Book Review - John Armstrong on Money

John Armstrong's book titled "How to worry less about money" is a treasure. Anyone who works in financial advice, and takes a real interest in how their clients think and feel about money, should read this.

There is a disclaimer early in the book highlighting that it is not about money troubles. That means it is not about the process of earning more or spending less. It is specifically about the relationship that a person has with money - whatever level of wealth or income they happen to be at, and irrespective of their actual money troubles.

Having said that, I would cheerfully recommend the book to anyone with money troubles because, as with most relationships, if you can think more clearly about what you want and why they actual changes necessary become clear. It is a quick read and well-priced. Buy it for your Kindle. Link. Or as a stocking filler for the worriers in your life (at Unity books). 

Which Product Do You Present First? Why?

Looking at the FMA's requirement to explain your rationale for selecting a product made a group of advisers I was working with start thinking about what they prefer to recommend. Specifically they focused on TPD and whether recommending TPD is a good idea or not. There was quite a difference of opinion. One adviser held the TPD was a waste of money, and good income protection was more important. Others argued in favour of TPD, pointing out the catastrophic nature, financially, of total and permanent disablement.

Recently I have read Nudge which highlights the control that you have as a 'decision architect.'  Their insight is that the way you frame a question often drives the answer. Put simply, if you present life insurance first, you'll sell more of that. If you never present TPD, you won't sell any. Decisions will largely follow the process you set up for making the choice.

The challenge for advisers is to know that at some point, unless they are spectacularly lucky, even the best of them will face a complaint. At which time they will be challenged to justify their advice. That justification will have to be stronger than the somewhat data-free tussle we had over TPD. When asked 'why?' in court it would be nice to pull put some supporting evidence, rather than just a vague 'I don't think TPD gets claimed on very much.'

How do you do this?

Collecting claims statistics is one starting point. Testimonials are valid as well. Another option is to pick up one of the models of risk management and build your advice process around that. Find some structure which fits with your experience and learn more about it. You could do far worse than to pick up a little volume such as "Risk, a very short introduction" or something a little lighter such as "The Norm Chronicles." Pretty soon you will have plenty of externally referenced ideas about the priorities you place emphasis on in the risk planning process.

Those ideas may save you a fortune when the lawyer for the opposition argues that you sold what you did simply to maximise your commission.


Risk - A Very Short Introduction

Many financial advisers specialising in insurance call themselves risk advisers - very few actually are risk advisers, in the sense that they advise on identifying and managing risk as corporate risk managers and consultants in the field would. I don't think that means that they shouldn't call themselves risk advisers, I think that they should go the other way, and build their skills and offer a genuine personal risk management service. There are a number of good reasons to do this:

  • Differentiation - you will definitely stand out from the run of the mill insurance adviser
  • Shifting your target demographic - high earners are much more likely to be interested in a genuine risk management service
  • More customer engagement - your services will be relevant in lots more situations and decisions than those that simply require a change in insurance

A good primer for those contemplating such a move is "RISK - A Very Short Introduction" by Baruch Fischoff and John Kadvany, one an academic the other a risk consultant.

Daniel Finkelstein of The Times says of the book it "...doesn't just analyse risk. It does something far more helpful. It tells you how to set about making decisions when you face risk I'm really glad I read it, and you will be really glad if you do the same."


Insurance Book Recommendation

I've just read Rick Vassar's book "Hide! Here Comes The Insurance Guy..." and beyond the hokey title this is actually a very good little book. Mr Vassar is obviously an intensely practical risk manager. Although his experience relates primarily to property and casualty insurance (what we call fire and general) there are generic lessons on risk management as a discipline and much of what he says is typical of all types of insurers.

There are many great passages in the book, but in my favourite our hero describes a scene in court. The opposing party's lawyer was examining Mr Vassar and showing some exasperation he asked to go off the record and exclaimed "what a scumbag". After being put the next question our hero said that he'd just like to say on the record that the lawyer had just referred to him as a scumbag off the record.

Food, Clutter, and Cheerful Tiredness

A great collection of books have been delivered in amongst the presents - so it wasn't quite a lump of coal, in fact. Amongst the highlights is a great BBQ book - Stoked - and also Steve Job's Birography. There are a number of others I shall gladly poke my nose into as well as assembling the entire Aubrey Maturin series on my Kindle (which I've read several times) for futhre reference. The kids have received more Nerf guns and we celebrated by constructing two forts in the lounge and filling the air with sizzling orange foam darts. Food of course, but the luxury of time more than anything else. Happy Holidays!

Cool Tech Interlude

Google Plus, Facebook updates, Kindle Fire - even the Boeing 787 - and many, many more: I'm just thrilled with all the cool new tech there is sloshing around these days. There is simply not enough time to catch up with it all.

I've blogged for more than five years now. Originally hosted services were really nasty affairs - but today there are many offering really great services, many options, design services, different formats for different types of website / blogs / systems / presentations / micro-sites... you name it. That led me to connect my story posts to a twitter feed. LinkedIn was pitched to me by a friend as "Facebook for grown ups" - I adopted that and I has now become a valuable tool - mainly for contacted details, resume details, renewing old connections, and keeping up to date with professional moves. It also takes a feed from my blog. Nice. Then I re-activated a long-dormant Facebook account sometime last year and finally 'got it'. I communicate far more with by brother, Aunts, and cousins now I'm on Facebook regularly. But Google Plus looks interesting, and although facebook is a great app, it has a lot of faults: Google could do it better. I shall see.The privacy thing is an issue - and that think where most FB apps require you to authorise them to post stuff to your wall - well that's rubbish.

I got a Kindle for my birthday a couple of months ago. On the recent trip it was fabulous: I had more than 60 books with me (which would have left little room for clothes had I taken hard copies). The device itself is light and a pleasure to read. Now they have a still smaller, lighter, version. But that was only a sidelight to the launch of the new Kindle Fire tablet. I am keen to get my hands on it. I've used I-pads and older Android tablets and I am not keen on Android - but apparently the Kindle Fire is different, and the user experience is much better. As an aside I notice that of the top ten books banned in 2011 seven are published by Amazon for delivery to a Kindle. I doubt whether many books are bought by the cab drivers, student, and street vendors who launched rebellions across the Arab world this year, but it is heartening to think that it is getting harder to limit the freedom to read.

But I what I would really like is a flight on a new Boeing 787. A lower cabin altitude, 25% lower emissions, bigger windows, and best of all - 60% less noise! Recent flights I've been on an A380 and a 777-200. Although I was very excited by the prospect of the A380, I have to say the flight on the 777 was much better. It was quieter, and with a nicer fit out (although that could have just been Air New Zealand compared to Air France's pack-em-in layout). But grabbing a ride is unlikely as the only one 'delivered' so far has gone to ANA (it's actually in fit out). But heck, I loved Japan so much when I was there on the weekend, I am keen to go back. I still have my Suica card...

Money - Philip Larkin

A love of poetry can rarely be combined with financial services. However, in my newly acquired Collected Poems by Philip Larkin I found Money. It is a pragmatic poem and suprisingly, even brutally relevant to the way most people do, or do not, use their money, and their sometimes shameful indifference to it:

Quarterly, is it, money reproaches me:
    ‘Why do you let me lie here wastefully?
I am all you never had of goods and sex.
    You could get them still by writing a few cheques.’
It is not common for people to write so plainly about the relationship between the amount of money one has and the amount of sex one can get. There are three other verses and I recommend them: the full text of the poem can be found over here.


Just read:

Mind Mapping and Memory, Ingmar Sventesson - Simple and straightforward - you don't need the entire Buzan back catalogue, you have plenty of material to work on in the most basic memory texts.

Hosts of living forms, Charles Darwin - Just finished on the plane, an accessible read because it is essentially an extended essay dealing with criticisms of his theory of competitive descent - otherwise known as natural selection.

Smart Choices, Hammond, Keeney, Raiffa - Excellent digest of the central tasks in complex decision-making by authorities on the subject.


New books!

Another wodge of new books arrived yesterday, The Thirty-Nine Steps, The History of Money, Theory of Moral Sentiments, and a recent Clive James... and just in the nick of time with the demise of the Whiskey Rebels last night.