A Spoonful of Sugar Helps the Medicine Go Down

Today I just want to tell you a story, so sit back and relax. Once upon a time . . .

How many times have you attended a class that began like that? Not too many times, I’m guessing. And I’m guessing that storytelling becomes rarer and rarer the more advanced the topic. Am I right?

But people’s brains are built to give attention to stories, so they tell us. So why don’t we use the technique more often?

In financial education, stories tend to appear in examples that are set aside from the text. Examples could be the real teachers in these courses, but they tend to be afterthoughts. What’s worse, savvy students might often feel they can skip over the examples. And they can, if the story is poor and the learning point is merely repetitive of the preceding text.

In my career, I’ve had a few opportunities to turn it around. The first one was a course called Introduction to Trusts. The original was a dry course that listed one estate planning concept after another. Examples were few and short. In revising the course, I decided to drop the dry recitations of property law and build the course entirely out of a half-dozen case studies. The property law was “discovered” in the process of solving a client’s problem.

The course was much more engaging. The student could see property law principles at work. My team soon was building more reality-based courses. Many years later, I learned that instructional design research supported many of the techniques we used.

It often seems impossible to get these topics on their feet. But any useful knowledge has a use! That is the key.

In every job that must be done
There is an element of fun
you find the fun and snap!

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Boomers Retiring Earlier . . . I Mean, Later . . .

As Baby Boomers age, stories in the financial press (and the mainstream press) are beginning to shift from “Boomers Retiring Early!” to “Boomers Retiring Late!” There are even stories saying that “Boomers Are Secretly Retired!” Or “Secretly Unemployed!” Whatever!

Of course, it’s all happening. There are tens of millions of us (76 million born between 1945 and 1964 and a large majority of us are still around). In a group this size you’re bound to find early retirees, late retirees, and secret retirees. We didn’t all go to Vietnam. We didn’t all burn our bras (not even 50% of us). We didn’t all do drugs. Sex and rock-and-roll were probably pretty widespread, but not universal.

And not only are we individuals, we live in a time of increased life spans. When we were born in the mid-twentieth century, life expectancy was just creeping out of the 60s! We forget that, at least 10 years have been added during our lifetimes.

Our grandparents had very few years of retirement, on average. Early or late, it wasn’t a big difference. Today, a boomer could be looking at 20 years of retirement (that’s the approximate average) or even 30 years (not too much of a stretch).

And as our lives have been stretched out, so have our life milestones. We married later. We had kids later. We put kids through college later. And these life milestones have become more expensive (college, medical, etc.) All these changes have increased the variability in boomer life experience.

Policy-makers and actuaries may look at the averages, but financial planning professionals look at the individual. The boomers are all individuals. Every single one of them.

Learning Lots of Long Lists

I have a rule of thumb: if I have to remember a list of items that’s longer than three items, I have to write it down. Otherwise, I will always forget one of the items. It’s my N-minus-1 rule. If the list is N items long, I will remember N-1 of them. I discovered this rule running to the grocery store for my wife. Now, when she asks me to pick up a few items, I always ask how many items she wants. If it’s more than three, I write it down.

Insurance education has lots of lists: lists of things that are covered, lists of exclusions—you get the picture.

I didn’t realize this when I first got into the insurance education business because my area was life insurance. Here’s the list for life insurance:

  • Dead—covered
  • Undead—not covered

Two items. I can handle that one. Of course it’s more complicated than that, but the life insurance list isn’t in the same league as health insurance, with its lists of procedures, or property-casualty insurance, with its lists of perils and hazards and risks—oh my!

Pure lists are hard to teach because, if the typical learner is anything like me, their brains operate on the N-minus-1 rule. And more often than not the forgotten 1 is the item they need to know.

In designing a learning experience, then, you have to decide exactly what it is you want to teach people. Here are some possibilities:

  • Instead of teaching people to recite a list, you might want to give them the list to take away with them (remember my grocery list)—then teach them how to use the list.
  • You might want to teach items on the list the learner might encounter with some frequency: property-casualty producers might have a greater need to understand the coverages and exclusions relating to employee dishonesty than they need to understand the exclusion for nuclear war.
  • You might want to teach why things are on a list: cosmetic surgery is on the list of exclusions because cosmetic surgery is normally elective, whereas an appendectomy is not.
  • Instead of pure memorization, you might have activities requiring the learner to sort items into “piles”: covered versus excluded. You can get really fancy and have a secondary sort of the excluded pile into exclusions that you can buy separate coverage for (like flood insurance) and exclusions that you can’t (like for war).

 

Handling the Math

People have a hard time with math. Even people who write about it.

Take a recent article in Slate called “Obamacare and the ‘Young Invincibles,’” that purports to evaluate the recent enrollment figure under the Affordable Care Act. This article is not written by an Obamacare basher, and yet the author’s failure to do the math possibly paints a more negative picture than warranted.

It all has to do with the health insurance enrollments of young people in the age 18-34 bracket.

Enrollment of young people is important because young people tend to avoid buying health insurance, but they are needed in the risk pool to balance off people of my age. The ideal risk pool has full representation from all ages.

The article says that 40 percent of the uninsured in this country were in this age bracket. Final enrollment figures say that 28 percent of those who enrolled were in this age bracket, far short of the 40 percent.

Is 28 percent good enough?

The article says that there is no benchmark because underwriting information is unavailable from the insurance companies. But it does compare the figure to the initial enrollment figure when the similar Massachusetts program was first launched. The figure for that age group in Massachusetts was 28.3 percent. The Massachusetts program went on to be a success.

Is the national figure of 28 percent comparable to the Massachusetts 28.3?

The article correctly states that it depends on how the enrollments break down by state. Some states encouraged enrollment, some states discouraged it. Some states made Medicaid available, some did not.

Another factor to be considered is the fact that, under Obamacare, young adults up to age 26 may now be included in their parents’ employer-provided health insurance. The article doesn’t account for these young adults. They would not have enrolled through the health exchanges and would, therefore, not be part of the 28 percent. The question is: were they or were they not counted as part of the 40 percent who were uninsured.

Unless we know about these young adults, how can we even come up with a figure? We can’t. The figure could be 28 percent or it could be more. Health exchanges were not the only avenue for young adult enrollment. You have to account for them all.

Unreality of State-Mandated Continuing Education

State insurance regulators take a dim view of sales training. There’s no continuing education (CE) credit for that. But this misses a key principle of androgogy (adult learning): adults need to be motivated. They need to know that there will be a payoff if they invest time and mental effort. When state regulators nix content that seem too sales-y, they are nixing the motivation that could drive learning. Without this motivation, agents are just putting in the time to get their license renewal. They take the easiest courses and learn very little.

Of course, it’s not that black and white. There’s certainly a spectrum of learners. Many people in the field lap up learning, spending way more time than CE rules would require. I’ve done it myself and gotten rewarded with a variety of advanced designations—and with knowledge.

I do sympathize with regulators, though. If you are going to require regular education, you have to require something with a minimum level of meatiness. I just think they go a little too far.

As a writer of continuing education courses, I want to set my concepts in a world that has a reality that is recognizable to the learner. The real world is a world of sales. When we remove that, we need at least to ask the learner to reflect on customer needs and suitability of solutions we offer to meet those needs. It’s not sales per-se, but it’s close (needs and suitability are components of many effective sales strategies). And it puts an ethical slant on the material that usually pleases the regulators.

Metaphorically Speaking

What do metaphors have to do with financial education?

To explain this, let me ask you to think back to the last time you worked a jigsaw puzzle. At first the task of assembling the puzzle seems daunting. But then you start noticing similarities in pieces. There are pieces with straight edges that form the borders of the puzzle. There are similarities of color or pattern that enable that help you start to group the pieces. Soon you begin to find pieces that fit together. The more you assemble, the easier it gets. It has to do with framework. The framework helps you connect each new piece. The more framework, the easier it is to incorporate a new piece.

Your mind works the same way. You have a hard time remembering a stray fact. It’s much easier if you have something to connect it to. This is born out by much research. Metaphors are one way to provide a connection.

Some financial concepts have richer networks of connections than others.

Take the concept of risk.

Risk can mean something very different for an insurance underwriter than it does for a securities rep. The insurance underwriter’s view of risk is probably closer to the common layperson idea of what the word means. Risk is bad. Risk is a chance of a loss. To the securities rep, the concept is expanded. Yes, risk is a chance of a loss, but it is also a chance of a gain.

These different views lead to different strategies for managing risk.

There is an old story about four blind men who encounter an elephant. One touches the trunk and describes the elephant as like a snake. Another touches the tusk and describes the elephant as like a sword. Another touches the elephant’s side and describes it as like a wall. The last touches a leg and describes the elephant as like a tree.

Metaphor is a tool to approach understanding and knowledge, but a metaphor is not the thing itself. It provides connections but not complete pictures. Skillful use of metaphor is a powerful tool, but it is only a part of the puzzle.

Countering Conventional Wisdom

If you are financially sophisticated, I want you to think about how you talk to a person who knows nothing about the topic. If you are a financial know-nothing, I want you to think about talking to a financial professional.

The question I have for both of you is the same: How do you talk to each other? What is you common language? What assumptions does one make that are totally foreign to the other?

This is the challenge of financial education. Knowledgeable or not, people make assumptions about money.

Often assumptions are heavily colored by public debates about taxes and insurance and entitlements and regulation. Even though we know that public debate is loaded with misinformation, we can help being swayed by it.

In some fields of education, students are blank slates. They know nothing. In the field of financial education, however, student can be steeped in the “conventional wisdom” and the conventional wisdom is wrong. As an educator, how do you counter this?

Well, you can’t become a counter-advocate. You are not there to advocate for policy. You are there to educate people about concepts. You need to be aware of common misconceptions, but leave the polemics at the door. You need to be the authority. And you have to make sure you don’t inadvertently buy into the controversies yourself.