I received some disturbing news earlier this week. My wife, Marea brought our eight-year-old dog, Bella, to the vet because she has been having difficulties climbing stairs. Of course, Bella’s nightly trek to our second floor bedroom could have been avoided if I had gotten my way and left her in the kitchen—and out of my allergy zone.
“Bella has a partially torn ACL,” my wife informed me as I returned home from work.
Since I’m not a big fan of invasive medical procedures, my initial thought was the dog could survive just fine without a fully functional ACL because she certainly has numerous other ligaments to support her joint structure.
As if she could read my mind (which she usually can), Marea stated briskly, “Repairing the ACL is the right thing to do.”
I had to ask: “So, what is the cost of doggie ACL surgery?”
Marea meekly replied, “A little over $3,600 plus our $500 initial consultation.”
As a recent victim of ACL surgery and thus not buying into surgery being the only viable option, I pretended to play hard ball with my wife. “Marea, let’s perform a little cost/benefit analysis here. On one hand, we have surgery, medications and follow-up vet visits. Or we can seek a more humane alternative and adopt a new dog.”
Her glare suggested where she wanted to place my cost/benefit analysis.
” Next you’ll tell me that she’s going to need a few weeks of rehab after the surgery.”
That’s right; there are rehab facilities for animals.
“I have more bad news,” she pursed her lips.
“Wait. Let me sit down. I can’t take much more of this.”
“Bella will likely need a second ACL surgery on her other hind leg around a year from now.”
I felt tears well up in my eyes. “This is worse than a federal government shutdown!”
Attempting to maintain my hard-nosed attitude, I asked her to consider what is in Bella’s best interest. “Sometimes we need to take a pet’s potential suffering and average lifespan into account in making this type of decision.”
Marea looked down. “Our vet said that if things go well, the recovery period will be nine months per leg.”
So, $7,600 for the surgeries—assuming no complications—plus18 months of recovery basically brings us close to Bella’s average life expectancy of 10.9 years. Going ahead with the first of two surgeries makes absolutely no sense for anyone in the family, including Bella.
“This is senseless. Bella can live with her two partially torn ACLs,” I said coldly. I felt bad, but this was beyond practical.
Marea counter-punched: “The vet said that unlike humans, when a dog’s ACL is completely torn, it is extremely painful and requires emergency surgery; therefore, it is important for us to address the issue now.”
“If surgery is the only option, do both Bella and me a favor and let her go to doggy heaven.” That was it. My wife’s eyes relayed an important message—she would prefer that I, instead of Bella, go to heaven—or wherever. I left the room and went to my office to do some doggie ACL research.
Eureka! There was a non-invasive alternative that had a reasonable level of success. A win all around! Bella gets healed, we have our dog, and we save some money.
Research in hand, I approached Marea. “I completed a little investigation on the internet.”
Her eyes lit up, accompanied by a sarcastic expression. “Did you find that new handbag I want?”
I ignored her comment, quickly brought her back down to planet earth and summarized my doggie ACL findings, which included seeking a second opinion and an initial treatment plan of two weeks of doggie rest and relaxation.
She thought about it. “We should have another consultation with our vet.”
So here we currently stand, Bella’s quality of life in the balance. So what do I do? I start to think how this little event relates to investing (because everything, in some way, can be tied to the markets).
There is nothing wrong with taking advantage of modern technology. Advisors, veterinarians, physicians, and attorneys do their best for clients, but neither medicine, law or investment management is an exact science. Consequently, I always recommend that investors do their homework, become as knowledgeable as possible, set up those consultations, and use resources (such as the Internet) before making important decisions. Who knows? My 20 minutes on the web might physically help Bella and avoid two years of needless rehab. This rule can apply to all decisions—especially when they relate to your hard-earned savings.
Clients must truly understand the risks and rewards associated with every investment decision. In Bella’s case, Marea and I need to know how much experience our vet has in ACL surgery, potential ACL surgical options, risks based on current age and her overall health, the most common setbacks, how often they occur, and finally, the success rate of simple rest and relaxation.
Alternatively, when and if your advisor suggests a strategic change to your portfolio, you should clearly understand why and whether this decision will increase or decrease the volatility (standard deviation) of your portfolio. More specifically, compare and analyze the best and worst 1, 3, 5, and 10-year statistics to your current portfolio to determine whether you are comfortable with the potential outcome.
For example, I significantly increased my cash position (thus lowering volatility) because of my discomfort with the potential impact of the U.S. defaulting on its debt. The anticipated upside market swing of attaining a political resolution is far less important to me than insulating myself from a major downside hit. So always review suggested changes based on what is important to you and your family. Don’t just look at potential upside results through rose-colored glasses.
Additionally, always review and compare differences in portfolio fees, expenses, loads, changes in asset mix (including domestic versus international exposure), and potential tax consequences, among a host of other variables. Advisors prefer that you schedule a time to review these important decisions. (Note that advisors have access to all of the data necessary to answer all of these questions.)
In a related topic, I am often asked whether I own one type of investment or another. If I do not own a specific investment type, the follow-up question is, “Why?” The fact is I don’t own many product types because I do not understand the underlying features or the contract. Like medicine and law, there are an unlimited number of specialties in the financial services industry, and one person cannot be an expert at everything. So as an industry pro, I personally only buy products I truly understand. Thus, always ask your advisor to explain new product features and contractual obligations in English.
Peace of mind is a critically important in all decisions. Our vet wants Marea and me to fully understand the benefits, as well as the potential downside ramifications, of doggie ACL surgery. Comparatively, advisors always want you to be comfortable with your current investment program.
It’s all about asking the right questions, and finding the best solutions.