Seeing People as Humans, Rather Than a Client
It’s hard to turn on the news these days. Between partisan politics, random acts of violence, and company scandals, we’re inundated with stories about people and businesses treating each other poorly.
Nowhere was this more evident than when United Airlines visibly dragged a passenger off an airplane this week because he refused to be bumped from an overbooked flight. The man was a doctor and had surgeries scheduled for the next morning. Apparently, United couldn’t get anyone to accept their final offer to give up their seat, so front-line employees decided it would be better to resort to brute force and physically remove a paying passenger from the plane.
Companies spend millions of dollars a year on advertising to attract customers, yet, when they have the chance to embrace relationships with their current customers, they repeatedly fail.
Contrast the actions of these United employees with those of Southwest Airlines. In 2015, they forever changed the lives of Peggy Uhle and her son. Peggy’s Southwest flight from Raleigh-Durham to Chicago was getting ready to take off when the pilot suddenly turned around and headed back to the gate. Peggy was asked to get off the plane, which led her to assume that she had boarded the wrong flight. What she discovered, however, was that her son had been in a terrible accident in Denver and was in a coma.
Not only had the gate attendant re-booked her on the next direct flight to Denver, Southwest employees offered her a private waiting area, rerouted her luggage, let her board first, and gave her a boxed lunch when she got off the plane. They also delivered her luggage to where she was staying, never asked for payment, and an employee even called to ask how her son was doing.
While the press and goodwill Southwest Airlines received from this incident was significant, it was not the driving force behind their actions. The employees were simply demonstrating Southwest’s core purpose to “Connect people to what’s important in their lives through friendly, reliable, low-cost air travel.”
These values empowered key stakeholders (the employees) to do what was right for the customer, without question or hesitation. Contrast this with United who, very generically, aspires to be the “airline of choice.” In fact, the only other reference to core values I could find online was a very legally worded “code of ethics and conduct overview”
There are a few key takeaways from these contrasting stories. The first is that the culture and values we create in our business and homes will lead to specific behaviors by our employees and family – for better or for worse. Therefore, it’s imperative that we be very clear and explicit about what we stand for in terms of each.
The other major lesson is that we need to focus more on seeing people as human beings, not simply as a client, partner, or competitor. If we treat them with respect and/or help them selflessly in a time of need, we will create more positive outcomes all around. United employees decided it was better to drag a passenger off a plane than to up their $800 offer and own their mistake. Southwest just decided to do the right thing. Karma took care of the rest.
What's an Investor to Do When History Doesn't Repeat Itself?
We’re in an era of extremes. It seems a day doesn’t go by without the word “historical” popping up in the financial news.
The equities market and consumer debt are at historical highs. Interest rates and high-yield credit spreads are at historical lows. We haven’t seen even a 5% pull-back in the market this year—for the first time since 1995—and the DJIA is exhibiting its narrowest trading range in history. These are indeed historical times. And whether this fact has you filled with extreme optimism or extreme pessimism, you have some important decisions to make going forward.
There are theories about how we landed in this particular era of extremes, and most are rooted in the significant changes that have impacted both how we live and how we invest. At the top of the list are globalization, automation, and the largest aging population in history (yet another “historical” to add to the list). It’s said that the most dangerous words in investing are, “it’s different this time,” yet one has to wonder if, in fact, it really is different this time. Not just because of the historical market highs. After all, there always has been and always will be a new market high waiting around the corner. What’s different today is the sheer number and confluence of these extreme highs and lows—and their duration. It’s a situation no investor has experienced before, which can make these waters feel pretty daunting. History repeats itself, and investment strategies are largely built on that conviction. But what do we do when it doesn’t? When history fails to repeat itself, how can investors plan for tomorrow with confidence that they are positioned to protect their assets and gain a reasonable level of yield?
The first step is to recognize that, at least in many ways, the investment landscape really is different this time around. All you have to do is look at the numbers to be sure of that fact. And the catalysts I mentioned before—globalization, automation, and the aging population—aren’t going anywhere. If anything, the impact of each will only grow as time moves on. What that means is that there’s no way to predict what’s coming next. The only thing we know for certain is that predictability is a thing of the past (if it ever really existed at all). The result: you need to approach your portfolio differently than you ever have before.
Your goal, of course, is to find return given a risk tolerance. Current yield is an important part of total return and getting it is an elusive proposition in today’s market. If, like many people, you’re less than confident that the four major sectors that currently drive the equities market—healthcare, discretionary, tech, and financial—are poised to continue to rise at even close to recent rates, it may be wise to seek out alternatives to help drive yield without adding more risk to the equation.
But if alternatives are the wise path forward, which alternatives are the best options?
Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), and energy stocks, traditionally the favored “non-correlated alternatives,” defied expectations when the stock market crashed in 2008, inconveniently revealing high correlations just as the equities market began its freefall. Anyone who was invested in these alternatives at the time knows all too well the devastating impact “non-correlated investments” can have on a portfolio, especially when they fail to do their job when it matters most.
Luckily, there is one alternative that can be counted on to remain uncorrelated to the traditional financial markets and, ultimately, deliver that precious yield: life insurance-based investments. And because this asset is literally built on one of the irreversible catalysts of change, the aging Baby Boomer population, owning life insurance may in fact be the ideal alternative to help investors generate non-correlated returns, regardless of where the market turns next. Even better, these investments typically deliver those returns with very low volatility.
What makes life insurance different is that, unlike typical alternative vehicles, secondary life insurance returns aren’t based on the economy. Instead, they are inherently non-correlated because returns are based solely on the longevity of the individual insureds.
As much as we would all love for the bull market to continue on its merry way, one thing history does tell us even today is that a bear market will come. It’s only a matter of when. As you strive to hedge your portfolios and prepare for the inevitable, life insurance-based investments are one tool that can help you achieve the three things you need most: diversification, low volatility, and yield.
- 1 of 1536