John Cameron's personal blog

Serious discussion about your financial position now - and in the future.

The Sad State Of Communication In The Financial World. A Tale Of Tribes, Jargon And Gobbledygook.

In certain parts of the financial world, we are meant to provide advice that is “clear, concise and unambiguous”.

This is a very worthy goal. A quick glance at some stock exchange announcements shows that “clear, concise and unambiguous” is often missing in action.

Announcements are often couched in terms that are unintelligible to ordinary people. It is as if they have been framed so that only members of the “financial tribe”, who are schooled in that tribe’s mind numbing jargon can hope to understand.

...
Continue reading
455 Hits

What’s In A Name?

We call our business “Black Swan Event Financial Planning” for a very specific reason – to keep reminding ourselves that, despite the best efforts of the legions of financial analysts in the world, there is an awful lot that nobody knows when it comes to giving financial advice.

Too often the exercise of doing projections provides a false sense of certainty about how somebody’s position may evolve over time. It’s almost as if the exercise of coming up with numbers enhances the certainty of a future outcome – without looking into the assumptions behind the calculations. Then, hey presto, some unanticipated change happens, and the projections go out the window.

Changes of this kind are known as “Black Swan Events”, and the crunch is that they happen far more often than theory dictates. This point (the fact that things changed in big ways much more often than they were meant to) was noticed by Nazim Taleb, and formed the basis of his book, “The Black Swan, The Impact of the Highly Improbable”. It also enabled him to pursue a very successful career as a New York fund manager.

...
Continue reading
500 Hits

It’s The Plan, Stupid.

George Bush lost the 1992 election to Bill Clinton by focussing on the wrong thing. Bush focussed on his record, and success in Gulf War one. Clinton focussed on the economy and jobs, and won the election, thus giving rise to the saying “It’s the economy, stupid”. In other words, focus on the right thing.  Often it is right in front of you, and afterwards you can seem stupid for not spotting it.

It’s much the same when it comes to planning your financial future.

Too often we see people focussing on particular financial products as a cure to their financial ills. Often the discussion goes along the lines of, “Should we have an allocated pension?” or, “Is an annuity the answer?” or “Is superannuation worth it?” or …….

...
Continue reading
528 Hits

How Big Is Your Buffer?

One of the issues that repeatedly crops up when dealing with clients is, “How well placed are you to deal with unforeseen expenses?” 

The expenses can range from relatively minor things such as an appliance suddenly failing, a minor car accident or a leaky roof, through to things far more catastrophic – a major illness, death of your partner, loss of job, marriage breakdown or any of a whole host of other things.

I started thinking along these lines, on reading a story in the Financial Review on 1st July. The story reported a survey carried out by the US Federal Reserve, to assess the resilience of American households if some financial shock occurred.

...
Continue reading
736 Hits
0 Comments

Culture – From Boring To Buzzword In No Time

The last couple of weeks have seen more skirmishes in the “culture wars”. 

The first shots were fired by a Four Corners Programme that disclosed that the Commonwealth Bank’s insurance subsidiary, Comminsure, had used dodgy methods to avoid paying claims. A poor culture within Comminsure was quickly blamed.

The issues have been smouldering for years, but now that full scale conflict has broken out, it looks like being a protracted campaign. No doubt there will be moments of tension, drama, high farce and even, yes, humour (in fact a sense of humour may be an essential survival mechanism).

...
Continue reading
499 Hits