Dancing numbers/hidden numbers

Anyone following the past three days of post-election analysis has to be impressed with how fluid the analysis has been.

On Wednesday we heard that young people did not turn out. On Friday we heard that they did.

On Wednesday we heard that the anti-gay marriage initiatives brought out the evangelicals, who swamped all other groups and were responsible for Bush's victory. On Friday we heard that that was not the case at all.

And throughout the week we heard an ever increasing drum beat of folks who believe that the numbers showing on various Secretary of State websites evidence the occurrence this past week of what would be the worst political crime of all time -- the systematic and widespread stealing of an American presidential election.

So maybe some weeks from now those who crunch numbers will have settled fairly well into a couple, or into a couple of couples, of camps of analysis, at which point we can then choose the analysis we believe to be true. Because here, as elsewhere, complex phenomena take some time to understand -- and surely 115,945,902 votes constitute a complex phenomenon, yes?

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Early understandings of complex phenomena are often based, in large part, on hope and faith and belief.

Interestingly enough, during this past election cycle the idea of "nuanced analysis of complex issues" became a badge of dishonor for folks who wanted to stop at the hope and faith and belief stage, and a badge of honor for folks who believed that evolution applies not only to organisms, but to thoughts and ideas as well -- folks who believe that, with time and debate and discourse, ideas and thoughts evolve into better and better ideas and thoughts (I leave it to you to define what "better" means in that context).

Now some types of numbers have some real precision built into them internally. They are largely free of nuance and therefore not much to hang one's hope onto.

This is where numbers like 72 and 145872 come in. They is what they is, so it's nigh on impossible to successfully argue that 148572 doesn't do what in yesterday's piece I said it did. Hope won't change that; there's no slack to flex.

But at the other end of the spectrum are numbers that stand in as representations of other things, and which can be argued and argued and argued. These numbers have a whole lot of give -- a whole lot of fluidity, a whole lot of slack -- built into them, which means that they provide plenty of room for hope, faith and belief in the hands in those perceiving the numbers, and a whole lot of room for deceit, carelessness and fraud in the hands of those disseminating the numbers.

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So how does this relate to financial health?

In a lot of the work I do with people, numbers are the ultimate reality test. So when, for instance, you add up the total value of all your stuff, you end up with a number that has a lot to do with how you can live your life. No ifs, ands or buts about it. Say what you will about whether it should be that way or whether life is fair or whether markets are good or whether up is down -- there's still no getting around how impactful that number is on your choices.

So number are really helpful in that context. They can be trusted.

But in other areas, it's a good idea to be very leery of numbers.

Most FSPs (Financial Services Providers) go to great lengths to utilize numbers in very specific ways; some go so far as to massage the numbers that they allow their customers and the general public to see. Now various regulatory frameworks require some numeric disclosures (e.g., mutual fund expense ratios), and others impinge quite thoroughly on numeric massaging (sometime to so great an extent that many investment advisors don't use numbers in their marketing materials at all), but in other areas the regulators allow FSPs to do pretty much as they will.

Do you know how much you're paying your FSPs? Your bank, your stock broker, your insurance agent, your mortgage broker? Most people know more about how much they pay for having their garbage picked up than they do about how much they pay for having their FSP's continued involvement in their financial lives.

And that's not only because many people tend to be at their consumer-worst when dealing with FSPs. It's also because FSPs -- some of them, anyway -- do what they can to hide that particular ball.

So if you don't know how much you pay your FSP, or if you don't know all the different ways they make money off you (hint: it's not just what you pay them) then you owe it to yourself to find out.

Sometimes it's tens of dollars. Sometimes it's hundreds of dollars. And sometimes it's thousands or even tens of thousands of dollars.

And if they give you any inkling that they would just rather not talk to you about this stuff, thank you very much, then ask yourself this: do I want want to do business with people who make it hard for me to understand how much they're charging me?

I hold this truth to be self-evident: anyone you're doing business with who doesn't tell you what their end of the deal is about is not someone with whom you should be doing business.

Because pricing is the essence of their deal with you, and if they won't fess up to the essence, what else are they hiding?.