Sentinel Chronicles The Issues Of An Era

January 2, 2013 Sentinel Comments Off
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If you want to stand out, you can’t be content just to blend in.

This seems obvious, but it is a truth that apparently has not been revealed to many people who write newsletters for accounting and law firms. I have seen a lot of those newsletters over the years, and even wrote a few myself when I was with Arthur Andersen, the big accounting firm, in the late 1980s and early 1990s.

Like our peers, we offered timely, valuable, clearly written information. But for the average reader, those newsletters were often boring. They contained information that our clients paid us to know, yet they often avoided saying what we really thought. The goal of such newsletters was, above all, to avoid offending anyone who held a contrary view.

I had a different goal when I launched my own newsletter, Sentinel, a few months after I opened my own firm. I did not plan to go out of my way to offend anyone, but I believed it was important to let clients, professional peers and (especially vital for a fledgling business) prospective clients know what I really thought about important and controversial topics. My business required me to earn people’s trust. I figured people had to know you before they could fully trust you.

So Sentinel was an unusual newsletter from the outset, more personal than most. It inspired personal responses, too – irate ones, sometimes, when a reader thought it was wildly off base, but also fan mail. I had never heard of a professional firm newsletter that received fan mail, so I assumed I was doing something right.

What I did not anticipate, however, was that Sentinel would become a chronicle of the era in which my company, Palisades Hudson Financial Group LLC, grew up. Yet that is exactly what happened. From the rise of the Internet to the fall of the World Trade Center, from the stock market bubble of the 1990s to the financial panic of 2008, the quarterly newsletter became a transcript of how I and my colleagues viewed the changing world that we were trying to help our clients navigate.

The Internet provided an early instance in which we tried to make sense of an uncertain and rapidly evolving situation. In “What Good Is The Internet?”, published in November 1994, I wrote, “[...] we’ve got something today – at least in a primitive state – that is obviously going to be important. We just don’t know why.” In subsequent issues, we considered ways to connect to the new technology (including the Pipeline, a dial-up service provider that could, among other things, send your email to your pager). We explained what the Internet might be good for, and explored ways for professionals to use the Internet to get tax and legal information.

I first wrote about the Defense of Marriage Act when it was passed in 1996. In “No ‘Defense’ In Fed Marriage Act,” I detailed not only the inherent unfairness of the law (as I saw it), but the tax and financial planning tangles it would create. After Massachusetts became the first state to offer same-sex marriage in 2004, I wrote another Sentinel article predicting the legal free-for-all that would follow as state laws conflicted with one another and with DOMA. The Supreme Court is expected to rule later this year on two cases about marriage equality, including one that challenges part of DOMA. We will undoubtedly have more to say about this topic in future issues.

Given the nature of what we do at Palisades Hudson, financial and investment planning matters have always been a big part of Sentinel’s repertoire. The very first issue, in May 1993, explained why I doubted that Congress would broaden the application of estate and gift taxes. (I was correct; estate and gift taxes were repeatedly reduced during the next 16 years.)

In 2004, we ran a two-part series on presidential tax returns, first focusing on the returns of then-President George W. Bush and Vice President Dick Cheney in January, then expanding to consider those of a variety of former presidents in the April issue. In 2005, we devoted the bulk of our April issue to Social Security, examining its origins and suggesting its possible future. We revisited the topic in 2008, when we looked at various government retirement programs.

Social Security is a topic that tends to stir a strong response. We published several letters to the editor, something we have always enjoyed doing, even though the letters usually take us to task. Sentinel’s mission has always been more to provoke thought than to change minds.

Another topic that stirs strong emotions is long-term care insurance, about which I (and later my colleagues) have been deeply skeptical since it was first introduced. We have been writing about what we see as the shaky economic logic of this product since 1993. Every article on this point receives pushback, usually from people involved in selling the insurance. As Anna Pfaehler discussed in her 2011 article “Crumbling Economics Undermine Long-Term Care Offerings,” the recession exposed preexisting cracks in the product’s foundations. MetLife stopped offering new LTC insurance policies in 2011, and John Hancock approached state regulators for permission to hike its premiums the same year.

We certainly don’t claim to be oracles, nor has history always borne out our predictions or opinions precisely. In 1995, we wrote “The Economic Case Against Tobacco Stocks,” asking whether companies that poisoned their own customers could be good long-term investments. As of this writing, Altria (the former Philip Morris) and Reynolds American, the two largest tobacco companies in the United States, are both still profitable. Their shares have, however, both performed substantially below the S&P 500 since 1995.

Even when we’re wrong in the particulars, our principles have served us – and our clients – well in fast-changing circumstances. After the tech bubble burst in the early 2000s, we advised clients not to panic, but instead to stay the course and keep focused on their long-term goals.

We again urged our readers and clients to remain calm in 2008, even going so far as to take out a full-page advertisement in a local newspaper. We reprinted the ad, along with the article “Revisiting The Panic of 2008,” in the October 2009 edition of Sentinel. At the time, we could look back one year and already see how far we had come. Now, several years out, we continue on a slow but steady recovery. The economic world did not end with the crisis of confidence that made 2008 seem so dire. Those who stayed calm and did not liquidate investments during the panic generally landed on their feet.

My article “Recovering From A Day Of Terror” was written within days of the 9/11 terrorist attacks. This was a turning point in our country’s political dialogue and, eventually, the state of international affairs. Eleven years later, even after the death last year of Osama bin Laden, the final chapter in this particular story has not yet been written.

Then again, any chronicle like Sentinel is always a work in progress. The world has changed a great deal in the past 20 years, and our firm has changed, too. We’ve grown in staff, offices and relationships. Yet my goals remain substantially the same, for the business and for this newsletter.

In the first issue, I wrote: “I hope Sentinel will bring you creative ideas about the personal and family finance issues you care about.” That is still the newsletter’s primary mission, one in which I hope we will continue to earn the occasional piece of fan mail.


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