Who is your Average Client?
8
Who is your average client? Independently wealthy? Broke? Homeless? Middle class? We
explore what it means to be middle class according to one author. You might be in for a
By: Phil Zeltzman, DVM, DACVS, CVJ
surprise
is
client, Dear Reader? Would
W hoandyour average is independently“average.”
you say that (s)he
wealthy?
Broke
homeless? Remember, I said
I’d venture to say that you might consider many of
your clients “middle class.”
I am constantly horrified when I hear client explain why they can’t afford surgery on a pet they
nevertheless consider like a child.
Some were laid off. Some have two or three jobs,
and still can’t make ends meet. Some clearly made
bad financial decisions. Some have a spouse fighting a war overseas. Some have a credit score lower
than their body temperature, despite years of hard
work. Some tell me the only way they can afford
surgery, it by borrowing from their 401 (k) – a
heartbreaking mistake in my mind.
Without getting into a political debate, let’s describe what a middle class person is according to
author Charles Hugh Smith in his blog entitled “Of
Two Minds”.
He writes*: “The middle class has atrophied into
the 10% of households just below the top 10%. The
truth is painfully obvious: A middle-class lifestyle
is unaffordable to all but the top 20%.” He then
describes his 10 key criteria for belonging to the
“middle class” (very slightly edited below):
1. Meaningful health-care insurance.
2. Significant equity (25%-50%) in a home.
3. An income-expense ratio that enables the
household to save at least 6% of their income.
4. Significant retirement funds (401Ks, IRAs, etc).
5. The ability to service all debt and expenses
over the medium term, should one of the primary household wage-earners lose their job.
6. A reliable vehicle for each wage earner.
7. They don‘t rely on government transfers to
maintain their lifestyle.
8. They have non-paper, non-real estate assets,
such as family heirlooms, precious metals,
tools, etc., that they can transfer to the next
generation (“generational wealth”).
9. The ability to invest in their kids (education,
etracurricular clubs/training, etc.).
10. Leisure time devoted to the maintenance of
physical/spiritual/mental fitness.
There you have it. Of course, I won’t dare to ask if
you believe that you or your employees belong to
this middle class. Back to my point: how many of
your clients meet these 10 criteria? Sadly, if they
don’t, how can they afford the level of medicine
and surgery you would like to practice and recommend? How will they help pay your digital X-ray
machine back? How will they fund your retirement? How will they help you give raises to your
hard-working team members?By borrowing from
their 401 (k), thereby incurring taxes and steep
penalties? By using their credit cards, if they’re not
already maxed out? By using a popular healthcare
credit card which I can’t name here, and paying
over 20% interest for the next several years?
And the killer is that the very same clients tend to
make bad financial decisions. Here is a not-so-unusual scenario when I (a traveling surgeon) do an
outpatient procedure (biopsy, X-rays, minor surgery etc.). They often had a really hard time coming up with the deposit. They might live far away,
so instead of driving all the way back home, they
say “we’re going to go shopping at the mall, just
call us when you’re done.” So they don’t have a few
hundred dollars to pay for the pet’s procedure, but
they’re going shopping?
Want more depressing numbers**? (again, this is
not meant to be a political discussion, we’re merely
looking at facts).
•
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Almost 60 % of Americans believe it is not
possible to be a middle-class person and be
financially secure (Source: a survey by Country
Financial, an insurance and financial firm in
Bloomington, IL).
A full-time worker needs to earn almost $19 an
hour to afford a two-bedroom rental.
This is the wages they would need to spend less
than 30 % of their income toward rent, as is
usually suggested (Source: National Low Income Housing Coalition).
In 2008, 25 % of people defined themselves as
lower-middle class or poor; in 2014, that number rose to 40 %.
Similarly, in 2008, 53 % of people considered
themselves middle class; in 2014, that number
fell to 44 % (Source: Pew Research Center).
Geoff Williams, the author of the article**, shares
the following income levels after talking to academics and financial advisors:
• A U.S. household with four people living off
$23,850 or less is considered poor.