THE COST OF GETTING ADVICE FROM YOUR BANKER

A banker said she proactively connects people in her network (even non-customers). That's generous and different. Or so I thought until two bankers from other brands made the same pledge. Maybe they read the same marketing-for-bankers magazine? Each made notes but none of the three followed-up. That tip might be in next month's issue.

How objective are referrals from your banker?

Outside Services

If you're asking about services the bank doesn't provide, you may get reasonable advice. Say you're looking for an honest mechanic.

However, you're limited to your banker's network and can expect a bias towards their clients. What if they don't know much about mechanics? There's also the fear of making a bad recommendation. Saying nothing is safer but does little to help you.

Does the banker have enough conviction to make the recommendations public (e.g., a testimonial on the mechanic's website)? Unlikely. Bank policies probably prohibit this anyway. It's also bad business since the banker's other mechanic clients won't be happy when a competitor gets endorsed.

Affiliated Services

Your mechanic may know that Pirelli tires are perfect for your vehicle but if they only stock Michelin, guess what you're getting?

Banks are like department stores. If you're asking about services that another part of the bank could provide (e.g., investing or insurance), guess where you'll get referred? It seems that bankers are required to make internal referrals even if they know of better options outside. These employees may even have mandated targets internal referrals. Who knows?

A banker who specializes in manufacturers may not have a diverse network. A banker who deals with clients in a geographic area loses site of better resources elsewhere.

Your Risk

One bank may seem like the rest. Even if you perceive and value the differences, moving accounts is a hassle. Ah, inertia. The more products you purchase from the same organization, the more painful to move. If you have your banking, credit card and line of credit all at the same place, you're likely to stay. Your banker knows this.

You risk getting taken for granted, though you may get small discounts as a reward for your loyalty.

We use different institutions for our savings account, chequing account, Line of Credit, credit cards, safety deposit box, RESP and investments. This diversity wasn't entirely intentional and may seem extreme. We lose out on bundling discounts but get to pick what seems best in a category. This a transactional approach: we're not building relationships.

Other Ways

You could ask your connections on Facebook (or other preferred social network) for advice. You could ask in a forum. A web search might lead you to a recent comparison of choices.

Finally, you could ask a banker from a smaller bank which doesn't offer many affiliated services.

Links

• Are we placing too much faith in banks' advice? (Globe & Mail, Nov 7, 2012) new
• Sales pitch often buried in bank's advice (Globe & Mail, April 6, 2011) new
• The car mechanic: do you pay for effort or results?
• How referrals lead you astray: the big lesson from a wet basement
• The RBC Canadian Open and unintended consequences
• Annoying pest or welcome guest? The Do Not Call list.
• Image courtesy of Miriam Writer (US)

Podcast 110 (3:59)

direct download | Internet Archive | iTunes (new)

PS We once had a personal banker who sent us a coffee basket. She dumped us when we wouldn't buy enough services. How proactive.

YOU MUST SEE THE TIM BURTON EXHIBIT AT TIFF

You wouldn't normally compare Tim Burton with Picasso and Matisse. Yet only they drew larger audiences the Museum of Modern Art in New York City.

Popular didn't mean great but here it does. The Tim Burton Exhibit is currently in Toronto at TIFF until April 17, 2011.

Tim Who?

Tim is primarily a movie director. Even if you're not familiar with him, you've probably seen at least of one of:

• mainstream: Batman Returns, Mars Attacks!, Pee-wee's Big Adventure
• quirky: Beetlejuice, Big Fish, Corpse Bride, Edward Scissorhands, Ed Wood, Frankenweenie, Vincent
• adaptations: Alice In Wonderland, Charlie And The Chocolate Factory, James And The Giant Peach, Sleepy Hollow, Sweeney Todd, The Planet Of The Apes

I've probably seen all his movies but didn't know much about him. I now have a deeper appreciation of Tim's accomplishments and abilities. The exhibit made me a fan by showing his art in the course of a couple of hours. Much of the information is probably available online. Yet a curated exhibit has much more impact.

Growth

Tim has been honing his skills all his life. How wonderful that he kept copies of things he did in high school (or maybe his parents did the archiving). There's a blotter with his doodling. He listed over 50 titles for possible movies. He enumerated the 13 forms of humour he'd seen. He penned a variation of 'Twas The Night Before Christmas. He wrote the unpublished Zlig children's storybook and got a written response from Disney (interesting but too similar to Dr. Seuss). And that's just as a teenager.

When you see his range of movies, what can you say? As with Roald Dahl, he manages to appeal to children and adults. His material is PG-rated.

Connections

Tim and Walt Disney seem like an odd pairing. The exhibit clearly shows the connection. Tim was accepted at CalArt, which Disney started. He's continued to work with some fellow students (such as a classmate who made 3D models).

I didn't realize the important role of poetry in Tim's life. His handwriting is surprisingly readable. He wrote to Jonny Depp about including a funny line about cannibalism in Charlie And The Chocolate Factory. Johnny agreed. That note gives insight into Tim. He wasn't commanding. Instead, he asked Johnny if the line would fit with his character of Willy Wonka and add to the film. Here's the final version:

Everything in this room is eatable, even I'm eatable! But that's called cannibalism my dear children and is in fact frowned upon in most societies. — Willy Wonka

I didn't realize that Tim is also an artist. He draws very well. He's had a dark sense of humour throughout his life. Stainboy is an interesting six part Internet series that spun off "tragic toys for girls and boys".

When you see Tim today, you can see the path he's taken. What a pleasant surprise that's he's also commercially successful and has such a diverse following.

If you like Tim's work, do visit the exhibit.

Links

• Tim Burton Exhibit: MoMA, TIFF
• Time Burton: Major career retrospective (artabase.net)
• Multimedia from The Tim Burton Collective
• Tim Burton movies (IMDB)
• Be like Tim Burton (marketing tips)
• Reasons to stop avoiding New York City
• The hidden costs of air travel
• Romeo and Juliet photo by Keith Chu

Podcast Episode 109 (4:29)

direct download | Internet Archive page | iTunes (new)

PS After your visit, do share your thoughts.

MAILBAG: CAREER ADVICE FOR STUDENTS (ACTUARIAL AND OTHERWISE)

Here's one of the recent emails asking for help (with the name changed).

Hello Mr. Sharma,
My name is "Pat Smith", and I am a high school senior that is considering a career in actuarial science, because of my interests in math, finance and economics.  Up until now, the only information that i have found on actuarial science has been through websites and brochures.  Even though this information is useful, it's not the same as seeing what an actuary does in person.  I would like to job shadow an actuary so I can witness the daily activities that an actuary performs and see if i can picture myself doing the same 20, 30 or 40 years from now. Could you please help me find such a placement for the summer?
Best,
"Pat Smith"

Is job shadowing a disguised request a summer job using the Puppy Dog Close?

Time is expensive and competition is fierce. Can you afford to have someone shadow you day after day? What would you get for your investment of thousands upon thousands of dollars? If the student were a potential hire, then there may be value.

There are probably HR policies against letting strangers in the building. Wouldn't you need to provide an access pass or some other form of identification? There may even be liability issues. Does the shadow get the employee discount in the cafeteria?

What would colleagues, staff and superiors think? How do you decide who is permitted to job shadow? If there are criteria, maybe there's a better choice who can help the company grow.

The Reply

Here's my reply.

Hi "Pat". You have an interesting idea but watching an actuary work has limited value. There are many different roles and many different levels. The work varies during the course of the year and by the size of company. There are major privacy and confidentiality issues that limit what an outsider can see. 

Suppose you love what you see; you may not be doing that. Suppose you hate what you see; you may not be doing that either. Outside of assembly lines, much of life is practicing to master your craft. Unless you're passionate, the process looks tedious. Actuarial exams aren't much fun and most students quit. Think of musicians or athletes who practice for hours a day, year after year. That's hard work with no assurance of success. You might be the right person at the right place but the timing may be wrong.  

These books might change your outlook

• The Dip by Seth Godin: be the best in the world (my thoughts)
• A Whole New Mind by Dan Pink: (Wikipedia) left brain work is easy to automate or outsource (See thoughts from Billionaire Sir Terence Matthews)
• Linchpin by Seth Godin: doing what you're told no longer brings security and success (see The Linchpin Session)
• Outliers by Malcolm Gladwell: (mastery + opportunity) > success

By the time you graduate, count on further changes. You cannot predict how the job market will remain during your working years. The actuarial field seemed secure when I began my studies at The University of Western Ontario. Yet I was the only second year student to get a summer job and one of only four who graduated with a permanent job. My 13 other classmates were shocked to find themselves unemployed. 

I worked for three companies that vanished. I worked in different divisions (personal insurance, group insurance, corporate valuation). I did consulting at a four person company. I ran a department with 10 staff. These experiences made me what I am. Ultimately, I opted out of traditional actuarial work. I never imagined that I'd be blogging or selling life & health insurance. Yet the skills I acquired prepared me for both.
Your request to job shadow is nontrivial. You might be able to find a traditional actuary who lets you follow them for a day (like the Take Your Kids To Work Day for grade 9 students). I'm not well connected to places that might agree. 

Some of the most important decisions in life take faith. If you  excel and develop portable skills through continual learning, you'll have a better chance at success. Before starting my actuarial studies, I got this advice for a happy life from Linden Cole, the Director of Education for the Society of Actuaries: find something you'd do for free and then find someone who'll pay you for doing it.
Best wishes for your quest.

Part of growing up is accepting uncertainty. If you're proactive, you prepare for it. At least this student is trying. Let's wrap up with this short video from Dan Pink.

Links

• Me an actuary? Seven questions from a student
• Billionaire Sir Terence Matthews on how to compete with India and China
• You (yes you) are a genius: The Linchpin Session from Seth Godin
• Outliers: Mastery plus Opportunity trumps Talent
• Thoughts on The Dip by Seth Godin
• What happened on Take Your Kids To Work Day?
• How to get free help from a stranger
• image courtesy of Louise Docker (Sydney, Australia)

Podcast Episode 108 (6:09)

direct download | Internet Archive page

PS If you have other suggestions for "Pat", please leave a comment.

HOW TO SAVE ON YOUR NEXT AUDI, BMW OR MERCEDES-BENZ

If you love cars and must have a specific latest/greatest vehicle, this post won't help you. If prefer brands other than Audi, BMW or Mercedes, the ideas here probably still apply.

For me, a vehicle is a way to get from one place to another in safety and comfort. I'm not tied to a particular

• brand: Audi, BMW or Mercedes-Benz are fine
• model: midsize car (A6, 5-series, E-class) or SUV (Q7, X5, ML)
• colour: any, though ideally not black or silver

Thanks to competition, these vehicles are well-equipped with features like keyless entry, a heated steering wheel, Bluetooth phone integration, GPS navigation, bi-xenon headlights and a backup camera.

Flexibility saves you money since you can walk away. At any given time, you'll find one vendor is more motivated to sell. This could be a sales rep, dealership or manufacturer. Ideally, all three. Here's how we got our last three BMWs and Mercedes.

Who's Selling?

To start, look for a model with an all-new generation on the way. Right now, the Audi A6 and Mercedes ML have numerous extras because new models are due later this year. The manufacturer won't drop the list price to boost sales. Instead, they'll include more options at no extra charge. That's better value.

In Praise of Older Designs

There's nothing wrong with an older design. You're avoiding the glitches that may plague an all-new model. When Porsche introduced the Cayenne, a gotta-have-it client had problems with the keyless ignition and closing the rear hatch. A colleague with a Mercedes E-class two generations ago had problems with squeaky brakes and lights that kept burning out. A client who always bought the BMW 5-series got the first Infiniti M45 and had numerous problems including deformed side-view mirrors. Even when you get loaners, you're still wasting time with a defective new model and risking anxiety. Let others pay a premium for the unproven. Even Apple has flops.

With a proven design, the reliability is more predictable and you know the crash test results. If you're leasing, you'll return the vehicle in three to four years and can get newer features after the kinks are gone.

The Dealer

The dealer helps by giving a discount off list price. Here's where you can practice your negotiation skills. I don't like the process. The last three times we bought, the sales rep started with a reasonable-looking discount and got our initial offer approved — no back & forth required..

The Financing

The financing arm helps by providing low interest rates and perhaps an inflated residual value to reduce lease payments. If you're returning a leased vehicle, you might get additional discounts to entice you to upgrade now. For instance, Mercedes offered to waive my remaining four lease payments.

There might be other incentives. For example, Mercedes had a Toronto Autoshow special to waive the first three lease payments.

Bonus

You'll save even more by picking a demonstrator. You skip the hefty freight and PDI charges. You also get a further discount because you're getting a "used" vehicle. We always do. This also reduces the risk of getting a lemon because the driver would have identified them already.

The Winner

After comparing options, Mercedes came out ahead now and three years ago. Both Audi and BMW warned me of hidden charges and bemoaned the pricing. Their loss. I replaced my E-class with a Bluetec diesel ML this week.

Links

• The best buying experience: Audi vs BMW vs Mercedes-Benz (new)
• The car purchase: recovering from bad service
• The car mechanic: are you paying for results or effort?
• The BMW Innovation Drive and the new 5-series
• What to do when your car lease ends
• Lease or buy: how life insurance compares with getting a new car
• Hyundai Sonata or BMW 5-series: the rationale for irrational decisions
• Small cars: Is "safer than ever" safe enough for you?
• Comparing factory tours for GM, Ford and Toyota (SparkInsight.com)
• image from Mercedes-Benz ML catalog

Podcast 107 (5:09)

direct download | Internet Archive page

PS I saved time by doing no research apart from visiting the three dealerships: Audi & BMW on Friday. Mercedes on Monday (and Thursday to take delivery).