The Flourish Feed Podcast
A series of curiosity driven deep dives into the nature of flourishing through wealth.
The Flourish Feed Podcast
#27 - The Biases Standing Between Us and Our Wealth
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In this first episode of Season 3, Gillian Stovel Rivers and Preet Banerjee delve into the complexities of financial stress faced by Canadians, exploring the intersection of behavioral science, decision-making biases, and the role of financial advisors. They discuss how present bias affects financial choices and the importance of having a structured financial plan. The conversation also highlights innovative approaches, including the use of AI to enhance financial literacy and connect individuals with their future selves. Ultimately, the episode emphasizes the need for a more human-centered approach to financial planning that addresses emotional and psychological aspects.
Be sure to check out Preet’s incredible contribution to wealth advice in Canada: Your Money Degree is the premiere self-paced practical guide to saving, investing and building wealth in Canada 🇨🇦
Let’s dig deep, tap into amazing resources like this and raise the floor for everyone.
Takeaways
💸Financial confidence remains elusive due to complex systems.
😌Present bias leads to poor long-term financial decisions.
💸Behavioral science plays a crucial role in money management.
😌Having a financial advisor can help mitigate decision-making biases.
💸Cognitive load can be reduced through structured financial planning.
😌Stress and uncertainty can derail financial plans.
💸AI tools can help visualize future financial goals.
😌Social media can negatively impact financial confidence.
💸Financial education is essential for all income levels.
😌Understanding personal values is key to effective financial planning.
Quotes
"Why does money still feel stressful?"
“We’re kind of hardwired to make bad decisions about money because we’re wired to think in the moment.”
“Every financial decision is a long-term trade-off, but our brains are built for short-term survival.”
“It’s not just a literacy problem — it’s a behavioral and emotional problem.”
“When you can make decisions in advance, you’re more likely to make choices in service of your future self.”
“Money is really in service of your life and your values—not the other way around.”
“If you don’t have a sense of purpose, you’re less engaged in the strategies that improve your financial life.”
“The best thing you can do is often nothing—but emotionally, people need to feel that something is being done.”
“Financial planning isn’t really about money—it’s about life planning.”
Chapters
00:00 Understanding Financial Stress in Canada
02:24 The Role of Behavioral Science in Financial Decisions
04:32 The Impact of Present Bias on Financial Choices
09:10 Strategies to Overcome Decision-Making Biases
10:31 The Importance of Financial Advisors
12:00 Cognitive Load and Financial Planning
13:33 Navigating Stress and Uncertainty in Financial Markets
19:07 Using AI to Connect with Future Self
23:04 Challenges in the Financial Ecosystem
26:41 Your Money Degree: A New Approach to Financial Literacy
31:32 The Global Need for Financial Education
34:11 The Broader Impact of Financial Planning
36:44 Engaging the Emotional Side of Financial Planning
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Connect with Gillian:
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https://flourishfamilywealth.com/
The Flourish Feed Podcast, a series of curiosity-driven deep dives into the nature of flourishing through wealth. I'm your host, Gillian Stoville Rivers, M A C F P C E A, Senior Wealth Advisor at CIA Zante Wealth Management.
SPEAKER_01And if you look at every financial decision that people make, they're all long-term trade-off choices. So the parts of our brain that develop the latest from an evolutionary perspective, the frontal cortex, that is the part of the brain that engages in executive functioning long-term financial trade-off choices. And that's a relatively new development in the grand scheme of things. So we're we're kind of hardwired to make bad decisions about money because we're hardwired to think very much in the moment.
SPEAKER_02Why does money still feel stressful for so many Canadians, even when they're doing all of the right things? In this episode, I am joined by Preet Benergy to explore why financial confidence remains elusive, how behavior and brain science shape our decisions, and how better system design can turn money into a platform for flourishing purpose and possibility. What you're about to experience is a conversation about behavior, brains, system, and designing money to support flourishing, not stress. If you've ever pondered the question, what is standing between me and not only being wealthy, but feeling wealthy? This episode is for you. But first, let's get to know Preet a little bit. Dr. Preet Banerjee was first trained as a neuroscientist, took a brief detour as an aspiring race car driver, and went on to become a leading voice on money, advice, and financial decision making. He is chair of the Foundation for the Advancement of Investor Rights, a columnist with the Globe and Mail, and co-founder of the Advisor Video Bootcamp, where he helps financial professionals master video to build trust and grow their businesses. A multi-platform creator, Preet has more than 125,000 YouTube subscribers, has authored three books, and was one of the original financial podcasters. For more than a decade, he was a panelist on CBC's The National with Peter Mansbridge and hosted Million Dollar Neighborhood on the Oprah Winfrey Network. He is a two-time winner of the Portfolio Management Association of Canada's Excellent in Investment Journalism Award. He holds a doctorate in business administration from Henley Business School in the UK, where his dissertation examined the value of financial advice to households. Sounds like something I should have on my night side table. He also holds a bachelor degree in neuroscience and a master's degree in business and management research. Beyond media and academia, he is a partner and director with Wealth Scope Portfolio Analytics and a former governor at the University of Toronto. His work today blends research, advocacy, and entrepreneurship with a mission to help people make smarter financial decisions and to advance the future of financial advice. Preet Banergy, welcome to the Flourish Feed Podcast.
SPEAKER_01Well, thank you so much for having me, Julian. It's my pleasure to be here.
SPEAKER_02Wonderful. Now, you know, not just Canadians, but pretty much anywhere in the world, you can find people who think that they're bad with money. But I kind of feel like this is one of my pet issues is that I think they're navigating a system that wasn't really designed for human psychology. So despite us all having higher access to information than ever before, why does financial confidence remain so elusive for so many of us?
SPEAKER_01Yeah, it's a great question. You know, we live in a day and age where there's so much access to information. And I think the first thing that people will realize is that not all information is good information. There's a lot more voices out there than there have ever been. And the world is a lot more complex than it's ever been. And so for a lot of people that find it, they find that kind of suffocating, a little bit paralyzing, and certainly overwhelming. And, you know, in the grand context of things, if you take a look at it, from an evolutionary perspective, most of our time on earth as a species has all been about surviving until tomorrow morning. So we're very present-biased. And if you look at every financial decision that people make, they're all long-term trade-off choices. So the parts of our brain that develop the latest from an evolutionary perspective, the uh frontal cortex, that is the part of the brain that engages in executive functioning long-term financial trade-off choices. And that's a relatively new development in the grand scheme of things. So we're we're kind of hardwired to make bad decisions about money because we're hardwired to think very much in the moment, and money is very much about long-term trade-offs.
SPEAKER_02You're absolutely right about that. I had another guest on last week who was talking about how really the system is very much set up to give you so much information all the time to provoke you to make more and more decisions. But it sounds like what we're having to train our brains to do is almost to make fewer decisions and make more considered ones. So this isn't this isn't necessarily a literacy problem, or is it a financial literacy problem? Is it a brain problem? Is it both?
SPEAKER_01Yeah, it's a it's a little bit of both. You know, if you take a look at working out, getting into better physical condition, this is a problem I think people intuitively understand a little bit more in that when you hire a personal trainer, you get great results oftentimes. And it's not because they showed you a fancy new way of doing a sit up. It just made you do the sit-up that you knew you were supposed to do, right? We know what we're eating isn't necessarily the greatest things to put in our bodies. We know what we should be doing differently. So it's not just a matter of literacy or information. There is the behavioral component, the emotional side of things. Why don't we do the things that we know we're supposed to do? And that uh that's very much a human uh sort of uh problem. And it's not, again, just a matter of literacy, although literacy does certainly, you need that foundation as well.
SPEAKER_02I like the anecdote or the the analogy of having the trainer, having the person that is in a constant conversation with you about something that's almost biologically written. I mean, I think we do have a code in us that is about surviving until tomorrow, but we probably also have a code in us that's about doing the right thing. What is it that you see predominantly pulls people off that causes the dissonance to eat the junk food from a financial perspective?
SPEAKER_01Yeah, I think it really comes down to time inconsistent preferences, technically. So this is related to our present bias. So present bias basically means that anything that happens in the present moment is psychologically magnified in our brains. So if you take a look at any trade-off choice, you are giving up something in exchange for something else. So, for the example of you know saving for retirement, the trade-off that you're making is foregoing current consumption, which is a little bit painful, in exchange for hopefully a very large retirement nest egg down the road, which is very pleasureful. And so on paper, that looks like a totally rational trade-off. A little bit of pain consistently on a regular basis in exchange for this big pot of money down the road, totally rational. But that's not how it looks in our brains. What happens because of this present bias is that anything that happens in the moment is psychologically magnified. So that little pain that we're feeling by putting money away and foregoing consumption feels like a lot of pain because it is happening in the moment. And the payoff of having that large portfolio down the road is psychologically minimized because it's so far off into the future. I'll give you a great example of how this manifests. There's this really cool experiment where researchers went to a company that was having a workplace seminar, and the seminar was in advance in like in a month, and they said, we want to run this little test. We're gonna provide all the snacks that people want, and we're gonna ask them to choose in advance, 30 days in advance. You know, do you want a healthy snack or an unhealthy snack, right? It's like a fruit salad or a chocolate bar, something like that. So when people chose in advance, they know that, yeah, you know, on average, you know, eating healthy is probably better for you. So two-thirds of the people chose a healthy snack, and one third chose a naughty snack. Then on the day of the workplace seminar, the researchers did something kind of cheeky and they said, Hey, we lost everyone's order sheet. We don't know what you ordered originally, but the good news is we have more than enough snacks of both types. So just choose again. And in the moment, people's choices completely inverted. Now, two-thirds of people wanted the unhealthy snack, and one third wanted the healthy snack. And so one of that's one of the sort of takeaways there is that when you can make decisions in advance, you may be more likely to make a more optimal choice in service of your future self than if you were to make a decision in the moment because of that present bias that we have.
SPEAKER_02Well, that's a great way of framing up my next question because some of those people chose the healthy snack in the moment, meaning they either really love fruit salad or they have found a way to hack that desire to have the fun thing right now in exchange for the bad outcome later. They have found a way to make the right choice. So have you seen or developed or talked or researched ways that people can almost turn that bias on its head to choose the right thing now? Is there a way of tricking ourselves?
SPEAKER_01Yeah, great, uh, great question. You know, these these biases exist to different degrees in different people. So for some people, it doesn't take a lot of willpower to choose the healthy choice, uh, but for other people, it certainly can. And if you know you're in that group of people where it is more of an issue, one of the antidotes is having systems in place, you know, having frameworks for making decisions before you actually have to make a decision on the spot. So if you had a framework that said, listen, I know that in the moment I will tend to reach for something sugary or whatever, then whenever you're presented with this choice, default for something that is healthy and just don't think about it. And that as simple as putting together a simple framework like that in advance can help you make that decision to avoid dwelling on it. Because if you dwell on it, then you get tempted by the sugar and the taste and all this stuff. But if you have a system in place, it can help you stick to a different framework that you naturally want to lean into.
SPEAKER_02Do you think advisors are part of that framework? I mean, at least then there's this sounding board that stops you from pulling out your phone in the middle of a subway ride and making a trade that maybe you shouldn't. Is it it's kind of like having the trainer. Is there a really important role there that the advisor is playing, or are just some people need that person and others don't?
SPEAKER_01Yeah. So for my own research, you know, I looked at uh both uh differences in types of advice that's available, but also the difference in people. And, you know, some people they are more uh delegating in terms of how they use the financial advisor, and other people they really rely on the financial advisor to just carry out what they want done. And it's really more of a time management uh perspective for them. So it really depends. But what I would say is for the average person, you really should be leaning on your financial advisor to help you with your decision making when it comes to anything to do with money and quite frankly, your life, because money is a very narrow way of looking at things. Money is really in service of your life and your values and what you truly want to achieve in life. And so if you can create systems, and one of the great ways to do that is with a financial plan. And one of the first things that most people would know who've been through a financial planning process is you have to sit down and really figure out what do you want out of life? What are you trying to work towards? And if you have more certainty with what you're working towards, then all the decisions that you make that are in service of those goals aren't gonna feel as arduous. If you're just saying, well, I should make better decisions with money and you have no sense of purpose as to what that future state is gonna look like, you are less engaged and invested with the strategies that will get you to a better place financially.
SPEAKER_02I like that a lot because it speaks to something you said a couple of minutes ago about having so many options in front of you. But when you have the discipline or the willpower based on a very simple system, you're basically found a way to reduce cognitive load. And by having that long-term goal with the advisor, you've also found a way to kind of reduce cognitive load in that now we have instead of a billion options in front of us, we maybe have a very small, a special, unique set for that person. When it comes to um having that clearer picture because of that long-term wealth plan and those clear goals in the meantime, how do stress and uncertainty cut into that, to that, that framework? Because that seems to be a big part of what's happening these days for people as well. I was just in a taxi cab cab earlier this week on the way home from the airport. And the gentleman very appropriately said, Well, you know, a lot of us don't want to be investing right now because it's a scary place to be. And yet last week on my podcast, I had a guy telling me that politics and markets are two different things. So, what do we do when stress and uncertainty start cutting into the designed plan that we've made?
SPEAKER_01Yeah, that's a great, very insightful question because it is something that a lot of people deal with. And we have a um a number of different cognitive biases. One that is most relevant to that is what's known as the action bias. And this is a tendency to want to do something when faced with some kind of time or pressure constraint. And the news is a perfect example of that because it's always trying to disturb you and motivate you to do something. You just don't know what exactly you should be doing. So I'll give you a um a very famous uh paper looked at professional uh soccer goalies in the Premier League, I think it was during penalty shot situations. So, you know, when you have a tie game, um you you sometimes, and depending on the sport, settle it through uh a series of penalty shots, penalty kicks. What they found was during these penalty kicks, these soccer goalies they dove to the left or to the to the right almost every single shot. It was like 94% of shots, they would dive to the left or the right. And when the researchers analyzed the actual shot trajectories, what they had found was had these goalies simply stayed in the middle and not move, they actually would have stopped more shots, won more games, and presumably made more money. But the funny thing is that if you were to tell a professional soccer goalie, hey, do you know that statistically speaking, the best thing you can do is nothing and just stay in the middle and do not dive to the left or the right, and you'll stop more shots and win more games, they'll keep on diving. And there's a couple of reasons for that. First is they're paid a lot of money, they're highly scrutinized, they've got all these fans in the stadium looking at them. And if they stood there in the middle and let even just one goal in to the left or to the right without diving, because it was the statistically correct thing to do, the fans would be up in arms. And so there's a lot of pressure to do something in the moment, especially when you're scrutinized and being paid. So there's a perfect corollary to the financial world and wealth management. And that is when people have a plan which includes an investment policy statement which contemplates in advance what you should be doing under different scenarios, when to rebalance and what have you. Whenever there's news in the you know, the the headlines are talking about, you know, this market has dropped, uh, recession is coming or whatever it is, there's a tendency for a lot of people to look to their financial advisor and they see that financial advisor as that soccer goalie and say, you need to do something because there's danger around. And, you know, the best thing that you can do as a financial professional is stick to the plan. And the problem is there's this emotional disconnect because your client is now saying, you need to do something. And if you just go to them and say, Yeah, we should just stick to the plan, which contemplates that this happens from time to time. There's short-term volatility, which is unpredictable, but that's the trade-off for wanting higher potential long-term returns. All they're seeing is that you're being flippant and they're not emotionally listening to their pain. And so, what I counsel a lot of people in the business to do is don't waste this opportunity to emotionally engage with your client. They have a pain that needs to be alleved. And you can actually alleve that pain while still doing quote unquote nothing to the portfolio. So, how do you how do you sort of figure this paradox out? You have to do something, and that something is re-engaging in that initial conversation you had about how your portfolio was built in the first place. Because while financial advisors, they live and breed that stuff, their clients have heard that explanation one time at the beginning of the relationship. It could have been 10, 15, 20 years ago. And so they've forgotten, first of all, they forgot 80% of what was said in that first meeting 20 minutes after that meeting because it's very complex stuff and they're hearing it for the first time. The retention is low. But give it five, 10, 15 years, and they've remembered virtually nothing. So if you can re-engage and go over that portfolio construction process all over again, they're gonna see that, yeah, you know what the answer is to stick to the plan and do nothing. But you've done something, you've made them felt heard and understood and helped educate them, re-educate them about the process that is in place, which ultimately leads to sticking to the plan. So you do both. You you serve that action bias, they want to see something done, you provide that education, and at the same time, you do what is academically the right thing to do, which is stick to the plan.
SPEAKER_02100%. Traditional wealth management focuses on a few key moments: your first house, sending your kids to university, when you retire, and when you die. Will you have enough? Will you die with too much or too little? These are questions of a very finite nature. Our approach goes above and beyond, with the belief that wealth is not just money, but comes in at least four forms: time, money, energy, and attention. And that wealth is a wave that you can learn to ride to a life well lived, a life where you flourished, where you surpassed the finite game of having enough, to experiencing the infinite game of playing forever. Instead of just focusing on a few of life's moments, we focus on all of the moments between the 1440 minutes of each day, the energy to be harnessed from each and every sunrise, every meal, and every great night's sleep. The power of connection and meaning that all four forms of wealth, time, energy, money, and attention can access. This is what it means to flourish. So the question is, which wealth advisor is right for you? An advisor who helps you open the door to a few of life's moments or to all of them? Consider this. In the next 24 hours, you have 1440 minutes, and it takes just a few of them to contact me at grivers at asante.com. Doing so could be one of the best investment decisions you ever make. I love what you're talking about here because it kind of sounds like one of the roles we play as advisors is helping to stretch the client's definition and understanding and relationship with time, because that's what you're doing, especially if you've had that client for 20 years and you take them back to the initial investment policy questionnaire conversation and we talk through again is this framework that we set up still true? And here's how it works. Also, in the wealth planning conversation, you're having them think about something that's 20 or 30 years down the line. Now, when I saw you speak in October here in Toronto, you talked about a couple of interesting AI tools that you have used and you showed us that helped clients redefine their relationship with time. Do you know what I'm talking about with the videos? I'd love you to talk about that.
SPEAKER_01Yeah, absolutely. So, you know, we talked about um timing consistent preferences and our present bias. And there's been a lot of research that shows that if you can address this present bias, if you can somehow make the future more salient, a little bit more tangible and less abstract, then you can sort of undo what our brain does in terms of inverting the trade-off, right? So with present bias, we magnify the emotions, positive and negative, if they're happening right now. And whatever the trade-off is down the road, whatever that is, positive or negative, that is minimized because it's so far in the future. So, how do you reduce the psychological distance between your present self and your future self? So there's been a lot of research in this area. The first uh sort of bits of research that were very popular were showing someone an age-progressed rendering of what they would look like in 20, 30, 40 years. So if you ask someone, you know, how much do you want to save for retirement, they'll see X dollars per month. If you then show them a photo of what they'll look like at retirement age and then ask them how much do you want to save for retirement, they'll say X plus 20%. So they choose to save more simply because now the future is a little less abstract. Yeah. Yeah. And so we can now take this further with AI and the various tools that we have available. So one of the strategies that I suggested to people to use is to use something like ChatGPT, input all your goals, all the things that you want to achieve in life, and say, listen, here are all the things I want to achieve in life. And I want you to create a beautiful narrative story about a dream day in the life of me at that age after I have achieved everything that I want to achieve. And so that's part one. It'll create this really compelling story, which even if you just read that, that's going to connect you more with your future self. It's going to be more vibrant, more tangible in your mind. But then we can go a step further. So there's another tool, and this one is free to use. It's called Google's Notebook LM. And what you do is you take that story that was. Written by ChatGPT and you feed it into Notebook LM. And there's a feature within Notebook LM that allows you to create a podcast and it will generate a conversation between two people and it sounds indistinguishable from two human beings. It is that good, the technology. But it'll be based on this document that you give it. So you say, Yeah, just create a podcast based on this document. And then when you hear two people and they talk so compellingly, when they talk about this dream day of your future self after you have achieved everything that you want to in life, people get excited to do financial planning. They're like, Yeah, okay, I get it. I want that, and I am willing to do more today in order to make sure that I actually achieve those things that I just heard about and was so vivid in my mind. So this is a great exercise that I recommend anyone to do. And um, anyone who has done it, be prepared that you may cry. It is so emotional, and that's part of what makes it so compelling because it is so personal and it really connects you with your future self.
SPEAKER_02It sounds like it does. And now I have to go do it again. I had done it once in October, but very, very quickly, just to sort of get a taste of what the technology could do. I want to talk a little bit about the dark side of that idea, which is maybe what prevents people, what is standing in the way from that outcome, from that reality. And I feel like what you've described as a tool, as a couple of tools, are ways that we can tap into our own neurobiology to be able to relate to the future. But what is currently standing in the way in our financial ecosystem of people having confidence, sort of using that tool, which I think is great, but there's other things that are popping up now and again. Maybe it's complexity, maybe it's instruments that don't make sense, maybe it's jargon. What do you see as things that are in the system right now, maybe the top two, if you will, that are undermining people's confidence?
SPEAKER_01Oh, social media. Uh, that's top. I think that um uh a friend of mine, Dr. Greg Wells, I think he was the first one that I heard say it, but I think there will be at some point in time we will look back at social media the same way that we look at smoking in terms of how bad it is for our health, specifically our mental health. It is a constant point of comparison, a constant source of noise, a constant source of anxiety. And it amplifies the present bias that a lot of people have because it makes everything that's happening today, which is what gets the click from the views, gets amplified because people want to talk about what is in the news. But there's another phenomenon, you know, which goes back to our evolution, and that um, you know, it was all about survival of the fittest. And so we compete. And what do we compete on? We generally only compete on things that we see. And so we see on social media everyone's vacations, you know, their new house, they just bought the new car, they just bought uh various renovations that they've done, you name it, it's it's their highlight reels that we're seeing all the time. We don't compete with uh how little debt they're carrying, uh, because you don't see that. It's not put anywhere. People don't walk around with a number over their head that tells you their net worth. All you see is the asset side of the equation. And there's uh a study that looked at, I think it was actually looking at data in Alberta, uh city in Alberta. What they found was if your neighbor wins the lottery, everyone else in the neighborhood is more likely to go bankrupt. And so it sounds counterintuitive, but what's happening is that, you know, if someone wins the lottery and they have this big cash windfall, they start buying stuff, you know, as you see more toys in their driveway, like uh a boat, uh motorhome sports car upgrades, you name it. And so when people see that, they think, well, I should probably be spending more money too to keep up. Of course, you don't know where they got the money from, how they're maybe they're financing it and what have you. So when other people who have no influx of cash start spending more to compete, they put themselves into a more financially precarious position and therefore they are more likely to go bankrupt. So it is a perfect example of you know how I why I believe that social media is probably the one of the biggest things getting the way of people achieving their financial potentials.
SPEAKER_02I look back and I think about it often, but I look back over the last 50 years, particularly with the financial industry, but also with technology. And you can see there's this like rise and fall of a tool is introduced, it crushes on increasing productivity, and then it starts to get misused and it it kind of starts to wreck us. And I think the computer is a good example of that. But this is my opportunity to ask you about the financial program that you have invented, which I think is an excellent way to spend time with a device that would forward people's financial development and confidence. So, can you talk to us a little bit about that?
SPEAKER_01I'd be happy to, and thank you for the opportunity to do so. So it's called your moneydegree.com. And this was born out of a couple of uh motivations. One was I was frustrated with continually seeing people getting shut out from access to quality guidance. So, generally speaking, the system works such that if you already have a lot of money, you have access to better quality advice. And that is a function of, you know, if you're a financial advisor, you're just starting out in the business, over time you gain experience and education, and you start earning the trust of people who have more and more money. So we always sort of graduate up to work with people who have more money, which means that people who don't have a lot of money yet, but potentially a lot of potential, they're relegated more towards the sales end of the business, unfortunately. And so, you know, if someone came to me and said, Hey, I've got a million bucks, two million bucks, can you refer a financial advisor? I have a Rolodex full of people I could confidently refer them to. Someone comes to me and says, I've got$100,000 less, I have zero confidence in where I can send them. That has been a problem since I got into the industry. So your money degree is designed as a next generation financial literacy platform. It is, yes, a video-based course. So it's me talking to people about the absolute basics in a holistic manner. Everything from what is a net worth, how do you calculate your net worth, create a budget, how do you optimize your workplace benefits, how should you think about renting versus buying a home? What is estate planning? It covers the basics of what people need to know about managing money. But then the next generation part of it is that there is a companion app. So after each module in the course, there is a corresponding module in the app where you then put into practice what you just learned. So after module number one, which is learning about what net worth is and how to calculate it, you then go in. Yeah, and you build your net worth statement. Module two, budgeting. You go into the app, you then create your budget. And so I kind of uh jokingly say that I should have called it money see, money do, because that's sort of the pedagogy of it all, right? But the other sort of way of looking at it is that this is what they didn't teach you in school. So this is your money degree and you can get it yourself.
SPEAKER_02Absolutely. And as a guy who knows as much as you do about behavioral finance and the science behind our decision making, you gotta know that if you're doing those modules and then building the thing, you're probably weeding out a whole bunch of other noise. Did you keep those biases in mind when you were designing it? Or is it just natural that some of those biases drop away once we start to do this work?
SPEAKER_01I did. And there's this paradox of choice. And uh when we're overwhelmed, uh, sometimes we get paralyzed into not doing anything. And so one of the things I really wanted to do is just simplify things down to what you really need to know. So it's kind of like the Pareto principle where 20% of your actions are going to drive 80% of your results, right? And so I tried to distill it down to when it comes to all these different aspects of personal finance, here's the really important stuff that you need the fundamentals for. And then once people put that into place, some people might end up doing a lot of stuff on their own. Some will probably end up, once they amass some wealth, uh, delegating to a financial advisor, but they'll be in a better position to have confidence with whatever path they choose because they'll have that foundation, which until recently really wasn't taught in schools. It was really learned by trial and error, which is a horrible way to learn about money. Because if you make big mistakes early on, just like you know, time is the secret ingredient in compounding wealth over a long period of time, if you make mistakes early on, that compounds as well. And so you shouldn't need to make mistakes to learn about money. You should just be taught the fundamentals to avoid the very avoidable mistakes that a lot of people do make, because again, we were never taught this stuff in school.
SPEAKER_02100%. And I do wish it, I've said now for 20 years, I should get more involved in the education system, but there's only so much time we have as advisors. And there's been this increasing amount, I'm sure you hear this all the time from advisors, maybe not just in Canada, but increasing amount of compliance burden that has made it so that it is even harder to take care of a small client these days. Do you see any models anywhere else in the world? I know you live in London in the UK, but do you see models elsewhere in the world where there is an access to professional advice, or is this a program that really is needed in more than just Canada?
SPEAKER_01Yeah, it I think uh sheepishly I'll say that I think it's a program that's needed more than just Canada. And I'm sure I won't be the only person providing uh an attempt at a solution to sort of cracking this nut because it's the same around the world. You know, the the compliance considerations, the red tape involved in dealing with just a household are so high that there just isn't enough time to justify working with, you know, people who are closer to the beginning of their wealth journey than people who are a little bit more established. So we haven't figured that out. And this is an attempt to do that. And this is one of the ways that technology could potentially be used to create a higher volume, lighter touch approach to advice to help people get some of that initial traction so that we have more people that, you know, the economics of the business can justify engaging in the next level of advice in their wealth journey. So I think it is a fairly universal problem just because of the of the overall economics of it. I mean, if you take a look at one of the solutions that's cropping up these days, you have, you know, fee for service uh financial advisors out there. Well, you know, if you want a comprehensive financial plan, it's gonna be a couple grand. And there's a lot of people who just can't afford that. And there's some people who, you know, it may not be the right model because it presumes that you have the self-motivation to continue with the execution of the plan and what have you. And some people have a tendency to want to save money by not going back for their regular reviews and whatnot. And so that might be self-sabotaging. So it's a very nuanced problem to sort of solve for because people are so different too, right? It a lot of the research in the old days really just assumed that everyone was the same. And that is not true if you spent any time in society at all. People are very individual, they have different preferences, different degrees of biases, and we have to account for that as well.
SPEAKER_02100%. And we're all coming from some original story of our first relationship with money, or the first time we earned, or the first time we spent, and those things kind of shape us over time. So when you're looking now back at, I guess maybe case examples or clients that you've worked with who did start young, who did have a great framework, what's at stake that we either have to win or lose, not just from the money side of things, but the other aspects of time management and energy management and and and I guess having the noise set aside, what what's at stake here for people who can start young? What does it look like?
SPEAKER_01Yeah, I think there's so much potential there. Um reducing stress, reducing uncertainty, anxiety, giving people more of a sense of purpose, which I hear a lot of people, you know, grapple with not knowing their place in the world and what they're supposed to do and what's the meaning of life and what's my purpose. And I think if you engage in sort of the long-term planning, which really comes from understanding who you are as an individual and what you want to achieve and what is important to you, if you don't take some time to really think about what it is that makes you happy, what makes you feel like the time that you're spending on any endeavor is worthwhile. If you don't know that, then it's hard to again feel alignment with your efforts versus your results. If you know what direction you want your results to be, what are the things you want to achieve, what impact you want to have on the world is, then you're gonna be more likely to spend your time in service of those goals. And for people who don't have plans and never really thought about it and are sort of lacking in those aims, there is that uncertainty. Am I doing the right thing? Is this the good use of my time? Should I be doing something differently? And that kind of to tie it back to financial planning. I'm a big fan of financial planning because financial planning is not really just about money, it is really about life planning at the end of the day. And uh the very first part of financial planning is the discovery process, discovering not only what people have and what they have to work with, but what is it they are working towards? And if you can delineate that, I think that you've solved half your problems because once that is more clear, your motivations to work towards those goals, you don't need as much motivation because you have a sense of purpose.
SPEAKER_02You have a sense of purpose. You've short circuited the presence bias so that you don't say yes to everything. You now have this filter for what it is you are and what it is you aren't. So when you look at, you've talked a couple of times about this already, but just in wrapping up, when you look at what advisors or educators or even technology are doing, what are we doing or what could we be doing even better to help people see that different definition of time?
SPEAKER_01Yeah, it's engaging more on the emotional side, on the psychological side of uh wealth management as opposed to the numbers, uh the dollars and cents of it all. And again, that goes back to if you really do understand yourself and what you want to achieve, everything else kind of falls in place, all right, because you have this North Star, which helps tell you, you know, is this moving me further in that direction, or is it taking me off this track that I want? And so it comes down to engaging the more human side of you know financial planning, the emotions and the psychology.
SPEAKER_02I love that. And I have to ask, too, do you have plans with your money degree to have a kind of Jarvis AI coach type person that would be your relationship with the application? Is that is that something because I think that's a piece that advisors deliver is this if you have the right trainer, if you have the right coach, if you have the right advisor, it's that person who is in your corner as a voice. And I wonder, is that something that we could imagine seeing in your money degree 2.0?
SPEAKER_01Well, there actually is already an AI component in there. So after someone has taken the full course and completed all the modules, they then hit this button that says, you know, analyze this and and uh give me a sense of what I should be doing next. And so it will take a look at everything. And it's um it's quite remarkable in how accurate it is, I would say, in terms of pointing people in the right direction as to what they should tackle next. So it has a sense of, you know, what is a priority, for example, if you don't have uh a will and you do have dependence, it'll say, This is the first thing you should be doing next, is making sure that you have your estate plan in order because you have people who depend on you. If you have multiple sources of debt, it'll say, listen, you carry a balance on your credit card, which is a double-digit rate of interest on the debt that you carry there. That should be a top priority. So it actually uses what's called uh an Eisenhower matrix. And this is where it takes all these different suggestions it has and it divides them into four quadrants based on effort and impact. So low effort, high impact becomes the first quadrant. So it says, listen, these quick things can generate big impact if you do them right now. And then you have high effort, high impact, and then you have low effort, low impact, and then you have low effort, sorry, high effort, low impact, which is something that you would de-prioritize because it's a lot of work for not a lot of gains. So it's a very sort of sophisticated way of triaging things quickly. I would say it's uh the next best thing to uh a human financial planner, but uh there's also still room for improvement.
SPEAKER_02I am so honored that you were able to join us here today. I've got a closing question that I ask uh actually, I ask a closing question at the end of every episode. It's the same for the whole season, but since you're the inaugural guest on season three, you're the first one to answer this one for me. Here we go. So I'm asking you to look ahead. What's the most meaningful way that either you're using or you imagine using AI to create more time, clarity, and or impact for the people that you serve?
SPEAKER_01Yeah, I mean, this is in line with my sense of purpose that I've developed in the last couple of years, born out of my research, which is people who are on the lower end of the wealth and income spectrum, they are horrifically underserved. And so AI can scale up a minimum level of quality of guidance that is available to the bulk of people. And so that is where I see myself and have been using AI and technology to try and create solutions to try and fix that problem once and for all. It feels like this is going to be my life's mission for a long time because it is a big problem. But I feel like there's finally some light at the end of the tunnel.
SPEAKER_02That is very exciting. And you and I have more to talk about on that because I hope I could contribute in some small way to that with the work that I do with the regulator. I have to say it was such a breath of fresh air to talk about how this concept of seeing the longer future can actually allow us to see money as a thing that can reduce stress instead of compound it. Because I think when you focus on the present, money tends to be the stressor. And in fact, it's actually a solution provider. And confidence, I'm hoping, is something we can all design together for more Canadians and more people around the world. Preet, thank you so much for joining us today. I wish you the most wonderful afternoon.
SPEAKER_01Thank you so much for having me. It's been a real pleasure.
SPEAKER_02Join me next week on the Flourished Feed Podcast to keep exploring the infinite game. In the meantime, remember to stay curious, turn your passions into purpose, and play hard. I'm rooting for you. This program was prepared by Gillian Stovell Rivers, who is a senior wealth advisor with CI Asante Wealth Management. This is not an official program of CI Asante Wealth Management, and the statements and opinions expressed during this podcast do not necessarily reflect those of CI Asante Wealth Management. This show is intended for general information only and may not apply to all listeners or investors. Please obtain professional financial advice or contact Gillian to discuss your particular circumstances prior to acting on the information presented.