Logically Speaking...Let's Talk About Price

Before I begin a quick analysis of the unquestionable and deplorable pricing structures forced upon widows and orphans, let me first make the point very quickly by mentioning a job posting I saw today (verbatim...the bold and caps are exactly as written)...

"2 Exp. cemetery and funeral service SALES PEOPLE needed. 401k, health insurance, training pay. Career position. HIGH INCOME POSSIBILITY. Recession Proof. 100% comm."

I see nothing about a compassionate individual wanted, or a thoughtful person to help grieving families and friends through this time of emotional and financial chaos. I see SALES PEOPLE...HIGH INCOME POSSIBILITY...100% commission. I see a flawed business model, with a target client base of grieving and irrational widows and children, with the focus on earnings potential based on how much you can sell them while they are not thinking clearly.

I understand that funeral homes and commercial cemeteries are for-profit entities...and I highly encourage a free market society. But, when the recruiting pitch is to make as much money by taking advantage of those who are emotionally distraught and not in a frame of mind to think through financial decisions...I believe that is just plain wrong, disingenuous and quite frankly, shameful.

I recently compared the funeral services from 2 funeral homes in NW Indiana, 1 in Elmhurst, IL, 1 in CA and 1 in NY, comparing a variety of regions across the US. NOT including a casket, cemetery plot or outer burial container, which I will discuss next, the range in expenses JUST for the funeral arrangements was $3,850 to $5,802...or a range in over $1,900 for the EXACT SAME SERVICES AND ARRANGEMENTS. Mind you that the 2 NW Indiana funeral homes are about 2 blocks away from each other! But, who thinks about shopping around when you've just lost your partner, your parent or your child?

You see, this is how it works...funeral homes charge an up front Basic Service Fee, which includes things like a "counseling fee"...paid no doubt to the 100% commission SALESPERSON...securing permits, filing death certificates and coordinating with the cemetery. It also includes an allocation to property taxes, overhead, personnel, etc...normal operating expenses of any business.

Everything else is itemized. Embalming generally averaged around $500, dressing and casketing the body averaged $300, visitation ranged from $400 for 4 hours on a weekday after noon to $1,175 for a full day and does not include a memorial or funeral service, which tacked on another average of about $500. Then you add an average of $300 for the transfer of the remains to the funeral home, average $200 for the hearse, average $250 for the utility/flower vehicle and $200 for a lead car (not a limo, which tacks on another couple hundred dollars).

Then you are pushed to purchase a guest register for about $40, memorial cards or folders for about $50, acknowledgement or thank you cards for about $40, and other little special touches that the SALESPERSON is sure would make the deceased feel special and important.

Mind you that this does not include the "cash advance items" like the obituary, in some cases the death certificate if it is not specifically included in the Basic Service Fee, flowers, and other items that, once again, the SALESPERSON is confident the deceased would have wanted, so how could you possibly not demonstrate this last show of love. A crucifix would really be a nice touch for only $38 and the pallbearers would look so elegant with matching gloves for $18.

So, without a casket, outer burial container or cemetery plot, the average cost of this 5 diversified sampling of funeral homes is $4,481.80.

According to Forbes in a 2005 publication, the average nationwide plot sells for $4,000. Outer burial vaults (although some areas still allow only liners) will run you on average $800 - $1,200 and a casket will run you on average from $2,000 to $6,000.

So, only using averages, the traditional at-need funeral service will cost you $4,481.80 + $4,000 + (low side outer burial vault) $1,000 + $3,000 (very low casket estimate)...for a combined total of $12,481.80...a pretty nice commission earned on that one, fur sure! In fact, using these low ballpark averages for the latter 3 items, if a funeral home ONLY conducted 50 at-need traditional funerals per year, at $12,481.80, and paid the SALESPERSON an 8% commission, that would equal an income just shy of $50,000/year. If the funeral home conducted 100 at-need traditional funerals per year, that income doubles to just under $100,000/year. Pretty nice chuck of change from manipulating the distraught.

This does not have to be the case for you. There are so many ways to save money while having a dignified, respectful funeral...the key is educating yourself, knowing your rights, making the decisions in advance, and documenting them. Somebody will have to make the decisions...it can be you or you can punt it to your loved ones.

Be wise...Be prepared...

Please learn more at www.FuneralPlannersInc.com or contact us at 219. 728. 1290. We can help.

Copyright 2009 Funeral Planners Incorporated

NFDA Stat Lacks Integrity-Fun With numbers

The great thing about statistics, and numbers in general, is that they can be manipulated to demonstrate whatever "fact" you are supposedly substantiating. Depending on so many variables, statistics are almost by design the perfect way to make fact out of fiction, allowing you to paint the canvas with the most appealing picture to influence others to your point.

The National Funeral Directors Association (NFDA) provides the 2006 average cost of a traditional funeral at $7,323, which most people who have arranged and paid for an at-need funeral know is much lower than they actually paid. Based on what I know and my background in finance, I simply do not believe that number. Skeptical curiosity got the best of me and I felt compelled to look into the statistical validity and integrity of that number, and...drum roll please...it is bogus. Oh, don't get me wrong, it's an average of something...but not what I believe is the average cost of a funeral. Funny how a single fact can ruin a good argument.

I will clearly demonstrate, using the NFDA's actual data, why that number is misleading at best, just plain wrong at worst.

Here are some facts (per the NFDA, but with no date reference):

• There are 20,080 funeral homes in the U.S.
• Over 10,200 funeral homes are members of the NFDA in the U.S. and internationally (they do not provide a breakdown of U.S. vs international membership)
• The NFDA provided 2006 average cost of a "regular adult funeral" is $7,323
• The average was calculated based upon member survey responses
• 3,000 member funeral homes, or 29% of it's membership, were invited to respond
• The response rate was 38%

Okay, now it gets interesting.

There is no explanation as to why only 3,000 members, or less than 1/3, were sent the survey or the diversification of the invitees, the notes do not specify whether the 3,000 invitees operated in the U.S. or if international funeral homes were also included, there is no indication of the selection process to identify those 3,000 invitees...were they "cherry-picked" or randomly selected? All of these, among others, very simple points can and will drastically determine the outcome.

Let me break it down...

• A 38% response rate equates 1,140 responses
• 1,140 represents about 11% of NFDA member funeral homes, and only about 5.4% of total U.S. funeral homes
• If survey invitees were not random, then inviting responses from targeted funeral homes in rural areas, financially depressed or disadvantaged areas, funeral homes whose business is influenced by providing goods and services to the homeless, mentally challenged or prisons, and family-owned vs corporately owned, basically allows the NFDA to handcraft a statistic to their advantage.
• The NFDA took a set number of goods and services and priced only these items from the submitted general price lists. This list is decidedly vague in what exactly was being included, providing the average cost of a "viewing or visitation", but did not specify the number of days, time of day, weekday vs weekend, etc...things that can change that number, thus the overall average, by HUNDREDS of dollars
• The average was NOT calculated from actual funeral receipts, but rather from only a pre-selected number of goods and services as determined by the NFDA.

Questions to the NFDA:

1) How would the average change if funeral home invitees were primarily located in the lowest median household income areas or rural areas? For instance, how would the prices differ from a funeral home operating in Liberty, MS (pop. 676) differ from one operating in Los Angeles, CA (pop 3.8M)?Or, funeral homes operating in Atherton, CA, with the highest median household income compared to those in Detroit, MI, with one of the lowest median household incomes?

2) Since when does information from 5.4% of total practitioners equate to "statistical integrity", as stated on the NFDA website? That's news to me...

3) What is the degree of influence from international funeral homes?

4) How were the 3,000 invitees determined?

5) Why did only 38% respond? A reasonable person might conclude that those funeral homes with higher prices operating in higher income, metropolitan areas may decline to respond knowing that they would influence the average up.

6) The funeral industry generates $11B annually...why weren't actual funeral receipts used as opposed to only the selected goods and services determined by the NFDA?

I could go on and on, but I believe my point is clear. When any type of analysis is prepared from unclear, misleading and manipulated data, the result is unclear, misleading and manipulated statistics. Only some of us can learn by other people's experiences...the rest of us have to be the other people.

Don't be the other people. Learn more about how to protect yourself and your loved ones by developing a thoughtful, comprehensive pre-need funeral plan at http://www.funeralplannersinc.com/.

Funeral Industry Price Fixing is NOT a Myth

Recently on the WSJ.com site, there was an article posted basically stating the absurdity of actually believing that funeral homes would knowingly and intentionally participate in nationwide price fixing and collusion with a casket manufacturer, and that anybody who doubted or questioned the integrity of funeral homes was callous. I beg to differ...

With the average cost of a traditional funeral in excess of $6,500, it is every consumers right, and frankly duty, to question why funerals cost so much today... especially in light of the fact that a casket is typically the most expensive cost. The article indicates that Funeral Consumers Alliance initiated a class action antitrust lawsuit, stating that three national funeral homes engaged in price fixing with a casket manufacturer. According to the article, "as a result of the conspiracy, unsuspecting casket buyers are forced to pay perhaps twice as much as they would if there were true competition in the market."

Reality check...caskets sold by funeral homes are typically MORE THAN DOUBLE!

Just a quick check of my casket file gave me some facts that I would like to share. Here is a simple comparison of what a casket sells for if purchased from a funeral home and what it costs if purchased directly from the manufacturer, many times with free overnight shipping:

18G Steel Casket
Funeral Home Price: $2,895
Manufacturer Price: $ 995
Difference: $1,900, or 67% mark-up

Solid Oak Casket
Funeral Home Price: $4,495
Manufacturer Price: $1,485
Difference: $3,010, or 67% mark-up

Solid Mahogany Casket
Funeral Home Price: $5,695
Manufacturer Price: $1,795
Difference: $3,900, or 69% mark-up

Copper Casket
Funeral Home Price: $5,595
Manufacturer Price: $2,195
Difference: $3,400, or 61% mark-up

These are not small, insignificant numbers. We are talking THOUSANDS of dollars of mark-ups that are being trust onto consumers, who have been led to believe that funeral homes are trustworthy and it would be distasteful to challenge their prices. In fact, the emotional state that most people are in when planning funeral arrangements is the perfect environment for manipulation to flourish. Particularly with encouraged sales techniques such as "this casket truly honors the memory of your husband"...what kind of cold-hearted wife would say no to that?

The fact is that the casket is going to be buried and nobody will ever see it again. It will eventually decompose, regardless of whatever kind of "gaskets" or liners that you are either required or manipulated to buy. Does it really honor the person who died to deplete their children's college fund to pay for their funeral? I think not.

But, the mocking tone and frivolous attitude of the author just goes to show the general pervasive attitude of the funeral and burial industry. The "people need us, so we can do what we want, when we want and to whom we want, because we have an unlimited number of potential clients because everybody dies" outlook. I disagree.

A pre-need funeral plan, developed with a thoughtful and clear mind, taking the quality and costs of various funeral related goods and services into consideration before making decisions is the only way to protect yourself and your loved ones. As I wrote yesterday, the FTC is responsible for regulatory oversight of funeral homes. During their 2008 undercover investigation of funeral homes nationwide, they managed to investigate 104. In 2006, the most recent year for "official" census studies, there were over 29,000 funeral homes in the US. Is 104 really a reasonable sample? I think not. And does it matter...of the 104, over 62% operated in violation of the Funeral Rule.

In short, there is really no disincentive for funeral homes to operate with the best interest of the consumer in mind. There is very little oversight, and if one dares to question their integrity and business principles (gasp), they must be some kind of cold, uncaring individual, subject to mock and ridicule.

That is wrong. Every consumer in this country deserves to be treated fairly. But, by about the time you are old enough to speak, you realize that is not always the case. You can and should protect yourself.

A pre-need funeral plan is a necessary and important step in financial and future planning. Please educate yourself, defend yourself from being victimized and learn how at www.FuneralPlannersInc.com. We help individuals and families everyday to make emotionally appropriate and financially responsible decisions about their funeral, burial, cremation and memorial options. Please learn more...it DOES make a difference and you DO have a voice and a choice.

Who Can You Trust When Somebody Dies?

Who do most American's turn to when a death occurs? One should exercise caution when putting trust and confidence into funeral homes.

The FTC enforces what is called the Funeral Rule, which is basically a step-by-step guideline to protect consumers from being taken advantage of or misled by funeral homes, crematories and cemeteries. Within this enforcement, the FTC conducts an annual audit of funeral homes across the country. The 2008 results were recently released and, if anything, it makes me feel that consumers are more vulnerable to funeral home manipulation and thankful that I am informed and prepared.

The FTC investigated 104 funeral homes across seven states. Incredibly, almost 62% were cited for significant and/or minor violations!

Orange County, CA was one of the seven states included. In Orange County, incredibly 61% of the 18 funeral homes inspected were cited for significant and/or minor violations. That is likely not much comfort to the countless individuals and families who trusted these and other funeral homes during their time of emotional crisis and grief.

On the bright side, you can be thankful that you didn't have to arrange a funeral in Northeastern Arkansas. Of the 15 funeral homes inspected there, 11 were cited for significant violations and 4 for minor...or simply a 100% FAIL rate.

Of the seven states, only one (Nassau County, NY) ranked below 50% of the funeral homes operating without violations. Of the 18 funeral homes investigated, 2 were cited for significant violations and 3 for minor.

But here is the real interesting part...funeral homes with significant violations can avoid costly and public litigation by agreeing to participate in a 3-year Funeral Rule Offender Program (FROP), which teaches compliance, the Funeral Rule and other topics that reasonable minds would assume they already knew considering they operate as a funeral home and are likely a member of the National Funeral Directors Association (NFDA). Violating funeral homes also make a "voluntary" payment to the U.S. Treasury and pay annual administrative fees to the NFDA.

Let me clarify...violators learn how to operate a compliant funeral home, while continuing day-to-day operations as a funeral home, and pay annual fees to an association that they likely already belong to, ultimately paying themselves. This builds consumer confidence?

It's important for consumers to have some degree of confidence in the integrity of funeral homes considering that multiple reputable sources report that the average cost of a traditional funeral is now over $6,500. In these economic times, coming up with that kind of money to be spent on something like a funeral, which holds no lasting fiscal value, is quite a daunting thought.

But, the empowering and most important thing is YOU CAN PROTECT YOURSELF!

By working with an independent, unaffiliated pre-need funeral planner like Funeral Planners Inc., you can know your rights and options and prepare a comprehensive and documented pre-need funeral plan, where over 100 decisions, arrangements and negotiations are made with the benefit of time and knowledge, allowing for thoughtful and financially responsible decision making.

Learn more at www.FuneralPlannersInc.com or call today at 219. 728. 1290.