November 30, 2014


chess: the king has fallen
We can’t predict the future but can take steps to put the odds on our side.

Corporate governance is a measure of companies keeping promises. Since life and health insurance is a long term promise that may last decades, isn’t that important?

Unlike car/home insurance, well-designed protection for mortality, morbidity and disability tends to have premiums guaranteed for life. That provides peace of mind since you can’t easily switch insurers: you’re older and your health may have deteriorated. In addition, newer products may fewer options and weaker guarantees. If the government changes the rules governing insurance, old policies may be “grandfathered” (exempt from the changes).

Similarly, financial advice can have lasting implications even when of high quality.

Lucky 13

The Globe and Mail has compared corporate governance for 13 consecutive years. Board Games 2014 includes 247 major companies in a searchable table. Data was prepared by the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto.

Not much changes, as you’ll see by looking at results for 2011 and 2007.

Selected Rankings

Let’s look at the financial sector, which historically ranks low in trust in comparisons like the annual Edelman Trust Barometer. Here are the banks, insurers, mutual fund manufacturers and advice givers. You’ll likely recognize the names.

 Rank Company Score
1 Bank of Montreal (includes BMO Insurance) 98%
2 Sun Life Financial 97%
3 tie Bank of Nova Scotia 96%
3 tie Royal Bank of Canada (includes RBC Insurance) 96%
6 Manulife Financial 95%
8 Intact Financial Corp (belairdirect, Grey Power, Jevco) 94%
13 tie CIBC / National Bank / TD Bank 93%
30 Industrial Alliance Insurance and Financial Services 89%
62 Western Canadian Bank 81%
69 Laurentian Bank 79%
81 CI Financial Group (CI Investments, Assante Wealth Management, Stonegate Private Counsel) 76%
185 Power Financial Corp (Great-West Lifeco, IGM Financial) 58%
197 tie Canaccord Genuity Group / Fairfax Holdings Inc 55%
197 tie IGM Financial Inc (Investors Group, Investment Planning Counsel, Mackenzie Investments)  
205 AGF Management 54%
221 Great-West Lifeco (Canada Life, Great-West Life, London Life) 48%
231 Dundee Corp 46%
237 Power Corp of Canada 44%
Look at the range. Some companies are at the very top with near-perfect scores. Others are closer to #247 (Fortuna Silver Mines, scoring 35%).

Missing Companies

You may be dealing with companies which aren’t rated. That doesn’t mean they’re “bad”. How would they score f they were included? That’s very tough to say. You can’t really tell. You can ask them if they are ranked by credible independent parties in a transparent way. You may get measures of financial strength. Maybe that shows they’re great at making money but doesn’t mean they’re great at keeping promises.

As usual, buyer beware!


PS Is there any downside to buying from a leader or any upside from supporting a laggard?

November 23, 2014


old classroom I’ve got a newfound respect for educators after guiding 30 lively Grade 8 students through the Junior Achievement Economics for Success program with Dana Mitchell for Advocis during Financial Literacy Month. Thanks to teacher Maureen Deeney and Principal Julie Aube at Christ The King Catholic School for the opportunity.

Here is career advice for students to consider.

Look For What’s Missing

Spotting what’s missing is more valuable than seeing what’s there. What’s missing leads to opportunities. Searching hones your detective skills and helps you stay curious. You get better at spotting distractions and identifying the real clues. You’re not looking for Waldo. You’re looking for where Waldo isn’t --- and wondering why.

Observe the challenges other people face and look for solutions.

Do they have trouble with deadlines? Learn to meet them. Do they start studying too late? Start earlier. Do they forget assignments? Find a system that works for you. You’re then building skills which are scarce and hence valuable.

Develop The Habit Of Saving

Saving means putting something aside now to have more later. Money is an example but not the only one. What about
  • saving time: you can do some things more efficiently (which may mean investing time in developing a process) and stop doing some things which don’t need to be done (note: leaving your room untidy may not be an acceptable idea).
  • saving health: we have only one body for life. Exercising, eating well and sleeping enough build resilience and help preserve what may be your most valuable asset.
  • saving attention: with all the demands and distractions around us, we’re tempted to multitask and prioritize. Both are exhausting. Cutting out stimuli simplifies life. Maybe you’re too knowledgeable about happenings in sports and music. Entertainment is important but maybe less would do? (extreme example: years ago, I stopped watching TV, listening to the radio and reading the newspaper.)

Be Generous

We can each help others for free. We can give of ourselves, our time, our attention, our caring. You’re then making the world better in your own unique way. You’re also changing yourself. You’re thinking in terms of abundance (giving) rather than scarcity (hoarding).

You’re helping change the world since some of the people you help will follow your leadership and help others too.

Develop Portable Skills

You’re unlikely to stay in the same role forever. You’ll likely advance in your career and might even change careers. The cause might be opportunity or necessity. Either way, you’re better prepared if you keep developing your skills.

A portable skill stays with you and helps regardless of what you do.

For instance, communication is essential. Are you improving your ability to read, write and speak? Are you mastering new media? For instance, you write differently for school assignments, blogs and tweets.  Other portable skills include managing your time, getting along with others and finding problems to solve. How can you lose by getting better?

Build Your Network

Success requires willing support from the people you know and — more important — the people they know.

You already have a network. How well do you plant seeds, nurture and prune? Consistent generosity gets noticed and can be free (e.g. the gift of information). Most people feel obligated to give back. Reciprocity is the #1 universal principle of influence.

If you’re in Grade 8 now, you’ve lived your entire life with the Internet. Connecting, sharing and staying in touch is easier than ever via social networks. In-person contact still matters, though.

Market Yourself

You can’t expect the world  notice your brilliance without your help. You need to stand out (or at least be good). You need to be remembered. You need to be findable. The Internet makes this easier for those who bother.


The path to the future includes drudgery. Persist. To quote Zig Ziglar:
When you do the things you ought to do,
When you ought to do them,
The day will come,
When you can do the things want to do,
When you want to do them.
Best wishes for a wonderful future.


PS Please leave the world better than you found it.

November 16, 2014


image You won’t find the type of warnings on alcohol or tobacco applied to
The onus is on us to learn, evaluate and decide. Attempts at consumer protection (e.g., banning sugary drinks in school vending machines or capping credit card interest rates at prime+5%) get challenged. How dare we lose our freedom to harm ourselves!

Which Side?

Sellers claim to be on our side, but are they really? We’re encouraged to
  • drink responsibly (but still drink)
  • follow the rules of the road (but buy vehicles which break them in  commercials)
  • eat a healthy breakfast (but include Nutella)
Since shareholders have different interests than buyers — and rightly so — don’t count on voluntary transitions to better guarantees, more transparency and lower prices. Look at MasterCard/Visa credit card transaction fees in Canada, which are among the world’s highest. They’ve increased 25% in the last two years. Now MasterCard/Visa will make voluntary reductions of about 10%, leading to a typical charge of 1.5%. This is considered a victory, but for whom?

Money Madness

The financial sector promotes financial literacy … but profits from our ignorance, inertia and limited choices. That’s not as effective as improving the products. We could be prevented from paying heavily on unpaid credit card balances if interest rates were lower. We could avoid the pitfalls of mortgage life insurance if poor products were not sold.

Until we live in perfect world, beware.
An Example
We were looking for a video tripod strong enough to support a camera, 15mm rod system, teleprompter and an iPad. The advisor at a well-known specialty store recommended tripods costing $750 or more! When I asked for a cheaper option. I was shown a $350 tripod with weak legs and a poor head. Then another $750 tripod.

Because I did my research, I knew that getting photography legs and a video head separately would be better and cheaper. The advisor — an expert — could have suggested this  but maybe she got sales commissions or thought conventionally.

A Strategy

Protect yourself with education. You can often learn the basics online from objective sources. That helps you ask the right questions and spot the wrong answers. You might find better solutions than those presented to you.


PS Mind the fine print!

November 8, 2014


100% extra free
If insurance were free (and there were no catches), how much would you get?

You might
  • top up your current coverage (e.g., more life insurance)
  • protect against risks you’ve neglected (e.g., critical illness insurance)
  • explore types you don’t know much about (e.g., long-term care insurance)
You might be willing to go through the hassle of the buying process. You might encourage your family and friends to follow your path.

Maybe you wouldn’t do anything what’s free (e.g., air) doesn’t seem to be worth much.

Sale Prices

If insurance were on sale, how much would you get? Your answer might depend on the size of the discount. If large enough, you might even buy protection you’ve refused in the past.

What if there were a one day sale? Would you buy then? Insurers avoid discounts because insurance isn’t an impulse purchase. Instead, they tend to have competitive “every-day” pricing. That’s to encourage advisors to consider their products. They may have contests to motivate advisors but you’re unlikely to know.

You don’t gain by waiting to buy. Even if your health and gender don’t change, you’re getting older. Your age affects the price you pay. Also, newer products don’t mean better guarantees.

Reducing The Price

You can’t save money by buying half an iPhone.  You can save on insurance by buying less coverage. Granted, you get less protection but is no coverage better? Since insurance requires ongoing maintenance, you can re-evaluate your situation during a future inspection.

Insurance costs more as you age and even more if your health deteriorates. You reduce the future price by acting today. When the asset being protected is a human life, the premiums can often be guaranteed for life.

The Limits

A billionaire bought a record $201 million of life insurance, which required 19 insurers and an annual premium in the millions of dollars. Why not more? There are limits on how much insurance you can get even if you can pay.

Underwriters determine what you’re worth. Let’s say that’s $5,000,000. You’ll have trouble replacing more than that. If you try to buy $2,000,000 from five companies, don’t count on getting $10,000,000 of protection. That’s because each company will ask about your other insurance you already have and are in the process of getting.

Real Life

Insurance isn’t free. There’s no Boxing Day, Black Friday or Cyber Monday sale either. Insurance may look like a luxury or waste until you need it. Unfortunately, you can’t buy insurance at moment before misfortune strikes --- at any price.


PS It’s currently Financial Literacy Month. Follow #FLM2014 on Twitter.

November 1, 2014


click to visit official websiteNovember is Financial Literacy Month in Canada. Getting attention during the busy period between Halloween, Black Friday, Boxing Day and New Years Day isn’t easy. According to Google Trends, interest in financial literacy has been growing. That’s great news. Kudos to everyone helping create awareness.
"financial literacy" - Google Trends in Canada There’s more to do.

The Challenge: Current Creators

If you already create ongoing financial education, Thanks! Why not try something new:
  • change your format: you likely prefer text, audio, video or photos. Try a different one.
  • go live: e.g., hold a Hangout On Air, speak at an event or have a Twitter chat
  • adjust your frequency: create more content or cut back to make time for something new
  • alter the length: you could make your content longer or shorter
  • experiment with a different platform: are you using the LinkedIn Publishing Platform or Pinterest?
You might reach a new audience and feel more enthused to create more content. 

The Challenge: The Silent Million

According to Statistics Canada, 1,122,300 people worked in finance, insurance, real estate and leasing in 2013. That’s 6.3% of the workforce (1 out of 16 people). How many of them publish their own original content to help the public understand money better? Now’s an ideal time.

If a mere 2.7% published a single article during Financial Literacy Month, we’d have 30,000 new articles --- 1,000 a day. And 100,000 articles only requires 8.9% to volunteer for a worthy cause which their employers likely support.

Others know about money too. For instance, accountants, entrepreneurs, executives, lawyers, professors, retirees and teachers. Include them and 1,000 pieces of fresh content a day looks even more feasible.

If each creator promotes to their connections, imagine how many new people could be reached and helped. 

Case Study

I’ve been looking for ways to engage people who aren’t especially interested in learning more about money.

For last year’s Financial Literacy Month, I organized Money 50/50: Insider Advice For Today’s Topsy-Turvy Times at the University of Toronto (like TEDx plus Q&A).  November got postponed to February and the Ted Rogers School of Management (see recap). Since TEDx Talks become videos, I decided to skip a live event and interview these insiders who might have been speakers:
  1. How much money do you need before getting financial advice? (Joe Barbieri)
  2. Financial independence at 31 (Sean Cooper)
  3. The Capital Gains Exemption isn’t a gimme (Mark Goodfield)
  4. Insights from an advisor to the insurance industry (Ross Morton)
  5. Reaching the unreachable (Jonathan Chevreau)
  6. Investing outside the markets (Vikram Rajgopalan)
  7. Five essentials to being a better investor (David Toyne)
  8. Planning for aging (Gary Hepworth)
  9. Demystifying SR&ED (Julie Bond)
  10. Retirement planning for small business owners and professionals (Clark Steffy)
This month, I’m
  • guiding Grade 8 students through the Economics For Success via Junior Achievement
  • sharing Business Strategies For Taxing Times at the Toronto Regional Board of Trade
  • launching a series of short educational videos called QanA (Question an Actuary)
Thanks to past, current and future creators of money-related content. Thanks also to everyone who invests in learning.


PS Money matters every month