I do a lot of work that I can’t write and publish big case studies about, which thins out my portfolio a lot. This is a summary of some of what I’ve done to give you a sense of the depth and breadth of my work.Read More
(Worth noting: As you read through the body of work in my portfolio, you’ll notice that my more recent portfolio pieces like this one illustrate a real turn — talking more about my role, questions, concepts and thinking, instead of showing off deliverables, as my work continues to evolve. So by way of framing and setting expectations, I won’t try to encapsulate the full service I’m working on here. I’m just letting you know, dear reader, that the turn is deliberate.)
In my new role at Morningstar that I took on in May of 2018, I was presented with some big questions to work on: how do we help people figure out how to do the right things with their money? More specifically, how do we help people learn why they should invest, and help them get to a place where they stick with it?
First, A little context
A few years ago I started to read all the Kahneman and Tversky I could get my hands on. They are the grand poobahs of behavioral economics, which has changed the way we think about how people behave with money and just about everything else at a Nobel Prize level. Their work changed my outlook on design forever, but admittedly, I hadn’t had a chance to really use what I’d learned from them, and other things I’d been studying in service and experience design. So when this role came up, I took it, because:
There is a LOT at stake for people, holy cannoli Batman, the scale and consequences are alarming and huge.
I love nothing more than a big, wicked problem that people actually need help with.
The team I met while interviewing was so stellar I thought, I have to work with them.
I was... well, I admit it, bored with UX, partly because I’ve been doing it for so long, partly because it’s being commoditized and partly because I no longer believe new software is the answer to every question.
And finally, I was married to a financial advisor for 13 years and helped start an advisory firm in 2009, so I know the ins and outs of the business reasonably well.
And now, Back to our story
At first, I was kind of boggled by the sheer size and scale of the problem. There were so many angles and possibilities!
Enter Dr. Sarah Newcomb, a behavioral economist, who was already working on these questions from her own angle. She wrote a book called Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind. A very good read, by the way. (She also interviewed Daniel Kahneman at the Morningstar Investment Conference right when I started working there — for real! In person! Squee! The father of behavioral econ! Such fangirling.)
My collaboration with her has been nothing short of magical in terms of advancing my work on these tough problems. I’ll take one slice of how we work together and describe the impact here.
Morningstar is quite comfortable talking to people who have been investors for a while. The DIY folks who build their own portfolios, people who understand why they need to invest, financial advisors who know how to select investments, people excited by the disintermediation of trading stocks and buying mutual funds, disrupted by companies like Morningstar and eTrade. You know, people who seem “smart” with their money (though that’s really a function of privilege, mentoring and education, a whole other topic). But that’s a small group of people whose numbers are shrinking. And all that change put a lot of pressure on financial advisors to change their approach to their work, not for nothing.
The people who are less understood, and less helped by the financial services field, are those who don’t participate for one reason or another. Time-starved people who look at the investing world, see how complicated it is don’t want to even dip their toes in. People who look at recent history and think, what a bunch of con men. People who are ashamed about what they don’t know, and can’t find their way to ask for help. Lots of reasons.
Back to our question: What about them? How do we help a larger number of people see why investing is something they need to do (no, really, we all need to do it) and help them become successful investors? How do we help financial advisors build the relationships they want to build with their clients, or expand their market to work with people who aren’t currently participating? In short, how do we broaden the circle of investing success to include more people?
My personal goal for the work I’m doing right now is to be part of helping to raise the national savings rate in the US. That’s what success looks like for me, if I’m helping to solve this problem.
So… I could have wandered about making and testing things for months. Well, actually, I still did that (for like, 3 months), but armed with so much more awareness, I could leapfrog over more months of guessing. In a single conversation, Sarah bequeathed three theories to me that unlocked my ability to do that. They were:
These are great theories but feel a little … cold and inhuman when you start to think about how they might be applied to a service. They are about how ALL people change what they’re doing — that’s important - how ALL people plan and manage change in their lives. After our mind-blowing chat, she said, “now you go do whatever you think is best and let’s talk next week.”
Watching Sarah and I on the next call a week later must have been entertaining. I drew a straight-out-of-Campbell hero’s journey on the whiteboard with the theories wrapped around them to prepare. I hopped on our video call and said I had something to show her. On the way over to the whiteboard, she said, “So I have an idea I want to run by you. Have you ever heard of the hero’s journey, the Joseph Campbell concept?”
Dear Reader, I just about dropped my laptop.
And that was the beginning of one of the best collaborations I’ve ever had. Whenever she and I get into one of our jam sessions, my whole brain is 🔥en fuego🔥 with what could be.
What I learned (so far)
nudges aren’t ethical
There’s a lot of buzz out there about “behavioral nudges” and honestly we should really just stop it right now. For real, QUIT IT. It’s not ethical.
Oh, they’re real, they’re effective, but they’re usually not done for the right reasons. You can throw a notification here and there to “nudge” people toward something you want them to do, like buy something, and it’s been proven to work. That doesn’t make using them the right thing to do.
Also, long term, it’s not effective if your actual goal is beneficial behavior change (like weight loss, diabetes management, or budgeting). Behavior change happens over time, so you can build the concepts into a service, but not into a single use product, digital or physical. It’s not realistic to expect that a single digital experience for one moment in time is going to provoke lasting positive change.
Money and physical health are like peas in a pod
I have yet to find anything in people’s lives that are as similar as managing your health and managing your money:
You have to eat and you have to have money, so they are inevitable, daily.
Everything we do with both addresses a need, conscious or not.
We arrive at how we eat and how we spend and save as adults with all the baggage of what we were taught as children.
The decisions we make about what to do with food and what to spend money on are made … maybe 100 times a day or more, with deliberate temptations thrown in our path constantly (think influencers, ad words, email…)
Those decisions have a cumulative effect on our future.
The upside of beneficial behavior is hard to even describe.
It’s pretty amazing when you start to see the parallels.
Behavioral Economics should inform but not lead design
Which gets me to my final point: behavioral economics tells you all about how all people react to events and stimuli (hint: not rationally), but it doesn't necessarily explain how to compassionately help people change or shift their response to those things.
That is the responsibility of design: to find a kind and compassionate way to help people not with their reaction — that’s pretty hard-wired — but with their response to what’s happening around them.
By way of example: which friend would you rather have at the table while your’e trying to lose 10 pounds, Spock or Deanna:
Waiter: “Here’s the dessert menu. You had a salad - you should treat yourself!”
Me: “I’m thinking about getting the ganache. I just don’t know. I know I’m not supposed to.”
Spock (behavioral): “You should have given back the dessert menu. It was unplanned to even see it, and the waiter is trying to sell you something. This would sabotage your long-term goal of losing ten pounds.”
Deanna Troy (empathic): “That looks really good and I can see why you’d want it. You did great ordering a healthy dinner. We could check your food diary app to see how this affects the meal.”
What I did there:
My reaction to the menu was predictable and normal, but I have time to plan a response. Spock is right, but it doesn’t feel very good to hear about how bad I am at making spontaneous, technically correct choices. I know it was unplanned, dude. Now I have to do something about it and oh god the waiter is coming back RIGHT NOW.
I made Deanna’s advice about the choice right now and helping me figure out how to respond. Notice that she did not say, “you shouldn’t order that.” Because I already know that, intellectually. I can soft pedal the waiter until I can make a decision I can stick with. Even if it’s ordering the ganache.
That’s because when I’m confronted with the description of something I didn’t know I wanted until someone tried to sell me something by appealing to immediate gratification, it’s just not about the long term goal any more. My brain can’t do that math right now — It’s about CHOCOLATE and wanting to reward myself because someone put a thought into my head that I should reward my good choice with a sub-optimal one. So the best route is to address the impact to my day and right now.
And that is what I’ve learned how to do on a daily basis in everything I make. And not coincidentally, lose forty pounds in the last year.