Thursday, January 29, 2009

(No 10) Crapspeak in business

'Crapspeak' is the inelegant word coined for the metaphorical slang so beloved by too many consultants, executives, bureaucrats and others in today's business garden. Indeed I have often felt as if I was drowning in a sea of corporate euphemisms and metaphors. 

In the current business world there are too many examples of the desire to call a spade a gardening implement. For example: in the life insurance business what we used to call cross-selling or needs selling is now referred to by some people as 'holistic selling'  --  precious phrasing to be sure but hardly helpful to understanding or precision.

Useful leadership in business as in politics requires knowing when change is progress rather than decay; indeed, understanding that change is not a synonym for progress no matter how much the acknowledgement of that reality may force amendment of an executive's career management plan. Such understanding has not, unfortunately, loomed large in the recent financial services 'meltdown' --  or in the sort of activity that produced it. 

The view that everything is changing for the better has been (at least until very recently) an effective form of marketing propaganda. It's a brand much beloved by some corporate types and has recently and aptly been dubbed "Google progressivism". Perhaps nowhere is use of that phrase in business more apt than when applied to those life insurance companies and their senior executives who abandoned career agency distribution systems supposedly because of the need they identified to change with the times (or some such rationale). The real reasons more often than not involved their own incompetence or lack of commitment to a system seemingly (to them) more difficult to operate successfully than some form of brokerage.

Such executives are yet another illustration of the fact the rise of the internet and its zillions of websites has encouraged the seductive but foolish notion that information and knowledge are interchangeable. The negative effects can be easily observed today in financial services as in other spheres of business activity.

The power of euphemism, often indistinguishable from linguistic flatulence in our current 'feel good' society, has even caught up with the selling of individual life insurance. For example: the increasing substitution of "financial advisor" for the traditional and honourable title of "agent". Indeed  today some life insurance industry research even argues for avoiding use with both agents and clients of words and concepts invoking "death" or "estate" or "death and taxes" in favour of more supposedly compelling, comprehensive and hopeful concepts embodied by the word "legacy".  

Hence agents talking to clients should talk about "legacy coaching" and life insurance as an "I love you contract" (it's not about me, it's about you). By extension we are meant to recognize that agents have similar 'values' to their clients and therefore this thinking has implications for agents selling successfully in markets from which they come. Why anyone should regard this latter point as in any way new to the business is beyond me. The idea of agents selling (at least for a time) in the markets to which they belong when they are recruited into life insurance selling is about as new as as last year's Christmas pudding.

There are days when I think it is nothing short of amazing that the active (i.e., prospecting and selling) agency system for individual life insurance survives at all considering the performance of its partners -- the majority of North American life insurance companies over the past 20-30 years. Its survival in as healthy a state as it still enjoys is a reflection in the main not of good company management but of its essential role in selling individual life insurance. 

Indeed it can be fairly said that the active agency system survives in spite of those responsible for its direction in many companies, not because of them.

Al Rickard
RickardsRead 

Saturday, January 24, 2009

(No.9) Sun Life: shrinking to greatness?

Those who follow RickardsRead know I was until recently an employee of Sun Life as well as having been a critic of the company going back years to my time as editor of The Canadian Journal of Life Insurance.

Sun Life was and is a very solid company whose worth and prospects have been consistently under-appreciated by 'market analysts' who frequently have only a superficial understanding of the reality of the life insurance business, especially its core business:  'selling stuff' and how this is done profitably through effective distribution. 

More than is the case with the big Canadian banks there has been a tendency for analysts and financial media to under-estimate the value and advantage to a company like Sun Life of having its Canadian operations as the profitable foundation on which rests its world-wide operations -- providing 46% (2007) of total net income, a % likely to be still higher at Sun for 2008. This under-estimation is entirely understandable since Sun's senior management goes out of its way to downplay the importance of what its strategy treats as the 'small' Canadian market (although still the most important source of Sun profits) in order to play up the prospects for great future profit it sees from its operations in Asia. 

Speaking as one who has been closer for the past several years to Sun's actual operations in Canada than many of those I have seen commenting on them publicly:  I have long regarded the Sun share price for most of that period -- a high of $51.25 during the past year but mostly much lower, in the range of its current $23-$25 -- as ridiculously low for a company of Sun's size, impressive financial strength, comparative competitive advantages, diversity of markets and performance generally over time. 

It is worth noting that a number of Sun's top officers and directors apparently feel the same way: in 2008 Sun insider share holdings increased by 20%. I have acted upon my opinion of Sun Life value and prospects as being far above current share price by purchasing more Sun shares for myself recently. However that is not to say I do not have reservations involving aspects of Sun's operations, especially actions announced in recent days. In fact I do.

Last week Sun announced a reduction of 4% in its staff world-wide and there will be 2009 operating budget reductions, at least in Canada. I suspect the reductions may well come disproportionately from Sun's operations in Canada, an unwise step given the role of those operations in generating the lion's share of the company's total profits. The Canadian operation has already in recent years been the subject of excessive budget pressures and reductions, particularly affecting the support for individual product career agency distribution.

If all the employees in Sun's operations world-wide (including MFS in the US and Birla in India) total at least 22,000, then 4% of staff would be approximately 900. But what sense does it make to have the Sun employees in Canada (approx. 7300) have to account for roughly a third (or even more?) of that total when the Canadian operation is also the workhorse whose efforts continue to carry along a disproportionate share of Sun 'passengers' located outside Canada? I will remain unconvinced that the burden of the reductions in Sun's staff (and budgets) reflect an appropriate distribution of the total until Sun is prepared to release detailed divisional/country by country information including where exactly the 4% staff reductions actually take place.

I have listened to a steady increase in recent years in industry rhetoric lauding the importance of a company's people -- staff and agents and brokers. Warm and fuzzy PR/HR style 'messaging' is the order of the day. Sun is no more prominent in making use of this approach than other life companies. Simultaneously I have observed a decline in the loyalty of too many companies to these same people as manifested in company actions as distinct from words. One knows of course that talk is easy -- and cheap if not backed up. Employee and agent loyalty to a company must be (and should be)  earned -- and sustained.  

Based on what I have already heard from within the Sun Life community after the company escorted so many people out the door last week, this action decreased still further morale among Sun's Canadian employees who remain. This will be even more the reality since the management communications to employees about the need for staff and expense reduction now shared nothing of real substance with those directly affected about specific causes, for example about the role of company losses in 2008 on its US investments as a major reason.

The inevitable further decline in the Canadian operation's employee morale and loyalty is unlikely to be offset by the recent declarations from senior management about how "unfortunate" the "job reductions" in the Canadian operations are although "necessary to reduce our size in order to manage through this recession". No mention about the role, as causes, of the losses in and costs of Sun's operations outside Canada.  

Squeezing its human capital may seem a predictable response for any stock company that is failing to meet -- or is afraid it will fail to meet --  investment analysts' often uninformed and unrealistic short-term financial expectations for a company. But managing with a view to this audience and a company's 'rating' can and certainly has sacrificed much longer term benefit in the often unsuccessful pursuit of more favourable short term numbers. It seems to me to be poor strategy indeed measured by its negative effect into the future on remaining staff.

The downward pressure on provision of adequate ongoing financial support to the Mutual/Clarica/Sun Life career agency distribution system in Canada (the biggest and best such system in Canada) actually got well and truly underway long before the Sun takeover of Mutual Life. It can be dated from the point at which Mutual Life's demutualization appeared on the horizon of Mutual Life's senior management. 

Whatever 'fat' may have existed in the support and operation of that career distribution system has long since disappeared yet the reduction in the level of support necessary for the future health and enhancement of that system has continued up to and including today. The idea that year after year a quality career agency distribution system can be expected to produce more and more sales based on less and less of the sort of resources needed to do so does not spring from intelligent decision-making. It is at best the product of wishful thinking and distribution strategy trickling down from financial bean counters who see the sales world from the wrong end of the telescope. At worst it is foolishness married to fantasy --  all the more so if that career system is a cornerstone of a company's most important profit generator as is the case in Sun Life. 

One longtime member of the Mutual/Clarica/Sun Life agency system in Canada said to me recently: " It looks to me like Sun's actions are taking its agency distribution in Canada back to where it was before Sun was able to buy the Clarica career system, back to declining life sales and declining market share." His prediction may turn out to have traction unless there are changes. 

I would add that one of the major reasons for the challenge to the productivity of the Sun career system as a producer of insurance sales is Sun's emphasis and incentive on having the agents sell more and more asset products, especially CI mutual funds. Sun management either cannot or will not see that there is a connection: i.e., asset sales are the easier sales and when these asset sales are the focus of company direction via heavy promotion with the sales force (particularly when a lifetime level commission system for insurance enables it, as the Sun career system's does) it encourages established agents to spend more and more of their time going after the easier asset sales at the expense of the harder sales (insurance).  

As I have watched and experienced Canadian mutual life insurance companies demutualize and become governed by the 'shareholder value' mantra I have observed that one of the things their stories appear to share is insufficient regard for the longer term consequences of being unwilling to forgo, say, making a dime a share this quarterly dividend in order (for example) to enhance and expand Canadian agency distribution in one or more of its various forms, and do so with even a fraction of the investment enthusiasm directed to prospectively profitable operations in distant markets. 

One understands the need for Sun Life to be seen by 'the market' to take action to offset the loss of hundreds of millions of dollars in the recent US market meltdown (large in absolute terms but no threat to Sun's financial solidity). But risking hobbling its most profitable operations, i.e., those in Canada, seems both misguided and short-sighted. Sun Life is unlikely to shrink to greatness, particularly if that shrinkage occurs disproportionately in its Canadian operations while it waits, say,  15 years for its newer Asian operations (e.g., China) -- in which, unlike Canadian career agency distribution, it enthusiastically continues to 'invest' -- to achieve a 15% ROE.

I don't doubt that Sun Life has job roles that could be cut without affecting operational effectiveness and productivity (indeed I too often saw such roles created and filled within Sun) but reducing the food fed to Sun's Canadian goose, the one that continues to lay so many of the operational golden eggs the company gathers each year, is questionable. 

I well recall being dismayed following the Sun takeover of Mutual/Clarica (where there had been an ongoing effort to eliminate unnecessary layers of management as well as administrative processes) to see a Sun culture -- one which still featured the sort of bureaucracy and red tape I had commented upon editorially all those years ago -- reverse this direction while in my view simultaneously prioritizing the reduction of supposed 'revenue-expense gaps', gaps involving some dubious assumptions, suspect numbers in terms of the real world of agency distribution and insufficient attention to insurance sales marketplace realities. 

To the extent that Sun in Canada must contribute to the company's recent world-wide food  rationing then the focus should properly fall on Sun's 'corporate' (non-operations) establishment in Toronto, the 'mothership' whose upkeep constitutes no small cost, and a sector of the company so expansive that it could surely benefit from the business equivalent of a visit to Herbal Magic or Jenny Craig. 

As for the many valuable people at Sun who were shown the door last week, it will not be even the smallest comfort for them to know that they are joining a very long line that began forming several years ago behind a banner carrying the words "SORRY BUT ...." after the Sun takeover of Mutual/Clarica. 

Tuesday, January 20, 2009

(No. 8) The day the music died

My years as a participant in the life insurance business as an employee, an observer, a writer and a critic began in the 1970s. They were distinctive years, even more so than I realized as they went by, perhaps because of the effect described by the Victorian prime minister W.E. Gladstone when he wrote in his diary (and I am recalling from memory here) that "while swimming for one's life one does not have time to enjoy the countryside through which the river passes". 

I recently asked a longtime friend (one of the sharpest industry people I know) to cite one or two of what he regards as the biggest changes he has seen during his lengthy career in the business.

He said: "You and I entered what was a business with a long term perspective; that's what the life insurance business was. We were taught to act in the best interests of policyholders yet unborn; what we in the life insurance business do is for the future as well as the present. Today too few in the industry seem to care very much about the industry's change to a short term perspective, long term now being treated as the end of the 4th quarter from now. Today, while in reality it remains a long term business it is now one with executive leadership that too often has a short term outlook."

He concluded: "I can't pretend anymore that sense and understanding exist in those industry locations where they don't."

As for me I have never been much good at pretending, a deficiency which made my survival for so long within the corporate tent all the more unlikely.

As a sometime historian I am well aware that age combined with selective or retiform memory can make years past seem better than they really were. Still, most of my years in the financial services business (associated as I was with Canada's first and best mutual life insurance company) were for me a fortunate time indeed, partly because of so many colleagues with whom I worked in Mutual Life/Clarica Life (as well, latterly, in Sun Life) who took their duties and their obligations to policyholders seriously. 

During most of my years in the business stock company rules and objectives had not yet made management by quarterly shareholder dividend the priority; freedom to manage in the longer term interests of a company's par policyholder-owners had not yet disappeared from many of the large life insurance companies in Canada and the U.S. Looking to the future of the company was a hopeful process rather than a reflection of an ongoing search for repetitive novelty with which to impress financial analysts, journalists,rating agencies and others possessing only a nodding acquaintance with the reality of the North American life insurance business and its long term relationship with both its policyholders and those who sell them insurance.

For me 'the day the music died' was Dec 8,1997 when the intention to demutualize the Mutual Life of Canada was announced, foreshadowing not only the unnecessary and undesirable elimination of a great Canadian, policyholder-owned company but also guaranteeing the disappearance of the company itself. This was made real on Dec 17,2001 when the acquisition of Clarica Life (Mutual Life's name as a stock company) by Sun Life was announced.

During most of my career a great deal of my job satisfaction came from working with career agents and for the par policyholder-owners of a mutual company, specifically from working on behalf of what I conceived to be their best interests, however small or indirect my contribution.

It would be disingenuous of me to now claim to have arrived after all those years at a point at which I have somehow become disappointed or disillusioned. I have not. I was in the business too long as both an observer and a participant for that to be so. For one thing the fine people I have come to know in the business have never been found only in association with mutually organized companies. 

Nor am I much surprised by what I have seen, especially in recent years, that has not been positive. How could I be when (for example) I have too often observed executive mediocrity and even incompetence rewarded -- as well occasionally as deviousness -- especially when married to corporate political skills? But I have been unable to derive much job satisfaction from, say, trying to contribute to a steady increase in the quarterly dividend paid to institutional investors in the never-ending corporate priority and quest for investment community applause.

However I do not forget or ignore how important the life insurance business continues to be to the social and economic fabric of Canada. I believe that the active, prospecting, selling agency system in its several forms will continue to serve Canadian buyers -- and it is likely to do so because it works. It still succeeds in selling client resistant products but it does so far less because of the companies whose executives sponsor or enable various agency distribution systems than in spite of them. Rather it comes down to those at the sharp end, the agents and brokers in the field,  who have -- if they choose to use it effectively  -- the opportunity to gain satisfaction as well as reward from making a real difference in people's lives.

Long before 2008 drew to its close it had become plain as a pikestaff to me that the time was past due for me to remove myself as a participant from the industry's ill-considered love affair with its brands of 'new coke', from aspects of its current approach to the life insurance business generally and from its handling and mishandling of agency distribution in particular.

That separation, now accomplished, does not preclude me from continuing to voice my opinions publicly. I do not intend to restart the Canadian Journal of Life Insurance, a project requiring more of my time and energy than I am prepared to commit to it. However there are other forms of public expression available to me which are more appealing but less demanding, such as this blog, where those who are interested in my views on various subjects many find them.  

 

Thursday, January 8, 2009

(No.7) A vital sound: swishing of the regulatory stick

Strong, comprehensive and vigorous prudential regulation by government of financial services including insurance is necessary to protect the consumer and preserve the integrity and soundness of the financial system. But certainly not the American variety of financial regulation and deregulation which facilitated the sub-prime mortgage debacle and its contributing role in the current meltdown in the US financial system.

Nor do we need the sort of US regulation under which, as we now see, the outcome of the rule in the financial business becomes -- heads you win, tails the taxpayers lose. Nor is there any attraction except to simple-minded adherents of 'market place freedom' of the actual 'unregulation' of aspects of that financial system ( like credit default swaps, so-called to avoid the use of a more accurate word -- insurance -- which would have attracted regulation). The self-serving and the ideologically deluded for too long loudly declared their belief that markets are self-regulating. Obviously they are not. As the chair of the US Securities and Exchange Commission has now admitted: voluntary regulation doesn't work.

In the run-up to the current financial mess in the US, it has been accurately observed (in the New York Times among other places) that financial regulation did not reduce risk it allowed it to be hidden; investors (including supposedly highly sophisticated ones) had no real idea of how exposed they were to unacceptable risk.

Is it not fair to question the value of a financial regulatory system that did little or nothing to prevent or even impede the development of a huge sub-prime mortgage industry in the US based on the promiscuous and sometimes illegal promotion of millions of residential mortgages to house buyers whose credit worthiness went unchecked, whose income levels were ignored and whose financial ignorance and gullibility was the basis of their signing of mortgage documents?

What we have seen since the onset of massive US government bailout activity is an unappetizing lining up of various financial services companies, auto makers et al (even the porn industry is asking for $5 billion) to receive taxpayer funds. So far requests, too often, seem to be greeted with what seem like minimal or non-existent government controls, insufficient accountability, minimal compliance requirements but not by even elementary tracking of the actual use of the billions of dollars being handed out.

I suppose it can be argued that such a pattern merely corresponds to the corporate incompetence and misconduct that was central to the mess that we as well as the Americans are in. After all how much more ridiculous can it be that, for example, during pre-meltdown activity in the market, financial companies could shop for a favourable rating among rating agencies -- as Lehmann Bros. did and received a AAA rating 4 days before it failed.

But financial regulation needs to be both informed and effective and therein lies one of the challenges to insurance regulation in Canada. Some Canadian insurance regulators have (as one senior and experienced insurance regulator said to me privately) no real understanding of the business they are regulating. There are many stumbles along the road to effective regulation and I have long resisted the common call within the business to reduce financial regulation, as if its reduction constituted some sort of ideologically-driven vehicle to carry business to the promised land of market place capitalism.

But when it comes to selling insurance, and the division between provincial and federal regulators and between prudential and market conduct regulation, we must aim for an appropriate balance at the provincial/market conduct level between regulation and handicap, as well as distinguishing usefully between the vital prudential or solvency regulation of insurance companies on the one hand and appropriate levels of market conduct regulation of agents which -- if not properly understood, set and directed -- can unnecessarily reduce both service to the public and their opportunities to buy a client-resistant core product, i.e., life insurance.

Having sat for many years on the companies' side of the table dealing with regulatory issues I know that carrots to encourage voluntary behaviour by business are all very well but they need to be backed up generally by some sort of regulatory stick, explicit or implied. Why? Because some life companies will bend over backwards to do what most of us would regard as the 'right thing' but there are others which will do far less on their own or in some cases nothing at all unless there is a regulatory stick swishing about somewhere behind them.

(No.6) Wellington's horse & agency rat holes

The life insurance industry's handling of insurance distribution over the past quarter century reminds me of nothing quite so much as the aphorism about the Duke of Wellington's horse at the conclusion of the Napoleonic campaigns: it had been everywhere, seen everything and learned nothing.

I can think of no area of the industry's activity which, in the main, has been mismanaged for so long and so consistently by senior corporate management as the distribution of individual life insurance nor have I seen any aspect of its commercial activity misused more frequently to 'demonstrate' executive leadership, vision and a desire to be seen to have the inclination and the ability to 'think outside the box'. Indeed I have watched agency systems of all sorts victimized by this or that executive's personal career management program.


It is not particularly difficult, as the revelations of the financial services meltdown during recent months have documented, to create a patina of financial success for some activity or process, one that will survive even if it is camouflaging a Ponzi scheme. In the insurance business look no further for cogent examples than the supposed life insurance sales success which is in reality dependent in whole or in significant part upon the sale of under-priced and/or over-compensated policies.

When it comes to pouring corporate funds down rat holes as the result of this or that 'bold and visionary initiative', a skillful executive can always equip such failures with a coat of many colours comprising sincere explanations, forceful excuses and (where necessary) management scapegoats.


Never in my years in the business did I expect to hear an executive willingly admit anything like this even in private:

"I just poured $X millions down a rat hole. I was advised in advance that my plan would not work but I had to demonstrate vision, leadership and a desire to change. I could not afford to be seen to be defending experienced-based wisdom and reality. If I have to change distribution strategy every 6 months to serve my career management plan, I will."

(No.5) Hanging by a thread with Marcus Aurelius

As I depart the life insurance industry after several decades I derive wry amusement from recalling that as a life company employee (as well as in my private, spare time role as an editor, writer and critic) I have been threatened occasionally with termination of employment as well as with libel action by several life insurance company CEOs. These threats related to my publicly expressed views on industry issues and companies, views that in one way or another infringed corporate bans on unlicensed expression or offended some senior executive's delicate sensibility. I have a letter somewhere written in the late 1970s by a CEO warning me that my job was hanging by a thread. That thread turned out to have quite remarkable tensile strength.

If my published transgressions against corporate propriety escaped notice by those who fancied they exerted authority over me I could always count on at least a few of those who -- yesterday -- told me of their great admiration for my frank expression of views to raise -- today -- with senior management my crimes and misdemeanors.  Disappointing behaviour one may say. Perhaps, but not all that surprising: in order to stab someone in the back it is first necessary to get behind him.

It still strikes me as beyond bizarre that for the past several years my employer has been Sun Life, a good company in a number of respects but one which I regularly criticized editorially beginning in 1978 in the pages of the  Canadian Journal of Life Insurance. Had anyone asked me then how likely it was that I would ever see a takeover of Mutual Life [my then employer] by Sun Life [then also a mutual company] and that if such an unlikely event were to occur that I would survive as an employee of Sun Life, I would have put the odds about the same as those of Her Majesty The Queen appointing me Archbishop of Canterbury. Perhaps,after sober second thought, I would have predicted the odds even higher against this outcome since my temperament has tended to push me towards the view expressed by the Roman Emperor Marcus Aurelius: the object of life is not be on the side of the majority but to escape finding oneself in the ranks of the unbalanced. 

Before joining the life insurance business I had earned 3 university degrees in history, training which (among other advantages) taught me the importance of learning from the past in order to help inform one's understanding of the present as well as some possible features of the future. Learning from the past is not something I have observed as a common trait among industry executives.

One of the most valuable parts of my industry education came from working in the field as financial planner with agents of the Mutual Life of Canada (later know as Clarica Life), Canada's first and best mutual life insurance company and one which had long maintained its own high quality career agency distribution system for its individual policies. Much later I witnessed that system begin to decline after senior management persuaded the company's board to demutualize, a change announced in Dec 1997 but preceded by the beginning of an ongoing obsession with ROE measures. 

Latterly insufficient support was provided for the (now) Clarica Life career system while its inflation in size was sought through rapid expansion, the purpose of which so far as I could tell being to enhance its appeal to potential buyers of Clarica. Success in this was achieved in Dec 2001 when Sun Life said it was buying Clarica Life.

When I heard this news I almost expected to hear the ringing of my phone signalling an overseas call from Buckingham Palace.   

Wednesday, January 7, 2009

(No.4) CEOs: Dopes and Gentlemen

During more than 35 years in the life insurance business as both a company employee and as the editor of my own magazine (the Canadian Journal of Life Insurance ) I have known -- and known of, based on inside sources -- quite a few company CEOs as well as platoons of senior executives in numerous life insurance companies.

I have not been awed by consistent brilliance within this group.  The majority have been decent and competent people;  a few have been thorough-going boors and bullies;  several had industry IQs only slightly above room temperature while a number were very bright indeed.

My experience does not lead me to be as harsh on CEOs as New York Times business columnist Thomas Friedman who, having considered financial industry leadership vis-a-vis the recent U.S. financial meltdown, declared [NYT,Nov 26,2008] that  "some of our country's best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye.   But it wasn't only the bankers". 

Indeed it was not, as the insurance industry's own experience attests.

I think of the performance of North American life insurance company CEOs over the past several decades as a spectrum, ranging from the merely custodial all the way to stupidly reckless with the majority somewhere in between.  I think that more frequent, costly corporate mistakes have been quietly buried internally than either the financial media or the rating agencies have ever come close to realizing.  The current 'meltdown' makes it clearer than ever that while some key executives have played unique and beneficial roles others were directly responsible for inferior, often disastrous corporate results for which, nonetheless, they were too often paid obscene amounts of money.   

In my view too few industry CEOs, especially in recent years, have been gentlemen in what I regard as the best sense and one which set an example for those they led.  As I said in a 2006 speech to the 52nd annual Banff School  two of the CEOs who stand out in this sense in my experience are K.R. MacGregor, President and then Board Chairman of the Mutual Life of Canada (1964-1982) and Don Stewart, current President of Sun Life's world wide operations starting in 1996.  For me these 2 men represent the opposite of the publicly posturing, spotlight-loving, self-promoting and often arrogant CEOs one encounters far too often these days through the media. 

In terms of defining who in the financial services CEO group of today are worthy of being called gentlemen I am partial to the view that a gentleman is the first to express thanks, the last to complain and always understanding of the fact that rank is not a synonym for class [q.v., Jean Beliveau, a person who by example defines the word gentleman]. 

Sunday, January 4, 2009

(No.3) Falling From Grace in Baton Rouge: being hugged by Jimmy Swaggart

"I drive in from Lafayette about 50 miles west,"  said the elderly lady who introduced herself to us as Alice.  "I started coming here about 6 years ago."  I wondered to myself: was that after Jimmy Swaggart fell from grace?

Some people collect stamps or spoons.  For many years I have followed television evangelists rating them as one would professional entertainers:  from the mediocre (the late Rex Humbard) through the preciously weird (Ernest Angley) and the outrageous (Oral Roberts) to the criminal (Jim Baker).

But in my view there is an American televangelist who stands apart from the rest --  Jimmy Swaggart of Baton Rouge, Louisiana.  I have long considered him to be the best 'stump preacher' of them all, the most artful talker and effective platform performer in an increasingly crowded field.

Brother Swaggart, as he refers to himself, had a fall from official grace some years ago.  After the first time police picked him up with a prostitute he was able,  relying on tearful public repentance, to save his denominational affiliation with the Assemblies of God -- but not after the second time it happened.

The congregation attending services at his Family Worship centre in Baton Rouge thinned dramatically as did his evangelical reach.  I watched a televised Swaggart service 'after the fall' where the congregation was so embarrassingly small it could not be hidden by judicious use of camera angles.  On stage Jimmy seemed diminished in his public personna, almost lacklustre.

Pat and I used to visit Baton Rouge periodically and did so several years running prior to Hurricane Katrina.  This part of Louisiana is (or was) an area with much that attracted us. Because of my interest in Swaggart we made a point of seeking out his Worship Centre and attending Sunday morning services in his huge church which seats several thousand on two levels.  The first time we attended I noted that attendance downstairs was vastly larger than I had seen soon after his 'fall from grace' (and it grew year by year) with younger as well as older worshippers and many black as well as white congregants.  The music was upbeat and of professional calibre, the enthusiasm high and TV cameras prominent to tape the service for later broadcast.

At the front of the church were seated the members of the Resurrection Choir plus several featured singers, musicians and to one side were arranged arm chairs in which sat Swaggart family members and church worthies.  After the first rousing song was well under way Jimmy slipped in by himself and sat down, picked up a hand microphone and began injecting his own "hallelujahs" into the service.  A bit later his wife Frances came in and sat down to the side.  Their son Donnie, also a preacher, was present from the outset and had gotten the service under way.

As it happened,  at the initial service we attended,  Jimmy's 69th birthday was marked with a special financial gift from the congregation.  At the beginning of the service, watching Swaggart half-slumped in his chair, I wondered if he was slowing down;  he wasn't.  One of the things which helps distinguish Swaggart from his televangelist competitors is his talent as a singer, musician and composer,  a professional level of musical talent comparable to that of his cousins Jerry Lee Lewis and Mickey Gilley.  To watch and listen to Swaggart at the piano playing and singing never fails to remind me of the mature Jerry  Lee Lewis.  To listen to him lead his highly polished singers and musicians in  "Jesus on the Mainline"  is to be reminded of what old time rock and roll could sound like -- although Swaggart himself has consistently rejected 'Christian rock' as unacceptable.

The service lasted more than two hours, with 45 minutes or so given over to Jimmy's rambling message, videotaped and edited for later television and radio broadcast.  Indeed Jimmy told his congregation that morning that he needed to raise $432,000 by the end of the week for a payment to another television station.

When it came time for Swaggart's message it soon became clear that he had lost none of his 'in person' edge as a preacher/performer.  He talked for 3/4 of an hour without a single note or hesitation.  He began pacing the thrust stage, open bible in hand, then moving down to floor level and walking up and down the aisles.  In his traditional style he used histrionics and emotion judiciously but effectively, humour selectively and always had the rapt attention of his listeners.

Brother Swaggart's 'sermon' would not likely receive a passing grade for theological coherence or correctness or even internal consistency but then he obviously does not care; he's not preaching to the graduating class of the Yale University Divinity School.  He knows his audience and they clearly know what they are looking for from him.

He covered a wide range of topics, from the physical abuse he suffered as a child before his parents were 'saved' to his assertion that "Buddhism,Islam and Mormonism hold no answers for me" nor does "humanistic psychology"  through the evil of child molestation and even touching on how being born again makes you 75% smarter.

His pithy lines rang chords from his audience:  "the modern gospel" as it is preached in some churches teaches that "it doesn't matter what you believe so long as you're sincere";  "put a live chicken under a dead hen and pretty soon you've got two dead hens";  "you say [to me] I know some saved people who act half-looped -- think what they'd be like if they hadn't been saved".

Swaggart never missed a beat in nearly an hour of continuous talking. My favourite moment in that service came when he walked up an aisle, took the hand of an elderly woman and declared,  "I've got more confidence in her spiritual knowledge of things than in President Bush's advisors".

At the services we attended Pat and I apparently stood out somewhat in the congregation as visitors.  The last time we attended,  a church elder approached us and, having determined that we were "all the way down from Canada" insisted that we stay and meet Jimmy after the service.  We did,  Pat receiving a Brother Swaggart embrace while I was content with a handshake.

The closest Swaggart came in the services we attended to referring to his 'fall from grace' was when he declared that "the scoffers are starting to say 'I was for you all the time' ".  It matters not one jot or tittle whether one regards Swaggart as a rogue or a prophet to be able to see him, as I did again on a Sunday morning in his home setting of Baton Rouge, as a smooth performer of a specialized art.

Friday, January 2, 2009

(No. 2) Crap & Lavender: the financial services meltdown.

I have occasionally been asked why I have often differed publicly and privately with the views of various so-called leaders of the financial services industry.

For me there has often been too little basis on which to defer to the supposed superior judgement and expertise of the industry's sophisticated 'big brains'.  Had I had doubts about my not deferring to such supposed expertise,  they would have disappeared in recent months as I watched the results of so-called expert financial wisdom at work:  the U.S. housing bubble,  the financial establishment's underestimation of risk and the regulators' failure to intervene.  We have witnessed the evaporation of trillions of dollars of equity,  plus (at the very least)  the prospect of not a $700 billion dollar bailout bill for U.S. taxpayers to bay  but a tab based on U.S. government 'bailout' commitments to date of  $7.8 trillion -- and counting.

My conclusion based on this and any number of other miscalculations by senior North American financial executives (from Canadian banks' debacle with LDC loans through the failure of 700 de-regulated Savings and Loan institutions in the U.S. in the late 1980's and early 1990's which cost U.S. taxpayers  $125+ billion,  to the high tech 'bubble' of the 1990's):  be very suspicious of claimed superior executive expertise if that claim is really based on little more than corporate rank,  publicity and self-promotion.

If something looks like crap and smells like crap,  chances are it isn't lavender.  It doesn't smell any sweeter because it emanates from a CEO or an industry pundit -- or for that matter when it originates in Canada.  Canadian banks have admitted (thus far) to  $10 billion+ of exposure to U.S. stinkers and are already relying on loan interest rates for their Canadian retail customers to help offset the squeeze on their profits.  The failures in Europe echo and enlarge upon these North American headlines.