Customer Service and Survival

by Jim Stovall

Customers are like teeth.  The only ones you need to maintain are the ones you want to keep.

I hear news stories and ongoing news media coverage about how bad the economy is and how consumers are not spending money.  You wouldn’t know this from going into the average retail establishment today.  The majority of businesses you might enter to purchase a product or service do not provide a level of customer service that you would expect from someone that is not having enough retail revenue.

There is a local establishment near my office where we purchase sandwiches for lunch.  They do not deliver, so we go across the parking lot and pick them up.  They have asked us to fax our orders to them.  This was acceptable, except they explained that they don’t often hear their fax machine receive an incoming order, so they asked if we would call them after we fax in the order.  We set up an account so our staff can simply sign for the lunch when they pick it up.  I mistakenly assumed they would bill me monthly, but when I did not receive a bill for close to a year, I contacted them and had to go through an accounting nightmare simply to pay for all the sandwiches.

One day it occurred to me that I’m working way too hard in a bad economy to spend my money.  If I have to write down the order, fax it in, call and alert them they have an order, and provide them with accounting so I can pay my bill, I’m doing everything but making the sandwich myself.  This situation would be laughable if it wasn’t so commonplace.

I travel often for speaking engagements and movie or TV business.  A polite and professional flight attendant is rare enough that you really notice it when you get one.  This is unfortunate because, due to rising fuel prices and the economy, the airline industry is struggling.  Most airlines’ flight routes and fares are just about the same from one airline to another.  The real differentiating factor they have to offer would be great service, but this is not the case.

In most customer surveys, good service and a polite, professional staff rank high in the criteria prospects use to make buying decisions.  In most cases, great customer service and polite, professional attitudes don’t cost anything but a little effort and energy.  In fact, it is invigorating and enjoyable to serve others.

If you want to succeed, you’ve got to make it easy for people to do business with you, feel good about spending their money, and want to tell others about their experience.

As you go through your day today, determine to separate yourself from the crowd by providing stellar customer service.

Today’s the day!

Why We Do Dumb Things With Money

“How could I be so stupid?”  Maybe you’re looking at a bulging credit card bill after over-spending during the holidays, just hoping your tax refund is enough to pay it off.  Or maybe you’re looking at a budget that simply won’t balance—for the 77th consecutive month—wondering how you made it this far in life without being able to master the simple math of addition and subtraction. 

Why is it that informed, educated and even brilliant people can be so dense when it comes to basic matters of personal finance?

I’m reading a book called The Checklist Manifesto by Atul Gawande, based on his fascinating article, “The Checklist,” in the December 2007 edition of The New Yorker.  On his way to making a compelling case for the use of checklists to ensure accuracy in even the most multifaceted procedures—like emergency room surgery or skyscraper construction—he gives us some insight into why we’re capable of doing dumb things in seemingly simpler processes.  In his words:

Two professors who study the science of complexity—Brenda Zimmerman of York University and Sholom Glouberman of the University of Toronto—have proposed a distinction among three different kinds of problems in the world: the simple, the complicated, and the complex.

Zimmerman and Glouberman give us a tangible example of each type of problem.  Simple is to baking a cake from a mix as complicated is to sending a rocket to the moon.  The latter requires “…multiple people, often multiple teams, and specialized expertise.”  But once you’ve marshaled the necessary manpower and know-how to send a rocket to the moon, the exercise can be successfully repeated.

This is not the case in complex problems, however.  The example they give for a complex problem is raising a child.  “Expertise is valuable but most certainly not sufficient.  Indeed, the next child may require an entirely different approach from the previous one.”  As a parent of two, this news was both heartening and frightening.  But it also helped me realize something groundbreaking, at least to me:

While many matters of personal finance seem so simple on their face, they’re actually quite complex…because WE’RE complex.

Even as a single person with no dependents or pets, our innate proclivity for self-deception is remarkable.  But within the context of a couple or family, it’s easy to see how the “simple” discipline of cash flow management, for example, can become quite complex.

Further complicating the problem is that most areas of personal finance require perpetual decision making, in which each individual decision to save, spend, buy, sell, re-allocate, contribute, distribute, insure, reduce coverage, file, expense, deduct, bequeath, endow, receive or disinherit is its own fertile ground for success or failure that could compound positively or negatively to impact the whole!

So let’s all enjoy a collective “WHEW!” as we momentarily enjoy the fact that making mistakes with money doesn’t mean we’re a complete nincompoop.  Of course, this is an explanation, not an excuse.  We’re still responsible.  Here are three ways we can all keep our financial decision making as smart as we are:

1)     Be cognizant of things financial.  Be present and deliberate when dealing with your money.  Keep these topics at front of mind by reading a good financial blog or two (ha, ha).  And consider reading my friend and colleague, Carl Richards’, new book, The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.  (It’s the only financial book I know of that is strewn with pictures!)

2)     Develop good habits.  We often need to force ourselves to be cognizant because personal finance either bores us or is loaded with self-deception.  The development of good habits, beginning first-and-foremost with a functional cash flow system, will help us develop the behavior we’d prefer.

3)     Be accountable to someone or something.  Some are willing and able to develop their own system to maintain accountability, but for many, a healthy relationship with a professional financial planner is the key.  In my Forbes post this week, “Hey Financial Planners, Do Your Job!” I gave advisors a gentle nudge, encouraging them (us) to make financial planning a simpler, more client friendly process that eliminates complexity instead of creating it.

What are some other ways you’ve been able to keep from making dumb financial decisions in your life?

Persistence and Procrastination

by Jim Stovall

Down the street from my office is a very large media complex containing a TV station, several radio stations, and a large conference center.  At one corner of the massive building, there is a large fenced area where several radio and TV broadcast towers soar hundreds of feet into the air.  Thousands of people drive by this complex every day and have seen the towers so many times they don’t even notice them any more.

Several months ago, a troubled young man—for reasons of his own—decided to scale the fence and begin climbing one of the towers.  By the time anyone noticed this young man perched on a precarious ladder hundreds of feet in the air, it was too late to stop him.  Police, ambulances, and emergency rescue workers were called to the scene and began efforts to persuade the young man to climb down from the tower.

The young man either ignored them or periodically threatened to jump.  As will happen with any large gathering, the media was soon on the scene.  TV, radio, and newspaper reporters began around the clock reporting of the ongoing activities of the young man who became known as The Tower Guy.

This went on for days and, somehow, the reporters found things to talk about.  The young man became dehydrated, sunburned, and appeared to be disoriented.  Finally, one heroic rescue worker was able to communicate with the young man and talk him into coming down.

The final media reports described how persistent The Tower Guy was in remaining on his perch for many days.  It’s important that we don’t confuse persistence with procrastination.  It is easy to think that persistence is doing something repeatedly or constantly while procrastination might be thought of as doing nothing at all.  In reality, too many of us are like The Tower Guy in that we persist in doing nothing of importance which, in reality, is procrastination as it relates to the things in life we know we should be doing.

Practice does not make perfect, in spite of the old adage.  Practice makes consistent.  Only perfect practice will make something perfect.  Persistence is only a virtue if we are persisting at doing things that matter to us and make the world a better place.

Most people perform activities today because they performed the same activities yesterday and will do it all over again tomorrow.  Before you do anything as a regimented part of a routine, make sure you know why you are doing it, what it will accomplish, and when you will be done.

As you go through your day today, make sure you’re investing every moment wisely and not just repeating mindless activities because that’s what you’ve always done.

Today’s the day!

Too Complex For Their Own Good?

This week on my Forbes post, “Don’t Outsmart Yourself Financially,” I took issue with an article written by Nobel-winning economist, Paul Krugman, for his rationalizing of the enormous debt load of our country.  But while economists have and will wax eloquent on the past, present and future utilizing brilliant theories well beyond the bounds of common sense (and often practical application), we have no such allowance in the realm of personal finance.  Indeed, YOU SHOULD NEVER PURSUE A STRATEGY YOU CAN’T UNDERSTAND.

Here are a collection of financial strategies that sound impressive but may be too complex for their own good:

  • Equity Indexed Annuities—EIAs are actually fixed annuities, but if you ask one of their passionate purveyors[i] how they manage to offer market upside with none of the downside, I hope you’ve set aside some time because you’re in for a very long conversation…if the agent even knows enough about their inner workings to  educate you.  In short, insurance companies buy bonds with your investment and use the interest payments to purchase stock options to materialize the upside of the stock market.  They hedge their bets—I mean, positions—by handcuffing you with some of the biggest (7%, 9%, even 12% and higher) and longest (10, 15 or even 20 years) surrender charges in the business.  Like too many financial products, these instruments are sold, not bought, and I don’t recommend tying up your money in one of these financial experiments.
  • Life Insurance As Primary Retirement Vehicle—There’s a wow-inducing sales system (called the LEAP system) that was built for life insurance agents seeking to increase their sales in one of the best-paying commission products on the market, permanent life insurance (whole life, variable life and universal life).   After an hour of mind-numbing chart-flipping, you’ll be ready to divert your 401k savings into a brand new life insurance policy![ii]  But unless you make over $250,000 per year or have millions in net worth, you simply don’t need to worry yourself with the variables in permanent life insurance.
  • “Option Arm” Mortgages—The landscape of mortgage products has dwindled significantly from the pre-crash days when you could literally pick the payment on your mortgage in the now infamous option arm mortgages.  A mortgage broker in Pennsylvania at one point pitched me on a joint collaboration in which I would lend financial credence to his recommendations for clients to take on these crazy mortgages and they would, in turn, invest all the extra money they didn’t have to pay towards their mortgage in accounts I would manage.  I laughed at first, thinking he was kidding.  Then I realized he wasn’t.  Especially with rates as low as they are today, there are very few reasons to take on any mortgage other than a fixed mortgage, but there is NEVER a reason to take on a mortgage that increases your debt instead of paying it off.
  • Exchange Traded Funds—This one may surprise you, and I should be quick to point out that ETFs can be very wisely and properly utilized in a diversified investment strategy.  But you’d better fully understand what you’re buying.  Much like a mutual fund, an exchange traded fund is a single investment representing a basket of securities.  For example, you can purchase an ETF that will track the S&P 500 index or commodities like gold or oil.  But the question remains, what exactly is inside of the ETF?  Sometimes it is actual investments, (like stocks in gold mining companies, for instance) but often the underlying properties in an ETF are derivatives—options or futures—and subject to market forces beyond the commodity or index itself.  If you don’t understand how the investment is built, you may be in for a surprise when you see how it actually reacts to market stimuli.

There are many other examples out there, and I’d love to hear what you’ve run into in your financial journey.  Please share your good or bad experience, or ask any questions, in the comments section!


[i] Why so passionate, you ask?  These products have some of the biggest commissions in the business.  Up to and over 12%!

[ii] I worked with one agent in a prior professional life who regularly pitched a “Roth Look-A-Like,” an alternate retirement savings vehicle designed to give you all the tax advantage of a Roth IRA, and more…except that it was nothing more than a whole life insurance policy.  I saw one unfortunate 20-something guy who wasn’t even married and had no dependents buy a look-a-like when his money would’ve been better served in a true Roth.

Wet Paint

by Jim Stovall

There are several ways we can learn lasting and significant lessons.  Some people learn as an ongoing enjoyable part of life, while others have to learn everything the hard way.

If you find a painted wall somewhere around your home or office and put up a sign that says “Wet Paint,” without realizing it, you’ve created a perfect laboratory for observing human behavior.  If you simply stand by and watch, you will see human nature and the learning process take several forms.

Some people will come by, see your “Wet Paint” sign, glance quickly at the wall, and go on about their way.  These people are generally well-adjusted, reasonably trusting, and non-confrontational.  If you remove the “Wet Paint” sign, these people will often make it a point to avoid touching the wall for several more days and even go so far as to alert others that the paint on that wall may still be a bit wet, so they should be cautious.

If you continue your observations long enough, you will observe another kind of human behavior as it relates to your “Wet Paint” sign.  A person will come by, clearly see your “Wet Paint” sign, and immediately touch the wall to see if the paint is actually wet.  These are people who would not have touched the wall if you had not put your “Wet Paint” sign there in the first place.  Even though this person has damaged your paint job and gotten wet paint on themselves, if they come by later, whether your “Wet Paint” sign is there or not, they will actually touch the wall again and continue this same behavior for hours or even days until they learn, through their own experience, that the paint is no longer wet.

All of us have the potential of learning very valuable lessons each day.  Some people can learn by reading or hearing the words of others; other people need to observe the outcomes of other individuals; while many people have to learn the lesson the hard way every time or, worse yet, never learn the lesson at all.  While we may think these learning styles are innate or inbred, we actually have more control over how we learn and what we learn than we might realize.

In our ever more complex, fast-paced world, it becomes more critical than ever that we develop the ability to learn lessons from others who have gone before us.  You don’t want to be among the sorry souls that learn, the hard way, that the surgeon general’s warning about cigarettes or the pleas of financial planners to plan for your retirement years were valid.

With all of the multimedia opportunities around us and constant access to the Internet, we should be able to learn from others’ words or at least their actions without having to get a handful of wet paint every time.

As you go through your day today, commit to learning the most lessons you can in the easiest manner possible.

Today’s the day!

The Victory In Failure

This past weekend, my seven-year-old son, Kieran, got beat up.  Worse yet, I was forced to stand by powerless, watching the whole thing, unable to intercede on his behalf.  Thankfully, everything’s fine.  He sustained no lasting physical injuries although it may take a while for him to recover emotionally…from his very first official wrestling tournament. 

Believe it or not, at seven he’s two-to-three years behind most of the other kids his age, so he spent the majority of his three matches getting his 60 pound frame slammed and twisted into the mat.  After spending weeks building his skills and confidence, he realized within 10 seconds into the first bout that he was outmatched.  At the end of the second (of three) 60 second periods his disappointment crescendoed and erupted into tears, doubling his embarrassment.  He spent the third period struggling to keep from getting pinned with tears streaming down his face.

Personal Failure

The worst part was that he still had two matches to go, and having seen the other two kids wrestle already, we knew it wasn’t going to get any easier.  He wanted to quit and go home.  What was I to do?  Parents in the movies always have the right thing to say, but I was searching and finding nothing; that is, until I remembered Tim Tebow.

We live in Baltimore, and that means we root for two teams—the Ravens, and whatever team the Steelers are playing—but over the course of this season, our household also admittedly got wrapped up in Tebow fever.  We’re suckers for underdogs and comebacks.  But what impresses me the most about Mr. Tebow is not his ability to win, but his grace in failure and his impervious defense against capitulation.  Whether deified in victory or discarded in defeat, he seems to maintain the same sincere posture of positivity, even after Denver’s 45-10 loss to the Patriots.

Kieran indeed lost his final two matches, but got successively stronger in each.  In the third, his dedication even earned him a couple points against a far superior opponent and a small cheering section of coaches, parents and teammates anxious to affirm his courage in the face of sure defeat.  He carried himself with respect and a sincere smile on his face to the fourth place (out of four) podium.

Financial Failure

Kieran’s story has little to teach us about money, but much about failure.  In no period since the Great Depression has financial failure been so widespread and felt with such impact.  There are those, like my son, who did everything they could to improve their chances of success, but lacking a certain level of experience or knowledge found themselves pinned down by the weight of decisions that turned on them.  Even many of those eminently qualified and gifted—like my friend and financial planning colleague who bared his soul sharing the story of his real estate blunders during the crisis—were humbled in defeat.

Losing your home, losing your job, or losing your ability to retire due to market losses is harder to handle than losing a football game or a wrestling match.  Failure of this magnitude can be absolutely crippling.  But it is, indeed, possible to gain something from losing.

The Depression Baby generation became the best savers in U.S. history (see Beyond Our Means, Princeton University Press, 2011).  Foreclosure and bankruptcy have spawned inspired financial counsel that has changed the lives of millions for the better (see Dave Ramsey).  Many job losses have imbued the aggrieved with enough frustration towards corporate hierarchy that they’re becoming our next wave of innovative entrepreneurs (see report by the Kauffman Foundation).  And market losses have encouraged the first generation of early retirees to pursue meaningful vocations they’re happy to perpetuate over occupations they were racing to end.

I’d love to know what you have gained through loss or failure, so please share in the comments section if you’re willing.

(This wasn’t the only emotional experience I had with Kieran this past weekend relating to sports and somehow, in my mind, things financial.  I wrote about the other in my Forbes blog this week—you can read “What Do NFL Playoffs And Money Have In Common?” by clicking HERE.)

Horse Sense

by Jim Stovall

More than virtually any other animal, horses have impacted the way we humans have lived throughout most of recorded history.  Many of us who have lived in the 20th and now the 21st centuries, have no direct connection to horses, but there is still much they can teach us.

Recently, I was reading about draft horses which are very large, muscular animals that, throughout history, have been used for pulling great loads and moving very heavy objects.  A single draft horse can pull a load up to 8,000 pounds.  The strength involved in this is hard to imagine.  So then we can speculate what would happen if we hooked up two draft horses to a load.  If you instantly thought two draft horses could pull 16,000 pounds if one draft horse can pull 8,000 pounds, you would be wrong.  Two draft horses pulling together cannot pull twice as much as one.  They can actually pull three times as much.  The two draft horses that can each pull 8,000 pounds alone can pull 24,000 pounds working together.

The horses are teaching us a very clear lesson in teamwork, but they still have more to teach us.  If the two horses that are pulling together have trained with one another and have worked together before, they can’t just pull three times as much working together as they can by themselves.  The two trained horses in tandem can actually pull 32,000 pounds, which is a load four times as heavy as either of the horses could pull by themselves.

The powerful lessons that these magnificent draft horses can teach us involves not only teamwork but coordinated and trained collaboration.  No one lives or works alone as the proverbial island unto themselves.

I have many friends and colleagues who telecommute.  This is a phenomenon that has gained popularity in the last few decades.  Many people avoid lengthy and expensive commutes and high-priced office space by simply working from home.  This can be very effective and efficient for some people; however, just because there is no one else around doesn’t mean that these people work alone.

The very technology that allows us to work independently requires the coordinated efforts of more people pulling together than has ever existed throughout history.  We now work regularly with people whom we have never met.

Recently, I co-authored a book with Tim Maurer—www.TheUltimateFinancialPlan.com.  Co-authoring a book involves tremendous coordination and constant communication.  Throughout the process, it was vital that both Tim and I fully understood and agreed upon very sensitive areas and directions within the manuscript.  I’m very pleased to report, thanks to Tim Maurer and our publisher Wiley and Sons, the co-authoring of the book The Ultimate Financial Plan was a very productive and enjoyable process.  I think we have a far better book than either of us could have written alone, but the ironic fact is that Tim Maurer and I have never actually met one another.  I have been on his radio show, we have done teleconferences, exchanged video messages, and edited one another’s manuscripts, but we have never been in the same place at the same time.  Unlike the draft horses, we can multiply the power of one another’s efforts without having to physically be in the same harness.

As you go through your day today, harness the power and productivity of teamwork, but be willing to expand your definition of collaboration far beyond your own time and place.

Today’s the day!