The Experts and You: Getting Your Money's Worth

Introduction:

Today we have three experts talking about experts. Susan Murray and Ken Wyman will be introduced in a moment by the organiser of this panel-Penny Willaims-who is the founding editor of Your Money magazine, Canada's first personal-finance magazine, launched two years ago.

The editor's desk is not new to Miss Williams, she has been editor of Calgary Magazine, The Insider's Calgary, and translations editor of the Canadian Encyclopedia. Fluent in French and Spanish, she has produced public-affairs radio documentaries for CBC network, most notably the "Ideas" series, and for the Alberta Provincial network CKUA.

In the corporate world, Miss Williams has written for the Canadian Petroleum Association and for executives in the major energy companies. She has been a judge for the National Magazine Awards, the 1985 Author's Awards and the Western Magazine Awards.

After receiving her degree in Political Science from York University, she joined the Canadian University Service Overseas (cuso) as a Volunteer, establishing a community radio station in a Peruvian jungle valley. Later, she became a staff officer for the Canadian Save the Children Fund and for Oxfam-Quebec.

Born in Montreal, Penelope Gail Williams is a director of both Cuso and MENSA Canada. She is on the Advisory Board of the Economics Institute of the University of Western Ontario.

Penny Williams' professional workshops and seminars are always sellouts but I was fortunate to attend one under the auspices of the Canadian Public Relation Society's Toronto chapter, and that is why Penny is here today. Let us hear from our trio of speakers, but first from the editor of YourMoney magazine on the topic: "The Experts and You: Are You Getting Your Money's Worth?"

Penny Williams

Today you get three for the price of one. I'm not only going to talk about how to deal with the experts; I'm going to demonstrate it. I have brought along two of my own. I should like to introduce them now.

First, Susan Murray. In 1982 Susan Murray founded her own firm, SA. Murray Consulting Incorporated, which helps client firms work most effectively with government. She has an appropriate background for that sort of thing, since she had previously worked with two firms that specialised in investor client and government relations, has worked within government itself, and has also designed and chaired or co-chaired several government relations conferences. Despite all her other activities, she also has time to write the occasional piece of political analysis for our magazine, Your Money.

The second expert I brought with me today is Ken Wyman, whose specialty is fund-raising. He is the Director of Ken Wyman and Associates. His firm specialises in helping community groups with their fund-raising, volunteer mobilisation, and public relations work. But can he practice what he preaches, you ask? And the answer is "Yes, indeed!" He was for a time Director of Fund-raising for Oxfam Canada and tripled the revenues, bringing them up to $1.2 million a year.

As he says, "I can honestly say I have raised millions for charity." Indeed, he is now writing a book on the subject, commissioned by the Secretary of State, working title: "Everything you need to know to get started in Direct Mail Fund-raising." When it is completed, it will be distributed to charities across Canada.

You might say that among us we intend to discuss with you everything you need to know to get started in dealing with the experts. But I do have an initial problem. Who are the experts and how do I address you, sitting as you are in The Empire Club? Are you experts or non-experts? Do I talk to you as experts, explaining the fears and mythologies of the non-expert, or do I assume you are all non-expert together and we can worry collectively about what to do about experts and expertise? But, of course, the answer is we are all both.

I know that in this gathering, if we are to take any one of the topics of the day, acid rain or Star Wars, trade with China, tax reform, the starving in Ethiopia, among us we would come up with people who could give a very useful, very expert analysis of the situation.

But I very much doubt there would be any one person who could adequately explain all of them. In other words, we are each expert at something, but we are well aware that we are extremely non-expert at a great many other topics and well aware that they are going to affect our lives; thus we need to deal, we need to cope, and we have this kind of love-hate relationship with expertise, we are hobbled by the old mythologies.

I find this reinforced by my work at Your Money. Our readers, who are successful business people in their own fields, certain of their competence in those areas, certain of what to do in their lives, are wary and timid when it comes to the matter of their personal finance. They feel they should seek expert advice, but they are intimidated by or fearful of seeking professional advice. There is something intimidating about it.

However, I have discovered that the financial advisors with whom we work, the so-called experts, are like the rest of us; outside their own areas of competence they, too, worry about the issues of the world. And they, too, can be as intimidated by the business of seeking out and making use of expert knowledge as we are.

We are all expert and non-expert at the same time, but we don't act on our knowledge of this fact. We don't seem to believe and act on what we know. We are either suspicious of the experts and therefore stay away from them, fearing their manipulation, their control, or we fall passively into their arms and expect them to somehow work magic without doing anything ourselves.

At the personal level, we worry, "How can I possibly know when the expert is right?" and so the question for all of us, whether we are dealing as individuals or as a society, is how may we make appropriate use of experts, both in our lives and as a nation, in order to reach our goals. How do we choose our expert? There are no certainties, but there are strong indicators and I would stress some of them:

Beware of the person who makes big claims for what you are going to get out of it-huge gains or instant gains or certain gains. Beware of someone who presents a cartoon image of the situation that has to be dealt with, because the reality is going to be more complex.

Beware of someone who hands out the definitive solution. As a society, we crave quick "fixes", easy solutions, but such are not realistic.

Beware of heavy pressure to act now, which usually means pay now without thought or question.

Finally, beware of the expert who is famous only for being famous-putting out a big fat book, for example.

What I'm talking about is common sense. Put those claims of the expert into the larger context; connect them to all the other factors in your life, so that you can then evaluate them. The key point in this partnership is a sense of context, the context in which we want this expert to operate. We start to demythologise expertise when we put the experts themselves back in the human context. So we use our experts best, we get our money's worth, when we use them in their own niche. For example, we consult our lawyer or accountant or a financial planner, some one person to help us. Who is responsible for seeing you get your money's worth? You are; you are the one who is paying, after all.

I see it in terms of a contract and I see it this way: You are the non-expert. You are consulting the expert, but should make preparation beforehand so that you know why you are meeting with this person. You must pay attention during the meeting, rather than being too intimidated to listen to what is happening, and you should certainly participate during the meeting. If you don't understand what is being said, if it doesn't make sense-ask. If you don't ask, the expert can't tell you. You also need to think afterwards about what has been said and follow through. Think about it and decide how you are going to incorporate it into your life. That is your side of the bargain.

The expert also has responsibilities: competence, clarity, courtesy and follow-through. If you are participating in this relationship and trusting your own intelligence and your own common sense, I would suggest the following points.

1. Has this expert the credentials that research tells you are important in this field? Has he or she good references from clients similar to you?
2. Are your questions answered? Are they answered clearly or are they brushed off?
3. Does working with this person make you feel clearer about the subject matter at hand or does it just get more confusing all the time?
4. Does this partnership help you set and then reach your own chosen goals?
5. Does this person's style and advice make sense in the context of the world you notice around you?
6. Finally, are you comfortable?

If you can say yes to all of the above, you are working with someone who is helping you learn more, do more, and be more of what you want to be, and that means he or she is the right expert for you.

We are, of course, not always in a situation where we are able to deal one-on-one. We may wish to make some decisions and yet we cannot conveniently sit down with one person. Take charities for example. There are all those good causes and you must decide which you might support of the many that approach you. How do you judge? Well, I know what to do at this point; I call in my expert: Ken Wyman.

Ken Wyman:

I'm going to be wearing two expert hats today. I'm here as a fund-raising consultant and, as a fund-raising consultant, I want you to ignore all the following good advice and make impulse gifts to all my clients cheerfully.

However, I'm also going to share with you some of the tricks of the trade we use to encourage you to give. It's a little unfair to ask me to help you to cope with people like me but I'll try. I'm also here as a fund-giving consultant and in that capacity I'm going to give you the same, I hope good, advice that I give to foundations and to corporations on how to make the best donation decisions-how to be your own expert philanthropist and you must be an expert philanthropist today.

Why do you give at all? Why do you give to certain charities and not to others? The decision is far more complex than choosing a brand of toothpaste or even an RRsP. In part, because the number of registered charities in Canada is mammoth. There now are fifty-five thousand registered charities in Canada that want your donations and the numbers are growing by about five every working day. There will be another ten percent by the end of this year.

Now, you have to understand the motivational tricks used by experts to get you to make your contribution.

First, I want to counsel you that you must beware of charities. Not everybody that comes to you asking for a contribution, even for what sounds like a good cause, is truly a charity registered with the Government and legitimate. Many of them have good causes. For example, there are organisations of disabled people who paint greeting cards and try to sell them to you through the mail. They are legitimately disabled people, the cards are legitimately painted by them, but they are not a registered charity. The one that I'm thinking about will tell you that. It says, "We are not a charity." They take pride in that, more power to them for setting up their own business. Here are some motivational tricks. First and foremost, we try to make arrangements for someone to ask you face-to-face for your contribution. Now this is especially dangerous for you if the charity has carefully, perhaps slyly, arranged for you to be asked by someone you have previously asked for a donation to your charity, or someone you owe a favour to, or someone you are trying to impress, such as a senior lawyer, tax accountant, insurance executive.

A compelling appeal comes in the mail or on the phone or in an ad and this is trick No. 2. It's made more compelling by having the letter signed by "experts" such as celebrities, or doctors. We did a research study through Gallup a few years ago that showed that sixty-one percent of Canadians trust doctors on any topic: golf scores, how to invest in latsps, what charity to support. The second-highest category was the police. Interestingly, forty-nine percent of Canadians said they trust the police, fifty-one percent presumably did not! University professors were the third-highest category and so I counsel my clients to use them. You may be interested to know that at the very bottom of the list with percentages that would not make anybody proud were, in order, politicians, journalists and union leaders.

People believe that say, Anne Murray, knows more about an international cause than you do, or that the fact that a prince or princess is a patron of the charity seems to have some special impact. The result is what we call world credibility or glamour by association. This works very well in high society events as well.

Thirdly, a cause becomes the media's current hot topic as Ethiopia did, as AIDs has become, even though the problem may have existed for years. One of the greatest frustrations for those of us working on international charities was that the Ethiopia crisis had been building for ten years before it suddenly became the media darling and we were finding it very difficult to get people to give at the earlier stages. It may not be solved by the time the media grow bored and move on-the problem may continue. It's one of the greatest frustrations that charities have.

A fourth trick is based on the fact that you care about an issue or fear you may have to care about an issue and the charity uses every trick in the book to build an emotional link, either a positive one or sometimes a negative one. For example, Terry Fox very positively helped us realise that we can survive cancer and perhaps that is one of the reasons the health charities do so well. Or you're thankful that your university education helped you get a good career so you give to the alma mater. Or you see a Food-Share coin can in a restaurant or beer store at the very moment when you are feeling most guilty and so you make a contribution. Or you make a religious donation because you've had a glimpse of your own mortality.

One wag at the Salvation Army, feeling outspoken one day, pointed out that people in their later years give more to charity than anybody else and he says it is because "they are cramming for their finals." I suspect it's true.

How do you cope with all this? Here are some tips on how to plan your giving and that's one of the core issues-you must plan your giving-don't give only in reaction to being asked. That's the classic dictionary definition of being a reactionary. Besides, the charities you may most want to support may never ask you, you may not happen to be on the right mailing list. I suggest that you be pro-active.

Consider what your priorities are. As Penny said a few minutes ago, "Know your goals." What issues do you care most about? It's OK to have more than one priority-most Canadians give to several charities-and for your priorities to change with time. Where can your donation, for example, have the most impact? Smaller grassroots causes may find that a contribution from you of a relatively small amount of money can go a long way, whereas a larger charity feels it is just a drop in the bucket.

Altruism is not a bad quality to have. What is greater than yourself that you would like to see achieved to make this world a better place?

It is also fair to talk about enlightened self-interest. For example, what does or could possibly affect you, your family, your friends, your community? What affects your livelihood, your employees, your customers, your operating environment?

For example, if you work in a company that employs single mothers you might fund day care to reduce absenteeism-a perfectly sound motive and everybody will be happy. Or someone posted to an oil company's office in Fort MacMurray might decide to fund a tour of the opera company or the ballet to try to convince his family that it isn't such a hardship posting after all. Or an insurance executive might decide to fund fitness programmes because healthier policy-holders mean fewer payoffs. Well, perhaps it's a little cynical, but those kinds of motivations are not unreasonable.

The second tip I would like to suggest is that you set aside a donations budget for yourself. Don't just give out of what happens to be in your pocket or cheque-book account. Remember tithing? Ten percent should be set aside for charity. Some people call that a minimal amount. Revenue Canada will allow you to contribute up to twenty percent and take deductions for doing that.

Interestingly, the Talmud prohibits you from giving more than twenty percent in case you impoverish yourself. However, if you already are impoverished, that's no excuse. The Talmud specifically says that, even if you are a recipient of charity, you must also give to charity.

Don't forget some of the ways you can maximise your giving ability or making yourself your own expert money manager when it comes to charities. For example, take advantage of those tax deductions that the Revenue Canada people so gladly give you. Many Canadians fail to deduct the donations that they are entitled to.

Consider giving "in kind" via goods, services, volunteering your time. Consider giving through a payroll plan; if you never see it on your paycheque you won't miss it nearly so much.

Consider setting up a monthly plan such as an electronic funds transfer programme; you're probably already paying a mortgage or car insurance or something through that kind of plan. It makes it easier to give ten dollars a month than to write out a single cheque for one hundred and twenty dollars.

Look for opportunities for matching gifts from your employers or the Government or foundations and if you are already giving all the cash you can now; consider wills, life insurance and bequests that help you give when you no longer need it.

During the Vietnam War, life insurance became very popular, particularly among black soldiers. They were all issued Government insurance policies, G policies, and a great many of them decided to make the beneficiary of the policy the Black Panther Party. Interesting that all were removed from combat duty immediately. The Government presumably did not want to be in a position of paying off one of those policies. This is perhaps the only known case of life insurance actually saving any life.

Tip No. 3: Investigate the charities. Comparison shopping is OK. For example, how do you choose between competing charities? In Ethiopia, for example, should you sponsor a child or should you sponsor community aid? Those are tough choices.

Ask for annual reports of each charity. Don't look at just what we send you in the direct mail. Ask for an audited statement, if you are interested in the financing. Read the project descriptions. Find out how the projects are chosen, how they are evaluated for success. Are the projects practical?

Find out whether you can ask to have your donation earmarked for certain projects or steered away from projects that you like less. Is this request meaningful? Is there any change in the budget as a result of your earmarking?

Consider their fund-raising and administration costs. Consider them carefully. The Government has a rule that says charities can spend no more than twenty percent of the money they raise on fund-raising and administration combined. Realistically, the costs may be higher.

For example, all those letters you receive in the mailbox and you say to yourself, "Where did they get my name and address?" Those are called prospecting mails. On a prospecting mail, people expect to break even, to raise as much money as they spend. What they are looking for is names, not dollars. Now that doesn't mean that you shouldn't contribute to them, but you have to understand that, on those mailings, the costs may be much higher.

I'm on the Board of the Canadian Society of Fundraising Executives, of which I am a member. The Canadian Society and our sister organisation in the United States tried two years ago to set up a method to calculate fund-raising costs so that we could compare across the board and say what is fair. We tried to decide whether a letter that was sent out to you was pure fund-raising or also contained educational material.

We were unsuccessful, as were also the Better Business Bureau and the Canadian Institute of Chartered Accountants. These facts may be discouraging, but it's tremendously important that you not underestimate the power of your gift. A few hundred dollars can be a very large gift for most organisations. Less can do a great deal.

Without your donation, we couldn't hear the music that sometimes keeps us going for another day. We couldn't help a young mother to break the poverty cycle for her children. We couldn't have done the medical research that almost certainly saved the life of someone in this room right now.

However, in conclusion, and I want you to pay very close attention to this point-gaze into my eyes-you will disregard all the previous advice, and the next time a charity that is a client of Ken Wyman & Associates asks you for a contribution, you will give it all your money. You will wake up now in three, two, one.

Penny Williams

Ken Wyman and I have been discussing how the individual makes these kinds of choices, how we reach out, tap expertise, try to behave like an expert as best we can. Our governments try to that on our behalf and they, too, on occasion consult with the experts. Our question therefore is: Are we getting our taxpayers' money's worth when they talk to the experts? And for this, of course, I talk to an expert: Susan Murray.

Susan Murray:

I heard a story the other day about a chief executive officer who set out to recruit an economist for a newly created position. A headhunter asked him for the qualifications he sought in candidates-age, education, compensation requirement, experience. The CEO said he didn't care about any of that, provided that the headhunter could find him a one-armed economist.

"One-armed?" asked the headhunter. "Why one-armed?" The CEO replied: `Because I don't want one of those fellows who give advice by saying: `Well, on the one hand, and, on the other hand:"

The CEO was clearly in favour of action over process. The story, I think, helps illustrate the real dilemma: not how expert the experts, but how expertly the experts are used.

My firm provides government relations services to Canadian-based companies and associations from monitoring to analysis strategy, implementation and, when required, representation.

In our work for our clients, we get a front-row seat on the performance of government, one of the grandest stage plays in the land. Governments are different from business: governments have deficits, business has disasters.

Government can raise prices just about any time it wants, often invisibly, because it is the only game in town, and government is different because of the motivation of the people who drive it. The real forces are politicians and bureaucrats who fervently believe they know what is best and can decide what is best for Canada and for Canadians.

And who is government? At the elective level, these people come from all walks of life and background, levels of experience, and sophistication. They range from firefighters to insurance brokers, lawyers, journalists, business people, the community activists. From these backgrounds, they suddenly become members and ministers and are reliant upon bureaucracy and outside submissions and counsel to help them make national and international policy. They must make decisions with long-term effects on the quality of life in Canada, decisions in so many areas the majority could not possibly be knowledgeable in enough to make the best possible choices.

Governments have to try to represent all public interests, balance a myriad of competing self-interests, sort out the facts of all issues with which they are empowered to act from the emotional, overblown and wrong-headed perspective on every issue from tariffs to housing, interest rates to the environment.

Who are the experts government listens to? Government's use of experts is tiered. For individual projects they (1) hire through a bidding process by ministry or department, (2) they appoint experts from auditors to tax specialists on specific financial projects, and (3) to develop direction for broad policy, as we all know, they appoint experts to carry out in-depth analysis of how they should proceed on any given issue from task forces to royal commissions.

For example, in the Province of Ontario the Dupre Commission was mandated to review how Ontario should move on financial deregulation of the banks, brokerage, trust and insurance companies and how Ontario should relate to the rest of the country and internationally.

Another area under review is child care. A select committee in Ottawa released its report for a national approach to daycare this week. Such topics usually get thrown into one of these studies when there is growing pressure for government to respond. Broad policy committees and task forces hear from expert witnesses and the general population by holding public meetings across the province or the country. Government's use of experts is widespread, but how well are the experts used? When the expertise is part of the decision-making process, the chances of achieving value for money are pretty good. However, when the experts become a process alternative to decision-making, the result is little different from a parallel situation in the private sector.

Sometimes governments act as impulse-buyers to frame tough decisions to buy time and political points or they listen to the experts substantiate their particular philosophical bent or point of view.

I know of an incident in which an expert was retained at a handsome fee to write all but the last page of a report. The government client had already written the conclusion. I don't think that is an isolated example, by the way. I'm not sure the kind of expertise that governments have sought would be all that agreeable to everyone in this room.

Surely the experts most fashionable in the seventies and eighties have been the pollsters. Their influence has ranged from time to time from considerable to absolute.

It has become routine and the new expertise is the use of polling data, not so much in determining policy but in shaping and packaging the data more attractively.

In future trends, governments will have to look again to the communications experts, to a new gaggle of economists and even, judgir. g by observations our firm is making, to lobbyists, in order to reverse the current and to represent complex government policy to the business community, and to develop critical consensus on complex structural issues such as tax reform and free trade.

Will governments continue to rely heavily on the experts? Absolutely! Will they make good use of the expertise? Yes and no. Yes to the decisive, no to the process-oriented who would prefer consultation to decision and inertia to pro-activity. In the end, surely, the successful decision-maker is the ultimate expert.

The appreciation of the meeting was expressed by The Honourable Roy Maclaren, P.C., a Director of The Empire Club of Canada.