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Posts tagged ‘Social / Political 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.


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.

You Know It’s Time to Move On

I have a friend who is being compelled to move from her longstanding residence shortly, due to a very unfortunate set of circumstances. She is quite unhappy, having to give up the apartment, albeit in a creaky old house, given its scenic, multidirectional view, but the environment has become untenable.

One of the constants of life is change – but some changes are much earlier to adapt to than others. (more…)

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 10 New Year’s Resolutions for 2018

It may be a new year, but there’s still baggage on the horizon…

  1. Lose weight by trimming your bling or dysfunctional cosmetic implants, whichever is heavier
  2. Get brochures or postcards of travel destinations you would have gone to if they were more affordable
  3. Set up a dart board with images of individuals or businesses which would benefit from getting the point
  4. Post a list of resolutions in declining font size and brightness so the later ones can be overlooked more easily
  5. Use a business card with a chip which allows for it to be remotely dissolved if the cardholder proves unworthy
  6. Invent a new species and become its trusted advisor in bilateral negotiations
  7. Memorize the first and last lines of book chapters so you sound like you are well read
  8. Develop a new social networking site which functions strictly to vote and comment on other social networking sites
  9. Eliminate any references to ‘trumped-up’, since that expression now has an inescapably deflating political connection
  10. Take back-to-back courses on empathy and callousness, then have a point-counterpoint debate with yourself


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…)

Common Experiences, Not for Everyone

Currently, in the Ottawa, Ontario area, midsummer weather has returned with a vengeance.

After most of this summer being of a relatively moderate mode, with concomitant complaints from those who prefer more opportunity to fry their skin, in the last week of the season and beyond we have hit a heat wave, which any prolonged period in mid summer would be proud of. Running several degrees above normal, both daytime and evening, it just goes on, getting even hotter, but more significantly more humid. (more…)