Dr. Daniel Crosby: The Psychology of Client Decision-Making Explained
43:46 Share

Capital Ideas isn't just a podcast. It's 90 plus years of data-driven insights from Capital Group, one of the world's largest active investment management firms. Available wherever you get your podcasts. Published by Capital Client Group, Inc. Reason leads to conclusion, but emotion leads to action. In today's show, Steve has a conversation with Dr. Daniel Crosby, the Chief Behavioral Officer at Orion Advisor Solutions.

Dr. Crosby is also the author of several influential books on behavioral finance, including his latest work, The Soul of Wealth. Steve and Daniel discuss why reason alone rarely changes minds and how financial advisors can use emotion, empathy, and behavioral techniques to guide clients through high-stakes decisions.

They also explore the importance of functional fictions, how our entertainment-focused society is dulling people's ability to make good decisions, and why bringing more soul into wealth might be your highest value to clients. With that, please enjoy the conversation with Dr. Daniel Crosby. We often think that, gosh, if I just have a persuasive case, if I just show the facts, if I provide some context and some background and I educate people,

that the client will understand and they'll make a good decision based on that. But that's not always the case. So why is it that as humans presenting good, factual, educational information isn't always going to persuade someone?

Yeah, so we'll start off perhaps unexpectedly with a book recommendation. If you're interested in the art and science of persuasion, Robert Cialdini's book, Influence the Psychology of Persuasion, I simply cannot recommend highly enough. It's just a fantastic book, which looks at sort of the six different dimensions of persuasion.

You mentioned, I think, the place where most of us start and where certainly most financial advisors start, which is with the math, with the facts of the case, the analytical piece, the mathematical persuasive piece. And it turns out that is one piece of it. That's not nothing. But if we introduce the facts in the absence of a relational grounding, we risk something that psychologists call the backfire effect.

So the backfire effect was initially studied with regards to medical research, and they found that people who had these sort of, frankly, quacky ideas about different facets of medical research and vaccines and different things, they found that when they were presented with contradictory factual evidence that undercut their claims, that

Not only were their minds not changed, but they actually doubled down on their bad beliefs and became more deeply ingrained in their bad beliefs. And since this has been studied in a host of places, religion, politics, anything where there is a strong emotional valence,

If we try to undercut that strong emotional valence with a factual persuasive tactic, we actually run the risk of making it worse. You're not going to change anyone's mind with the math and the absence of a relational grounding because it requires people to admit that they were wrong and that they might have been wrong for a very long time and they fear that they will lose face in front of you.

So at Orion, we have this sort of five-part conversational framework for having hard conversations with clients. And the math is the fourth piece. And all of the pieces leading up to that are about establishing rapport, establishing connection,

because they have to feel like you care. They have to feel like you have their best interests at heart. They have to feel like changing their mind is aligned with their own purpose and where they want to go, or they simply will never do it. In a previous book I wrote, The Behavioral Investor, I looked at fMRI research and

on the emotional valence of different conversational topics, right? So they would hook people up to brain scan machines, and then they would talk to them about sex and death and religion and politics and all of these sort of hot button issues. And they would measure how much electrical activation there was in the brain.

Steve, the conversation that elicited the most response was money. More than sex, more than death, more than religion, more than anything, our most emotional conversations are around money.

And when we try and meet that emotion with fact in the absence of care and love and connection, it is bringing a knife to an emotional gunfight and it just does not work. There's a quote from Jonathan Swift that I think is probably appropriate here. I'd love to get your take on it. He wrote, reasoning will never make a man correct an ill opinion, which by reasoning he never acquired. And so the idea being that if my belief is

if my opinion that I hold, if I didn't acquire that through deep research, factual analysis, if I really acquired that through an emotion, through TikTok, through someone that maybe I respect, whether what they're saying is accurate or not accurate, that to get me out of that belief,

There's no reasoning that's going to do that because I never use reasoning to come up with that belief in the first place. Does that play at all into the research that you've done? Yeah, that is a perfect quote. And precious few of our opinions are arrived at through reason. If you look at the research on how people form opinions, it's a little scary, candidly. But basically what happens is,

We think that our brain, that our reason is the filter, but what our reason ends up being is more like the PR department. We have something that we want to believe, right? We have something that we want to believe emotionally. And then we work backwards to retrofit factual or reasonable arguments to support that case and give it a patina of sensibility.

But really, it's emotion that's driving almost all of our beliefs, almost all of our decisions. And we're working backwards to, again, retrofit that sensibility onto it. Most people assume that it works the other way, that we move through the world in a primarily rational way.

And then only occasionally does extreme emotion sway us from being homo economicus, this perfectly rational man. It is quite the opposite. We are emotional beings.

only sometimes looking for rational arguments to support the things that we very badly want to believe for emotional reasons. So I agree with the quote, and I would further add that almost all of our beliefs are emotional. Very few of the things that we believe, especially the things that we believe most deeply, are

Things like faith, political tribalism, beliefs around money. Most of these are inherited or just emotionally resonant more than they are rational.

Yeah. Another quote that I heard a long time ago was reason leads to conclusion. Emotion leads to action. And I'm sure you've seen the research as well that was done a number of years ago where they had a patient who had some part of their brain was cut off the part that was like the emotion aspect of the brain. And what they discovered was the person couldn't make a decision.

to your point about if we don't feel an emotion, we can't make a decision. How do we think about the emotions that we feel that will enable us to make decisions that ultimately could be in our best interest? Is that even a way to think about it? Yeah. So let me see if I'm answering your question here. So the research you're talking about is definitely quoted in Damasio's book. I don't remember. Yes. Antonio Damasio. Yeah. I can't remember if he did the research or not. It's definitely quoted in his book.

And to further riff on that, what was fascinating about that research is they found that there is an emotional substrate of even the most just quotidian, benign, everyday decisions that we make. Like people who had these emotional processing centers of their brain damaged, they couldn't

pick which ice cream flavor they wanted. It wasn't just high-stakes stuff. They couldn't figure out if they wanted to wear the white shirt or the black shirt. It was just, it demonstrated the degree to which there is an emotional current running through even the smallest decisions in our lives. And so when you start to see this everywhere, which is truly where it is, you realize that there's no such thing as an emotionless decision.

We give this advice, I think, in a well-meaning way. I think in the world of finance, we say, hey, you just have to be clinical. You just have to be- You have to control your emotions. Yeah. Like you got to keep your emotions under wraps. Go back to what I talked about earlier. There's nothing that's more emotional than money. So the idea that a decision, especially a decision about your wealth, your net worth could ever be stripped of emotion is candidly crazy.

But we can do two things with respect to emotion. One is we can halt. So in the 12 step literature, they have this acronym in the recovery literature. They have this acronym halt, which stands for hungry, angry, lonely or tired person.

With the thought being, if you're recovering from whatever, you know, substance abuse disorder or something like that, you don't want to be making big decisions about your life and your recovery when you are hungry, angry, lonely, tired, or fill in your strong emotion here. I do think it's safe to say about our money as well. When we are feeling...

especially exuberant, especially sad, especially whatever. I think these are good moments to stop, take a pause. And sure enough, the research suggests this is like very unsexy, but very true that one of the best things that you can do for your money is when you have a strong compulsion to do something dramatic, go all to cash when you're worried about the markets and

One of the best things you can do is literally to sleep on it for 36 to 48 hours to take a day or two and just sit on your hands and do nothing because you are still emotional, but you're not in this heightened emotional state in one direction or another. So that's one piece of advice with respect to the emotion. The other piece of advice is understanding that we are inherently emotional and

is aligning your decisions with those emotions. To give an example, there's research that I talk about in The Soul of Wealth where people who looked at a picture of their children before making a financial decision make better financial decisions, save more for retirement, etc.,

than people in a control group. Now, to be clear, that's totally irrational. That's in the strictest sense of the word, that's an irrational choice. But it's one that I'll take. If I'm your financial advisor, it shouldn't take you looking at a picture of your kids to save for your retirement. But if that works, it works.

And I think there are ways where we can align our emotions with the better angels of our nature and the better angels of our financial nature.

And make good choices. And that's always going to be easier than white knuckling your way past some hard emotional time. A couple of things I want to touch on based on what you just said there. One of the two strategies you mentioned there was to sleep on it. And I had a conversation here just in the past week with a financial advisor.

And we were talking about a very difficult decision that he had to make. And we were talking about, well, what's my thought on the topic? And we looked at a number of different scenarios. And I said, here's what I would like you to do. I want you to make the decision to do blank. Because I knew where he wanted to go with the decision, but he was just trying to get some confirmation. Is this really the best decision? So I said, I want you to make the decision right now that you're going to go and pursue strategy A.

And then I want you to sleep on it tonight. And then I want you to wake up tomorrow and ask yourself, how does that sit with me today after having made the decision yesterday that I'm going to do course of action A? And I said, I think your body, your guts, your intuition is going to tell you whether that's a good decision or not. So not just sleep on it, but actually make the decision today.

to go one way and then sleep on it and then wake up and see how that makes you feel. Maybe a riff on the old Solomon idea, cut the baby in half kind of thing. But yeah, I don't know if you have any thoughts on that little twist to that idea. That's a brilliant intervention, right? Because I think one of the things we get caught in rumination and just the seesawing back and forth between two decisions, look, make a decision. Okay, this is what you're doing, but you don't have to enact it yet.

There's an intervention in psychotherapy called paradoxical intention. It's not quite what you did, but if you have a client come in who wants to stop smoking, most therapists would go, okay, here's the things we're going to do to help you not smoke. In paradoxical intention, you just go, okay, I want you to go smoke your brains out. Like for three hours a day, I want you to smoke as many cigarettes as you can.

And they'll go do this. And they'll even say, hey, for someone who's anxious, I want you to worry. Make me the longest list of horrible things that could happen for two hours straight and then put it aside. And people go, oh, when they have to live with this extreme version of that thing, they realize how silly that it is. So there's something to be said for trying it on and then sleeping on it. I thought that was well done. You're an honorary shrink, Steve.

I'm not a real one. I just play one on podcasts. How's that? A second thought I want to share is how much of this is biological in terms of our decision-making. And what I mean by that is we think about how the brain developed over the whole history of human beings, right?

Did it evolve for us to seek the truth, to come up with the best decision? Or was it more about, hey, we've got these wild animals chasing us and we're trying to seek safety and shelter and survival and adaptation. So does the brain help or hinder us when it comes to making, quote, good decisions?

This is exactly the right question to be asking. I'm in nerd heaven now. We're going to go deep, Steve. So we are, to answer this question, you have to think about what humankind does best, right?

It's not communication because like dolphins do that, right? And it's not opposable thumbs. Chimps have those. Like all the things that's not tools, crows can use tools, like all these things that have been put forward as why we're at the top of the food chain. It's not really any of those things. The thing that we do the best is that we work together, right?

And the way that we work together is by agreeing to operate as though things that are not true in the strictest sense are true. So the borders of the state of Georgia don't exist in nature, but we act as though they exist, right? Like,

the principles, the rule of law in the U.S. Constitution. Like we made that up, but it serves a purpose. And we, at least historically, have abided by the rule of law in the Constitution. So that's what we do the best. They call these functional fictions, is we agree to operate as though things that are not actually true in nature are true. And this allows us to cooperate.

That is the profound upside, is that we can build churches and governments and rules and civilizations. And this is a wonderful thing for human cooperation. And it's why we've flourished. The downside of this, though, is that we tend to move as a pack. And again, in one of my previous books, there's this famous psychological experiment called the Ash Experiment, where folks are shown a line on the left,

And they're asked to compare it to three lines on the right of different sizes and say which line on the right looks like the same size as the line on the left. I have an eight year old. She could do this with 100 percent accuracy by herself. It's the easiest thing in the world. Like one's short, one's medium, one's long. The line on the left is medium. It's the easiest thing in the world.

But what they do is they line people up so that, say, you, Steve, are the eighth respondent in a series of respondents who are doing this publicly. And the first seven respondents are in on the joke. So they give the wrong answer. And like very convincingly, let's say the right answer is B. They go, oh, God, it's obviously A. And so by the time we get to you,

What we find is that a majority of the time, you, the one person in the group who's not in on the joke, give the wrong answer to the easiest perceptual problem on the planet. And we used to think that this was strictly a matter of peer pressure, right? We used to think that you were just being effectively bullied into giving the wrong answer because you didn't want to stick out.

With brain scans, though, we can monitor people's brains while they're going through this and other people giving the wrong answer literally changes the way the brain perceives the literal length of the line. I just can't even explain to you how science fiction-y this is.

that other people's reality is literally shaping in the most concrete way, the way that you view the world and the things in the world. So we are in some ways, we could not have been wired any worse to be investors because we are wired for certainty. And as we're finding out this year, being a good investor takes a lot of dealing with uncertainty.

We are wired for now and being a saver and an investor requires you to privilege tomorrow. We are wired for certainty and immediacy and action. And we know from 19 different countries where it's been studied that the more you trade, the worse you do. So everything that's required of being a good investor is 180 degrees on the other side of how we are wired today.

to be these herding cooperative creatures who trust the tribe and privilege the tribe above everything else. Give me a lot of angles here. Told you we were going deep. Yeah. Okay. So one that certainly stuck out there,

was this idea of when you're talking about the different size lines and seven people are in on the joke and said, we used to think it was simply peer pressure, but now the studies of scanning and everything indicates that it's actually rewiring how our brain thinks, which is super scary. And if you think about, we see this, I don't want to turn this into a political conversation, but we see this around the world where political strongmen will continue to communicate their

either misinformation or just outright lies. And if they repeat it long enough, what I hear you saying is that if something that may not be true, if it's repeated often enough, that a lot of people, their brain will actually rewire, maybe particularly if they're already aware

partial to what is being said, even if it's not actually true, but they want to believe that it's true, that is rewiring the brain. So did I get that correct there? Yeah, you definitely got that right. And in a less political arena, you can even see this in sporting events. If you see a contentious penalty or a foul at the end of a game,

where team A and team B have very different ideas about who was at fault or whether or not it was a penalty or a foul. And we can see that it's motivated reasoning. The way that people reason has everything to do with the outcome that they want to see. And two people from two sides of the aisle or from two competing sporting franchises can seem the same set of facts and

the same series of events and come to diametrically opposite conclusions about what actually happened. And yes, a lie repeated often enough becomes the truth, especially when back to that motivated reasoning, it's something that you want to believe. So going back to something you said here a moment ago, you called it functional fictions, right?

And I want to pick up on that. So a few years ago, I did a podcast with Shankar Vedantam, and he wrote a book called Useful Delusions, which I think is similar to what you're suggesting here with functional fictions. And what he was saying in his book is that, again, getting back to this idea of we want to believe, we believe things that may not necessarily be true, but

But in this idea of a useful delusion, there is something that having that belief, even if it's not objectively true, satisfies some need that we have. And one of the examples that he gave, and there was a situation that happened many years ago where on a fraudulent basis,

This was way before the internet. Someone had taken out an ad in a newspaper or something, a classified ad section, and basically pretended they were a woman who was lonely and was looking for companionship with men type thing. And so they would exchange all these letters back and forth. And the men were thinking that this person actually liked them. And then eventually the person is asking for money. And so then the people would be giving money. And then long story short,

It turns out, obviously, this was just all fraudulent. It was a man behind it, and he essentially absconded with all this money. Then it goes to court. And in the court case, they actually called some of the victims of this scam to testify. And it turns out that some of these victims testified in support of the person who was perpetrating the scam. And they basically said, hey, even though

I know that this wasn't what it was purported to be. It made me feel good. And it was something that I needed at that point in my life. And I'm okay actually having given that money to have that feeling, even though I know it wasn't after the fact, it's not what I thought it was.

But during the time, it met what I needed. I don't know if you have any thoughts on that or how does that sort of play in this idea of functional fictions? And how does that also perhaps play into getting back to a financial advisor when a client is nervous and market's dropping and move me to cash? We know, generally speaking, that's not necessarily the optimal thing to do, but maybe a portion...

into cash to help meet a need that they have at the moment to help them get through and survive whatever it is that they need to survive. I don't know if you have any thoughts on that. Yeah, I'm a big advocate of bending, not breaking and not letting the perfect be the enemy of the good. I

Because from a strictly rationalist, perfect understanding, 100% equity portfolio would be the right formulation for just about everyone in the world at any age. But we don't live in a perfect world. And so what we need is a portfolio that maximizes anxiety-adjusted returns and maximizes people's ability to take the ride.

For most people, there's all kinds of great examples of this about why this is hard for most people. Harry Markowitz, Nobel Prize winning financial theorist, who basically told us all about how to calculate an efficient frontier. When they ask him, what does your portfolio look like? He goes, it's half stocks and half bonds. And everyone's, what in the world? Like half stocks and half bonds. Why? I'm avoiding regret.

The father of modern portfolio theory is doing this just goofy 50-50 split. The person who invented the 4% withdrawal rule wrote an article a few years ago. The 4% withdrawal rule, of course, you've got to have at least a 60-40 portfolio. You've got to have at least a 60% equity exposure for those assumptions to work. And at the time, I believe he was 10% equities, 20% fixed income, and

and 70% in cash because he said he was so scared. It's like his own rule didn't work because he couldn't take the ride. So I think that things like if a client comes in, moving a small allocation to a safety bucket to give them a sense of action. Again, I talked earlier about sometimes rather than trying to white knuckle past the behavioral bias until we break, the thing to do is to give into it in small measure.

I can't do it anymore because of compliance rules at the firm where I work now. But for most of my life, I have kept a 3% to 5% allocation of my assets in an E-Trade account where I traded them like an absolute degenerate, doing all the things that I know that I shouldn't be doing with my quote-unquote real money, but

Because it was like a cheat day. Like it was a bend, don't break thing. I know I have this impulse to trade actively to do these things. It's like I can give into that in a measured way and it keeps me from giving into it in a more meaningful way. I think the behavioral literature would counsel us against being philosophical purists of

that just pound the table about what might be a portfolio optimal, but a behavioral suboptimal. And I think we want to bend, not break sometimes. Yeah. And I love that framing, a bend, not break. One other area that I want to touch on here today that's related is social media. What is the research showing in terms of how these new forms of media are changing?

perhaps rewiring our brain, perhaps conditioning us to think short-term, to think in six-second TikTok videos, to think in soundbites, to think in memes, to shorten our attention span, to distract us. And as it relates to a financial advisor, there's really a tension here in that the forms of media today that are so popular are

are working directly opposed to the kind of thinking that a financial advisor wants to bring into the conversation, namely long-term thinking, preparation, reason, thoughtfulness, analysis, nuance, those sorts of things. So how do you think about

social media today and what financial advisors might be able to do to counteract some of the negative influences of social media on the work that a financial advisor is trying to do. Jonathan Haidt's book that came out this year on the tragedy of social media's impact on us as a nation is really worth your time. He's a very systematic and deep thinker about these things, and he's put together a

From a financial perspective, though, I think there's some really interesting things that are happening. So one of the stats that I've really driven home as the parent of a teenager and to soon to be teenagers is that people who limited their social media to five minutes in the morning and five minutes in the evening,

had an immediate 10% boost in happiness. Now, Steve, this is equivalent to the boost in happiness we see with things like SSRI, so like Prozac or Lexapro. And I'm not poo-pooing the power of medicine. That's good stuff if you need it. But it's incredible to think that

that just limiting time on social media could buoy your well-being to that degree. And the reason why I think is well understood, it's because you and I are aware of every wart and every bump in the road in our own lives. And yet on social media, we're seeing highly curated highlight reels of everyone else's life.

And so from a financial perspective, it makes us deeply unhappy. Other research that I talk about in The Soul of Wealth that I think about all the time and I've applied to my life is who you compare yourself to is a better predictor of financial contentment, like a felt sense of being well off has less to do with how much money you have in the bank and more to do with who you're benchmarking to.

And the tricky thing is if you look at human history, like for most of human history, you knew 150 people and they probably looked like you. They ate the same stuff as you. They were probably socioeconomically very similar to you. And those were the people you knew. And that's what your world looked like for most of human history. Now, through the power of Instagram,

I can follow the richest people in the world and can compare my relatively boring existence as a suburban dad of three to someone who's jet setting all over the world. And I can be found wanting, right? I can follow the guy with the best hair and the best abs and the best tan and the best car. And we do. That's who we follow.

We follow the people that are models, that we follow the people that exhibit these superlatives, and then our lives look small in comparison.

So the research on social media and kids, it's unequivocally horrible for kids. I can't say that loudly enough. If you're letting your kids run wild on social media, you're doing them a profound disservice. And I won't couch that at all. It's very bad. But even for adults, you can be a lot happier than you are. You can feel a lot wealthier than you are if you're thoughtful about your reference class.

So be thoughtful about your reference class. Be thoughtful about what you value in a non-material sense. Be thoughtful about the legacy that you want to live in the world and follow people that embody that legacy, not just people with good abs and good hair and big bank accounts. Like you. My abs are weak. My hair is doing okay for a middle-aged guy. All right.

My colleague, Mitch Anthony, I've heard him say many times that comparison is the killer of contentment. So right along with what you're saying there, it's who are you comparing yourself to? And Mitch and I actually just did a webinar this morning. We talked a lot about social media. And one of the things that we talked about was a guy named Neil Postman. You may be familiar with him, but he's not alive today, but had written a number of books really about media, TV in particular, and

And Marshall McLuhan, who some people may be familiar with, and McLuhan has this famous line that the medium is the message. And so we talked about that as it relates to the impact that social media is having on the clients of financial advisors. And again, it's directly opposite of what advisors need to do. And one of the interesting things that I talked about was in one of Postman's books, he had a book called Amusing Ourselves to Death.

And he made a comparison between Aldous Huxley, who wrote Brave New World, and George Orwell, who wrote 1984. And in those two books, in Orwell's 1984, it was all about this Big Brother, dystopian society, surveillance, oppression, suppression. And that's how people are going to do what Big Brother wants them to do. But then in Huxley's book, Brave New World,

It was more about entertainment and distraction. And what Postman was trying to argue was that it was actually Huxley who was really more accurate in the sense that as we think about how media has evolved today,

It's all about entertainment and distraction and memes and sound bites. And so it's conditioning consumers to want to have short,

pithy answers to really complicated, nuanced problems. It's conditioning people to just scroll really fast and see what grabs our attention so that we'll stop on that and get our attention, just like on YouTube. If you want to have popular videos on YouTube, you got to make sure that you have a really attractive, attention-grabbing, provocative thumbnail on your image. Otherwise, no one's going to click on it.

And so we're getting all of these conditionings through social media, which is the opposite of what a financial advisor is trying to do in the sense of having clients

context, perspective, long-term thinking. And so in our webinar this morning that Mitch and I did, we really went into some detail on that and what are some things that advisors can do to try and bring that perspective back and expand the timeline when consumers today are being conditioned to have quick answers to long-term complicated problems. I don't know if you have any thoughts or insights on that.

So it's interesting. I think, again, we have to maybe meet in the middle. I've certainly seen the dumbing down that you're talking about. And that was my Amusing Ourselves to Death was one of my late grandfather's favorite books. And he felt very strongly about that book. And it is interesting.

The more insidious form of giving up our freedom is definitely to just waste it on TikTok. If some fascist specter showed up, we'd fight hard against it. And yet we'll shackle ourselves to like dumb ideas and little videos without mounting an offensive.

It's interesting when I wrote The Soul of Wealth, though, you'll see the book is 50 short chapters. And I wrote it, my previous books were 20 to 25, 12 chapters of 20 to 25 pages a piece. And in this one, it's 50 chapters of four to five pages a piece, because I'm trying to write for the way that people consume information these days. So I do think we as a profession can

can get better about using visuals, using different forms of media like you do. You and your partner do a great job with this, right? Meeting the people where they're at, but still understanding that there's a minimum threshold of seriousness and thoughtfulness that's going to go into these things that's not always going to fit in a two-minute video. And so I think that's

So balancing those two worlds of the thoughtfulness and the rigor with meeting people where they're at, I think is an important middle ground to stake out as an industry. Yeah. And I think one simple thing that we can do as well as financial advisors is you had mentioned earlier, we're wired for now. And so we want answers now. We want this now. And so we're just, we're not necessarily thinking long-term. And I think when you do have clients that come to you and they are looking for something

fast action answers now or whatever, or they're being swayed by the latest headline or the latest quote or the latest influencer that they found on TikTok that said something,

Okay, let's look at that and let's see what impact that may have on your financial plan over the next five to 10 years. So what we're doing is we're trying to expand the horizon. We're trying to expand the timeline from the immediate moment to let's see what impact this has over the long term on your financial plan as we've developed this. And so always trying to bring it back to the plan, which I think most advisors already do.

And then also bringing it back to the individual client in the sense that, well, let's look and see how this is going to impact you.

And so it's always about you. It's always about, let's see how this impacts what's important to you. Previously, we've identified that the things that are most important to you are A, B, and C. Let's see how this latest headline, let's see how this latest thing that you heard will impact the things that you've already identified as most important to you over the next five to 10 years. So I think if we can do some little things like that, we can...

let clients know that when you're having a conversation with me as your financial advisor, it's not about the latest headline. It's not about the latest video. It's about you. It's about what's most important to you. It's about the long-term. It's about the plan. And we're always going to keep going back to those things because that ultimately is why you're paying me to help you think like that, even though,

As we've talked about this whole conversation, we're being swayed by all these other outside influences and we're letting emotions sometimes get us into decisions that may not necessarily be the best for us. But I'm that guide and I'm not going to turn myself into a performer like a lot of these people on social media are. I'm your guide. And we always need to understand that's the role that we play as an advisor. And that's where we're really going to deliver the greatest value for our clients.

So I know an advisor who keeps old newspapers in his office. So usually five to 10 years old. So think about five years ago. I mean, it's like in the jaws of COVID five years ago. And so you have some newspaper splashy headline from five years ago that says whatever Dow crashes on global recession fears, whatever.

And so if a client comes in with a really acute fear like this, he'll bring it out and say, hey, do you know, do you remember this? That was a scary day. Legitimately, that was a scary day. We didn't know what was going on. But you probably don't think about that day much now. Five years on, you probably don't think about it. Yeah, like today, this tariff thing or whatever we're worried about today, it is very scary. And I'm not trying to minimize that.

But let's go back to the plan. Let's think about five years from now. I think what you said was brilliant. Let's revisit these values and let's think about how that's going to sit five years from now. And it does a good job of just breaking them out of their trance and lengthening that conversation a bit. We could talk about this forever. I do want to hear a little bit more about your book. You've mentioned it here a couple of times, The Soul of Wealth. So what is something that you want to

Financial advisors that read this book and consumers that read the book as well. What was your hope with the book when you were writing it and conceiving it? When this country was founded, not quite 250 years ago, 85% of the world was living in poverty. You know, what today would be $2 or less a day. Today, that number is 9%.

Since World War II, the average American home size has tripled. And yet, when you look at how we're doing as a country, as a world, we feel less well-off. We feel less grateful. We have much higher instances of mental illness and loneliness and disconnection. So we're living through this moment of unprecedented material wealth, but low levels of well-being. And

And so basically what the soul of wealth is just trying to bridge that gap to try and say, how can we take the wealth that we've created and bridge the gap from a life of substance to a life of significance? How can we take the material substance that we've accumulated and turn it into a life of significance? And for the advisors that are listening, importantly, I think that is the future of advice. AI is going to do an incredible job.

of whatever value add or differentiation remained in places like asset management and even financial planning and places like that. I think AI is just going to get so good at that so fast.

that what has been true at the margins, that the relationship was the most foundational thing. I think that's going to become amplified in the years to come. And I think the best advisors are going to be the ones that compete on helping their clients live lives of significance and meaning. And so that's what the book is all about. So just to be a little fun here, a little cheeky,

What is the six second TikTok video, the soundbite, the meme that you want people to think about as it relates to the soul of wealth?

Oh, gosh. I'll steal from the best. I'll steal from my hero. Viktor Frankl said, ever more people have the means to live, but no meaning to live for. That's the six second message that we've never been richer, but we've also never been more disconnected. Doesn't need to be that way. How can you take what you've built and use it to build a life that's worth living?

I think that's a perfect way to end the conversation today. Daniel, really appreciate it. And thank you for all the great work that you do here in the profession. You're one of the bright lights in the profession here and the folks at Orion that employ you and give you the ability to go out and share the great work that you do and all the great books that you put out. Thank you, my friend. You're great at what you do as well. That very thoughtful interview. It was a pleasure to join you.

All right. That's all for today. Make sure you like and share this podcast through your favorite social platforms. And for more great podcasts, visit us at Barron's dot com slash podcast. Take care and be safe. Capital Ideas isn't just a podcast. It's 90 plus years of data driven insights from Capital Group, one of the world's largest active investment management firms available wherever you get your podcasts published by Capital Client Group, Inc.,