Decisions, Decisions. A Simple Approach to Better Financial Decisions.
Copyright 2014 CLIFE Inc. All rights reserved. Any reproduction of parts or all of this book and its contents by any means electronic or mechanical is prohibited.
ď Ť Decisions, Decisions is relevant to all those who work in the financial services industry or in association with life insurers. The information in the course is provided for educational purposes only; it should not be construed or interpreted as providing advice. This information is provided for informational purposes for members of the general public.
Agents and advisors should always seek guidance from their principals and compliance experts in regards to informing themselves and others about details of the products they sell and other considerations of their business.
ď Ť We welcome all feedback and suggestions for additions to the course. Please send your comments to info@clifece.ca. CLIFE INC. 1595 Sixteenth Avenue Suite 301 Richmond Hill, ON L4B 3N9 www.clifece.ca
Decisions, Decisions provides continuing education credits upon satisfactory completion of an online test. Please see the website for details or email info@clifece.ca.
Table of Contents Purpose of this Course
4
Bad Decisions
5
Understanding Decision Making
6
A Decision-making Matrix
11
The Financial Planning Application
19
An Insurance Decision
45
The Business Succession Application Summary
49 53
Purpose of this Course •
Decision-making is a skill, and like all skills it can be improved.
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Improvement comes from understanding the factors involved in making a decision and applying them.
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The ultimate objective in “acing” decision-making is to know the process so that decisions are objective and consistent.
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This course will provide background so you can better understand how decisions are formed, and a method to use to arrive at good decisions.
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All financial advisors can use this information to present the value of alternatives to his or her client and create better-quality financial planning.
Bad Decisions •
What makes a decision bad?
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Assuming a person has the mental capacity to make a rational decision, here are some factors that lead to poor decisions: o Lack of objectivity; o Reliance on luck; o Lack of information; o Underestimation of risks; o Inability to imagine consequences; o Failure to consider alternatives; o Lack of rationale or justification; o Rush to judgment; o Inability to correctly identify the real issue.
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People have the right to make bad decisions on their own behalf. As Mr. Justice Quinn of the Ontario Superior Court of Justice stated: “The right to be foolish is an incident of living in a free and democratic society.”
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Those with responsibilities for others --- a duty of care --- do not have that right. Decisions must be made as a result of a process that can be substantiated if it is ever challenged.
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The problem arises: How can a decision be made when there are a number of good, and suitable alternatives to choose from, and when there are many factors to take into account?
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