Now, You Are The Actuary

I have noticed, and do not like, a disturbing trend – and that is the transfer of either the work or the risk (and often both) to the consumer.  As the world gets more complex and choices (and consequences of choices) multiply, the accompanying knowledge needed to make a good decision is becoming more arcane and specialized.  But, by a mysterious alchemical process those with the least knowledge are becoming more responsible.  And the sad truth is that many of us are ill-prepared to manage the responsibility.

Point:  Used to be you went to the bank for a mortgage and the big decision was whether you took out a 15-year or 30-year mortgage.  Today, the consumer who, by every study ever done has like an 85% chance of being financially illiterate, must decide term and interest rate.  So, the lender, who (supposedly) is the expert, does not advise or make the decision.  Now it is the consumer, many of whom cannot balance their checkbook, now must figure out whether a six-month, 1-year, 3-year or 5-year ARM based on LIBOR or Treasury CMTs, or the Cost of Funds Index is better than a 15-year or 30-year fixed rate mortgage.  Great.  Lenders have successfully off-loaded the risk to the uninformed and typically financially illiterate consumer.  Just Google™ the phrase “US financial literacy” to confirm my judgement.

Point:  Like Panera?  I do not.  On top of disliking 6 inches of bread with my 1/4 inch or less of meat, I also dislike picking up my meal at the counter and having to bus my own table.  If I really wanted to do that, I could have made a sandwich at home. 

Point:  Ever buy a Universal Life Insurance Policy?  How come I am the one who must figure out how long I am going to live?  Real life example:  Me: So, I pay for this policy for 30 years, right?
Agent: Right.
Me: And if I happen to live 31 more years, what happens when I die?
Agent: Well, then the policy has no value.
Me: So, I pay for 30 years, and you do not have to pay anything out if I live longer than that?
Agent: Right
Me: I do not like that outcome.
Agent: To ensure your payout, all you have to do is promise to pay for the rest of your life.
Me: This discussion is over.

PointEmployed?  Good for you.  Got a 401K plan or IRA?  Even better.  Now you get to choose between aggressive or passive investments, stocks, or bonds, long-term or short-term, company stock or not.  And choose wrong (which according to most research, we do) and you have no retirement funds.  Pension plans (those where when you retire, the company pays you annually based on your tenure and salary) have gone the way of the dodo and ALL the freakin’ risk is now on the shoulders of those least educated on how to make the choices.  See my comments on financial literacy above.  And, oh, you do remember that the Trump Administration and Republican Congress resisted the ‘Fiduciary’ Rule – which simply required that your broker/advisor put your interest ahead of their interests.

Point:  Airlines.  Now I am the travel agent.  I make the reservations online.  Also, I take the entire risk that something might happen, I might need to make a change or cancel my flight  — it will cost me between $75 and $200 to change the ticket on top of any additional fare.  Truth:  I just bought a one-way ticket for a trip I had a round trip ticket for because I needed to change the return.  Changing the original ticket would have cost $425 — $200 change fee plus another $225 fare differential.  The one-way ticket cost $167.  I went to college so I would not have to be a reservations agent.  Now I am one.  And do not get me started on how the airlines have turned me into their personal baggage handler.

Point:  Cable TV and Phone Plans and Data Plans….I cannot even begin to figure out how these guys are screwing me.  I cannot decipher minutes and text messages and GBs of data across 4 phones.  In fact, I have seven phones on the family plan because each time one of us upgraded a phone, it was cheaper to add an extra phone line than it was not to add the phone line.  I have phone numbers with no phones.  I have channels I never watch and premium channels and HD packages and sports channels.  What I get for free is all the reality TV shows, QVC, Australian rules football, and rap music.  So, in each of these cases, again, the decision risk has shifted completely to the consumer….and it results in bad decisions for the consumer that are great for the company.  Remember how we hated the old “Ma Bell”?  I do not.  I yearn for her return to remove me from this morass.

Point:  Let us face it.  The petroleum retailers (yes, I mean gas stations) have turned us all into gas jockeys.  Smelly shoes and smelly hands are our reward, because none of us believe even one iota of that that huge labor savings went towards lower prices.  Not only that, but remember when the cost differential between budget, regular, mid-grade, and premium was 5 cents between grades or 20 cents total.  Check it out now.  85 cents or more.  What bullshit.

Point:  Have you received your annual request to reenroll in your employer sponsored health care plan?  Worse yet, have you had to choose whether (or not) to receive Medicare Parts A, B, C, and/or D but of course, that is not really the choice you have to make.  If you want Part A (hospital coverage – which is mostly free) you must also sign up for Part B (Medical Coverage – which most assuredly is not free).  Then of course you can choose neither A or B but choose Part C – the privately administered Medicare advantage Plans, i.e., brought to you by those most empathetic and generous Insurance companies like BlueShield/BlueCross, Aetna, Anthem, and others.  No worries, just visit every insurance provider website and provide them with you name, address, email address, and phone number to get a quote.  Then choose between their bronze, silver, and gold plans.  By the way, some of these Medicare Advantage plans also provide Medicare Part D coverage (Rx) but some do not.  So, then we go to choosing a Part D plan.  Unlike Parts A & B, you cannot sign up for Part D through the Social Security/Medicare office or website, but again, you need to choose a provider.  Back again the insurance companies to make a choice.  All you need to do is enter all your prescriptions into each of the insurance company’s databases to see if that specific medication or its generic (if those work for you) is covered and then the insurance company will tell you what the Rx will cost, what your co-pay is, and whether it is classified as ‘permissible”.  And I am not going to even begin to describe the complexity of not choosing a Medicare Advantage provider.  Then you must go through choosing a Medigap program with its 8+ options and three tiers of service. 

Of course, this mishmash of shit has produced a whole ‘nother new class of experts:  The Medicare Coverage Consultants.  They may be “free,” i.e., they get commissions from the insurance companies they advise/steer you to or they may charge you fees in advance and may receive some sort of kickback from the insurance companies, I am not exactly sure.

What I do know, having done this for both my parents myself, is that it ain’t easy to decipher.  I am a History/Economics major with a math minor, and MBA, and I am computer and business tool literate.  Under the Affordable Care Act, I could actually (finally) get private health insurance after my employer-sponsored coverage ended and I still went to a broker/consultant for help.  This is one fucked up process and the costs, mistakes and/or errors are all on the user.

I am sure there are many more, and even more important illustrations.  I have turned into a busser, a gas station attendant, and a customer service agent, as well as an accountant, an actuary, and investment professional, and only God knows what else.

I do not know about you, but I am getting goddamn tired of it.

2 thoughts on “Now, You Are The Actuary

  1. Agree with your rant….. but you have also revealed yourself to be a savvy consumer. By the way, I need some help renewing my Norton Antivirus account😚.

  2. A Harvard MBA no less! Excellent commentary Dan. You are 100% correct — but it’s not hard to understand why…it’s the drive for productivity & profit. Wages represent the largest single expense for many companies, and so cutting people gets you the expense savings, and then all you need to do is dump the work on the customer and spin it like it’s good for them. It’s sad but true…maybe it’s an opportunity for companies that truly deliver value?

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