ImproMed E-Newsletter April 2015 | Page 8

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). • • • • • 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.