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Posts tagged ‘Business Commentary’

What is ‘Independent Advice’?

An article in the current edition of The Insurance & Investment Journal raises the age-old conundrum of receiving ‘independent advice’. It should be noted that the report is in support of the idea.

Why has this been such a prevailing issue, frequently a hot topic of reportage?

I certainly identify with the question of how independent is the advice one gives. In my twenty-four years in the financial services industry, I was working on behalf of a large organization primarily focused on planning and investments. With respect to the latter, we were offered a platform of in-house investment options, chiefly mutual funds; although for about the last twenty years, third party managed funds have been offered as well.

Thus, while not exactly offering completely independent choices to clients, we were able to cover the range in a reasonable manner, made more so by the company’s emphasis on overall financial planning, and its training sessions for the ongoing development of consultants. Moreover, in this industry, the array of offerings across the board for many years has been so vast, no one could be an expert beyond a limited range of products anyway.

In the article, a different aspect of the issue is discussed, namely, the law of survival perspective affecting insurance companies in Canada. The narrative looks at how best practices ties into what’s best for their distribution networks.

On the one hand, there are independent advisors who want to remain so. “If an insurer offers special conditions to independent advisors to increase sales” – inducing them to funnel their business to only one provider – the impact may “become unfair to other advisors with whom it has business relationships”.

On the other hand, if the insurance company increasingly focuses on its own network of distribution, “it is likely that other insurers will eventually do the same”. If they all start to fold their tents, the wide-open possibilities of interdependence will be replaced by the tunnel vision of intra-dependence.

In other words, it is not only unseemly but also impractical for supposedly independent advice to be allocated from just one hand.

So, can advice in the context of providing a service ever be truly independent?

As suggested by my own experience, and with other service episodes anecdotally, this goal remains aspirational. When I hear or read of spokespeople promoting the independence of their service mantra, I can’t help but feel they are deluding themselves.

No one person or organization has an all-encompassing formula or lock on full independence, at least not in the commercial world. Product knowledge in many service fields, such as relating to personal finances, keeps advancing and expanding. As we all know, technology has quickened the pace; indeed, as pointed out by Tom Friedman in his book, “Thank You for Being Late”, the pace of ‘accelerations’ has reduced internal evolution in much of what affects us to one to two years. As well we must consider the human factors, such as personal expertise, performance, and, let’s face it, ethics.

Thus, truly independent advice giving is a ‘pie in the sky’ concept. That doesn’t mean we can’t enjoy reaching for a piece as much as possible.


Travel Tips

Open any travel related periodical or insert, and chances are that, in addition to glowing enticements to visit sites far or near, there will be some degree of tips from supposed experts. Sometimes the expertise is limited to lessons learned by the author about specific destinations; sometimes it’s more general ‘rules of thumb’ (not the green kind).

Case in point: the spring edition of CAA (Canadian Automobile Association) Magazine devotes several pages to recommending travel locations for 2018, with brief comments from CAA travel specialists. Some remarks are more insightful than others.

For example, in considering potential travel to Sweden, the CAA representative observes that a trip timed in fall or winter provides a good opportunity to see the Northern Lights – which one may well witness also in northern Canada or Alaska at a much less cost of time and money.

On the other hand, the commenter on a trip to Ireland makes the less obvious suggestion to not depend on a smartphone quality camera if one wants pictures which do the lush, green landscape justice.

In relation to venturing to South Africa, the advisory makes the practical points about the need to have some cash on hand, due to ATM access limitations, and to check with one’s bank concerning the use there of debit or credit cards.

Accepting there is value in guidelines about specific locales, there are some more generic versions of advice out there which one may encounter…

  • When traveling to a country where the native language is not one’s own, understand that it’s not incumbent upon native speakers to cater to one’s delusions
  • When traveling in groups in less secure locations, be wary of dependence on the ‘buddy system’, lest one be the buddy left exposed in the face of danger
  • There may be sober reasons why ‘the road less traveled’ is in fact less traveled
  • Ancient archeological sites are not customarily invitations to tourists to uncover souvenirs
  • There are countries where ‘the web’ refers to lodgings of large members of the arachnid family
  • Accept that being a ‘green’ footprint minimizer involves more than simply being in steppe
  • Make sure local water looks as see through as the picture on a water bottle
  • Remember that drivers of small cars overseas do not necessarily have matching size tempers
  • Stonework should not be cut from foreign roadways simply because it would make a nice backsplash in one’s kitchen
  • If renting an attic apartment, be wary of rooms where concave dimensions are the motif

A Hurdle is not a Stop Sign

Perhaps all of us, at one time or another, have been tempted to feel discouraged, perhaps quickly, by setbacks on the long journey to accomplishing major goals.

Indeed, if looking at statistics, one can easily be ready to throw in the towel, especially if that towel is frequently coated with rejection.

Many of us are familiar with the 80/20 rule, which anecdotally applies to a wide range of endeavours: 80% of the output, such as the reward, comes from 20% of the input, primarily effort. The classic example is sales, wherein about 80% of income inevitably seems to be generated from 20% of clients.

Statistically, numerous activities determine success via variations of this truism.

The flip side indicates that 80% of effort produces only about 20% of the benefits. Stated another way, the majority of our efforts will be either limitedly successful or not at all so. The measuring stick differentiating achievement and failure is predicated on the latter being the more common result, even for those deemed to comprise the upper strata of success.

Baseball is a good example. An offensive player has a decent chance to be in the Hall of fame with a long career average of .300 – meaning having averaged three hits for every ten official at bats! A pitcher can win the Cy Young award giving up an average of one earned run every three innings.

Similarly, with acting, a good income earning performer can still face a turn down rate when reading for jobs of about 70%. Moreover, as they acknowledge themselves, the denial even after many years stings because it is the performer personally, not a separate product or service, being rejected.

An article in the current month’s Psychology Today provides some mental ammunition to help cope with these realities.

The author focuses on “five problematic moments one is likely to encounter on the path of goal pursuit”, and considers our likely reactions followed by positive ways to respond.

  • Re getting started: committing to begin is hampered by our realizing we have the furthest distance to completing our objective; our response should be to identify the few initial steps, then write down a date to get going while informing others to make oneself accountable
  • Re giving up ‘at the first hurdle’: we feel doubts about whether the effort is truly worthwhile; our response should be to appreciate that ‘the relationship between effort and meaningfulness works both ways’, that meaningful goals may require more effort so ‘the more rewarding, satisfying, and empowering’ achieving them becomes, with ‘a huge emotional return on the investment’
  • Re giving up at a later hurdle: we feel the goal is too difficult, so ask ourselves why we keep trying; remember that a setback or obstacle is not a stop sign, it’s a detour, which requires problem-solving and confidence both to get around this problem and to try to avoid having it recur
  • Re ‘giving in to procrastination’ during the process: our reaction is to feel negative, and wish to escape with some outside pick-me-up; rather than switching to a more enjoyable diversion, remind oneself that it’s O.K. to feel bad, knowing the unpleasantness can be tolerated for a while, and keep in mind the value of the goal
  • Re sabotaging the effort before the finish line: we feel that failure will be devastating, and we can only try so much; so, while fearing failure can become an excuse which is self-fulfilling, one can also imagine success, being aware there are challenges, such as that two steps forward are often accompanied by one step back, and ultimately dreams can be attained

We may have to halt for stop signs, but not for hurdles.

Adding Value

The proposition of ‘adding value’ has been an underlying foundation for success in service-oriented businesses for many years.

If one wants to generate a positive, lasting and loyal, relationship with customers, providing those extra ingredients of value is vital. This could be indirectly related to business, i.e. taking clients to lunch, paying for tickets to events, etc., or more directly, such as keeping in regular contact, or going the extra mile in solving problems quickly, or obtaining more helpful data for decision making.

As someone who spent more than two decades in the financial services industry, I can attest that these qualities helped me retain clients for the long term.

An article in the January edition of The Insurance & Investment Journal looks at the value proposition playing out in the marketplace for current advisors. The gist of the perspective is that, to cope with technological change, not least of which is the growing impact of artificial intelligence, advisors need to exploit adding value through specialization and breadth of product knowledge. Changes involving online selling and administration demand making positive use of technology.

Into this mix one can add the evolving demands of consumers, to which advisors and businesses both must adapt if they want to remain in the picture.

There are, of course, other creative ways in which to add value:

  • Hand out colourful PLUS signs to help keep top of mind the goal of having an ‘add(ed)’ mindset
  • Provide clients with pocket magnifiers so they can more easily see data they actually want
  • Sensitize frequently used forms to personify them in presentations and administration requirements
  • Have some delicately coded ‘dirt’ on robot advisors to make it easier to damage their competitive credibility if need be
  • Secretly buy share certificates in AI technology, and include them as promotional gifts to clients
  • Bring along visual specialists, to strive to make every environment shown in the best light

Charitable Rewards

According to a recent report from the Fraser Institute, using tax data, the percentage of Canadians giving to charities has diminished to about 21% from a level of 25% ten years earlier. It has also gone down as a percentage of income.

Americans compare more favourably on this particular scale, with nearly 25% contributing and at a much higher rate of income than Canadians. (more…)

TOP Craft Show Products of the Future

The year-end holiday season is the ripest time of the year for most retailers, providing more customers the chance to satisfy their gift buying goals.

While the ‘bricks-and-mortar’ version of the typical retail establishment has become increasingly usurped by on-line alternatives, there remains an important factor in favour of the former: the tactile experience of checking out items in the flesh. There are times you need to feel or examine a potential purchase before being truly satisfied the cost/benefit analysis works in your favour. (more…)

The Untapped Insurance Market

The year-end issue of The Insurance & Investment Journal continues its core mandate of covering the inexorable evolution of these integral aspects of personal financial planning.

No matter what the product or service being offered, WIIFM (What’s in it for me?) is always paramount for the prospective buyer, or, put another way, the cost/benefit analysis needs to favour the latter part of the equation.

But what of products or services appealing to limited, niche markets? (more…)