RISCARIO INSIDER

February 23, 2013

IMAGINE YOUR ADVISOR WINNING AN OSCAR

... and the winner is ...

The Academy Awards anoint the year's “best” films. Let’s say your advisor is in the running. What category would apply? Let’s explore a few.

Best Actor/Actress

Actors work from scripts that others have written. Advisors do too but may also improvise. Over the years, they hone their skills. You might not realize that a script is being used because you’re seeing a practiced performance for the first (and perhaps only) time.

You may infer the actor is like the character played in real life. That need not be the case. The nominees are rarely ugly but does appearance imply better skill?

Best Director

Advisors are rarely directors. They're more likely actors. Maybe they are directing you towards a sale? Directors have problems staying within budget — in this case yours. Was the $207 million remake of King Kong in 2005 really necessary? Maybe the 1933 original was enough.

Best Screenplay

On the screen, we see the same stories retold with minor changes. With Netflix, you quickly see the lack of originality. With advisors, that's good. A creative advisor could turn out to be a Bernie Madoff (New York), Scott Rothstein (Florida) or Earl Jones (Montreal). Tried and true works well, unless the script is outdated.

Best Special Effects

Advisors make their offerings look great. Sometimes better than reality. Just because you want to believe doesn't mean you should.

Advisors may use magic like the power of compound interest. Results depend on the assumptions used and human behavior. Investment returns are volatile and we are too.

Best Foreign Language

Does your advisor seem to be speaking a foreign language? If you need a translation, maybe you’re ready for an advisor you understand.
If you easily understand your advisor, you might be facing a different problem: simplification. Life isn't black and white. Just because we understand everything being said doesn’t mean that everything we need to understand has been said.

Best Editing

Editing makes a huge difference. Sometimes the entire story changes. Advisors may leave out the details they don’t see as pertinent to their goals. Maybe you want to see the raw footage and decide for your self what matters.

This re-edit changes Mrs. Doubtfire from a comedy into a horror film.

The Judge

Maybe your advisor is the judge selecting the winner for you. This simplifies your life but results may be suboptimal. We can’t even decide on the best coffee.

… and the loser is …

Podcast 208

direct download | Internet Archive page | iTunes

PS Do you really care who wins the Oscar?

February 16, 2013

IF YOU HAVE/HAD/WANT MONEY, READ ‘POUND FOOLISH’

I wasn't expecting much from Pound Foolish: exposing the dark side of the personal finance industry (Amazon link).

I saw a video interview (which I can’t find) and felt author Helaine Olen was sensationalizing to sell more copies. She was picking on easy, obvious targets like Robert Kiyosaki (did he really have a Rich Dad?) and David Bach (the latte factor guy who's bad at math). I didn't disagree with her conclusions or assessments but wasn't expecting much more than a book that seeks fame by attacking the well known with sizzle.

Look Closely

To my surprise, Pound Foolish is well researched and contains valuable insights into the world of personal finance.

Have societal issues contributed to the way we are? After all, previous generations seemed to do well financially — even on one income. Are we really that ignorant? Do we really overspend? Or has the world changed in ways that work against us.

Our financial options have become much more complex. We bear more risks (remember defined benefit pensions and job security?). The changes happened quickly ... faster than many can adapt.

You may have sensed something basic isn’t right. Recall the words of Morpheus in The Matrix:

“You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad … [The Matrix] is the world that has been pulled over your eyes to blind you from the truth.”

This book helps you see what the problems might be and why we can’t easily solve them.

To use terminology from The Seven Habits of Highly Effective People, I’ve avoided talking about the circle of concern, preferring to focus on what we can do ourselves. our the circle of influence.

Are Financial Literacy Initiatives Genuine?

Seventy percent of profits in the credit card industry come from people who do not pay off their bills in full every month. Why would the financial services sector support something that has the ability to significantly impact their bottom line for the worse unless they either believed it was not a real threat or believed it to be a lesser threat to their profits than government regulation? — Pound Foolish

The author asks whether the financial sector wants us to be financially literate since that would hurt their profits. Picture Sylvester and friends looking after caged Tweety birds like us. Here are related posts:

Your Views

You may not agree with everything Helaine says or appreciate her use of unnecessarily complicated words like “éminence grise” and "solipsistically". There is also unneeded profanity. Continue reading because Helaine paints an overall picture that’s worth seeing.

Lessons And Reminders

In the world of finance, do not assume that people helping you have your best interests at heart or genuine skill. If you're dealing with a friend or family member, you may actually be at a bigger risk than if dealing with a stranger. When you’re confused or think you’re getting solid advice, you’re more vulnerable. That's just life. Hasn't it always been so?

The author is not totally altruistic in writing her book. However she does say things that are worth our attention. I'm curious to see what she does next. Identifying problems is important. So is helping people with the solutions. Even if there aren't any easy ones.

Podcast 207

direct download | Internet Archive page | iTunes

PS I taut I taw a puddy tat