Wednesday, January 20, 2016

Continuing Connection V: My Dog Is Not A Toaster Legislation

Continuing Connection V: 
My Dog Is Not A Toaster Legislation

            By law, your dog(s) & cats(s) which 70%+ sleep in your bed, which in the case of dogs increase your longevity 7 years (AIG commercial), which 90%+ of you believe are family members – are no different – per your state legislatures and the laws they have enacted – than a toaster.
            That’s correct – your state legislature continues this classification that your dog(s) & cats(s) are toasters – even though there is precedent to change this:

  • There are cruelty laws for the protection of dogs and cats – not toasters
  • Dogs and Cats can be designated beneficiaries of a trust – not toasters
  • Emergency Medical Service Now Available as 013/20/14 by Law in Colorado for Dogs & Cats - not toasters 
 Furthermore, let us compare companion animals (domesticated non farm animals – dogs and cats) relative to 3 tests considered ironically for being human. But before making these distinctions – let me tell two stories – one very personal story.
Relative to self awareness when it came to taking care of itself and more likely you when ill – even if it meant – not going for his leash at the designated daily time – rather staying in bed with you? Now all puppies chew. Please explain how my black standard poodle Moses – chewed only one thing – one time – one time only – my Shabbat prayer bencher book (which now 15 years later, I use every Friday night Shabbat and when the time comes I shall be buried with).
Now another very personal story.
In 2005, I went through 28 courses of radiation for a T1 larynx cancer (even though I never smoked). My male black standard poodle, Moses (who graduated in 2013) nightly during the radiation would lay his head ever so gently on my neck until I fell asleep. After the protocol ended – Moses no longer put his head on my neck – resuming capturing my hand for petting and or also putting his head check to check or on my chest.

As for self awareness…
Self awareness is knowing they know. Ever see that guilty look on your dog’s face when he’s been naughty.
A story of self awareness and Werner’s butterscotch candies.
I like Werner’s Butterscotch candies (more than I should) – you know the ones in the gold wrappers.
Well obviously, I left an open bag on the kitchen counter top.
When I came home, my standard poodle Moolah had several gold wrappers from the Werner’s Butterscotch candies in the fur on both of her ears.
When I asked Moolah as she sat adorned with the gold Werner’s Butterscotch candy wrappers on her ears, ‘Moolah, did you get and eat my Werner’s Butterscotch candies?’
Moolah shook her head in the negative.
Tell me she didn’t know that she knew.

So here are the 3 tests for comparison of ‘humanness.’

                                                            Companion Animals Toasters  Most Humans
1.      Self awareness                                  yes                   no                    ?
2.      Ability to understand complex        yes                   no                    ?
3.      Capacity for empathy                      yes                   no                    no       

And 50 states and their legislatures still consider – with the acquiescance of state veterinary associations that your dog(s) & cats(s) are no different than toaster. (I should have added a 4th column for Veterinary Associations & State Legislatures)


Tuesday, January 19, 2016

YOUR DOG WILL THANK YOU: Continuing Connection VI: Steinbeck & Biblical Joseph:

Continuing Connection VI: Steinbeck & Biblical Joseph:
The Recent Market Decline & Personal Financial Anxiety

And, behold, there came up out of the River seven cows, handsome and fat of flesh, and they fed in the reed grass. And, behold, seven other cows came up after them out of the River, ugly and lean of flesh, and stood by the other cows upon the bank of the River. And the ugly and lean cows ate up the seven handsome and fat cows.
(Genesis 41:1–4)

Joseph’s interpretation to Pharaoh: there will be seven years of plenty, symbolized by the handsome cows in Guccis™ & Jimmy Choos™, followed by seven lean years symbolized by the emaciated cows(having consumed the fatted protein cows actually losing weight (the historical first Adkins Diet).

And it never failed that during the dry years the people forgot about the rich years, and during the wet years they lost all memory of the dry years. It was always that way
Steinbeck, East of Eden

            Fat to emaciated; client amnesia wet years forgetting the dry years – the dry years forgetting the wet years – wet dreams and schemes.

            The question is not ‘how one did relative to the indexes in this down market/dry year to date’ which is the inquiry of the habituated MOREon but rather ‘do I still have ENOUGH?’ Managing assets (more, more, more – relative) increases personal financial anxiety the during the dry years, emaciated goals and therefore portfolios while ENOUGH, in contrast, lowers the anxiety during these periods do due managing goals for sustainability.

Remember the wet years & manage one’s personal financial goals (rather than managing assets) to reduce personal financial anxiety & emaciation.

And Yes, Your Dog With Thank You
(For Continuing His Upgraded Diet: Warmed Raw. Cooked,
 or Better Kibble Diet vs Being
Downgraded to Pedigree™, Old Yeller, Kibbles & Bits etc.)

YOUR DOG WILL THANK YOU:Continuing Connection Part IV: Picking Pet Health Insurance #2

Continuing Connection Part IV: Picking Pet Health Insurance #2
Your Dog Will Thank You

            Stipulating to Schwartz’s Insurance Law (what good is a Cadillac with no gas in the repair shop, or what good is a Yugo, with gas, in the repair shot all the time): while pet health insurance coverage has become better since the 1990’s that’s a relative statement like – being the winner in a beauty contest of uglies.
            Without there are carrier(s) that:

·         Have good coverage, a deductible per year (not per incident) but an insurer that has 3.84 per 100 complaints (which is only closed complaints not open nor ‘the hell with it’ complaints figured in which could mean 3, 4, 5 times the amount – not getting paid, getting paid less on claim etc.
·         Have very good coverage, but a non rated insurer (Yugo) behind it
·         Have a very good carrier, but go by condition for each deductible and tried to take symptoms like diarrhea (which 30%+ of puppies have) to be pre-existing illnesses to deny coverage
·         Giveth on one hand – and taketh on the other when examining policy language
·         Have unlimited catastrophic coverage in total – but limited per incident

You get the idea – gotchas, gotchas, gotchas …handing you an umbrella when it isn’t going to rain
So here is the checklist if you choose a pet health insurer

1.      A+ Bests and or AA S&P rating (remember no guarantee as Mutual Benefit Life went down with a AAA and A+ rating & remember all those mortgages in the meltdown of 2008 that were A+ rated by those bastion of integrity rating agencies
2.      No exclusions for hereditary conditions
3.      Yearly deductible preferable, secondarily per condition, lastly per incident

(What this means is once you meet the deductible for the year then reimbursement begins whereas, on per incident there is a deductible for each occurrence covered. So if you have 4 incidents during the year – a new deductible for each during the year. As for per condition, a new deductible for each condition though not each incident of the condition during the year.)

4.      Minimum $15,000 lifetime coverage – preferable at least $10,000 per year coverage restored each year – and not limited by a per incident

(For example a policy that states for example $50,000 lifetime coverage but has a $2500 per incident coverage  effectively eviscerates the coverage given a $5000 injury is only covered to the extent of $2500 despite the $50,000 supposed coverage. This is handing you an umbrella when it isn’t going to rain.)

5.      Preferable: alternative care is standard (acupuncture, homeopathy, chiropractic, etc under the supervision of a veterinarian)
6.      Pre-existing illnesses – restored coverage after being 1 year or less condition free
7.      Waiting period before coverage begins – 30 days or less
8.      Coinsurance after the deductible is split minimum 80% paid by the carrier, 20% by the guardian
9.      As long as premiums are paid and current – the policy can’t be cancelled.
10.  An NAIC (National Association of Insurance Commissioners) ratio that is less than average for the property and casualty category (which pet health insurance carrier fit within

If the average in the property and casualty area (remember companion animals by law are property and even though the policy sold is ‘Pet Health Insurance’ the carrier for pet insurance purposes is classified as under property and casualty. So if the average complaints in the area is is 1 per 100 less than 1 is preferable – 3.84 as is the case of the insurer of one Pet Health Insurer is a red light.

THE ALTERNATIVES: (one that exists and one that should exist but doesn’t):

  1. Self insurance (which has it’s drawbacks)
  2. Bundled Pet Health Insurance as a rider/option or ‘contingent policy’ to one’s homowners or renters policy (remember again by law companion animals are personal property like a toaster) given floaters (options) are normal and customary for jewelry, firearms, furs (all personal property) on homeowners policies & 70%+ of jewelry, firearms, and furs – DON’T sleep in their owners bed as dogs do (Sealy Study)

DISCLAIMER & DISCLOSURE #1 ALERT  I have a patent for – to put the pet health insurance on your homeowner’s policy – which hasn’t happened though I have been working at this since 1998 which I’ll discuss after later.
DISCLAIMER & DISCLOSURE #2 ALERT I have a pet insurance policy on Simcha and Goodie. I have had long waits on payments – in one instance the insurer – no kidding - held up payment because they couldn’t get info from a Vet Clinic – which I hadn’t used in 10 years (let alone for these dogs) – and that they didn’t have the insurance on (Talk About Dog ID Theft – Lifelock™ may have another potential market). Seriously. But both Simcha & Goodie have now what might be considered preexisting conditions – so I’ll stay and fight as I am used to the shennigans of pet insurers now. Besides, the now documented actions of the insurer will make good copy for my blog & potentially another book as well my continued motivation (now 16+ years) for the disruptive distribution of pet insurance on homeowner’s policies concept.

SELF INSURANCE (self insuring the potential risks rather than transferring the risks)

But first understand the insurance is risk transference. You can either self insure a risk or part of the risk – or transfer part or all of the risk – to an ‘insurer’ The discussion of self insurance next is excerpted from my book Trust Me: I’m Not A Veterinarian 2008 and updated to 2016

Steps To Consider

Let’s face it, there is no such thing as a free dog or cat. Whether it’s original cost, destruction, vet bills, etc. – companion animals are costly (but, from a cost benefit ratio, I contend, very inexpensive ((compared to raising a child -$250,000+ , sending him or her to college another $100,000 to $200,000++ for them to come home without a job and resent you – sarcasm intended)). Therefore, instead of wasting money on pet insurance premiums until real, affordable, no games-gotchas, convenient major medical pet health insurance comes to fruition, I suggest the might suggest the following with noted cavaets:

·         Self-Insure: for each companion animal put aside initially $500 -$1000 and then $50-$75 a month in a separate account. (For example, I have set up my own self insurance for each of my dogs – investing in Vanguard Health mutual fund.)

The positive of this approach is 100 cents on a dollar (other than gains or losses on your chosen investment) are available to pay healthcare costs versus maybe 60 cents from a dollar of insurance premium. (After commissions, administration, marketing costs – typically 60 cents are available for claims.)
The negative – God forbid a major illness(s) or accident(s) occurs of a magnitude of $5000 in the first couple years – the amount accumulated may not or would not be sufficient to offset the total cost of the $5000 illness injury, but neither would any existing pet health insurance with a $2500 per-incident limit or, worse, inner limits (lowered maximums per illness or injury) when you’ve accumulated only $2300 to $3700 (giving no value to investment gains or loses).

Making the case - $5000 injury or illness at the end of three-years
            Self Insurance vs Today’s Pet Health Insurance:

            Accumulation (Initial Deposit)  $500 $1000 
            Earnings at 6% after tax             95        191     
            Per month deposit
                     $35                                 $1260  $1260
                        6% earn. After tax          116      116
                     Total available                $1971 $2567
        $50                                  $1800  $1800 
            6% earn After tax           167      167
        Total Available                $2562  $3158
         $75                                 $2700  $2700
            6% earn After tax           250       250
         Total Available               $3545  $4141
            For $5000 claim

Of course, you could have paid $30 - $50+ per month (much more in 2016- jds) depending on age etc, with the $2500 per incident limitation. You would have paid out the following:
                                                $35/mo            $45/mo            $50/mo
Premiums                                $1260              $1620              $1800
Loss of earnings @ 6%             116                    150                  166
$2500 of the $5000 claim       $2500              $2500              $2500
Out of pocket on $5000          $3876              $4270              $4466
Net insurance coverage           $1124              $780                $534
Of course, if you have no claims, you are ahead by self insuring $3545-$4141 versus having paid premium of $1260 to $1800 (not including lost earnings during the period.)

However, if the investments made go sour – then there will be one can make the argument insuring would be preferable. However, what do you think insurers invest in? So their investment portfolios will suffer as well. How does this effect you given your coverage in the contract? Underwriting of claims gets ‘tougher’ – trying to chisel and weasel out of claims or reducing claim costs as less is available to pay claims. Of course, that never happens at insurers – who live and die (figuratively) to reduce their claim loss ratio 1/10th of 1% which would be a cause for celebration at insurer’s home office – lampshades on heads and all. (Note: I espouse this opinion as a conservative Republican not some bleeding heart liberal/progressive.)

Self-insurance is still a viable alternative to today’s insurance (considering gotchas, or non rated underlying insurers) the longer the time till a big claim (and remember, not even calculated in this contrast is the fact that today’s pet insurance premiums typically rise annually – and at the 7th + year in come policies the coverage actually decreases.)
The time when today’s questionable pet health insurance wins versus this self-insurance is in the first year or two – assuming there are no inner limits, no ‘continuing coverage claims’, etc. – is the large claim incurred.
So until real, affordable, no games “gotchas” major medical pet insurance  is available as described previously, given the history with pet insurer claims, etc., my choice is to self-insure which, in effect, is the recommendation of Consumer Reports which prefers paying ‘out of pocket’ to today’s Pet Health Insurance coverage should be considered as an alternative.


Monday, January 18, 2016


Continuing Connection (TZAVTA) Part III: Pet Health Insurance #1 of 2
Your Dog Will Thank You

A Personal True Story (from my book:
Trust Me: I’m Not A Veterinarian- No Dog Before His Time)

My Nicki, a black lab shepherd mix, named for former AWA Wrestling Heavyweight Champion Nick Bockwinkle, was still loving but stoic when it came to her maladies. She would just stretch, while I, on the other hand, would kvetch.
            When available for her and my other canine companions, I secured pet health insurance.
            You would think I would know better –with my experience (having been a fee only personal financial planner and being one of the first if not the first pioneer of no load life insurance (I made 14 cents an hour at it).
            Pet insurers, in the US, have come and gone, as I had experienced with Medipet (issued by Fireman’s Fund, then owned by American Express). So I sought to secure coverage from VPI (now owned by Nationwide) which had been in the pet insurance business the longest time.

            VPI is the largest provider of pet health insurance in the country. The Wall Street Journal and others indicate VPI has 80%+ of the market share at this writing.
            80% of what?  80% of the less than 2% of all companion animals are insured in the United States households..
2% of 80%, if anything, is an indictment.
Two-thirds of American households have companion animals; only one third have children (per the American Pet Manufacturers Association). Companion animals in US Households are growing at 5% a year twice as fast as the child population and there is 200% more dogs than children in these domiciles. (Micro Trends). Yet after 20+ years, pet insurance has penetrated only 2%-3% of the potential market while in Britain approximately 30% have pet insurance and the Brits spend less per capita on companion animals than we do as Americans!
            Draw your own conclusions but here's a hint: in the past Kiplinger’s has questioned the value of pet insurance in general (VPI in particular at one point), and Consumer Reports in 2003 preferred self-insurance (self-funding) to pet insurance in general in its (July, 2007) article: ‘Why Pet Insurance Is Usually A Dog.  Again, in May of 2012, Consumer Reports On Line gave 4 paws down to pet health insurance ranking pet health insurance as #2 of the 7 “Insurance Policies You Don’t Need.”
            That said, now 2016, in a beauty contest of uglies, the American pet health insurance policies are better – but going from 30% (an F) to 60% is a D- in Charlie Brown Peanuts™ vernacular - barely passing giving the ‘gotchas’ in the overwhelming majority of these policies.

            Back then, I believed the VPI policy I had purchased was a $50 deductible, 80/20 cost sharing split (the company 80%, the owner 20%) thereafter with an out-of-pocket maximum per incident of $2500 but $10,000 lifetime coverage. I understood that charges must be reasonable and customary, and furthermore, hereditary illnesses would not be covered. (1)
            Thus, when Nicki required a $1300 anterior cruciate ligament surgery (remember this was 1996 this surgery costs much more today), I expected the following payment:

$1300     cost of surgery (reasonable and customary in the Denver area)           
     -50     deductible
$1250      basis for 80/20 sharing ratio
               -250      my 20% of the cost
            $1000      to be received from the insurance company.

            That's how you would figure your normal (human) health plan benefit. I received approximately $400 (and not $400 initially but only after review after review.)
            I wasn't provided with this information at point of sale, nor upon receipt of paid contract, but it turns out reimbursements were not only restricted by the per-incident limit, the deductible, the 80/20 split, and reasonable and customary charges (the surveys of which are not provided by the insurer and lag a good year or two thus creating an inflation discount on how much is paid) but also subject to “inner limits” (a schedule of maximum payments per procedure).
            Inner limits state that for xyz operation – regardless of reasonable and customary – we will only pay up to X amount.
            And not only did VPI have an inner limit per procedure – but it further limited the inner limits by whether the procedure was primary, secondary or tertiary – meaning the primary cause or incidental to some other procedure, factor, etc.

            In effect, this VPI policy, at that time, wasn’t in my opinion, insurance, but rather in effect a discount policy – like these health cards which give you a discount but are not insurance.
            In addition, if you did not bunch your claims together within a certain period of time, then a whole new deductible started – even if it was the same incident.
            But the coup de grâce for this VPI policy – which effectively recaptured a significant part of the $400 claim payment they reluctantly made– was the hidden authority for the VPI to add a surcharge to the insurance premium upon renewal – due to usage!!! Whoa!
            That was 1996.

1) The better policies today do not exclude hereditary illnesses nor typically invoke reasonable & customary but have other ways to wiggle out of payment). I would have preferred (and paid for) a $100 or even $250 deductible, 80/20 split – per year – not per incident – but that was not available then.

By way of full disclosure, I have now the only patents for pet health insurance (in the 705 category) to bundle pet health insurance on homeowners’ policies (there is also, what is called a dependent claim, for a minimum vaccination by law discount – see Moolah’s chapter in the bok to reduce harmful over vaccination). Inspired originally by Nicki’s non VPI treatment by VPI– the benefits by adoption this patent to companion animal guardians, their dogs and cats, as well as insurers (direct writers like State Farm as well as reinsurers like a Swiss Re) are formidable including:

  • Reducing the cost/premiums of pet insurance cost  by 1/3 or more
  • Reducing the veterinary incentive for over vaccination due to the optional discount for minimum vaccination by law given to the companion animal guardian/owner.
  • Presently given estimates that less than 2% in the US have pet health insurance while 30% have pet health insurance in Britain (yet they spend 20% less per capita) at 15% market penetration and 200 million dogs and cats this is a $10-$15 billion dollar untapped potentially very profitable market.
  • The insurance industry - even if it just broken on what is call their ‘loss ratio’ would make multi millions even billions over time via increased retention of policyholders keeping their policies longer. (One premier upper end insurer 15 years ago told me that a 1% increase in retention is $14 million to the bottom line – just think what that would mean for State Farm at 20%+ of the homeowner market.)
  • Increased healthier longevity:  pets that are insured in Britain live on average 2 years longer than their breed. At only a 1 year healthy longevity increase and 15% market share this would save effectively 1,250,000 dogs and cats a year AND my actuaries estimate save another 150,000 per year from economic euthanasia.

So then why after all this time (now 15+ years I have been working on this) – hasn’t this pet health insurance occurred – other than my pleasing personality? One reason that has held up adoption of this concept was the Bilski case which put in jeopardy the whole 705 category/subcategory of business process patents (the pet health insurance bundling process patent was within this category). After all, why engage in licensing or pay royalties if you don’t have to? The case has since been resolved – such that the attorneys tell me there is not a problem with the patent.


Pickin’ From Today’s Pet Health Insurance Offerings #2 Next Entry

Friday, January 15, 2016

YOUR DOG WILL THANK YOU PART II: ‘Continuing Connection’ (Tzavta): Long Term Care & Living Wills

‘Continuing Connection’ (Tzavta): Long Term Care & Living Wills

            Again – some statistics:

  • 19% of those over 60 are orphans – in the sense of no family.
  • the fastest growing segment of companion animal ‘ownership/guardianship/parenting’ is age 50+ with 3 or more dogs and or cats
  • 70% + of our dogs & cats sleep in their guardians’ bed. (Sealy study)
  • Companion animals extend our lives an average of 7 years (AIG commercial)
  • 90%+ of us, in study after study, believe our dogs and cats are ‘members of the family’ (not personal property!)

And yet, especially for those without families, you need long term care assistance even while still living in your house.
What provision have you made for your dogs and cats if your are unable or need assistance in caring for your companion animals?
And what, if you need an assisted living facility or nursing home care – again what provision is made for the care – if you may not be able to fully care for your dogs and or cats?

Of course, each of us wants to continue our connection (tzavta) with our companion animals. And there are two things in particular you can do – to minimize compromising the care of your dogs and cats relative when you are unable to or can’t fully take care of them:
  1. a living will with instructions for example  for home or other pet sitting and
  2. long term care insurance (LTC):

A good estate lawyer – preferably one who has companion animals (rather than one who nods with trying to hide that ‘it’s just a dog look’) – will be necessary to go through all the scenarios, the if then’s etc – in case of – to protect your dogs and cats. This living will should be done in conjunction with your overall estate planning AND the pet trust and pet protection agreement referenced in part I – the previous entry.

As for long term care coverage, let me stipulate:
 1) getting on claim regardless of good carrier or not – is a hassle so build into your mindset hiring legal counsel should the need arise and
2) remember Schwartz’s Insurance provider rule: what good is a Cadillac without any gas that’s in the shop all the time. What this means is you can have excellent coverage per the policy but if the insurer’s financial strength is questionable, and it has a high complaint ratio (multiply by at least 4 as National Association of Insurance Commissioners ((aka The Insurance Complex Revolving Door)) complaint ratio reflects only closed complaints).

That said, the Long Term Care (LTC) coverage offered now is drastically reduced in benefit periods offered awhile having increased cost substantially as the actuaries – again – screwed up on pricing believing in lapse supported pricing.
(The thought the lapse rates on policies would be much much higher leaving those premiums of the policies that lapsed for the claims of people who continued coverage. Like crash value life insurance “Life Insurance Is Hell & Then You Die” that blew up in the late ‘80’s and early ‘90’s the actuaries (cpas without personalities) used lapse supporting in the premium calculations and didn’t learn their lesson. The actuaries will blame low interest rates – certainly a factor – but not an excuse as the lapse calculations failures were deliberate. So when the companies blame ‘low interest rates’ they are trying to escape blame for their own incompetence.)
It use to be one could get lifetime coverage – for nursing and home health care. You will be lucky if you can get 5 years in offerings and at stiff premiums. Furthermore, whereas there was relaxed underwriting when the policies came out initially – the underwriting has become more and more stringent in rating coverage (meaning possible increased costs over standard or preferred premium rates).

That said, it is true – that something like 98% will spend less than 3 years in a nursing home. But it is also true that more likely than not, home health care could be longer (I have no stats on that). And it is very true that cognitive disorders (dementia, Alzheimer’s etc) can go on for 5-7-10 years in some cases – and a 3 or 5 year policy will have been depleted.
(The answer is really a 2 year wait period long term care policy – maybe a shorter period for home health care – with a 15 years or lifetime coverage. But alas, unfortunately my joke about innovation at insurance companies: if you want to commit suicide just stand in the insurer’s lobby at 4:25 PM (when work is over at 4:30 PM) and you’ll be stampeded to death.)

Given the above – carriers to consider – though I am not recommending them (nor do I receive any remuneration from them) – and who knows 20 years from now when the coverage is needed: Mass Mutual, New York Life, and Northwestern Mutual.

Put in place your living will and secure the long term care coverage!
Your Dog and or Cat Will Thank You.


Thursday, January 14, 2016

(YOUR DOG WILL THANK YOU) Part I: ‘Continuing Connection’ (Tzavta) - Pet Protection Agreements & Trusts:

 ‘Continuing Connection’ (Tzavta) - Pet Protection Agreements & Trusts:

The ‘best’ is a singular superlative with the exception, in the plural, our dogs

            Stunning statistic: 19% of those over 60 are orphans – in the sense of no family. And yet, the fastest growing segment of companion animal ‘ownership/guardianship/parenting’ is age 50+ with 3 or more dogs and or cats.

            70% + of our dogs & cats sleep in their guardians’ bed. (Sealy study)
            Companion animals extend our lives an average of 7 years (AIG commercial)
            90%+ of us, in study after study, believe our dogs and cats are ‘members of the family’ (not personal property!)

            And so, heaven forbid, who is going to care for your companion animals if you are a seasoned citizen orphan or not when you graduated – pass on?
            For those with family, most assume a member or members of the family will pick up the slack.
            But things change.
            Divorces happen.
          Spouses, no kidding, change the décor, and if your beagle doesn’t go with the new furnishings, curtains (so to speak).
            The pecuniary bequests made to relatives in the hopes for the care of your best friends – unless in a trust – can be ‘redeployed’ and not for the benefit of your companion animals.
            To minimize or prevent former spouses getting rid of the dog because of changes in décor, or a change of heart of one whom you made a pecuniary bequest for the care of your dogs – pilfering those monies for personal use - there are Pet Trusts

            In most if not all states now, one can set up a Pet Trust exactly to address these concerns making your companion animals – who even though by law unfortunately are still ‘personal property’ (see my book Trust Me: I’m Not A Veterinarian and coming soon – beneficiaries. (But unlike a toaster – which is also personal property by law – our companion animals can be made beneficiaries of a trust!)

            I have and have had for years, drafted by attorneys Suzanna Fox Buchanan (her dog is Rocky I believe) & coordinated with my estate lawyer Richard Saul (his dogs are Elle & Sally) here in Denver, one of the first if not the first Pet Trust in Colorado which is funded specifically for the care of my dogs (then for Buddy, Moolah, Ricki, Nicki, Moses, Elle & Max and now for ‘Reb’ Simcha & ‘Her Royal Highness’ Goodie) . Furthermore, I have a Pet Protection Agreement with additional specific instructions for care, and subsequent guardians if necessary.
            You should have a trust and pet protection agreement as well. (For $60 or so, you can even do a Pet Protection Agreement on Legal Zoom. The Pet Trust agreement should be in consultation with your estate lawyer in conjunction with a review of your estate wills and trusts which you haven’t updated – in how long?

Death ends a life not a relationship
The Rebbe

            This blog, my writings, my former practice was and is about Enough. And yes, Enough is ‘healing personal financial anxiety, puttin’ money in its place, to transcend, to elevate to CONNECT, to one’s significance, assignment, and or meaning (what is meant to do, meant to be – enough to live on; enough to live for).
            Notice the word CONNECT.
            In the word Mitzvah (yes, as in Bar Mitzvah) is derived from the Aramaic – Tzavta – meaning – connect.
            Our companion animals – be we with family and or senior orphans –are best friends, teachers, confidants, comedians, the best psychologists (that cost but biscuits), someone to grow up with – someone to grow old with.
            They CONNECT us – tzavta.
            Therefore, to continue connection – even until again – for your best friends – it isn’t ‘enough’ to just make a grant to another hoping for their care – but set up the Pet Trust and Pet Protection Agreement – NOW.
            You dogs and cats will thank you – as they greet you – connect with you (Tzavta) once again.
            And that connection – continuing connectionTzavta! - is beyond existence…


Wednesday, January 6, 2016

The Chinese ‘Fortune’ Cookie or Chinese Firecracker: Risky Business: The Myth of “Risk Tolerance:”

The Chinese ‘Fortune’ Cookie or Chinese Firecracker:
Risky Business: The Myth of “Risk Tolerance:”
Written January 6, 2015 as
the Chinese Market Takes Another Correction

It is common ground in the  industry  …that the task of a financial adviser is to find a portfolio that fits a number: the investor’s ‘attitude to risk.’ My purpose, here, is to suggest there is no such thing
The Myth of Risk Attitude,
Psychologists Kahneman & Tversky

          Context, context, context.
          A true story

          Picture a geologist who, at the time, created an oil play that was the largest discovery in the lower 48.
          Born in a small town in Colorado – he conceptualized the discovery sitting on some rocks at the age of 11 – that is not a misprint.
          Of course, the drilling didn’t occurred until he was in his 50’s after everyone else had given up on oil being in the formation.

          A wildcatter through and through.
          So out of context, not considering being independent of his oil and gas revenue stream, let alone income replacement upon disability, education considerations for the kids, nor asset disposition according to desires – let alone income adequacy for his spouse should he predecease, his ‘wildcatting’ inclination permeated his ‘risk tolerance’ for investing.
          But when the aforementioned goals and subsequent prioritization process occurred, it turned out -he could fund his financial independence (slow down) goal and retirement goal with less than market rates of return – given the oil income stream – becoming independent of his independent oil business.

          Thus, out of context, a client’s risk tolerance inclination to his overall personal financial assets instead of relative to his prioritized  personal financial life goals and values is foolishness – not personal financial planning. The perspective of a wildcatter’s investment temperament relative to business,, given the context of managing personal financial goals – modified his otherwise aggressive inclination to became quite conservative – as he reminded me with my own words ‘you don’t sacrifice what you need for what you don’t need.’ Furthermore, his measurements to be on track and accomplish his objectives were not the  Dow or the S&P – but a required rate of return after tax after assumed inflation with the least risk (volatility) possible (which was lower than the  historic Dow or S& P even adjusted for tax and inflation. In other cases, it may be just the opposite. The point is: personal financial life planning is contextual managing of goals not managing assets regardless of the lip service (‘have truths; whole lies’ – Talmud) of asset under management compensation by so called personal financial planners in denial. As Tom Paine said, “a long habit of doing the wrong thing often gives it the superficial appearance of being right.” (And responses of denial when challenged.)
          First one needs to stop the leakages – the potential for large capital depletion (liability, inadequate income replacement from a potential disability or long term care requirement) transferring risk with contingent assets. Risk transference in these areas are the Depends™ of personal financial life planning. Secondly (really concurrently) minimize  leakage (usually the imbalance of palliating niceta (aspirational / status) expenditures which compromise the gotta and oughta levels of spending. The gotta expenditure level is absolute requirements  which, if not meet, would really cause anxiety – fears of the wolf at the door (lack, destitution, hardship). The oughta level is the shoulds – which would allow a comfortable without lavishness standard of living (which could jeopardize the personal financial life goals). Aspirational spending (at the expense of gottas and oughtas) can turn into ‘perspirational.’ And then neither Ban™, Right Guard™ nor Sure™ - almost for sure – won’t help at that point.
          The question is ‘what is ENOUGH’ not ‘More’ (which is never ENOUGH) and just a palliative – an altered (not altar-ed) state to medicate and ironically soothe the under lying anxiety which the pursuit of More never Enough only increases – like the third carrot cake slice when complaining about the need to lose weight.
          Note to those who say ‘we’ll cut back on the nicetas – the luxuries – the lavishness when and if we have to’ usually it is too late especially as one ages – and the time & energy ‘to make up deficiencies’ is shorter and shorter.
Capital depletion exposure transferred or reduced, leakages ended or minimized (“addition by subtraction”), and gotta, oughtas and niceta levels of standard living defined, then criteria may be better defined as well as acceptable percentage loses (‘risk tolerance) demarcated per prioritize objective -as well as rebalancing, accumulation – distribution strategies etc…

Trigger Personal Financial Planning WARNING!!!!!:
Next Paragraph is X Rated
(read the analogy at your own discretion)

Beating the Dow is Often Just Beating Off
in the context of personal financial life planning objectives

X Rate Trigger Warning Off

The question:  is one on track to achieve and or maintain the personal financial life goals – inflation risk adjusted after tax – prioritized? If that requires a higher rate of return than ‘the Dow or S&P’ the question then becomes first 1) can one increase the amount to be contribution for accumulation and or 2) more realistically, can the oughta level and especially the niceta level of the present standard of living amounts be modified – which will have typically a greater probability of sustained impact on the goal(s) rather than trying  to beat the Dow – and the increased volatility & anxiety endured.

There are no solutions only tradeoffs
Thomas Sowell

          Therefore the question ‘what is one’s risk tolerance’ overall is malpractice without the context of acceptable downside risk willing to be incurred relative to each personal financial goal in priority, sequence & cascade with tradeoffs. Overall risk tolerance enunciations is just ‘it sounds, good has a good beat’ with Bobby Rydell singing Wild One from the American Bandstand. (Alas, I show my age – and past crush  on Annette Funicello).

I got principles. You don’t like these principles, I got other principles
Groucho Marx
          In light of the prospect of lower rates of return in the next decade, and compression of asset under management (AUM) percentage fees (i.e. forcing competitive reduction) in light of competing robo advisers, asset under management (AUM) compensated asset managers in personal financial planning clothing planners seek to maintain the same asset under management percentage of compensation. Result: many of these ‘so called’ planners and wire houses have become born again ‘goal managers’ to avoid reduction in fees..
          These are many of the same self serving planners that said ‘take out the biggest mortgage you can the interest is deductible’ to, in effect, use financial leverage (and get more asset under management compensation) rather than paying down the mortgage principle. These born again ‘goal planners’ seem to have forgotten ‘their risk tolerance two step’ as financial leverage magnifies also on the downside in effect increasing personal financial anxiety. Now some of these ‘born again’ goal planners are rephrasing the spending levels of gottas (absolute requirements), oughtas (standard of living), and nicetas (luxury – above and beyond) to, in one case, safety (from poverty and anxiety), stability (standard of living) & aspiration. I can only wonder if some of these born again goal planners (though still charging an asset under management fee) have secured the services of former Obama and Clinton parsing spinmeister specialists.. Now it’s human capital being converted to financial capital – sounds good, has a good beat but it is just a re-titling of man at work and dollars at work. But like Starbucks pricing, it seems charge is  function of the number of syllables in the coffee order.

You must lose a fly to catch a trout
. ~George Herbert

          The  ‘newly born again’ AUM goals oriented planner’s business’ has its fly open… (clients now baited with Holy Mackerel?) (1)
          And that’s Risky Business even for Mission Impossible’s Tom Cruise.
(1)     Years ago, a commission planner asked me how to transition to fee only compensation without losing his clientele. I replied, ‘you have two choices. ‘A’ saying I’m going fee only so I won’t be shtupping you any longer or ‘B’ in one year my practice is transitioning to fee only – up till then it is your choice to go fee only or remain fee and commission.’ Confession, is good for the Sole’- slightly seasoned – even if fishy.
(2)     For those unfamiliar – Tom Cruise has starred in Risky Business as well as the Mission Impossible series.