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Speaker 1: Welcome to How to Money. I'm Joel, I'm Matt, and

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Speaker 1: today we're talking about fixing your broken financial behavior with

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Speaker 1: Dan Egan. All right, so.

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Speaker 2: Why are there more millionaires? Joel? Because the basic formula, right,

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Speaker 2: it's pretty simple. Just spend less than you make so

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Speaker 2: that you can invest in low cost, diverse fied index funds.

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Speaker 2: Like we literally, we're not at all joking when we

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Speaker 2: say that if you follow those straightforward steps, and it

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Speaker 2: won't be long before you are sitting on millions of

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Speaker 2: dollars in retirement. It's that simple. But that doesn't mean

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Speaker 2: it is that easy. And evidently we are the reasons

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Speaker 2: that we don't have more money or whatever it is

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Speaker 2: that we want in life. Here to talk to us

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Speaker 2: today about that is behavioral scientist Dan Dan is the

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Speaker 2: director of Behavioral Finance and Investing over at Betterments, and

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Speaker 2: today we're going to discuss how human psychology impacts our

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Speaker 2: financial decision making. Dan, and thank you so much for

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Speaker 2: taking the time to speak with Joel and I today.

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Speaker 3: I'm very happy to be here, looking forward to the conversation.

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Speaker 1: We are too, Dan, And the first question we ask

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Speaker 1: everyone who comes on the show is what's your craft?

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Speaker 1: Beer equivalent. I like to think of that as kind

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Speaker 1: of a smart behavioral thing to have something to spend

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Speaker 1: money on proactively, even though you're doing the smart thing

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Speaker 1: with your money on the flip side, investing and saving

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Speaker 1: for your future. What's that for you? What's your craft

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Speaker 1: beer equivalent?

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Speaker 3: So I've been doing something new a little bit lately,

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Speaker 3: where with questions like this, I had my answer, and

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Speaker 3: I'll tell you my answer, and then i'll tell you

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Speaker 3: my wife's answer for me. My answer was, and this

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Speaker 3: is something I'm so happy about. It's like a little

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Speaker 3: luxury that makes me happy on the time. I have

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Speaker 3: multiple of the same thing in different locations so that

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Speaker 3: I don't have to worry about having that one thing.

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Speaker 3: So I have like six pairs of the same sunglasses

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Speaker 3: and ones inside the car and the other ones in

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Speaker 3: my back, et cetera. It costs a bit more, you know,

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Speaker 3: like it feels a little bit unfrugal because you could

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Speaker 3: just have one. But I absolutely love having these extras

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Speaker 3: and spares.

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Speaker 1: Everything very cool.

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Speaker 3: So I was talking to my wife about going on

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Speaker 3: the podcast in this question, and I was like, but

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Speaker 3: I want you know, like you know me, you're an

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Speaker 3: outside perspective, How would you answer that question for me?

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Speaker 3: And without hesitation, instantaneously, she said, power tools. Apparently I

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Speaker 3: have fully entered my middle aged dad diy arc where

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Speaker 3: my splurge is a one hundred and fifty two hundred

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Speaker 3: dollars power tool that I'm going to use three times.

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Speaker 3: But I'm really happy that I have it.

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Speaker 1: That is awesome.

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Speaker 2: I actually I really do the job easier if you

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Speaker 2: have the right tool on hand.

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Speaker 1: And I'm curious the multiple things in different places. I

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Speaker 1: also love that. Is that because you forgot stuff like

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Speaker 1: your sunglasses? Because I've got way too many pairs of

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Speaker 1: sunglasses because I just lose them regularly, and so I

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Speaker 1: buy three every summer and I place them in random places.

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Speaker 1: But I guess what other things do you to lose?

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Speaker 2: Is frugal card? Three of the same thing, they're like eight.

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Speaker 1: Dollars, Like they're not nice, but they're like ray bans

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Speaker 1: or anything like that. But what else? What else fits

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Speaker 1: into that category? And is it because you're you got

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Speaker 1: showed up someplace and you're like, ah, I forgot the

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Speaker 1: thing again?

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Speaker 3: Yes, little like spare battery packs for my phone charging cables, chapstick,

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Speaker 3: perhaps an easy one, But that's that's cheap. Nice water

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Speaker 3: bottles I have when at work. Oh, actually, here's another example. Keyboards.

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Speaker 3: I have the exact same Apple keyboard with like the

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Speaker 3: touch I D thing in the office as I do

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Speaker 3: at home. And I bought both of them myself because

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Speaker 3: I didn't want to have different keyboards between home and work.

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Speaker 3: Now that I say it out loud, it sounds really OCD,

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Speaker 3: and maybe it is. But yeah, I want, like I

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Speaker 3: was like this, I spend so many hours on these things.

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Speaker 3: I want them to be the same and make me happy.

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Speaker 1: No, I get it.

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Speaker 2: There's something to be said about redundancy, and like, that's

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Speaker 2: what you're prioritizing here, the ability to not have to

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Speaker 2: schlep something like I very much. I'm just so optimizing

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Speaker 2: frugal and cheap. Some would say that I'm you know,

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Speaker 2: I'm lugging my water bottle home from the week, Like

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Speaker 2: I keep a water bottle here at work, but I

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Speaker 2: don't use it during the week, but I take it

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Speaker 2: home on the weekends and it's just something I have

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Speaker 2: it I do. But I could see Dan in this situation.

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Speaker 2: He'd be like, no, no, no, no, second, I've got the

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Speaker 2: same water bottle at home that I get.

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Speaker 1: To use, and the water bottle Matt uses Dan he

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Speaker 1: I believe found on the side of the road or something, right.

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Speaker 2: So, no, it was at a conference, then nobody claimed it.

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Speaker 2: In the hotel, I was helping the clean up after

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Speaker 2: our party and the hotel staff was about to toss

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Speaker 2: this perfectly is still.

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Speaker 1: Looking for that water battle.

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Speaker 3: I feel like my wife is going to tell me

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Speaker 3: I shouldn't have told you guys this, but they can

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Speaker 3: do it anyway. Maybe one of the biggest riskiest things

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Speaker 3: I did in our marriage was one day we were

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Speaker 3: walking along the street in Philadelphia and there was this

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Speaker 3: very cool, bright green hoodie on the side of the road.

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Speaker 3: There was like dirty but not like messed up. And

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Speaker 3: I looked at I was like, that's really cool. I

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Speaker 3: really like that, and she was like, leave it, don't.

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Speaker 3: I picked it up. I took it home, I put

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Speaker 3: it through the washer. It's still one of my favorite hoodies.

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Speaker 3: It's fantastic. Oh my goes, I can't believe you did that.

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Speaker 2: I like how she said leave it like she was

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Speaker 2: walking walking y'all's dog, but instead she was talking to you, Dan.

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Speaker 2: I've ever seen that to my dog when they would

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Speaker 2: pick something up with her mouth the.

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Speaker 3: Exact same tone. Leave it.

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Speaker 2: Oh my gosh, you also have a okay, and this

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Speaker 2: is why I've figured that Joel and I would be

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Speaker 2: fast friends. But you've got a bunch of bikes, right, Like,

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Speaker 2: how many bikes do you have? Because you're up in

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Speaker 2: New York City. Space comes out of premium there.

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Speaker 3: So I would now say that I have three. I've got,

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Speaker 3: you know, like you're It's called a triathlon bike, so

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Speaker 3: it's a little bit like a road bike, dropped handles,

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Speaker 3: thin tires. I like it, but the fact is is

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Speaker 3: I've gotten older, I don't really I'm not going to

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Speaker 3: do the performance thing much anymore. I don't go that fast.

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Speaker 3: So my main one is a what's it called. It's

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Speaker 3: like a fortified like city hybrid bike. It's got the

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Speaker 3: pannier rack.

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Speaker 1: It's my steady like gravel bike.

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Speaker 3: Yeah, exactly, like get into work at home.

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Speaker 2: That's my daily commuter.

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Speaker 3: And then I do have a piece of land upstate

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Speaker 3: and we have bikes there, and that is where I have.

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Speaker 3: You know, again, one of my my biggest purchase is

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Speaker 3: that I'm very happy about I have an electric rad

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Speaker 3: bike where I can bang out sort of like twelve

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Speaker 3: mile rides with like my kids sitting on the penny

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Speaker 3: or hauling her on her bike without a problem. So

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Speaker 3: I have three at this point.

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Speaker 1: That's awesome. Is the rad Is it a rad wagon?

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Speaker 3: It's the convertible one, one that's like a Brompton that

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Speaker 3: you can collapse.

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Speaker 1: Okay, cool, I too have a power bike. I love

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Speaker 1: it hauling the little man around to and from school

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Speaker 1: and stuff like that. So awesome.

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Speaker 2: Okay, let's move. We better start talking about money here

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Speaker 2: before we leave. Yeah.

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Speaker 1: Yeah, but we do talk about bikes a lot. They're

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Speaker 1: money saving instruments, right, But let's talk about behavioral finance. Dan.

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Speaker 1: I'm going to ask you three questions at once. What

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Speaker 1: is behavioral finance? How new is the discipline? And why

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Speaker 1: were you attracted to it? All?

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Speaker 2: Right?

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Speaker 3: Behavioral finance is just you know, taking into account the

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Speaker 3: fact that we're humans in financial models. And I can

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Speaker 3: go through some specific examples of this. They'll resonate. They're

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Speaker 3: pretty simple. But it's just that we don't make decisions

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Speaker 3: like computers or like mathematicians would, and it's pretty predictable

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Speaker 3: how we're going to make decisions that are different. It

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Speaker 3: is relatively new in that I think probably some of

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Speaker 3: the most seminal work that has influenced me was done

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Speaker 3: in the nineteen seventies. So the paper that won Daniel

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Speaker 3: Konneman and Namedstavirsky the Nobel Prize was published in nineteen

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Speaker 3: seventy four. So it takes a little while for academic

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Speaker 3: findings to get sort of substantiated and brought over to

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Speaker 3: the commercial world. So twenty thirty years isn't that bad.

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Speaker 3: I've been doing this now for about fifteen years in

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Speaker 3: an applied kind of business setting. So I actually remember

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Speaker 3: in college I was doing economics and the most interesting

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Speaker 3: part of it was the introspective of microeconomics. Why do

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Speaker 3: we make decisions this way? How do we think about

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Speaker 3: risk and return? And can we do it better? There's

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Speaker 3: sort of systematic patterns in how people mismake decisions about

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Speaker 3: what's going to make them happy in the future in

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Speaker 3: terms of how and when they spend money. And is

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Speaker 3: there like a career there where I get to go

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Speaker 3: and think about, oh, you keep making the same mistake

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Speaker 3: over and over again with money, maybe you could help

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Speaker 3: other people avoid that mistake?

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Speaker 2: All right, Well, you mentioned maybe sharing some examples like

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Speaker 2: what are the most common behavioral patterns you know of

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Speaker 2: human fallibility of these mistakes that you see, and how

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Speaker 2: do they tend to impact money decisions that we're making

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Speaker 2: us people.

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Speaker 3: So the core one, the core, the one that won

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Speaker 3: the Nobel Prize is a model called prospect theory that

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Speaker 3: I think mostly just has like three core parts. The

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Speaker 3: first is that our views of things are context dependent

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Speaker 3: or reference point dependent. So if you are making one

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Speaker 3: hundred thousand dollars a year, you are going to look

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Speaker 3: at a ten thousand dollars windfall way differently than if

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Speaker 3: you are making thirty thousand dollars a year. The amount

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Speaker 3: that you're willing to risk to get that ten thousand

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Speaker 3: dollars is going to be different. So the first thing,

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Speaker 3: which again is very into it, is just we are

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Speaker 3: not kind of computers that look at how much money

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Speaker 3: will I end up with? We are people who say,

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Speaker 3: here's where I am now, what's the change from where

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Speaker 3: I am now? When we're considering a decision. So number

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Speaker 3: one reference point dependent. Number two, we're risk averse, which

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Speaker 3: is that we generally are going to require there to

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Speaker 3: be a bigger payoff if we're going into a risky situation.

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Speaker 3: The neat thing that prospect theory found is that while

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Speaker 3: that's true more in the gain setting, it actually flips

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Speaker 3: in losses. We are risk seeking in losses, which this

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Speaker 3: comes up in gambling a lot, where if you are losing,

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Speaker 3: you're gonna be like, I want to double down, I

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Speaker 3: want to get back to even. It comes up in

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Speaker 3: single stock investing a lot where this translates over to

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Speaker 3: something called the disposition effect, where people will sell stocks

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Speaker 3: that have gone up in value because it feels good.

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Speaker 3: They're closing out again. It feels nice. But people who

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Speaker 3: are holding onto a losing stock will hold on to

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Speaker 3: it for nearly twice as long in the hope that

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Speaker 3: they'll get back to even. And in fact, if they

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Speaker 3: get back to even, they sort of sell out of

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Speaker 3: that stock immediately because they're like, few that sucked, but

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Speaker 3: at least I didn't lose any money on it. So

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Speaker 3: those three things reference dependence, risk aversion, and gains and

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Speaker 3: risk seeking lawsuits is prospect theory, and it's been incredibly

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Speaker 3: powerful for explaining a wide array of behavior about insurance

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Speaker 3: or gambling behavior, or investor behavior, or what neighborhood we

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Speaker 3: choose to live in, and how to incentivize teachers to

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Speaker 3: improve their students' test scores.

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Speaker 1: You wrote At one point you wrote that finding a

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Speaker 1: bias is easy, Fixing it is hard, which makes sense,

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Speaker 1: Like you could just kind of watch humans walk down

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Speaker 1: the street and be like, idiot, that was a dumb move.

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Speaker 1: Can't believe that person did that. It's so easy to

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Speaker 1: and same like I could look in the mirror and say,

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Speaker 1: like one hundred things I did that were really done

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Speaker 1: that day. It's easy to identify the biases. But when

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Speaker 1: it comes down to actually like fixing those errors in

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Speaker 1: maybe the way in particular that we approach our personal finances,

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Speaker 1: what does that look like?

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Speaker 3: So the first element of it is admitting or you

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Speaker 3: know that the first the first step is admitting that

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Speaker 3: you've done something wrong or that you're doing something wrong,

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Speaker 3: which is actually a big step.

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Speaker 1: Starting to sound twelve step program here.

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Speaker 3: Yeah, saying like over and over again, I do something

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Speaker 3: that is not in my own best interest. You have

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Speaker 3: to have enough like letting go of ego that you're like, eh,

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Speaker 3: I should probably improve that and it's something that I

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Speaker 3: should do better. A lot of people aren't going to

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Speaker 3: get past that first step of having some introspect in

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Speaker 3: saying I could be better if I changed this somehow.

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Speaker 3: This is something that's not actually how I want to behave. However,

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Speaker 3: it is human nature to behave in a certain way.

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Speaker 3: We have a lot of like automatic processes that run

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Speaker 3: so that we don't have to think about them. Changing

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Speaker 3: your behavior is tough. So number one, you have to

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Speaker 3: say this is something I want to change. Number two,

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Speaker 3: you have to set up habits or patterns or external

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Speaker 3: prostheses to get you to do those things differently and

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Speaker 3: stick with them over a period of time. So the

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Speaker 3: analogy I like to use is it's very easy to say, like, oh,

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Speaker 3: you're short sighted, you should wear glasses. Making glasses is

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Speaker 3: really difficult. Remembering your glasses and remembering to wear your

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Speaker 3: glasses is a little bit as much harder. So when

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Speaker 3: we find a behavioral bias, it's nice, but it's sort

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Speaker 3: of like the beginning of the are people going to

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Speaker 3: admit and want to be helped with this thing? Are

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Speaker 3: they going to be able to let go pride in

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Speaker 3: you go and say, yeah, I'm flawed and here's something

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Speaker 3: that I would like to be better at. And number two,

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Speaker 3: can we set up an environment or tools or accountability

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Speaker 3: patterns that help them actually change that behavioral pattern.

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Speaker 1: We'll talk to us about that.

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Speaker 2: I guess you said something a second ago external prosthesis, right,

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Speaker 2: So like it sounds like what you're talking about exoskeleton

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Speaker 2: or like systems for us to exist within. It's almost

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Speaker 2: like when the problem shows up, you already need to

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Speaker 2: have something happening, right. Like It's funny, like we were

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Speaker 2: just talking about this with bit when it came to

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Speaker 2: bitcoin and investing, because we've seen a run up recently

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Speaker 2: and I was just like, dang it, I feel like

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Speaker 2: this is something I should have addressed because we own

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Speaker 2: a small amount of bitcoin, not much, but I was like,

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Speaker 2: I prior to this most recent run up, I wish

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Speaker 2: I would have created some sort of rule that said that, oh, right,

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Speaker 2: once it hits one hundred k, once it hits two

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Speaker 2: hundred two and fifty, what am I going to do?

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Speaker 2: Because in the moment once it hits zero or zero,

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Speaker 2: Because then the moment you're thinking, you're either looking to

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Speaker 2: minimize risk, like you said, or you're looking to kind

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Speaker 2: of maximize risk and take on additional risk. Is that

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Speaker 2: what you're talking about here? You're almost talking about rules

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Speaker 2: and systems to put in place.

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Speaker 3: Yes, and I think you touched on some good parts

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Speaker 3: of it. Number One, you need to come up with

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Speaker 3: something that I sometimes think is like a constitution that

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Speaker 3: you're writing. I hear, are the rules for how I

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Speaker 3: am going to do this. It's not necessarily what policy

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Speaker 3: you're going to implement, but even think about, Okay, I'm

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Speaker 3: going to write down my bitcoin trading strategy and it

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Speaker 3: will say if bitcoin does this, I will do this,

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Speaker 3: and if bitcoin does that, I will do that. So

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Speaker 3: you've already set out you're sort of like your policy,

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Speaker 3: your strategy. Now you have to have some way to

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Speaker 3: implement it that doesn't rely on your self control and

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Speaker 3: doing it in the moment. And that's really the hard part.

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Speaker 3: It's easy to say, like I'm going to eat healthy.

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Speaker 3: Here's what I'm gonna eat Monday, Tuesday, Wednesday, Thursday. How

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Speaker 3: are you going to handle it when the snack tray

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Speaker 3: comes around? Yeah, So that's the process. Processes is the

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Speaker 3: idea of kind of being a bionic person, having external

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Speaker 3: things glasses for example, that help you to in effect

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Speaker 3: see the world or interact with the world in the

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Speaker 3: way that you really want to. So a good example

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Speaker 3: of this that I think it's so illuminating in multiple ways.

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Speaker 3: There's a study that was done with a German brokerage

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Speaker 3: so like trading brokerage, stock brokerage, online stock brokerage, and

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Speaker 3: what they did is they said, for free, no cost

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Speaker 3: to you, we the researchers are going to send you

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Speaker 3: performance reports for your accounts every three months. And they

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Speaker 3: did this off the back of some research that found

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Speaker 3: that generally speaking, people don't know what their own portfolio

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Speaker 3: returns are, or if they do, they tend to pay

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Speaker 3: more attention when they believe that they're going to have

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Speaker 3: beaten the market and be up, then underperform the market

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Speaker 3: and or be down. So when we pay attention to

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Speaker 3: how we've done is very asymmetric. We pay more attention

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Speaker 3: when we think it's going to make us feel good,

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Speaker 3: and so most people don't realize how often and when

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Speaker 3: they have underperformed or done poorly at investing. So these

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Speaker 3: reseachers just said, cool, we want to give people feedback,

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Speaker 3: Like a professional portfolio manager whose job it was to

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Speaker 3: get We're going to give them these performance reports every

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Speaker 3: three months. For I believe it was a year and

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Speaker 3: a half, and it told them, you know, like what

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Speaker 3: percentage of trades you made did well? Did you beat

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Speaker 3: the index? Did you underperform? Were you overweight in specific sectors.

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Speaker 3: It was very like, at some level like dry stuff,

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Speaker 3: but it was a feedback loop that told them unequivocally,

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Speaker 3: here were your returns, here were the returns of the

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Speaker 3: market over the same period, and here's some other information

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Speaker 3: about you. And what they found is that at the

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Speaker 3: end of I believe, one year of sending these people

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Speaker 3: reports again just for them over the course of the

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Speaker 3: year every three months these personalized performance reports, people started

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Speaker 3: trading less. They were more likely to use kind of

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Speaker 3: broad based index funds, they were more diversified. So this

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Speaker 3: was a good signal that like this kind of personalized

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Speaker 3: feedback that tells somebody, hey, maybe you're not so good

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Speaker 3: at this, Maybe you could, you know, spend your time

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Speaker 3: doing other things and it would be a better use

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Speaker 3: of your time. It works. At the same time, that

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Speaker 3: brokerage after the study was done, was like, cool, let's

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Speaker 3: shut this down because people are trading less, yea, and

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Speaker 3: they're not happy that we're telling them that they're doing

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Speaker 3: it best.

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Speaker 1: Okay, I really want to ask you this then, because

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Speaker 1: you're right, like, there's as someone who's in charge of

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Speaker 1: architecting kind of behavioral things for betterment, behavioral elements to

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Speaker 1: help investors make better decisions. You've done some really great work,

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Speaker 1: but can't you also use your powers for evil? And

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Speaker 1: aren't there companies doing this like hijacking our attention with

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Speaker 1: advertising companies, advertising companies, social media companies. There's this way

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Speaker 1: in which you can say, ah, here's what's true about

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Speaker 1: human behavior. Let me exploit this from my own personal benefit.

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Speaker 1: And it sounds like that company maybe was onto something

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Speaker 1: good and then abandon it because they realized maybe it

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Speaker 1: was benefiting investors but not the company itself.

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Speaker 3: Absolutely, I think unfortunately this is I feel like there's

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Speaker 3: a gravitational pull towards free and easy and things that

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Speaker 3: make us feel good that we only learn to get

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Speaker 3: out of after we've had enough experience. So definitely, I think.

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Speaker 3: You know, like one of the pieces that I wrote

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Speaker 3: a while ago that I was kind of coming back

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Speaker 3: to was this allure of free and how free is

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Speaker 3: so much better than paying any little amount. But that

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Speaker 3: means that you have a very different relationship with whoever's

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Speaker 3: providing the service, Like if your stock brokerage is free,

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Speaker 3: they're getting paid by somebody else, which means you kind

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Speaker 3: of don't have any like leverage with them to say,

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Speaker 3: here's the service that I want, here's how I would

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Speaker 3: like things to be different, here's how you could improve

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Speaker 3: things for me, and like I'll pay more for it.

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Speaker 3: The other element of it that I think is pretty

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Speaker 3: tough is there's a smaller market for people who want

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Speaker 3: that's the right way to put this, For people who

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Speaker 3: have experienced their own mistakes and kind of have a

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Speaker 3: low enough you go to say, like, I want somebody

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Speaker 3: to help me with this, compared to I think it

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Speaker 3: was like decades ago the e trade adverts, where you know,

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Speaker 3: it's like this very kind of like alpha male. I'm

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Speaker 3: going to train and make lots of money and be

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Speaker 3: such a kind of like just alpha male. Some words

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Speaker 3: I can't use. The idea there is, like it takes

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Speaker 3: time and good feedback loops for you to realize these

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Speaker 3: perfectly human faults within yourself and want to help handle them.

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Speaker 3: I think at better in One of the nice things

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Speaker 3: is that generally speaking, the people who we deal with

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Speaker 3: either have already gone through that process and come out

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Speaker 3: the other side. They've climbed Mount stupid and walked down

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Speaker 3: the other side, or they just went around it entirely

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Speaker 3: because they weren't interested in it, or it never really

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Speaker 3: appealed to them. One of the neat things we did

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Speaker 3: years back was look at who was most likely to

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Speaker 3: try to market time, both during raging markets and falling markets,

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Speaker 3: and the answer was always young men, and that women,

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Speaker 3: almost regardless of age, were really good at just kind

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Speaker 3: of staying the course and not reacting to anything and

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Speaker 3: did much better for it. So I think the tempting

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Speaker 3: thing is that you'll hear about the kind of the

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Speaker 3: I don't know the sexiest, most glamorous, high growth things

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Speaker 3: that are free and so on which work, but I

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Speaker 3: think they tend to work as long as there's new, fresh,

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Speaker 3: naive people who haven't gone through the process of Eh.

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Speaker 3: I don't know, is this a good use of my

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Speaker 3: time or should I really kind of like spend my

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Speaker 3: time improving my own personal life or my own career

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Speaker 3: rather than trying to trade stocks.

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Speaker 2: I think that makes a ton of sense. And that's

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Speaker 2: I mean, like you said, like that's what betterment is

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Speaker 2: on a mission to do and not to I guess

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Speaker 2: give too heart of a plug to that you're the

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Speaker 2: company that you're with, But like you're talking about folks

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Speaker 2: who are looking to potentially time the market, and the

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Speaker 2: solution to that is to just simply dollar cost average

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Speaker 2: into the market. But what are some of the tools

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Speaker 2: that Betterment's offering to just accommodate for our flaws to

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Speaker 2: make it to where we are over the course of

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Speaker 2: the long run winning right? Like And that's I guess

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Speaker 2: that's the difference here too, is that like in the

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Speaker 2: short term, it may not be as winning of a

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Speaker 2: proposition for the business right for Betterments, but it's almost

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Speaker 2: like an altruistic approach to the customer and to business

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Speaker 2: generally speaking, because it's like, look, over the long haul,

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Speaker 2: you're going to vastly outperform what you would have done

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Speaker 2: on your own.

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Speaker 3: Yeah. I think both for us and for individual clients

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Speaker 3: people who are looking to invest, it can get exhausting

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Speaker 3: to chase whatever fat is out there, and it is

435
00:20:14,560 --> 00:20:18,560
Speaker 3: much better to be consistently thinking what is a core,

436
00:20:18,720 --> 00:20:21,760
Speaker 3: evergreen thing that we want to be doing, and how

437
00:20:21,760 --> 00:20:24,640
Speaker 3: do we invest and spend time to have that available.

438
00:20:24,920 --> 00:20:27,600
Speaker 3: Keep going back to the Jeff Bezos quote, if we

439
00:20:27,640 --> 00:20:29,720
Speaker 3: had a good quarter this quarter, it's because of decisions

440
00:20:29,720 --> 00:20:31,720
Speaker 3: that we made two or three years ago. And I

441
00:20:31,720 --> 00:20:33,760
Speaker 3: think that is true for us as a business, and

442
00:20:33,760 --> 00:20:37,440
Speaker 3: it's also true for individual investors. It's not month to month.

443
00:20:37,680 --> 00:20:39,359
Speaker 3: It is I'm going to make a decision now, and

444
00:20:39,359 --> 00:20:40,919
Speaker 3: hopefully it's going to pay off well in two to

445
00:20:40,960 --> 00:20:44,639
Speaker 3: three years. So a few examples of how we try

446
00:20:44,640 --> 00:20:49,480
Speaker 3: and make the boring, straightforward dollar cost average, low cost

447
00:20:49,480 --> 00:20:54,879
Speaker 3: diversified investing interesting and fun and not the boring. Option.

448
00:20:55,520 --> 00:20:58,679
Speaker 3: Number one is goals. So you think about it as

449
00:20:58,800 --> 00:21:02,359
Speaker 3: envelopes or buckets or just ways to separate out your money.

450
00:21:02,720 --> 00:21:05,680
Speaker 3: The idea is that I have a goal that is

451
00:21:05,720 --> 00:21:08,600
Speaker 3: I want to send my daughter to college. I've got

452
00:21:08,840 --> 00:21:10,840
Speaker 3: roughly fourteen years left in that how much do I

453
00:21:10,880 --> 00:21:13,200
Speaker 3: need to save every year when I put it into

454
00:21:13,240 --> 00:21:16,240
Speaker 3: this portfolio that's going to glypath over time in order

455
00:21:16,280 --> 00:21:18,359
Speaker 3: to make sure that she could go to college if

456
00:21:18,400 --> 00:21:20,920
Speaker 3: she wanted to, or a new car, or a house

457
00:21:21,440 --> 00:21:26,000
Speaker 3: down payment, or the biggie retirement. So the ability to

458
00:21:26,040 --> 00:21:30,960
Speaker 3: separate out individual pockets of money has a lot of benefits.

459
00:21:31,359 --> 00:21:35,600
Speaker 3: Number one, the more that that goal has a meaningful

460
00:21:35,680 --> 00:21:38,480
Speaker 3: emotive purpose for you, the better behavior're going to be

461
00:21:38,560 --> 00:21:42,680
Speaker 3: around saving and investing in that goal. So my daughter's

462
00:21:43,200 --> 00:21:46,119
Speaker 3: college fund, it has a picture of her. You can

463
00:21:46,200 --> 00:21:48,920
Speaker 3: upload individual pictures to betterment, and it's got a picture

464
00:21:48,920 --> 00:21:53,960
Speaker 3: of her actually at a graduation ceremony for my wife.

465
00:21:54,000 --> 00:21:57,000
Speaker 3: And so every time I see that goal, I'm reminded of, like,

466
00:21:57,040 --> 00:21:58,720
Speaker 3: I want to invest for my daughter's future. I want

467
00:21:58,720 --> 00:22:01,400
Speaker 3: to go to her graduation ceremony many years from now.

468
00:22:02,119 --> 00:22:04,080
Speaker 3: This is what the purpose of this is, and I

469
00:22:04,119 --> 00:22:05,600
Speaker 3: really want to make sure that I continue to save

470
00:22:05,640 --> 00:22:08,040
Speaker 3: into it and know I'm not going to get distracted

471
00:22:08,040 --> 00:22:10,400
Speaker 3: by what the market's doing over the next two months

472
00:22:10,480 --> 00:22:12,159
Speaker 3: or three months, because this is a goal that I

473
00:22:12,160 --> 00:22:15,280
Speaker 3: am investing in for fourteen years. So gold based investing

474
00:22:15,320 --> 00:22:18,000
Speaker 3: and making it evocative and meaningful for what the person's

475
00:22:18,040 --> 00:22:20,680
Speaker 3: trying to achieve is one of the big wins.

476
00:22:21,040 --> 00:22:23,679
Speaker 1: Can you elaborate on evocative and meaningful real quick? Like?

477
00:22:24,600 --> 00:22:29,080
Speaker 1: And humans, there was what that Fidelity study a number

478
00:22:29,080 --> 00:22:32,280
Speaker 1: of years back about taking a selfie and using the

479
00:22:32,720 --> 00:22:36,520
Speaker 1: age yes, the aging yes yeah, like, So visualizing yourself

480
00:22:36,520 --> 00:22:39,080
Speaker 1: at a thirty years down the road makes you more

481
00:22:39,080 --> 00:22:42,920
Speaker 1: inclined to sympathize with older you, whereas thirty year old

482
00:22:43,560 --> 00:22:48,160
Speaker 1: individual is likely just to prioritize living for the now. Yeah,

483
00:22:48,200 --> 00:22:51,720
Speaker 1: how important is it to kind of connect those tangible

484
00:22:51,960 --> 00:22:56,400
Speaker 1: future realities to kind of our current living experience.

485
00:22:56,760 --> 00:23:00,200
Speaker 3: So this is one of the coolest parts about being human.

486
00:23:00,240 --> 00:23:00,399
Speaker 2: You know.

487
00:23:00,400 --> 00:23:03,040
Speaker 3: Sometimes we talk about like how are humans actually different

488
00:23:03,080 --> 00:23:07,280
Speaker 3: than other animals and so on. Humans spend a lot

489
00:23:07,320 --> 00:23:11,639
Speaker 3: of time thinking about and imagining the future and imagining

490
00:23:11,720 --> 00:23:14,280
Speaker 3: like the past that might get them to different futures.

491
00:23:15,160 --> 00:23:18,840
Speaker 3: And the more that we spend time thinking about, like

492
00:23:18,880 --> 00:23:20,840
Speaker 3: I'm here, what do I want to have happen? What's

493
00:23:20,920 --> 00:23:22,600
Speaker 3: going to be required to get from a to BO

494
00:23:22,720 --> 00:23:26,199
Speaker 3: on that path, the more realistic we can actually say, like, Okay,

495
00:23:26,600 --> 00:23:29,200
Speaker 3: if I want to have a warm house this winter,

496
00:23:29,600 --> 00:23:32,040
Speaker 3: then I need to go out and chop wood now

497
00:23:32,240 --> 00:23:34,080
Speaker 3: so that I have it prepared for when the winter

498
00:23:34,240 --> 00:23:37,000
Speaker 3: is cold. It is superpower. It's this power that we're

499
00:23:37,040 --> 00:23:40,080
Speaker 3: kind of constantly a little bit living in the future.

500
00:23:40,119 --> 00:23:44,400
Speaker 3: We care a lot about our future selves, and that

501
00:23:44,520 --> 00:23:47,080
Speaker 3: works against the kind of the nawism, the short termism

502
00:23:47,160 --> 00:23:49,240
Speaker 3: of like how does it feel right now? What would

503
00:23:49,280 --> 00:23:52,160
Speaker 3: relieve me when markets are going down. It feels anxiety.

504
00:23:52,160 --> 00:23:54,639
Speaker 3: If you're paying attention to it, it pays. It feels

505
00:23:54,680 --> 00:23:57,400
Speaker 3: anxiety provoking. You feel like you have to do something,

506
00:23:57,480 --> 00:23:59,520
Speaker 3: you have to feel like active, you have to react

507
00:23:59,560 --> 00:24:02,240
Speaker 3: to what's going on now. The more that you start

508
00:24:02,480 --> 00:24:05,320
Speaker 3: thinking about I'm talking about Okay, I'm in this for

509
00:24:05,400 --> 00:24:10,400
Speaker 3: twelve years for a purpose, which is my daughter's education.

510
00:24:10,520 --> 00:24:13,919
Speaker 3: It is not to make money. Sort of addressing your

511
00:24:13,960 --> 00:24:17,680
Speaker 3: question directly, we people can like name their goals whatever

512
00:24:17,720 --> 00:24:20,240
Speaker 3: they want for them. They can attach images to them,

513
00:24:20,840 --> 00:24:22,200
Speaker 3: or you can keep it as the default. And I

514
00:24:22,240 --> 00:24:24,720
Speaker 3: think the default name is something like build wealth, which

515
00:24:24,760 --> 00:24:28,120
Speaker 3: is very generic and sounds good, but it's not very evocative.

516
00:24:28,119 --> 00:24:31,399
Speaker 3: It's kind of weird. I want more, you know, I'm

517
00:24:31,400 --> 00:24:33,720
Speaker 3: the Scrooge McDuck. I want more of what I got.

518
00:24:35,080 --> 00:24:38,440
Speaker 3: And so if your only benchmark for our things going

519
00:24:38,440 --> 00:24:41,040
Speaker 3: well is do I have more than I put in,

520
00:24:42,080 --> 00:24:45,080
Speaker 3: it's very it's very thrashy. Sometimes you're up, sometimes you're down.

521
00:24:45,119 --> 00:24:48,320
Speaker 3: It's very emotionally volatile. On the other hand, if you're

522
00:24:48,359 --> 00:24:51,119
Speaker 3: looking at okay, I am on track to send my

523
00:24:51,200 --> 00:24:53,280
Speaker 3: kid to college, and I am saving and I'm investing

524
00:24:53,280 --> 00:24:54,520
Speaker 3: in a way that it keeps me on track for it,

525
00:24:54,560 --> 00:24:57,240
Speaker 3: and I still have a I don't know, seventy eight

526
00:24:57,240 --> 00:25:00,400
Speaker 3: percent chance of hitting that amount in ten years. All

527
00:25:00,400 --> 00:25:02,639
Speaker 3: that anxiety and that thrash goes away, and you're kind

528
00:25:02,680 --> 00:25:06,639
Speaker 3: of like comforted and relaxed because you're I know the

529
00:25:06,680 --> 00:25:08,760
Speaker 3: future that I am building for is going to be correct.

530
00:25:08,800 --> 00:25:11,280
Speaker 3: I'm not reacting to the present. I am building for

531
00:25:11,320 --> 00:25:16,320
Speaker 3: the future. So much stuff, so much stuff around our interface,

532
00:25:16,320 --> 00:25:18,840
Speaker 3: around the way we think about things is how can

533
00:25:18,880 --> 00:25:21,560
Speaker 3: we help people focus on and build for the future.

534
00:25:21,560 --> 00:25:24,200
Speaker 3: How can we give them the tools to say, what's

535
00:25:24,200 --> 00:25:26,120
Speaker 3: the range of outcomes I can expect over a year

536
00:25:26,160 --> 00:25:28,640
Speaker 3: if I'm in this portfolio in the future, how much

537
00:25:28,680 --> 00:25:30,000
Speaker 3: do I need to save if I want to hit

538
00:25:30,000 --> 00:25:33,880
Speaker 3: this goal six years in the future. Instead of if

539
00:25:33,920 --> 00:25:36,679
Speaker 3: you log into a brokerage or something, what hits you

540
00:25:36,760 --> 00:25:39,440
Speaker 3: is the past you log in, it's just like, here's

541
00:25:39,480 --> 00:25:41,680
Speaker 3: how you did over the past five days, here's how

542
00:25:41,680 --> 00:25:44,200
Speaker 3: you did over the past three months. It's a fact,

543
00:25:44,200 --> 00:25:46,280
Speaker 3: but you can't change it and there's no planning for it.

544
00:25:46,480 --> 00:25:48,560
Speaker 3: So the more that we can help people, we give

545
00:25:48,560 --> 00:25:50,159
Speaker 3: them those tools to say, like, let's focus on the

546
00:25:50,160 --> 00:25:52,119
Speaker 3: future and focus over the things we can control and

547
00:25:52,200 --> 00:25:55,000
Speaker 3: change to make the future better. The better they invest in,

548
00:25:55,040 --> 00:25:56,199
Speaker 3: the better we do as a company.

549
00:25:56,480 --> 00:25:57,000
Speaker 1: I love it.

550
00:25:57,119 --> 00:25:59,159
Speaker 2: Yeah, it makes so much sense. All Right, We've got

551
00:25:59,280 --> 00:26:01,679
Speaker 2: more dumb decisions to talk about and how it does

552
00:26:01,720 --> 00:26:04,639
Speaker 2: that we can that we can avoid those and like

553
00:26:04,760 --> 00:26:06,359
Speaker 2: Dan said, build our wealth. We'll get to all of

554
00:26:06,359 --> 00:26:15,719
Speaker 2: that and more right after this. All right, we're back.

555
00:26:15,760 --> 00:26:19,040
Speaker 1: We're still talking with Dan Egan. We're talking about financial behavior.

556
00:26:19,160 --> 00:26:22,199
Speaker 1: And the truth is us humans exhibit a lot of

557
00:26:22,240 --> 00:26:24,880
Speaker 1: poor financial behavior so much of the time. But there

558
00:26:24,920 --> 00:26:28,320
Speaker 1: are ways that we can, yeah, fix that and Dan,

559
00:26:28,720 --> 00:26:31,840
Speaker 1: Dan is an expert at this. And Dan, I'm curious,

560
00:26:31,880 --> 00:26:34,359
Speaker 1: like unique human beings. I like to think of myself

561
00:26:34,400 --> 00:26:37,000
Speaker 1: as a unique individual, and I think most.

562
00:26:36,840 --> 00:26:38,440
Speaker 2: People do, right, snowflakes.

563
00:26:38,520 --> 00:26:40,720
Speaker 1: Yeah, it's not in a strong way, that's right, that's right,

564
00:26:40,720 --> 00:26:42,680
Speaker 1: A very strong snowflake. I mean, I think most people

565
00:26:42,720 --> 00:26:44,199
Speaker 1: like to think themselves that way. They don't like to

566
00:26:44,200 --> 00:26:46,480
Speaker 1: think that they are one in a crowd of many.

567
00:26:46,840 --> 00:26:50,080
Speaker 1: How does like behavioral finance maybe not just help mitigate

568
00:26:50,280 --> 00:26:54,879
Speaker 1: common flaws, but how does it speak to specific personality types?

569
00:26:55,080 --> 00:26:58,480
Speaker 1: It does it have that level of sophistication, It does.

570
00:26:58,520 --> 00:27:01,720
Speaker 3: It's definitely more work to make use of it. And

571
00:27:01,840 --> 00:27:04,879
Speaker 3: also what's tricky about it is how well can you

572
00:27:04,960 --> 00:27:07,800
Speaker 3: do it sor right we put it out of sample,

573
00:27:07,880 --> 00:27:10,639
Speaker 3: you know, like how well can I predict what behavioral

574
00:27:10,680 --> 00:27:14,919
Speaker 3: biases you are likely to have without following you around

575
00:27:14,920 --> 00:27:16,920
Speaker 3: for a year or two to actually like get the

576
00:27:17,000 --> 00:27:20,200
Speaker 3: data and run it off there. And this is something

577
00:27:20,200 --> 00:27:23,200
Speaker 3: that we're getting better at, and we're getting better both

578
00:27:23,240 --> 00:27:25,720
Speaker 3: at knowing when we can do it and when we

579
00:27:25,760 --> 00:27:29,119
Speaker 3: can't do it. So, coming back to some of the

580
00:27:29,119 --> 00:27:32,720
Speaker 3: things we talked about before, I was looking at data

581
00:27:32,760 --> 00:27:35,280
Speaker 3: around kind of thinking about like who do we need

582
00:27:35,320 --> 00:27:37,200
Speaker 3: to talk to and how do we need to talk

583
00:27:37,240 --> 00:27:40,120
Speaker 3: to them when markets are getting choppy around to specific

584
00:27:40,119 --> 00:27:43,520
Speaker 3: news events. You can think about elections or the FED

585
00:27:43,600 --> 00:27:47,000
Speaker 3: changing rates, or I don't know, some like you know,

586
00:27:47,119 --> 00:27:50,600
Speaker 3: China trade deal, et cetera. Things that are likely to

587
00:27:50,640 --> 00:27:52,960
Speaker 3: cause markets to be volatile that people never coming up.

588
00:27:53,280 --> 00:27:56,200
Speaker 3: And so we were looking at trying to predict who

589
00:27:56,320 --> 00:27:59,000
Speaker 3: was going to be the type of person, not the individual,

590
00:27:59,000 --> 00:28:01,920
Speaker 3: but the type of person who was going to de

591
00:28:02,080 --> 00:28:06,359
Speaker 3: risk their allocation ahead of a scary event. And we

592
00:28:06,400 --> 00:28:09,720
Speaker 3: were building up this model which was something on the

593
00:28:09,800 --> 00:28:12,879
Speaker 3: order of like how old are you, what gender do

594
00:28:12,960 --> 00:28:15,960
Speaker 3: you identify as, how long you've been with us, what

595
00:28:16,000 --> 00:28:18,320
Speaker 3: type of gold do you have with us? And then

596
00:28:19,280 --> 00:28:22,480
Speaker 3: two factors which were very powerful, more powerful than a

597
00:28:22,480 --> 00:28:25,120
Speaker 3: lot of the other stuff. Do you use our mobile app?

598
00:28:25,119 --> 00:28:29,399
Speaker 3: And how often do you log it? And so you know,

599
00:28:29,480 --> 00:28:31,760
Speaker 3: like I wasn't necessarily trying to figure out for a

600
00:28:31,800 --> 00:28:34,560
Speaker 3: specific person, but I can go off of some demographics

601
00:28:35,040 --> 00:28:37,560
Speaker 3: as well as a little bit of the observed behavior

602
00:28:37,880 --> 00:28:39,560
Speaker 3: for you that I have and build out a model

603
00:28:39,560 --> 00:28:41,040
Speaker 3: that it was I think it was like sixty or

604
00:28:41,080 --> 00:28:43,440
Speaker 3: seventy percent accurate. It's saying who was going to come

605
00:28:43,440 --> 00:28:45,280
Speaker 3: in and do something that we were worried about, so

606
00:28:45,280 --> 00:28:48,520
Speaker 3: that we could target just those specific people with communications

607
00:28:49,320 --> 00:28:51,720
Speaker 3: and not hit the people who weren't so much of

608
00:28:51,760 --> 00:28:54,720
Speaker 3: a risk with those communications. So I think it is

609
00:28:54,720 --> 00:28:56,920
Speaker 3: a cutting edge area. I think the hardest part about

610
00:28:56,960 --> 00:29:00,200
Speaker 3: it is either having the specific behavioral data of the

611
00:29:00,200 --> 00:29:03,040
Speaker 3: person themselves or being able to predict it based upon

612
00:29:03,240 --> 00:29:04,360
Speaker 3: other people like you.

613
00:29:04,880 --> 00:29:06,680
Speaker 2: And there are just so many stinking factors that go

614
00:29:06,760 --> 00:29:09,240
Speaker 2: into that as well. But so you're talking about the

615
00:29:09,280 --> 00:29:11,040
Speaker 2: app and just I guess the frequency at which folks

616
00:29:11,040 --> 00:29:14,080
Speaker 2: are opening the app. It makes me think about neuroticism.

617
00:29:14,120 --> 00:29:16,040
Speaker 2: And I'm not sure if you were referencing the study

618
00:29:16,080 --> 00:29:19,480
Speaker 2: you're talking about, that German study, But was that the

619
00:29:19,520 --> 00:29:22,600
Speaker 2: same study as the where you addressed the Meerkat effect

620
00:29:23,040 --> 00:29:26,200
Speaker 2: versus more of the Ostrich approach and putting your head

621
00:29:26,840 --> 00:29:30,200
Speaker 2: in the sand. Okay, No, there are two different things. Oh, okay, gotcha.

622
00:29:30,200 --> 00:29:33,040
Speaker 3: Well, but to us was informed by the former. So

623
00:29:33,920 --> 00:29:36,960
Speaker 3: years ago, probably about fifteen years ago, I was working

624
00:29:36,960 --> 00:29:41,440
Speaker 3: with a company that had an online brokerage for their clients,

625
00:29:41,920 --> 00:29:45,280
Speaker 3: and we were likewise running this longitudinal study that said,

626
00:29:45,360 --> 00:29:47,320
Speaker 3: like every quarter, we're gonna come out and we're going

627
00:29:47,400 --> 00:29:49,480
Speaker 3: to ask you some questions about the decisions you made,

628
00:29:49,560 --> 00:29:51,800
Speaker 3: about how you invested in, what you're looking, what your

629
00:29:51,800 --> 00:29:55,479
Speaker 3: forecasts are for the next quarter. And interleaven with these

630
00:29:55,560 --> 00:29:57,920
Speaker 3: various sort of practical investing questions, we asked them some

631
00:29:57,920 --> 00:30:01,840
Speaker 3: personality questions, one of which the Neuroticism scale, which is

632
00:30:01,880 --> 00:30:05,160
Speaker 3: a very well established Big five personality scale that we

633
00:30:05,200 --> 00:30:09,680
Speaker 3: thought might be linked to specific behavioral aspects and a

634
00:30:09,720 --> 00:30:12,200
Speaker 3: base model that we were building off of. There was

635
00:30:12,240 --> 00:30:14,480
Speaker 3: a research paper that was done by I believe George

636
00:30:14,480 --> 00:30:17,440
Speaker 3: Lowenstein in some colleagues years back that said, how do

637
00:30:17,560 --> 00:30:20,160
Speaker 3: people when do they pay attention to their accounts? And

638
00:30:20,200 --> 00:30:22,120
Speaker 3: it was a very easy model that was like, well,

639
00:30:22,160 --> 00:30:24,680
Speaker 3: they want to pay attention when it's going to make

640
00:30:24,680 --> 00:30:26,720
Speaker 3: them feel good, and they're going to not pay attention

641
00:30:26,760 --> 00:30:28,280
Speaker 3: when they think it's going to make them feel bad.

642
00:30:28,560 --> 00:30:30,280
Speaker 3: So they predicted whether or not people were going to

643
00:30:30,360 --> 00:30:32,240
Speaker 3: log in to check their accounts based upon how well

644
00:30:32,280 --> 00:30:36,160
Speaker 3: the market had been doing recently, and they found, you know, yes,

645
00:30:36,240 --> 00:30:38,920
Speaker 3: it's true. People log in more when it's doing good

646
00:30:38,960 --> 00:30:40,840
Speaker 3: and log in less when it's doing bad. And they

647
00:30:40,840 --> 00:30:44,600
Speaker 3: coined it the Ostrich effect. There's less attention paid when

648
00:30:44,600 --> 00:30:46,920
Speaker 3: it feels like things are going to be bad. They

649
00:30:46,960 --> 00:30:52,080
Speaker 3: did this with Vanguard client data and love Vanguard. Wonderful company,

650
00:30:52,120 --> 00:30:55,080
Speaker 3: wonderful clients. They are a very specific type of client.

651
00:30:55,280 --> 00:30:59,280
Speaker 3: You don't get day trader active management clients at Vantage.

652
00:31:00,080 --> 00:31:03,320
Speaker 3: So we had access to online brokerage clients who were

653
00:31:03,800 --> 00:31:07,840
Speaker 3: the counterpoint, people who for whom volatility and day trading

654
00:31:08,040 --> 00:31:10,600
Speaker 3: were the reason that they were there. And so we

655
00:31:10,720 --> 00:31:14,080
Speaker 3: found a mix of things, you know, like some people

656
00:31:14,080 --> 00:31:17,560
Speaker 3: were high neuroticisms, some people were low neuroticism. In almost

657
00:31:17,600 --> 00:31:21,640
Speaker 3: all cases on our platform, when returns were bad, people

658
00:31:21,720 --> 00:31:23,800
Speaker 3: also logged in more. So it wasn't like the ostrich.

659
00:31:23,800 --> 00:31:25,760
Speaker 3: It was a mere cat. Whenever there are big moves,

660
00:31:25,760 --> 00:31:28,239
Speaker 3: whenever there's danger, you're more likely to pay attention. So

661
00:31:28,280 --> 00:31:31,200
Speaker 3: hence we called it the meerkat effect contra to them.

662
00:31:31,440 --> 00:31:34,440
Speaker 3: But also we found that the higher neuroticism was, the

663
00:31:34,480 --> 00:31:36,560
Speaker 3: more sensitive to it you were, the more of a

664
00:31:36,560 --> 00:31:39,440
Speaker 3: sort of anxious personality type that you had told us

665
00:31:39,480 --> 00:31:41,960
Speaker 3: you had, the more likely you were to log in,

666
00:31:42,120 --> 00:31:44,800
Speaker 3: especially when things aren't going well, and likely to react.

667
00:31:44,960 --> 00:31:47,280
Speaker 3: So it's a great example of like, yes, if we

668
00:31:47,360 --> 00:31:50,080
Speaker 3: have good dimensions that we can kind of measure you on,

669
00:31:50,120 --> 00:31:53,240
Speaker 3: like neuroticism, we could give you a pre screener to

670
00:31:53,320 --> 00:31:56,160
Speaker 3: learn about you and say, okay, this person's at more

671
00:31:56,280 --> 00:31:58,120
Speaker 3: risk of this kind of behavior, we should help them

672
00:31:58,160 --> 00:31:59,760
Speaker 3: out more in this specific setting.

673
00:32:00,160 --> 00:32:02,000
Speaker 1: That yeah, I mean, I guess you could run some

674
00:32:02,040 --> 00:32:04,600
Speaker 1: sort of personality tests for everyone signing up for the platform,

675
00:32:04,880 --> 00:32:07,400
Speaker 1: and then you'd be able to cater to them more directly.

676
00:32:07,440 --> 00:32:09,760
Speaker 1: But that also might be a like they might not

677
00:32:09,760 --> 00:32:10,800
Speaker 1: want to sign it on the platform.

678
00:32:11,680 --> 00:32:13,680
Speaker 2: It's like yeah, yeah, you gotta find the happy medium

679
00:32:13,680 --> 00:32:16,520
Speaker 2: between like finding the best data to collect from people,

680
00:32:16,560 --> 00:32:18,959
Speaker 2: but at the same time, like you said earlier, if

681
00:32:19,000 --> 00:32:20,520
Speaker 2: they don't want to be helped in that way, well

682
00:32:20,560 --> 00:32:22,440
Speaker 2: then you're just turning people away at the door.

683
00:32:22,440 --> 00:32:23,880
Speaker 1: Like I'm gonna go somewhere else where. They're not asking

684
00:32:23,880 --> 00:32:26,719
Speaker 1: me all these weird questions exactly. Yeah, I was struck Toure.

685
00:32:26,760 --> 00:32:29,440
Speaker 1: I was reading on your blog and you write something

686
00:32:29,480 --> 00:32:32,840
Speaker 1: the effect of purely rational people have a really hard

687
00:32:32,840 --> 00:32:35,080
Speaker 1: time making decisions, which I thought was interesting too. We're

688
00:32:35,080 --> 00:32:38,280
Speaker 1: talking about, you know, neuroticism, but the flip side of

689
00:32:38,320 --> 00:32:41,160
Speaker 1: that is like incredibly rational people. It seems like the

690
00:32:41,200 --> 00:32:43,080
Speaker 1: opposite would be true. And then you go on to

691
00:32:43,080 --> 00:32:45,719
Speaker 1: write about the role of faith in investing and how

692
00:32:45,720 --> 00:32:47,800
Speaker 1: important that is, and I was like, I don't know.

693
00:32:47,840 --> 00:32:49,320
Speaker 1: I think I need Dan to explain that some more.

694
00:32:49,320 --> 00:32:54,120
Speaker 3: It sounds fascinating, though it is absolutely one of I

695
00:32:54,120 --> 00:32:58,560
Speaker 3: don't know, like what are the foundational papers or ways

696
00:32:58,560 --> 00:33:01,640
Speaker 3: of thinking about how we make decisions. Demasio is the

697
00:33:01,640 --> 00:33:05,840
Speaker 3: researcher's name, and he has some very technical name for

698
00:33:06,000 --> 00:33:09,440
Speaker 3: like the somatic mirth hypothesis I believe, which is basically

699
00:33:09,520 --> 00:33:13,240
Speaker 3: that there are some people who, unfortunately, for one reason

700
00:33:13,280 --> 00:33:16,120
Speaker 3: or another, the part of their brain that kind of

701
00:33:16,160 --> 00:33:18,560
Speaker 3: like tells them if things feel good or bad has

702
00:33:18,600 --> 00:33:23,120
Speaker 3: been disconnected. They don't experience pleasure and playing to the

703
00:33:23,160 --> 00:33:26,240
Speaker 3: same degree that you or I would. They're still perfectly rational,

704
00:33:26,280 --> 00:33:28,840
Speaker 3: they can do math, they can have conversations, et cetera.

705
00:33:29,360 --> 00:33:32,280
Speaker 3: So you can almost think about these hyperrational Spock people,

706
00:33:32,880 --> 00:33:36,040
Speaker 3: And in studying them and working with them, he noticed

707
00:33:36,040 --> 00:33:39,400
Speaker 3: that they had a hard time making decisions because they

708
00:33:39,440 --> 00:33:41,440
Speaker 3: couldn't kind of like be like, well, what do I want?

709
00:33:41,840 --> 00:33:44,080
Speaker 3: What's going to make me feel good? Because I don't

710
00:33:44,120 --> 00:33:47,680
Speaker 3: have that internal representation of good or bad or pleasure

711
00:33:47,760 --> 00:33:50,440
Speaker 3: or pain. So they would hem in hall on endlessly

712
00:33:50,520 --> 00:33:54,000
Speaker 3: about like, well, you know, like this has these good qualities,

713
00:33:54,040 --> 00:33:56,400
Speaker 3: and these have that's good qualities and just not make

714
00:33:56,440 --> 00:33:59,600
Speaker 3: a decision. So part of the interesting thing is like

715
00:34:00,360 --> 00:34:02,400
Speaker 3: that sense of I don't know, frustration when things take

716
00:34:02,480 --> 00:34:05,840
Speaker 3: too long, or an instinctive reaction to something being good

717
00:34:05,960 --> 00:34:08,560
Speaker 3: or icky is actually a core part of the decision

718
00:34:08,560 --> 00:34:10,480
Speaker 3: making because it forces you. It gives you a real

719
00:34:10,560 --> 00:34:13,719
Speaker 3: motivation to make a decision rather than try and list

720
00:34:13,719 --> 00:34:17,279
Speaker 3: all the pros and the cons out and one of

721
00:34:17,320 --> 00:34:19,000
Speaker 3: the things that I've looked at a lot. You know,

722
00:34:19,760 --> 00:34:22,960
Speaker 3: probably most people who are listening to this are familiar

723
00:34:23,000 --> 00:34:26,040
Speaker 3: with investing. They have gotten over the hump of saying

724
00:34:26,080 --> 00:34:27,920
Speaker 3: I am going to invest in some fashion. It might

725
00:34:27,920 --> 00:34:29,760
Speaker 3: be through a four to one K, through the IRA,

726
00:34:29,880 --> 00:34:35,560
Speaker 3: diversified individual stocks, whatever. Most people don't get to that point.

727
00:34:35,920 --> 00:34:38,640
Speaker 3: The set of people who invest, especially in some kind

728
00:34:38,680 --> 00:34:40,400
Speaker 3: of a hands on fashion outside of their four oh

729
00:34:40,400 --> 00:34:43,560
Speaker 3: one K is targeted funds pretty small. And that's because

730
00:34:43,680 --> 00:34:46,279
Speaker 3: investing is scary and it's risky, and you come into

731
00:34:46,320 --> 00:34:48,200
Speaker 3: it and that first decision you have to make where

732
00:34:48,239 --> 00:34:51,400
Speaker 3: you're like, how am I going to invest? There are

733
00:34:51,640 --> 00:34:54,480
Speaker 3: so many different competing ways of talking about it, Like

734
00:34:54,600 --> 00:34:57,080
Speaker 3: I like value stocks, I like growth stocks. I have

735
00:34:57,239 --> 00:35:00,480
Speaker 3: this strategy that one et cetera. And we don't know

736
00:35:00,520 --> 00:35:02,480
Speaker 3: which one of them is going to do well over

737
00:35:02,520 --> 00:35:04,880
Speaker 3: the next any period of time. Right, you almost have

738
00:35:04,960 --> 00:35:08,240
Speaker 3: to say, like, I am going to put my faith

739
00:35:08,360 --> 00:35:11,600
Speaker 3: in this way of approaching things. Maybe it's the low

740
00:35:11,719 --> 00:35:13,880
Speaker 3: cost diversifies the only thing that matters, and I'll be

741
00:35:14,000 --> 00:35:16,239
Speaker 3: okay over the long run. I have faith that this

742
00:35:16,320 --> 00:35:18,560
Speaker 3: will work out so that I can pull the trigger

743
00:35:18,760 --> 00:35:22,160
Speaker 3: and get invested. Because in the absence of some kind

744
00:35:22,200 --> 00:35:25,399
Speaker 3: of short circuit that says like, just get in there,

745
00:35:25,600 --> 00:35:27,840
Speaker 3: just do it, have some way, we would sit there

746
00:35:27,880 --> 00:35:30,080
Speaker 3: and be like, well, I don't know, but the FED

747
00:35:30,200 --> 00:35:33,200
Speaker 3: might do this, but China's importance to doing that, but

748
00:35:33,360 --> 00:35:35,680
Speaker 3: this company's done really well. You would just end up

749
00:35:35,800 --> 00:35:36,400
Speaker 3: going back and.

750
00:35:36,440 --> 00:35:40,480
Speaker 1: Forth endless analysis paralysis. And I think that's probably the

751
00:35:40,520 --> 00:35:41,799
Speaker 1: case for a lot of people, and they're like, well,

752
00:35:41,840 --> 00:35:43,839
Speaker 1: there's a hundred differ people telling me one hundred different things.

753
00:35:44,120 --> 00:35:46,880
Speaker 1: How do I know which one I should believe? And

754
00:35:47,200 --> 00:35:49,560
Speaker 1: sometimes the thing is just to get started and then

755
00:35:49,600 --> 00:35:51,200
Speaker 1: you can learn as you go. But part of the

756
00:35:51,360 --> 00:35:52,960
Speaker 1: part of the deal is you got to like get

757
00:35:53,000 --> 00:35:54,120
Speaker 1: the first domino off, make.

758
00:35:54,080 --> 00:35:56,359
Speaker 2: The daying decision. Yeah, And I think a big part

759
00:35:56,360 --> 00:35:57,759
Speaker 2: of that too, Dan, I mean, correct me if I'm

760
00:35:57,760 --> 00:35:59,560
Speaker 2: wrong here, is not just making that decision, but then

761
00:35:59,600 --> 00:36:02,359
Speaker 2: sticking with the decision. And I think that's where maybe

762
00:36:02,360 --> 00:36:04,640
Speaker 2: a part of where that faith come comes into play too,

763
00:36:04,800 --> 00:36:07,640
Speaker 2: because by receiving new data, like, yes, you need to

764
00:36:07,640 --> 00:36:11,080
Speaker 2: absorb that information and take that into account, but it

765
00:36:11,160 --> 00:36:13,520
Speaker 2: doesn't necessarily mean that you're going to immediately be reactive

766
00:36:13,600 --> 00:36:15,319
Speaker 2: to the market because you've got a game plan, you've

767
00:36:15,320 --> 00:36:16,880
Speaker 2: got an investment strategy, and there's.

768
00:36:16,800 --> 00:36:21,160
Speaker 3: No strategy that never underperforms no matter what is. You

769
00:36:21,280 --> 00:36:23,440
Speaker 3: have to be willing to sit there and say it

770
00:36:23,560 --> 00:36:25,480
Speaker 3: isn't working right now, but I think it will work

771
00:36:25,520 --> 00:36:27,520
Speaker 3: out in the long run. There's no strategy that has

772
00:36:27,560 --> 00:36:29,560
Speaker 3: a perfect track work, so you have to have faith

773
00:36:29,560 --> 00:36:30,480
Speaker 3: through in those tough periods.

774
00:36:30,800 --> 00:36:33,200
Speaker 2: That makes sense. So in addition to kind of having

775
00:36:33,280 --> 00:36:37,000
Speaker 2: that game plan, that strategy that faith talk to me about,

776
00:36:37,040 --> 00:36:40,000
Speaker 2: I guess expectations of what we should expect from the

777
00:36:40,080 --> 00:36:42,879
Speaker 2: market because like a lot of folks out there preach

778
00:36:43,160 --> 00:36:45,839
Speaker 2: an average of eleven to twelve percent when it comes

779
00:36:45,920 --> 00:36:48,080
Speaker 2: to returns, even what we've seen recently, right like you

780
00:36:48,120 --> 00:36:49,520
Speaker 2: look at last year, you look at this year. It's

781
00:36:49,560 --> 00:36:53,000
Speaker 2: been great for investors. But how do our expectations for

782
00:36:53,680 --> 00:36:57,960
Speaker 2: our investment returns impact our decision making and how it

783
00:36:58,120 --> 00:37:01,799
Speaker 2: is that we react or hopefully don't react to the market.

784
00:37:02,120 --> 00:37:06,839
Speaker 3: So a couple of different points. One is that it's

785
00:37:07,000 --> 00:37:11,200
Speaker 3: always nicer to be surprised to the upside than the downside.

786
00:37:11,880 --> 00:37:15,400
Speaker 3: So when we go through sort of financial planning, how

787
00:37:15,480 --> 00:37:17,680
Speaker 3: much return should you expect from the market, or maybe

788
00:37:17,760 --> 00:37:20,360
Speaker 3: how much return should you plan on from the market.

789
00:37:21,000 --> 00:37:23,160
Speaker 3: Don't go with the most optimistic figure. Don't go with

790
00:37:23,239 --> 00:37:26,120
Speaker 3: ten percent. Say I'm going to plan on five percent.

791
00:37:26,920 --> 00:37:28,960
Speaker 3: And one of the nice things about this is that

792
00:37:29,000 --> 00:37:30,400
Speaker 3: you know if you set that out and say I

793
00:37:30,440 --> 00:37:33,839
Speaker 3: expect a five percent growth over this many years, as

794
00:37:33,960 --> 00:37:37,279
Speaker 3: time goes on, you'll know half of it. Right, You'll

795
00:37:37,320 --> 00:37:40,239
Speaker 3: know like half of the way through your investment. Okay,

796
00:37:40,280 --> 00:37:43,840
Speaker 3: actually I averaged out about nine percent returns. I'm ahead

797
00:37:43,840 --> 00:37:46,040
Speaker 3: of where I thought I would be. This is great.

798
00:37:46,120 --> 00:37:48,240
Speaker 3: I can take on a little bit less risk because

799
00:37:48,920 --> 00:37:50,920
Speaker 3: I'm ahead of the game, or de vice versa. But

800
00:37:51,040 --> 00:37:55,960
Speaker 3: number one is don't focus on or try for requiring

801
00:37:56,000 --> 00:37:58,040
Speaker 3: a high expected return because that puts you into a

802
00:37:58,160 --> 00:38:01,799
Speaker 3: very fragile position, not just from a planning point of view,

803
00:38:02,280 --> 00:38:05,680
Speaker 3: but also from a I don't know, like a take

804
00:38:06,239 --> 00:38:08,600
Speaker 3: being being able to be taken advantage of point of view.

805
00:38:09,320 --> 00:38:13,239
Speaker 3: There's a great story by Barry Rittolets from when he

806
00:38:13,560 --> 00:38:18,719
Speaker 3: was a young advisor where he was, you know, he

807
00:38:18,800 --> 00:38:21,160
Speaker 3: had a prospective client who was chatting with him, and

808
00:38:21,280 --> 00:38:23,600
Speaker 3: the client was like, so, what are your expected returns?

809
00:38:24,200 --> 00:38:26,520
Speaker 3: And Barry was like, what like for the S and

810
00:38:26,560 --> 00:38:28,839
Speaker 3: P five hundred and then guy was like, yeah, yeah, yeah,

811
00:38:29,040 --> 00:38:30,960
Speaker 3: what are your expected returns? And Barry was like, I

812
00:38:31,000 --> 00:38:34,279
Speaker 3: don't know, man, like nine percent, And the the client

813
00:38:34,360 --> 00:38:35,680
Speaker 3: was like, well, this other guy I'm talking to you,

814
00:38:35,760 --> 00:38:38,800
Speaker 3: he says he thinks twelve percent. And Barry was like,

815
00:38:39,560 --> 00:38:43,000
Speaker 3: what are we talking about here, Like, what like are

816
00:38:43,040 --> 00:38:46,080
Speaker 3: we talking about who's more optimistic about the economy or

817
00:38:46,200 --> 00:38:48,040
Speaker 3: is he saying that he's going to like beat my

818
00:38:48,200 --> 00:38:52,719
Speaker 3: portfolio by three percent? But because the other advisor gave

819
00:38:52,760 --> 00:38:55,080
Speaker 3: this sort of like strength, like just more optimistic figure

820
00:38:55,080 --> 00:38:57,200
Speaker 3: about what's going to happen, the client went with them

821
00:38:57,719 --> 00:39:00,560
Speaker 3: and they probably were disappointed when that didn't meet materialize.

822
00:39:00,960 --> 00:39:03,160
Speaker 3: So a good way to think about it, I think

823
00:39:03,239 --> 00:39:06,160
Speaker 3: is just like keep your expectations low so that it's

824
00:39:06,200 --> 00:39:09,600
Speaker 3: easy for them to be outperformed, and as that outperformance happens,

825
00:39:10,480 --> 00:39:12,160
Speaker 3: you'll be closer to your goal, you'll be closer to

826
00:39:12,200 --> 00:39:14,840
Speaker 3: retirement or whatever it is. It gives you more optionality

827
00:39:14,920 --> 00:39:17,239
Speaker 3: later in life to pivot and change and use the

828
00:39:17,280 --> 00:39:20,040
Speaker 3: extra money that you probably hopefully have gotten for other

829
00:39:20,120 --> 00:39:22,080
Speaker 3: things and not be in the position of saying like,

830
00:39:22,200 --> 00:39:25,759
Speaker 3: oh no, those twelve percent returns didn't materialize. I'm in

831
00:39:25,800 --> 00:39:27,000
Speaker 3: a bad place, all.

832
00:39:26,960 --> 00:39:29,640
Speaker 2: Right, Well, steal man the argument for me, Dan, because like,

833
00:39:29,719 --> 00:39:31,359
Speaker 2: when you do look at the like the last ten

834
00:39:31,440 --> 00:39:33,359
Speaker 2: years of the S and P specifically, you're looking at

835
00:39:33,440 --> 00:39:36,600
Speaker 2: something like over twelve percent nine something, I guess when

836
00:39:36,600 --> 00:39:38,960
Speaker 2: you account for inflation. But what are the dangers then,

837
00:39:39,680 --> 00:39:42,719
Speaker 2: two folks who might be thinking that, like, hey, I'm

838
00:39:42,760 --> 00:39:45,279
Speaker 2: only going to see five percent, I could see a

839
00:39:45,320 --> 00:39:45,920
Speaker 2: downside to that.

840
00:39:46,080 --> 00:39:48,080
Speaker 3: And I think what's the downside? It's that they save

841
00:39:48,400 --> 00:39:50,919
Speaker 3: more as a percentage now than they would have needed

842
00:39:50,960 --> 00:39:53,440
Speaker 3: tom And it's.

843
00:39:53,280 --> 00:39:54,920
Speaker 1: Not the worst downside but the worst outside.

844
00:39:54,920 --> 00:39:57,920
Speaker 2: But I guess you know, life is both trade offs, yeah, right,

845
00:39:58,040 --> 00:40:00,520
Speaker 2: And so when it comes to individuals, especially maybe folks

846
00:40:00,520 --> 00:40:02,359
Speaker 2: who are listening to the show, and they're the ones

847
00:40:02,400 --> 00:40:04,799
Speaker 2: out there who are really getting after it, and man,

848
00:40:04,840 --> 00:40:06,640
Speaker 2: that is awesome. We love hearing that, We love hearing

849
00:40:06,680 --> 00:40:08,560
Speaker 2: all the wins that folks are in, all the progress

850
00:40:08,600 --> 00:40:10,800
Speaker 2: that folks are making. But there's a certain amount of

851
00:40:11,320 --> 00:40:14,440
Speaker 2: life that you're giving up if you are thinking, okay, man,

852
00:40:14,480 --> 00:40:16,840
Speaker 2: i've got to see you know, a saving rate of

853
00:40:17,080 --> 00:40:19,839
Speaker 2: x amount in order to retire by age whatever, when

854
00:40:20,280 --> 00:40:22,600
Speaker 2: maybe there might be an ability to take your foot

855
00:40:22,600 --> 00:40:24,040
Speaker 2: off the gas a little bit, maybe do a little

856
00:40:24,040 --> 00:40:24,560
Speaker 2: bit of coasting.

857
00:40:24,800 --> 00:40:27,239
Speaker 3: I think the good thing there is to do that

858
00:40:27,360 --> 00:40:29,400
Speaker 3: coasting when you know that you can, rather than you

859
00:40:29,480 --> 00:40:32,480
Speaker 3: hope that you can. So there's a very there's a

860
00:40:32,520 --> 00:40:36,239
Speaker 3: big difference between saying I am in a position where

861
00:40:36,360 --> 00:40:38,960
Speaker 3: I know, even if market's returned three percent, I'd be

862
00:40:39,040 --> 00:40:43,640
Speaker 3: fine because you've you've got to like you. There's such

863
00:40:43,680 --> 00:40:47,759
Speaker 3: a neat thing do you guys talk about lifestyle creep

864
00:40:47,760 --> 00:40:47,960
Speaker 3: at all?

865
00:40:48,040 --> 00:40:48,160
Speaker 2: Oh?

866
00:40:48,239 --> 00:40:51,080
Speaker 3: Yeah, okay, So there's such a neat thing about like

867
00:40:51,239 --> 00:40:54,799
Speaker 3: the triple powered impact of making sure that you save

868
00:40:54,920 --> 00:40:57,719
Speaker 3: more as your earnings grow in terms of keeping your

869
00:40:57,760 --> 00:41:00,520
Speaker 3: lifestyle small, which means you have to bankroll less lifestyle

870
00:41:01,000 --> 00:41:05,839
Speaker 3: in retirement. That just gives you this freedom, this optionality

871
00:41:05,960 --> 00:41:08,640
Speaker 3: later to say I can always increase my spending later

872
00:41:08,680 --> 00:41:11,080
Speaker 3: when I know I'm good, rather than now when I

873
00:41:11,160 --> 00:41:14,600
Speaker 3: hope I'm good. And I think that's the difference is

874
00:41:15,520 --> 00:41:18,680
Speaker 3: if you are saying I am counting on I am

875
00:41:18,760 --> 00:41:21,600
Speaker 3: depending on a high rate of return to make the

876
00:41:21,680 --> 00:41:25,000
Speaker 3: decision I am making today, make sense, you are putting

877
00:41:25,040 --> 00:41:26,440
Speaker 3: yourself in a position where you can end up in

878
00:41:26,600 --> 00:41:30,480
Speaker 3: a bad spot if it doesn't materialize, if this return

879
00:41:30,600 --> 00:41:34,400
Speaker 3: doesn't turn out that way. And you know, for most

880
00:41:34,400 --> 00:41:35,880
Speaker 3: of us that we're talking about is either like is

881
00:41:35,920 --> 00:41:38,320
Speaker 3: it ten percent or is it six percent? In the

882
00:41:38,360 --> 00:41:41,520
Speaker 3: most extreme cases, there are people who, you know, the

883
00:41:41,760 --> 00:41:43,799
Speaker 3: investment that they made was only going to make sense

884
00:41:43,840 --> 00:41:46,480
Speaker 3: that they could guarantee you twelve percent return, and you know,

885
00:41:46,560 --> 00:41:48,560
Speaker 3: they bought a house and we're trying to airbnb it

886
00:41:48,640 --> 00:41:52,279
Speaker 3: and that didn't materialize, and then they took a humongous

887
00:41:52,400 --> 00:41:55,200
Speaker 3: loss because they had to sell the house in foreclosure,

888
00:41:55,200 --> 00:41:58,000
Speaker 3: they couldn't afford it anymore, et cetera. One of the

889
00:41:58,040 --> 00:42:00,400
Speaker 3: big parts of pain a lot of the times is

890
00:42:00,400 --> 00:42:02,880
Speaker 3: when you have to deleverage, when you have to let

891
00:42:03,040 --> 00:42:05,719
Speaker 3: go of something that was a highly leveraged investment in

892
00:42:05,760 --> 00:42:08,239
Speaker 3: one way or the other because the returns didn't materialize,

893
00:42:08,440 --> 00:42:12,120
Speaker 3: And that's very, very painful. So again, it's it's giving

894
00:42:12,200 --> 00:42:15,759
Speaker 3: yourself breathing room and free optionality. You can always live

895
00:42:15,880 --> 00:42:19,319
Speaker 3: richer later if you kind of like had low expectations,

896
00:42:19,960 --> 00:42:21,719
Speaker 3: but it's very hard to recover if you had high

897
00:42:21,719 --> 00:42:23,239
Speaker 3: expectations that didn't materialize.

898
00:42:23,800 --> 00:42:25,320
Speaker 1: I like that. I like the way you said that,

899
00:42:25,480 --> 00:42:27,759
Speaker 1: and I think you're right, And I think you might

900
00:42:27,840 --> 00:42:31,600
Speaker 1: be trying to talk yourself into being able to invest

901
00:42:31,719 --> 00:42:33,799
Speaker 1: less of your income if you're saying, oh, I'm going

902
00:42:33,880 --> 00:42:36,080
Speaker 1: to get fourteen percent returns and so I can only

903
00:42:36,520 --> 00:42:39,040
Speaker 1: invest seven or eight percent of my income and I'll

904
00:42:39,040 --> 00:42:41,480
Speaker 1: be just fine. But then you might be, yeah, setting

905
00:42:41,480 --> 00:42:43,239
Speaker 1: yourself up for failure. All right, Dan, We've got a

906
00:42:43,239 --> 00:42:45,560
Speaker 1: few more questions we want to get to with you,

907
00:42:45,760 --> 00:42:50,200
Speaker 1: including like do robo advisors eliminate the need for real

908
00:42:50,280 --> 00:42:52,320
Speaker 1: life advisors? We'll get to that and more right after this.

909
00:43:00,280 --> 00:43:02,400
Speaker 2: We are back from the break talking about how you

910
00:43:02,520 --> 00:43:06,440
Speaker 2: can fix your broken financial behavior that that bad behavior

911
00:43:06,640 --> 00:43:10,719
Speaker 2: with Dan Egan and Dan, like Joel alluded to before

912
00:43:10,800 --> 00:43:15,160
Speaker 2: the break, let's talk about robo advising because I think

913
00:43:15,560 --> 00:43:19,040
Speaker 2: you're probably a bit biased. You've worked at better men.

914
00:43:19,120 --> 00:43:21,560
Speaker 1: That's a behavior of flaw that Dan Egan has. That's

915
00:43:21,640 --> 00:43:22,680
Speaker 1: that's true that I'm assuming.

916
00:43:22,840 --> 00:43:24,640
Speaker 2: How is this going to impact his response to this

917
00:43:24,800 --> 00:43:26,800
Speaker 2: question I'm about to ask him? But for over a

918
00:43:26,880 --> 00:43:28,680
Speaker 2: decade you've been doing this, but like, do you see

919
00:43:28,760 --> 00:43:31,759
Speaker 2: robo advisors as a solution That just completely eliminates the

920
00:43:31,880 --> 00:43:35,120
Speaker 2: need for more of a one on one relationship with

921
00:43:35,360 --> 00:43:36,240
Speaker 2: a financial advisor.

922
00:43:36,480 --> 00:43:39,920
Speaker 3: No, absolutely not. I think they're wonderfully complimentary. That's that's

923
00:43:40,000 --> 00:43:42,120
Speaker 3: kind of like being like, do I not need an

924
00:43:42,160 --> 00:43:46,960
Speaker 3: accountant if I have Microsoft Excel? Most of us a

925
00:43:47,040 --> 00:43:48,439
Speaker 3: lot of us, And I think this is one of Also,

926
00:43:48,480 --> 00:43:50,200
Speaker 3: it's one of the tough things for humans in general

927
00:43:50,239 --> 00:43:52,880
Speaker 3: to grasp, is like when a new service or product

928
00:43:52,960 --> 00:43:56,120
Speaker 3: comes on, it creates a market that didn't previously exist.

929
00:43:56,160 --> 00:43:59,480
Speaker 3: It doesn't necessarily take away from existing ones. So I

930
00:43:59,520 --> 00:44:02,440
Speaker 3: think most of the growth in robo advisors has been

931
00:44:02,960 --> 00:44:05,680
Speaker 3: from people who were either not investing at all because

932
00:44:05,680 --> 00:44:07,680
Speaker 3: it was too intimidating or they weren't sure how to

933
00:44:07,800 --> 00:44:11,640
Speaker 3: do it, or DIY investors who are like, okay, you know,

934
00:44:11,840 --> 00:44:13,719
Speaker 3: time to go to the chores. It's Friday. I'm going

935
00:44:13,760 --> 00:44:15,640
Speaker 3: to go in and rebounce my portfolio. Got to get

936
00:44:15,680 --> 00:44:18,560
Speaker 3: it done. I don't think many many people kind of

937
00:44:18,680 --> 00:44:21,560
Speaker 3: like left their advisor because of robo advisors. I think

938
00:44:21,600 --> 00:44:25,400
Speaker 3: it just served a new space, but also betterment offers

939
00:44:26,400 --> 00:44:29,720
Speaker 3: our platform for advisors, and that's one of our largest

940
00:44:29,760 --> 00:44:33,640
Speaker 3: growth areas is advisors who you know, we're like the

941
00:44:33,719 --> 00:44:37,719
Speaker 3: more updated, powerful Microsoft exell for managing their clients' finances.

942
00:44:38,000 --> 00:44:40,759
Speaker 3: They say, why would I ever want to spend time

943
00:44:41,000 --> 00:44:44,600
Speaker 3: rebalancing or tax loss tarvesting or asset locating or putting

944
00:44:44,640 --> 00:44:48,960
Speaker 3: together goals and saving plans myself when I could offload

945
00:44:48,960 --> 00:44:50,879
Speaker 3: all that stuff onto a robo advisor And that means

946
00:44:50,920 --> 00:44:53,480
Speaker 3: I get to more spend more time talking with my

947
00:44:53,560 --> 00:44:55,920
Speaker 3: clients and you know, going for hikes with them, playing

948
00:44:55,960 --> 00:44:58,320
Speaker 3: golf with them, whatever is meaningful, talking to them about

949
00:44:58,440 --> 00:45:01,480
Speaker 3: like the really big prioritizations have to make in their lives.

950
00:45:02,000 --> 00:45:05,160
Speaker 3: So this is a very common model of kind of

951
00:45:05,239 --> 00:45:09,120
Speaker 3: like what happens when some better technology comes onto the scene.

952
00:45:09,520 --> 00:45:12,280
Speaker 3: What it does is it pushes the existing service providers

953
00:45:12,400 --> 00:45:14,520
Speaker 3: up the value chain so that they can do more

954
00:45:14,719 --> 00:45:17,480
Speaker 3: at a higher level with a more human overtone. And

955
00:45:17,560 --> 00:45:19,160
Speaker 3: I think that's really what's happened here.

956
00:45:19,239 --> 00:45:22,560
Speaker 1: So basically robo advisors similar to ATMs, Like, they didn't

957
00:45:23,000 --> 00:45:24,919
Speaker 1: lose a lot of jobs, They just changed the jobs

958
00:45:24,960 --> 00:45:26,920
Speaker 1: at the bank that people were doing, yep. And that

959
00:45:27,040 --> 00:45:29,840
Speaker 1: was the fear right when ATMs came about, was like,

960
00:45:30,360 --> 00:45:32,160
Speaker 1: who's We're not gonna need banks anymore. People are just

961
00:45:32,200 --> 00:45:34,680
Speaker 1: gonna go to this robot and not true.

962
00:45:34,920 --> 00:45:37,680
Speaker 2: And what do you think the future of behavioral finance

963
00:45:37,719 --> 00:45:40,360
Speaker 2: looks like? And I guess not even just behavioral finance,

964
00:45:40,400 --> 00:45:43,120
Speaker 2: because in the end, I mean, behavioral finance is interesting,

965
00:45:43,320 --> 00:45:46,200
Speaker 2: but what's most interesting, I think to individuals is how

966
00:45:46,239 --> 00:45:49,520
Speaker 2: that impacts their own personal finances. And so do you

967
00:45:49,600 --> 00:45:52,920
Speaker 2: think through behavioral finance and some of the insights and

968
00:45:52,960 --> 00:45:55,840
Speaker 2: studies and apps that that y'all are able to implement,

969
00:45:55,920 --> 00:45:59,000
Speaker 2: that it's possible to account for and not only account for,

970
00:45:59,080 --> 00:46:01,440
Speaker 2: but even eliminate all of the just all of the

971
00:46:01,520 --> 00:46:03,600
Speaker 2: mistakes that we tend to make as investors.

972
00:46:03,800 --> 00:46:06,080
Speaker 3: I think the biggest issue with it right now is

973
00:46:06,160 --> 00:46:09,080
Speaker 3: figuring out the business models to allow those sorts of

974
00:46:09,120 --> 00:46:12,400
Speaker 3: things to be sustainable. So it is very hard to

975
00:46:13,080 --> 00:46:16,359
Speaker 3: sustainably tell people that they should trade less a they

976
00:46:16,360 --> 00:46:18,600
Speaker 3: don't want to pay you for that advice, and somebody

977
00:46:18,640 --> 00:46:20,839
Speaker 3: who's in a trading model doesn't want you to give

978
00:46:20,880 --> 00:46:24,279
Speaker 3: that advice either. Where I think there's some really nice

979
00:46:24,360 --> 00:46:26,960
Speaker 3: possibilities is that more and more we're coming up with,

980
00:46:27,600 --> 00:46:29,680
Speaker 3: I don't know what to call it, like protocols or

981
00:46:29,920 --> 00:46:33,080
Speaker 3: systems where the incentives are better aligned to allow people

982
00:46:33,120 --> 00:46:35,200
Speaker 3: to do that. So if you think about how open

983
00:46:35,239 --> 00:46:38,120
Speaker 3: source software works. Sorry, this is a very nerdy side case,

984
00:46:38,160 --> 00:46:41,439
Speaker 3: but like they aren't necessarily paid, it's not necessarily business model,

985
00:46:41,680 --> 00:46:43,440
Speaker 3: but there's a lot of kudos involved with it and

986
00:46:43,680 --> 00:46:45,919
Speaker 3: pride in like writing a package and you can add

987
00:46:45,960 --> 00:46:48,520
Speaker 3: to other packages over time in a way that it's

988
00:46:48,600 --> 00:46:50,880
Speaker 3: like an open source project that people can contribute to.

989
00:46:51,600 --> 00:46:54,160
Speaker 3: I have contributed to open source projects where I'm like, hey,

990
00:46:54,320 --> 00:46:56,200
Speaker 3: here's a behavioral angle on this that I think could

991
00:46:56,239 --> 00:46:58,520
Speaker 3: help and I want to add to it, and it

992
00:46:58,600 --> 00:47:02,480
Speaker 3: maintains itself because it's they're really interesting things. I actually

993
00:47:02,560 --> 00:47:05,479
Speaker 3: think Crypto had some of this, where you know, here's

994
00:47:05,520 --> 00:47:07,359
Speaker 3: the open blockchain. I'm not an expert in the stuff,

995
00:47:07,400 --> 00:47:09,960
Speaker 3: but here's the open blockchain. Anybody can go in and

996
00:47:10,320 --> 00:47:13,600
Speaker 3: analyze your trading records for your wallet and tell you

997
00:47:13,719 --> 00:47:16,040
Speaker 3: when you've done well and when you've done poorly. The

998
00:47:16,120 --> 00:47:18,440
Speaker 3: same thing is true if there's new like at protocols

999
00:47:18,480 --> 00:47:21,440
Speaker 3: that things like blue Sky run on. So I think

1000
00:47:21,480 --> 00:47:25,880
Speaker 3: it's been historically very hard to have really good aligned

1001
00:47:25,960 --> 00:47:30,720
Speaker 3: business models that serve a behavioral oversight function because people

1002
00:47:30,920 --> 00:47:32,640
Speaker 3: don't kind of understand how to pay for it. One

1003
00:47:33,200 --> 00:47:36,040
Speaker 3: of the few outstanding cases is dual lingo, which is

1004
00:47:36,280 --> 00:47:38,560
Speaker 3: very behaviorally informed in getting you to come back and

1005
00:47:38,640 --> 00:47:40,960
Speaker 3: keep your streak up and continue to learn the language.

1006
00:47:41,480 --> 00:47:42,960
Speaker 3: But there are very few of them where we pay

1007
00:47:43,000 --> 00:47:45,279
Speaker 3: people to tell us like how to behave better. On

1008
00:47:45,360 --> 00:47:48,560
Speaker 3: the other hand, something where you can set up and

1009
00:47:48,719 --> 00:47:52,600
Speaker 3: work off of, like publicly available data, or something that

1010
00:47:52,800 --> 00:47:55,640
Speaker 3: doesn't require money changing hands quite so often. I think

1011
00:47:55,640 --> 00:47:57,319
Speaker 3: I have a lot of hope that there's more work

1012
00:47:57,360 --> 00:47:58,600
Speaker 3: that we can do there to help people.

1013
00:47:58,840 --> 00:48:01,400
Speaker 1: All right, final question, would you suggest to our listeners

1014
00:48:01,840 --> 00:48:05,880
Speaker 1: who maybe they're like, Okay, cool, I'm not expecting an

1015
00:48:06,440 --> 00:48:11,279
Speaker 1: algorithm or some sort of new technical feature to help

1016
00:48:11,360 --> 00:48:15,080
Speaker 1: me in my pursuit of being better at my finances.

1017
00:48:15,480 --> 00:48:17,680
Speaker 1: What are maybe just kind of some normal, run of

1018
00:48:17,719 --> 00:48:20,440
Speaker 1: the mill things that people can basically funnel into their

1019
00:48:20,480 --> 00:48:24,359
Speaker 1: daily lives to improve how they're handling money, aside from

1020
00:48:24,680 --> 00:48:26,799
Speaker 1: the work that you do you're doing, and aside from

1021
00:48:26,800 --> 00:48:28,840
Speaker 1: the work that's being done in the payproal finance space.

1022
00:48:28,960 --> 00:48:33,239
Speaker 3: The base one is a budget, and I am a

1023
00:48:33,280 --> 00:48:35,600
Speaker 3: big believer in what I would consider sort of pay

1024
00:48:35,640 --> 00:48:38,920
Speaker 3: yourself first or a top down budget. I want to

1025
00:48:38,960 --> 00:48:42,480
Speaker 3: minimize how much regret and how much how many decisions

1026
00:48:42,520 --> 00:48:44,320
Speaker 3: somebody has to make, how much self control they have

1027
00:48:44,400 --> 00:48:46,800
Speaker 3: to have over the course of a month. And the

1028
00:48:46,840 --> 00:48:48,239
Speaker 3: way that I find it's easy to set that up,

1029
00:48:48,239 --> 00:48:50,000
Speaker 3: you know, like you sit down and you're like, okay,

1030
00:48:50,640 --> 00:48:52,640
Speaker 3: you know roughly, how much do I get paid every month?

1031
00:48:52,840 --> 00:48:56,040
Speaker 3: What are my required outgoings? How much is leftover? I

1032
00:48:56,120 --> 00:48:59,000
Speaker 3: want to save this much of it and whatever is

1033
00:48:59,080 --> 00:49:01,840
Speaker 3: leftover after that, after I pay myself first, I can

1034
00:49:01,920 --> 00:49:04,960
Speaker 3: spend how I want. Do not sweat the coffees, Do

1035
00:49:05,120 --> 00:49:07,799
Speaker 3: not sweat the movie tickets. Do not look and micromanage

1036
00:49:07,840 --> 00:49:10,280
Speaker 3: the individual things of your budget, because all that matters

1037
00:49:10,360 --> 00:49:12,120
Speaker 3: is that you have been saving ahead of time, so

1038
00:49:12,160 --> 00:49:15,000
Speaker 3: you can spend how much you want on whatever you want.

1039
00:49:15,480 --> 00:49:17,480
Speaker 3: And I think that that sort of setting up a

1040
00:49:17,560 --> 00:49:21,040
Speaker 3: budget and saving however much you can from it a

1041
00:49:21,320 --> 00:49:24,440
Speaker 3: starts to build up some really nice muscle around like Okay,

1042
00:49:24,480 --> 00:49:26,200
Speaker 3: I've got a budget, I've got inflows, outflows, I know

1043
00:49:26,239 --> 00:49:28,080
Speaker 3: what they're going to look like. It allows you to

1044
00:49:28,120 --> 00:49:30,200
Speaker 3: build further into Okay, what are the other things that

1045
00:49:30,239 --> 00:49:31,600
Speaker 3: I want to save for in the future, and how

1046
00:49:31,680 --> 00:49:33,719
Speaker 3: do I trade them off? Against what I'm consuming now,

1047
00:49:34,239 --> 00:49:35,800
Speaker 3: So I actually I think a lot of it starts

1048
00:49:35,880 --> 00:49:42,759
Speaker 3: with some kind of process system, basically a budget that

1049
00:49:42,840 --> 00:49:46,360
Speaker 3: makes it easy for you to spend and save intentionally.

1050
00:49:46,719 --> 00:49:47,160
Speaker 1: Very cool.

1051
00:49:47,280 --> 00:49:50,560
Speaker 2: Yeah, start with those rocks, then all that other sand

1052
00:49:50,600 --> 00:49:51,279
Speaker 2: will fit.

1053
00:49:51,920 --> 00:49:52,120
Speaker 1: Dan.

1054
00:49:52,160 --> 00:49:55,319
Speaker 2: Obviously, folks can head over to Betterments. But is there

1055
00:49:55,400 --> 00:49:58,279
Speaker 2: like a specific page or a new tool that y'all

1056
00:49:58,280 --> 00:50:01,600
Speaker 2: are excited that about brings online soon for our listeners

1057
00:50:01,640 --> 00:50:02,080
Speaker 2: to check out.

1058
00:50:02,160 --> 00:50:05,440
Speaker 3: Definitely if you want to come check out Betterment, my

1059
00:50:05,600 --> 00:50:07,800
Speaker 3: work is kind of like suffuse throughout it, and I

1060
00:50:07,880 --> 00:50:09,880
Speaker 3: have quite a few of our blog articles that you

1061
00:50:09,920 --> 00:50:12,040
Speaker 3: can read. You can also come to my personal site,

1062
00:50:12,080 --> 00:50:15,800
Speaker 3: which is Dpegan dot com and I've started to spend

1063
00:50:15,960 --> 00:50:19,000
Speaker 3: some time on blue Sky with my handle is that

1064
00:50:19,160 --> 00:50:22,000
Speaker 3: Dpegan dot com. So come there and heckle me and

1065
00:50:22,160 --> 00:50:23,799
Speaker 3: say I need a voice coach.

1066
00:50:25,520 --> 00:50:27,640
Speaker 1: Awesome, Dan, thanks so much for joining us today. We

1067
00:50:27,719 --> 00:50:28,440
Speaker 1: really appreciate it.

1068
00:50:28,719 --> 00:50:29,359
Speaker 3: Thank you very much.

1069
00:50:29,400 --> 00:50:33,000
Speaker 2: I loved it all right, Joel fun conversation with Dan

1070
00:50:33,120 --> 00:50:35,359
Speaker 2: Egans for sure. I think we knew that we would

1071
00:50:35,480 --> 00:50:37,600
Speaker 2: like him, but I ended up liking him so much more.

1072
00:50:37,840 --> 00:50:39,959
Speaker 2: It's always a nice surprise when you feel like, truly

1073
00:50:40,040 --> 00:50:42,480
Speaker 2: you could sit down. We kind of were making plans

1074
00:50:42,520 --> 00:50:45,440
Speaker 2: to get beers after we hit after we hit stop

1075
00:50:45,560 --> 00:50:47,359
Speaker 2: Recording's got to get plane tickets, go to New York,

1076
00:50:47,400 --> 00:50:49,120
Speaker 2: I know, or vice versa the next time he comes

1077
00:50:49,160 --> 00:50:51,880
Speaker 2: down to Atlanta. But do you have a big takeaway

1078
00:50:51,920 --> 00:50:54,840
Speaker 2: from our conversation with Dan Egan of betterment to know?

1079
00:50:55,120 --> 00:50:57,759
Speaker 1: So much good stuff in here. But I love when

1080
00:50:57,800 --> 00:50:59,920
Speaker 1: he said, you know, we have to admit that we're

1081
00:51:00,440 --> 00:51:01,400
Speaker 1: and we have to kind of let go of some

1082
00:51:01,480 --> 00:51:04,759
Speaker 1: of the ego. I think humility is a big part

1083
00:51:05,040 --> 00:51:07,520
Speaker 1: of what it takes to be successful with money, realizing

1084
00:51:07,560 --> 00:51:09,560
Speaker 1: that there are varied outcomes and that we don't control

1085
00:51:10,040 --> 00:51:12,360
Speaker 1: all of the end results, and we can control to

1086
00:51:12,400 --> 00:51:14,680
Speaker 1: a certain extent the input, but don't have the full

1087
00:51:14,719 --> 00:51:16,960
Speaker 1: picture of where things are going to end up. And

1088
00:51:17,080 --> 00:51:20,239
Speaker 1: I think actually sometimes we undersell our abilities of where

1089
00:51:20,280 --> 00:51:22,200
Speaker 1: things could go, at least I think I did.

1090
00:51:22,280 --> 00:51:22,600
Speaker 2: Early on.

1091
00:51:22,680 --> 00:51:24,520
Speaker 1: I was like, well, I'll never get here or I'll

1092
00:51:24,560 --> 00:51:26,239
Speaker 1: never get there. I can't imagine I'll ever get to

1093
00:51:26,320 --> 00:51:29,200
Speaker 1: this point in life. And it's amazing how much just

1094
00:51:29,280 --> 00:51:30,920
Speaker 1: doing the right thing over an extended period of time

1095
00:51:31,000 --> 00:51:34,440
Speaker 1: will take you in that direction. Into a positive trajectory

1096
00:51:34,480 --> 00:51:37,239
Speaker 1: with your money, but just emitting some clause, letting go

1097
00:51:37,280 --> 00:51:39,680
Speaker 1: of the ego, staying humble. I think it's going to

1098
00:51:39,719 --> 00:51:42,760
Speaker 1: allow us to have a more of a healthy disassociation

1099
00:51:43,200 --> 00:51:45,120
Speaker 1: from the final outcome. And I think it's going to

1100
00:51:45,120 --> 00:51:47,200
Speaker 1: allow us to do the right thing, even though we

1101
00:51:47,400 --> 00:51:49,320
Speaker 1: might not have one hundred percent conviction. We have to

1102
00:51:49,360 --> 00:51:51,439
Speaker 1: exercise some of that faith he talked about, too sure.

1103
00:51:51,520 --> 00:51:53,600
Speaker 2: Yeah, recognizing that you've got a problem or maybe that

1104
00:51:53,680 --> 00:51:54,960
Speaker 2: you aren't making the best decisions.

1105
00:51:55,040 --> 00:51:55,800
Speaker 1: That's the first step.

1106
00:51:56,040 --> 00:51:58,560
Speaker 2: But I don't know what my big takeaway is from this.

1107
00:51:58,680 --> 00:52:00,840
Speaker 2: But when he was talking about we're talking about coasting

1108
00:52:00,920 --> 00:52:02,920
Speaker 2: and having enough, and I was kind of pushing back

1109
00:52:02,920 --> 00:52:04,640
Speaker 2: on the five percent number that he threw out there

1110
00:52:04,920 --> 00:52:06,920
Speaker 2: and something he says, so he said, there's a difference

1111
00:52:06,920 --> 00:52:10,719
Speaker 2: between knowing that you can coast versus hoping that you

1112
00:52:10,800 --> 00:52:13,480
Speaker 2: can coast. And he's talking about having breathing room. He's

1113
00:52:13,560 --> 00:52:16,319
Speaker 2: talking about optionality, which is man, he's like speaking our

1114
00:52:16,440 --> 00:52:18,399
Speaker 2: language like and that's maybe that's why it was fun

1115
00:52:18,400 --> 00:52:20,240
Speaker 2: to talk with him, But like there is a difference

1116
00:52:20,280 --> 00:52:22,799
Speaker 2: though between like, Okay, what does it mean to say

1117
00:52:23,080 --> 00:52:25,680
Speaker 2: I know that I can coast. What does that mean? Well,

1118
00:52:25,719 --> 00:52:27,600
Speaker 2: it means that you don't have to take any risk. Okay,

1119
00:52:27,680 --> 00:52:29,399
Speaker 2: well what does that look like? It means having enough

1120
00:52:29,440 --> 00:52:32,160
Speaker 2: in the bank to say, well, I don't have to invest. Actually,

1121
00:52:32,200 --> 00:52:33,800
Speaker 2: I can just count on what the bank's going to

1122
00:52:33,840 --> 00:52:36,160
Speaker 2: give me. Well a the rate that banks are paying.

1123
00:52:36,400 --> 00:52:39,279
Speaker 2: It's varying, as you know, and what we've seen lately

1124
00:52:39,320 --> 00:52:41,640
Speaker 2: is that is going down. But even still, I don't

1125
00:52:41,640 --> 00:52:43,600
Speaker 2: think anybody would make the recommendation that you should have

1126
00:52:43,640 --> 00:52:45,360
Speaker 2: all of your bank all of your money in the

1127
00:52:45,440 --> 00:52:48,200
Speaker 2: bank earning interest from what the banks are paying, as

1128
00:52:48,239 --> 00:52:50,279
Speaker 2: opposed to actually putting it at risk. And so I

1129
00:52:50,360 --> 00:52:53,720
Speaker 2: guess what I'm saying is that, And I'm still processing

1130
00:52:53,760 --> 00:52:56,120
Speaker 2: and chewing on what he said. But it's not quite

1131
00:52:56,160 --> 00:52:58,680
Speaker 2: as binary as knowing that you can and hoping that

1132
00:52:58,760 --> 00:53:01,400
Speaker 2: you can. There's there's a spec there's a it's a

1133
00:53:01,440 --> 00:53:03,520
Speaker 2: dimmer switch in between, and you have to figure out

1134
00:53:03,600 --> 00:53:07,279
Speaker 2: where along that continuum that you, as an individual feel

1135
00:53:07,280 --> 00:53:10,359
Speaker 2: comfortable taking on the risk associated with that. So it's

1136
00:53:10,440 --> 00:53:12,960
Speaker 2: good food food for thought for me, but hopefully for

1137
00:53:13,120 --> 00:53:15,480
Speaker 2: all the listeners out there that maybe think about where

1138
00:53:15,680 --> 00:53:17,200
Speaker 2: along that continuum they are as well.

1139
00:53:17,280 --> 00:53:19,680
Speaker 1: Yeah, no, I think that's a really good point. And

1140
00:53:19,960 --> 00:53:22,839
Speaker 1: I think even you've already talking about something like Coast Fire,

1141
00:53:22,880 --> 00:53:26,160
Speaker 1: where somebody has invested enough early on in their life

1142
00:53:26,239 --> 00:53:28,200
Speaker 1: where hey, I don't have to invest in other diamond

1143
00:53:28,200 --> 00:53:30,440
Speaker 1: I'm I'm pretty sure I'm gonna have enough money in retirement.

1144
00:53:30,600 --> 00:53:33,920
Speaker 1: Well typically they're pretty sure, right, they can't be certain

1145
00:53:34,320 --> 00:53:36,560
Speaker 1: because they still have decades left to go of the

1146
00:53:36,640 --> 00:53:39,120
Speaker 1: growth to prove out in that account. So we're we're

1147
00:53:39,160 --> 00:53:41,600
Speaker 1: all doing the best we can with the information we

1148
00:53:41,680 --> 00:53:42,120
Speaker 1: have on with.

1149
00:53:42,120 --> 00:53:44,279
Speaker 2: The limited amount of information on hand, because we don't

1150
00:53:44,280 --> 00:53:45,680
Speaker 2: know the future. Like that's the other thing, Like you

1151
00:53:45,760 --> 00:53:47,319
Speaker 2: might have more than enough, but then what if something

1152
00:53:47,400 --> 00:53:50,920
Speaker 2: comes up that completely derails your finances and all of

1153
00:53:50,960 --> 00:53:52,719
Speaker 2: a sudden, Yeah, I don't want to go into like

1154
00:53:52,800 --> 00:53:54,920
Speaker 2: worst case scenarios, but like they're out there. What about

1155
00:53:54,920 --> 00:53:56,399
Speaker 2: best case scenario? You're like, man, I could have saved

1156
00:53:56,440 --> 00:53:59,200
Speaker 2: lesson those earlyiers, and it's like, yeah, well you can't take.

1157
00:53:59,120 --> 00:53:59,680
Speaker 1: That back either.

1158
00:54:00,480 --> 00:54:03,959
Speaker 2: All right, real quick, let's mention Dale's American pale Ale.

1159
00:54:04,440 --> 00:54:06,560
Speaker 2: What a classic. If you had a guess, when was

1160
00:54:06,600 --> 00:54:08,000
Speaker 2: the first time you had a Dale's Oh my gosh,

1161
00:54:08,040 --> 00:54:08,480
Speaker 2: back in the day.

1162
00:54:08,560 --> 00:54:10,480
Speaker 1: Definitely one of the first craft beers I ever had

1163
00:54:11,160 --> 00:54:13,440
Speaker 1: from the good folks over at Oscar Blues, and they

1164
00:54:14,000 --> 00:54:16,279
Speaker 1: forget where they're they're originally out of Colorado, and then

1165
00:54:16,320 --> 00:54:19,800
Speaker 1: they have a second facility in North Carolina and Brevard.

1166
00:54:19,840 --> 00:54:21,640
Speaker 2: I think that sounds fraz because I'm not. Actually, I

1167
00:54:21,640 --> 00:54:23,040
Speaker 2: don't think they were one of the ones that's actually

1168
00:54:23,120 --> 00:54:25,560
Speaker 2: in Asheville, but they're like, I think they're out there

1169
00:54:25,560 --> 00:54:26,360
Speaker 2: in Bravard, which.

1170
00:54:26,160 --> 00:54:28,480
Speaker 1: I love Brevard, but I haven't actually been to God's

1171
00:54:28,480 --> 00:54:31,279
Speaker 1: Conjury to date to the Oscar Blues facility. But the

1172
00:54:31,400 --> 00:54:34,399
Speaker 1: Dale's palel is in my mind. It's it's darker than

1173
00:54:34,440 --> 00:54:36,880
Speaker 1: I remember it. It's multier vibes.

1174
00:54:37,000 --> 00:54:37,720
Speaker 3: Yeah, when we're.

1175
00:54:37,600 --> 00:54:39,160
Speaker 2: Ported, I was like, that doesn't look like a pale,

1176
00:54:39,160 --> 00:54:41,480
Speaker 2: almost like a light brown. Looks like a yeah, or

1177
00:54:41,480 --> 00:54:43,920
Speaker 2: at least an amber. Yeah, dude, this is in Longmont

1178
00:54:44,200 --> 00:54:46,080
Speaker 2: or at least this that's where the specific camp came from.

1179
00:54:46,080 --> 00:54:46,640
Speaker 1: I'm not sure.

1180
00:54:47,000 --> 00:54:48,239
Speaker 2: I feel like I would have stuck in my mind

1181
00:54:48,320 --> 00:54:50,120
Speaker 2: because that's where mister money Mustache and all of our

1182
00:54:50,120 --> 00:54:50,520
Speaker 2: friends live.

1183
00:54:50,600 --> 00:54:54,680
Speaker 1: That's right, long Mont, Colorado. I know, Well, yeah, that's random,

1184
00:54:54,719 --> 00:54:56,239
Speaker 1: but yeah, I mean to me. This is like an

1185
00:54:56,280 --> 00:54:58,319
Speaker 1: old school pale al but it still holds up. It's

1186
00:54:58,440 --> 00:55:02,040
Speaker 1: it's still tasty, even though maybe it's not as overly

1187
00:55:02,080 --> 00:55:04,800
Speaker 1: hopped as a lot of the modern ones. Yeah, super solid.

1188
00:55:04,920 --> 00:55:08,120
Speaker 2: It's good American drinking. I highly recommend it. But that's

1189
00:55:08,160 --> 00:55:09,640
Speaker 2: gonna be it for this episode. You can find our

1190
00:55:09,640 --> 00:55:12,160
Speaker 2: show notes up on the website at howtomoney dot com.

1191
00:55:12,640 --> 00:55:15,000
Speaker 2: We'll also link to a couple of the studies or

1192
00:55:15,040 --> 00:55:17,880
Speaker 2: maybe some of the articles that Dan has written. If

1193
00:55:17,960 --> 00:55:19,680
Speaker 2: you are I don't know, if there's a few things

1194
00:55:19,680 --> 00:55:22,120
Speaker 2: that we discussed that stood out to you, you can dive.

1195
00:55:22,040 --> 00:55:25,480
Speaker 1: Deeper, put on your bifocals, and get in those white papers.

1196
00:55:25,560 --> 00:55:28,000
Speaker 1: That's gonna do it, Matt for this episode. Yes, until

1197
00:55:28,080 --> 00:55:30,439
Speaker 1: next time, best friends, I'm best friends Out