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
Ubik
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 InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag