RISCARIO INSIDER

February 13, 2011

THE A-B-Cs OF 1-2-3: THE KEY TO FINANCIAL LITERACY / NUMERACY

Stephen Covey said that if two people think the same, get rid of one: they're redundant. You add value when you think differently.

Let's extend the thinking. If you predict an outcome, why bother wasting time, money and focus on the research?

Start fixing the problem instead.

The Force

Enter the Task Force on Financial Literacy. In elementary school, I learned that "literacy" is about understanding words and "numeracy" is about understanding numbers. Remember the "Three R's"? Reading and writing dealt with literacy and arithmetic with numeracy. Maybe financial literacy means the A-B-Cs of 1-2-3? There are three reasons why numeracy eludes us.

Whatever the name, a group of well-intentioned people spent $$$ (millions?) and a couple of years to discover what we already know: more financial education is needed.

Why would the findings be a revelation?

In 2001, the Financial Consumer Agency of Canada was launched to deal with the same issue. In 2005, 40% of adults had low literacy. What progress has been made there? Maybe we need a Task Force on Nonfinancial Literacy too.

The Conflict

Do smarter consumers mean more profits? If not, there's a conflict of interest.

If companies know that customers have trouble understanding numbers, they can exploit this ignorance and hide behind legalese. Unless they're fiduciaries, they aren't obligated to act in your best interest.

A pizza chain is currently advertising free toppings in large letters. The tiny fine print says you only get "1 (one) single topping". How does "toppings" become "topping"? The disclosure may be legal but it's misleading and makes it hard to fight cynicism about their real intent.

Profits
Would numeracy boost or chop profits in the financial services industry? Look at

credit card statements: only pay the minimum balance of $27.41 [and keep borrowing the rest at very high loan rates]
mutual funds: are you shown an unbiased comparison with ETFs [which are much less profitable]?
extended warranties: are you told they are "notoriously bad deals" [but very profitable]?
get rich quick schemes: are you told you might get rich [but not as fast as the promoters]

How can the buyer beware if the buyer doesn't understand and isn't fully informed? Imagine if the norm switched from "buyer beware" to "seller inform".

In Your Corner

When you're buying real estate, your agent will explain what the wording means and help you prepare counteroffers. Most other times you're dealing directly with a salesperson and can't change the terms. That leaves you with two choices: take it or leave it. When I leased my car, there were many spots to sign. There was implied pressure to wrap up. Even if I read and understood every word, what difference would that have made?

Take Initiative

You are the key to numeracy. The onus to learn basics like compound interest is on you but you're not alone. When you're ready, you'll find volunteers committed to helping you understand numbers:

bloggers: Canadian Capitalist, Million Dollar Journey, Thicken My Wallet, …
discussion groups: Canadian Money Forum, …
newsletters: Rob Carrick's Personal Finance Reader, …
publications: Globe Investor personal finance, Financial Post, MoneySense, …
seminars: Ellen Roseman, …
nonprofit or government: ABC Life Literacy, The Money Belt, …

All these resources are free. Feel free to add more. Use them and help others too. Let's stomp on innumeracy.

Podcast 104 (5:35)

direct download | Internet Archive page

PS What's $1,000,000 after taxes on the investment growth?

February 5, 2011

TWO WAYS TO STAY VISIBLE (AND EMPLOYABLE)

Patterns show opportunities, especially before others discover them. Some are disturbing. This one affects you whether you're working for a company, self-employed or looking for a position. Invisibility. That's no way to bulletproof your job or protect your livelihood.

The solution is simple: be visible.

Flubs

If you're hard to find, you're easy to overlook. Why would anyone bother searching for you? There are often reasonable substitutes. I prefer Dr. Pepper but won't storm out if offered Coke or Pepsi.

Here are observations from business cards I've collected in the last three weeks:

none ("forget" them or "ran out")
bent (usually from too much time in a wallet)
corrected (e.g., change in address or phone number; using up your old stock shows you're cheap)
no email address

You need a business card, if you don't have one from work.

Business Card Basics

Your business card is useless until you give it to someone else. Make sure your card looks nice to make a positive impression. Make sure your card also looks good when scanned and photocopied. Make sure your card is easy to read in dim lighting and by people with poor eyesight.

Your business card only needs three items

your name
your personal email address (Gmail, Hotmail are fine)
a link to more information (e.g. LinkedIn, your personal website, your blog).

Your card is now timeless.

Adding More

A phone number is a good addition if portable. You'll probably want to show your hard-earned designations. You might include a title or memorable tagline. You don't need to show your home address. How's that? Now you're accessible while maintaining your privacy.

Order so many business cards that you feel compelled to hand them out. Maybe a crazy number like 500 or 1,000. This won't cost much more. You don't want to take shortcuts by printing your card yourself or using a service that gives free business cards in exchange for advertising on the back. Shortcuts send a bad message. You want to look professional. Even if you lack design skills, you can create a nice card using templates. That's a nice way to stand out if you're in one of the least prestigious professions.

Business cards get lost, discarded or misplaced. There's a way to make a lasting connection even with people you haven't met in person.

Get Listed

Today's business directory is LinkedIn. Even if you have a website and show up on Google, you want to be here too. There's no downside to getting listed. You decide what information to show and who sees it. My profile is detailed and visible to anyone.

Here are 12 recent (but classic) flubs I've seen in LinkedIn profiles. They're easy to correct.

not here: you're unlisted
scant content: you're harder to find with keyword searches
mistakes: typos, jargon or poor writing (get help from a spell checker and friend)
no photo: others may have the same or a similar name; a photo makes you easier to remember
out-dated info: some show an old position as current
gaps: missing years or missing positions raise questions (e.g., why is nothing shown for 2004-2007?)
very few connections: why so few want to associate with you? This raises questions.
hard to contact: you can require people to know your email address before inviting you to connect: Why be so reluctant to connect? After all, you decide who to add to your network.
no short URL: a long link to your profile is a sign of an amateur (here's what to do)
using your business email address: This is okay if you're self-employed. Otherwise, use your personal email address to maintain your privacy.
no recommendations received: why won't any (or many) publicly vouch for your expertise?
no testimonials given: why won't you show generosity towards others?

Business cards and a good LinkedIn Profile will take you far. There's much more you can do, to build and nurture your network. Being visible is a great start.

Podcast 103 (6:27)

direct download | Internet Archive page