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Executive Times |
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2006 Book Reviews |
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The
Number by Lee Eisenberg |
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Rating: |
* |
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(Read only if your interest is strong) |
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Click on
title or picture to buy from amazon.com |
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Bloviated Lee
Eisenberg’s The
Number could have been a well-written magazine article. Instead, it’s a
book with a catchy subtitle: “A Completely Different Way to Think About the
Rest of Your Life.” Eisenberg proposes ways to think about wealth and
financial security, all of which are covered in better-written books. I never
quite found what was completely different about what Eisenberg offered. Perhaps
financial planners will provide this book to clients to ask and answer
questions that are related to “the number”: the amount of net worth that is
sufficient to allow one to feel financially secure. Here’s an excerpt, from the
beginning of Chapter 3, “The Eisenberg Uncertainty Principles,” pp. 28-31: It
was just five years ago that culturally attuned, affluent boomers saw their
own happy reflections in books such as David Brooks’ Bobos in A
disclaimer before the curtain goes up on the Uncertainty Principles:
Deliberately excluded from the list are a couple of the truly big hairy
reasons why people close their eyes to the future. These are the obvious uber-dreads that are indisputably beyond anyone’s
day-to-day control: Fear of death. Woody Allen has no monopoly on this
one. Fear of dying certainly ranks high among disincentives to plan. It
weighs heavily on the mind of a psychiatrist I meet at a resort in Fear of global annihilation. Skittishness over the possibility of a
cataclysmic event (terrorist, environmental) also renders people disinclined
to plan. In other words, let’s just get through the week, and then we can get
cracking on that cash-flow analysis. The
Eisenberg Uncertainty Principles have to do with things we could change if we
had the will, or knew how: 1. The uncertainty that results from living
in a society and culture so steeped in the moment, and awash in debt, that
there’s little social or peer pressure to get one’s financial house in order. Easy
credit makes it easier to spend than to save, more pleasant to shop than to
plan. We throw money around. We piss it away. We treat ourselves to new shoes
or a smart phone when we’re feeling blue. The Wall Street Journal recently reported that since 1990, median
household income has risen 11 percent, adjusted for inflation; median household
debt, on the other hand, has risen 80 percent. Consuming is all-consuming, a
full-time job unto itself. Who has time to gather expenses onto a budget
worksheet, even if the budget is designed to restrain us? 2. The uncertainty and lack of motivation
that come from not knowing how money works. Doing money right is not a
core competency for most people. This is either a baffling irony or a natural
consequence of a materialistic culture. People feel stupid about money, so
they keep it at arm’s length, sometimes for decades (call these the Lost
Years, which we’ll get to). People may be OK when it comes to earning money
and quite adept at spending it, but a great many of them confess to feeling clumsy,
myopic, and highly inept when it comes to managing it. Surveys bear this out.
Many of them indicate that even educated and professionally successful
people don’t know the basics, e.g., that a money-market fund isn’t made up of
stocks; or that the value of a bond goes down when interest rates go up. Not
knowing the fundamentals is definitely a roadblock to proactive planning. 3. The uncertainty caused by knowing that the
old retirement support systems are withering away. Until recently it was
fairly simple to live and pay for a lifetime on the planet. You worked, you
retired, and you died shortly thereafter, in more or less dutiful compliance
with accepted timetables of the day. There were reliable systems in place to
finance your retirement. Most people knew exactly how much money would arrive
in their mailboxes every month, and it always arrived as promised. For a host
of reasons (we’ll get to these, too) it doesn’t work that way anymore. 4. The uncertainty caused by the immense cloud that hangs
over future retirement benefits: bankrupt corporate pension plans; what an
angry stock market god might do to smite private retirement savings plans. This uncertainty thrives like mold in
the brave new petri dish of financial
self-determination. Just as we scratch our heads over where yesterday’s
security went, we have too little faith in tomorrow’s. Companies implode and
take our benefits with them; others try to chisel their way out of old
commitments or simply find they can’t fulfill them. United Airlines recently
won a court ruling in the largest pension-default case ever. Its pension fund
was short nearly $10 billion, only half of which was insured by a government
agency. The government agency itself is
going broke. Then there’s that little matter of Social Security. 5. The
uncertainty that comes from failure to see the larger picture in all of the
above. It would be helpful to have trustworthy teachers, mentors, and
financial counselors who are accessible to everyone, no matter how rich or
poor. Financial life is wildly confusing, fraught with subjectivity and
arbitrary calls. There are too many decisions and choices to be made, lots of
arcane minutiae to juggle. There is endless fine print and gobbledygook about
estate planning, tax codes, disbursement strategies. Not to mention the fact
that those damn politicians down in 6. Finally, the profound uncertainty over what truly matters
at the end of the day. Let’s
assume that you’re lucky or smart enough to navigate the foregoing
uncertainties. Having gone to so much trouble, do you really want to wake up
one morning, throw open the shutters on a glorious day, gaze at the dewy rose
garden below, and watch the sun rise on the rest of your life, screaming,
“I’m so wrinkled, miserable, and bored I wish I was dead”? The greatest
uncertainty of all may be the uncertainty over what money is good for. We
bury this uncertainty under a million clichés. Money can’t buy happiness. Oh,
no? Money can buy time and opportunity to do the things we most love. It can
help us fulfill our obligations as parents to our kids and as kids to our
parents. It buys quality health care. But somehow or other, we get our
knickers all twisted up when it comes to figuring out the real value of money.
Could it be that in the end the reason we don’t plan is because we don’t have
anything meaningful to plan for? The audience for The
Number is the hoard of baby boomers who have
anxiety about retirement. For any reader, The
Number will bring to one place a scattered and eccentric approach to
financial and life planning. There are ample questions in The
Number, few answers, and ways to think about life that for some readers
will be familiar, and for others will be totally
foreign. In some perverse way, there’s too much and too little in The
Number to recommend it. Steve Hopkins,
April 24, 2006 |
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The recommendation rating for
this book appeared in the May 2006
issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/The
Number.htm For Reprint Permission,
Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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