45: Behavioral Finance and How Betterment is Optimizing Around It

Invest Like a Boss

Sam Marks Johnny FD Derek Spartz

Business, Investing

4.8 • 518 Ratings

🗓️ 15 March 2017

⏱️ 76 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Dan Egan is the Director of Behavioral Finance and Investments at Betterment. He has spent his career using behavioral finance to help people make better financial and investment decisions. Dan is a published author of multiple publications related to behavioral economics.

We were fascinated at the prospects of how technology and psychology may be blended to help us as investors make better decisions, and in many ways, make fewer decisions. Dan joins us to talk about his background in the field, analysis of mountains of behavioral data, and how Betterment is optimizing their platform around a very important part of investing – human emotions.

Links:

Website
Linkedin
@daniel_egan
Betterment archives for Dan Egan

> Try Betterment for 6 Months Free with this link

Discussed:

Betterment CEO Jon Stein: A Decade of Pioneering Robo Advisory - ILAB 22

Sam Mark’s Personal Millions and Show Introduction - ILAB 01
From $1k to Future Millionaire: Johnny FD’s Investments - ILAB 02
From $0 to Self Made, How to 300X Your Investment - ILAB26

Time Stamps:

03:53 - Beginning in behavioral finance
06:50 - Stock market crash
10:20 - Altering decisions from emotion
14:20 - Personality traits for investing
19:00 - Tax impact preview
23:30 - Conservative and liberal taxpayers
26:00 - Buy and hold vs. active manager
28:00 - Getting hired at Betterment
31:00 - The Betterment team
34:44 - Design and user experience
38:00 - Recession and market crisis plan
43:28 - Marketing timing and dips
46:22 - Internal growth vs. the competition
51:20 - Call in advisor service
56:10 - Making quick emotional decisions
59:30 - Anticipating the next downturn
1:00:30 - Investing in yourself
1:06:00 - Surfing in Bali & skiing in Tahoe
1:06:40 - Betterment vs. other Robo-advisors

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Transcript

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0:00.0	British gas have this thing. We call it home care. We'll fix all sorts and its unlimited repairs.
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0:19.0	Your home won't feel booby trapped. It'll feel just like
0:22.5	new British gas taking care of things and looking after you. T's and C supply excess options
0:28.9	available per repair. Welcome to the Invest Like a Boss podcast. I'm Sam Marks and I'm Johnny FD.
0:35.1	We're a self-made entrepreneurs who invest our own money and use modern technology to invest like a boss. Join us each week for exclusive interviews with our network of modern investors, business owners, and multimillionaires to discover new ways to invest our hard-earned cash. Hey, guys, it's Johnny. And welcome to Invest Like a Boss episode 45. I'm here with Sam Marks. Hey, guys. Hey, Johnny. Yo, this is going to be an awesome episode.
0:56.2	I've been looking for this for a long time. This is going to be a good follow-up for episode 36 with
1:01.5	Dr. Daniel Krosby, where we talked about psychology and how much human emotion affects our investment
1:08.3	decisions. And Johnny, I know human emotion affects a lot of our
1:11.5	investment decisions. Yeah, definitely. And I think it's really cool that we are recording this now
1:16.8	when the market is going up and it's at an all-time high because we can very clearly think about
1:23.4	what we would do the next time there is a drop. And while, and we can just replay this episode again and say, okay, this was the plan. This is what we talked about. This is what, you know, human emotions, what psychology is affecting us and making us acting rational. Let's take a listen to this. This is going to be a good, like you said, it'll be a good test next time we go into a recession or depression.
1:51.1	And on this week's episode, we have Dan Egan, who is the director of behavioral finance and investments at Betterment.
1:55.6	He's also a published author in economics and has been working in the field for over a decade.
2:15.7	I am really excited to see how Betterment is blending technology and hundreds of years of psychology study into their modern platform to help kind of shape and curve or at least play into human emotions and try to help us make better decisions and not emotional decisions.
2:16.3	Definitely.
2:18.0	And Dan's a super smart guy.
2:24.5	He's been a guest lecturer at Ivy League universities like Columbia, at NYU, UCLA, all these great places. So I'm excited to just dive in and see what he has to say about the way we think
2:29.7	about money. Dan, welcome to Invest Like a Boss. Thanks for coming on the show.
2:33.5	My pleasure. Thanks for having me. Well, man, this is a very exciting episode for us because
2:37.9	I and a lot of our listeners have really become interested in behavioral aspects of investing.
	...

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