The Maleficent 7

Maleficent 7The Magnificent Seven is a terrific 1960 movie “western” about seven gunfighters hired to protect a small Mexican village from marauding bandits. A re-make is currently in the works and the “original is itself a re-make of Akira Kurosawa’s Japanese classic, Seven Samurai. Meanwhile, Maleficent is the “Mistress of All Evil” in Sleeping Beauty who curses the infant princess to prick her finger on the spindle of a spinning wheel and die before the sun sets on her sixteenth birthday. Today I’m offering up a mash-up from these movies to outline what I’m calling the Maleficent 7 – seven inherent human problems and limitations that impede our ability to make good decisions generally and especially about money. Continue reading


Five Good Questions with Terry Odean

5 Good QuestionsTerrance Odean is the Rudd Family Foundation Professor of Finance at the Haas School of Business at the University of California, Berkeley. He is a member of the Journal of Investment Consulting editorial advisory board, of the Russell Sage Behavioral Economics Roundtable, and of the WU Gutmann Center Academic Advisory Board at the Vienna University of Economics and Business. He has been an editor and an associate editor of the Review of Financial Studies, an associate editor of the Journal of Finance, a co-editor of a special issue of Management Science, an associate editor at the Journal of Behavioral Finance, a director of UC Berkeley’s Experimental Social Science Laboratory, a visiting professor at the University of Stavanger, Norway, and the Willis H. Booth Professor of Finance and Banking and Chair of the Finance Group at the Haas School of Business. As an undergraduate at Berkeley, Odean studied Judgment and Decision Making with the 2002 Nobel Laureate in Economics, Daniel Kahneman. This led to his current research focus on how psychologically motivated decisions affect investor welfare and securities prices.

Today I ask (in bold) and Terry answers what I hope are Five Good Questions as part of my longstanding series by that name (see links below). Continue reading

Five Good Questions for Carl Richards

Carl Richards is a Certified Financial Planner™ and the founder of Prasada Capital Management, a fee-only firm he created to help clients with two objectives:  to avoid losing money and to enjoy their lives. He also explores how our relationships with money impact the quality of our lives at Carl is perhaps best known for his helpful illustrations of financial concepts, a sample of which may be seen below.  His sketches may be seen at, as part of his weekly writing for The New York Times, and at Morningstar’s Advisor blog. He is also the author of a best-selling book, entitled The Behavior Gap. Carl earned a Bachelor of Science degree in Finance from the University of Utah.  What follow are what I hope are Five Good Questions for Carl Richards. 


  1.  Your drawings help people understand what may be difficult concepts.  What do you think are the keys to an effective drawing?

Being an amateur! As is very apparent, I have no art background, but for some reason I found I learned things I didn’t know when I went through the process of trying to explain things using a Sharpie and a piece of paper. Limiting yourself to simple tools, like a whiteboard, pen and paper, or the back of a napkin forces you to get to the stuff that really matters. Having no artistic talent helps as well. Because I can’t draw a horse or a bird, I have to use simple lines, a box or a circle.

  2.  What have you found to be the most effective tool(s) for dealing with the “behavior gap” (the difference between what we should do and what we actually do)?

Asking questions. In our industry we have an obsession with having all the answers, but we spend very little time making sure we are asking the right questions to start with. If we can help people get clear about why they are doing the things they are doing, then, maybe we can help them make change.

  3.  You’re a powerful advocate for meaningful conversations about money.  How do you suggest people get started and go about having those conversations?

First recognize that is it okay to talk about money. Most of us were taught that money, sex, politics and religion were things you didn’t talk about in polite company. Of course we have gone way too far when it comes to sex, but we still have not learned to talk about money. Another key is to do what Stephen Covey suggested and learn to listen to understand and not judge. People want to know that we understand them before we give them advice. How can we prescribe before we take the time to diagnose?

   4.  You are careful to advocate life planning rather than just financial planning.  What does that mean?

I am not sure that life planning is the right term, but the reality is that the process of planning for our financial futures is about life. Almost every goal we have is funded by dollars. Security, health, safety, education, retirement are all make possible to some extent using money. So if we think that financial planning is a process of spreadsheets and calculators we are kidding ourselves. These things are about life. We are talking about people most important goals and dream and the things that keep them up at night.

  5.  As you emphasize, we need and may even want simplicity but we are attracted to complexity.  How do you suggest that people go about simplifying their financial lives?

Start by getting clear about where you are today and where you want to go, then give yourself permission to peruse the simplest path to make it happen. So often we think that because the problem feels complex to us, the solution must be complex, when more often it is the simplest solution that has the staying power to get us moving forward.


The AdvisorOne version of this article is here.  The Five Good Questions series: