Rounds Online

Guest Contributor: Sidney A. Blum CFP®, CPA/PFS, ChFC, GreatLight Fee Only Advisors, LLC., 2521 Gross Point Road Evanston, Illinois 60201 847-556-9299 Ext. 1, 847-556-9335(Fax) sidb@glfoa.com

Whether making medical decisions or financial decisions, both are influenced by emotions. The role of emotions when making financial decisions has transferable application in the world of medical decisions as well.

Financial advisors know that one of the most important components of providing financial advice is discussing the client’s goals. Inherently your goals are tied to how you see yourself and in what ways you see your money and net worth as a reflection of yourself. This aspect of your financial life is usually tied to emotions based on perceived positive or negative experiences in your life. Financial advisors find that they expend considerable time and energy addressing emotions and negative reactions to events in clients’ lives. The goal is to move the focus toward positive steps in reaching the client’s goals.

As with other aspects in your life, emotional reactions can distract you from well reasoned actions that benefit you in the long run. This is the reason it is beneficial to engage a financial professional to guide you through your financial life circumstances with advice driven by goals rather than emotional negative reactions.

The use of Emotional Intelligence is a learned skill set. Financial Advisors who are skilled in understanding the four basic emotions that guide them and their clients will find they are more successful in their chosen work! The four emotions are: Glad, Sad, Mad and Scared. These four basic emotions are neither good nor bad – they just “are”! It is one or more of these emotions that help determine just how “risk adverse” a client will be. It is absolutely necessary for a financial advisor to be aware of the client’s emotional state, whether the client is aware or not.

People react emotionally to market downturns. They are probably scared first, but also mad and sad as the market changes. They may get caught up in the market’s emotional swings and lose sight of their own goals and strategy. They think it will always stay that way. Or in an upturn, they believe the market will always stay up. They get caught up in the euphoria of “glad” and again lose sight of their goals and strategy. Many people get caught up in the high market frenzy and end up buying shares that are overpriced.

Pulling out of the market to protect temporary downside losses in value also means not participating in the upside, which eventually occurs. From the major downturn in the spring of 2009 to the fall of 2009, the market recovered better than 35%. Those who pulled out of the market and stayed out missed out on that portion of their own portfolio’s recovery. Due to reacting emotionally, people buy in up market and sell in a down market – the opposite of what garners them a good return.

Another difficulty is that people lose sight of the fact that a fund investment is in actual companies – some of which survive and some don’t. The nature of the investment market is that there are no guarantees on return of investment. A certain amount of volatility is normal. It is the price you pay for the opportunity of garnering a higher return than with “safe” investments.

And how safe are “safe” investments? If your “safe” investments are earning 1% while inflation is running at 3%, you are losing purchasing power. If the bucket is leaking slowly, it can still end up empty!
So when you feel “glad” about a safe investment, what may be a good feeling may turn out to be a bad investment.
How does an advisor help to keep their clients’ focus on the positive steps that can be taken to meet goals instead of reacting solely to current market conditions? How does advisor keep from getting involved in the client’s negative and unproductive emotional reactions?

Advisors have seen these situations before, but clients may not be aware that financial markets tend to return to the norm and provide a positive return in the long run. By helping provide a perspective on how the market normally behaves; the focus can be shifted from how the market currently stands, a temporary fluid condition, to the longer range behavior of markets. This provides a sense of stable emotions that allows the client and the advisor to make better financial decisions.
An advisor can also help you realize that financial planning is more than investments and that some goals are not solely monetary. It is less stressful and far more productive for people to keep their eyes on their goals, not on the dollar value of their portfolio. In the end, your net worth is not the same as your self-worth.

Because emotions play a significant role in all decisions we make, a major part of an advisor’s job is to help the client keep their focus on the positive steps that can be taken to meet those goals instead of reacting based solely on emotions!

What is all the moaning and groaning about.  What a bunch of whiners.  For the life of me I can’t understand why every high school sophomore doesn’t want to grow up to be a doctor.  I mean, how good does it have to get?

First you can plan on graduating high school.  If you live in Chicago that would of course assume that you aren’t shot and killed on your way to or from school.  But let’s assume you keep your nose to the grind stone and get good grades and do well on your ACT test (might not even have to worry about that because they are talking of dropping that test all together). 

You are accepted at a great college and for the next four years you can study and learn and run up huge educational bills.  But don’t worry, you can borrow from a wide range of programs at very low interest rates and defer pay back almost forever if you stay in school.  Let’s just say that a four year private college degree is going to set you back about $50,000.

But again, you are committed and study hard and get good grades and apply for medical school.  Just applying for medical school will set you back between $1500 to $3000.  But once you are in you are really going to have some fun.  Let’s say that you managed to get into a great private medical school.  You can look forward to 16 hour days, little time off, lots of stress and best of all you get to pile up some more debt…lots of debt.  Even with financial aid and family help and a part time job (bad idea I’m told) the yearly cost of medical school can run between $22,000 on the low end and $50,000 on the high end.  The average medical school grad has piled up $120,000 in debt!

But do not be deterred.  This is a life long investment you are making and you can count on steady employment and a great life style…well, maybe.  But I digress.  The educational carousel is still turning.  Just because you got your MD doesn’t mean you are ready to start curing the sick. 

Welcome to residency.  Now your 16 hour days go up to 28 hour days 8 days a week.  After all, you have only been in school for 20 years so far and you have a lot to learn.  So, its three more years of hard work, long hours and stress.  But at least you are finally getting paid for your labors.  That’s right! No more tuition.  You are going to be making $35,000 per year as an almost doctor.  Now to some that may seem like a good deal of money.  But if you consider that the interest clock is ticking on your medical debt and you do need a roof over your head (for those rare occasions when you aren’t in the hospital) and food to eat…well, I wouldn’t plan on taking a chunk out of your personal liabilities.

But the day finally comes and you finish your residency and are ready to become a primary care physician and make some money.  Right?  Well…..As a primary care physician you will probably be paid between $30 and $70 to see each patient.  Medicare and Medicaid reimbursement hasn’t gone up in over a decade.  And the government is going to dump another 31 million new patients into the deep end of the pool and they are all going to want to come and see you.  And the government is going to pay for it all by cutting Medicare by a half a trillion dollars and by cutting reimbursement to….you guessed it…doctors.

I guess you can plan on more 70 hour work weeks, heavy patient loads and a salary that should have you debt free in about another ten years or so.  Considering you were probably around 27 years old when you graduated…well you do the math.

So, what is all the whining about.  You are 37 years old.  You will be earning a full salary for the first time in your life.  The government is doing everything in its power to put you out of business.  Your insurance is going up…reimbursement is going down…patient loads are going up….time off is going down.  But look at it on the bright side.  If you compute your earnings by the hour, you are making at least as much as an auto worker and your prospects for continued employment are better.  And in only another 25 years you will qualify for Social Security…assuming its still solvent.

New Services and New Concerns
Update from Medecins Sans Frontieres – Doctors Without Borders

Two months after the January 12 earthquake, medical needs remain immense in Haiti and living conditions are extremely precarious. Although the phase of urgent life-saving medical care has passed there continues to be a critical emergency context in which thousands of people need post-operative care, rehabilitative care and physiotherapy, as well as psychological counseling. The extremely difficult living conditions increase the stress experienced by people living in camps or in tents throughout Port-au-Prince and its surrounding areas. The rainy season has begun, worsening already horrific living conditions for many who still do not have proper access to sanitation facilities and increasing their chances of contracting malaria. There is also insecurity in camps due to poor lighting facilities or poor security management, indicated partly by an increase in sexual violence cases.

Because it is crucial that patients be cared for until the end of their medical treatment, MSF has expanded its capacity to include specialized post-operative care—including plastic and micro-surgery, treatment for burn victims, physical therapy, rehabilitation, and psychological counseling. MSF is also focusing on primary health care, with out-patient departments in various locations in the city, and with secondary-level health care services, including emergency obstetrics, intensive therapeutic care for malnourished children, and inpatient care for pediatrics and adults.

MSF is also continuing with its activities in water distribution, with the construction of sanitation facilities such as latrines, and with the distribution of tents and hygiene and cooking kits. MSF is closely monitoring the situation in the camps and is ready to inform or advocate to authorities about the unmet needs of the population.

Currently, MSF has 348 international staff in Haiti working closely with over 3,000 Haitian staff. With the expansion of services, the 26 MSF hospitals and health centres can accommodate 1,346 inpatients. In the last two months, MSF teams have performed more than 3,700 surgeries, provided psychological counselling to more than 22,000 people, and treated 54,789 patients. MSF teams have distributed nearly 18,000 non-food item kits—including kitchen kits, hygiene kits, jerrycans, blankets, and plastic sheeting—and more than 10,000 tents.

Every now and then I am so taken by something that I find online that I feel compelled to pass it on. It’s no secret that I find the rush to health care reform (Obama 2.0) to be ill advised and dangerous. But when taken in the full context of what is happening in American politics, it becomes the tip of a very frightening ice burg.

A fellow named Bill Whittle appears in a forum called PJTV. Many of his broadcasts can be found on YouTube. I stumbled across something that I believe my readers need to see.

Thanks Bill

http://www.youtube.com/watch?v=GdtqtfXdR-c&NR=1&feature=fvwp

You wouldn’t be visiting if you weren’t clinically qualified.  Your medical education speaks for itself, your resume caught their attention, you handled the phone interviews well and now its show time.  Your interview suit fits just so and you now find yourself sitting across the desk from one of the practice partners.  It’s Love/Love and the doc is about to serve.  Here are three tips that may decide the match in your favor.

• Don’t underestimate the value of role playing.  It may feel awkward and you may feel like a member of the grade school debate team.  But a few hours across the desk from a colleague fielding likely questions is going to polish your presentation.  As with most other things, the internet is a resource.  Just Google interview questions and you will have all the test questions in advance.  Practice does really make perfect!
• The first ten minutes of an interview can be stiff and formal.  It’s your job to break the ice and develop some rapport.  Establish eye contact.  Maintain a comfortable posture.  Speak slowly with well placed pauses.  Everyone likes to hear their own name.  If the doctor has pictures of the family in sight ask about the family.  If the doc has a picture of his dog, ask about the dog.  If you see a picture of the doc on a sail boat, it’s a safe bet that he enjoys sailing!  There will be plenty of time to address the important clinical issues.  Finding common ground on a personal level could put you on the letter head.
• A conversation is an exchange of information.  A dialog is one person talking at another.  Avoid the latter and contribute to the former.  If you have done your home work you should be able to ask pertinent questions.  If you know what you are looking for you should be able to express your needs.  Everyone appreciates a good listener.  Maintain eye contact.  Acknowledge another’s points with a shake of the head.  Body language is a form of communication.  You were given two ears and one mouth for a reason. 

Remember, bring your a-Game to the interview.  Play to win…even when the opportunity isn’t your first choice.  It would be a pity if you discovered one hour into the interview that this is your dream job and you just spent the last 60 minutes doing your impression of a lump on a log.

Most Americans will admit that our healthcare system needs fixing. But over 70% of Americans have some sort of health insurance (private or Medicare or Medicaid). And most are happy with what they have and are more than a little nervous with anything that might affect their coverage. And seniors are a case in point.

My mother, who just turned 85, is proud of the fact that she has voted in every election since she was old enough to vote. I confess I don’t even know who was running for president back then. As a senior citizen she is part of a very powerful voting block from which Republicans and Democrats alike are seeking support on the healthcare reform issue.

Mom surprised me the other day when out of the blue she declared that if the Democrats get their hands on healthcare we are facing a “government take over of medicine.” And that is “not a good thing for us old folks.” Treading lightly, I pointed out to her that Medicare is a government program and they have already taken over her healthcare.

“Baloney,” she replied. “Medicare is insurance. It has nothing to do with the government.” And therein lies the Democrat’s problem. Seniors are big users of health care. And they vote in much larger numbers than other segments of the population. A recent ABC/Washington Post poll showed that only 45% of all respondents supported the Democrats healthcare reform proposals. But only 34% of seniors responding were in favor.

And when you consider that the Democrats are planning to cut a half trillion dollars in Medicare expenses over the next ten years to help pay for universal coverage, seniors have a right to be concerned. Democrats are quick to point out that the cuts will come from the elimination of fraud and waste. Oh please….

The Republicans are gleefully throwing logs on the fire. Healthcare reform is rapidly becoming a third rail for seniors. AARP admitted that they lost over 60,000 members in protest of their support of healthcare reform even though they have yet to endorse any specific legislation.

If Democrats expect to carry the day, they are going to have to do a much better job of communicating the positive changes to Medicare included in the legislation they are proposing. Changes like simplifying and improving the confusing prescription drug coverage, offering free preventive health services and extending the subsidies currently available to low-income senior citizens.

But the Democrats do not help their own cause when they use imaginative accounting to get where they are going.  As they explain it, the cuts in expenses will help prolong the life of Medicare.  At the same time they are planning to use the savings to cover 31 million new bodies, many of whom will need subsidies to afford the mandatory insurance that the legislation calls for. 

The Congressional Budget Office recently expressed some reservations about the claims drifting on the hot air in Washington.  In a monumental understatement they pointed out, “To describe the full amount of hospital insurance trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings, and thus overstate the improvement in the government’s fiscal position,” 

As Mark Twain was fond of saying, ” There are lies damned lies and statistics.”  It is hard to imagine seniors embracing the new Medicare cuts. After all, they have the most to lose and the least to gain from any changes in the healthcare delivery system in this country.