This week on "Real Money, Real Experts", Rachael and Mary sit down with psychologist and behavioral finance expert, Daniel Crosby. This conversation was a fun one, covering everything from epic failures to Chat GPT to the power of authenticity - which starts with doing the hard internal work on ourselves.
Daniel reminds us that technology is our friend, shares some great book and podcast recommendations, and offers words of wisdom from his father that we can all benefit from remembering.
Show Notes:
1:25 Daniel's journey into this field
3:45 How the transition into this space worked
7:54 One failure Daniel has experienced
10:11 One success Daniel has experienced
11:35 His journey as an author
15:33 Advice for building engagement with clients
17:39 How technology may affect or drive financial services in the future
21:32 Top books Daniel recommends
23:03 Daniel's final 2 cents
24:27 How listeners can connect with him
Show Note Links:
Want to get involved with AFCPE®?
Here are a few places to start: Become a Member, Sign up for an Essentials Course, or Get AFC Certified today!
Want to support the podcast? We love partnering with organizations that share our mission and values. Download our media kit.
This week on "Real Money, Real Experts", Rachael and Mary sit down with psychologist and behavioral finance expert, Daniel Crosby. This conversation was a fun one, covering everything from epic failures to Chat GPT to the power of authenticity - which starts with doing the hard internal work on ourselves.
Daniel reminds us that technology is our friend, shares some great book and podcast recommendations, and offers words of wisdom from his father that we can all benefit from remembering.
Show Notes:
1:25 Daniel's journey into this field
3:45 How the transition into this space worked
7:54 One failure Daniel has experienced
10:11 One success Daniel has experienced
11:35 His journey as an author
15:33 Advice for building engagement with clients
17:39 How technology may affect or drive financial services in the future
21:32 Top books Daniel recommends
23:03 Daniel's final 2 cents
24:27 How listeners can connect with him
Show Note Links:
Want to get involved with AFCPE®?
Here are a few places to start: Become a Member, Sign up for an Essentials Course, or Get AFC Certified today!
Want to support the podcast? We love partnering with organizations that share our mission and values. Download our media kit.
Welcome to Real Money Real Experts, a podcast. We're leading financial counseling and coaching experts share their stories, their challenges, and their advice for helping people manage money in the real world. I'm your host, Rachel DeLeone, executive director of the Association for Financial Counseling and Planning Education for AF C P E.
Speaker 2:And I'm your co-host, Dr. Mary Bell Carlson, an accredited financial counselor, or afc, and the President of Financial Behavior Keynote Group. Every episode we're taking a deep dive in the topics that personal finance professionals care about, helping clients, building community, and your professional growth. Daniel Crosby is the Chief Behavioral Officer at a riot Advisor Tech. In his role, he is responsible for bringing behavioral tools, training, and technology to financial advisors to allow for the practical application of behavioral science. He's a psychologist by training and a behavioral finance expert who applies his study of market psychology to everything for financial production design to advisor client engagement. Dan has more than 10 years of experience in the financial services industry and has published a number of bestselling books that serve as guides to building stronger advisor client engagement with a focus on achieving better outcomes. Dan, we're glad to have you on the show.
Speaker 3:Thank you. It's great to be here.
Speaker 1:So Daniel, one of our favorite ways to kick off every interview is to have you take us back. Can you tell us a little bit how you got into this field?
Speaker 3:Yeah, it's a, it's a great question and I, I took the long way. I took the sort of the circuitous route. So as, as Mary said, I'm a clinical psychologist by education, and I, I really went into the business, uh, specifically with an eye to thinking that I would work, uh, with, with women with eating disorders. I mean, that was sort of my stated reason for, for going into the industry. And I got in and I got a couple of years into clinical work and I really just burned out. It was incredible work, powerful work. I'm glad I did it, and I think it's such important work, but I was young, I had poor boundaries, and I feel like I just took my work home with me to agree that was untenable. And so I, I came to my dad about three years into my PhD program and I said, you know, dad, look, I love studying about why people do the things that they do, but I don't know that I need to do it in a medical setting. And my dad, who is a financial advisor, said, well, hey, there's a ton of psychology in my work. And, you know, at the time I was like, what are you talking about<laugh>? Because I, I, I had always really sort of conceptualized of my dad as a salesperson and sort of a stock picker, you know, sort of my, my one dimensional view of his role was this someone who selected investments and someone who brought in new assets. And I was like, what did you know, what does your work have to do with psychology? And so my dad didn't have the language to say, Hey, you should look into behavioral economics, or you should look into behavioral finance. He didn't know what any of those things were, but sort of that simple comment on his part, put me on a path to discover these things myself. And then to try and create solutions that speak to people like my dad who's, you know, a financial advisor in a mid-size city in the south. I felt like there was a ton of great work being done in, in academia, and I felt there was a ton of need for, for folks like my dad. But there wasn't sort of a translator or a go between for those groups. And, and that's who I've tried to be.
Speaker 2:You know, Dan, I remember meeting you almost a decade ago when you were doing mini shows and keynote events. Kind of tell us what that looked like. So you've found out from your dad, I really like this space. What did that transition into the space look like for you?
Speaker 3:So I first had to sort of get someone to take me seriously at all<laugh> like sort of in a, in a, in a business context. And that was really that, that took a minute, you know, I mean, it's like, so I, I wanted to do this, but after I graduated with my PhD, I was still applying. And everyone's like, ah, you're a clinician. And I, I couldn't sort of get anyone to take a chance on me until I had one, uh, gentleman who was himself a clinician and had transitioned into sort of organizational behavior type work. He knew that it was possible, and so he took a chance on me. And I'm, of course forever, forever grateful for the, for the chance that he took on me and, and what he saw on me. And, you know, the, my first work out of grad school was actually doing pre-employment assessments and sort of consulting at a bank. So I was, our, our number one client was a large bank here in the southeast that, you know, lots of folks would know. And before they would hire someone, they would bring me in to give them IQ tests, personality tests, sort of culture fit assessments, and do a half day interview with them. And in addition to that, I was doing some consulting and some training and some speaking around, you know, we'll call it sort of high level behavioral economic principles. And, uh, I did that for about a year and a half. And, and I was, you know, at some point I was like, uh, you know, I was like 27 when I started this job. I saw what I was billing my clients, and I saw what I was getting paid and noticed the large discrepancy<laugh>. And so I said, look, I, I think I can do this on my own. So in the middle of the great recession, I decided to go out on my own in my late twenties and sort of hang a shingle doing sort of behavioral finance consulting on my own. And so, you know, I can go into that in some detail, but like, you know, it just started slowly and really spread sort of organically through word of mouth, you know, just getting one or two organizations to take me seriously and like the uptake, the belief in the behavioral side of the business. I can't overstate this, it just wasn't then what it is now. Like, it's so widely accepted now. And, you know, 12, 13 years ago when I was starting out, it was just not that way. You kind of had to convince people that this thing even existed and then convince them to hire you. So yeah, it was, uh, it was tough at first, but, uh, but I made it<laugh>.
Speaker 2:Well, I, I'm smiling Dan, because I'm, you and I are in that same realm, and I know that even I, I remember one speaker telling me that he had a video about five or seven years ago that was a great Ted talk, super strong, and then nobody even knocked on his door. Like no one was watching it<laugh>. And here you think of a TED talk to have great success, right? And it wasn't until the last two to three years that anyone has even cared. And so I think that very similar, right? Things come in and fade out, but I really am grateful for their, what I am seeing on this financial behavior change front, the shifting conversation about how we work with human beings and how we need to know the technical side. But the most important asset is understanding humans and how to navigate that territory.
Speaker 3:I remember well, going to a large insurance provider and, and sort of, uh, you know, giving them my pitch and they're like, this, this isn't a thing. Like, you know, like behavioral<laugh>, behavioral finance isn't a thing. And I'm like, no, someone won a Nobel Prize for it this year.<laugh>, you know,<laugh>, I promise it's a thing, but you know, it, it kind of hadn't trickled down. And you know, Mary, even this year, like you said, the last two or three years, and it's definitely been trending that way for a long time, but even this year, I've just noticed a ground swell and an enthusiasm and a widespread acceptance that I've never seen before.
Speaker 2:And it's exciting. I, I think that's one of the things that for so many of our listeners, and by the way, we have a lot of listeners that are practitioners. And so I think they can really relate to you when you've had these ups and downs and how you've had to sell yourself and had you quite honestly have had several roles in this field. And that's kind of what I wanna go into next. I wanna start off with one of your biggest epic failures. Can you share with us where you just landed flat on your face at one point?
Speaker 3:My biggest, probably most epic failure was early in my time as a consultant, like early in my time as a solopreneur. And what had allowed me to jump from w to employment to self-employment was sort of one big contract, one steady contract. And a couple of years into my consulting life, I lost that contract. I mean, nothing. I, I wish I had a better story for you. It's like, you know, no, nothing catastrophic happened, but just, you know, we, we parted ways. I lost that contract and that was like 80% of my income and I was so disheartened and I was so, uh, so stuck at the time. But what it allowed me to do, and I think many people who've lived through something similar would tell you the same is what, like that disruption, that change, that failure made me revisit a bunch of things that I had gotten lazy about. Like, you know, I had sort of rested on my laurels cuz I had this big client and I had, you know, not been charging enough and I had not diversified enough and I had not thought about the future enough. And so that, you know, it's trite to say, right? Because at the time I was terrified and I had, you know, young kids and no money. But, you know, at the, that really was the catalyst for all the good stuff that's come afterwards for all the books, for all the success, for all the other stuff was really catalyzed by that sort of moment of, of having to self-examine and go like, you're not gonna be able to feed your family, but if you don't, you know, if you don't tighten this up. And so I, you know, it's one of those creative destruction moments that, that you're not thankful for at the time, but you certainly are, you know, 10 years later. Yeah.
Speaker 2:Yeah. And I think that's the part that so many of our listeners can relate to is learning from epic failures because we've all had them, nothing to be ashamed of, but they really can be a launch point for something else. So now I wanna follow up with, tell us about what one of your biggest successes has been.
Speaker 3:This is always the harder part to talk about, right? But the, you know, the, the thing that I'm proudest of professionally, I'll put it that way cuz it seems less obnoxious. Like the, the thing that I'm proudest of professionally are, are my books. So, you know, in particular my books, the Behavioral Investor and The Laws of Wealth, both of them were named, uh, best Investment Book of the year in the year that they came out. They've each been translated into a number of languages, I think 12 languages now. And like the success of those books and just the idea that my ideas can sit on someone's nightstand in, in Malaysia. You know, I had a buddy in on, on vacation in Malaysia recently, and he is like, Hey, took a picture, saw my book in a bookstore<laugh>. And like, you know, that to me is by far the coolest thing that I've ever done, is just getting ideas out into the world in a way that's permanent and, and letting those ideas travel around the world is such a gift and such a cool thing to me that that's definitely what I consider my biggest success.
Speaker 2:Yeah, and I wanna dig in a little more to that cause I know we'll have lots of listeners that Eva have written a book or want to write a book. But let's talk about the hard parts of that too, because it's not necessarily an overnight success. What has it been like in your journey of a, as an author?
Speaker 3:Oh, I have a great story for you. So I am under contract. I've not told anyone this and it's a good thing.<laugh><laugh>, it's a good thing. So I'm under contract to, it's March 29th now, I'm, I'm under contract to deliver a new book on September 1st. And the way that I had been doing that is I do kind of all the research upfront, you know, it's like I, I outline it meticulously because you got to eat that elephant one bite at a time, right? So it's like, okay, if a book's 200 pages long, I'm gonna break it into 50 chunks and then you're just writing a bunch of four page essays. And that's sort of infinitely more doable to me than, than the alternative. So I've broken it up into all these chunks and this is right as chat g p t is hitting. And so I am playing around with chat G p T. And so let's say I'm writing about financial wellness, well, I can go to chat g p t and type in, okay, give me the 10 most popular or most cited works academic works on financial wellness. Give me a title, a brief summary, and a link to a PDF or a, a link to a journal and chat. G p t would spit it back and I was like, oh my gosh, this is gonna be the easiest book I've ever written. Like this is gonna do, you know, you still gotta write the thing, but like, this is gonna tee up such an incredible amount of research for me. I'm gonna be able to know at a glance whether I wanna dive deeper and read the whole study on and on. Okay, I've got about 80 pages of notes now I go in yesterday and start clicking on the links, they're all made up. It's, oh my goodness, it's nonsense. And I start, I start googling the name of these studies. They're, they don't exist<laugh>. Oh my goodness. So when you ask me about the hardest part of writing a book, the hardest part of writing a book is right now when you think you're being technologically savvy and bold and using a great new tool and it's just aggregating nonsense and making up studies. So that's my hardest thing at this moment in time. Mary<laugh>
Speaker 1:Daniel, that's a good lesson because you hear a lot of buzz around that tool and that upcoming technology and even the fear of, you know, in academia of people using that, or it even taking away the need for authors because everything can be written through a bot, but it's for better or for worse, that's a good reminder that I think there is value in technology, but there needs to be a balance between the professional and, and the tech.
Speaker 3:I was weirdly relieved, uh, you know, to kind of, kind of to your point like of, I mean, immediately I was dejected. I have a ton of,
Speaker 1:Certainly a lot of work to
Speaker 3:Do, ton of work to do, ton of work to do now. But yeah, there was something comforting and knowing like, okay, I still gotta put some elbow grease into this and like this isn't gonna write itself and I I still need to do some work here for better or worse.
Speaker 2:That's a fair warning to any college students out there. By the way,<laugh>, if you is gonna write your paper, be warned,<laugh>,
Speaker 1:Better click those links.<laugh>.
Speaker 3:Yeah. God, god forbid your professor, uh, looks up any of the studies. I saw<laugh> when, you know, when this, when this happened to me, I started digging around and there was a, a YouTube video by an Oxford professor who's like, yeah, I, I got this paper from a student and they had this fascinating article and I was shocked that I had never read this study and I went and looked it up and it<laugh> it exist did not exist. It didn't exist. Yeah,<laugh>.
Speaker 1:Well, Mary had mentioned that a lot of our listeners work in the personal finance space and you know, anywhere are from financial planners to counselors to educators. And your interest in behavioral finance started with your father who is a, a financial planner. But if you had a piece of advice to give to some of our listeners, um, maybe they're struggling to build stronger engagement with clients, uh, what would you say to them? This
Speaker 3:Is tough and it's a little amorphous, but I, uh, but I do think it's the most important thing, so I'll say it. So I believe that our clients have a sixth sense for authenticity. And when I think back on the most valuable elements of my doctoral training, which candidly I don't use much of sort of in, in my day-to-day, the most valuable piece of that experience for me is, is what I'll call doing my own work, right? Like the process of having had a therapist, the process of getting brutal feedback from my, from my cohort and people I was close to about my performance as a therapist. And so I think for folks that are having a hard time connecting, I think we need to do what Jason's wi has written about, which is to use financial psychology and, and sort of human first advice and all the things we're talking about as a mirror, first, a mirror onto our own behavior first and then only secondarily is something we use to help our clients. Because I think when, when we are in a good place, uh, when we are non-defensive, when we are authentic and open and all the things that we preach to our clients, I think it becomes second nature for them to, to meet us where they're at. So I think sometimes that lack of success is not some lack of technical chops or not a need to take a class on active listening. It's barriers that exist because we haven't done the hard work of sort of weeding our own garden yet.
Speaker 2:Yeah, and I like the fact that you said doing my own work in the same line that you just mentioned, the chat G B T, right? Like, because it really is about looking internal. It's so easy to see someone else's bias, a cognitive bias, but it's very hard to see our own and it's very hard to change that. And I think that's what's, as financial coaches and counselors, it's very easy to tell people what they should do, but it's really hard to look internally and see what we need to be doing and how we can be better listeners or better involved in our own lives and with our own spouses or with our own families. So Dan, I wanna go back to our technology discussion because I think there's a lot there and there's a lot of questions in the financial advisor community about how technology is gonna drive our future. I know that a few years ago we were really worried about AI completely taking over a financial planning job. We haven't seen that, we have seen it help maybe in certain components. And you work in a technology space. Talk to us, how do you envision technology affecting or driving financial services in the future?
Speaker 3:I was on a panel recently with Brian McLaughlin, the founder of Redtail, and we were talking about AI because Redtail uses AI and you know, even though we work for the same company now, they kind of positioned us as sort of this man versus machine back and forth,<laugh> and Brian, Brian is my buddy, so he was giving me a hard time. But you know, the, the way that I put it is that we want to use AI to help build a practice around us and not have us build a practice around ai. Because I don't think, you know, as was said earlier, I don't think we need to be scared of any of these things because I think the least valuable parts of the sort of planning coaching process are increasingly automated. And I think that's nothing but a good thing. You know, the fact that investment management, rebalancing, trading, you know, planning, all of these things are gonna continue to see greater and greater technological strides. I think that's a really good thing because it, it allows us to be free to do the things that are uniquely human because you know, the fact is there's 330,000 financial advisors in the US and all of them, nobody likes to say this out loud, but all of them do kind of the same stuff. Like, you know, if you take away sort of like the, you know, one to 5% who don't do a very good job, you know, the 95% plus are doing the same stuff. They're, you know, they're creating plans, they're diversifying assets, they're doing all the blocking and tackling and AI is gonna make that that easier and better and more streamlined. The most unique thing about your business is you and you're going to get to be more you, uh, as AI and technology, uh, continue to make things better and easier. And I think the people who have done their work, right, that done the thing that we've talked about and have built a human first client-centric business are gonna really stand out. And then the people who are trying to compete on, on today's hot technology, you know, today's hot technology is tomorrow's table stakes. And you see how fast chat g p t is is improving. Look, if I give it another couple weeks, it'll probably give me some good citations.<laugh><laugh>, maybe I should, maybe I just need, maybe I just need to wait a month<laugh>, you know, so I, I think it's good to be aware of these things to say abreast of new developments, but I don't think it makes sense to try and have this be your competitive advantage because you are the best and most unique part about your business and let AI help you be more of who you are.
Speaker 1:Daniel, you are incredibly well-read and well connected in this space. What are some of the top books that you'd recommend our listeners to read to become better versed in financial behavior?
Speaker 3:Okay, let's see. I've got a whole, I've got a whole list that breaks it out,<laugh> that breaks it out by sort of sub-discipline. And of course I'm gonna blank now. So the best books I've read this year, the Brad Klan's book that just came out, I'm gonna forget the title of it, you know, something very formal. Uh, but the brad the Brad, we'll put it the chat, yeah, the Brad k Quan's book that just came out, I just finished and it was really fantastic. And he has a co-author whose name I'm forgetting. Anyway, I'm, I'm messing that one up. But it was very, it was very good. And there's a couple of books by someone who I am on the same publishing label with. Uh, the, the Choice Factory and the Illusion of Choice by Richard Shotten are both very, very good. I just finished those, those are, those are both fantastic. And there's a new podcast I would recommend too. Gotta recommend my podcast, standard Deviations, which I, you know, talk about this stuff every week on, on standard deviations. But this morning I interviewed a woman called Jen Kleinhans who has a, a podcast called Choice Hacking, which is like 10 to 15 minutes long and covers consumer psychology and behavioral economics in a really engaging and approachable way. And it's just a great listen. Awesome.
Speaker 2:And by the way, it's Charles Chaffin, Ted Cla and Brad Klontz and it's the Psychology of Financial Planning. At the end of each interview, we like to ask our guests to share their 2 cents. If you had one piece of advice to leave with our listeners, what would it be?
Speaker 3:Yeah, the piece of advice is that none of this very, none of this matters very much<laugh> I think, I think sometimes we who work in the field of finance get so wrapped up in money and money stories that we forget. The very thing that we should be remembering and sharing with our clients is that all that money is good for is to serve the creation of a meaningful life. And so, you know, my dad, who is my financial advisor, whenever I call him to talk about my money, you know, the first thing that he asks me is, are you putting first things first? Which is effectively like, are you, you know, are you working for family and faith and the things that matter more than this money thing that we're about to talk about? So I think it can become easy for us for money to, to loom larger in our minds than it ought to. So yeah, my advice is just remember how silly all of this is and that, you know, none of us makes it out of here alive and that all of this is to just help us live a good meaningful life. With the short, short bit of time we have here,
Speaker 1:Daniel, uh, thank you so much for coming on the show today. Can you tell our listeners how and where they can connect with you?
Speaker 3:Yeah, Daniel Crosby, PhD on LinkedIn, Daniel Crosby on Twitter. The books are the Laws of Wealth and the Behavioral Investor and my podcast is called Standard Deviations.
Speaker 2:Dan, it's always a joy to chat with you and have you on the show. Thanks for coming.
Speaker 3:My pleasure Rachel.
Speaker 2:It's always fun talking with Dan. He's always doing something and starting something new and I've known his work for a decade now and it's fun to see how he's involved. I'm actually liked hearing about his background. I don't know that I've ever got it in one sitting of how everything evolved. And so I thought that was very neat. Some of the key points that I thought he honed in is authenticity and I appreciate that we got an authentic side of him today and I think that's really important as you're working with clients is your own authenticity to where a client feels better and can actually communicate better with you. And it's one of the ways to best improve relationships is by being authentic. And you'll find like-minded clients that really just come to you because of that authenticity. The other way he put it is the most unique thing about you is you. And so with that keeping in mind, I've heard a lot of financial service professionals nervous about technology or trying to stay away from technology and I think that's just the opposite of what you wanna do is understand technology will always be there, it will always be evolving, but at the end of the day, you make up the business and without you it wouldn't be the same. And so that's an important key feature. And then last but not least is what his dad said is, are you putting first things first? And I think that's a great way to look back on your own life and say, am I putting my family first? Am I putting my life first? Am I putting myself first? Right? Easy to say as maybe as a working mom or as a full-time or multiple jobs, especially if you're launching your own practice, it's hard to put yourself in there or your family in there. But I think that's really, really important as you're doing these things and building out your own business or helping others as counselors. He even mentioned this on the podcast earlier is you can burn out, right? And so those types of things are really important if you're helping other people to make sure you're doing self-care and taking care of you
Speaker 1:Too. Mary, I think that when he spoke about technology, it was really interesting cuz I think sometimes we see technology, it can be a gift or, or something to fear, but I, I love his outlook on technology and how more automation actually allows us to be free to do the things that make us uniquely human and that make us better. Financial counselors, educators, coaches and I also really resonated with what he said about money being a tool to serve the goal of living a meaningful life. And it really reminded me of something. Sandra Davis always says that there are no money goals, there are just life goals, you know, and money is just a tool to help us get there. And so just such a delight to have him on today. He was very authentic and I really appreciated Mary, the question you asked about the epic failure<laugh>. Um, I was like, that could be a question on every show cuz I really think it opens people up to show authenticity. We've all had epic failures and I loved how, you know, obviously in the moment you can't always see the other side, but sometimes it's those failures that really move us to where we need to be.
Speaker 2:Rachel. That's the one thing I would love to have more authenticity in is being okay to fail and allowing people the space and energy that even the word failure, I think makes people nervous. So it's, it hinders our progress, it hinders our ability to push the envelope or move forward in, in a profession, even in what we do globally, right? As counselors. And so I would encourage you to try things and it's okay if you fail because it's gonna launch you and you're gonna learn something in new ways and maybe it really is an epic failure that you feel like you learn nothing. It'll still teach you a lesson of what not to do next time.<laugh> better propel. So I think that's a really important key to authenticity in the workplace is talking more about failures.
Speaker 1:Mary, I think it also shows the power of language. You know, you hear the word failure and you, you're, you kind of seize up, but really, you know, it's how do we reframe it in terms of what's the opportunity and what's the, the learning from it to everyone listening today. Just a reminder to save the date, the A F C P E symposium is gonna be held this year in New Orleans, Louisiana, November 29th through December 1st. And right now we have an invitation to present open, and we encourage anyone who is in research or practice to apply to present this November. And join us in New Orleans for the 2023 A F C P E Symposium.