Behaviour Finance with Brian Portnoy | E104

Financial Planning For Canadian Business Owners

Jason Pereira talks to Brian Portnoy, Founder of Shaping Wealth and author of three books, including the must-read advisor book - The Geometry of Wealth. Brian is a well-known expert in the field of behavioral finance, and he will talk about what behavioral finance is and how it affects our decision-making and our relationships with the people advising us.

Episode Highlights:

• 07:16: We think of ourselves as kind of thoughtful, critical thinkers. But the fact is that the main elements of the brain are designed or evolved to basically regulate all the different biological or physical systems inside of us, says Brian.
• 09:19: We see good financial planners enter their practices in day-to-day is dealing with people as who they are, as opposed to who in economics textbook said they should be, says Brian.
• 11.21: Brian says that their brain is a gas guzzler, and it soaks up a ton of energy. It doesn't want to work that hard because we are constantly trying to be efficient, and in the way we use energy, it produces specific outcomes, especially in the context of our decision-making that are quite consequential.
• 12:34: The brain tends to seek out information that merely aligns to what we were thinking before, says Brian.
• 14:41: Jason has read in multiple places that the brain, when under stress performs worse and our IQ gets dumber when we are under prolonged stress and our ability to process information just diminishes.
• 19.50: We need to stop pathologizing normal human behavior and just work with the people who show up in all their messiness and complexity, says Brian.
• 21:27: Brian explains what they are doing with Shaping Wealth and how they are trying to move beyond that general construct of just understanding dump of information checklists.
• 24:29: Each of us is born with a certain level of emotional intelligence, just like we have a certain IQ, and emotional intelligence is just not a trait that we're born with, it's a skill.

3 Key Points:

1. There is a whole stack of evolutionary remnants that are built inside of us that really do not map to the traditional economic man model.
2. One of the unsung tasks of modern behavioral finance is that advisors get to know themselves as well or better than they are getting to know their clients and stop acting like some diagnostic expert.
3. Positive psychology is a distinct field of psychology and the science of happiness. It's basically saying what are the inputs to a life well lived.

Tweetable Quotes:

• "Behavioral finance is basically a science and a discipline that sits at the intersection of economics and psychology." - Brian
• "One of the key assumptions in traditional economics is that more is better, and from an empirical point of view, that's not the way we are wired." – Brian
• "If someone is coming to you because they think that you can pick investments better than the next guy, I think you have a competitive problem. But if they think that you are better at structuring the estate just perfectly, it's hard to distinguish yourself on those sorts of things." - Brian

Resources Mentioned:

• Facebook – Jason Pereira's Facebook
• LinkedIn – Jason Pereira's LinkedIn
• https://www.shapingwealth.com/
• https://www.linkedin.com/in/brianportnoy/

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