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3 January 2017 Multimedia

Designing Better Decisions, with Dan Egan

  1. Dan Egan
  2. Patrick O’Shaughnessy

Welcome to Patrick O’Shaughnessy's podcast series, Invest Like the Best.

My guest today is Dan Egan, who is the managing director of Behavioral Finance and Investing at Betterment.  In this wide-ranging role, Dan has his hands is most of the ways that Betterment interacts with its clients and how it invests their money. This is one very interested and smart guy who is clearly passionate about helping investors make better decisions.  In this conversation, we explore everything from science fiction, automation, investor behavior and how Betterment tries to solve problems that goes beyond the automated asset allocation that is their bread and butter.

Books Mentioned

Harrison Bergeron

The Moral Philosopher And The Moral Life

Stories of Your Life and Others

Sum: Tales from the Afterlife


Iain M. Banks

The Three-Body Problem

The One Sentence Persuasion Course – 27 Words to Make the World Do Your Bidding

Links Referenced

Kahneman, Mental Effort, and the Scary Parole Study

Show Notes

2:04 – (first question) – The conversation starts with Dan’s passion for Sci-Fi because the two talked about it at length when they first met at the evidence-based investing conference.

2:41 – Harrison Bergeron

4:31 – What really makes for good sci-fi and some of Dan’s most favorite

4:36 – The Moral Philosopher And The Moral Life

5:39 – Your life and People like You (short stories)

5:49 – Sum: Tales from the Afterlife

8:44 – Ubik

10:30 – What books would identify whether a person is a sci-fi fan

10:47 – Iain M. Banks

11:39 – The Three-Body Problem

12:46 – What does it mean to be a behavioral economist, especially when it comes to the day-to-day tasks

14:11 – Designing systems that make people better investors 15:15 – All of the different areas that Dan influences the Betterment experience

17:03 – The idea of nudges that will help people make better decisions and improvements to the dashboard

19:22 – How does Dan think about nudging people to stop making the same mistakes that are becoming more common as the tools have made trading more accessible

21:33 – One system designed called Tax Impact Preview and how it helps people make better decisions

23:46 – How are these systems delivered to the consumer and help them make a better decision 25:00 – What other ways that Betterment nudges customers to make better decisions 25:02 – The One Sentence Persuasion Course – 27 Words to Make the World Do Your Bidding

27:25 – How Betterment is preparing its customer base and itself for the next downturn

30:48 – Preventing people on Betterment from making the same mistakes that are made in other places

33:45 – Reassuring investors when they log into the site as opposed to emailing them and causing panic

34:39 – Exploring Dan’s philosophy roots

36:44 – How to remove fallible human factors from decision making

38:36 – Kahneman, Mental Effort, and the Scary Parole Study

39:30 – How worried is Dan about automation and the jobs of the world

43:18 – We have to look at how to combat inequality but not as a financial problem, but as a motivation problem

45:00 – Dan’s decision to come to Betterment and the idea of money vs happiness

49:35 – Helping customers design indices for every single individual and every goal

53:25 – What aspect of Betterment’s offering makes it so unique from its competitors

55:45 – How do you scale a company and keep up the hiring of high quality talent

58:45 – Looking at Dan’s most memorable day 1:00:07 – Kindest thing anyone has done for Dan

1:02:48 – What advice would Dan give to students and graduate students interested in getting into the markets Learn More For more episodes go to Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at Follow Patrick on twitter at @patrick_oshag

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