Dan egan Dan egan
Podcast 210

210: The Science Behind Financial Decisions with Dan Egan

Today, I’m speaking with Dan Egan. He’s the Director of Behavioral Science and Investing at Betterment, where he integrates behavioral finance and passive investment management to help customers achieve their goals. The Betterment platform is designed to help make good behavior automatic and bad behavior difficult, and it’s helped his customers avoid reduced returns as a consequence of bad trading.

Using his background in Decision Science from the London School of Economics and deep knowledge of programming and statistics, he uses his work to explore the psychology of design, money, investing, spending, and randomness.

Dan was introduced to me by Brian Portnoy, one of my previous guests, and I’m excited to have a chance to speak to another expert in this unique field. Today, we talk about what behavioral finance is (and why it matters), why it’s human nature to make bad financial decisions, and who benefits the most from working with Robo-advisors as they grow their portfolios at any age.

In this podcast interview, you’ll learn:
  • Why too many options and financial products being available inevitably leads people to make bad decisions.
  • How Robo-advice is helping people systematize their decision making–and how Daniel defines a “proper advisor.”
  • Why companies like Betterment, Wealthfront, and Robinhood aren’t actually in competition with retirement professionals.
  • How good advisors really earn their commission–and why it has almost nothing to do with returns.
  • How to recognize bias in Robo-advisors–and why people don’t actually program algorithms behind these tools.
  • Why hobbyists who want to be portfolio managers need to think like portfolio managers–and also fire themselves when their portfolios don’t deliver returns.
  • Why it’s so difficult to change how your financial life works when you retire or enter another drawdown phase–and how to make this transition easier when there’s more time than ever to obsess over markets.
Inspiring Quote
  • "I think knowing what the things are that you should be thinking about now before they hit you in the face is one of the best values an advisor can bring." - Dan Egan
  • "One of the things that is both the greatest hope but also the greatest weakness of the human species is the fact that we could learn from each other." - Dan Egan
Interview Resources
Offer valid in the 50 United States and the District of Columbia, to first-time requestors. During the offer period, receive one (1) in-stock book per request. Limit (1) book per week per household. Limit three (3) books total each calendar year, between January 1 and December 31. Offer valid while supplies last. Howard Bailey Financial, Inc. reserves the right to cancel, terminate or modify this offer at any time. Void where restricted or otherwise prohibited.
Read the Transcript

Casey Weade: Dan, welcome to the podcast.

Dan Egan: Thanks for having me. My pleasure.

Casey Weade: I'm excited to have another behavioral finance expert.

Dan Egan: I know. We’re multiplying these days.

Casey Weade: You sure are. I think between retirement coaches and behavioral finance experts, they're coming out of the woodwork right now. And I'm just intrigued by both of those groups of individuals and that's why I feel like a good large majority of my guests have been behavioral finance experts and retirement coaches and have a real interest in the area. Especially I think as a financial advisor, we spend so much time watching individuals’ behaviors and going, “I don't understand why. Why would you possibly make that mistake? Where did you hear that? Why did you do that?” and I want to know why. And you have all the answers.

Dan Egan: All of them. Yep.

Casey Weade: And you're also introduced to me by Brian Portnoy, one of our previous guests.

Dan Egan: Absolutely.

Casey Weade: Gosh, one of my favorite interviews that I've ever conducted. So, the bar has been set high, my friend.

Dan Egan: Uh-oh.

Casey Weade: Well, first off, I think it's nice. I feel like every behavioral finance expert, if you didn't just come straight out of college and get your degree, you have a different definition of behavioral finance than the next individual. You'll have kind of a unique definition of behavioral finance. And I think for many investors and your average retiree, behavioral finance is kind of a foreign concept. Can you explain in your words, what behavioral finance is?

Dan Egan: Yeah. I think it's a number of things. Early on, so if you go back to like when I was in college, a lot of behavioral finance was about pointing out how people are irrational or make mistakes. It might be about probability or values or whatever it is and sort of going like, “Oh, well, that seems like one plus one doesn't equal two inside of people's heads,” and that's like interesting for a little bit and it does give you some sort of like, "Oh, there are improvements to be made.” The next level of it is saying, "Well, it's sort of predictable how and why people make mistakes.” And maybe we can use those same patterns to improve the behavior. We can think about changing the way pensions or 401(k)s are designed and take advantage of like for lack of a better word, it's called laziness, and say like, "Okay. So, suppose we use laziness as a strength rather than weakness, we could actually have people experience better retirement outcomes.” Where I am now? So, for some context, I did a lot of this in college and then came out after a master's degree and started working with Barclays Wealth in the UK, which is a high net worth asset management firm, people having millions. At some level like that amount of sort of opportunity like the number of things, the variety of things you can invest in is a little bit paralyzing.

Part of what we were trying to do is to narrow down to people like what are the things that really you should focus on. There are too many options. There are too many possibilities out there. Let's start with you as kind of the centerpiece and think about what you should be focused on investing in. And that was very useful from a sort of like facilitating things points of view. Where I kind of kept feeling this sort of tension was that the tools that we were using to do it didn't actually kind of like gel with what we said was best practices or how we wanted clients to think about it. I'm going on for a little bit but it's worth it, trust me. So, a great example is like you talk to a client about their goals and what they're looking to achieve, and so on. And you set up sort of a financial plan that takes into account values and goals, whatever it is, what they're looking to do with themselves. And then no matter what, regardless of what that plan or goal was, you send them a quarterly financial statement that says, "This is what your investments did over the past three months.” And so, there's this huge disconnect.

Then I started getting really interested into the idea that like, and a lot at Barclays like it was hard for us to change the tools that we used to communicate about investing and about retirement plans and financial plans with clients because they were third-party vendors or whatever it was. So, we couldn't actually change the tools that we were using to show them investment performance or the status of their accounts or what they should focus on. So, a big part of the move to sort of a more Robo-advisor type thing was mostly about the ability to change the technology, so that it gelled with that planning or sort of better financial advice framework. And the thing that I keep coming back to is like you can definitely hammer a screw, right? But number one, it's not going to be a very good experience and, number two, you’re probably much better off screwing it. So, a lot of the time what I look at now is saying, okay, the way we design things, the way we interact with technology with each other with apps, it has a large influence over the kind of financial outcomes that we experience. And we don't think about it. We're not overly aware of it but designing those tools so that they make us and help us be successful by taking into account psychology and just kind of like human behavior, that's what I really focus on is designing the tools and services that we have to help people be successful without them having to put in a ton of effort.

Casey Weade: And maybe for some of the individuals out there that maybe don't have a lot of experience with Robo-advice, I mean the whole Robo world, it's relatively new. I remember talking in the last decade. And what exactly is Robo-advice? I think there's a wide spectrum of what's out there and available in the Robo world. I mean, you got a full spectrum of all kinds of different options. So, what is Robo-advice and how is it helping investors make better decisions?

Dan Egan: So, I'm going to take the two words apart and just talk about the two different parts. So, number one advice, actually, this is a really key thing that a lot of people aren't aware of. There are let's call them financial technology services out there that are brokerages or they're sort of portfolio managers. They don't give advice. And I think one of the things people need to be aware of is that there's two very different sort of classes of advisors. There's brokerages and RIAs, registered investment advisors, who give proper advice. They're regulated differently. They're generally paid differently. So, at least from my point of view, a Robo-advisor is somebody who, even though you might be getting all of your advice through a smartphone or website, they are held to a fiduciary standard, they are paid like an advisor, they are responsible for telling you, "This is what I think you should do,” and that's very different than sort of a brokerage that's like, “Did you see what Amazon did yesterday?” The first part of it, Robo is kind of the most interesting technology aspect of it.

So, over the course, I've been with Betterment for about eight years now so I know where all the skeletons are buried. I know like the process that we've used over the years to get where we are today. But a big part of it is actually talking to humans, certified financial planners, watching what they do, watching the conversations they have, what are they constantly saying. Well, like you actually ask, I don't know, somewhere between five and eight questions to get to advice that you're going to give somebody on a specific topic, things like, "Should I use a Roth or a traditional IRA, or how much risk should I be taking in this specific goal that I'm investing for?” And the idea is that we can sort of systematize and take that advice out so that it doesn't have to be constantly delivered by just one human being, and put it into computers, and allow people to access it 11 o'clock at night, on their own terms. It's much less expensive when you have the computers doing it. It's not going to be perfect for everybody, especially people who have very complicated situations financially or who need a little bit more guidance or help. But for a lot of people, really the key thing is lowering the barrier to entry, allowing them to feel comfortable getting started, knowing that somebody is looking out for them that they're going to give them advice about what they need to do.

And so, from that element of it and this is the part that I love the most, so we have the advice kind of the algorithm that sits inside of a human's brain about like they take inputs about who a person is and they give outputs about what you should do with your money, trying to extract those, and put those into the website and into the smartphone in various ways. But also doing in a way that resonates with people that makes them feel kind of like confident and secure that they've done the right thing that they understand what's going on, giving some opportunities for education but also allowing them to not have to do a lot. So, I think, for everybody, a big part of the Robo thing is like we know how to do lots of things but we spend a lot of hours actually doing them. And the more that we can outsource that brute force labor, that boring stuff of, "How should I rebalance? Okay. Let me go open an Excel spreadsheet and figure all this stuff out.” Computers are good at that stuff and we should just outsource it to them and let them do it and run off for it. And that elevates us to think more about the big issues like what are the goals that I have? How should I be thinking about things? Am I on the same page as my spouse and other stakeholders in my finances? So, it frees up the time to talk about the big pictures rather than the little ones.

Casey Weade: There are so many different places I can take that. I think I took half a dozen notes while you were talking there. I think there, gosh, I want to start with this, I think, proper advisor piece that you said off the top. You said there are two different types of advisors. There are brokers and then there are registered investment advisors. So, you said proper advisor. Can you just reiterate how would you define a proper advisor? I think this is something that is starting to come to the forefront. People are starting to understand regulations and there are different types of advisors but it's still a relatively new concept much like the Robo advisor.

Dan Egan: Yep. And I would throw out here that my main interest here is that I'm not an expert legally so caveat emptor like have a grain of salt with us. There are two very different sort of categories of people who most people will interact with. There are brokers and a broker is they are just there to broker a transaction. They have somebody who's trying to sell something and somebody is looking to buy something and they're that sort of facilitator, a little bit like a stock exchange to make that transaction happen. But they're not responsible for saying to you as an individual, "This is the right thing for you. I've looked at all of the different options out here. I've considered your personal circumstances, etcetera, and this is what you should do.” And you can think about the liability of advice like are they saying, “This is what you should do, and I kind of stand behind that advice.” Brokers don't. They're there to just facilitate the transactions to sort of be an intermediary to smooth things along. And they are regulated by a different entity, etcetera, than advisors. I'm using kind of like a capital A type advisor thing here, who generally are like they are held to a higher standard, they have to show the thought process that they put into for why somebody should do something, a course that they should take, and they're generally paid differently.

A broker is paid by a transaction in some way. Whereas an advisor is generally paid an ongoing fee of some kind in order to continue to give advice and at some level also like bear the fruit, the outcome of that advice themselves. So, Betterment, for example, charges 25 basis points for any assets under management, and that's our advisory fee. And to some degree, the idea there is like if we give you bad advice in two or three years, our fees are going to be lower because you're going to have less money. So, we want skin in the game to say like we're giving advice and we're going to kind of like, number one, be held to a regulatory standard, that they can come to us and say, “You didn't ask the client enough questions. You didn't consider their personal circumstances enough when recommending this. You didn't look at all the funds or the available options out there when doing your due diligence.” Number one, that's an advisory standard to be held to. Number two, the skin in the game that we want to be kind of like rewarded over the long term for the advice that we provide, which is about sort of the intermediate to long-term decisions they make.

Casey Weade: I think one of the things that has come up in past conversations about Robo-advisors, I think you've seen this in different articles and regulatory bodies saying how can a computer fulfill a fiduciary obligation that financial efforts, so the legal responsibility to put the investors needs ahead of my own or the computer in this situation. We will spend and we'll spend in a first visit just an hour just really getting to deeply understand someone. And it's more than just numbers, it's more than just asking a couple of dozen different questions. It can be filled out on a computer. We're emotional human beings. How could I understand how to do what's in the very best interest of the person sitting across the table if I don't know all of their past experiences, especially from a behavioral finance perspective? I want to know what money was like growing up. I want to know their past mistakes. I want to know their long-term goals or desires, their purpose, and meaning. I mean, a computer can't fulfill that role. How does it fulfill a true fiduciary role?

Dan Egan: Yeah. I think there's a couple of different components to that. It's very interesting because I have the same questions but almost in the opposite direction like half of what I study is how fallible and inconsistent and incoherent humans are. One of the studies that, actually, like really it was while I was working with a lot of human advisors that’s brought to the fore was that the advice that a lot of human advisors gave looked like the advice that the advisor wanted to give themselves and didn't differ by client very much. One of the interesting things we've learned as a Robo-advisor is that we actually tend to have much higher proportions of our clients being female and minority than you would expect, generally, number one, from who gets served as financial services population, and number two, from the population at large. And I think part of it that's actually tricky is that the human connection is both a strength and a weakness. It comes with your ability to say like, “Okay. This is my perception of who the client is, what they need, etcetera. You bring your own biases, your own thoughts, and preconceptions about maybe both investments and about who the client is before.

There are circumstances where the clients almost don't want you to know them because they want to feel that they're being given good advice, regardless of your perceptions of them. So, the ratio of our clients who are female is somewhere I believe up around somewhere between 36% and 40%, which is extremely high for a financial advice firm. It would be blown out of the water if you were a broker but even for financial advice firm per context, 401(k)s where people are usually defaulted into using the plan, women tend to make up about 45% of the plan, which is just a little bit lower than kind of like employment numbers. So, there are a couple of components of that. When we give advice, we have to be extremely transparent and systematic about, number one, what information we are using to make that. We can only know what you tell us and it's very clear. And so, we can't take into account, “Oh, well, my perception of them is that they're a little bit scaredy-cat-ish and so I'm going to make like I'm going to delta my advice based on that. We have to be very clear about like when we take it in, literally, you can read computer code and see this is how it's used.

When I talk to somebody about like how their age or their income influences the advice that we're going to give them, it's a very clear straight-through path of like here's where that information is used, here's how it changes advice. And that means it's consistent, it's coherent like you're not going to get two people getting different advice if you come into our system. There might be a different Robo-advisor who gives different advice because they've got different algorithms but we're sort of coherent about that. And I think that they both have sort of strengths and weaknesses. I think that we can deal with what I sort of think of is that Pareto optimal like we can deal with 80% of people's financial needs really well. Like, they're coming in, they're like, “How much do I need to save for retirement? Should I use a Roth or a traditional IRA? How can I save on my taxes a little bit?” These are things that don't necessarily require like a long, complicated discussion. On the other hand, if you're somebody who has substantial wealth in sort of private assets, you've got like a family legacy or a lot of moving parts to consider and taxes and estate planning and so on, it's going to be much, much harder for us to deal with all of that exploding complexity. And that's where working with a person who kind of, again, can narrow down that scope of possibility in a way that's right for you is going to be very, very powerful.

So, I tend to think of it now as just being like the computers and the machines are really, really good at 80% to 90% of the work because 80% to 90% of the work is straight-through processing data, kind of like if-this-then-that type things but that last 10%, depending upon if you need it, is where you go and you say like, “I need to talk to somebody who knows this stuff better than a computer ever would.” I think there's a really interesting thing going on right now, which is like we're all remote. You know, like maybe the person who's best to serve me as a financial advisor doesn't live near me. Maybe that person is like in, I don't know, California.

Casey Weade: Fort Wayne, Indiana.

Dan Egan: Definitely. The barrier is broken, right? Like, if I was saying like I want somebody who really knows about restricted stock options of tech companies or something like that, like not every financial advisor is going to be great at that. So, I think there's that like even within financial advisors, that specialization of knowing the target client that they want to work with because they're really good at it, that exists even within the financial advisor space.

Casey Weade: Yeah. Well, in our pre-interview, we talked about being competitors. And I said, “I don't see us as competitors.” I think, in general, I think you'll have the articles that you see out there and a lot of the discussions and a lot of advisors I know are scared of this Robo-advice industry, “Wow. They're going to take all my clients.” I've never seen Betterment or Wealthfront or a Robinhood. I've never seen these places as competitors. And you didn't either. Can you explain why you don't see a company like ours competing with a Betterment?

Dan Egan: So, the first one, which is very practical, which I told you, is that we don't actually make any more money in either way. So, for context, Betterment is the technology platform for a lot of advisors, Betterment for advisors, and we earn the same amount of money with an advice client as we would from a retail client, a self-directed client. So, one is that just economically we're not like, I don't know how to put it like, “We're not trying to go out and win the same kind of businesses, the same kind of client.” Generally speaking, our clients are I don’t know how to put it like they are reasonably savvy that they know what they want. They kind of have an idea like, “I want a balanced portfolio. I want it rebalanced. I want a little bit packed stuff.” Those are very different people than the people who are like, "Hey, I've got $2 million and I'm about to retire and pull the trigger. This is scary. What exactly is going on here? What do I need to think through? What are all of the different components of this?”

So, I often think about it like Betterment has designed some kind of like, what’s it called, like a sedan, right? It's a good car. It's like what you would recommend to the vast majority of people, maybe a hatchback, so you get some trunk space in there. It’s really useful. But the people who are looking for either a high-end sports car or like a Jeep or an offer, they have different needs and sedans don't really compete with Jeeps, or with high-end sports cars. That's just a different market. They're both cars. They both get you where you're going but they're serving fundamentally different populations because of the specific needs that they have for what they're using. I think there might have been actually something else that I said, and I'm just forgetting it, so feel free to like bring it back in.

Casey Weade: Well, we talked about how, I mean, I've recommended Robo-advisors for years over the last decade. I've said, "Hey, you should go do a Robo-advisor.” We're not always the right fit for everyone that comes in the door. It doesn’t always make economic sense for us to work with everyone that comes in the door. We aren't the cheapest. And that's not why people come to work with our team. They don't come to us because of price. They come because of value. And those younger individuals that are in their 20s or 30s, it's all about growth and accumulation. What's the number one determinant of your annualized returns? The number one determinant is going to be cost. You want to keep your cost as low as you can possibly keep it and you want to continue to invest. I mean, that's pretty much it. And if you go to your average advisor, they're not going to beat the S&P 500. So, maybe you should just buy the S&P 500 index fund. However, most people don't have the confidence to just buy the S&P 500 and hold on to it for the next 20 years, let alone the behavioral finance piece, which is, well, they're going to make mistakes along the way, and a Robo-advisor can help them stay in line on their way to meeting that long term goal and keep their costs low along the way.

Another becomes this point, I think in my opinion, it becomes this point where you've accumulated assets. Now you have enough to retire and you go, “Okay. I've got enough. I don't want to go through another ’08 and I don't want to have to think about this stuff anymore. I want to partner and I have more than just growth concerns. I want to have an emergency fund that's appropriate. I want to have income to last a lifetime. I want to have inflation, protection, flexibility. I want to have an estate plan, I want a tax plan, I want a partner, a coach to bring all these different pieces together. You pay an advisor, in my opinion, for liability protection, for risk management. You don't pay them for growth because they're in the vast majority, 99.9% are not going to beat the market. You pay them for a completely different reason.

Dan Egan: One of the toughest things about the advice industry is that, as an advisor, you know the things that the client doesn't know that you feel like they should be paying you to help them like avoid the liability of but they kind of don't know that coming in. So, I've seen this both within our retail clients and our advice clients in that we were a goals-based platform. We really want people to think like, "Why are you saving? What is this money for? Like, if it's for your kids' college education, then we should be using 529s and we should be thoughtful about what kind of accounts and what kind of glide path that's going to be on.” That's different than your retirement money, which is different than your house down payment money, which is different than your emergency fund money. And what we often see is that a lot of people come in, especially in the first 90 days, and they're like, “I'm going to try it out. I'm going to put like $1,000 in and see what it does and they open up an account that's just kind of like make money.” So, the most frustrating part from our point of view is that we really want to get people into the idea of investing with a purpose, investing with some sort of like this is like, "Why I'm doing this?” And a lot of them just want to think about as like, "Well, it goes up. It makes money. It goes up and that's all I need to know about it. I don't need to struggle with the real financial planning things.”

This is one of the cases where I think a financial advisor like earns their weight probably in the first, I don't know, like 90 days, whatever it is to say, “Listen, I'm going to push you,” that like we have to think about what we're going to use this money for and what it's for in the future, like, "Do you want to retire? What kind of retirement do you want? Do you want to like be able to pay for your kids' wedding?” That's an important thing. We have to sort of budget out and think about values and priorities and how this money is segmented. It's hard for us to push clients to really like get them to do that struggle work because we're an app. People want sort of an easy, seamless experience on the app. And I can do a little bit of that from the technology angle. But being really pushed a little bit like a personal trainer to say like, "No, we're going to like try to do hard things and we're going to try to think about what the purpose of our money and our life is.” That's something that an advisor brings out in ways that people don't see coming.

Like one of the things that I see slam people financially all the time is kids. Nobody thinks about saving up for kids ahead of time. And yet, I mean, talk about something that impacts your budget. You know, if you're talking about daycare. I saw some figures for daycare that were somewhere between like $800 to $1,200 per month. That's a huge hit to your budget. If you weren't thinking about that ahead of time, you're going to get hit with a, "Wait. I don't know. Should one of us keep working? This is really expensive.” That throws off your long-term earnings curve, etcetera. So, I think knowing what the things are that you should be thinking about now before they hit you in the face is one of the best values an advisor can bring. And they can really make a client like have to struggle with those things and make decisions in advance when you still have time to plan.

Casey Weade: Yeah. I mean, if you go to Betterment, I mean, you're one of the few really hybrid Robo-advisors out there. You have the platform. You come in, press play, and you're off and investing and super low cost, right? And then you have the ability to get some one-time advice for a fee. You can pay about twice as much for messaging and phone contact to the CFP or you can go and get a dedicated advisor for around 1%, 80 basis points, 1.5%. I mean, you've incorporated a human element. And I wonder if when you look at those different tiers that have been established, I would imagine it kind of goes by age where you have the 20-year-olds are on the pure investing, “Hey, I just want to get started. I got a very simple goal. I need to make some money. I need to save some money.” And then it just goes up from there. We have maybe the 30, 40-year-olds looking for that one-time advice, a 40, 50-year-olds messaging with a CFP, and the 50, 60-year-olds looking for that dedicated advisor.

Dan Egan: Yeah. There's definitely a pattern there. It's exactly as you say. The people who are just getting started, they don't need a complicated experience. If you're saving, if you got $1,000 to $5,000 to invest, you don't need to overcomplicate that. And figuring out the savings pattern, you’re using the Roth or the traditional, whatever it is that you're getting the employer match in your 401(k), that's the important thing.

Casey Weade: I got to say the world's changed. So, I just met with another advisory firm recently. We were discussing an acquisition and what are with all these little accounts $1,000, $5,000, $10,000, $15,000 accounts. And so, well, they can't go anywhere else. So, we want to serve them, we want to take care of them, and really benefit these people because they're going to go out and they're going to end up getting stuck in a mutual fund somewhere, paying in A-share front-end loads and then ongoing fees. So, we charged them 1.5%, 2% per year. You know, the world's changed. You, the advisory firm, and that client would be better off if you just said, “Go to Betterment.” I think we just need to educate ourselves about these things.

Dan Egan: Yeah. And, look, I think it's funny. We love working with advisors because we view it's that perfect symbiosis of like we're good at the behind-the-scenes technology and the design and like your client can use a smartphone app. Yeah. And it's going to be updated, whatever it is. I think we do weekly updates inside the app now like they're not going to be in some sort of a stagnant thing. But you are going to own the relationship. You are going to own the conversation.

Casey Weade: You’d be the quarterback.

Dan Egan: Yep.

Casey Weade: Yeah. You mentioned, we talked about bias. So, you talked about advisors having bias and, yeah, we do. I mean, I'm very aware that I have bias. I think we all have it. The most important part is being aware that we have the bias in the first place. And one of the things I often say about myself is the only thing that I am extremely convicted on is not being extremely convicted. There is another solution out there and I need to continue to learn about it. But I think that Robo-advisors have the same bias and you mentioned…

Dan Egan: We have different biases.

Casey Weade: You mentioned the word algorithm. You said, “Well, every Robo-advisor is going to position your assets a little bit differently because it is being guided by an algorithm, ultimately, that a human built.”

Dan Egan: Yep. Absolutely.

Casey Weade: So, there is a bias built into the Robo firms. How do you recognize the bias from one Robo-advisor firm to the next? And say, let's go down the same traditional path too. You’re meeting with a traditional advisor. How do you really understand their bias? You'll have one advisor says, “I hate annuities.” Another one says I hate the market. One says I hate life insurance. One loves life insurance. I'll never write long-term care insurance. The other one writes long-term care in every client. How do you recognize bias whether it's in the technology world or the advisory space, the individual advisory space?

Dan Egan: It's a little bit of a bugbear to me in that like I think the word bias has gotten kind of blurred into something that is too generic. So, I think what I would say is that advisors have personality, and their own personality is exactly as you said, their experience with annuities or with, I don't know, bonds or something comes through. And it'll be right sometimes, and it'll be wrong sometimes. And I don't want to kind of convict them of just being biased in some generic fashion. What I do think we see is that you want to have somebody who's good enough at saying, "I'm not going to have my personality be the driving thing of a lot of these decisions.” I want to have the client be the thing that kind of like drives the variation in outcomes. So, there's a great paper by Alessandro Previtero that looks at the portfolios and account setups of advice clients, and basically says like say you've got like one client, let's call her Annie, and she's with advisor 1. Her portfolio while she's with advisor 1 is going to look like all of advisor 1’s other portfolios. And then she goes to advisor 2, and all of a sudden her portfolio is going to look like all of advisor 2’s portfolios and their setup.

Part of this makes sense, right? Like these advisors, they have their views, they have the due diligence that they've done, their beliefs they're going to bring to the fore but it's also a bit weird in that like shouldn't this portfolio be as much about like Annie as about them? Shouldn't it have been crafted? Shouldn’t there be like if we're going to call ourselves experts and advisors, there should be some coherence about what we do across clients, otherwise, clients are going to be like, "They're all just making it up. They have no idea.”

Casey Weade: In the medical world, I mean, think about the medical world, right? You go to three different doctors. You do get three different opinions. It's not a whole lot different.

Dan Egan: Yeah. So scary.

Casey Weade: Yeah.

Dan Egan: So, one of the things that I think is neat, though, is like you said a person program, the algorithm. It's actually never a person. So, generally speaking, by the time and like part of our advices ended up in the app, at least two CFPs will have like worked through it, and like put their touch on it. Somebody generally from like our quant team, which tends to be more investing focus but understands the math and so on will have looked at it. A tax expert will have looked at it. And then additionally, you'll get something like a behavioral expert like me who's looked at it, and then you have all the software engineers and stuff. So, it does remove a little bit of the idiosyncrasy of the bias. It's like a committee. So, it removes the possibility of there being some kind of like extreme right or wrong outcome in that field. And so, it is systematized. It’s also kind of like anybody can go in. When we have discussions about how we're going to change the advice, it's kind of neat because it's discussions about how we're going to change the algorithm. And then somebody says like, “I want to include this new facet about who somebody is,” we have to think about all the different things that that might affect, and we all have discussions about it.

And then only once it's sort of been through a kind of like very transparent, how are you going to deal with this, in all cases, not just the one you happen to be thinking about right now. It gets deployed to the clients. So, I think it has its own biases in it because we tend to focus on the things that are tractable and easy to manage with an algorithm, as opposed to very soft feeling things or like pushing spouses to have tough conversations with each other. That's very hard, if not impossible for us to do. So, we do focus on the things that are technologically tractable but it's far less likely to sort of be like this one person had this one view, and therefore all of their clients get that thing. That's what we're trying to avoid.

Casey Weade: It sounds like the key element there is teamwork. I think that is just when I meet with an individual advisor that's on his own or her own, in her own office, and has maybe an assistant, that's where there's a scary amount of bias, right? There's no real checks and balances. It’s like I will go out and we've got 10 advisors, we sit down, we talk about the cases together, and everyone has a different opinion. And they're all smart guys but we're able to put our minds together to come up with the best solution. When I go to a conference, I'll sit at a conference around a table for lunch with 10 really good advisors, and they all have different ideas. I think the most important element and it sounds like you agree to any good plan is having a good team.

Dan Egan: Good team and good process. I think that like teams are very good, as you said, sort of bringing different perspectives. I think one of the key things is you're very likely to avoid an obvious mistake when you have all those different perspectives. Somebody will see the one like the one gotcha or the one catch area. But the other component of it, I think, is also process. I grew up in Philadelphia, so I’m a big trust the process guy. And I think that designing good processes to kind of like go through are under-appreciated, things like, come on, like astronauts are both incredibly intelligent people. They really do not want to die in space. They are heavily motivated. And they still use checklists to go through everything they need to do during a mission. So, I think that sort of established process that you can follow so that it's sort of you're not having to make it up on the spot every time. You're not just relying on your memory. Good process in combination with teamwork is fantastic.

Casey Weade: I love that. I'm surprised by how many advisors don't have a process. You know, it's old school. My dad didn't. I followed my dad for over a decade, and it was sit down, make a bunch of notes on a yellow sheet of paper, and this is what we're going to do. There wasn't any software. There's no use of technology. I think the world is getting much more efficient in a lot of ways and a lot better for individuals and clients. Since we're on this bias kick, I want to go down to a blog post that you had a while back titled Not-so-great expectations: The curse of high expected returns.

Dan Egan: Oh, man. Yeah.

Casey Weade: Can you tell us what this article is about? I mean, there's a lot of things that I loved about it but you talked about the game. How's the game played?

Dan Egan: Yeah. So, it's such a tough one. So, often, one of the first questions we'll get on any advisor is going to get from a prospective client is what are your expected returns? What do you think you're going to do for me? And notwithstanding that most advisors are going to say, "Well, there's a range. It depends on how much risk you take, etcetera.” You might have two people, and they're both thinking about the S&P 500 and they say, one of them says, “I think the S&P 500 is going to do 5% this year. The other one says, “I think it's going to do 8% this year.” So, their expected returns are 5% and 8%. Now, the client might not understand that these guys, they just have a difference in opinion of the exact same thing. They can both put you in the S&P 500. You could get 5%. You could get 8%. Whatever it is, you're not getting a different return because of the advisor's beliefs. You're not getting a different return because somebody's optimistic or pessimistic. And so, part of it is just kind of like this fooling ourselves because of like people don't have different expected returns because of their beliefs. But the most optimistic advisor somehow sounds better.

The second thing that I think is actually really worrisome is if you start using those numbers in financial planning. So, if you bet on an 8% return over the next however many years, and you end up with a 5% return, that is not a good situation to be in. On the other hand, if you bet on a 5% and you end up with an 8%, that's actually not really that bad. You're okay. And this is like I sort of feel like sometimes advisors need these kind of like anguish sessions, where we talk about how clients or prospects are like they shoot themselves in the foot despite you trying to help them where you say, “The best thing I can do for you is have a low return expectation. Because if that happens, you're going to be okay. We're going to be able to handle low returns. And if they're higher, we're golden. That's perfectly fine.” Unfortunately, clients often take it the opposite way and say, “I want the guy who tells me the highest expected returns,” even though they're effectively gaslighting themselves.

Casey Weade: Yeah. We've lost clients due to this and that's why I wanted to bring it up. We had one and we will often do projections at 3% or 4% in a plan. I got one, “I'm only going to get 3% or 4%.” “No. That's all you need to get. We're just trying to figure out what the required rate of return is. This isn’t what we're expecting you to actually get. We think it'll be a lot better.” And then, well, another guy told me, he'd made 7% a year. How do you manage that? How do you manage those expectations to get them to the right place? I mean, you said in that article, the average investor expects annual returns of 10.7%, one-sixth expect over 20% per year. I think my favorite quote that you had in that article and I just laughed out loud. My staff is probably wondering what Casey's laughing about in this office but you said, "Also, when presented with more realistic (lower) expected returns from advisor, more consumers may embrace DIY investing, believing they can easily get 11% returns. Derp.” I didn't realize derp was actually a word in the dictionary.

Dan Egan: I think I probably had to look that up myself too just to make sure that my copyedit team didn't cut it. Yep.

Casey Weade: Yeah. So, how do you do that? How do you manage those expectations? When someone says, “I want 8% per year,” and you say, “I just don't think that's realistic,” I don't know how you talk them down. And that's why they end up being DIY investors many times or just going to the advisor next door that said, “Yeah. I can get you 8%.”

Dan Egan: Yep. So, I think that, yeah, part of it, unfortunately, I think is thinking. I have a, well, she is now five. I had a four-year-old up until yesterday and she's now a five-year-old.

Casey Weade: Funny how that happens.

Dan Egan: I know. Once a year, every year is that you sort of like free yourself to start thinking about like, "Okay. In a lot of areas of life, people need to make the mistakes themselves.” They're not going to believe somebody else who’s made the mistake and is trying to share their wisdom with them. They're not going to avoid the same mistake. People don't believe stuff until they make the mistake themselves, and they experienced the consequences of it themselves. And so, instead of trying to kind of like shelter people, etcetera, I think sometimes what we need to do is give them that experience or have them learn the lesson in a safer way as possible. Like, we don't just sort of throw people down the toughest ski run on the mountain initially. You start off on a green and like you fall over on a green when you're learning to ski. So, when it comes to this, number one, I would say being very transparent and talking them through like 4% is a really good number because I say, “Well, listen, even if stock markets return 7%, I'm going to chop off 2% purely due to inflation. You're talking about a traditional account and you're going to get taxes that you have to pay on the tail end of it. So, I'm going to chop off another 1.5% purely due to taxes. So, this is your spending money, your real inflation-adjusted spending power. We're already down to like 4.5%, 5.5% there and that has nothing to do with like what I think the stock market's going to do.

So, talking people through all those actual mechanics and like you said, that's the required return so that we know you're going to be okay. If you get more, that's great. On the other hand, I think what you almost need to do is say like, “You should go out. You should absolutely take. Tell you what, if you've got $100,000 account, I want you to take $15,000, $20,000 of it and I want you to go out and invest and I want you to really track it. Don't put any money in like you're now the hedge fund manager. Go out and make 10% in a year and you have to do two years in a row,” and think about some sort of thing where they're going to realize if they're just in a high beta portfolio that like when the market goes down, how much do you get out when the market went down? One of the things that gets people with a lot of sort of DIY brokerage and trading apps is that brokers again, they don't really want you to learn if you're a good investor or not, because most people are going to learn that they're not beating the market, or at least not, when they take into account how much time they have to spend doing the stuff, whatever it is, trading, rebounds, looking up companies, etcetera.

So, they don't have really good performance management or performance assessment tools in their apps. You know, it's like you buy a thing, you hold it, it goes away. You don't see that performance anymore. The best way to have no losers inside of your investing account in a brokerage app is to just sell anything that's lost, and boom, everything's green. You’re genius. So, one is like to say like we want you to learn so like, yes, maybe you can do this. I want you to actually really track your performance. I'm not sure if there are really good tools out there for self-directed people to do this but like, if you're going to try and be a portfolio manager, you have to treat yourself like a portfolio manager. You're going to fire yourself if you are not actually delivering. And part of that's tracking your performance like a portfolio manager would get their performance track. We need to see your one-year, your three-year, your five-year. You need to see your alpha, your beta, blah, blah, blah. In my experience, what this mostly does is that people aren't going to do this. They go out and they trade a lot and they do a lot of stuff. And after some period of time, it's like, “I don't really want to do this anymore.” Like I win some, I lose some, but I don't really want to be like doing this seriously. People like to do it. They like to talk about sports like, "Hey, did you see what Tesla did yesterday?” “Yeah, I got a little of bit,” like a buddy of mine just said in like, "You still have any Bitcoin?” And it's like some spectator sport thing. You have to just be able to talk about the team.

On the other hand, doing it seriously, a lot of people want that done by somebody else. So, leaning into that sort of like, here's your personal, you're the portfolio manager. Play, pause, so you can talk to other people about what you own and what you don't own. Do that, you're going to take whatever it is, 5% to 20%, whatever you're comfortable with, that's yours. This stuff that we're doing seriously, we're going to tax manage it, we're going to tax loss harvest, we're going to do asset location, we're going to risk manage it and glide path it. It’s not going to do anything crazy, good or bad, but that's the stuff that lets you do whatever the heck you want over here. You can go crazy over here if you want. You can go out and get some put options, go ahead, whatever you want to do.

Casey Weade: Right. And this leads me to a question that our VP had before we started this interview here today. He said, so we're in 2020. We go back to March of this year and he's had a couple of clients who we put together a plan and after the plan’s put together he said, “Hey, your income’s guaranteed for the rest of your life. You've got funds over here for emergencies. You've got plenty of flexibility. We got the inflation strategy, estate plan, health care plan, and we've got everything taken care of. Now, we have this bucket over here. This is never money. What do you want to do with it?” And he said, "Well, I want to be aggressive.” And so, we take it to the market and say, “I want to be aggressive.” Fill out the risk tolerance questionnaire, aggressive growth. But then March comes along, and they take a hit. They go, “I'm not aggressive anymore. I was wrong. I want to get more conservative.” And so, they get more conservative and then we get to today. We're sitting here in December. Market’s done really well. Elections kind of come and do a close here. They go, “You know what, I think I want to be aggressive again.” And so, he's going to but what's going to happen next time that the market…? How would you handle those conversations? This is not an unusual conversation. Everybody thinks they're aggressive until they're not.

Dan Egan: So, the first thing and it blows me away, you said like they do the risk tolerance questionnaire. Obviously, like there needs to be one that actually does this, either number one, correctly assesses people, or I think what you're saying is a little bit more nuanced, which is that people don't have some number inside of them. They're like, “Oh, you're an 87.” And obviously, like, if you hit an 88 risk tolerance, you're going to freak out. People are very much like in the moment. They're hearing the news. They're like looking at what went up, and they want to feel that good and they're looking at it when it goes down, and they don't want to feel that bad.

Casey Weade: Can I inspect this? So, many times I'd say, well, as long as you have a plan, then you shouldn't panic, right? I mean, you've got all the things that you need taken care of so we can let this ride and be aggressive. We don't have to try to time the market. In the real world, that doesn’t always work. So, sorry. I just want to put that in.

Dan Egan: Yeah. I know. I think asking other questions that get into that kind of behavior are really so kind of like, "Hey, do you watch the market frequently? Like are you going to be keyed into this? A new one which is a little bit sad for me to say but I think it's actually quite predictive is to ask somebody if they are political and if they are political, like for what team? One of the things that we've seen, it's like an academic literature and our own clients is that people really kind of conflate like what's going on in the political spectrum right now with going on in the economy. So, if you go back to 2016, I remember this from election night, during election night, basically, Democrats were like, “I'm getting out. The market’s about to crash. It's all going down.” And republicans going, "It'll be fine. It'll be great.” And the exact same thing, the flip happened back in, I don't know when they'd actually started getting called but November Sometime. And so, we think like getting into the head of the person and saying, "What are the triggers that are going to lead you to do this stuff?” Like, what are your fear factors? So, like the market’s gone down, the political situation isn't great, and I'm worried about whatever.

And then talking about those intermediate things and having real conversations about like, "If you're monitoring the portfolio this frequently, if you're really looking at this, you're going to see losses.” And you can talk about commitment mechanisms. One of the ones that I love is the idea of them making a video that says like, “Dan, you don't care if the market goes down 35%. You're going to stick and hold if the market goes down 35%.” And if they have somebody who's kind of their friend like the video sits with that friend, and they have to call that friend and watch that video in front of their wife, their partner, their buddy, or whoever it is, and they have to take the hazing, if they're going to go ahead anyway, and break the promise that they made to themselves and possibly to other people about it. So, bringing in sort of a combination of self-commitment as well as social commitment can work a little bit. I think rather than try and say, "Don't do anything,” one of the techniques that I tend to use is, "Do something. We're going to do something. We're going to do a whole bunch of stuff right now.”

Casey Weade: This is your sacrifice throws.

Dan Egan: Yes, absolutely. You know, like always do different things, smaller things like always lean into the person that’s going to be impossible to divert a river, right, or to like stop a river. You can dam it up but like it's going to get through eventually. So, how can you take that emotional power and divert it into, “Okay. Let's tax loss harvest really hard right here. We're going to focus on these securities and get those offsets out of them.” There's a wide range of kind of like I don't want to call them busy tasks because they're actually really good sort of financial planning and financial assurances. People need something to do and you almost want to like lean into that and say, "We're going to give you a whole set of things that we're going to do to take advantage of this downturn.” And not flipping, not flipping, which I'll be honest is a little bit easier I think when people are in the accumulation phase, where it feels like if they put money in now, it can grow more in the future, as opposed to they put money in the past and it's lost a little bit. But I think that there's a lot. You lean in to say, "Yes, we're going to do stuff.” So, what pattern are we going to use to get out of the market? Let's shift down by like 10% stocks this week, and then see what the tax impact of that is going to be.

And I think that that sort of, number one, gradualism, doing smaller changes, looking for the lemonade out of lemons in terms of tax-loss harvesting, etcetera, you want to actually have them, give them a feeling of agency and empowerment like they are back in control in some fashion. This is something that they're manipulating and changing so that they aren't tempted to just look at that big red button and hit panic and get all out. So, if we were having that like downturn homework list that you can say like, "It's time to get to work. Let's start like revving the engines for all the things that we can do right now.” It's very, how do I put it like, cathartic to a lot of people.

Casey Weade: You said we have a bias for action.

Dan Egan: Absolutely.

Casey Weade: And I love that but most advisors aren't trained that way, right? We're trained to say, "Hey, just stay the course. This is part of the plan. Everything will be okay.” But people naturally want action, whether that's tax-loss harvesting, investing cash on the sidelines, or selling some high-cost funds, and reallocating the low-cost funds that have big capital gains. I mean, people just want action and I thought that was a great visual of jujitsu class getting thrown and using your own momentum for that. Yeah, one of the things I want to make sure we get to is something that came from one of my mentors, Dan Sullivan. I don't know if you're familiar, Strategic Coach, and Dan Sullivan. So, I've been following Dan for a very long time and one of the conversations he often has with Peter Diamandis on Exponential Wisdom. I love that podcast and I think that's where I heard it. It might have been in person from him, I don't remember, but he was talking about how he's always going to want a human giving him financial advice. There's always going to be a human element when it comes to many individuals that are receiving financial advice for one reason he cited which was, “I don't know what I want. I don't actually know what I want, and you cannot predict what I want, or what I'm going to do based on my past behaviors.”

For me, I didn't know that I would love hunting as much as I do and there was nothing in my past history or past experiences that would have said, “Casey is going to be in a tree every single day during hunting season,” but I am and that's because I met a friend who was really into hunting and introduced it to me. And I think there's a carryover there to the financial world, too. There are goals that you may need to introduce to you that have nothing to do with your past behavior. I just wanted to get your thoughts on that because it's one that I think a lot about that in different facets of life.

Dan Egan: You know, that's absolutely like one of the things that is both the greatest hope but also the greatest weakness of the human species is the fact that we could learn from each other. I think about this Bob Seawright is a sort of one of the OG behavioral gangsters. He's on Twitter occasionally. Anytime I get to see him at a conference, he's a grandfather now, and like these are the people who you sort of plumb for the wisdom. You got to figure out what questions to ask them and like, "What are the mistakes that you've made now that you look back on them? What are the regrets of the things that you did and the things that you didn't do, etcetera?” But I do feel like I think of it, again, kind of like going back to things like having kids. You think about the path that a lot of people take to have kids, it's like, you're single, and then, hey, you’re getting into a relationship. And maybe like, I don't know, two or three years later, you get married, and then a year later, you have kids, right? And so, it's like if you look at a four-year horizon, you're never looking back when you're single and being like, “I should probably start saving for children now because children are going to take a lot of income out of my pocket and like they're very expensive and so on.” It just seems bizarre.

But those sorts of kind of like potholes, liabilities coming up, that you aren't aware of because you haven't been through and you don't believe it yet. Having somebody talk to me more and more about those things is the thing that I kind of feel like, "That's what I want more.” Somebody telling me, "Here are the things that you haven't even considered, that I would strongly recommend that you think a little bit more about.” To your point, like, and if the friend had been like, "Hey, you're going to really like hunting,” you'd probably be like, “No, I don't.” There's no reason.

Casey Weade: I don’t want to kill an animal. I love animals.

Dan Egan: I think there's like how do we get that sort of, how do we get that flavor of that experience as quickly as possible as sort of like, actually, letting people understand this visceral or this intuition, like, “Oh, actually, this is something that I'm really more interested in, that I want to spend time on.” Like mine is like I've never been interested in like building things physically but it's corona. I can't really do a lot of things and I ended up building an A-frame. I did not foresee that being as kind of, number one, challenging. There's a lot of wisdom that comes like you can read stuff but until you've actually tried to make something square, you're not going to do it. But like there's a lot of those things where we need to make it easier to have smaller, introductory experience to give people that visceral feeling of like, actually, maybe this is the right thing for me. Maybe like right now I'm like, “Who the hell would move to Florida when they retire? It's boring down there.” But a lot of people do it. A lot of people who are a little bit like me do it. So, maybe I should be more open to that idea.

Casey Weade: Yeah. When I think about that, it makes me think of variable annuities. Variable annuities were like, I mean, I've always hated them. I've never seen one that I liked and dad was always saying is that, well, it's one of the best-selling products in the world, maybe should keep an open mind. Let’s keep checking them out. And I continue to revisit that and maybe I'm wrong. Let's take another look. And I think Wade Pfau foul was one that maybe, "Oh, I see the use now.” Really it's a behavioral thing. If they're never going to invest any other way, unless they have some type of fallback position, then I guess paying 3%, maybe the price is worth it. That's why I love. That's my favorite thing about doing the podcast is just getting introduced to these other experiences that individuals have had that change your mind or make me better, I think, really just makes me better. That's why I'm always consuming so much. Another thing that during our pre-interview as we close up here, I think was important, and that was the growth to income transition. We touched a little bit about the bucket approach to retirement income planning. Can you bring that back around for me?

Dan Egan: Sure. So, one of the things that I think is that when I think about like the toughest maneuvers to pull off in your financial life, you go from earning consistently, getting a paycheck, whatever it is, twice a month, and knowing that you can always buy a little bit more with that income that you've got years of it to like potentially grow, etcetera. And that switch from having a full-time job, you've got like stuff to do, a social group to really focus on, a steady source of income to being retired and saying, “Well, number one…” Actually, let me touch on one more thing, your balance is generally just going up either because of the savings or because of what the market is doing. So, there's this sort of really tough point where a person's life gets inverted with retirement and that all of a sudden, for a lot of people, the balance of your accounts should start going down. Your paycheck is going to start coming out of that and you're going to have to deal with kind of like the score on the video game doesn't go up anymore. It actually starts going down. That's what it's supposed to do. You used to have a lot of distraction and focus in your life with your professional life. You're now going to spend a lot more time with your spouse and you're going to need to figure out how to do that, and you're going to have a lot more free time, where you can look at and worry about what's going on in financial markets and watch loud TV shows that scream at you about them.

So, I think that this sort of change is incredibly difficult. When I say it that way, it's like, wait a second, yeah, you're flipping how somebody's life has worked financially up until that point in time, on its head. And dealing with and this is something that I don't have a lot of experience with but I'm aware of is being a big problem for a lot of retirement advisors is getting people comfortable with, number one, like the amount that they actually can spend down doing that out of the principle rather than just out of the dividends or the income yield that that thing throws off. My impression is a lot of people, they don't want to see the principal go down, and they will do things that are very kind of like unwise in order to prevent that from happening. So, that sort of switch, I haven't heard a ton of like research on it. I've heard lots of anecdotes. But I think that's probably one of the most valuable things that we need to start kind of like getting really good at as an industry is that like I don't know what it would be like four years out from retirement and like five years after retirement, that flip period, giving people as good a transition as possible, so that they're comfortable so that they're not making kind of like impulsive or I hate the word but like emotional mistakes, where what's driving them is a fear of balance or an over-focus on what markets are doing.

And so, yeah, I think that's what we were chatting about and that's one of the things that I enjoy hearing from advisors is what they have found works with helping people actually like enjoy that first, I don't know, 5 to 10 years of retirement rather than freaking out about it.

Casey Weade: Yeah. And that led us into developing an income strategy, right? I think it's just okay, how do I spend money? How am I going to get a paycheck out of this thing and led our conversation into kind of the bucket approach discussion where, okay, I mean, and I talked about it as a behavioral finance resource. The reason that we're doing this is not that it's going to end up with a different allocation than you would have otherwise but the biggest mistakes in retirement are emotional mistakes or behavioral mistakes, and it’s a behavioral finance thing. So, we're still going to have the 60/40 mix, but you're going to have this one fixed income bucket you're going to draw down for the next 10 years. Again, another one, you're not going to touch for 10 years and then you have another one you're not going to touch for the next 20 years. This is all equities. So, when we see a march come along and the market’s down 30%, we're down 30% say in our third bucket, we go, "That's okay. Because let's pretend that how would you invest your money if you're 20 years younger?” Would you be concerned about what's going on in the market right now if you were 20 years younger? Most people say no.

Dan Egan: Yep. That's perfect, right? It's like, look, your next 10 years, we have all that money. You have nothing to worry about for 10 years. So, why are you going to worry about what's happening in March of this year?

Casey Weade: Yeah. I thought that was fun. The Betterment is tackling that same issue. So, looks like we're out of time here. I really enjoyed the conversation but I'm going to ask you one final question and maybe you haven't answered this. Maybe you don't. But what is the strangest financial behavior that you have?

Dan Egan: Me personally? That's a good one. There's that feeling of like there's something there and it's hiding from me because it doesn't want me to say it out loud. What would it be? The only thing that I can think of which is kind of funny, it's a very fixative thing, is that I have an Amazon Prime VISA credit card, where you get like cashback for points that can be spent at Amazon and it's also a credit card, so it's got like an 18% interest on it. I am irrational about making sure that I always clock a profit on the card. So, I will look at how much I've paid in interest through the year and how many points and money I've made from the points in the rewards and will almost like moderate my balance to make sure that I am never spending more in interest than I am getting back in points like I want the card to be profitable. Now, this makes zero sense because no matter what, I should never be paying 18% interest, right? Throw the card out immediately and you'll be in a more profitable position. But there's just something about that kind of like, “Don't ever let the card be unprofitable to you,” that just gets me and I immediately started like not spending money and just paying down the credit card as quickly as possible to do it.

Casey Weade: I have some financial advice for you on that but for another time. That is an interesting behavior from behavioral finance experts of all.

Dan Egan: I know. The great thing about being one is like every day you're like, "This is me.” I’m just like you, just making the same mistakes.

Casey Weade: You’re human too. You’re a human too. Yeah. We will make sure to include all links to everything that we've discussed here in the show notes and make sure we link back to you, the blog, Betterment, etcetera. Thanks so much for taking the time. It's been a lot of fun.

Dan Egan: My pleasure. Thank you for having me. Take care.