This Brian Portnoy take really resonated with me. He says we (the finance industry) have created a “Behavioral Finance entertainment complex that does very little to help real people make real decisions.”
In a nutshell, people are predictably irrational (as Dan Ariely put it).
We know a lot of ways these irrationalities manifest.
In the business of advice, avoiding costly errors is one easy way to improve results. So – point out the irrationalities and get to fixing.
But not all irrationalities are created equally. Sometimes suboptimal is good. Sometimes “Stairway” or “Bohemian Rhapsody” is what the party needs, and sometimes it’s “Blitzkrieg Bop” or “It’s My Party And I’ll Cry If I Want To,” or _____ (your pick).
Portnoy’s mission is to take our knowledge of biases, accept that they’re not all (always) mistakes, and figure out better ways to work within our foible-filled minds.
I am so in for this and what his new firm, Shaping Wealth, is doing.
If interested, check out “Behavioral Finance 2.0” with Dr. Daniel Crosby and Dr. Brian Portnoy on the Standard Deviations podcast.