It is a popular trend these days in financial planning to talk about all the ways our clients behave irrationally, supported by a growing base of research in "behavioral economics" that demonstrates how our hunter/gatherer brains are ill-equipped to cope with today’s complex world. We tend to talk about these behaviors in the negative, but what if we could use some of our irrational tendencies to our benefit, instead?
Financial planning has long witnessed an unfortunate “gap” between practitioners and academia. As the stereotype goes, the practitioner community to too focused on strategies, techniques, and application, while the academic community spends too much of its time on research that is too basic or too abstract. Well, at the Academy of Financial Services meeting held in conjunction with the FPA’s annual convention, that gap appears to be narrowing, quickly.
In this new column I’m calling “On the nighttable…” I will be highlighting some of the books that I’m reading. Right now, I’m just finishing up a book called “Stabilizing an Unstable Economy” by Hyman Minsky. But the interesting thing is not just that it’s another book on stabilizing the economy… it’s that Minsky wrote it several decades ago, yet it is nonetheless remarkably prescient about the events of the recent years!
After being absent from this blog for nearly a year, I’m happy to report that the Nerd is back! That’s right, Nerd’s Eye View is coming back to life with a new focus, and a fresh commitment that it will have content!
As George Santayana said, “Those who cannot remember the past are condemned to repeat it,” but fortunately we don’t need to remember the past ourselves, at least when it comes to financial planning. E. Denby Brandon, Jr., and H. Oliver Welch, have done it for us in their new book “The History of Financial Planning: The Transformation of Financial Services.”
Already being experienced by consumers and financial planners, it seems that the economic downturn has arrived on the doorstep of the Financial Planning Association as well. In the past week, the FPA national organization has slashed their staff by approximately 12%, and the price of their upcoming conference by over 70%!