Meet with PWL Capital: https://pages.pwlcapital.com/en-ca/contact-us?utm_source=content&utm_medium=youtube&utm_campaign=rationalreminder_yt What shapes investor beliefs and behaviours? Steve Utkus, a leading expert in investor behaviour and former Global Head of Investor and Retirement Research at Vanguard, brings decades of groundbreaking insights to this episode. Drawing on exclusive access to Vanguard’s anonymized client data and investor surveys, Steve uncovers the intricate links between what people believe and how they invest. In the first half, he reveals surprising findings from his research into investor beliefs and portfolio decisions. The second half dives into the impact of financial advisors, both human and robotic, on improving investor outcomes. Steve’s reflections, enriched by years of collaboration with academic leaders and personal conversations with Vanguard founder Jack Bogle, offer a rare window into the world of data-driven financial research. Join us today for this fascinating conversation as we unpack fresh perspectives on investor behaviour and the evolving role of financial advice! Timestamps: 0:00:00 Intro 0:03:39 Why it is important to understand the beliefs of investors 0:08:34 The benefits of using survey data 0:10:16 The effect individual beliefs have on portfolio equity shares 0:19:51 How beliefs affect individuals’ trading behavior 0:21:18 How heterogeneous individual beliefs are 0:26:21 The effect investors’ cash flow expectations have on their expectations of future stock returns 0:33:01 How investor expectations about economic growth and stock returns changed during the COVID-19 stock market crash 0:38:28 The lessons for investors in how pre-crash beliefs affected selling behavior after the crash 0:41:49 The motivations investors give for investing in ESG assets 0:46:32 The importance of financial returns to investors with ethical or hedging motives 0:53:56 The type of investor that benefits the most from switching to a robo-advisor 0:57:26 If robo-advisors can automate portfolio management, the needs that human financial advisors are satisfying 1:02:40 The needs that are least important 1:07:45 How unadvised investors’ needs differ from those that work with a robo or traditional advisor 1:14:57 Whether correcting investors’ miscalculations about what they pay for advice change their decision to pay for it 1:16:46 The reasons traditionally advised people in the sample give for not switching to robo-advising 1:21:11 The effect a relationship with a “good” advisor has on investor behavior through periods of poor market performance 1:29:52 The other benefits investors in the sample are getting from human advisors 1:34:29 The attributes that define a high-retention advisor 1:39:34 What financial advisors should be focusing on in their practices to be as valuable to their clients as possible 1:42:25 Stephen defines success in his life Links From Today’s Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Steve Utkus on LinkedIn — https://www.linkedin.com/in/steveutkus/ Episode 278: Juhani Linnainmaa — https://rationalreminder.ca/podcast/278 Books From Today’s Episode: Bogle on Mutual Funds — https://www.amazon.com/Bogle-Mutual-Funds-Perspectives-Intelligent/dp/111908833X Papers From Today’s Episode: ‘Political Cycles and Stock Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401 Scott Cederburg Paper — ‘The Diversification and Welfare Effects of Robo-advising’ — https://www.sciencedirect.com/science/article/abs/pii/S0304405X24000928 ‘Who Benefits from Robo-advising? Evidence from Machine Learning’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3552671 ‘Human Financial Advice in the Age of Automation’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4301514 ‘The Misguided Beliefs of Financial Advisors’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3101426