Egan: Wealth platforms must build for 5% of experts to win 95%
Dan Egan · Dan Egan – Better Investment Outcomes (Capital Allocators, EP.23) · Aug 28, 2017 · at 25:40
Dan Egan, Director of Behavioral Finance and Investing at Betterment, explains why fintech platforms must build transparency for power users to drive word-of-mouth adoption.
0:00 / 0:20exact quote · 20.8s
720p mp4 · rendered on demand · StarZero watermark
“The 95% of normal people, they're asking the five percent of people who they should use. So you can't simply say, oh, well, we'll just target on the 95%. You actually have to provide the transparency and knowledge for the five percent of sophisticated people to feel like they can recommend you, they trust you, and they see what you're doing enough, because they're the ones who are recommending their friends and neighbors and so on to use you.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Dan Egan
Egan: Telling panicking investors to do nothing is the worst strategy
“So the worst thing you can ever do if somebody's freaking out to say, stop, don't do anything, sit still, et cetera. You have to take that anxiety and that energy and redirect it towards more positive things.”
Egan: Advisors cannot implement behavioral finance without controlling software interfaces
“They might want to implement some of these insights from behavioral finance, but unless you control the technology, it's very hard for you to do that.”
Egan: Searching for manager alpha is only worthwhile with millions in assets
“However many hours you spend trying to find the right manager, or trying to find the right strategy and understand what this stuff is doing, is not well spent unless you already have a very, very large asset base. I'm talking in the millions, at least.”
Egan: Saving $33 more monthly matches 1% annual manager alpha for averages
“He basically found that for that person, in order to, if that person went with finding out how to, you know, save more or invest more, rather than pick the better manager, they would need to save something like 33 more dollars per month. So, that's the trade-o…”
Egan: Betterment employs human advisors primarily to study and automate their jobs
“In the longer term, to be clear, We are going to keep automating a large part of that. So it is not simply a matter of, oh, we hit some brick wall and we had, you know, we ended up having to use advisors. Every single financial planner or licensed expert on ou…”