Wednesday, May 22, 2024
Home Authors Posts by David J. Murphy

David J. Murphy

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CLU, ChFC, FLMI, is a director, vice president, team leader, speaker and mentor for Global Leadership Partners. For nearly four decades Murphy worked in the financial services industry, and has held positions in sales, marketing, product development, training and development, distribution, agency management, and recruiting. In his latest role he was responsible for managing National Account relationships. In this role he shared business leadership and practice management concepts with business owners, marketing organizations and independent financial professionals. He is a frequent contributor to industry trade journals and a keynote speaker at industry events. After 37 wonderful years in financial services, it was time for Murphy to give back, to share with others the training, development and experiences he enjoyed by God’s grace, and encourage others who are just starting out or seeking to grow. Global Leadership Partners identifies, equips and sends business leaders to speak at leadership seminars in partnership with organizations primarily in Eastern Europe, but eventually, around the world. The intent is to foster development of foreign leaders who will courageously stand for strong values and a high ethical standard. This work is based on the belief that the world will be a better place when filled with leaders who lead according to proven values and bedrock principles. Murphy is a frequent contributor to industry trade journals and is available as a keynote speaker for life insurance industry meetings and training events. He can be reached by telephone at: 312-859-3064. Email: murpd191@gmail.com. Twitter: https://twitter.com/InLifeOnPurpose.

Financing Life’s Motion

Big Picture

There is no such thing as sitting still.

The Earth rotates on its axis relative to the Sun. How fast you are traveling depends on your latitude. In Cincinnati, OH, where I live, I am moving at 807.79 MPH.

The Earth revolves around the Sun once a year. Since Earth’s orbit around the Sun is an ellipse, it travels at different speeds during the year. On average, Earth revolves at a speed of 66,629 MPH.

But wait, the Sun revolves around the Milky Way Galaxy once every 250 million years. Seems like a long time, but the Sun is booking it at 514,495.347 MPH.

The Milky Way as a whole is moving at a velocity of approximately 1,339,200 MPH.

Little Picture
The average electron is traveling at about 4,921,260 MPH. (For reference, the Speed of Light is about 670,616,629 MPH)

The average speed of a carbon atom in a molecule is about 5,592 MPH, and about 3,355 MPH for a hydrogen atom.

When water is at room temperature (68 °F), the average speed of the water molecules in the water is approximately 1,300 MPH.

A blood cell will travel through your entire body in about one minute moving at approximately 2.05 MPH.

Point: Everything everywhere is moving. Are you holding on to something?

Life and Movement
“Movement is the essence of life.”—Bernd Heinrich, Winter World

It is fascinating to watch scientists chase the answer to the question, “Is there life on other planets?”

We are grappling more and more with the need to define the critical distinction between machine life (AI and robots) and living human beings.

In recent decades scientists focused enormous energy and allocated significant funds in order to establish laboratory approaches to creating test-tube life.

What exactly is life?

Interestingly, the National Library of Medicine posted an abstract on the subject of what actually is a living organism and made this statement: “Some scientists and philosophers of science suggest that it is not possible to define life.”1 This is an observation found on an official website of the United States Government.

Life? Can’t define it.

According to another arm of the United States Government, the Natural Park Service, “Living things have very specific characteristics. All living things need food, water, reproduce, grow, move, breathe, adapt, or respond to their environment, and produce waste, though they do these things in very different ways.”2

The National Institute of Health (another arm of the United States Government) concurs:

“In biology, it is generally agreed that organisms that possess the following seven characteristics are animate or living beings and thus possess life: the ability to respire, grow, excrete, reproduce, metabolize, move, and be responsive to the environment.”3

Okay, maybe we can define it.

Point: For purposes of this article we will assume that we can define life, and that one key component of a living thing is movement—the ability to move.

The Importance of Movement to Human Existence
“Movement is a fundamental aspect of life. It affects everything from circulation to digestion to metabolism to immunity. The body contributes far more to our lives than just physical attributes such as strength and endurance—it plays a major role in emotions, learning, and relationships.”4

Human beings are meant to move and keep moving. Remaining stationary for long durations contributes to possible negative health outcomes such as cardiac complications, increased risk for certain cancers, and even early mortality.

Participating in regular movement (i.e. physical activity or exercise) benefits human minds and bodies. Movement:

  • Releases endorphins and helps relieve stress
  • Allows for breaks from everyday challenges and responsibilities
  • Helps emotions move through physical bodies
  • Provides an outlet for self-expression

And yet, “Modern Americans sit for 13 to 15 hours per day.”5

The Mayo Clinic recommends:

  • Use a standing desk when possible.
  • Set a reminder to stand and move at least once per hour.
  • Take a walk over lunch.
  • Walk during phone or conference calls.
  • Park far from store entrances and enjoy your walk to and from.
  • Skip the elevator and use the stairs.
  • Walk around your house when doing routine tasks like brushing your teeth.
  • Take your dog for a long walk once daily.
  • Walk on a treadmill while watching TV.
  • Do yard work, such as mowing your lawn, raking leaves or planting flowers.

“Health gets better with movement, productivity gets better, and people enjoy their jobs—and lives—more.”6

Helping Financial Services Clients Move
As Independent Financial Professionals (IFPs), we are concerned about our clients in a holistic manner. Our desire is for them to thrive. In that regard, is it possible we can contribute to their health by creating opportunities for movement?

Practical Applications:

  • Ask clients when they exercise and if they like to exercise alone or with other people.
  • Ask clients if they prefer indoor activities or outdoor activities, or both.
  • Ask clients to self-describe their own fitness level.
  • Schedule client appointments at times that will not conflict with their exercise routines.
  • Lead by example and engage personally in physical activities and movement.
  • Create a work environment in your office to allow staff to move freely throughout the day when they are the most motivated to do physical activities.
  • Schedule client meetings in outdoor spaces and include walks.
  • Use standing desks for client meetings.
  • If you give gifts to clients, consider pedometers as a physical activity initiative.
  • Consider raising money for a worthy cause by inviting all your clients to participate in a 5 K run/walk or other physical event already scheduled for your community.

Point: IFPs have personal contact with numerous clients every year. In each encounter IFPs can encourage the clients to pursue physical movement as a way of strengthening their own physical health.

Financial Moves
IFPs can also influence clients to make wise financial moves. These actions may not impact physical health directly but will certainly improve financial health. Consider reminding your clients to make these moves:

  1. Review the family budget and cut out unnecessary expenses. Over time individual financial decisions accumulate and can collectively impact financial lives negatively, neutrally, or positively. When it comes to budgets, aggregated decisions rarely have anything but negative impacts. Encourage clients to review these areas:
    – Debit or credit card balances
    – Discretionary spending on entertainment and eating out
    – Underused or even forgotten apps, subscriptions, and streaming services
    – Property and Casualty Insurance Premiums
  2. Review the balance in Emergency Funds. Rarely does the need for an emergency fund decrease over time. Major home improvement and repair projects, automobile repairs or replacement, uncovered medical bills—these grow over time with deterioration and age. Clients may need to move money to bolster their Emergency Fund.
  3. Review Retirement Savings Goals. The forces in the economy that impact savings goals do not rest. Inflation, market trends, interest rates, and volatility require clients to annually reassess retirement goals and current savings. Adjustments and money moves are frequently necessary.
  4. Review Passwords for any and all financial transactions conducted digitally. Cybersecurity risks demand that clients periodically change passwords and even consider using a password encryption service.
  5. Review Data and Document Storage, Files, and Record Keeping Practices. Every client’s electronic copy of important documents should be stored in a password-protected format on a removable flash drive or an external hard drive and kept secure in a location known by family and estate executors. Paper copies of important documents are best stored in a fireproof and waterproof safe or safe deposit box. Again, spouses, adult children, and estate advisors should know the location. Clients should make the move to use document shredders in order to safely destroy outdated physical statements.
  6. Review W-4 Tax Withholdings. Life moves fast. Children move out. Parents move in or pass away. Having too much money withheld from paychecks causes clients to give the government an interest-free loan.

Summary
Human life is movement in time and space. Movement is necessary for life and health. This is true of physical, mental, emotional, and even financial health.

American Ellen Glasgow, a Southern novelist, once wrote:

“All change is not growth, as all movement is not forward.”

As an IFP, you can have a measurable and positive influence on your clients by encouraging movements that accrue in growth and forward progress.

Jerry Seinfeld, American Comic said:

“To me, if life boils down to one thing, it’s movement. To live is to keep moving.”

Clients sometimes need our help. So why are you still sitting?

Footnotes:

  1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8376694/.
  2. https://www.nps.gov/common/uploads/teachers/lessonplans/3rd%20Lesson%20Plan%20Living,%20Non-Living.pdf.
  3. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10123176/#:~:text=In%20biology%2C%20it%20is%20generally,be%20responsive%20to%20the%20environment.
  4. Washington University in St. Louis, Human Resources: http://tinyurl.com/yc7fm4a2.
  5. https://www.mayoclinichealthsystem.org/hometown-health/featured-topic/the-importance-of-movement.
  6. Ibid.

All About Home

“Home is the place where, when you have to go there, they have to take you in.”—Robert Frost

I have always liked this humorous quote about what “home” is, but there are two powerful words embedded in it: “have to.”
In independent financial services, we are armed with tools, products, approaches, and solutions to meet people right where they face “have to.” This is nowhere more in evidence than in the sphere of home.

Home is defined as:

  • “one’s place of residence”
  • “the social unit formed by a family living together”
  • “a familiar or usual setting: congenial environment”1

I would add that home is where life happens and where responsibilities converge.

Benefits and Responsibilities of Home
The Eastern Tent Caterpillar is a familiar pest for people living in Eastern North America, especially in the Northeastern United States. From Canada, South to Florida, and West to the Dakotas and Texas, they defoliate trees and build their unsightly tents.

As adults, they are moths that are fluffy, tan to light brown in color, and have two white, oblique stripes on the wings. Quite handsome, actually.

As caterpillars, they are hairy, mostly black with a white stripe down the back, featuring brown and yellow lines along their sides, and they have a row of oval blue spots on the sides. Again, fairly good-looking.

The adult female moth lays 150-400 eggs in masses that are covered with a shiny, black varnish-like material. These egg masses encircle branches that are pencil-size or smaller in diameter. The animal overwinters as eggs. The eggs hatch about the time that the trees’ buds begin to open, usually in early March.

Let’s focus on their nest. Eastern Tent Caterpillar nests are commonly found on wild cherry, apple, crabapple, and similar rosaceous trees. After hatching, they form web tents through collective effort. The individual caterpillars weave silk from their salivary glands. During the useful life of the tent, the caterpillars each continue to add to it to increase the space it affords. These tents occur in the crotches and forks of branches in Spring and early Summer. These tents serve multiple benefits for the caterpillars:

  • Warmth in the early Spring against the cold of night and risk of frost
  • Protection from predators and parasitoids
  • Protection from heat of the day in Summer, or from rainy weather

Problem: These creatures eat leaves, and the leaves are outside the nests. They must travel outside the nest to forage. They “have to” take time from foraging to work on the nest. “To have a home is to incur costs: It has to be made, and it takes time, energy, and expertise to make, and the wherewithal to travel to and from it.”2

Point: To have a home is to incur costs. It requires maintenance. It provides a base from which all of life flows.

Intersection of Financial Planning and the Home
The English word, “economics,” is derived from the Ancient Greek word οἰκονομία (oikonomia), which is the combination of two Greek words, “Oikos” meaning household, and “Nomous” meaning management. Interestingly, when we speak about the economy, we generally mean the entirety of the activities of all the people. However, managing the economy starts at home.

Home ownership and financial planning are actually closely intertwined in many ways, including:

  • Life Insurance: A top reason for owning individual life insurance is to cover the outstanding mortgage at the time of death.
  • Disability Income: No one wants the family to have to move because a disability restricts employment and lost income prohibits making monthly mortgage payments.
  • Adequate Property and Liability coverage: Although the risk of not insuring the home could be devastating financially, “12 percent of homeowners in the U.S. do not have home insurance, according to a 2023 survey by the Insurance Information Institute (Triple-I) and Munich Re.”3
  • Net Worth: The value of a home is an important factor.
  • Liquidity: The equity in the home can be important leverage.
  • Tax Planning: Homeowners can deduct certain expenses and interest payments from their taxes.
  • Goals and Objectives: A desire to own a larger home, or second home can weigh heavily on choosing between alternative uses of future income or current savings.
  • Home Equity Conversion Mortgage (HECM): A reverse mortgage can be an option for seniors who have equity in their homes and want to remain in their homes or supplement their income.
  • Emergency fund: Home repairs can be expensive.
  • Cash Flow: A homeowner’s monthly mortgage payment can be a sizable portion of the total family budget.
  • Emotional Perspective: Whether or not it makes logical sense, a homeowner may prioritize paying off a mortgage over other possible uses of income just to have the security of living in a home debt-free.
  • Estate Planning: Homeowners can pass on their home to children and grandchildren by either selling or gifting it to them while still alive, bequeathing it when they pass away or signing a “Transfer-on-Death” deed in states where it’s available.

Point: To own a home is to incur financial obligations over a long period of time and experience short-, and long-term financial consequences.

Focus on the Home
As an independent financial professional (IFP) you need to pay attention to cultural and economic swings that often impact the very place where people live. Many cultural forces combined with economic forces cause fairly dramatic shifts in when people enter the housing market, where people choose to live, and what accommodations they prefer.

Generational Differences
Home ownership is heavily impacted by generational shifts. “Millennials adapted more quickly to new technology than older adults and were the first to prefer consuming content online. They also disrupted consumer behavior patterns by forming their own brand of life stage priorities. They now make up the largest share of what should be the homebuying population. Millennials shifted the timing of various life stages, represent the most racially and ethnically diverse adult age group, and earn more than prior generations.”4

According to the Freddie Mac Single Family Marketing Analytics, Market Research, and Insights Department:

  1. Millennials’ homeownership rates lag behind those of older generations.
  2. “A significant share of millennials have yet to mature into homeownership, as many of them either haven’t reached the life stages that typically prompt a desire to own a home.”5
  3. The Millennial generation is at risk of never reaching the same homeownership levels as older generations because of the historical divergence in homeownership rates between different races/ethnicities.”6
  4. “Delayed marriage, financial challenges of racial and ethnic minorities, less financial security and higher debt all contribute to lower homeownership rates for millennials. Rising home prices and a record low inventory of affordable housing for sale have also impeded homeownership.”7
  5. “The average millennial homeownership rate was 43 percent in 2019, which was 22 percentage points below the overall national rate.”8

On the other hand, for older people, a prime reason for purchasing a home is the desire to be near children and grandchildren.
Desire to be closer to family/friends/relatives (Percentage Distribution of Buyers)9

  • Ages 58 to 67, 21 percent.
  • Ages 68 to 76, 20 percent.
  • Ages 77 to 97, 33 percent.

Favorable Tax Structure
People sell houses and buy houses for a variety of reasons, including:

  • Employment or educational opportunities.
  • Proximity to family or friends.
  • Geographic and lifestyle preferences like weather, natural landscape, and population density.
  • Cost-of-living and taxes.

The latter is heralded by some social scientists as an increasingly important factor.

“Of the 10 states that experienced the largest gains in income taxpayers (2020-2021 IRS migration data) four do not levy individual income taxes on wage or salary income at all. There is a strong positive relationship between state tax competitiveness and net migration. Overall, states with lower taxes and sound tax structures experienced stronger inbound migration than states with higher taxes and more burdensome tax structures.”10

Impact of Rising Interest Rates
According to a study conducted by US Bank Wealth Management:11

  • The average 30-year mortgage rate in the U.S., which was below three percent in 2021, exceeded seven percent in mid-August 2023 and peaked at 7.79 percent in late October.
  • Housing market inventory in 2023 was low. “Cost barriers may be keeping some potential homebuyers from entering the market. At the same time, many existing homeowners are reluctant to sell only to assume more costly mortgages required to purchase new homes.”12
  • Existing home sales in 2023 were the lowest since 1993.

Point: As an IFP it is important to stay current on the impact of cultural and economic trends on your clients’ housing choices and financial objectives.

A Strong Financial Home
According to the Consumer Financial Protection Bureau,® (An official website of the United States government), “Financial well-being means having financial security and financial freedom of choice, in the present and in the future. More specifically, having financial well-being is when you:

  • Have control over day-to-day, month-to-month finances.
  • Have the capacity to absorb a financial shock.
  • Are on track to meet your financial goals.
  • Have the financial freedom to make the choices that allow you to enjoy life.”13

Finances play a role in the way we feel every day. An individual’s or family’s overall well-being is greatly influenced by the impact of poorly-controlled spending, unwise investing, misjudgments in major purchases, irresponsible debt accumulation, and intra-family disagreements over money.

A wise, caring IFP who takes the time to understand the home dynamics can have a lasting impact on individuals and families.

Point: We cannot overemphasize the important opportunity for each IFP to enter into a person’s life, impact the whole family, and make a lasting difference in their entire homelife.

Summary
A dear friend of mine is concerned about the environment. He knows he can have limited impact as a solo player in the theater of humanity, but he does what he can. He regularly walks on the roadsides and picks up litter.

As an IFP, you may have grave concerns about the trends in the National Economy, or World Economy. You may fear the possible disruption that AI poses, the challenges of restoring robust supply chains, or the size of the National Debt. You may not have much ability to impact the larger picture, but you certainly can make a difference one home at a time.

Managing the economy starts at home.

“The strength of a nation derives from the integrity of the home.”—Confucius

The best place to start is to help your clients to review the decisions from their past that led to the current state of financial affairs, and then move on to building attainable, satisfying financial goals and objectives.

“I realized that home is where there are both knowledge of the past and plans for the future.”14—Bernd Heinrich

Huge numbers of people across the United States need your professional expertise. Make every effort you can to bring the tools, products, approaches, and solutions to meet people right where they face their biggest challenges—in the sphere of their own home.

Footnotes:

  1. https://www.merriam-webster.com/dictionary/home.
  2. “The Homing Instinct: Meaning and Mystery in Animal Migration,” by Bernd Heinrich, Houghton Mifflin Harcourt; First Edition (April 8, 2014), page 38.
  3. https://www.insurancebusinessmag.com/us/news/property/whats-causing-americans-to-drop-home-insurance-coverage-457862.aspx.
  4. https://sf.freddiemac.com/docs/pdf/fact-sheet/millennial-playbook_millennials-and-housing.pdf.
  5. Ibid.
  6. Ibid.
  7. Ibid.
  8. Ibid.
  9. https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf.
  10. https://taxfoundation.org/data/all/state/taxes-affect-state-migration-trends-2023/.
  11. https://www.usbank.com/investing/financial-perspectives/investing-insights/interest-rates-impact-on-housing-market.html.
  12. Ibid.
  13. https://www.consumerfinance.gov/consumer-tools/financial-well-being/about.
  14. “The Homing Instinct: Meaning and Mystery in Animal Migration,” by Bernd Heinrich, Houghton Mifflin Harcourt; First Edition (April 8, 2014), page 248.

Wrong

“The fact that man knows right from wrong proves his intellectual superiority to the other creatures; but the fact that he can do wrong proves his moral inferiority to any creatures that cannot.”—Mark Twain

In Iasi, Romania, I met an engaging 17- or 18-year-old woman named Sophia. She is a Ukrainian refugee. Sophia escaped the war in Ukraine along with her mom, sister, and aunt. Her father is serving in the military.

Sophia attended our seminars on Emotional Intelligence. The reason she requested to meet with me was to ask me, “How do I choose the right university?” And, “How can I get admission to a university in America?” I helped her think through these questions and even supplied resources to help her discover universities in America that have special programs for Ukrainian refugees.

Sophia wants to study Web Design. She knows HTML, Java, and Photoshop.

She is a ballroom dancer and model. When I asked her about the purpose of life and her worldview, Sophia said she has not thought about faith or God much. She categorically said, “There is really no right or wrong, nor is there really anything truly good or bad.”

I challenged this:

“Sophia! I am so glad to hear you say that! Poor Russia is getting criticized by everyone because they attacked Ukraine. You at least know they are perfectly within their rights since there is no right and wrong.”

This shocked her. Which was the point.

Nihilism is a philosophy that is increasing in popularity among young people the world over. The definition of nihilism is:

  • “a viewpoint that traditional values and beliefs are unfounded, and that existence is senseless and useless;
  • a doctrine that denies any objective ground of truth and especially of moral truths”1

Sophia is flirting with nihilism but, so far, she has only accumulated a shaky framework of opinions.

Right or Wrong
In November, 2023, NY Representative George Santos (who represented parts of Queens and Long Island) was the subject of a Congressional investigative panel charged with researching a myriad of accusations of “wrong-doing.” In fact, Santos faced a 23-count federal indictment that includes allegations of stealing donor identities, using their credit cards to make thousands of dollars of charges, and directing some of the money into his own account or into his campaign fund.

The scandal-plagued, federally indicted freshman representative from New York was expelled December 1, 2023, from the House of Representatives by a 311-114 vote, including 105 Republicans, to become only the sixth House member to be removed in U.S. history. (There have been over 11,000 house members in U.S. history.)

Question: Why should anyone care what Santos did or didn’t do if there isn’t any right or wrong?

Point: In a world that appears to be dismantling the traditional understanding of right and wrong, an independent financial professional (IFP) must continually work hard to conduct herself properly in order to maintain a clear conscience and remain professionally ethical.

Fascinating Etymology
The word “wrong” has an interesting history. Its origins have several sources:

  • Old English, meaning ““twisted, crooked”
  • Old Norse, meaning “crooked, wry, wrong,”
  • Middle Dutch, meaning “sour, bitter,” (literally, “that which distorts the mouth”)2

(“Wry” is used to describe someone’s face that is twisted into an expression of disgust.)

Wrong=twisted, crooked, wry, sour, bitter; that which distorts the face or mouth.

(Conversely, the word “right” has this historical meaning: “to move in a straight line,” and “not bent.”)3

Question: Who gets to decide what is straight, unbent, or pleasant tasting?

The “Wrongs” of Independent Financial Services
In financial services, we operate in a world that still believes there are such things as right and wrong, good and bad. Our clients expect us to speak and behave with integrity. There are of course many layers of governance and standard-setting. Compliance reaches as far as it can, and regulators contribute to oversight, but at the end of the day we must manage ourselves to high ethical and moral standards.

The sad reality is that as an IFP it is easy to deceive, ignore, or even cheat clients every day and not get caught. The reason is because government oversight of IFPs is highly fragmented, and regulators from the Federal and State governments are not always in sync. There isn’t a central database documenting IFP misconduct.

According to the Stanford Institute for Economic Policy Research (SIEPR):

“There are over 650,000 registered financial advisers in the United States helping manage more than $30 trillion of investable assets.”4

“One in 13 financial advisers have a misconduct-related disclosure on their record.”5

“Misconduct is geographically concentrated. The highest rates of misconduct are in areas with more elderly and less-educated populations.”6

According to the U.S. Securities and Exchange Commission (SEC), here are just a few “wrongs” that IFPs perpetrate:

  • Fraudsters may misrepresent their education.
  • Fraudsters may lie about having been awarded honors that they have not received or that do not even exist.
  • Fraudsters may pretend to hold certain professional titles to suggest that they have certain expertise or qualifications.
  • Fraudsters may inflate their professional experience.
  • Fraudsters may pretend that they have a certain position or title at a company.7

“Examples of misconduct included paying to settle customer disputes, being terminated after allegations of improper behavior, being held liable in civil litigation, or receiving criminal or regulatory sanctions.”8

Point: While we ourselves know if we are abiding by moral, ethical, and legal standards, we can sometimes fool others; and even if we get caught, we can still find ways to keep working in financial services.

Practicing in a Straight Line
It is each IFP’s free opportunity to create a reputation that aligns with personal character. It is also possible to hold ourselves to high standards of character. We can impact our clients’ facial expressions and the orientation of another person’s mouth to reflect positively on our work when our name is mentioned.

It is important to remind ourselves from time to time (maybe annually) of the commitments we individually make to ascribe to high ethical standards. A great place to start is reviewing the CFP Board’s Code of Ethics and Standards of Conduct.9

Another great barometer of our personal integrity is the extent to which we are willing to be held accountable by others. An accountability partner can ask us the hard questions.

Or we can simply check ourselves.

Practical steps:

  • Review what can be discovered about your educational and professional background. Is it accurate?
  • Are there discrepancies regarding your publicized background, such as conflicting information or dates?
  • Are you confident enough to direct potential clients to sources where they can independently verify your credentials and professional claims with reliable sources, such as National Association of Personal Financial Advisors (NAPFA), Investment Adviser Public Disclosure (IAPD), FINRA BrokerCheck, and the web sites of state securities regulators?
  • It is possible to operate 100 percent of the time above board and still experience a consumer complaint. If this is your experience, are you more comfortable hiding the fact or disclosing it and providing context and eventual resolution?

In general, a wise IFP invites every client to engage in open communication, to ask questions, and to demand transparency. To behave with transparency, do the following:

  • Disclose all aspects of compensation.
  • Go beyond recommending opportunities that are merely “suitable,” and choosing instead to specifically recommend only those that are in the client’s “best interest.”
  • Take the time to explain your thought processes and investment strategies.
  • Entertain all of your clients’ ideas, allowing them to have a say in their own financial future.
  • Explore ideas and educate the client about why something might be plausible or perhaps inadvisable.

Here are great ways to give assurance to prospective clients:

  • Explain how you make your money.
  • Describe your approach to financial planning.
  • Delineate the financial planning services that you offer.
  • Clearly define the particular type of clients you normally work with.
  • Make it known if you enforce account minimums.
  • Provide a checklist of the information prospective clients need to bring in order for you to develop a financial plan.
  • Notify all prospective clients regarding how many times and how often you will want to meet with them.
  • Let all clients and prospective clients know if you are willing to collaborate with their other advisors like CPAs or attorneys.

Summary
While traditional social constructs of right and wrong appear to be in flux, or eroding, those of us in financial services must diligently strive to operate in ethical, moral, and legal ways.

How much better to create sweet experiences for clients rather than leaving them with a sour or bitter taste in their mouths!

In his book, A Failure of Nerve: Leadership in the Age of the Quick Fix, Edwin Friedman wrote:

“Leaders must always focus first on their own integrity.” This is also true of IFPs.

Footnotes:

  1. https://www.merriam-webster.com/dictionary/nihilism.
  2. https://www.etymonline.com/word/wrong.
  3. Ibid.
  4. https://siepr.stanford.edu/publications/policy-brief/misconduct-under-microscope-examining-bad-behavior-financial-advisers.
  5. Ibid.
  6. Ibid.
  7. https://www.sec.gov/enforce/investor-alerts-bulletins/ia-credentials.
  8. https://www.policygenius.com/personal-finance/news/how-to-vet-financial-advisors/.
  9. https://www.cfp.net/ethics/code-of-ethics-and-standards-of-conduct.
  10. A Failure of Nerve, Revised Edition: Leadership in the Age of the Quick Fix, by Edwin H. Friedman, Church Publishing; 10th Anniversary edition (May 1, 2017).

Image by krakenimages.com on Freepik

Serving As You Ought

Mary Flannery O’Connor (1925-1964) was an American novelist, short story writer and essayist. During her short life, she wrote two novels and 31 short stories. O’Connor’s best-known work, a novel entitled “A Good Man Is Hard to Find,” was published in 1955. As a Southern writer, she wrote intentionally in a style that relied heavily on Southern history and culture and featured grotesque characters encountering violent situations. As a woman of Irish descent and Catholic beliefs, O’Connor wrote in such a way as to present the created world as being charged with God. Haunted by Him.

In April 1959, O’Connor wrote a letter to fellow writer, Cecil Dawkins. The letter contained this very personal revelation:

“The other day my Mother asked me why I didn’t try to write something that people liked instead of the kind of thing I do write. Do you think, she said, that you are really using the talent God gave you when you don’t write something that a lot, a lot, of people like? This always leaves me shaking and speechless, raises my blood pressure 140 degrees, etc. All I can ever say is, if you have to ask, you’ll never know.”1

Point: We are all constantly evaluated by other people who have their own experience, opinions, and ideas for how things should be done. If they have to ask, maybe we are not making our purpose clear.

What Makes You, You
As an independent financial professional (IFP), you provide advice and guidance to clients regarding investments, insurance, and other financial planning matters. You propose solutions and actions which align with your clients’ goals, you listen to their needs, and you act in accordance with their best interests.

You may be extremely prudent in the advice you offer, professional in your practices and methods, and knowledgeable in your areas of expertise, but there will still be people who will find fault with you or reject you as their personal advisor.

What kinds of criteria do people use with which to select an IFP? Consider the following:

  • Professional Certification (CFP, CWM, CLU, ChFC, or CFA)
  • Education (university degrees, Masters, etc.)
  • Experience (including the path to becoming an IFP)
  • Range of Services
  • Specialization(s)
  • Compensation Structure (flat or hourly fee, commissions, or a combination of both)
  • Reasonableness of your fee(s)
  • Investing Approach
  • Transaction Based Service Model or Consultative
  • Whether or not you serve as a Fiduciary

Beyond these important factors, there is something that generates the most important value of working with you: Your individuality.

Question: As an IFP, have you zeroed in on your personal definition of “success?” The foundation of your individuality is the “why” behind what you do and how you do it. The “why” dictates what you consider to be success.

Oughteries
In my faith tradition, God is Love. He invites us into a loving relationship with Him. The same tradition makes one thing utmost above all else: We are to love others. But human beings can be geniuses at taking an invitation from God and turning it into a burdensome obligation–what someone once described as “hardening of the oughteries.”

Oughteries can obstruct the essence of who a person is. A person might be driven by love, and yet behave as if following some set of rules, trying to live strictly by a standard of dos and don’ts. This person’s freedom is restricted by a “hardening of the oughteries.”

As an IFP you must abide by all pertinent regulations, maintain all the record-keeping standards, and at all times avoid serving your own personal interests ahead of the clients’ interests. In addition, every direction you recommend that a client takes, each product you recommend, and the decision trees you utilize when making recommendations, all come with guiding principles. These collectively create the oughteries of being an IFP.

Point: It is tempting to construct a practice as an IFP that is entirely defensive, or primarily built on maintaining the right boundaries. Doing so will eliminate the joy and wonder that you hoped to experience in the profession you chose.

Rediscovering Your “Why”
Something attracted you at first to the financial services industry. You felt driven to gain the proper certifications. You sat for exams. You studied the broad array of products. Your fulfillment came from something in particular at first. What was that driver?

Examples:

  • A huge passion for helping people achieve the freedom that is true wealth. As James Clear (@JamesClear) wrote on X:
    “Real wealth is not about money. Real wealth is: not having to go to meetings, not having to spend time with jerks, not being locked into status games, not feeling like you have to say ‘yes,’ not worrying about others claiming your time and energy. Real wealth is about freedom.”
  • Protecting widows and orphans. This was my reason for getting into the career of selling life insurance. It felt religious as well as fulfilling:
    “Religion that God our Father accepts as pure and faultless is this: to look after orphans and widows in their distress.”
    —James 1:27 (NIV)
  • Deploying an in-depth analytical ability across all areas of financial planning (cash flow planning, retirement planning, investment management, insurance planning, estate planning, and tax planning).
    “Happiness comes from solving problems. […] Happiness is a constant work-in-progress. The solutions to today’s problems will lay the foundation for tomorrow’s problems.”—Mark Manson
  • Excelling at salesmanship. This is a key requirement for successful IFPs. There is an art to persuasion. There is, however, a higher goal than making a sale or getting a client to act. The joy comes from seeing the client’s life improved.
    “Engaging people is about meeting their needs—not yours.”—Tony Robbins
  • Releasing native curiosity. Some IFPs delight in uncovering precisely what each client needs and therefore approach financial planning like detective work. They like nothing better than piecing together minute details, fashioning a road map to success, and wrapping it all into a comprehensive plan.
    “I’m naturally curious, and I’ve always been driven by my curiosity. Curiosity gets people excited. Curiosity leads to new ideas, new jobs, new industries.”—Anne Sweeney

Point: The easiest thing is to let the work interfere with the joy of the career. The joy is rediscovered when you revisit the reason you chose to be an IFP.

Application—Serving As You Ought
Once you remember what it was that led you to choose a career in financial services, the next thing is to make your approach to business flow from that joy-giving purpose.

It starts with aligning your practice with transparency and authenticity.

Practical ideas:

  1. Clearly explain why a client should choose you as an investment advisor. Plainly lay out the training, certifications, experience, and successes you have had.
  2. If you are recommending an insurance product, pull out your own policies and demonstrate that you recommend what you also own.
  3. Enthusiastically explain how you choose specific investments to recommend to clients. What have you learned that can benefit them? Why are you oriented to specific categories?
  4. Willingly and honestly help your clients understand how your fees and the underlying costs might affect their investments. Use an example of a specific amount of investment to show how much will go to fees and costs and how much will be invested for the client.
  5. Exemplify accountability. Who can the client talk to if they have concerns about how you treat them or what they consider to be disappointing results?
  6. Reveal any past experiences of having clients complain, of being fined, or disciplined in any way. Lay out the facts. No one is perfect. Successful people attract detractors.

Summary
Flannery O’Connor’s own mother questioned the value of her work. You can be sure that people will look at what you do with dubious eyes.

If you love what you do, it should be evident in how you do it.

If you can stay focused on the reason for your career choice, and keep your work habits aligned with that purpose, you will be seen as authentic.

Do not succumb to the trap of oughteries. Yes, obey all laws, follow all regulations, conduct yourself ethically, hold yourself and your practices above reproach—but do not make all this effort the goal.

Flannery O’Connor knew who she was and what she was all about. She had no problem in explaining why she wrote the way she did. In an essay she described her use of the grotesque this way: “Whenever I’m asked why Southern writers particularly have a penchant for writing about freaks, I say it is because we are still able to recognize one.”2

If you have read all the way to this point, I want to encourage you to practice the art of your profession with authenticity and transparency. Remain committed to the cause that attracted you to the industry in the first place, and don’t get distracted by the “hardening of the oughteries.”

One last piece of encouragement (again from O’Connor):

“Accepting oneself does not preclude an attempt to become better.”

Footnotes:

  1. “The Habit of Being: Letters of Flannery O’Connor,” page 326, edited by Sally Fitzgerald, published in 1979 by Farrar, Straus, and Giroux. ISBN 9780374521042.
  2. “Some Aspects of the Grotesque in Southern Fiction,” an essay by Flannery O’Connor, 1960.

The Financial Arena

On a Tuesday morning in November, I took my car in for repair. All of a sudden it had begun displaying a series of warning lights and messages:

  • Check Brake System!
  • Check ABS!
  • Check VSC System!

Ruh-roh.

While I waited for the repairs to be done, I walked down the street to a Panera Bread restaurant where I met a friend. We enjoyed bagels and coffee and conversation.

The dealership called to say they needed to collect a replacement part from another dealership and that my car would not be ready for another three hours. My friend left and I stayed and got some work done.

A married couple in their seventies came in and occupied the booth next to me. They had a pleasant conversation between them about repairs they were making to their home in anticipation of putting it on the market. They were getting ready to move into a single level, smaller, courtyard home.

Then in walked a man wearing a Cincinnati Bengals cap, a Bengals shirt, and jeans. He said, “Hey Mom and Dad, been waiting long?”

Dad: “Nah. We looked for you in the stands during Monday night’s game between the Bengals and Bills. Were you there?”

Son: “We were. We loved the feel of the arena that night!”

(He said “arena.” I liked the sound of it. Very Roman.)

Dad: “What was it like when Damar Hamlin came out onto the field?” (Hamlin suffered a cardiac arrest during a Week 16 game between the Bengals and Bills in the 2022-23 season. This was the first time Hamlin had walked back onto the field where he nearly died.)

Son: “The crowd expressed great empathy and warmth for him. He seemed to reciprocate.”

Dad: “Amazing, and on top of that, it was a great game!”

Mom (Switching subjects): “Are you still getting married in January?”

Son: “Yes, for sure.”

Dad: “Thank you for coming to meet with us. Your upcoming marriage has prompted us to think about our finances and the plans for our estate.”

I am admittedly a Bengals fan and had listened to this point in their conversation with casual interest. Suddenly, when estate planning came up in the conversation, I began exercising my best ease-dropping skills.

Here is what I learned about the family:

  • The married couple has two sons.
  • The older son is very successful and owns a business he built from scratch.
  • The younger son, in Bengals gear, is not so successful. His first marriage ended in divorce. He has had a few different careers. The woman he planned to marry in January is not someone his parents are thrilled about.

Point: All financial and estate planning occurs within the arena of vital family dynamics.

The Financial Arena
The English word “arena” dates back to the 1600s and has its origins in the Latin word, harena, meaning “sand, or a sand-strewn place of combat.”1 According to the dictionary, the word “arena” has various definitions:

“1: an area in a Roman amphitheater for gladiatorial combats
2a: an enclosed area used for public entertainment
b: a building containing an arena
3a: a sphere of interest, activity, or competition, the political arena
b: a place or situation for controversy, in the public arena”2

Question: In what sense is there a “Financial Arena?”

Answer: In this sense: “a sphere of interest, activity, or competition.”

Point: Financial planning is an ongoing process designed to guide people to make sensible decisions in the sphere of money that can help them achieve their life goals by competing against forces like inflation and market volatility. The activities that happen within this arena include the following:

  • Establishing life goals–short, medium, and long term
  • Identifying current assets and liabilities
  • Evaluating the current financial position–and the distance remaining between now and to achieving financial goals
  • Developing the plan–creating a clear path for achieving specific goals
  • Implementing the plan–making the necessary spending, saving, and investing changes in order to make goals happen
  • Monitoring and reviewing the plan regularly and making necessary adjustments

Sidenote: In Orlando, Florida, on the main campus of the University of Central Florida, there is a sports and entertainment arena named “Addition Financial Arena.” It was constructed beginning in 2006 as a replacement for the original UCF arena. Addition Financial is a credit union with a history of helping clients for more than four score years. On May 1, 2019, CFE changed the arena’s name to Addition Financial. Effective beginning August 18, 2022, UCF announced that Addition Financial had extended their naming rights for the facility through 2034. The arena is home to the UCF Knights men’s and women’s basketball teams.

The Financial Arena Is a Scene of Contest
Allow me to return to the family I overheard at Panera discussing financial and estate planning decisions. Recall that there are two sons. There is also a finite estate that the parents intend to pass on to these two men.

I do not feel in any way unethically responsible for knowing the details of this family’s financial picture because they loudly, and openly, discussed this with each other after I was already in place before they came in and sat down next to me. (Who doesn’t enjoy a little eavesdropping with their coffee?) Listening to the conversation, however, I made specific mental note of these sometimes-controversial factors:

  • Dad retired and rolled over his retirement plan assets into an IRA now held by a large investment firm. He estimated the current value at $700,000. It was initially significantly higher, but they have been living off the IRA over the past several years.
  • The house is owned outright and has an estimated market value north of $500,000. When the couple acquire a smaller home, they expect to have no post-sale, post-purchase surplus left over.
  • Dad described having another significant account (nonqualified) being managed by an independent financial professional (IFP). He estimated the current market value to be in excess of $400,000.
  • Dad and Mom want to pass on their existing funds to their sons while alive and not in testamentary fashion.
  • Problem #1: They are not interested in their younger son’s second wife benefiting directly from their gifts. They demand that he have a prenuptial agreement that specifically excludes her from receiving his inheritance.
  • Problem #2: They are unwilling to take into account the comparatively disproportionate financial standing of their sons in the division of assets between them.
  • Problem #3: The older son and the couple’s IFP (a woman) had previously dated, and now totally dislike each other. He does not trust her and frequently asks his parents to move the money to an IFP he uses.
  • Problem #4: The older son was not present at this meeting. He, however, has instructed his parents to only give him financial gifts in years that would coincide with favorable investment market conditions.
  • Problem #5: The younger son thinks his older brother is so successful financially that a greater portion of the estate should go to himself.
  • Problem #6: The older son is the favorite offspring of both Mom and Dad and the younger son knows it.
  • Problem #7: There are no grandchildren. This is a problem because Mom believes without grandchildren there really is no lasting legacy. She would prefer to give the money to charity.

Point: A successful IFP must help clients navigate economic factors of course, but there are often familial factors, sources of intense emotional contest and conflict, which often prove much more intransigent.

Blood and Money
There is a reason why the word arena came from the Latin word for “sand, or sandy place.” The broad open areas of Roman amphitheaters were strewn with sand to soak up the blood.

In the Old Testament, in Leviticus 17:14 we read that “the life of every creature is its blood.” That is why God said to the Israelites, “You must not eat the blood of any creature, because the life of every creature is its blood; anyone who eats it must be cut off.” Blood equals life.

But then we hear the expression “bloodshed.” Bloodshed is the destruction of life, as in war or murder, slaughter. It is death.

Point: When engaged in the arena of financial and estate planning, the IFP must remember both aspects of life and death when helping clients make plans. Money has utility during life and must be properly and responsibly passed on at death. In both instances, the IFP must address a wide array of issues such as taxation, inflation, risk, and multiple alternatives for accomplishing stated goals.

Application
Returning to our family in Panera, how might an IFP begin guiding them in their estate planning goals?

  • Meet separately with the parents away from either son.
    • In this meeting, gain full understanding of how they feel about their investment advisors and management.
    • What will they need by way of income to last their entire lives?
    • How much should they retain in an emergency fund?
    • What principles are guiding their preferences? Specifically, why do they wish to treat each son equally? Why do they not want their future daughter-in-law to benefit from their son’s future inheritance?
    • Ask the parents if life insurance might be a way to accomplish estate equalization.
    • Is a Grantor Trust perhaps indicated by the family dynamics? A properly drawn trust could supplant the need for a prenuptial.
    • Should they consider their older son’s feelings about their IFP?
    • What gives them the greatest joy when they think about their financial legacy?
    • Is there an opportunity to achieve Mom’s charitable aspirations?
  • Meet with the sons together and with both parents present. At this meeting both sons need to know that they are beneficiaries and not benefactors. This means that:
    • They will receive the gifts and/or inheritance when and in the manner that Mom and Dad prefer.
    • They need to plan for how they will utilize these gifts, and what steps they will take to multiply the gifts’ effectiveness and extend their longevity.

Summary
The Financial Arena is not a place for the timid to go to find refuge and safety. Every seasoned IFP knows that it is frequently a place to battle economic, societal, and familial contenders.

President Theodore Roosevelt, who left office in 1909, delivered a speech in Paris on April 23, 1910, which would become one of the most widely quoted orations of his career. Although he had labeled it, “Citizenship in a Republic,” it would become widely remembered as “The Man in the Arena.” At 3:00 PM in front of the Sorbonne, where an estimated 25,000 people packed the streets, Roosevelt criticized people who have “an intellectual aloofness which will not accept contact with life’s realities.”

Dr. Brené Brown paraphrased Roosevelt’s speech in a TED Talk and used his phrase “daring greatly” as the title of one of her books.

As this article concludes, let us remember that our business is not conducted in the realm of theories, but in the actual lives of real people with real problems.

From “The Man (Person) in the Arena:”

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”3

For every IFP battling in the Financial Arena of sweat and blood, I applaud you and hold you in great esteem. Keep striving to do the daring deeds of assisting people in their quest to live financially successful lives.

P.S. The conversation between the son and his parents took a strange turn when he suddenly, and with a surge of energy, announced in non sequitur fashion, “I bought my future wife a gun!” Dad said he had much to say about this. At this same moment the dealership called and informed me that my car was finished. I almost hated to leave before I heard where the conversation was going to go next!

Footnotes:

  1. https://www.etymonline.com/word/arena.
  2. https://www.merriam-webster.com/dictionary/arena.
  3. https://www.mentalfloss.com/article/63389/roosevelts-man-arena.

Fine

“Fast is fine, but accuracy is everything.”—Wyatt Earp

“It is a fine thing to be honest, but it is also very important to be right.”—Winston Churchill

While reading in the Old Testament book of Exodus, my attention was riveted by the simple word, “fine.” For context, Moses successfully led the people of Israel out of Egypt, and they began their forty-year wanderings in the wilderness.

In Exodus 16, after one and a half months in the wilderness, the hungry, tired, and worn-out people of Israel began grumbling against their leaders: Moses, and Aaron. If you know this story, you are aware that God heard their complaints and began providing sporting fowl (quail) each evening, and something called “manna” each morning.

For us living 3400 years later it is hard to know what manna was like. Even back then it was a bit of a puzzle. “When the people of Israel saw it, they said to one another, ‘What is it?’ For they did not know what it was.”1

We read this description of manna: “In the morning, dew lay around the camp. And when the dew had gone up, there was on the face of the wilderness a fine, flake-like thing, fine as frost on the ground.”2

There it is. “Fine.” Repeated twice. The Hebrew word translated “fine” is Daq. It means a “very little thing, small, thin.”

Point: On occasion we benefit from taking a commonly used word and examining its application to our business practices, our personal character, and to the impact that we are having on others.

Financially Fine
How do we as independent financial professionals (IFPs) use the word “fine?”

I consulted a dictionary to learn the various meanings of the word. It is polysemous. (Like “run” or “bank” it has several meanings). Consider some of these various definitions of the word “fine:”3

  • All right, well, or healthy: not sick or injured
  • Superior in kind, quality, or appearance: excellent
  • Very small, very thin in gauge or texture
  • Very precise or accurate
  • Delicate, subtle, or sensitive in quality, perception, or discrimination

Let’s ask ourselves three very fine questions:

  1. Can we categorically state that our clients are doing fine? (All right, well, or healthy.)
  2. Can we describe the planning that we do, and the products that we recommend, as being fine? (Superior in kind, quality: excellent.)
  3. Do our clients experience the attention we pay them as being fine? (Very precise, detailed, accurate, discriminating, perceptive, of high quality.)

“We’re Fine”
As an IFP, you want to know how your clients are doing. At. All. Times. But how?
Here are several ideas:

  • Talk to them. With current technology, it is even easier to talk with our clients because we have countless ways to connect to one another. When we talk with a client, we should not be afraid to get a little bit personal. Fine means healthy, and that extends beyond just financial wellbeing.
  • Follow your clients across all social media platforms. You will discover that they are eager to post important events, milestones, celebrations, new purchases, and sometimes–they grow silent. That is when you really need to check in on them.
  • Remind yourself of their goals, dreams, and objectives and keep these same ideas in front of them. By doing so you become known as someone who is worth doing business with.

Point: Frequent, intentional, client-centered contact is the only way to know if your clients are fine.

“These Are Fine!”
An IFP delivers excellent service and products when the clients’ expectations are met or exceeded. How do we know when we have met that test?

  • Customer retention will tell us. If we are a fee-based practice, are our clients willing to continue to meet with us and pay the fees?
  • Repeat business is key to knowing that we enjoy continued trust.
  • Measure the clients’ enthusiasm with surveys.
  • Take client complaints seriously.
  • Measure client satisfaction by percentage of new clients earned through referrals.
  • Track the number of attorney, accountant, and insurance professionals you get introduced to by satisfied clients.

Point: It is easy to delude ourselves that we are providing fine, excellent service and products. Our beliefs need verification.

“Fine Work!”
Nobody likes to have someone else look over their shoulder. Being inspected or audited is uncomfortable. The regulatory environment in which IFPs operate demands that we invite scrutiny. We need to know that our recommendations and financial reviews are both precise and accurate. Like scientists.

“Precision and accuracy are two ways that scientists think about error. Accuracy refers to how close a measurement is to the true or accepted value. Precision refers to how close measurements of the same item are to each other. Precision is independent of accuracy. That means it is possible to be very precise but not very accurate, and it is also possible to be accurate without being precise. The best quality scientific observations are both accurate and precise.”4

Think of the game of darts. The goal is to hit the bulls-eye (center) of a dartboard.

  • The closer that the dart lands to the bulls-eye, the more accurate the throw is.
  • If you throw two darts and they are neither close to the bulls-eye, nor close to each other, your throws are neither accurate, nor precise.
  • If all of the darts you throw hit the board very close together, but far from the bulls-eye, there is precision, but not accuracy.
  • If you throw four darts and all four land an equal distance from the bulls-eye, your throws are accurate, but not precise
  • If the darts that you throw land close to the bulls-eye and close together, there is both accuracy and precision.

Point: Your service and the products that you recommend must be both precise and accurate. Your clients’ goals and objectives are the bulls-eye. Helping them reach their goals is the way to measure precision. Their risk tolerance, budget, and willingness to accept loss are each to be considered as a measure of accuracy.

Summary
When I checked where else in the Old Testament the Hebrew word Daq, translated “fine,” might appear, I was surprised and delighted with what I found.

In the book of 1 Kings, chapter 19, we find the prophet of God, Elijah, fleeing for his life. (He discovered that it is dangerous to criticize the King and Queen). He hid in a cave. God said to him, “What are you doing here, Elijah?”4 Then, “Go out and stand on the mount before the Lord.” And behold, the Lord passed by. Theophany can be startling because it is not what we would expect.

  • First, a great and strong wind tore the mountains and broke in pieces the rocks before the Lord, but the Lord was not in the wind.
  • Second, an earthquake shook the ground, but the Lord was not in the earthquake.
  • Third, fire blazed in scorching heat and flame, but the Lord was not in the fire.

No, after the strong winds, earthquake, and fire, there came the sound of a low whisper. (Literally, a fine silence.) God showed His presence in near silence. As the story unfolds, however, fine Divine silence does not mean Divine inactivity.

As an IFP you need to keep the idea of fine silence, quiet presence in mind.

  • You are not required to be wildly entertaining, come across as brilliant, become pesky, or force your opinions on your clients. Let your presence be fine.
  • Your products do not have to be heralded as the best, the cheapest, the highest performing, the leading one of its kind, etc. You are aiming for fine.
  • You do not have to have all the answers. There’s a big difference between demonstrating your abilities and acting like a know-it-all. Your mastery of the concepts already exceeds those of the client and is likely just fine.
  • Don’t try to impress through technical speech. Unless you’re absolutely sure the client understands the meaning of an acronym or what a buzzword means, stick to simpler terms. Don’t use words in your written communication (emails, planning documents, and text messages) that you wouldn’t use during verbal communication (in person or on the phone). People find plain vocabulary to be just fine.
  • Bite your tongue. No client relationship is perfect, and disagreements with clients are bound to occur. Rather than responding angrily or defensively to a client who is being rude, take a step back, show self-restraint, breathe, and stay away from offensive statements—even if they’re warranted. Loud vocal volume or intensity is never fine.

“Drawing on my fine command of the English language, I said nothing.”—Robert Benchley

If you are already exemplifying all of the above, I believe you are already a fine IFP!

Footnotes:

  1. Exodus 12:15, The Holy Bible, English Standard Version. ESV® Text Edition: 2016. Copyright © 2001 by Crossway Bibles, a publishing ministry of Good News Publishers.
  2. Ibid, Exodus 16:13-14.
  3. https://www.merriam-webster.com/dictionary/fine.
  4. https://manoa.hawaii.edu/exploringourfluidearth/physical/world-ocean/map-distortion/practices-science-precision-vs-accuracy.
  5. 1 Kings 19:9, The Holy Bible, English Standard Version. ESV® Text Edition: 2016. Copyright © 2001 by Crossway Bibles, a publishing ministry of Good News Publishers.
  6. Ibid, 1 Kings 19:11.

Specialists Trading In Antonyms

When I was 11 years old, I inherited two things from a 14-year-old neighbor kid named Bill:

  1. A parakeet named Clancy
  2. A newspaper route

Bill asked me to take over his bird and his route because he and his family were moving away. I never cared much for Bill. My friends and I called him “Pigeon-toed Monkey Vomit.” He was a scholarly type, wore glasses, and was an only child. (I regret not being more kind to him.)

Clancy seemed lonely and led to the acquisition of a second parakeet. They pretty much hated each other. Neither of them lived more than a few years under my care.

The paper route, on the other hand, set me up pretty well financially. I had 80 customers spread across two sprawling neighborhoods divided from one another by a highway named Winola Road.

The Scranton Tribune was the morning newspaper I delivered to these houses. It cost $1.10 per week back then. When it came time to collect the payments, I walked the same route, but instead of it being 5:00 AM when I started out each morning delivering papers, I showed up at dinner time when I knew most people would be home.

Many, if not all, customers tipped me. That was how I earned money. Rather than give me a dollar and look around for a dime, many customers just gave me two one-dollar bills.

At the end of my second year, at age 12, I had $2,500 in my personal account at First Federal Savings. Being twelve, I walked into their building one afternoon and demanded to see all my money, in cash (specifically in $20 bills, stacked five to a pile, and in 25 piles) on the counter. The first teller balked. And a second. Then finally someone with some clout stepped up and met my demands.

All of this seems other worldly, like part of a story that only exists in history books or fiction. Consider these anomalies from life as we know it today:

  • Daily print newspaper, delivered by a young person walking alone in the predawn hours
  • Six editions of a daily newspaper delivered to the door for only $1.10 per week
  • Cash only transactions
  • People exchanging dimes
  • Commonplace savings and loan institutions
  • Face-to-face banking

Point: Like all things, financial behaviors, commerce, and money matters inevitably, and unpredictably, change over time.

Uprooted
A colleague of mine is planning to purchase rural space in order to create a study center where individuals can reconnect to nature, the land, and to the significance of farming in human life. He describes people as being “deracinated.” This adjective is defined as “uprooted” from one’s natural world, home, culture, or similar environment. “Uprooted” means to be ripped out of place.

In a certain sense, if we live long enough, we are all deracinated from the way things used to be. (Think of my paper route example.)

I am acquainted with many people serving Ukrainian refugees who are dispersed throughout Eastern and Western Europe.

One such person, Donna, is caring for these dear souls currently living in Croatia. I enjoy receiving her newsletters. She empathizes with the refugees, saying of herself (and all of us) “We are all living in exile, trying to find meaning in a place other than home yet longing to return.”

Donna writes: “Exile is when you live in one land, and dream of another. It gives a discomforting disconnect between our memories and our fundamental sense of who we are and the reality of a new identity we have to construct.”

Independent Financial Professionals (IFPs) Serve the Uprooted
Anna Helhoski wrote an article for the web site Nerdwallet, published Mar 7, 2023, and entitled Pandemic at 3 Years: How Our Financial Lives Have Changed.1 Consider her observations:

  • By August 2021, an estimated 2.4 million workers had retired early or unexpectedly since the pandemic began, according to research from the Federal Reserve Bank of St. Louis.
  • Retirement didn’t last long for some. Among those who retired during the pandemic, 27 percent of people returned to work because they simply needed a bigger nest egg to get them through their golden years, according to a report from Joblist, an employment listings and research site; 21 percent said they specifically returned to the workforce in response to inflation and the rising cost of goods.
  • Inflation peaked at 9.1 percent in June 2022—the highest rate in 40 years, according to Bureau of Labor Statistics data.
  • The car market turned upside down. Supply chain problems caused new car production to plummet, pushing more car shoppers to buy used vehicles.
  • The Fed raised the funds rate a whopping seven times in 2022.
  • We changed the way we bought homes. As quarantines lifted and interest rates fell, investors and new buyers made big moves, even snapping up properties sight unseen. Many homeowners opted to refinance to historically low rates instead of putting their homes on the market. Competition for limited inventory heated up, and bidding wars, waived contingencies and cash offers became commonplace.
  • While stuck at home, consumers weren’t spending the way they used to, and those who qualified received an infusion of cash via government stimulus checks. Those factors, combined with higher wage growth, led to historic levels of personal savings. Households accumulated $2.3 trillion in savings from 2020 through summer 2021, Federal Reserve data show.
  • Rates on savings accounts and CDs skyrocketed. The inflation partly caused by pandemic-related supply chain disruptions led the Federal Reserve to increase its federal funds rate multiple times. Banks and credit unions took their cue to raise rates.
  • Small businesses got a hand. From April 2020 to May 2021, over 11 million Paycheck Protection Program loans were issued to provide small businesses with emergency financial assistance, according to an October 2022 analysis of Small Business Administration data by NPR.

The financial lives of our clients no longer look like they did just a few years ago. Compared to when an independent financial professional (IFP) and a client historically met for the first time, almost nothing is what it was back then. Clients have literally been ripped out of place, uprooted, in terms of the physical location where they once worked, lived, traveled to, invested, bought cars, dined, or shopped.

In addition, if in a subtle way, people are even uprooted in how they view money. Today’s digital world influences how clients make financial decisions.

The increased use of electronic payments is changing how clients value money. The more removed they become from their money, the less they may think about how much they’re spending and saving.

Point: The IFP serves a clientele that, to a remarkable extent, works, spends, saves, and invests very differently than just a few years ago. They are financially deracinated.

Welcome the Antonym
For every word there are useful synonyms, other words that have the same, or similar meanings. Example: “Extirpated” is very similar to uprooted and deracinated.

On the other hand, for every word there are multiple words carrying the opposite meaning. These antonyms are the essence of how best to combat the impact of the word they oppose.

Here are some antonyms that are shared between “uproot” and “deracinate:”

  • Build, create, establish
  • Put in, help
  • Ratify, remain, leave alone
  • Welcome, plant, sow

IFPs Help Clients to Build, Create, Establish
Change is often unnoticeable. We roll into disruptions slowly, and pay little attention to what is different.

Post Pandemic there are many things that IFPs can help their clients to build or rebuild, including:

  • Build a realistic post-pandemic, forward-looking budget. Cost of goods and services has changed. Incomes and interest rates have changed.
  • Rebuild emergency savings. During the Pandemic many clients spent their emergency funds when their employment changed, they bought new houses because they were suddenly working from home, or they needed to find things to do outside (RVs, boats, ATVs, etc.).
  • Re-start any savings goals that were paused, such as retirement or college savings.
  • The old trends, frameworks, and financial objectives may no longer be applicable. An IFP can help clients create a renewed financial plan.

IFPs Can Put in, Help
IFPs are equipped to help clients take recovery one step at a time. The IFP can put the client in the right frame of mind. Oftentimes, the client has simply lost perspective. We know that primary-aged children experienced educational setbacks during the Pandemic. Similarly, small businesses, families, and individuals experienced financial setbacks. Fresh perspectives are required in order to:

  • Reacclimate to higher interest rates.
  • Properly assess the volatile stock market.
  • Grasp the impact of gyrating real estate prices.

IFPs Can Ratify, Remain, Leave Alone
Whenever a person survives an upheaval, a perilous moment, or disruption, they emerge wondering what is the same, what needs to receive attention, and what can be left as is. Consider the clients who are wondering if:

  • They still need the disability policies they own.
  • The life insurance coverage they have still meets the need.
  • The Last Will and Testament is up to date.
  • The named gardians for the children are still the right choice.

By sitting down with a seasoned IFP, they can receive reassurance, ratification, and confidence that the insurance owned is still the right coverage, the beneficiaries are still the correct designation, and that executors and guardians remain the proper selection.

Professional IFPs Welcome, Plant, Sow
Spring follows Winter. Bare fields are again resown with fresh seeds in order to grow another crop. On the other hand, for sustainable farming, crops must be varied and rotated.

Clients often need to have their hands held if they are going to make fresh starts, major changes, or significant goal adjustments. The IFP can welcome the clients to new ways of seeing their lives in the context of their financial circumstances. For instance:

  • After a period of no vacations or travel, and no eating out, many clients overspent in the period since the Pandemic in an attempt to make up for lost time. They need to contain the urge to splurge for that exact reason and get back to living and spending like they were prior to the Pandemic. They need to sow new spending habits. They need to rotate from spending to saving.
  • IFPS can welcome clients back to the financial wisdom of thinking long term, spending less than they earn, and keeping an emergency fund.

Summary
The financial lives of our clients no longer look like they did just a few years ago. As an IFP you serve a clientele that, to a remarkable extent, works, spends, saves, and invests very differently than just a few years ago. These clients are financially deracinated.

The antidote is the antonym.

Thinking back to Donna working with Ukrainian refugees living now in Croatia. To combat the feelings of displacement, and uprootedness, Donna led the children in a new direction: “In Croatia, we have delightful times offering craft projects and playing with outside summer toys. For a group that has known deep trauma, toys such as frisbees, beach balls, bubbles, and water squirt guns brought great joy, and physical exercise.”

In their financial lives many clients have never experienced the rapid changes of the last several years. There is a whole spectrum of actions that the IFP can urge their clients to take, and the IFP can be creative. While some clients may face some very hard choices, the experienced IFP is equipped with the skills to combat the feelings of uprootedness.

“One can remain more sure-footed by taking small steps, but perhaps achieve greater speed by taking bigger steps. Of course, one also runs the risk of setting out in a completely erroneous direction. Surely the important thing isn’t the length of our steps, but that the objective is clear.” —Angela Merkel

The seasoned IFP can help clients regain their footing and reorient themselves to the proper objectives. All it takes is a handful of antonyms.

Footnotes:
1. https://www.nerdwallet.com/article/finance/what-did-the-pandemic-change.

Time To Realize The Power

Many years ago, when I first started selling life insurance, I often found myself with hours of unassigned time on late weekday afternoons. I frequently spent the time in the public library reading. (I was a little lazy in the beginning of my career.) It did not take long before my new bride, herself a hardworking first grade teacher with as many as 30 kids in her class, began innocently asking, “How was your day?”

Soon, just anticipating her question caused me to step up my game and make better, more productive use of my time. There was power in her ability to influence my behavior. Since those early days, my wife has helped me grow in innumerable ways and is responsible for my maturing in every direction possible. (She’s nowhere near done, however!)

“Anyone who thinks that they are too small to make a difference has never tried to fall asleep with a mosquito in the room.”—Christine Todd Whitman

Point: We can have an effect on other people in ways that exceed our comprehension.

Self Motivation
In his comprehensive overview of moral philosophy, The Theory of Moral Sentiments (1759), Adam Smith introduced the concept of the “impartial spectator”—an imagined third party who allows an individual to objectively judge the ethical status of his or her actions. Smith believed that we judge ourselves only by imagining what an impartial spectator would approve or disapprove of in our conduct. Underlying this idea is the fact that we have a natural desire to be loved and we dread receiving blame.

Whenever I endeavor to examine my own conduct…I divide myself as it were into two persons: and that I, the examiner and judge, represent a different character from that other I, the person whose conduct is examined into and judged of. The first is the spectator…The second is the agent… (TMS III. 1.6)

Once we grasp the idea of an indwelling impartial spectator, believing that we are capable of judging ourselves, we construct a new delineation between being praised and being praiseworthy, being blamed and being blameworthy.

There are many limitations of this notion, but primary among these is the fact that such a system, if it existed, can only be applied retrospectively. It is unwieldy and not useful for making prospective decisions.

Point: As human beings, we have a conscience, we are aware of social mores and norms, and we have a sense of what is best, or just good, as well as what is unconscionable, or just out of bounds. Nevertheless, we need others to keep us accountable.

Time to Realize the Power
An independent financial professional (IFP) has an impact on a person or family or business whether or not he or she writes any insurance, invests any funds, or earns any fees. In fact, an IFP can have incredible impact on client behavior without actually meeting regularly or in person.

According to Investopedia, “Advisors’ real value lies in managing client behavior. Their mission is to keep their clients focused on their goals, even as their short-term objectives may change.”1

On the Web Site for Michael Kitces, guest post writer Derek Tharp wrote the following: “The unique power of the human-to-human connection means clients can achieve better behavior, change outcomes, with a financial advisor than they may be able to achieve by themselves or through the use of technological tools. Because when a human is involved, we often have few options for totally avoiding the unfavorable perceptions we think others may have about us if we don’t follow through on our goals…which can be highly motivating. In the case of technology, while it may provide useful behavior change reminders…we can always just turn off the technology and feel very little guilt. But it’s far harder to just ‘turn off’ an existing relationship with another person.”2

This is noteworthy. The iPhone in the client’s hand is capable of doing innumerable things to help clients to better organize, maximize, multiply, and research nearly everything. Yet, an IFP has even more power!

“How wonderful it is that nobody need wait a single moment before starting to improve the world.”—Anne Frank

At the outset of the COVID-19 Pandemic, Harvard Business Review published an article addressing the changes that remote work would likely have on productivity. The article stressed the importance of human-to-human contact.

“Social psychologists have known for decades that people are motivated to work harder when others are watching. When they are observed, people run faster, are more creative, and think harder about problems. These effects occur for several reasons. For one, people want to impress others through their performance, and thus try harder. Anyone who has ever stayed in the office late when their boss was still around experienced this phenomenon.”3

When a client engages the services of an IFP, it is with the intention of upgrading every aspect of a financial life. Intuitively, clients know that a certain degree of accountability is necessary in order to achieve desired outcomes. They expect this accountability to come from personal interactions.

If the presence of an IFP has a fundamental effect on clients and what they do or how they behave, it also impacts how they think about their actions. Somehow, what a client does or doesn’t do magnifies in importance just because an IFP is liable to ask questions in their next meeting.

“When others are watching, people include others’ perspective into their own perspective. The dual perspective then magnifies their work, because investing time, energy, and effort into something that feels big and meaningful is much more motivating than investing in something that feels small. The magnification of one’s work increases one’s motivation to work more and harder.

People magnify what they do not only when they are observed, but even when they merely feel observed.”4 (Author’s emphasis)

A Brief Physics Lesson
We should not be surprised by any of this because this is how the world works.

In physics, there is something called “The Observer Effect.” A disturbance takes place when someone observes a closed system simply by the act of observation.

“This is often the result of utilizing instruments that, by necessity, alter the state of what they measure in some manner. A common example is checking the pressure in an automobile tire, which causes some of the air to escape, thereby changing the pressure to observe it.”5

“The Observer Effect is the fact that observing a situation or phenomenon necessarily changes it.”6

Point: Scientists make extreme efforts to eliminate the impact of their own presence on whatever they are studying. Human beings give off heat, radiation, air movement, carbon dioxide, bacterial contaminants, oils, moisture, and other factors that impact measured outcomes. Our scientific equipment similarly contaminates the objects under study.

The Hawthorne Effect
One subset of The Observer Effect, related to the study of human behavior, is The Hawthorne Effect. Many decades ago, a study was conducted at a factory named Hawthorne Works. The study analyzed the change in human behavior, especially productivity, by changing the amount of light at the Hawthorne Works and measuring its impact on working practices. Greater lighting led to temporary increases in production. Why? Greater lighting made everything and everyone more visible.

Applications of lessons drawn from The Hawthorne Effect are incorporated into many activities aimed at influencing the behavior of innumerable, randomly selected people whose actions occur simultaneously, or consecutively.

One such application is called the “Red-Light Camera Program.”

“In a Red-Light Camera Program, a camera is installed in a location where it can take photos or video of vehicles as they pass through an intersection. City employees or private contractors then review the photos. If a vehicle is in the intersection when the light is red, then a ticket is sent to the person who registered the vehicle.”7

The idea behind these programs is to reduce cross-street collisions. Theoretically, drivers should fear the possibility that they will be fined and will therefore be more likely to stop at the light, consequently lowering the number of accidents. And in fact, evidence clearly shows that Red-Light Camera Programs are effective at decreasing the number of vehicles running red lights.

Independent Financial Professionals and The Observer Effect
“You may find that making a difference for others makes the biggest difference in you.”
—Brian Williams

IFPs provide human-to-human accountability, a key value-add that will be hard for computers and AI to ever mimic.

“When a human is involved, we often have few options for totally avoiding the unfavorable perceptions we think others may have about us if we don’t follow through on our goals.”8

Application of The Observer Effect for IFPs

  1. When an IFP assigns expectations of a client, ones that are SMART (Specific, Measurable, Attainable, Relevant, and Time-based) the client can expect to later account for the results. This will change the trajectory of the client’s behavior.
  2. An IFP can consistently remind clients that each goal aligns with what the clients want to accomplish. Failure of the clients to follow through on their responsibilities will cause them to not achieve what is important to them.
  3. An IFP can help clients wisely assess their behavioral motivations by evaluating the ways in which the clients’ various social groups that they belong to influence their spending, savings, and investing habits—positively or negatively.

Practical Ideas:

  • Record and send a video of you asking the clients to remember their goals and to inquire as to what the clients have been doing.
  • Set up an online group with multiple clients to exchange their progress on their goals and to keep each other accountable.
  • Take pictures of your client meetings and share the photos with clients from time-to-time, to add the element of human observation.
  • Make a growth chart for clients of their goals that they want to improve on and ask them to share their progress.
  • Send a Post-It note with the word “Done” on it and attach it to a copy of the client’s financial goals or milestones that have been achieved.

Summary
“What you do for yourself dies with you when you leave this world, what you do for others lives on forever.”—Ken Robinson

The role of an IFP provides fantastic opportunities to demonstrate patience, humility, and some humanity. It also is a privileged position with the power to change human behavior.

The power is more potential than kinetic. To be unleashed, the power to modify the behaviors of clients must follow the normal activities of a professional advisor:

  • Preparation: Do the work beforehand. Conduct a thorough client analysis before each meeting, do the research, get a list of questions together before the appointment.
  • Client Meetings: Demonstrate care and respect for people’s time through prepared agendas, keeping the meeting on track, and ensuring action steps with responsible parties.
  • When Real Life Strikes: When a client faces a difficult personal situation (illness, child/elder care), respond quickly, stay appropriately in touch, follow-up with sensitivity.

By acting in this fashion, an IFP can be far greater than Smith’s “impartial spectator.” Indeed, the IFP can exercise astounding power to affect the clients’ behavior. The clients need this. Even if they are patently unaware of their need.

“I’ve learned that you shouldn’t go through life with a catcher’s mitt on both hands. You need to be able to throw something back.”—Maya Angelou

Here’s encouraging you to Pitch with Power!

Footnotes:

  1. Investopedia https://www.investopedia.com › ho…How Understanding Client Behavior Helps Financial Advisors.
  2. https://www.kitces.com/blog/how-financial-advisor-human-connection-positive-behavior-change-accountability-partner/.
  3. https://hbr.org/2020/05/we-work-harder-when-we-know-someones-watching.
  4. Ibid.
  5. The Observer Effect | IEEE Conference Publication – IEEE Xplore.
  6. Hawthorne effect – Catalog of Bias.
  7. Red Light Cameras May Not Make Streets Safer – Scientific American.
  8. https://www.kitces.com/blog/how-financial-advisor-human-connection-positive-behavior-change-accountability-partner/.

Eliminate The Impossible

Sitting across from me on a veranda at an African College was a young woman in her second year at the university. She has a warm smile and a slightly shy aura. Her English is good, and her accent is understandable. (A plus because my hearing is not great.) I will call her “Missy.” Missy has a hard story to relate and only after I ask several strategic questions are we finally getting to truly important matters.

Missy has two older sisters. They are seven and five years older than her respectively. Both are married and live in different villages. Early in their marriages both invited her to stay with them. On different occasions, and when her sisters were out of the houses, both of her brothers-in-law individually raped Missy. Horrific experiences. Blood boilingly awful. To add insult to injury, Missy’s sisters deny that these incidents ever even happened. “My husband would never…”

All of this is told through tears, but with strength that inspires.

Missy’s underlying question is, “How can I move forward in life?”

My answer: “First, identify what is impossible.”

Arthur Conan Doyle’s character, Sherlock Holmes, said, “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”

This approach is invaluable to solving mysteries, but also has application in many directions, including dysfunction within families (and as we will see, in financial services).

Missy faces a dilemma:

  • Either she can grow bitter, bear resentments, and nurture hate toward her attackers and her sisters; or,
  • She can forgive her attackers to their faces and forgive her sisters to their faces for denying what happened.

I ask, “Missy, we cannot change the past, so what do you want in your future?”

“I desire to have my family around me and do not want to see it all broken apart.”

I tell her that choice number one—sitting in bitterness, unforgiveness, and hate—will make her dream impossible. Alternatively, extending grace (unmerited) and forgiveness (undeserved) is the path forward to achieve her desires. (This option is unnatural and may require God’s help.)

Point: When faced with hard issues, challenges, and difficulties, the way forward begins with discovering, then eliminating, the impossible.

Financially Impossible
The United States is $34 trillion in debt. Getting out of debt seems to me to be undeniably impossible. But I digress.

As an independent financial professional (IFP), you meet innumerable people whose financial situations appear extremely bleak. In order to give them practical, executable action steps, you must first eliminate the impossible.

Case Study #1:
You get introduced to Darrin, age 45. He is an extroverted guy with a nervous demeanor. His wife Susan, age 46, is the friend of one of your clients and, having heard of the good work you did for her friend, contacted you requesting your assistance with her own family’s finances.

You look around. Nice four-bedroom house on a broad wooded property. Two late model cars on the circular driveway. “Must be doing pretty well,” you think to yourself.

You ask an opening question: “Who has been your financial advisor?”

“We have never used one,” says Susan. “Neither wanted nor needed one,” says Darrin. (Yellow caution flag.)

“Of the financial institutions you have worked with, which has been your favorite?”

Susan looks at Darrin, who says, “I really don’t trust any of them.”

“Exactly how have they disappointed you?”

“Too many restrictions,” says Darrin. (Yellow caution flag.)

You decide to switch tactics. “Tell me about your financial goals.”

Susan: “We want to retire while we are still young to a state with a warmer climate and near beautiful water where we can attract visits from our grandchildren!”

Darrin: “Retirement. That will be the day.” (Big red flag.)

After asking Darrin a series of questions designed to peel back the layers, you and Susan are simultaneously introduced to three pieces of bleak news:

  • Darrin has nothing saved for retirement.
  • Darrin has been a compulsive gambler. In fact, he cashed in their CDs before the end of their terms and gambled away those monies. He borrowed funds from his 401k by finagling his answers to the questions as to the use he intended to make of them.
  • He took lines of credit against the house over and above the mortgage.

The Impossible: Retiring at a younger age and purchasing a beachfront condo.

The probable: While most IFPs recommend that young people save 10 percent to 15 percent of their incomes toward retirement, they also know that people in their 40s earn 60 percent more than they did in their 20s. People in their 40s and even 50s who are not on track can often catch up by saving a larger percentage of their income. Because Darrin earns a strong income, and the combined total loan payments are less than 30 percent of his income, there is a strong possibility that Darrin and Susan can get on track to retire in Darrin’s mid-to-late sixties and be able to afford a place, while maybe not on the beach, perhaps four blocks from the beach. Regaining financial footing will require the following:

  • Counseling for Darrin’s gambling addiction.
  • Great accountability.
  • Transparency.
  • Susan acting as a co-signer on all accounts.
  • Significantly increasing the savings from each month’s income.

Unsurprisingly, forgiveness and grace will also be required!

Case Study #2:
You were recently introduced to Pickleball. You had no idea how popular the game had become until you heard so many people talking about it. At the invitation of a neighbor, you tried it out. And loved it! Your enthusiasm led you to join a kind of league. Now you meet innumerable people who are like-minded and have equivalent skills.

One such pickleball fanatic is Robert. At age 42 he seems no older than…age 62. He is not in Olympic shape, let’s leave it at that. As a successful IFP you know when to begin asking probing questions.

“Tell me about your family,” you say.

“Well, which one?” he responds. Letting you absorb this in a moment of awkward silence, Robert says, “You see, Debbie and I raised two children, and they are on their own, married, and beginning their families. They are fully fledged!”

You mean it when you say it, “That is great news! Congratulations!”

Robert continues. “Then, the unexpected happened. We met a young woman desiring to end the pregnancy in which she was carrying twins. We urged her not to go through with the abortion she was contemplating. She agreed upon one condition. Debbie and I would have to adopt, and raise, her twins.”

“Ufda,” you say. (Your deceased Norwegian parent still impacts your life!)

“Well, we are delighted, actually, and we feel like we have brand new purpose,” says Robert.

“If you don’t mind me asking,” you hesitantly begin, “How has this impacted your financial lives, like retirement goals?”

“Most of it went out the window!” Robert does not look unhappy. “I will be 60 when the twins graduate from high school and start college.”

“Well, I already used up my Ufda.” Then you venture into the wild unknown, the land of no return. “Do you still own life insurance?”

Now Robert looks serious. “You know, I don’t. We had buckets of term life insurance that we let lapse when our kids were launched. I guess I should consider this. Do you sell life insurance?”

“Sorry, no,” you lie. “I mean, I secure life insurance for clients that need/want it, but I am not a salesman per se.”

“Gotcha,” replies Robert.

You and Robert meet again later, this time not on the Pickleball court. You discover that in addition to carrying a few extra pounds, Robert has Type 2 Diabetes. And, he has a family history of heart disease.

You secure some quotes for 20-year term from a few leading carriers. The rates are something like ten times what he paid prior to dropping his long-held policies.

“These premiums are a bit off-putting,” you observe. “Tell me. Would you have agreed to adopt the twins if you didn’t think you could provide for them?”

Robert looks intrigued. “Of course not.”

Taking a deep breath you ask, “Then you are committed to doing so, even if you die prematurely?”

Robert nods. “It would be impossible to do so unless I owned sufficient life insurance, wouldn’t it?”

“Yes,” you say, and then, “It’s the impossible we want to eliminate first. Now that we have done away with the impossible, we can investigate what’s possible.”

Point: Most family and individual financial crises are partial failures, not complete; financial stress usually involves temporary setbacks and not permanent. This is the basis of something being probable, and not impossible.

Financial A Fortiori
In philosophy, there is something called an a fortiori argument. It is defined like this: “If something less likely is true, then something more likely will probably be true as well.”1

Example: “Jesus used an a fortiori argument when He said, ‘If you, then, though you are evil, know how to give good gifts to your children, how much more will your Father in heaven give good gifts to those who ask Him!” (Matthew 7:11) Jesus’ point hinges on the phrase how much more.”2

As an IFP you encounter potential clients who cling to an idea even if it is indubitably false. One such idea is the amount of life insurance that someone should own in order to be a prudent provider for his or her family.

Case Study #3:
A successful female executive says, “I think about $500,000 is the right amount of life insurance given our circumstances.”

Facts:

  • She makes $112,000 per year.
  • She has a husband who is on disability from the Police Department. He gets a minor monthly stipend. He is on a prescription for a neurological treatment that costs in excess of $1,200 per month out of pocket.
  • There are two children aged 13 and 10. They are each in the “Fast Track” program at their schools. They expect to go to college.
  • The kids’ combined private school tuition (partially subsidized by the school in honor of her husband) is still $1,200 per month.
  • The monthly mortgage payment is $1,150 and the outstanding loan balance is $395,000.
  • Total household monthly budget for basic expenses is slightly less than $6,000.
  • They have $28,000 in their savings.

As an IFP you could make an a fortiori argument along these lines:

“If you died without life insurance your family’s savings of $28,000 would be used up in less than six months. Where would that leave them? On the other hand, if you died owning $500,000 of life insurance, your family’s expenses would be covered for less than seven years. If leaving them destitute after five months is unacceptable, how much more acceptable is leaving them destitute after seven years?”

The a fortiori argument in this case is, “If it places your family in an impossible situation in only five months without life insurance, is delaying an impossible financial situation by seven years more acceptable?”

There is a stronger use of a fortiori argument. “If you believe that $500,000 is ample, and your family could struggle by, then how much better would it be for them if they had $1,000,000?”

Point: In financial services we benefit our clients when we first identify, and eliminate, what is impossible, and second, by using a fortiori arguments, helping them see what can be possible, even probable, and in fact, preferable.

Summary
An IFP’s responsibility is to root out the impossible and to make plain the probable. In essence, as an IFP, to best help your potential clients who are currently in financial crisis, “Identify what is impossible.” Then eliminate that.

Next, employ the very useful skill called a fortiori argument in order to persuade clients regarding what is truly possible.

“The ancient Romans utilized argumentum a fortiori, ‘argument from strength.’ Its logic goes like this: If something works the hard way, it’s more likely to work the easy way. Advertisers favor the argument from strength. Years ago, Life cereal ran an ad with little Mikey the fussy eater. His two older brothers tested the cereal on him, figuring that if Mikey liked it, anybody would. And he liked it! An argumentum a fortiori cereal ad.”3

Much of the procrastination that occurs in families putting off financial planning decisions stems from the fact that the waters are murky. There are currents of impossibility flowing just below the surface.

Financial issues are usually not completely beyond solving, and rarely final.

Sherlock Holmes: “It may be that you are not yourself luminous, but that you are a conductor of light. Some people without possessing genius have a remarkable power of stimulating it.”4

I say, regardless of what your clients believe about their circumstances, shine a light on the possibilities, and that will have inestimable consequences in their lives and yours.

Footnotes:

  1. https://www.thoughtco.com/what-is-a-fortiori 1689072#:~:text=Examples%20and%20Observations,probably%20be%20true%20as%20well.%22.
  2. https://www.gotquestions.org/a-priori-posteriori-fortiori.html.
  3. “Thank You for Arguing: What Aristotle, Lincoln, and Homer Simpson Can Teach Us About the Art of Persuasion,” by Jay Heinrichs, 432 pages, Kindle Edition, First published February 27, 2007.
  4. “The Return of Sherlock Holmes,” by Arthur Conan Doyle, Sherlock Holmes Series, Publisher: Book-of-the-Month-Club, Release Date: January 1994, ISBN: B000B11TGC.

Living In“If, Then” Sentences

In the last five years I have become quite involved with the Ukrainian people. I have traveled to Ukraine numerous times and spoken to a few dozen audiences of university students in many cities. In March 2023, shortly after the one-year anniversary of the Russian invasion, my team and I conducted an online seminar (for some seventy students) entitled, “Prepare Yourself for Victory.”

The simple outline for our presentation was as follows:

  1. You must proactively prepare yourself for victory.
  2. You must somehow continue living productively during war.
  3. You need to take steps that will help you move forward.
  4. You are needed by others to find hope and comfort in these dark times.

The purpose behind this seminar was to break the stranglehold of inertia. Many university students in Ukraine are understandably neutralized. How can they imagine moving ahead in these dark days?

I have never lived in a country under military siege. But, in 2010 I was diagnosed with cancer. Bladder cancer. It was life-threatening. I had two years’ worth of treatments. At the time I read author/speaker John Piper’s booklet entitled Don’t Waste Your Cancer. He wrote it when battling prostate cancer. The message: Make the most of your cancer. Redeem it. Turn it for good. Because of that booklet, I began engaging with other patients in the hospital waiting rooms and doctor’s offices. Many of these dear people were wringing their hands in anxiety and hopelessness. It was easy to sit beside them, place a hand on their shoulder, and offer some words of hope and encouragement. I was in the presence of people I would never otherwise meet because of my cancer. I was committed to not waste the opportunity that my cancer gave me.

Moral of the story: Rather than wait until I was cancer-free, I began working right away on improving my life and helping others.

If, Then
Like the Ukrainian students I have spoken to, and many people I met who were dealing with cancer, it is easy for any of us to get stuck, and to put progress on hold until peace or healing happens. It is tempting to wait until the dust settles. The idea is to simply postpone growth and the extension of ourselves. “If” we return to normalcy, “then” we will move upward and onward.

Point: People living in negative circumstances can fall prey to “If, Then” thinking. They live in an “If, Then” sentence.

On the other hand, human beings can act exactly the same way in positive circumstances. Something great is happening or will soon. Is it best to wait until afterward before investing more time and energy into anything now?

Examples:

  • You have a much-needed beach vacation coming in two weeks. At the same time, just today, your manager finally gave you approval to launch the initiative you proposed. Do you wait until you come back from vacation, refreshed, before starting it?
  • You propose marriage, the proposal is accepted, and a wedding date is set. Do you stop dating?
  • In a year you and your spouse will be empty nesters. You think maybe you will downsize afterwards and perhaps relocate to a warmer climate. Should you fix the dripping faucet, repair the cracked ceiling, and start now getting the house ready for sale?

Point: The easiest thing for a human being is to put off doing things until tomorrow. The easiest thing to believe is that everything is, or will be, fine.

Financial Services Is All about If, Then
When I first got into the life insurance industry, my friends found me a bit morose. I was incorporating the notions of death, disability, and chronic illness into my conversations. Who else but independent financial professionals (IFPs) major in the miseries? “What will you do when the market suddenly crashes?” “What if you were to be hit by a truck coming home tomorrow?” “What if your husband had a stroke and was unable to return to work?”

Many financial services products address things like crisis, tragedy, illness, disability, and death.

“You should consider owning life insurance. If you die… then…”

“Your family will be grateful if you purchased long term care coverage. If you get chronically ill… then…”

“Your biggest asset is your ability to earn an income. If you get disabled… then…”

Point: Financial services is an industry based on helping people survive the unforeseen and unexpected. The “If.” We urge people to prepare now to have funds available “Then.”

What about the in between?
Say an IFP successfully places a sizable life insurance policy, and the family is protected from financial ruin should the insured die. Everyone feels better. Nothing else needs to concern us until “Then.” Right?

Perhaps an IFP assists a couple with their retirement strategies. Accounts are established, automatic monies are allocated, and selected investments are begun. Easy peasy, lemon squeezy. Nothing to do but watch and wait. Right?

What about the “Now?” IFPs offer more than the “Then.”

Financial Planning Is Like an International Flight
In my work with Global Leadership Partners, I take international flights every Fall and Spring. After all the hassle and commotion of Security, Passport Control, queuing to board, finding a place for the carry-ons, and meeting and greeting seatmates, I am ready to sit back and relax until we land ten hours from now.

Not so fast. There are the required announcements. I need someone to tell me again about seatbelts, oxygen masks, exits, emergency landings, and floor lighting.

Finally, we are in the air. Ahh. Suddenly, around 10,000 feet, more announcements. I am offered inducements to acquire another credit card. I learn what I am missing by not having linked to in-air Wi-Fi.

“Overhead lights will be dimmed. If you need a reading light use the lamp above your seat.” Finally!

Not so fast. Here they come with water. Again, a round of drinks and snacks. Lights on, and a meal is served.

A long span of time passes in darkness without disturbance. Then the pilot comes on, “I am turning on the ‘Fasten Seatbelt’ lights because turbulent air is reported to be ahead.” This is repeated by the flight attendant.

Sometimes, a request is made for anyone with medical training to attend to an ill passenger.

Someone uses the wrong bathroom, and we are all reminded to use those provided in our own cabins.

Lo and behold! Another water service followed by a final meal and a plethora of announcements.

Point: The “If” in my head was a successful take-off. The “Then” is the anticipated safe landing. I think that is all there is to it. Not so fast.

No Such Thing as Autopilot in Financial Services
Aaron Vickar and C. Brant Steck, CFP, wrote: “Many who own permanent life insurance think of their policy as operating on autopilot, and they assume it will automatically take them to their desired destination. Unfortunately, unlike airplanes, there is no such thing as autopilot for life insurance, and permanent life insurance policies (whole life, universal life, variable universal, indexed universal, etc.) require regular monitoring to ensure that they are doing what you intended them to do.”1

This is true. The principle applies to term life insurance too. And disability income protection. And LTCI. And retirement plans.

As annoying as all the interruptions are on long flights, they are essential, or at least beneficial. I know IFPs who resist contacting existing clients because they sense that any contact with them is seen by the clients as an interruption. (They can imagine their clients, window shades drawn, sitting back with eye shades and noise-canceling headphones.) Why should they disturb their clients? After all, the policies are in place. Investments are growing nicely.

My advice? Get over it. Stay in touch! Keep everyone current on what they own, the track they are on, and keep an eye on the destination. Will it be reached? Give assurance. Thank them for the trust they placed in you. Let them know of new opportunities. Better options. Offer enhancements.

Point: Like a long flight, financial planning is for a great stretch of life. Checking in is respectful. Essential. (Too much checking in may be a little annoying.)

Summary:
Consider the wisdom calling to us from the First Century:

“Come now, you who say, ‘Today or tomorrow we will go into such and such a town and spend a year there and trade and make a profit’—yet you do not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes.”2

It is foolish to count exclusively on expectations we entertain for all our tomorrows.

Lesya Ukrainka, one of Ukraine’s best-known poets and playwrights, once wrote: “He who has not lived through a storm does not know the price of strength.” (Her face is on the 200 Ukrainian hryvnia paper currency.)

People generally plan for storms but many have not yet faced them.

We are in an industry that anticipates storms coming at uncertain times in unpredictable ways. Storms have happened on my flights.

  • I have experienced fellow passengers dying on board.
  • I have been on planes forced to land due to equipment failure.
  • I have experienced nausea aboard the flight and needed assistance.
  • I have trembled and been vexed regarding tight connections and sought reassurance from the flight attendants.

As an experienced IFP you have seen the “Then.” Clients have died. Death claims have been paid. People you served are living on income from the DI policies you sold. You have seen the price of strength because you were there when others suffered.

Point: Clients rely on you to use the experiences of other clients you have helped in times of crisis. They count on you to make sure they are really going to be okay—“Then.”
That is, “If” you are willing.

Footnotes:

  1. “Autopilot: Great for Airplanes, Not So Great for Your Permanent Life Insurance Policy,” by Aaron Vickar and C. Brant Steck, CFP, https://www.thestreet.com/retirement-daily/your-money/autopilot-great-for-airplanes-not-so-great-for-your-permanent-life-insurance-policy.
  2. James 4:13-14, The English Standard Version (ESV), published in 2001.

Free Stock photos by Vecteezy