The Rabbi, The Monk, The Money

I know, the headline sounds like the beginning of a well-worn joke or a film title that’s trying too hard to be irreverent. But here’s the thing: this post is really about a Rabbi, a Monk, and Money, as odd as the title may seem. Then again, this is BuddhaMoney. And we’re known to sprinkle spirituality into the money mix, you know, for the sake of leading you toward a balanced, fulfilled life. Because, hey, this is who we are and what we do.

Digging deeper than the snappy title, this post is about whom you choose as a financial advisor, mortgage broker, or anyone else hired to care for money related aspects of life.

That said, it’s not that you need to choose folks of the cloth for financial guidance. And, anyway, it’s not like there’s a whole lot of spiritual gurus out there who double as profit seeking money experts. But there are some. Or a few, anyway. Um, well, let’s say four that I’ve come across. Still, regardless of scarce availability of sage-turned-crackerjack-financial-pro, we can learn from the ones who do exist.

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Does Money Matter? Oy! Do You Really Need To Ask Such a Question?

There’s this guy named David Frankel. Frankel works as a mortgage broker in Philadelphia. His previous gig included, among other responsibilities, officiating at weddings and bar mitzvahs as a Rabbi.

Like other quality mortgage brokers, Frankel knows the ins and outs of mortgage related issues. And he surely does his best to secure the lowest possible rate on terms most favorable to clients.

Okay, sooooo … what differentiates Frankel from competitors? Given that there are other quality brokers out there, what makes Frankel a guy you want to hire? Does his rabbinical knowledge and experience translate to a business edge?

Lets answer this by turning back the clock to the middle / late aughts. Remember 2007-2009, when the financial world imploded? And the building blocks for the economy busting meltdown were constructed with unsavory, immoral, dishonest (I’m being kind here) people and institutions intent on making a buck for them self any which way they could?

There was something missing from these kind of people, the kind who didn’t think twice about taking part in the Get-It-While-You-Can-Get-It-While-Its-Hot festival of selfishness and greed. What was missing? How about a crazy little thing called Integrity.

And this is Frankel’s edge. Integrity. In an industry where self worth is measured by net worth, this is where Frankel, and others (spiritually learned or not) with equal parts Integrity excel. These are the kind of people who stitch together the fabric of society. These are the kind of people, truthful people, who you want to hire for money matters.

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In the mortgage business, people like this do not try to provide you with the largest mortgage possible (so the lender may make more money) nor an elephant size Home Line of Credit (so you may be tempted to borrow more against the equity in your home thereby increasing your debt so, again, the lender may make more money). Instead, their purpose is to provide you with nothing more than a mortgage that suits your needs and fits your financial circumstances.

And before rushing through paperwork and sending a bucket of money your way, they patiently learn your needs through asking questions. And listening. And caring. And encouraging you to consider what a home means to you, what money means to you. And when all is said and done, the person with Integrity is just as satisfied with a fair transactional profit as they are with knowing that you, their client, is equally satisfied.

Frankel, and people like him, are the kind of people you want to deal with. Genuine people whose actions are guided by honesty, compassion and a sense of fair play. Guided by a crazy little thing called Integrity.


 Chewy Bit

For a riveting ride inside the minds that cratered Main Street and Wall Street, read The Big Short. It’s a movie too but the book offers way more detail and is equally fascinating.


Suffering Prevention Specialist

The basis of some religious teachings is something along the lines of … ‘suffering exists; we will teach you how to overcome suffering.’

Doug Lynam, former Benedictine Monk, current Financial Advisor, sees himself as a Suffering Prevention Specialist. (Gotta love the job description!) Like Frankel, Lynam truly cares about his clients, saying that his work “requires all of my mind, heart, and devotion”.

Specifically, he’s focused his efforts toward reducing suffering among schools and their employees. Seems that there have been too many schools farming out employee retirement plans to incompetent, or even negligent, money managers. The result being the blowing up of later in life dreams through depletion of pension assets.

Lynam’s response? Instead of smoke billowing out his ears or filing a frenzy of lawsuits, Lynam calmly steps up and takes action by devoting him self to helping schools build more effective retirement plans. Because it wouldn’t be enough to only sympathize with the plight of those who have suffered financial wrongdoing. The sympathy, the compassion, has to be combined with mindful action that helps people.

And together with other caring people working at LongView Asset Management (including a Hindu Nun and a Buddhist Chaplain), Lynam takes action not only through constructing and implementing sound financial plans. He also walks the extra mile for clients … because that’s who he is.

In this sense, Lynam helps people work through other issues loosely related to finances:

“Perhaps one of the cardinal sins that I see the most, though it’s not a popular one to talk about, is sloth.

Some people are afraid but also a little lazy, and they don’t really want to do the hard work of facing their mistakes or lack of organization and knowledge on these subjects and take responsibility.”

Here, Lynam recognizes the life challenges and difficulties people experience. And he does what he can to educate, guide, and help people alleviate their suffering.

Well, I wouldn’t be going out on a limb here in saying that Lynam is certainly not your typical financial advisor. But he is the kind of financial advisor from whom most everyone would benefit.

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Integrity Is Available For All

Like I said earlier, there aren’t a whole lot of spiritual gurus out there who double as money experts. But there are others plying their trade in the financial industry whose principled, stand up values inform their work and their approach to business relations. These are the kind of people you want to do business with; people who show by their words AND actions that they care about you and your family. People with Integrity.

 

Women: Beware Male Financial Advisors

85% of financial advisors are men. Of this 85%, the vast majority fail their female clientele. And this failure is largely two-pronged: first, it’s the result of knuckledragging men working in a testosterone laced environment that doesn’t try to learn, or is biologically incapable of learning, that women approach investing differently than men and; second, for both knuckledraggers and the more evolved males, subconscious negative gender perceptions come into play.


BCG Study Confirms Male Financial Advisors Are Bumblers

The Boston Consulting Group (BCG) is a management consulting firm with more than 60 offices worldwide. A few years back, BCG undertook a Comprehensive Study focused on women’s experience with financial advisors (FA).

The study’s results revealed that women expressed many of the same complaints about FAs as did men, such as: dissatisfaction with communication, quality of advice, lack of tailored solutions, and having to wade through an absurd pile of bureaucracy.

While all that could be fairly anticipated, what raised hairy eyebrows were these additional frustrations voiced by women: a sense of subordination, unequal access to information and deals, inadequate attention, and less favourable financial terms.

And we’re not talking about a few dissatisfied outliers. Nope. What we have here is a majority revolt as borne out by the following unfudged numbers:

  • 73% of women say they’re not satisfied with financial advisory services.
  • 80% of widowed women fire the FA within one year of their husband’s death, then hire a new FA.
  • 87% of women said they could not find a FA with whom they ‘connect’.

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It’s All About Relationships

Referring to the above bullet points, let’s deal with issues one and three first.

Annoying, Socially Inept FA

It’s no surprise why the majority of women are annoyed, or downright frustrated, by their FA.

The financial industry trains FAs to think in a detached, analytical manner, with the only item of any consequence being money. And as long as the FA earns money for clients, as long as portfolios perform according to plan, then clients will be happy. Granted, this approach works for most men.

But not so for women. Instead, women take investing proficiency for granted in a FA. After all, it’s their job and the expectation is for the FA to perform well at their job. What matters more is building a trusting relationship, connecting, with the person charged with responsibility for their money.

Unfortunately, too many male FAs have a knack for chipping away at trust, thereby alienating female clients. They do so in a number of ways including:

  • Lack of Respect. Disrespecting women through time honoured patronization and condescension, speaking to female clients as if only a man could do the job and the female client should not bother to ask trivial questions because, surely, investing is beyond a woman’s capacity;
  • Harmful Stereotypes. Stereotyping money management needs according to gender. As if one-size-fits-all women investors. As if all women should be shuttled into low risk securities. As if investment decisions are solely based on social issues, such as sustainable or green investments, rather than considering these issues together with portfolio strategies focused on performance. As if women are not interested in investing. As if women are not the decision-maker where a married couple is involved; and
  • Dishonesty. Being evasive about fees and charging women higher fees than men.

Good Riddance

On to the second issue, 4 out of 5 women fire the FA after hubby checks out of this planet. Kudos to them!

Look, imagine you and your spouse deal with a FA for an extended period of time during which the FA consistently, repeatedly, unfailingly speaks only to hubby regarding investment matters because hubby was marked as the go to guy on all joint accounts as soon as he gave FA a firm, manly handshake and mentioned last nights score in the football game.

And when you try to weigh in, you’re undermined, belittled, treated as if you are an unknowing child. What’s shocking and unfortunate is that the FA stayed in the picture for as long as he did.


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So What if Male Financial Advisors Don’t Understand Women?

So … what does it matter that male FAs don’t understand female clients?

Well, in the financial advisory business, the more money you manage, the more money you earn. Because fees are most often generated as a percentage of assets held, the goal is to continually increase the amount of money you manage.

To be clear about this, if you’re a FA, and you manage assets for clients in the neighborhood of $50 million (a successful FA with 5-8 years in the business hits this target), and you charge a 1% fee on assets, that translates to gross earnings of $500,000. A tidy sum.

Still, regardless of how much they earn, a typical FA is always searching for more dough, either to grow their business or to replace clients who have chosen to leave. And if the FA fails to connect with women on the money management front, then he’s seriously denting his earning potential.

Why? Because women now account for 57% of university undergraduates and 59% of graduate school students in the USA, and higher education typically means higher earning power. Because 40% of women earn more money than their husbands. Because more and more women have joined the ranks of senior corporate executives, professionals, and go it alone entrepreneurs, earning larger and larger paychecks. Because the greatest wealth transfer ever is happening now, with trillions of dollars being inherited by Baby Boomers and Gen Xers, and owing to women living longer than men, the bulk of this money eventually ends up under a woman’s full control. Because, today, women control almost $40 Trillion (USD) or 30% of the world’s wealth, and their share of the global money pie is projected to continue growing.

So if you’re a male FA, um, yes, definitely, you want to learn to walk upright to ensure your clientele includes women.


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What Women Want, Investment Wise

Here’s the thing: you don’t get to manage the money unless you invest in the client relationship on the clients terms.

This means listening, really listening to the client, trying to understand her concerns, and not thinking you know what is best for her. It means being honest about fees, empathizing with her fears around money, tamping down the standard male bluster, talking a whole lot less about your self, and creating a financial plan that connects the client to her whole life instead of obsessively focusing on making money as an end in itself.


Is Evolution Real?

The way I see it, about half the human population wants to turn the clock back to some illusory golden era, the other half wants to move forward.

If your FA belongs to the delusional pack, and is more comfortable pretending he’s master of the universe, then its time for a switch. Whether married, single, divorced or widowed, fire Mr. Knuckledragger and find your self an emotionally balanced, 21st century FA, whether male or female, someone you can trust, someone who truly cares about you and your financial future.

Of course, for all you BuddhaMoney members, you may recall the blog posted a few months ago about whether or not you should hire a FA or a Robo-Advisor.

If a Robo-Advisor suits you, well then, all these issues I’ve been talking about, they go poof! And you have a pleasant investing experience.

In this regard, for Americans, take a look at ElleVest which is a Robo-Advisor directed to women. I haven’t used the service so I can’t vouch for them, but they’re worth checking out. For Canadians, so sorry, you Canucks are behind the curve on this one as there’s no comparable service offered in Canada just yet.

Money & Marriage: Troublesome Mix

Holding top spot on the chart tracking Things-That-Couples-Fight-About? Money.

No matter how much you have or don’t have, money triggers disagreement between couples. Why? Well, let’s introduce this issue by saying that everyone has their our own approach to spending, saving and investing money. And it’s rare for two people to consistently be on the same page with their money thoughts and feelings.

But here’s the thing: it’s never just about money. It’s deeper than that. It’s complicated and thorny and knotty and tricky and just plain tough.

Below the surface, sowing the seeds for argument, is the issue we all have to face one day (no, not the one where you question why and how you morphed into your parent): what does money mean to you?

  • Does money represent Safety? Power? Love? Control? Success? Freedom? Prestige? Generosity?
  • What did you learn from your parents (our typical role models for managing money), how do you emulate their saving and spending patterns, and have you questioned why you emulate them at all?
  • Do you share money decisions with your partner? If yes, do both of you have a fair and equal say regarding money decisions? If not, you absolutely have to look into this because, unless your partner sports wings (hint: heavenly angel), resentment is growing.
  • As for the person earning less money, is their self-esteem taking a hit; feeling as though they don’t measure up because they’re not contributing enough dough to the relationship? And maybe not receiving enough respect for other contributions and accomplishments?

Potentially, it’s a minefield, this whole money and relationships business! But do not fret, for all is not lost for those who read on.

Communication and Flexibility

Okay, so you love each other, maybe you’re even nuts about each other (good for you!) but when it comes to finances, there is close to zero compatibility. What do you do?

Talk to each other. Open up. Reveal your hopes and dreams and fears and debts and assets. In a relaxed, peaceful way because, hey, this is your partner and you love her/him, and there’s no place for anxiety where two healthy adults are discussing what is the best way forward for both of them.

When you’re talking, expect to compromise, to take one or two or three for the team because that’s what teammates do for each other. They understand that money management is a joint responsibility, recognize the pressure that their partner is under, empathize with the particular emotional money-related baggage carried by their partner, and help out where possible. The bonus of working together? Disagreements are kept to a minimum, and you’ll respect each other that much more.

No Two Ways About It: Budgets Are Not Sexy

Sexy, shmexy. So it’s not your idea of fun. Okay, got it. Opinion noted. Now, forget about judging the process and acknowledge that drafting a family budget is The Most Effective Way To Track Your Money.

And when you track your money, you are soooooo much more likely to reduce frivolous spending, contribute to savings, achieve your financial goals and … (drum roll please) minimize money related disagreements thereby making for a more loving and peaceful relationship and life.

I mean, if you both want to retire at, say, age 55, and move to Peru because you do not want to live another day without sipping their unbelievably delicious, delectable coffee then, budget-wise, what do you have to do to make this happen?

If you want to buy a home, top up your investment accounts, save for the kids education costs, pay off the mortgage … again, figure out what needs to be done and structure the budget to make goals a reality.

As the architect of your life, you are much more likely to build according to plan when you actually have a plan, i.e, a budget. And you review the plan once or twice each year, adjusting as necessary to account for life changes. The alternative, which rarely works out well, is something called ‘a hope and prayer’. I don’t recommend this.

For those who get a headache just thinking about the task of drafting a budget, well, technology to the rescue! There are a whole bunch of money management programs that smooth the process. For starters, take a look at Mint and Learnvest.

Whether you rely on this kind of program or not, the point is for you to do whatever you need to get that budget in place, to ensure your plans turn into reality according to your schedule.

Two Becomes One

In a healthy relationship, there is no more ‘yours’ or ‘mine’ when it comes to money matters. When you hitch your wagon to another, you sign up for the assets and the debts.

As a team, you’re building together for a common future. And if you don’t accept this line of thinking, um, well, money issues will definitely be an ongoing source of stress. Because by not accepting the team concept, you’re going at it alone and, last time I checked, marriage was exclusively a team game. The go-it-alone approach? That’s just a sign of deeper issues, starting with lack of respect and trust that will ultimately corrode your relationship.

Shhhh! It’s Secret

Referring back to the ‘Marriage Is A Team Game’ line of thinking, don’t hide money issues from your partner. Don’t keep a secret credit card or make large purchases without telling your partner. In the wider world, that kind of behavior is called deception and it’s not looked upon kindly. Because if you intentionally deceive your partner, then it’s not about money, it’s about trust, and lack of trust is not healthy for any relationship.

That said, no one cares to be micro-managed. In this regard, you may want to agree upon a dollar amount that would activate the I-should-tell-my-partner-about-this purchase-because-I-love-my-partner. For example, both of you agree to make a point of telling the other when making a purchase costing more than $100, or whatever dollar amount suits you. And this sort of behavior has the added bonus of reinforcing trust and respect, and making life peaceful and loving for the long haul.

Thrifty Couples Are Happier

It’s not about the money or being a miser. Rather, it’s about what you value. If you value relationships, friends, giving effort, and purpose, then you walk hand in hand with happiness. And if you value loading up your existence with material stuff, then the worse off you’ll be as far as happiness goes.

Of course, this notion of value I’m spouting is from a bygone era. It doesn’t have to be but that seems to be the general direction of things.

Fact is, we live in a society that elevates a corporate culture promoting product cycles lasting maybe six months, one where we consumers are encouraged to buy the latest model, the biggest home, the most luxurious car, and spare no expense because (hello banks and lending companies!) you have the option of borrowing money and going further into debt.

Stuff. It’s a powerful draw for most of us. The mere wanting of stuff is enough to turn some of us into bobbleheads; bouncing around excitedly, our mind shut off from any other thoughts, like the inevitable weight we’ll feel under the burden of credit card debt or home line of credit debt, and the gloomy pessimism we experience when our financial hole gets deeper and deeper. Most importantly, the damage that excessive consumption and resulting debt does to meaningful relationships.

The thing is, the so-called Disney created ‘American Dream’, it’s not about having everything you want. Nope. It’s about achieving self-sufficiency, knowing that you do not have to rely on someone else for your livelihood. And the more you spend, the more you consume, the less likely you will ever know this kind of freedom or happiness, the kind that thrifty couples know really well.

Manufacturing Trouble

Sure, potentially, money and relationships present a minefield of trouble. But it doesn’t have to be this way. And it won’t be this way if you’re willing to put in the effort to understand the source of your own feelings about money, and to respect, trust and engage in an ongoing, open dialogue with your partner. Do this and eventually money will lose the top spot on the Things-That-Couples-Fight-About chart.


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Enter Buddha

Love one another, but make not a bond of love.
Let it rather be a moving sea between the shores of your souls.
Fill each other’s cup but drink not from one cup.
Give one another of your bread but eat not from the same loaf
Sing and dance together and be joyous, but let each one of you be alone,
Even as the strings of a lute are alone though they quiver with the same music.

 

 

Powerful Women Pay A Price

Sheryl Sandberg, Facebook Inc. (NASDAQ:FB) Chief Operating Officer, wrote a book titled, Lean In: Women, Work, and the Will to Lead. The crux of the book’s message is that equal treatment of genders remains a far way off. To remedy this problem, argues Sandberg, more women need to be in powerful positions.

It isn’t that all women need to be political, financial or business leaders. Rather, the message is that women, in general, would benefit from more women in leadership positions; leaders who would give voice to women’s needs and concerns thereby resulting in more equitable regard for all women.

But hey, I’m a guy. Best to get some back up here from an extraordinary woman, Christine Lagarde, Managing Director, International Monetary Fund, who said:

When it comes to thinking about women in powerful positions, we are too often blinded by the daggers of the mind, infected by the malignant mind bugs that mire us in the prejudices of the past.

We need a 21st century mentality for women’s economic participation. We need to flush away the flotsam of ingrained gender inequality.”

Courage and Smarts

Certainly, many women today have taken hold the reins and then some. A few random examples include: Ginni Rometty, IBM Chief Executive Officer (NYSE:IBM); Indra Nooyi, Pepsi Chief Executive Officer (NYSE:PEP); Angela Merkel, Chancellor of Germany; Janet Yellen, USA Federal Reserve Chair; Jody Wilson-Raybould, Attorney General of Canada; and Abigail Johnson, Fidelity Investments USA Chief Executive Officer.

These women are to be admired for a host of reasons, not the least of which is overcoming bias inherent in a societal system built by, and favoring, men.

As importantly, they may be looked upon as positive role models, as people contributing to refashioning a society blinking less and less when a woman rises to the top, be it in business, politics, finance, law, media, medicine or any other industry.

And owing to the courage and smarts of this sort of exceptional woman, my teenage daughter is growing up in a society where arbitrary, destructive, gender barriers continue to be pushed aside by determined, forward thinking, progressive, not-stuck-in-the-Pleistocene-era women and men. For this I am grateful. For a kinder, gentler world, we will all benefit.

Cost Of Breaking Glass Ceiling

Yet, is there a downside cost to women climbing a stairway to the corner office?

While shattering of the metaphorical glass ceiling becomes more commonplace, and some women achieve wealth and/or power during their ascent, career success may come at the expense of marriage.

According to results of a study undertaken by psychology researchers Dr. Brian Lewis (University of California in Los Angeles) and Stephanie L. Brown (University of Michigan), published in the journal Evolution and Human Behaviour, many men tolerate, accept, even embrace women participating in the economy on a more equal basis. However, when it comes to wading into the marriage market, men of all stripes show a marked preference for less accomplished women.

The theory goes like this: men’s preference for less dominant women is “rooted in the evolutionary drive to pass on genes to the next generation.”

Meaning, a long time ago, thy creature known as knuckle dragging man possessed limited resources. Not wanting to dedicate sparse means to another man’s child, he sought a submissive woman, one whose behaviour he could “exert some kind of influence” over in order to reduce the threat of paternal uncertainty. Um … to restate that in street lingo, a woman whom HE could control, who would not be seduced by some other hairy, grunting dude.

And as a result of man’s historical preference for obedient women, successive generations of males inherited genes encoding attraction to compliant women.

Evolution Interruptus

So, the more women achieve, the less desirable they become?

If the study’s findings are accurate then, not unlike fruit flies, man is biologically programmed to behave a certain way, including seeking control of his mate. If so, then vanity and insecurity may no longer be held responsible for man’s general avoidance of more accomplished women since, at least in a romantic context, evolution may have passed him by.

 

Should You Trust Your Bank?

My 25-year young niece (let’s call her Millennial Woman) is employed full time earning a reasonable income. Being a savvy saver, she’s now taken the first step to becoming an investor by opening an investment account with her friendly neighborhood bank. Why did she choose Friendly Neighborhood Bank? I asked the same question.

Millennial Woman (WM). “Well, I have my bank account with them so I thought it would be convenient to have my investments there too.”

BuddhaMoney (BM). “And the bank suggested what for your investments?”

MW. “The person I dealt with was super nice and said my money should go into a Balanced Mutual Fund.”

BM. “Why a Balanced Fund?”

MW. “I don’t know exactly but the bank said it was suitable for me given my age and risk tolerance.”

BM. “Hmmm. As for the Balanced Fund, is it managed by Friendly Neighborhood Bank.”

MW. “Yes, how did you know?”

BM. “Call it a wild guess. Did the bank suggest any other investment options?”

MW. “No, but it seemed fine and, like I said, the bank person was so nice.”

BM. (silently) Oy.

Banks Are In The Trust BUSINESS

TD Bank is the 10th largest bank in the USA (NYSE:TD), 2nd largest in Canada (TSE:TD), and ranks number 13 globally. Here’s what Bharat Masrani, CEO of TD Bank, recently said:

“TD is in the trust business. We know we must earn our customers’ trust before we earn their business.”

https://www.thestar.com/business/2017/03/13/report-that-td-bank-employees-broke-law-doesnt-reflect-workplace-culture-ceo-says.html

Masrani is absolutely correct. People deposit their money with financial institutions they believe are trustworthy.

From what I gather, Millennial Woman agreed to open an investment account with Friendly Neighborhood Bank, and follow the financial adviser’s advice to place her funds in an investment product managed by Friendly Neighborhood Bank, because the financial adviser came across as ‘nice’. And ‘nice’ translated to trustworthy.

Look, here’s the thing you have to recognize: first and foremost, banking is a Business. A huge business with tremendous profits at stake [in December, 2016, TD reported quarterly profit of $2.3 Billion (CAD); in January, 2017, Wells Fargo – the largest American bank – reported quarterly profit of $5.3 Billion (USD)]

In business (I’ll state the obvious here), you’re selling services and/or products. And when you’re selling something to the public, the odds of closing the sale are a whole lot higher when you put on a smiley face and make nice with the buyer (i.e., you, the potential bank customer, are the buyer).

So when you’re saying that the salesperson (i.e., financial advisor) is ‘nice’, I’m saying: that’s all fine and good and yes most, if not all, of us would prefer to interact with kind, respectful people. But when it comes to deciding how best to manage your money, really, the salesperson must be offering something more than a pleasant disposition, an attractive face, or a free pen! The salesperson absolutely must convince you why Friendly Neighborhood Bank is the best place for your money to grow.

Banks Are In The Sales, Sales, SALES BUSINESS!

The above quote from Bharat Masrani? It was given in response to media stories detailing TD Bank’s aggressive sales tactics at its Canadian based branches.

Should I be shaking my head, waving a finger, or judging TD Bank for allegedly aggressive sales tactics that are nevertheless within ethical boundaries? Nope. I mean, come on, banks are in the Sales Business! You want to be successful at sales, well, you’ve got to step up and SELL (i.e., persuade, convince, coax, sway, influence, cajole …).

And as a potential customer, my responsibility is to know who I’m dealing with and what is their objective (SALES!). My responsibility is to know that one of the prime mandates of business is growth, and growth comes both from attracting more customers and selling more products and services to existing customers.

Not so coincidentally, Wells Fargo (NYSE:WFC) was recently subject to similar charges as those levelled against TD Bank. The difference being that Wells Fargo was found to have gone a step further, crossing the ethical/legal line of permitted sales practices and subsequently having their knuckles rapped by financial regulators.

https://www.washingtonpost.com/business/economy/it-goes-beyond-wells-fargo-concerns-grow-over-sales-tactics-in-banking-industry/2016/09/16/d83bf4c0-7b73-11e6-beac-57a4a412e93a_story.html?utm_term=.114a4f895a41

Let me be clear here: banks crossing ethical/legal lines should be held accountable and the public should be protected from predatory practices. That said, there’s nothing offside about driving employees hard for the purpose of increasing sales and thereby increasing the bottom line. It happens, and it will continue to happen, and blathering and complaining about a bank’s behavior won’t do much but raise the complainer’s blood pressure.

So … as a consumer, my best line of defense is educating myself about the workings of the financial industry. Because the old saying, ‘knowledge is power’ rings true. And I’m a HUGE fan of self-empowerment.


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Enter Buddha

Unconditionally trust your Self, advocate for your Self, know when to place your Self first.


Trust, But Not Blindly

What could Millennial Woman have done differently?

  • Before meeting with Friendly Neighborhood Bank, research the competition. Learn about the offerings of other financial institutions. With this knowledge in hand, MW would be in a strong position to determine whether Friendly Neighborhood Bank is truly offering the best solutions for her.
  • Recognize that, while an effective salesperson will make you feel good about your self in the moment, employees of Friendly Neighborhood Bank are not in the business of making friends. They are in the business of sales. So put your ego aside and don’t be flattered by the salesperson’s fawning attention. This is a part of their job that assists with closing the deal with a potential customer.
  • Knowing you are dealing with a salesperson, ask questions. For example, given that there exist thousands of mutual funds offered by hundreds if not thousands of mutual fund companies, why should MW buy a mutual fund sold by Friendly Neighborhood Bank? Is there a conflict of interest here? (short answer: yes, of course there is; banks push their own products not because their products are necessarily best for you, the consumer, but because this is more lucrative for them because they earn management fees from their own Funds).
  • Ask not only why you should buy a particular mutual fund, but why you should buy a mutual fund at all? This doesn’t mean that you should not buy a mutual fund, but you should explore the investment universe, and especially consider Index Funds, which typically carry a much lower management fee and perform as well or better than an actively managed mutual fund.
  • Ask why you even need a financial adviser when a Robo-Advisor may perform better for your portfolio.
  • At the end of the meeting, do not commit one way or the other. Simply say that you will think about the information you have been given and will contact Friendly Neighborhood Bank shortly to let them know of your decision. This avoids you being pressured into making an impulsive decision, and gives you time to conduct as much research as necessary to determine which financial institution and which investment products best suit your needs.

Caring For Your Self

As for MW, she’s one amazing person who’s excited and nervous about  entering the world of investing. And she’s agreed to think about what I’m saying here in this post, and to take time to process how this all applies to her situation. Because while she’s still holding fast to her opinion that the financial advisor at Friendly Neighborhood Bank is nice, she also recognizes that her financial future is best cared for when she’s fully informed of all options, and by making decisions that are best for her financial health.

Ethical Investing … Why Bother?

‘Good People’ have a moral compass. ‘Good People’ adhere to universal ethics. ‘Good People’ care about others. ‘Good People’ care about more than just making money. Therefore, ‘Good People’ who invest their money engage in Socially Responsible Investing (SRI). Following this line of thinking, ‘Bad People’ do not engage in SRI, are selfish, greedy, and immoral.

Yikes! On several fronts that’s too, too, too … it just doesn’t sit right with BuddhaMoney. Okay, still, is it True? False? Simplistic? Naïve? All or None or One or more of the above?

SRI Investors: Who Are You?

Before picking a side and jumping to conclusions, let’s flush out the concept of SRI or Ethical Investing, two terms often used interchangeably.

At its core, SRI implies investing in companies that meet a certain standard of corporate responsibility regarding social, environmental and ethical considerations. Generally, investors who take an interest in SRI fall into two camps:

  • Camp 1: SRI is an investment with a charitable component, in which non-financial rewards of the investment are just as important, if not more so, than the rate of return.
  • Camp 2: While corporate SRI practices may add value to their investment strategy, potential rate of return is the dominant consideration.

SRI Fans

As with any issue under the sun, there are proponents and critics of SRI.

Proponents believe that SRI is about ‘doing good’ by seeking a blended return, i.e., investing in companies that offer both strong financial return and social return.

That said, proponents do not hesitate to acknowledge that a business must turn a profit if it is to survive. But, they say, if the only focus is profit then survival is far from assured.

SRI Boo Birds

As for SRI critics, they hang their hat on the words of renowned free market economist Milton Friedman:

“There is only one social responsibility of business: to increase profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”.

Friedman’s followers lay responsibility for social issues at the feet of government, not private enterprise. Further, they assert that SRI investors are willing to accept lower financial returns for only the promise of vague and loosely measured social returns.

What’s the Purpose of Investing?

I’m not looking for a right or wrong answer, or to label anyone Good or Bad. For me, this is a personal issue to be determined by thoughtful examination of your conscience, your beliefs, and by asking your self, what is your purpose for investing?

  • Is investing about ‘doing good’ by seeking a blended financial and social return?
  • Is it about making a difference by supporting organizations that take a stand against human rights violations, lax environmental controls?
  • Is it about penalizing organizations that sell liquor or tobacco, that facilitate gambling and enable addicts?
  • Does ‘doing good’ mean you do not buy shares of companies that bribe government officials, lie and cheat, do not provide safe and fair working conditions for employees?
  • Or does it mean that, although an organization is not blatantly or even slightly offside on the ‘sin scale’, it just doesn’t measure up for other reasons, and whatever those reason are justifies steering clear.
  • Maybe investing is a simpler, singular, concept. I mean, why should it be about anything more than making money?

The thinking here is that if you want to support charitable causes, if you want to ‘do good’, then you will do so through donation of your time and/or money to registered charities, not through investing. Further, so goes this line of thinking, by not restricting your self to investing in SRI organizations, you have so many more available investment opportunities. And the better your investments perform, and the more money you make through investing, the more you are able to support worthy causes.

What do you think? There’s no right or wrong on this one, although some may disagree. The best you can do is to follow your conscience and avoid investing in organizations that do not meet your standards, whatever these may be. Because you have no one to answer to except your self.


Here’s the conventional thinking about SRI Investing:

Advantages

Social Fairness. Through investing, supporting companies that you believe promote social fairness.

Ethics. You vote with your dollars to support organizations that adhere to ethical business behavior.

Disadvantages

Poor Investment Returns. Companies pursuing socially responsible activities may not maximize shareholder value since all capital in the company is not primarily used to increase profits.

Increase Risk. Because there are fewer companies that qualify for SRI, there are fewer opportunities for portfolio diversification. In turn, this may increase overall portfolio risk. As well, companies engaged in socially responsible activities may have higher risk due to lower gross profit margins.

Lost Opportunity. You may be leaving potentially strong investments on the table not necessarily because the company is inherently evil or even terrible on SRI issues but because they don’t measure up to someone else’s standard of what qualifies as an SRI worthy company, even though that company’s products/services do improve the human condition in some manner and creates jobs.

Spin. Few companies do not employ marketing spin. Meaning, the company may be adept at creating an image of social responsibility but less competent at engaging in socially responsible activity. So, it’s essential to do your homework, to know that the company’s actions are in line with its image.

I know, that’s a a fair bit of information to chew on. So, hey, go ahead, take your time, there’s no rush. Once some clarity comes your way on this issue, and if you decide you would like to put dollars to work, you might start by researching the Funds listed below (big important note: I do not hold any of these Funds nor am I endorsing them):

  • iShares MSCI KLD 400 Social Exchange Traded Fund (DSI:NYSEARCA)
[https://www.ishares.com/us/products/239667/ishares-msci-kld-400-social-etf]
  • Domini Social Equity Fund (DSEFX)
[http://domini.com/domini-funds/domini-social-equity-fund]

 


Now, if you decide to buy these Funds or other Funds or companies falling under the SRI umbrella, just remember that your ownership of such securities doesn’t qualify you as ‘Good’ or ‘Bad’ People. Nah. No value judgment. Instead, you’re an investor doing what is best for you and your family.

 

Avoiding Holiday Debt Hangover

Why Give Gifts During the Holidays?

Yes, we live in a consumer society. Our economy would screech to a halt if, en masse, we did not heed the marketing call of the multi-tentacled beast known as … Retail Store.

And, once called, how may we possibly resist? Especially during Christmukkah (this year, 2016, Christmas and Hanukkah overlap so, to the dismay of purists, and the delight of Retail Store, the two holidays are teaming up in an effort to generate a power boost for the economy. My sense, call me naïve, is that conspiring corporate minds are behind the scheme).

The question is not how may we resist but why would we resist? My Buddha, there are gifts to be gotten! Family members, friends, co-workers, teachers, and endless others are counting on us. Because, because, because … this is what we do for others, and what we require of our self. For religious or secular reasons, or simply because gift giving during these holidays is our custom, we do not pause to question. And what’s wrong with that? Gift giving is a self less act. An act of kindness, generosity and goodwill. At this time of year, aren’t we entitled to simply buy without restraint, and take a break from psychoanalyzing our motives?

jingle-bells


Enter Buddha

Be conscious of, and understand, your actions. Know the reasons for doing what you do. Once there is understanding, you free your self of your own, and others, expectations.


Holiday Hangover

Okay, here’s what I’m getting at: do you know how much you spend during the holidays? Can you afford all the gifts? If you answer yes, and your finances will not be worse for wear come the New Year, then good for you. But if you’re in the ‘no’ camp, or say something along the lines of, ‘that’s what credit cards are for’, then I’m here to ask you to please REMOVE YOUR HEAD FROM THE SAND at your earliest convenience.

Kindness, generosity and goodwill must extend to your Self as well as others (for those who interpret my words as meaning you should buy your self gifts, hang in there, I’m about to explain myself better). This means not spending what you cannot afford. Why? Because breaking your budget means you’ll be visited by the Angel of Suffering not too long after the pretty lights come down or the last latke is eaten (lat-ke. Noun. Potato pancake fried in way too much oil, heavily salted, yummy taste, eat too many and arteries revolt).

And to be perfectly clear, if you have to make purchases using a credit card, knowing you will not be able to pay the balance in full by the due date, then this puts you in the ranks of Cannot Afford.

Not having enough money to buy all the gifts that you want is not an issue. Rather, the issue arises when you pretend to be in the Can Afford ranks. Because when you don’t celebrate the holidays within your financial means, the merry season is bound to end gloomy. What happens then? Suffering. And this suffering typically lasts a whole lot longer than a spiked eggnog high.

Once we’ve come down from the toasty endorphin rush that accompanies buying Stuff, and are confronted with the cold reality of a large bill that must be paid in full by the due date otherwise we’ll be charged interest at the prevailing rate as set out in the government approved Credit Card Mafioso Humungous Interest Charge the Sucker Law, we kinda feel … awful.

Our self-esteem takes a hit. We get anxious. Maybe we fall into panic once we’re past the denial stage and admit to our self that our debt has gone up. Again. And we don’t know when or how we’re going to pay it off. And we feel anything but jolly and free. No, just the opposite. Debt is prison.

Middle Way

Buy now, pay later. That’s what we’re sold on, not just during the holidays but all throughout the year. Sure, spending, consuming, benefits Retail Store and the general economy, but is it good for you?

I’m not going to get into what the holidays are all about, because that would be veering too far off the BuddhaMoney path. But I can tell you this: even if the primary purpose of the holidays is gift giving, this has to be done within budgetary constraints. Your budget. And your budget cannot include borrowing to buy gifts. It cannot include falling into debt. Because you will do too much damage to your self.

Think about it this way: when you borrow, you are taking what is not yours. You are taking from your future self; throwing the shackles of debt on to your future self. Why would you do that? Because it’s the holidays and you’ve told your self a story that supports your feeling of entitlement to buy what you want? Because you’ll punt the issue a month down the road, and let future self worry about debt and the accompanying ulcer? Because spending money you don’t have is ‘normal’ during the holidays? Because everyone you know carries debt?

Listen, anyone who cares about you would never accept a gift knowing it would cause you harm. That’s what debt is, financial and spiritual harm. But if we’re not spending money on gifts during the holidays, or giving what we feel are inadequate gifts, what should we do?


Enter Buddha

You are loved for who you are. Knowing how to touch the heart of another, and be touched, is the true gift. Your possessions, your roles, your achievements, your presents, are not you; these are but props, not evidence of your worth.


Hmmm. If you cannot afford to participate in Retail Store mania, give the gift of your self, your time and positive energy. Now there’s an idea. Maybe even priceless. Or, you do what you need to limit spending within a pre-set budget. Doing so avoids the holiday hangover, the terrible stress that comes part and parcel with debt. And just maybe the holidays will be that much more enjoyable this time around.

First Comes Love, Then Prenup?

First comes love, then comes prenup, then comes marriage?

Honeymoon Haze

Some three years ago, when friends of mine learned that I was ready and willing to tie the knot for the second time, they asked whether I had considered a prenup.

Hey, friends are good for that, for looking out for you when you might be wearing blinders. Was I wearing blinders? Well, I will say that the thought of a prenup hadn’t crossed my mind, even though I knew that more than 60% of second marriages in the US and Canada end in divorce.

The thing is, the woman I was soon to marry, my wife, best friend, my partner in laughter and joy, was the kindest, most gentle soul I had known and my brain hadn’t imagined, couldn’t fathom, a scenario where not only would we divorce but she would be unfair toward me in any way. Upon hearing words like this, sensing I had floated up to cloud nine, my friends repeated, with more urgency, the need to consider my finances.

Of course, my brain had been dipped in honeymoon juice, as are all brains when they journey through the honeymoon phase. You know, that period of time when the shiny new love of your life is perfect. If they habitually pick their nose, they’re perfect. If they run a half-marathon, smell like a skunk and refuse to shower, they’re adorable. You’re so ramped up on pleasure hormones that even the disco pop tunes they play every day at five o’clock while drinking a pina colada are filling your heart with warmth and desire.

Still, at some point, as it always does, the haze lifted. And when my feet touched ground I asked myself whether a prenup was good for me. And I decided it wasn’t.

Why? Well, being a guy who knows a fair bit about finances, who knows that conflict over money is a primary reason for break ups, you would think I would minimize my financial risk by having an agreement in place that protects assets I bring into the relationship. That said, my gut told me to assume a holistic view of our impending union (interpretation: the romantic subdued the pragmatist, for better or worse).

For me, marriage is about two people wholeheartedly sharing their life with each other, and part of that sharing includes finances. If you keep finances separate, then you are holding back, putting your self first. And that just didn’t sit well with me. If you’re going to say “I do” you better be willing and wanting to step in with both feet.


Enter Buddha

One is not compelled to marry. Rather, each person has the freedom to decide whether to marry. If that decision is made, then the two people have entered into a partnership. By their nature, partnerships are to be equal.


Under the Bodhi Tree

To challenge Buddha (who would wholeheartedly welcome any challenge), you have to ask whether he would have benefitted from a lawyer and a financial advisor sitting with him while meditating under the Bodhi (pronounced Boh-dee) Tree.

I mean, isn’t it simply a matter of taking care of business that you go with the odds (50% failure rate of first marriage, 60% in second marriages, and atrocious if you venture into marriage a third time or more) and protect your self financially? If you bring a whole lot of dough to the marriage and are used to living a certain lifestyle, why give away that slice of pie to your former spouse after the pillars crumble? Or if you contribute significantly to the marriage in non-financial ways, don’t you have a right to determine beforehand a fair amount of financial compensation for valuable contributions made during marriage?

All In Favour

Agreed, prenups do not fall under any sub-genre of Romance. Regardless, given the close to even odds of marriage ending in divorce, how could you not bring up the issue before the wedding date? A prenup is actually good for your marriage; it may even help sustain your marriage. How so? It will force you to openly discuss what assets each partner is bringing into the relationship, kinds of debts and how much, likely inheritance, saving and spending habits, and financial goals.

The prenup’s basic function is to protect each spouse’s pre-marital assets from a claim by the other spouse in the event of death or divorce. Specifically a prenup may state exactly how much your partner will share in your pre-marital assets in the event of divorce or death (especially relevant to those with children from a prior marriage).

But that’s not its only function. The prenup may also protect assets acquired during marriage by setting a fixed amount for spousal support or eliminating spousal support altogether.

Considering that the median marrying age in North America is approaching 30, it’s more likely that those entering marriage for the first time are bringing assets with them and, just as importantly, debts. For those entering second and subsequent marriages, you likely have more assets, and possibly debt, than when you were younger. All the more reason to have a full discussion about what each of you are bringing to the table. The thinking being that, on divorce or death, the certainty provided by a prenup minimizes destructive arguments about entitlement to assets, as well as minimizing court proceedings and scary legal costs.

All Opposed

Why an agreement focused on selfishness, on me, me, me rather than WE? An agreement that weakens the union through imbalance of financial security? Do the two partners arrive at the table with the same hand? No. One will have less money, fewer assets, therefore less bargaining power. Should one partner object, and the other partner be determined to forge ahead, what is the one with less money to do? What can he/she do? Call off the wedding?

Discuss, discuss, discuss! Absolutely you should discuss money and finances, what you have, what you owe, your spending patterns, values, and financial goals before vowing to spend your life by each other’s side. It would be foolish not to do so.

But why the desire, why the need, to lawyer up and legal language your discussion such that you walk away with a formal contract that sets out ways in which one partner will withhold property from the other, a contract that moves love and trust to shaky ground, one that separates and undermines the marriage before it starts?

Protecting Both Partners

It isn’t uncommon to believe that the wealthier partner is the one clamoring for a prenup. Sure, this may be the case. But a well-crafted, fair, prenup is designed to protect both partners. If you bring big dollars to the marriage and are used to living a certain lifestyle, you’ll want the agreement to specify how much you would owe to your spouse on divorce. And if you contribute to the marriage in non-financial ways, and are sacrificing a career to raise children or pursue other interests, then you want the agreement to spell out fair compensation for your contributions.

Bodhi Tree Revisited

Whether or not a prenup is right for you, well, that’s a personal decision. Should your marriage end in divorce, will a prenup minimize the anguish that typically goes hand out of hand in divorce proceedings? Possibly. Will it make for a more fair settlement of assets? Maybe. Overall, will it help or harm you and your spouse? That’s uncertain. Best I can say is that you should both be on the same page on this issue. If you disagree, with one partner wanting the prenup and the other opposing, and are unable to find compromise, then for the peace and continuing existence of your relationship, it’s not worth it.

So for all you lovebirds thrown off course by the prenup issue, go find a Bodhi tree (or an Elm, Fir, Arbutus, Maple, Redwood or any other tree) of your own to facilitate reflection. Tap into your inner Buddha, share your truth with your partner, and figure out what is best for both of you.