About Separating Value From Bias
I’ve worked in the fields of insurance, personal finance, and alternative investments since 2006 mainly as an actuary helping people understand how to use insurance as an investment and tax-free wrapper as part of their financial and investment plan.
I got into finance because I loved numbers and economics.
What I didn’t know back in 2006, that I clearly know today, is that financial services as an industry has very little to do with finance.
It primarily has to do with the marketing of services and products to a population that has very little understanding of finance—and therefore has no way of evaluating pre- or post-sale whether the service or product they acquired was worth the price they paid for it.
To be honest, most times, the people don’t even know the full price they’re paying for the service or product they bought let alone are able to assess value.
That’s because financial services include numerous fees (most of which are in the fine print) that consumers underestimate the effect of.
Here are just some of them: advisory fee, custodian fee, fund manager fee, premium load, administration fee, cost of insurance, mortality and expense fee.
The cumulative effects of these can reduce a client’s wealth by 50% or more.
Is this worth it?
Well, it depends.
And your answer here depends on the following things:
1) The alternatives
2) Your feelings around money today
3) Your knowledge of personal finance, insurance, and investing
My goal with this Substack is to use my expertise to help you understand all three of these better and on a deeper level so that you can help make better decisions for yourself and your family.
But beyond this, my goal is to help you realize that the significant inefficiencies, inequalities, and exploitative mechanisms I highlight are not just in the financial services industry—they exist in almost every facet of the world we live in.
By making you more aware of how these inequalities function in finance, I’m hoping it will help you become more aware of the broader systems at play in the world around you and create a deeper sense of awareness of the systems you want to be a part of—and those you want to walk away from.
In order for the financial services industry to change, its consumers have to be more aware of the flaws and risks embedded in them and demand better from their advisors.
It’s completely market driven.
In the absence of this consumer awareness and demand for better, financial services professionals have no impetus to change—especially when the fees they charge are enormous relative to the marginal value they provide.
It’s easy money for them.
Analogously, if we want to be part of a world that is more in line with our values, we need to have both a deep awareness of our own values and how the systems we’re a part of fit in with that.
In order for all of that to happen, there is an immense amount of education that needs to happen first.
And I’m merely trying to be part of that.
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