THREE POWERFUL PROTECTORS AGAINST CORPORATE MISCONDUCT

We don’t live in a perfect world. On any given day, you’ll find reports of businesses behaving in ways that are less than noble. We have reasons to be cynical. We can’t rely on superheroes to save us. Litigation is risky, expensive and slow. We aren’t powerless though.

We're protected against corporate misconduct by the combination of

1. Regulation
2. Competition
3. Publication

This trio isn't perfect but can be effective. We’ll use financial services as an example

Regulation

The regulators focus on keeping financial institutions solvent. They set rules and specify minimum capital requirements. When capital gets set aside, it's typically invested in conservative investments for security. There are likely restrictions on the types of investments permitted, which means lower (but safer) returns. Tying up capital is not attractive for investors but protects buyers.

Canada escaped the financial meltdown and the regulations were certainly a reason.

Competition

In the world of gadgets, market share is an important consideration. When there’s a clear market leader like the iPad, it’s tough for competitors to charge more (or even the same price). Lowering prices also increases the size of the market.

In financial services, profits seem more important. When I was designing insurance products, there was always pressure to boost profits but without losing market share. That’s virtually impossible. At any given time, some competitors will be more interested in market share.

Overall, competition is your friend and augments regulation.

Publication

Regulations may be followed and competition may be effective. There can still be problems. For instance

• mortgage life insurance from lenders is a bad deal
• multilevel marketing has risks
• mutual funds have high investment expenses

That's where publication comes in. The media can investigate and report. Bloggers can bring scrutiny too. Wikipedia is a living repository reminding us of what happened. You can do your part through social media too. Your messages reach the world instantly.

Awareness helps everyone who pays attention make better decisions. You’re still free to make mistakes you later regret but you can avoid them too.

What’s stopping you from buying from a good company? When you do, you punish a bad one at the same time. That’s an ideal win/lose.

Links

• Reasons to be cynical and how to fight cynicism
• What are you doing about your high investment expenses?
• Three reasons life insurance prices are shooting up
• Rate hikes: Is your advisor sleeping on the job?
• image courtesy of KaYann

Podcast 167

direct download | Internet Archive page | iTunes

PS What do you do if you see misconduct?

FROM BUCKET LIST TO BALK-IT LIST

It's tempting to wait until the last minute.

Consider filing your taxes. Here the deadline is real. You face penalties if you're late. There's media attention. You know what you have to do, even if you'd rather not. Help is available whether you want to Do-It-Yourself or pay someone do it for you.

Silent Deadlines

Most deadlines aren't well known. You may not face an immediate penalty for missing them. The onus is on you to be proactive.

Think of farming. You can't plant crops five minutes before dinner. Even pizza delivery takes longer. Since you know you must eat, you know you need to prepare in advance.

Think of saving for retirement. The magic of compound interest takes time. Delaying is very expensive. Since no one is forcing you to save, it's easy to delay,  save less or both. The pain comes later. You might not be able to save if become disabled and are unable to work. Or if you don't take steps to remain employable.

Think of health. Our bodies are accommodating ... until they're not. We can't go back in time to exercise more, eat better or drink less.

Health insurance and life insurance purchases have silent deadlines. When you are likely to claim, coverage may not be affordable or available.

The Easy Solution

There isn't one. The important but non-urgent things are easy to delay when the unimportant but urgent beckon.

A Bucket List is a place to itemize what you want to do before you die and then start doing them. The list often contains exciting goals like travel.

Balk-it List

A Balk-it List is different. Here you jot down the things you don't want to do but need to do someday.

Here’s how. Set a timer for 15 minutes and start writing. Feel free to continue if the ideas are still poring out of you. Pen and a small paper notebook work well. You can add more items later simply and quickly. You may prefer your smartphone or tablet.

Next, organize your list by priority and timeframe. Electronic tools might help here (e.g., Remember The Milk or Toodledo). Finally, work on reducing your list. This is a situation where the Pick Four 12-week goals program may be just what you need.

Stop Balking

We don't know when our last minute will expire or our state at that time. We know where we are now. Are you where you want to be?

Links

• Is the Pick Four goals program right for you?
• Steve Jobs "buttoned-up". Have you?
• Two ways to stay visible (and employable)
• Three practical ways to increase your net worth
• Are you saving too much for retirement?
• The Process System for planning simply
• Why is financial planning ignored?
• Planning beyond the wedding
• image courtesy of Shaun Ellithorpe (Thunder Bay, Ontario)

Podcast 166

direct download | Internet Archive page | iTunes

PS You could add your Balk-it List to your Bucket List