I am cutting these posts back to bi-weekly, in an effort to focus on completion of my second book, also weekly is too much of me.
Numerical Literacy
One of many interesting anecdotes I came aware from Dan Gardners 2008 book Risk: The Science and Politics of Fear was that 45% of Canadians are unaware of how many millions are in a billion. There were many other reality checks in there as well. In particular for parents.
This ‘millions in a billion issue’ in itself is not exactly a serious thing, although it perhaps points to a larger issue.
It is interesting as, to some extent, it makes clear that we humans are really not so great with numbers. Other than the numbers with which we interact daily.
Making sure we get the right change back at the coffee shop for instance, although that skill is surely in decline as we become increasingly cashless and further detached from our actual money and wealth. This growing detachment from our money is another topic for another day.
What I see in my daily experience with clients is that we, the trusted advisor, are heavily relied upon for our own mathematical skills. We are believed to have such skills based on the role we have chosen to play. So we had better actually have reasonable math skills.
With very little exception there is no such thing as ‘not being a numbers person‘ other than by choice. If one wishes to learn then one will learn.
I enjoy, because I am odd like this, checking in with the Kahn Academy periodically and taking some basic math lessons.
Time well spent for any Broker.
Also useful on a day to day basis is having a cheat sheet handy with basic formulas such as; @ ~3% over 30 yrs a mortgage payment will be ~$400.00 per month per 100K of mortgage money, or ~$40.00 per month per 10K.
You can work out the 25 yr AM figures.
This is the basic sort of numbers translation that clients can use and will appreciate. It keeps mortgage calculators out of the picture which themselves can be misleading and problematic, it also gives the client the power to easily calculate payments on the fly without sending you 19 requests on a Sunday afternoon to calculate 19 ever so slightly different payments.
Add value, be the expert, and know numbers.
Love numbers.
Be the number