Lessons on Plagiarism from “The Decider”

In light of the news that our 43rd president plagiarized portions of his OWN MEMOIR, it’s clearly time for a review of what we learned in high school English class about giving credit to others. Not doing so is an act of piracy.

When I posted the link to the article that broke the plagiarism story on my Facebook page with a note that it seems likely Mr Bush’s editor will soon be “spending more time with family,” I got a couple of comments to the extent that it’s impossible to plagiarize your own story.

Yes, it’s possible to plagiarize when writing about yourself

Plagiarism occurs when you take and use ideas, passages, etc., from another’s work. Have a look at these two passages from Mr Bush and General Tommy Franks paying particular attention to the phrases in bold — this is one of the instances of piracy:

Bush writes: “Tommy told the national security team that he was working to apply the same concept of a light footprint to Iraq… ‘If we have multiple, highly skilled Special Operations forces identifying targets for precision-guided munitions, we will need fewer conventional grounds forces,’he said. ‘That’s an important lesson learned from Afghanistan.’ I had a lot of concerns. … I asked the team to keep working on the plan. ‘We should remain optimistic that diplomacy and international pressure will succeed in disarming the regime,’ I said at the end of the meeting. ‘But we cannot allow weapons of mass destruction to fall into the hands of terrorists. I will not allow that to happen.’“

Franks, in his memoir American Soldier, writes: “‘For example, if we have multiple, highly skilled Special Operations forces identifying targets for precision-guided munitions, we will need fewer conventional ground forces. That’s an important lesson learned from Afghanistan.’ President Bush’s questions continued throughout the briefing…. Before the VTC ended, President Bush addressed us all. ‘We should remain optimistic that diplomacy and international pressure will succeed in disarming the regime.’ … The President paused. ‘Protecting the security of the United States is my responsibility,’ he continued. ‘But we cannot allow weapons of mass destruction to fall into the hands of terrorists.’ He shook his head. ‘I will not allow that to happen.’”

Plagiarism isn’t a partisan issue

This post is meant to be instructive, not political.

Evidently Mr Bush had a crack researcher helping him flesh out his story. No problem with that. If Mr Bush wanted to lift passages from others’ work, he could have simply said “So-and-so  said it best…” and then quoted the original.

Why the editor should be “spending more time with family”

Editors have scads of software to detect plagiarism.  The editor (and publisher)  should have known  people would go through Mr Bush’s work with a fine tooth comb and should have been more diligent in assuring that the final book was beyond reproach. Ultimately, the publisher is responsible for the book, but the editor will take the fall.

Lessons for my clients

• You’re wise to check your recollections of events with other sources. If they are the same, I’ll handle it without plagiarizing; if they are different, I’ll encourage you to acknowledge the differing points of view and make a compelling case to believe yours.
• If others have written about you they’re likely to give your work some publicity whether your accounts agree or not. But all bets are if if you plagiarize their work.
• List your references.

You’re Only Fooling Yourself

Last week, under the presumption of sending me St. Patrick’s Day greetings, I got this from a life insurance agent who likes to pose as a financial advisor:

St. Patrick’s Day is quickly approaching. Even if you’re not Irish, you still get an Irish Blessing to hold on to for the year.

May your pockets be heavy and your heart be light,

May good luck pursue you each morning and night.

This is also the week that I send one of my periodic checklists. Please take a second of time to check-off these questions. It could help reduce your taxes and provide new financial tips. That’s worth a second! Here is the checklist.

This is not a download or an attachment. It is a safeguarded link.

And here’s what I got in that safeguarded link:

Let’s break this down

First,using the elementary school holiday calendar as an excuse to send solicitations is disingenuous. I can see right through your ploy.

Second, when you say you’re providing me with a checklist that will help me reduce taxes and provide financial tips that’s what I expect. You lied.

Third, the visually wretched “checklist” leads with the setup that you are somehow helping ME  keep my “records current” when in reality it’s a lead generation form for YOU.

This kind of crappy communications gives the insurance sector a black eye.  You earned the Golden Retriever Crappy Communications Award for March, 2010.

Brokers vs Advisors vs Clients’ Best Interests

Last week the NYT ran another story on the screwy financial regulatory landscape here in the States.  With so many financial professionals calling it quits with big firms and hanging out shingles as advisors,  the big money (brokerage firms) do their best to obfuscate their incentive to SELL, rather than ADVISE or MANAGE.

The story ably illustrates how some individual brokers provide advisor-like services while some advisors closely resemble brokers.

One advisor’s view

I interviewed Derek Hernquist, Chief Investment Officer at Integrative Capital, LLC in Charlotte, NC on this matter.

Derek: “It makes no sense to me that there are two standards, and I think the brokerage industry has blurred the lines by changing titles to “financial advisor” from broker or registered rep. Most people I speak with are unaware of the distinction between financial advisors and investment advisors.

“Seriously, how can anyone read this line from the article and not think there’s a problem “Congress is now considering a provision that could alleviate some of this confusion by requiring brokers to act in their clients’ best interest. ‘Requiring brokers?’ Shouldn’t a client be able to trust this is already the case?”

Derek’s a smart guy with principles. While I had his ear I asked a few more questions:

Q: Why did you launch your own advisory practice?

A: I found myself frustrated with my answer when friends asked “What do I do with my money? The growth of Wall St. left investors with an overwhelming array of underwhelming choices. It became harder and harder for the true risk managers to be noticed amidst the race to beat the benchmark. I felt compelled to step in and help filter the noise for those without the time to do so.

Q: Why did you choose Registered Investment Advisor (RIA) registration?

A: I needed complete independence of investment choices as well as fair pricing to give clients a shot at attractive risk-adjusted returns. This eliminates everything but the hedge fund and investment advisory models,and I felt that the demographic I wanted to help was outside the scope of hedge funds.

Q: Compensation is a big issue. How did you determine your fee structure?

A: I love the performance-driven aspect of hedge fund fees, but had to compromise in order to open my tent to individuals that don’t qualify as accredited investors.

In Warren Buffett’s early days, he charged nothing for the 1st 6% of return and asked for 25% of profits above that.  I’d love to do that, but that’s outlawed for non-accredited investors under the 1940 Act. To this point, I’ve settled for charging clients 1% of assets up to a max of $10,000 per year. Account size doesn’t dictate required workload, so this is my way of flattening the cost curve a little as clients grow into accredited investors.

Prompts for Professionals

I wrote about compensation and the need for some honest disclosure on how any professional is paid last June. One of the comments included this observation: “Funny – no one asks their doctor how they get paid either.  Might be worth asking. Most doctors I know have incentive to rush you through their office because they are paid by the HMOs based on how many patients they see per day.”

• If you own your firm, tell your clients why you decided to structure your compensation as you did.   If you work for a broker or agency, tell your clients why you believe the comp structure you work under is fair to you and to them.
• Explain how you balance the competing interests of your financial future and theirs.
• Have an up-front discussion about how they can challenge your ethics.
• Do you belong to a professional organization that requires credentialing?  Tell your clients about the credentialing process and how your preparation and credentialing benefit them.
• Publish your continuing education plans for the year.
• Solicit feedback from clients: what topics do they find most confusing?

How about it? Let’s have a hearty discussion in the comments section.

Gotta Love footnoted.org

Financial pros and self-directed investors alike appreciate the work that Michelle Leder at footnoted.org does speaking truth about powerful businesses and the people they overpay to run them. Good to know someone’s on the job ferreting out the things companies try to bury in their routine SEC filings.

Ms Leder found her calling as a forensic reader of company reports after losing part of her IRA on Qwest Communications. Conducting the post-mortem on that  transaction,Ms Leder realized that “instead of relying on happy talk from corporate executives and over-enthusiastic analysts, she should have spent her time reading the company’s SEC filings. In a little over an hour’s time, she found several red flags that pointed to overly aggressive accounting.”

A seasoned business journalist, she wrote Financial Fine Print: Uncovering a Company’s True Value and launched footnoted, which was acquired by Morningstar earlier this month. Proof positive that sometimes those who do good can also do well.

Be sure to bookmark or get a feed from footnoted’s blog.

Here’s a recent video of Ms Leder who, like me, works out of a home-based International Headquarters and is ably assisted by a canine.

An Effective Apology

I remember when my elder son was about four or five and learning to say all the wrong things. One day he stomped into my room, ranting a string of expletives about his brother. He stopped mid rant, clapped his hand to his mouth, looked me in the eye and said “I’m sorry, Mom, my mouth was on fire.”

It’s hard to keep a straight face in situations like that.

Today’s agitated world creates situations ripe for effective apologies — from public officials and CEOs, to neighbors and family members — yet we too often find ourselves at a loss for how to give apologies earnestly or accept them graciously. Next time you need to apologize, turn to John Kador’s book and blog.

I had the good fortune of talking to John last summer and have heard him interviewed on this topic. He’ll show you how and why leaders who willingly and skillfully apologize make more money, enjoy longer careers and create stronger relationships than those who don’t.

Until you get your hands on the book, remember the Five Rs of an apology: recognition, responsibility, remorse, restitution and repetition.

Prompts for professionals

• John Kador says that some kinds of apologies make the situation even worse. If you’ve ever perpetrated a harmful apology, how can you turn the situation around? For example, let’s say your client left a trade request on voicemail — something your message reminds them not to do — and their trade wasn’t executed. Did you say something like “I’m sorry you didn’t follow the directions on my voicemail to call my assistant instead of leaving the request on my phone”? I bet that didn’t go over very well because it was a criticism wrapped in the language of apology. Perhaps something like this would be more effective:  “I know you lost money because that trade wasn’t executed. I feel awful about it. If I had received your voicemail in time I would have called you back and perhaps been able to minimize your loss. While I can’t make you whole on this transaction, I can assure you that if you (take this action) in the future, we can get your trade executed on time.”

• Is there a chance you can break a stalemate with an apology? Something like “Ever since (the event) our relationship has been strained. Although there’s been a lot of water over the bridge since then, I want to acknowledge that if I had it to do over again I would have treated you better. I hope you’ll accept my apology for (ignoring your phone calls/blaming you/etc.). Although I can’t wipe away the past, I’d like to ask if you will give me another chance to work something out. If you do, I promise to (return your calls/refrain from blaming/etc.).”

• Is there a situation where your company has taken a stand you disagree with and you’re caught between it and a customer? Is there a way you can apologize and accept some of the blame instead of throwing your company under the bus?

Banker Motivation

As I mentioned in December Book Lust I’m reading Dan Pink’s new book Drive: The Surprising Truth About What Motivates Us. The book’s publisher had perfect timing, with  January’s headlines of banker bonuses and the prospect of taxing TARP recipients.

There’s a lot of hand wringing about what will happen to the entire economy if the financial sector is reined in:

• Will “under paid” (therefore presumably under qualified) bankers screw up the economy?
• Will all the good financiers move to hedge funds, leaving our big banks in the hands of a bunch of brain-dead drones willing to work for a mere 25x their average company worker’s wage?
• Is limiting banker compensation the last nail in capitalism’s coffin?

And then there’s the rumor that Goldman Sach’s Lloyd Blankfein will be taking a $100m bonus for 2008′s work. That’s in contrast to the US Census Bureau’s report that the average 2008 per capita income was just under $27k. I don’t think the feudal lords of the dark ages made those multiples.

Before jumping in with Drive‘s analysis of human motivation,  I’ll let The Daily Show guide us down memory lane with those to whom much was given and nothing was demanded:

The Daily Show With Jon Stewart	Mon – Thurs 11p / 10c
The Financial Crisis Inquiry Commission-Team
www.thedailyshow.com

The evolution of motivation

Mr Pink says Motivation 1.0 centered around survival. Sometimes survival meant stealing a meal or a spouse but eventually the human species figured out that cooperation was a less painful, more humane way to conduct ourselves, and Motivation 2.0 came into being.

Motivation 2.0 centered around punishment and reward and “it is so deeply embedded in our lives that most of us scarcely recognize that it exists.”

Despite its greater sophistication and higher aspirations, Motivation 2.0 still wasn’t exactly ennobling. It suggested that, in the end, human beings aren’t much different from horses — that the way to get us moving in the right direction is by dangling a crunchier carrot or wielding a sharper stick. But what this operating system lacked in enlightenment, it made up for in effectiveness. It worked well, extremely well. Until it didn’t.

The Seven Deadly Flaws of Carrots and Sticks:

1. They can extinguish intrinsic motivation
2. They can diminish performance
3. They can crush creativity
4. They can crowd out good behavior
5. They can encourage cheating, shortcuts, and unethical behavior
6. They can become addictive
7. They can foster short-term thinking

This is not to say that carrots and sticks are always bad

Drive has a chapter on circumstances where punishment and rewards work very well, thank you very much. But we’re headed full gallop into Motivation 3.0, which recognizes that while people are at times profit maximizers (and therefore extrinsically driven), we are also “purpose maximizers,” which means we’re motivated intrinsically as well.

For the word lovers among us, “purpose maximizers” has its own Latinate descriptor: Homo Oeconomicus Maturus (Mature Economic Man).

Bruno Frey, an economist at the University of Zurich says “Intrinsic motivation is of great importance for all economic activities. It is inconceivable that people are motivated solely or even mainly by external incentives.“

Mr Pink lists several highly successful business people who are driven by intrinsics to achieve and even asks us to ponder whether the intrinsically-motivated Warren Buffett and Oprah Winfrey are any less economically successful than Jeff Skilling and Donald Trump (whom most would agree are Motivation 2.0 poster boys). 

What about the bankers?

Americans are stuck in Homo Oeconomicus (Economic Man) mode, instead of Homo Oeconomicus Maturus mode. We aspire to big bucks ourselves, so while there’s still a chance we can make the current system work for us, we’re loathe to reform it. I think this is why we  didn’t DEMAND taxpayer representation on the boards of the organizations we taxpayers saved from the ash heap in October 2008. That,  plus the fact that the moneyed class and the politicians they own have convinced us that we should fear big government more than big business (or perhaps anything else).

We’ve seen what extrinsically motivated bankers can do for society. I’m sure we can find some Homo Oeconomicus Maturus boards and managers out there — aren’t they the ones running credit unions?

Maybe Sir Richard Branson could bring “Virgin Money” to the US, too. The CEO (a woman!) says “Our aim is to make ‘everyone better off’ in the way we do business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a growing profit to shareholders. Our approach to banking is founded on developing a sustainable, savings-based business.”

Finally, I’m not in a position to judge whether Lloyd Blankfein believed himself when he declared that his firm does “God’s work.” Stephen Colbert seems to have an answer to that question:

The Colbert Report	Mon – Thurs 11:30pm / 10:30c
Goldman Sachs Does God’s Work
www.colbertnation.com

Dan Ariely 3 of 3: Trust and Healthcare Reform

In the first of this three-post series I offered a sound file of Dan talking about the limits of rationality when devising and regulating public services.

In the second, we explored how  Treasury’s un-trustworthiness dealing with TARP and the financial meltdown has led to social anxiety and depression.

While writing that second post it occurred to me if our elected and appointed officials been truthful and upfront in their dealings with $700b bailout, we’d already have a healthcare reform bill.

It also occurred to me that we hold public servants to a higher standard than CEOs of healthcare. When healthcare execs earn blood money by standing between us and our doctors, we shrug it off by saying “Hey, that’s just capitalism,” or “Oh well, cost of doing business,” but when our elected officials stand between us and our doctors we get nuts because that’s rationing.

What Ariely has to say about our beloved invisible hand of the market

In the updated version of Predictably Irrational, Ariely observes about his own profession:

Rational economics has always been the basis for setting up policies and designing our institutions. What’s wrong with that? Neoclassical economics is built on very strong assumptions that, over time, have become ‘established facts.’   Most famous among these are that all economic agents (consumers, companies, etc., are fully rational, and that the so-called invisible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny.

Building on these basic assumptions, rational economists make recommendations regarding the ideal way to design health insurance, retirement funds, and operating principles for financial institutions. This is, of course, the source of the basic belief in the wisdom of deregulation: if people always make the right decisions, and if the “invisible hand” and market forces always lead to efficiency, shouldn’t we just let go of any regulations and allow the financial markets to operate at their full potential?

On the other hand, scientists in fields ranging from chemistry to physics to psychology are trained to be suspicious of ‘established facts.’ In these fields, assumptions and theories are tested empirically and repeatedly. In testing them, scientists have learned over and over that many ideas accepted as true can end up being wrong; this is the natural progression of science. Accordingly, nearly all scientists have a stronger belief in data than in their own theories. If empirical observation is incompatible with a model, the model must be trashed or amended, even if it is conceptually beautiful, logically appealing, or mathematically convenient.

Unfortunately, such healthy scientific skepticism and empiricism have not yet taken hold in rational economics, where initial assumptions about human nature have solidified into dogma. Blind faith in human rationality and the forces of the market would not be so bad if they were limited to a few university professors and the students taking their classes. The real problem, however, is that economists have been very successful in convincing the world, including politicians, business people, and everyday Joes not only that economics has something important to say about how the world around us functions (which it does), but that economics is a sufficient explanation of everything around us (which it is not). In essence, the economic dogma is that once we take rational economics into account, nothing else is needed (emphasis added).

In sum, we trust theories more than facts.  No wonder we’re in such a quandry.

Dan Ariely 2of 3: Trust and the Meltdown

Last week I set the foundation for today’s installment, complete with a sound file of bestselling author Dan Ariely’s talk to our Business School Alliance in Charlotte. This post will make the most sense to those who read that first.

New insights on the meltdown

The 2nd edition of Ariely’s book,  Predictably Irrational, includes a full chapter on the 2008 meltdown.  In it, he emphasized trust (and the breach thereof), saying that no matter the long list of expensive “heroic measures” the central banks take, they’re unlikely to achieve the desired effect without taking measures to restore trust.” After all, trust is the foundation of paper money to start with.

“Imagine how different things would have looked if the banks and the government had understood the importance of trust from the get-go. Had that been the case, they would have worked harder to explain more clearly what went wrong and how the bailout would be used to clean up the mess. They would not have ignored the public’s sentiment; they would have used it for guidance. They would have included some trust-building elements in the bailout legislation itself thoughts about the subprime mortgage crisis for example, they could have guaranteed that every bank bailed out with taxpayers’ money would have to commit to transparency, limit top managers’ salaries, and eliminate conflicts of interest.”

Trust and “learned helplessness”

Ariely says outright that Paulson’s behavior told us clearly that no one really understood what was going on. “One question we might ask is whether the general (psychological) depression that followed might have been mitigated if Paulson had been able to explain what went wrong in the first place, what his proposed measures were going to achieve, why he changed his decision to buy toxic securities, and what his plan was for the rest of the bailout money.

“As it turns out, even some answers could have made a difference. All creatures (including humans) respond negatively in situations where things don’t seem to make sense. When the world gives us unpredictable punishments without rhyme or reason, and when we don’t have any explanation for what is happening, we become prone to something psychologists call ‘learned helplessness.’” In a nutshell, those who’ve learned helplessness simply stop trying to help themselves because they believe such attempts are futile.

He suggested we help ourselves by changing “the way we consume news, from passive receptivity to actively thinking about the information and trying to make sense out of it.”

Amen to that. My prescription?  More NPR and NewsHour; complete abstinence from Fox(so-called) News.

Coming in part 3 of 3: How lack of trust in financial meltdown affected healthcare reform

Writing prompts for bloggers & newsletter writers

• I wrote a post with writing prompts in May based on The Atlantic’s Article “Why I Fired My Broker.”  I quoted Seth Klarman saying “The average person can’t really trust anybody. They can’t trust a broker, because the broker is interested in churning commissions. They can’t trust a mutual fund, because the mutual fund is interested in gathering a lot of assets and keeping them.  And now it’s even worse because even the most sophisticated people have no idea what’s going on.”  What steps is your firm (or are you) taking to communicate to your clients that you are trustworthy?  That your processes are fail safe (or at least properly audited)?
• Do you think more straight talk with your clients on your compensation will engender trust?  If you work for a broker or agency, why not tell your clients why you believe the comp structure you work under is fair to you and to them?
• In a post on compassion fatigue and shared trauma by financial advisors we discovered how and why advisors avoid client contact.  Ariely points out the need for trustbuilding, which can only happen with increased contact.  What steps have you seen advisors take (or have you taken) to step up client communications? Can you point your clients to more trusted information portals?

Dan Ariely 1 of 3: Trust, Revenge & Financial Reform

Bestselling author Dan Ariely, a professor of behavioral economics at  Duke, made a special appearance in Charlotte for our Business School Alliance last week. Ariely’s book, Predictably Irrational, just went into a second edition and — holy cow– is still in hardcover. I’ll write about his visit in this and two other posts this week. Here’s what’s in the new edition:

1.  A New Intro: Why the recent events in the economy make behavioral economics more important than ever before

2.  Reactions and Anecdotes: Expanding on some of the lessons we learned in the earlier chapters with interesting new stories and some more science

3.  Thoughts about the Subprime Mortgage Crisis and Its Consequences: A more in-depth look at how irrationalities played a role in the recent Subprime Mortgage Crisis, along with some of his thoughts on how we can fix those problems

Part One: we trust and seek revenge irrationally

Cliff’s notes: Ariely demonstrates that people aren’t always “selfish economic maximizers.” We will trust when we are rationally unwise to do so.  He also points out that we are, irrationally, “very happy to spend lots of money to make others suffer,”  joking that if you’ve any experience with divorce you’ll understand what he’s talking about. He explained the social utility of revenge in situations where lawlessness prevails.

Interesting factoid: PET scans of brains plotting revenge are quite similar to those experiencing pleasure.

I particularly like the novel way he approaches financial and healthcare reform.  He reminds us that roads and highways have wider lanes than a vehicle width, they have shoulders where people aren’t supposed to drive, they have protective medians and speed limits — none of which a “rational economist” would allow for.  Conclusion: when we devised our transportation system, we allowed that drivers would need room to make mistakes (or get out of the way of others who do).  We should plan ahead for “mistakes” in financial and healthcare reform efforts as well.

I had the foresight to bring my digital recorder, so enjoy what Dan has to say (click the link to play inside this window or download).

Trust-Revenge-Financial Reform

Writing prompts for bloggers & newsletter writers

• This is a time of great mistrust and financial churn. Perhaps you have either benefited professionally or been mistaken for a miscreant (or both). It’s not all in your control, is it? Do you have any anecdotes on how people irrationally trusted you or another advisor?  What about anecdotes where someone wrongly thought you had treated them badly and sought revenge? Does this make more sense now that you’ve heard Dan’s talk? You might offer some straight talk to your clients and prospects on this topic.
• Dan talked about AIG employees being harassed in public after the bailout. Can you relate any episodes of client anger that you handled particularly well or poorly? What lessons did such an episode teach you about yourself? Your profession? Human nature?
• If you’re an advisor, can you see yourself making use of the mango story when dealing with marriage or business partners who are dissolving their relationship? Or perhaps the Dr. Strangelove metaphor works better?
• What do you make of the parallel between how a “rational economist” would design a highway system and how we should revamp our healthcare system or re-regulate our financial system?