurance] rate increases are as follows [at Manulife]: 9% on InnoVision; 12% on Security UL; and 7% on Limited Pay UL. The largest increase is among clients aged 35 to 45, with an increase of 20% to 25%.”
— Advisor.ca, Sep 23, 2011

Once again, other companies will likely copy.

Dilemma

At times like these, the behaviour of salespeople is fascinating to watch because of the conflict they face. Commissions are based on the premiums you pay. As rates increase, total commission dollars usually do too.

That's makes smokers lucrative prospects. They know they must pay more than nonsmokers. They know they may not get approved. If they have a genuine need for insurance, they want to buy. Price is less important.

Act Now?

If you're a prospect for new coverage, your advisor is probably pushing you to buy now before the increases. Even if you're considering a company which has not announced rate hikes, do you want to risk paying more next week?

Insurance is considered sold, not bought: more supply than demand. To motivate you to buy, salespeople like enticing strategies which make insurance look like a no-lose, too-good-to-be-true deal. Here are the top five strategies . The problem is that there's no real urgency for you to act. A price hike might be, when coupled with the usual closing techniques.

If you're being sold an appealing strategy when you don’t have a clear need for insurance, higher rates hurt. Your salesperson has motives to push you to buy now.

Wait?

If you are already a client and have no imminent plans to buy more insurance, you may get ignored. It's more lucrative for your advisor to close new sales.

An Exception

What if you are planning to convert term life insurance to permanent coverage? You'll be stuck with the higher rates while your salesperson gets rewarded with more commission dollars. There's no incentive for him or her to spend time with you now.

Here, you benefit by calling your advisor. Just be wary of attempts to top up your coverage unless you need more.

Your Best Course

If you need more permanent life insurance, buying before the newest round of rate hikes will save you money. Also, new products may be worse in less visible ways such as weaker guarantees.

Case study: Coke Classic deviated from the original recipe by replacing expensive pure sugar with cheaper high-fructose corn syrup. You probably can't taste the difference but you're not getting "the real thing". If the population gets super-sized too, that's a nice side benefit. Bigger people can consume even more.

Insurance policies can take a couple of months to get approved. Your premiums are generally based on the date you apply, rather than when you get accepted. You can’t lose by acting now.

Did You Know?

If you're getting proper after-sales service, you'll already know about the upcoming rate hikes, even if they don't affect you. A newsletter or email is quick and cheap to send.

Podcast 136 (5:41)

direct download | Internet Archive page | iTunes

PS Not all rates are increasing but that doesn’t mean any are going down …

LIFE LESSONS FROM A 50 YEAR OLD

promodcares@gmail.com (Promod Sharma) — Sat, 17 Sep 2011 19:14:00 +0000

Last month, Dad turned 75. This week, I'm 50 and finally feel I understand my purpose in life.

So much has happened since 1961. Man landed on the moon. The Berlin Wall fell. Compact discs replaced vinyl records and cassette tapes. Computers became personal and affordable. Air conditioning changed from a luxury to a necessity. GPS navigation reduced arguments on family road trips. Phones became mobile and smart. What a wonderful, wonderful, wonderful time to be alive.

The greatest marvel is the Internet, which was born in 1957. We now have instant access to nearly anything and anyone from almost anywhere. Often free. What a liberator!

Childhood

As a child, I had a lingering fear of nuclear war between the Americans and Russians. What if annihilation started by accident? We’d be just as dead. I wasn't terrified to the point of losing sleep but I was concerned. The 1985 song Russians by Sting was reassuring but I wish I heard it in the 1960s. If you were born after the fall of the Berlin Wall, you may not understand the Cold War era and might be more worried about terrorism.

Overall, childhood was great. I walked to school and played with friends outdoors. We didn't worry about knives or guns at school but we played with toy weapons. I read the Hardy Boy mysteries. My favourite TV show was the police drama Hawaii-Five-O which aired Friday nights at 10 PM. I was in agony when the schedule briefly changed to Thursdays because there was no way my parents would let me stay up that late with school the next day.

There were so many marvels. Life kept getting better. I excelled at my studies and looked forward to a rosy future despite the rocky economy.

Family

Someone who'll help me see things in a different light.
All the things I detest I will almost like
--- Depeche Mode, Somebody (1984)

I grew up in London, Ontario where my parents gave me an excellent foundation. I didn't want to live alone but didn't know if I'd ever find someone who could understand me. Sharmila did. We've been married since 1988. Having an anchor and companion makes life rewarding.

Our son, Jeevan, was born in 1994. Parenthood brings challenges but mostly rewards. He goes to university next year and might leave home for the first time. That would be an emotional experience.

40 in Sept 2001

Turning 40 is meant to be a milestone. My birthday was mere days after 9/11 and the end of innocence. I didn't feel like celebrating during that numbing time.

I was focused on my career since life at home was running smoothly. For security, I especially wanted skills which were

portable: useful in other companies (e.g., communication, management, leadership)
complementary: not overlapping what others did

That's still a great strategy.

I was Actuary, Individual Insurance at National Life, insurer for the wealthy. I reported to the company's sole Senior Vice President, Rene Trudeau. I also had dotted line responsibilities to General Manager, Individual Division, Prem Agrawal. Both listened to me and helped me grow. They reported to the President, Vince Tonna. I had considerable leeway, 10 staff, and a corner office (a childhood dream) with an excellent view towards Queen's Park.

The Wrong Wall

My boss was going to retire and I figured I'd get a portion of his role, a company car (another childhood dream), and live happily ever after.

In 2004, the parent company started dismantling my company. My 10 staff were gone and I was reporting to an assistant vice president in Quebec City.

What a boot to the head!

To paraphrase Stephen Covey, I was climbing the ladder of success only to find it leaning on the wrong building. I realized there was no security in the corporate world. Your future depends on the whims of upper management and investors. How do you build a solid future on a shaky foundation?

Security comes from bringing in revenue. I switched to helping top advisors with advanced marketing until I got booted out in November 2009. By then I built the skills to help you directly.

50 CANDLES

Turning 50 is a big but pleasant transition. I now feel I understand why I'm here on this planet.

The corporate world teaches well but stifles change. Even if you make the decisions, you face compromises in quality and timelines. The advisor world is disappointing because of the conflict between what's right and what's lucrative. That leads problems in deciding who you can trust. Among the wealthy — the best served segment — 33% lack confidence in their advisors. That creates a tremendous opportunity.

Since childhood, I've wondered how I could make the world better in my own small lost-in-the-rounding way. I knew I had more to offer but didn't access to the right tools.

New Tools

Nowadays, we can do so much with so little. We don't need to own factories, maintain web servers, rent offices or hire permanent staff. What do you need beyond what you already have: your computer, your mobile phone and Internet access?

That's so empowering. With social media, we can even beat much larger organizations because we can make personal connections with real people. The gap between thinking and doing is minuscule. What we don't know, we can learn online just-in-time or outsource.

I’ve written assorted posts about careers to help you see the immense possibilities if you seize opportunity. You don’t need talent or permission. You need to start and keep going. If you need a boot to the head, read Linchpin by Seth Godin with an open mind.

Next 50 years

There are no free rides.No one said it'd be easy.
The old man told me this, my son.I'm telling it to you.
— John Mellencamp, Minutes to Memories (1985)

I've seen too many people — especially in the corporate world — who start coasting when they reach their 50s (sometimes earlier). They feel entitled to slow down. They aren't embarrassed to say their smartphone is "too hard" to learn. These sages know what won't work because they've "seen it all before". They look rolly polly and drink a little too much (when on an expense account). They need help with the same things month after month. They're wary of LinkedIn and still don't understand Twitter. They start dying little by little, piece by piece.

I plan to keep doing what I’m doing: learning, caring and sharing. You’re invited to the party.

Podcast 135 (9:02)

direct download | Internet Archive page | iTunes

PS When's your next milestone birthday?

9/11 AND THE END OF INNOCENCE | #911plus10 #sept11

promodcares@gmail.com (Promod Sharma) — Sun, 11 Sep 2011 13:11:00 +0000

The Twin Towers were very special to me. I don’t like heights but visited the World Trade Center twice. The last time was in 1987 when I was working for Metropolitan Life. This time, I was brave enough to go to the windows and look out. You might yawn but this was a victory for me.

9/11 changed my world in a way that nothing else has. The end of innocence. The terrors that happened in other countries were now on our shores. Forever.

Today’s the 10th anniversary of 9/11/ This is the first time I’m telling my story.

Where Were You?

On the morning of September 11, 2001, I was on stage in Halifax, Nova Scotia unveiling my biggest initiative ever, the SaveTax Project, which gave advisors personalized, functional websites.

Something was wrong.

I was going through my content too fast. Way too fast. Elsewhere across Canada, my audiences were smaller and carefully picked — generally 20-50 advisors. That lead to more questions. Here I was on a stage in front of 100-200 advisors. That's too many for spontaneous questions. By the time I figured this out, I didn't know how to slow down and interject questions for them.

The moderator was standing at the side. I didn't know why since I had so much time left. That affected my pacing too. I finished my 60 minute session in a record 38 minutes. The moderator then told us that a plane crashed into the World Trade Center.

My presentation no longer mattered.

Reaction

I was dazed. So was everyone else. Some were watching TV in the lobby. I went to my room and turned on my set. The newscaster was saying something about a second plane, other attacks and the shut down of airspace. I couldn't understand. That couldn’t be right. Why were they reporting this? There was talk of terrorists. Everything was getting shut down. Trains weren't running. Car rentals were blocked.

I tried calling home and got through. My wife and seven year old son were safe. They didn't know what was happening. Life seemed normal. I told them to turn on the TV and that I'd phone back once I found out how I'd get home.

How would I get back to Toronto?

Cash

I changed into my street clothes and went down to the lobby. No one knew what to do. There was more speculation about terrorists. To stop their communications, the Internet and mobile phone networks might be shut down. Was that even possible? To stop them from transferring money, the banking system might be shut down.

US flights were being redirected to Halifax. All hotel rooms were now booked. Since I hadn't checked out, I was told that I couldn't be kicked out. Several colleagues had checked but could not get their rooms back.

In a daze, I went down the street to a banking machine. I figured that I'd need cash if credit cards wouldn't be accepted. I don't know how, but I managed to insert my card into the wrong crevice. Now I had no bank card and little money. I went into the bank, which had tellers but no customers. I explained what happened. Would they believe me? They seemed numb too. Without question, they retrieved my card. I withdrew $500.

Like ET

Back at the hotel, arrangements had been made to rent two vans. This was possible because our host had a personal connection. We were going to be charged mileage. The cost was over $2,000. I don't remember if that was per vehicle or in total. It didn't matter. Capitalism thrives during crises.

I got something to eat but didn’t have much appetite. The roads were eerily quiet. We drove home with minimal stops listening to AM news radio. Sometimes we got a signal right from New York City. No one said much. We just wanted to get back to our families. For a while I was seated in the last row and not beside a door. I couldn't get out. I felt choked and claustrophobic. The rear air conditioning vent wasn't working (what you expect for $2,000?). I had trouble breathing until I calmed down. I didn’t tell anyone my predicament.

At the next break, I grabbed the front passenger seat and took turns driving. I don't know how I stayed awake and on the road. After about 20 hours of driving, we were safely home.

Epilogue

In 2002, I was in Washington DC:the SaveTax Project was nominated for an eFusion award from AM Best. There was so much security. Even getting into my hotel required a security check. Vehicles entering buildings were checked. You could no longer enter the Washington Monument with a bottle of water or pocket knife. These reactive measures felt like installing a security system after the jewels are gone: well-intentioned, expensive and ineffective.

I went to the 9/11 exhibit which had opened at Museum of American History on September 11, 2002. When I saw items from the World Trade Center that had melted from the extreme heat, I was moved. Movies show more extreme spectacles but this was real. And unreal. The exhibit brought me peace in a way I can’t explain. The next step was visiting Ground Zero in August 2009 and talking to New Yorkers who were personally affected. The final step in the cathartic process is this post.

Your Story

You'll have your own 9/11 stories. I may have some facts mixed up. Can you believe that 10 years have passed? Days turn to minutes and then distort into memories.

9/11 already feels like ancient history. It's easy to forget the powerful emotions we felt at the time. Time moves forward. Our lives get busy. Details fade. That helps us deal with tragedy.

Video Tributes

Here are two musicians with close connections to New York City.

Bruce Springsteen sang My City of Ruins weeks after 9/11. You’ll find better quality recordings but this one has a special intensity.

Both of Peter Gabriel’s daughters were in NYC on 9/11. Neither was injured but he didn’t know because he couldn’t reach them. He expressed his feelings in I Grieve.

Lest we forget.

Podcast 134 (8:05)

direct download | Internet Archive page | iTunes

PS This weekend, life looks quite normal. A mobile phone company is shooting a commercial several houses away. Life carries on and on and on.

HOW LAMAR ODOM’S MOM SAVED HIS LIFE

promodcares@gmail.com (Promod Sharma) — Sun, 04 Sep 2011 21:28:00 +0000

A lot of people don’t think they’ll ever need life insurance, but how do you know? My mom didn’t, but look at how important her decision to buy life insurance turned out to be. — Lamar Odom

NBA fans will know of Lamar Odom (Wikipedia ), but do you know how his mother saved his life with insurance?

Lamar Odom has seen seen plenty of tragedy off the basketball court. His dad, a heroin addict, left when Lamar was six. His mom was raising him alone but she died of colon cancer at 35 when he was just 12. His son died in his sleep at only 6.5 months old. His grandmother died at 80 (she raised him after his mom died). His cousin was shot and killed at 24. The SUV taking Lamar to the funeral indirectly killed a 15-year old pedestrian.

Lamar is now 31 and the ambassador for Life Insurance Awareness Month.

September ‘11

I’m sure my mom didn’t think that she’d die at 35, but that didn’t stop her from doing the responsible thing. — Lamar Odom

Lamar explains in his own words. (If the video doesn’t play, here is a direct link.)

Lamar’s mom left money and a caring grandmother. Both made a huge difference in his life.

What Type Of Coverage?

Perhaps Lamar's mom automatically got group life insurance through her employer --- one of the two types of coverage you can’t own. The death benefit is typically 1-2 times your annual salary and premiums are paid by your employer. Group life makes an excellent foundation but may not be enough.

The biggest problem is that coverage disappears when you leave your employer. Your departure may forced upon you. There's often a short window of a month to convert the group life coverage to the same amount of personal coverage without any medicals. I don't see this option exercised often. The ex-employee might not understand the value, act too slowly or be worried about paying. A new job may provide group life insurance and other benefits but there's a period with no coverage. That gap could last much longer than anticipated.

Whether Lamar’s mom was protected through work or privately, the important point is that she was protecting against the unexpected.

Parallels

If my dad didn’t have life insurance, everything would have changed for our family. We would have had to sell our home.
— Leslie Bibb, LifeHappens.org

Do you see the parallels with Leslie Bibb's story from 2010? She was only three when her dad died and didn't realize the role that his insurance played in her family's survival.

Getting life insurance is boring and easy to delay. Lamar's mom and Leslie's dad thought otherwise. Simple planning and low cost protection saved their families.

Now's a great time to get your insurance coverage reviewed and updated. If not now, then when?

Podcast 133 (4:10)

Life Insurance Awareness Month website (LIFE Foundation)
Lamar's video + Behind the scenes (LifeHappens.org)
10 questions with Lamar Odom (LifeHappens.org)
Lamar Odom (Wikipedia)
Lamar Odom accident: Lakers forward no stranger to personal tragedy (Lakers blog, Jul 19, 2011)
Laker's Lamar Odom has to deal with death all over again (LA Times, Aug 2011)
Heavy heart: Lamar Odom's shoe (The Association, Nov 2006))
Lamar Odom seeks tax deduction for NBA fines and fitness fees (Forbes, Nov 2010)
Iron Man didn't save Leslie Bibb but another superhero did
Two types of insurance you may have but can’t own
Longevity over the last 100,000 years
image courtesy of Bridget Samuels (Los Angeles)

direct download | Internet Archive page | iTunes

PS Don't forget about your health insurance ...

IS YOUR CAR BUILT TO LAST?

promodcares@gmail.com (Promod Sharma) — Sun, 28 Aug 2011 00:33:00 +0000

Just like us, cars have survival rates. Some last longer, perhaps not 1 billion seconds but longer than many marriages (average of 14.2 years in Canada). As you might expect, more expensive brands tend to last longer. They're probably built better and maintained better. There are noteworthy differences among brands.

Survey Says

"All our cars are designed to have a long and useful life on the road. In an age of mass production that sometimes favours planned obsolescence, our products look to provide long-term value. And the numbers back that up." — Mercedes Benz Magazine

DesRosiers Automotive Consultants looked at vehicles sold 21-24 years ago (1985-1989) that are still on the road in 2010. Here are the survival rates:

Mercedes-Benz: 63.7%
Second Best German Brand: 34.9%
Best Japanese Brand: 11.7%
Industry Average: 6.4%

The results for Mercedes look impressive but can you trust them when they’re published in their own magazine?

Accurate?

Statistics can deceive. I wanted to know the identity of the unnamed brands. The omission made me curious. I figured the Second Best German Brand was BMW but where do Porsche and Audi fit in? A better comparison would look at Mercedes' real competitors, not the overall industry. You wouldn't compare a BMW with a Sonata, but Hyundai did.

Here’s what a Dec 2010 report (PDF) from DesRosiers shows. Compared with Mercedes

Porsche is higher in every period (85.1% for 21-25 years old vs. 59.8% for Mercedes)
BMW and Lexus are higher for the first 15 years
Audi’s survival rate for 21-24 years is only 6.5%
“Few Ladas and older Hyundais have survived the trip from 1985 to present due to an almost comical array of quality issues”

Wrong Measure?

Longevity may be the wrong measure. Wouldn't you like to know the cost of repairs too? What if Mercedes vehicles last long but require triple the maintenance?

If Mercedes are so well-built, why is the warranty on used vehicles substandard? The BMW Certified Series Protection Plan warrants used vehicles for the earlier of 6 years and 160,000 km. The Mercedes Extended Limited Warranty is also 6 years but only 120,000 km. That’s 40,000 km less. If the cars are that great, why isn't the coverage for more years and more kilometres? Perhaps the maintenance costs get crazy after 120,000 km?

A warranty is insurance. Isn’t more protection better?

Worthwhile?

A nice vehicle, may last for ages but there are problems. Your vehicle may start reaching a point where the repair bills start piling up. Paying does not guarantee that your vehicle will last. If you're able to maintain your vehicle on your own, that's different.

Newer vehicles are safer. That's worth something, depending on the type of driving you do. Your survival rate is also important.

Podcast 132 (5:34)

direct download | Internet Archive page | iTunes

PS Beware of the most dangerous part of driving

LEARNING FROM THE DEMISE OF HP’S TOUCHPAD

promodcares@gmail.com (Promod Sharma) — Sat, 20 Aug 2011 20:00:00 +0000

What a week for changes in major companies

Google buys Motorola Mobility for $12.5 billion (US)
HP discontinues their weeks-old TouchPad tablet
HP looks at exiting the PC market

We’ll focus on HP’s flip flopping.

HP's TouchPad Tablet

There are two major operating systems for tablets and smartphones: Apple iOS and Google Android. Rather than use Android for free, HP decided to spend $1.2 billion to buy Palm last year and get WebOS. The heavily hyped TouchPad launched last month and quickly flopped. HP is already shutting down that division, which also made smartphones.

Best Buy wants to return 240,000 unsold units to HP which might crush and bury them in the desert as Apple and Atari have in the past. This might cost HP $100 million (US). Right now, they’re trying fire sale prices as low as $99. How would you feel if you pay $500 or more weeks earlier?

HP is the world’s largest PC maker but they are looking at selling their low margin PC division. That’s a major change too. HP needs to sell about seven PCs to match the profits of one Mac. This is further proof that we don’t buy on price.

RIM Too

RIM decided to scrap their Blackberry operating system but the replacement (QNX) won’t ship until 2012. For now, RIM just launched several improved but lackluster new Blackberries.

The Playbook tablet has also flopped but RIM is still unwilling to admit this. They may have shipped 500,000 but it looks like about half are unsold. The Playbook isn’t even in the top 5 tablets. Imagine needing to connect your Playbook to your Blackberry phone just to get email. What were they thinking?

History Repeats

The sad part is that Palm was the leader in mobile devices until they married phones and gave birth to smartphones. RIM then ruled the high end as mobile email and security became essentials. For some reason, HP decided to become the #1 PC maker in the world. They did. Now they’re looking at leaving for the same reason as IBM in 2004: low profits.

At the time, there were glowing articles about the "foolproof" strategies that the likes of HP and RIM were pursuing. Also sad is that good people at those companies lose their "safe" jobs because of bad bets made by a few.

Bad Decisions

Even the biggest companies falter, especially when successful and making profits.

Do you remember when Dell wore the halo? They were considered the best until buyers saw computers as commodities and opted for elegant designs. That's Apple's strength. Do you have a Dell music player, smartphone or tablet? If you do, how satisfied are you? If price wasn't a consideration, would you have chosen to Think Different?

The iPad already brings in more revenue than all of Dell’s consumer PC business.

We’re fickle. In recent years, there was a shift towards netbooks but they’re now boring commodities. Next year tablet sales are expected to take the lead.

Lessons

Who would buy an HP tablet now (unless at a give-away price)? How would you feel if you bought one at full price and told everyone your TouchPad was better than an iPad?

HP is admitting major past and current mistakes. What about you? Is it time to acknowledge some failures and move on?

Podcast 131 (4:58)

direct download | Internet Archive page | iTunes

DAD'S 75TH BIRTHDAY

promodcares@gmail.com (Promod Sharma) — Sat, 13 Aug 2011 09:28:00 +0000

There’s a belief that life is divided into quarters, each lasting 25 years. Our role changes in each segment. Here are the quarters
1. for your studies
2. for your family
3. to help society
4. for yourself (e.g. meditation)

It's my Dad's 75th birthday. I still have trouble believing that. Change occurs gradually. Dad doesn’t seem old. Maybe that's because he's committed his life to helping others. He was the head of the math and physics department at Regina Mundi College, a private boy's high school in London Ontario. He also taught at Catholic Central high school, also in London. He touched many lives.

Students liked him. We'd be out somewhere and former students would come up to him and say Hi. They especially remembered his jokes.

Warren Buffett looks at expenditures in an unusual way. When his wife Susie wanted to do $50,000 of home renovations, he agreed. Yet he saw the expenditure as $1,000,000, because he understood compound interest and future values. Dad is similar. He sees spending a dollar on himself as depriving others of 40-50 rupees. You'd spend $10 differently than $500 with this mindset, or the one Warren has.

Philanthropy

Dad took early retirement to help poor people in India. My mother shares this passion. They have various projects there. Unfortunately, they don't take photos to show us. Already this year, they've:

given a hand water pump for clean drinking water in a remote village
built a library
built a clock tower
donated musical instruments
created a music scholarship

I’m sure they’ve done other things. I lose track. Their biggest initiative is a school to teach

living skills to the handicapped
beautician skills to help young women become financially self-sufficient

When we visited India, I saw what they'd done with my own eyes. They were changing lives.

Legacy

My parents are leaving a wonderful legacy by helping others. Warren wanted to defer his gifts until his death. My parents want to help now. Warren has since taken this approach too, donating through the Bill and Melinda Gates Foundation.

Lessons

Ever since I was a child, my parents said we're here to make the world better. I saw them helping many people throughout my life. I wasn't sure what to do. Until recent years, I wasn't comfortable dealing with people. It's been a struggle to overcome my self-limiting beliefs. I still prefer to help from a distance as blogging allows.

In grade 8, I saw a friend’s family devastated because the father died without life insurance. He didn't trust the salespeople or insurers. That stayed in my mind. In first year university, I decided to devote my life to insurance. I became an actuary to design flexible and accountable products. Later I helped advisors sell insurance. That's when I saw you're poorly served because a salesperson is not a fiduciary who's required to put your interests first. There's very little information to help you make informed decisions.

I'm not a fan of rules and regulations. In a buyer beware world, your best weapon is information. Thanks to social media, we can reach the world instantly and without any censorship. In that spirit, I started this insider blog in 2007. I was also working on overcoming my fear of dealing with the public.

In 2009, I bypassed the salespeople to serve you directly. Like my parents, my life work is helping make the world better by giving whatever we have.

The Special Day

Guess how dad's celebrating his 75th birthday?

This weekend, my parents are volunteering to help run a one day retreat. Yesterday from 5 PM to 9 PM they helped set things up. Today, they'll work from 6 AM to 9 PM. The event itself runs from 7 AM to 6 PM. That's arduous regardless of age. This year, we're here to to help them. I hope we can keep up.

Podcast 130 (5:30)

direct download | Internet Archive page | iTunes

PS Happy Birthday Dad!

MAKER FAIRE DETROIT 2011 DISAPPOINTS

promodcares@gmail.com (Promod Sharma) — Sat, 06 Aug 2011 22:59:00 +0000

Maker Faire Detroit 2010 was fantastic (podcast 78). Others agreed. A fellow repeat attendee said the attendance goals for the two days were met by noon on the first day. That's easy to believe. That experience led great expectations for this year. We were disappointed.

Larger

The scale was larger this year. Favourites returned: the Lifesize Mousetrap and Coke & Mentos spectacle. Yet much was missing (or seemed to be). Last year, we saw more makers and presentations (or so it seemed). We attended both days since there was so much to experience.

This year, the large Anderson Theater and the smaller theatre in the Automotive Hall Of Fame sat vacant. Besides learning, a presentation lets you recharge in air-conditioned comfort. Since the temperatures stayed above 90F or 30C, that's very welcome. Last year, we spoke to more inventors. We got freebies like bags and stuff to fill them with: pens, pads, Altoids. The US Army had an engaging exhibit too.

No Big Deal

This time, there were many more vendors of products and food. That's not special. Inside hallways that used to be empty were filled with vendors too. The types you'd see at other fairs or flea markets or farmer markets. There's nothing wrong with that but we expected grander inventions than last year. Expectations grow.

There were more food choices, including local fave Buddy's Pizza. However, there was a ticket system ($10 for 5 tickets). That's workable but there were only two places to buy and dozens of places to spend. This created unnecessary line ups.

After a couple of hours we were done. We spent much of the day in Greenfield Village. As members of The Henry Ford, we got free admission.

Highlight

The highlight? Race your own Coke & Mentos “car” (really a 2L Coke Zero bottle). Last year, we loved Eepy Bird’s Coke and Mentos show. We knew nothing about them in advance, which added to the experience. This time they performed on the front lawn of The Henry Ford. This meant everyone could sit down and see them for free. Some spots were shaded. Since the audience was so spread out, the experience was diluted. The show seemed shorter and there was only one performance per day, instead of two.

When you see fireworks, you anticipate the climax and can tell when it occurs. There's a feeling of completion. You leave satisfied. This time, the Eepy Bird finale didn't seem like a climax. What? Done already?

Also Missing

Some of the more interesting attendees were missing this year. Last year, the was a fellow with two Flip cameras mounted on a homemade monopod. There were hobbyists who made miniature metal cars.

Worth Attending?

If you're near Detroit, you may enjoy a visit to Maker Faire. The $28 ticket included admission to The Henry Ford museum and parking was free for the weekend.

If you've already attended Maker Faire, you might want to wait several years before returning. That’s the drawback of the inaugural edition being so good.

Podcast 129 (4:12)

direct download | Internet Archive | iTunes

PS If you attended Maker Faire, what did you think?

Riscario Insider

REACH YOUR GOALS WITH PICK FOUR FROM ZIG ZIGLAR AND SETH GODIN

Seven Habits

Getting Things Done

What's Missing

Pick Four

Form A Team

Rules

Why 12 Weeks?

What's Missing?

Picked Four

Links

Podcast 153 (hmm)

CAN AN ADVOCATE SERVE TWO MASTERS?

Product Design

One For All

All For One

Oh No

Conundrum

Links

Podcast 152 (6:51)

THE WORD ADVISORS IMPLY BUT DARE NOT SAY

Fiduciary

Advocate

Proof

Price

Links

Podcast 151 (4:21)

YOUR FAVOURITE POSTS OF 2011

Overall

The Top 20 Posts

Work A Peek

Career

Various

Insurance

Financial

The Top 5 Podcasts

The Top 3 Countries

Sources of Traffic

Keywords

Browsers Used

Operating Systems

Screen Resolution

Mobile Devices

Links

Podcast Episode 150 (9:45)

THE MOST SPECIAL TIME OF YEAR

Wonder

Boxing Day

Hot Chocolate

Why Not?

Links

Podcast 149 (6:05)

KEEPING PROMISES: CORPORATE GOVERNANCE 2011

Trends

Rankings

The Bottom

No Guarantees

Links

Podcast 148 (6:39)

WHAT ARE YOU DOING ABOUT YOUR HIGH INVESTMENT EXPENSES (MERs)?

The Facts

Morningstar Global Fund Investor Experience (Mar 2011)

Financial Post

Investment Executive

The Globe and Mail

Canadian Labour Congress (CLC)

Disagreement

Why Hide?

The Real Purpose Of MERs

Unbundle

Links

Podcast 147 (12:37)

WHERE DOES YOUR INSURANCE ADVISOR GET ADVICE?

The Past

Insurers

Intermediaries

Independents

The Ideal

An Extra Step