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Welcome to personal finance for
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long-term investors, where we believe
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Benjamin Franklin's advice that an
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investment in knowledge pays the best
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interest both in finances [music] and in
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your life. Every episode teaches you
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personal finance and long-term investing
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in simple terms. Now, here's your host,
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Jesse Kramer. Welcome to Personal
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Finance for Long-Term Investors, episode
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120. I'm Jesse Kramer. By day, I work at
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a fiduciary wealth management firm
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helping clients nationwide. You can
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learn more at bestinterest.blog/work.
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[music]
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The link is in the show notes. And by
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night, I write the best interest blog
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and I host this podcast. I put out a
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weekly [music] email newsletter as well.
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All of which help busy professionals and
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retirees avoid mistakes and grow wealth
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by simplifying their investing, their
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taxes, and their retirement planning.
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Later today, Professor John Dinsour will
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be joining me to talk about marketing
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and advertising and debt and some really
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intriguing conversation about how debt
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and loans and financing and other
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somewhat risky financial behaviors get
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sold and get pushed on people like you
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and me. But first, we'll do a review of
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the week. This one is from AB17, who
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says, "Exceptional and essential
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personal finance podcast. I stumbled
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onto Jesse's podcast, and from the very
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first one I listened to, I gained so
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much knowledge. Jesse has a fantastic,
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easy to listen to voice, and his
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delivery is spot-on. I love the topics,
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and it keeps me motivated to do better
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with my portfolio. Jesse's advice is
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based on sound financial principles. I
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respect this guy. At his core, in
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addition to whatever talents he
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possesses, he has the heart of a
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teacher, and the AMAs are fantastic."
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Well, AB17, thank you for the kind
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words. You're right. I'm not sure what
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talents I possess, but whatever they
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are, both my parents were teachers, as
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I've talked about here on the podcast
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before, and I'm glad that maybe that
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teaching gene comes across in these
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podcasts. So, AB7, shoot me an email to
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Jesse at bestinterest.blog, and I'll get
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you hooked up with a superoft podcast
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t-shirt. Before Professor Dinsmore joins
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us, let me tell you why I am weak. I'm
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weak. And on average, I might bet that
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you have some weakness, too. And I wrote
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what I'm about to read. I wrote it in
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2022. And the title of this article is I
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am weak. So are you. The more I admit my
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weakness, the better I become. And you
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might be the same way. So here's an
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example. YouTube works on me. I can
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waste hours on YouTube. YouTube knows
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the stuff I like to watch. It feeds me
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as much as I'll consume. And when we
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think about that fact, we might draw
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back a little bit and say like, "Ew."
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And Twitter, when I was on Twitter,
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Twitter worked on me, too. So did
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Facebook. My Facebook timeline was
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littered with foster dog stories. Get
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it? Littered with foster dogs. The
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YouTube and Twitter and Facebook, they
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learned my weaknesses. That is, in other
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words, how to manipulate my brain and
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how to keep my attention. And their
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techniques worked against me. I am weak
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against them. I'm weak against their
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techniques. Here's a crazy stat. At
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current rates, the average person, and
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hey, that might be you, the average
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person will spend six years of their
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life scrolling through social media.
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Sugar works on me, too. and so does salt
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and so does fat. The food industry knows
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how to make food as appetizing as
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possible. And my taste buds and my brain
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chemistry are victims of that fact or at
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least we're weak against that fact
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whether I'm a victim or not. And here's
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another stat. 74% of US adults over the
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age of 20 are overweight or obese based
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on the okay based on the sometimes
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maligned BMI or body mass index. My BMI
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is 28, 29, 30 depending on the day. I'm
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overweight. I am overweight and my ego
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wants to believe that I'm strong enough
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to overcome the addictive allure of
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social media or the addictive allure of
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a sugar stuffed food. I want to say
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something like, you know, how can those
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people waste all that time on social
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media? How can those people shovel that
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junk food into their faces? But I am
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those people, right? Big social media
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and big food. Their tactics work on me.
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I am the psy that they had in mind. Can
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I be blamed for this? Well, armies of
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programmers and psychologists design
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social media platforms, and armies of
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chemists and food scientists find the
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optimal levels of sugars and salt and
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fat in the foods they design. What hope
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does a simple man like me have against
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that? If I'd known I'd get addicted or
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taken advantage of, maybe I would have
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avoided the stuff in the first place.
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But I'll say this, knowing my weakness,
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being aware of my weakness, helps out
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immensely. If I waste an hour watching
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dog videos, I don't ask what the hell
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just happened. I know exactly what
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happened. I I recognize my weakness. I
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was weak against them and I kind of fell
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victim to them again. I I ought to know
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better. I know that I need to recognize
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my triggers and catch myself early in
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the act. But okay, what does this have
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to do with the world of personal
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finance? Well, marketing and advertising
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must work, too. Since my monkey brain
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falls prey to social media and unhealthy
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food, I know I'm getting led along or
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tricked or at least convinced by
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advertising and marketing, too. I must
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be. I'm sure of it. My ego, of course,
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wants to think that I've armored myself
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against the slings and arrows of a
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marketer's arsenal. But let's be honest,
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if the experts have outgunned me on
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social media and food, then the
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marketers are probably winning, too.
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It's only logical. But unlike with
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social media and food, I don't know
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exactly how I'm getting tricked.
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Advertising and marketing can be subtle,
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indistinct, sometimes hidden in plain
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sight. You can believe that you're
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immune to marketing, and you can claim
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that your purchasing decisions are
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always of your own accord, but the data
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show differently. Here's another stat.
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The average person sees 1,700 online
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advertisements, like banner ads, per
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month. Do you think you ignore all 1,700
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of those ads? You know, why do you buy
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Nike shoes? Why do you shop at Whole
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Foods? Why is Iceland on top of your
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travel list? You might not know why, but
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somewhere a marketer is probably
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smiling. I mean, do you really know how
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marketing affects your spending habits?
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Now, what can we do about that? If we
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want to fight back against the constant
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onslaught of advertising, it's an uphill
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battle. Go ahead and and Google
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something like how to fight against
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marketing techniques. Go Google it.
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Almost all of the top results are
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actually pro-arketing articles like 11
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ways to sell anything to any audience.
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In other words, tons of people are
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working on better ways to sell you junk.
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Very few people are trying to help you
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buy less junk. This battle really is up
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to you and me. I'm here to help, too.
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But it's up to us on an individual
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basis. There aren't that many people who
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are really gathering groups of people
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together to fight on our side.
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Nevertheless, here are a few quick ideas
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to fight back against incessant
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marketing. The first one, unsubscribe
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from any email you don't want, including
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my emails. Email marketing is incredibly
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effective. Don't let a brand sneak into
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your inbox and and into your brain every
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day or every week or something like
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that. The second tip, look at
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advertising critically. Rather than
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observing an ad like a pathy, I watch
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ads like an investigator or a scientist.
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I try to break down the advertisement
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and hopefully develop some sort of on
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the-fly defense against it. I ask, "What
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exactly are they trying to sell and how
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are they trying to convince me to buy
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it?" The third thing you can do, review
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old purchases. Was that purchase
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worthwhile? If not, do you think that
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advertising or marketing maybe played a
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role in convincing you to make that
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purchase? And the fourth one, ask, "What
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am I paying for? A popular fashion
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company sells leggings for $100 a pair.
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Well, what are you paying for?" You're
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paying for an image of eliteism and and
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maybe sexiness. And that image was
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created by marketing. And I bet some of
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you know exactly what liking brand I'm
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referring to. And that fact alone proves
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how marketing works. That's brand
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awareness. And I'll ask you if you have
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any interesting techniques against
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advertising and marketing. By all means,
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please reach out. Share them with me.
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Jesse atbestin.blog.
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So there's nothing wrong with weakness.
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We're all weak in our own unique ways. I
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am weak. So are you. But recognizing
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that weakness, that is a strength. To
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plug a leak, you first have to identify
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the leak. And that's what we're doing
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here today. Or keep on eating Cheetos in
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your sexy leggings cuz you know those
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dog videos won't watch themselves.
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Either way, I think this is a really
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interesting idea we're talking about.
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and John Dinsour and I are about to talk
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about it a little bit more. Here's a
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quick ad and then we'll get back to the
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show. Did you know my written blog, The
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Best Interest, was nominated for 2022
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Personal Finance Blog of the Year and
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it's been highlighted in the Wall Street
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Journal, Yahoo Finance, and on CNBC. I
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love writing, especially when that
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writing is to share financial education.
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And I usually write one or two articles
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per week. You can read them all at
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bestinterest.blog.
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Again, the web address is
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bestinterest.blog.
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Check it out. Professor John Dinsour is
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a leading scholar in behavioral finance
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and marketing and advertising, exploring
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how individuals make financial decisions
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and the psychological factors behind
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them. His research bridges theory and
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practice, offering actionable insights
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for everyone from retirees to policy
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makers to financial planners, seeking to
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understand decision-making, nudges, and
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long-term financial well-being. So,
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without further ado, here's Professor
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John Dinsmore.
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John, I uh I read an article about you
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saying that you want to, you know, help
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consumers recognize when financial
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decisions are being influenced by clever
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marketing. So, let's start there. I
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mean, what are some of these clever
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marketing things going on that we're
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maybe not even aware of? You know, I
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think a lot of times all of us would
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agree with the statement that
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advertising works. probably not all of
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us would agree with the statement that
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advertising works on us. The tricky
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thing about persuasion is that you don't
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really know all the time that you're
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being persuaded when you are. It's going
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to get more and more difficult with AI
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becoming the engine of everything of
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getting these highly adaptive ads that
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are based on not someone who meets your
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profile but on you, your search history,
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any ads you've clicked on, any of your
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prior purchases. So I think and I
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especially when it comes to finance,
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it's going to be something very
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difficult to navigate because a lot of
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us don't fully understand finance, but
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if we're and we're buying it more and
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more online, whether it's car loans,
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mortgages, whatever, credit cards, you
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know, we really need to be careful. And
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I think that AI in particular and maybe
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driving consumer finance to where the
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classroom is going now, which is more
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off more and more offline because so
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many of the AI tools are so good that
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you know I and a lot of my colleagues
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are reverting exams to being you know
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paper and pencil, not being able to take
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them online and that sort of thing. That
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may be where consumers need to go when
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it comes to shopping for well anything
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but also in particular finance.
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>> Yeah. Really interesting. You mentioned
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a word there adaptive ads which you know
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I can think to myself when I go watch a
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YouTube video I recognize the fact that
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I'm being served an ad for some product
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in my search history. I kind of realize
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there's something being specifically
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targeted at me the individual. I mean,
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is that what you mean by an adaptive ad,
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or is it even more kind of crazy and
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dystopian than that?
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>> If you saw Bladeunner 2049, there's a
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scene after Ryan Gosling is coming back
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from just getting the hellbeat out of
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him and then like a 10story holographic
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image of his AI girlfriend starts
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pitching him some product. I mean, I
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think we will get more sophisticated
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about this, too. I mean, my kids are
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constantly saying, "Well, that's AI."
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But then they're quicker to pick it out
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than I am. But no, I I think it's in
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some cases, like today, there going to
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be some things where you're like, "Okay,
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that's very creepy. I feel spied on."
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And then in other cases, I think AI will
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adapt enough to become less identifiable
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to create more subtleties and things. So
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you have a harder time knowing that, oh,
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this is based on my Amazon account or
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whatever. Zooming out even even a little
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bit further and this is going back to
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your first answer. You mentioned this
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idea that most of us are aware that
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we're being advertised to, that we're
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being persuaded. Most of us are aware
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that it works on somebody, but very few
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of us are willing to admit that it works
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on us. And I I feel like I I've heard
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that statement in some form mentioned
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before and I'm aware that that's kind of
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part of the whole advertising industry,
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>> but do you have any like concrete
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examples of that that even if it's more
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traditional advertising than modern
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advertising of just the fact that
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whether you realize it or not, this
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stuff probably is working on you, right?
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I mean, I know for me and I finally I
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think my wife has finally gotten me to
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stop like I would sometimes buy these
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weird novel contraptions. We were having
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some drain flies in our kitchen. I don't
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know if you've ever had drain flies in
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your kitchen.
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>> It's not great. They are what they sound
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like. Uh these little like fruitfly size
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insects
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>> that if you haven't cleaned out your
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drain, they end up making a home there
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and it's just it's totally gross. But
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probably because I had forgotten to turn
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my microphone off on my Instagrammer, I
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start getting pitched all these almost
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like infomercial type of bug trap
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things. And there have been some other
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things as well. So I I you know I I am
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acutely aware as and my wife is acutely
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aware that I am susceptible to
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advertising. So but the adage about
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advertising is what it's the right offer
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to the right person at the right time. I
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mean there's probably another plank in
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that which is so long as they don't know
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you've been spying on them. But in the
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case of the bug traps or some other
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things that I bought clearly social
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media has caught me when I was in the
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mood to buy something and pitch me the
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right product. Well, this is a good
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transition then because I think this is
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I pulled this quote I think from
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something I saw that you wrote which is
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that marketing tactics deliberately or
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not exploit biases and blind spots when
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it comes to evaluating debt in this
00:13:31
specific case you were talking about you
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know the marketing of financial products
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the marketing of loans and debt and that
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kind of thing. What biases or blind
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spots are we talking about here and how
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do these specific marketing tactics
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exploit our biases and blind spots?
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>> Yeah, I mean there's a bunch of them,
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right? So I would say if you look into
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there's one of the biggest biases is
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something called loss subversion right
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so uh the authors of that conan and
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tverki have they won a Nobel prize for
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it they've had books written about them
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and it's really just that we hate losing
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much more than we love winning and when
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you put that into a financial context a
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lot of times we will buy a lot of things
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like extra add-on services like extended
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warranties and things like that because
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we're so afraid of making the wrong
00:14:18
decision or a losing decision that we
00:14:20
become very susceptible to that. So, you
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know, my wife's car a couple years ago
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just up and died. Like, we were having
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lunch and we looked out in the parking
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lot and there was like fluids all over
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the parking lot and you know, we had it
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towed in and it was pronounced dead on
00:14:35
the scene and so we had to go get a car,
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right? We went and shopping for now the
00:14:41
big sort of family SUV we had had was a
00:14:43
very comfortable car. It was awful in
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terms of reliability. So, I think we,
00:14:49
you know, we wanted to go, we went to a
00:14:51
brand that had a a strong reputation for
00:14:53
reliability. Of course, we're hearing
00:14:55
how reliable it is the whole time during
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the sales pitch and the moment we commit
00:14:59
to buying it, they pivot into, well, but
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it doesn't mean it's foolproof and this
00:15:03
thing could blow up and it could really
00:15:05
cost you, right? It was like 20 seconds
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ago, you were telling me how reliable
00:15:08
this thing and now you're convincing me
00:15:10
that like, you know, doom is right
00:15:11
around the corner. But it is I mean the
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car is the second biggest purchase most
00:15:16
of us ever make, right? So naturally
00:15:18
we're going to be extra cautious about
00:15:20
that and so a lot of us end up buying
00:15:22
extender warranties and that sort of
00:15:24
thing. I on my car that I the last car I
00:15:28
got I remember they said well you know a
00:15:31
pro we can spray it with a protective
00:15:32
coating and I think they wanted like a
00:15:34
thousand bucks for it. And I had
00:15:37
actually driven I traveled a bit to get
00:15:39
the car cuz I I found it on what I
00:15:41
thought was a good deal. And I said,
00:15:43
"Well, okay, but how long would that
00:15:45
take?" And they're like, "Oh, it takes
00:15:46
like five minutes." And I was like,
00:15:47
"Well, if it takes five minutes, why
00:15:48
does it cost $1,000, right?" But I, you
00:15:51
know, in that case, I declined. But
00:15:53
there have been other times where I've
00:15:54
I've definitely bought tack on insurance
00:15:55
and warranties and that sort of thing
00:15:57
because I mean, I am very loss averse.
00:16:00
>> Yeah. I just think about right every
00:16:02
Amazon purchase now, especially I think
00:16:03
for maybe it's like electronics. I feel
00:16:05
like they usually try to they tell while
00:16:08
you're checking out, don't you want this
00:16:09
extended warranty? Travel now usually
00:16:12
comes with some sort of travel insurance
00:16:13
add-on pitch they're trying to make to
00:16:15
you. And specifically, you know, John,
00:16:17
mo most of the listeners here to this
00:16:19
podcast are DIYers in their financial
00:16:22
lives, maybe even like thinking about
00:16:24
retirement through a bit of a DIY lens.
00:16:27
And I think immediately of annuities. I
00:16:30
I don't know how familiar you are with
00:16:31
annuity products as part of retirement
00:16:33
planning, but it's basically this
00:16:35
insurancebacked product that says,
00:16:38
"Don't risk losing everything you've
00:16:40
saved for retirement. Here's this steady
00:16:42
protection that provides you guaranteed
00:16:43
income." And when you really look at the
00:16:45
underlying math, you say, "Oh, well,
00:16:47
that probably isn't that appealing a
00:16:48
deal, but it's sold as protect, protect,
00:16:51
protect, don't lose, don't lose, don't
00:16:52
lose." And just going back to that loss
00:16:55
aversion, what else? I mean I know
00:16:57
Conorman and the Terski were full of
00:16:58
really interesting biases. Are there any
00:17:00
others that that really stick out?
00:17:02
>> There have been a bunch of things that
00:17:04
of course they are giants in their field
00:17:05
and so there have been a bunch of
00:17:06
offshoots for it. So another thing
00:17:09
related to loss aversion is what you
00:17:11
call like an anchoring effect that
00:17:13
typically people find the first piece of
00:17:15
information that they see and they kind
00:17:18
of block out anything else. You know, a
00:17:20
big reason for that is, you know, we are
00:17:22
asked to be well, we're asked to make
00:17:24
decisions on a lot more things than it's
00:17:27
would ever be capable to be an expert
00:17:29
on. So, in a lot of cases, especially if
00:17:31
we're dealing with something that makes
00:17:32
us a little anxious like finance. A lot
00:17:35
of times we just well they call it
00:17:37
seizing and freezing, right? So, you
00:17:38
seize on the first piece of information
00:17:40
that you find that you think gives you
00:17:42
the answer you want and you freeze out
00:17:44
everything else. Well, when you're
00:17:46
dealing with things like, you know,
00:17:48
loans and credit that they usually have
00:17:50
a lot of components to price, they may
00:17:52
have escalation causes. They may have
00:17:54
all these things. People will seize on
00:17:57
like an introductory interest rate and
00:17:59
then, you know, they won't pay attention
00:18:01
to anything else. It's like when people
00:18:03
buy something online and they don't
00:18:05
incorporate any shipping cost to it if
00:18:07
it's $50 plus. I mean, I don't know if
00:18:10
you've ever done this where another
00:18:12
example of maybe me being one of the
00:18:13
bigger suckers out there where you see a
00:18:15
really attractive upfront price for
00:18:17
something and you click on it. This
00:18:19
thing's usually $80. They're advertising
00:18:21
it for, you know, 60 or 70. So, you
00:18:24
click on it and then of course it's like
00:18:25
$25 to ship it, which is absurd. But, I
00:18:28
mean, this we do the same things with
00:18:30
loans. We'll take that initial rate and
00:18:33
even if it's only good for a couple of
00:18:35
months and then it escalates, you know,
00:18:37
that's what we encode as the price and
00:18:39
then we block out all these other
00:18:41
things.
00:18:41
>> Have you looked into the buy now pay
00:18:43
later at all? Like this growing theme of
00:18:46
services in the finance industry. It's
00:18:48
there's a few companies that are now
00:18:50
like trying to out compete each other to
00:18:51
to win that race. But I can go buy a
00:18:54
$500 product on Amazon, not pay anything
00:18:57
for 3 months, or maybe they just divide
00:18:59
it into, you know, 10 months of even
00:19:01
payments, and they're charging me some
00:19:03
hidden interest rate in there. I mean,
00:19:05
any any specific thoughts on on that
00:19:07
service? Economists refer to something
00:19:10
called intertemporal discounting, which
00:19:11
is just like a really fancy way to say
00:19:13
that depending whether if something is
00:19:16
in the present or at some point in the
00:19:18
future, we're going to look at it in
00:19:19
different ways. If we push things off
00:19:22
just a little bit into the future, we
00:19:24
have a tendency to think it's way more
00:19:25
affordable than it actually is. You
00:19:28
combine this with the general sort of
00:19:29
optimism that we have that, you know,
00:19:32
we're always going to have more time,
00:19:33
money, and energy in the future than we
00:19:34
have today, right? So, even if it's only
00:19:37
three or six months out, people are
00:19:39
likely to think, well, you know, I'm
00:19:41
strapped for cash this month because,
00:19:43
well, you know, my car needs to get
00:19:45
serviced. But there's lots of expenses
00:19:47
like that every month. What you really
00:19:49
need to think about is how many months,
00:19:52
you know, do you end up the month and be
00:19:53
like, "Wow, I've got all this money in
00:19:55
my account." Probably not too many of us
00:19:57
do, but we have a tendency to think of
00:19:59
the future we will. When you push off
00:20:01
payments for things like that, oh, this
00:20:03
month I'm broke, but in a few months I'm
00:20:05
going to have all this stuff sorted, and
00:20:06
it's well, there's all these different
00:20:08
expenses that creep into your life that
00:20:10
you're not anticipating. So, I think
00:20:12
psychologically that's why a, you know,
00:20:15
buy now pay later is really attractive
00:20:18
to a lot of people because they fool
00:20:20
themselves into thinking that they're
00:20:21
going to be able to afford it when they
00:20:23
probably won't be able to.
00:20:25
>> How do we unfool ourselves? I mean, you
00:20:27
gave some answer there about just like,
00:20:28
you know, you almost need to just be
00:20:29
more realistic with yourself. But I love
00:20:31
that fact. I wrote it down. We all think
00:20:33
we're going to have more time, money,
00:20:35
and energy in the future than we really
00:20:37
do. And I can look back and say, "Yeah,
00:20:39
there have been times before when I've
00:20:40
I've assumed I'll be able to
00:20:42
fundamentally change my life over the
00:20:44
following 12 months." And then in
00:20:45
retrospect, you look backward and say,
00:20:47
"I didn't quite hit my my my high goal
00:20:50
there." But are there any I mean, in
00:20:51
practice, is there anything we can or
00:20:53
should be doing to just be a little bit
00:20:55
more realistic with ourselves? I've got
00:20:57
two boys, 12 and 15. And I remember
00:21:00
always thinking, you know, as I've
00:21:02
progressed through the parenting and the
00:21:04
boys have grown, okay, well, I'm broke
00:21:06
because we're paying for daycare, but
00:21:07
once we're done paying for daycare, you
00:21:09
know, we'll be good. But then, of
00:21:10
course, they're doing sports and all
00:21:12
these other things and braces and all
00:21:13
this stuff keeps coming. though I've
00:21:16
finally come to grips with being wrong
00:21:18
so many times that it's really in my
00:21:22
mind it's more the test of you know
00:21:24
where are we now in terms of you know on
00:21:27
most months you know are we eatking it
00:21:29
out to get to the end of the month or or
00:21:31
do we feel like we have some space there
00:21:34
and I think that's a better judge of
00:21:36
where you are right now and where you've
00:21:37
been recently versus trying to figure
00:21:39
out where you'll be in the future
00:21:40
because I once got laid off from a job
00:21:42
it was right around the great recession
00:21:44
I don't think anyone has that in the
00:21:46
career path of I have a layoff or two
00:21:48
and you know I think half of all workers
00:21:51
end up getting laid off at one point or
00:21:52
another. We we should assume we're going
00:21:54
to get laid off at one point or another.
00:21:56
But I I think so yes, you know, God
00:21:59
willing this our ships come in for all
00:22:01
of us in the future, but I think the
00:22:03
present and the recent past is a better
00:22:05
judge of where you'll be. Here's a quick
00:22:08
ad and then we'll get back to the show.
00:22:09
I love getting your questions and some
00:22:11
of you ask me questions about the wealth
00:22:12
management firm I work for in Rochester,
00:22:14
New York. Others ask about the Best
00:22:16
Interest blog and this podcast, Personal
00:22:18
Finance for Long-Term Investors, which
00:22:19
operate without advertising, without
00:22:21
pushy sales, and with no payw walls. How
00:22:23
can the blog and podcast stay afloat
00:22:24
without me dumping my own money into it?
00:22:27
Well, to answer both those questions, I
00:22:28
want to point you to episode 78 of
00:22:30
Personal Finance for Long-Term
00:22:32
Investors. I intentionally recorded
00:22:33
episode 78 to shine light on those
00:22:35
topics and inform you how you are
00:22:37
actually helping and can continue
00:22:38
helping these projects carry forward. So
00:22:40
if you've ever been curious about the
00:22:42
business of my blog and podcast or if
00:22:44
you're curious about my day job in
00:22:45
wealth management, please check out
00:22:47
episode 78 and let me know what you
00:22:49
think. So my wife and I yesterday, it
00:22:51
was a Sunday, we had on our beloved
00:22:53
Buffalo Bills on in the background.
00:22:56
Go Bills. Uh, and I heard what must have
00:22:58
been my millionth advertisement for a
00:23:00
sports gambling app. I mean, they're
00:23:02
they're just ubiquitous, especially when
00:23:04
when you're watching live sports.
00:23:06
They're ubiquitous. And I've on this
00:23:08
podcast before gone deep on my I'm kind
00:23:11
of way out on the spectrum, I think, of
00:23:12
disliking sports gambling and kind of
00:23:14
what it does to us on a societal or just
00:23:16
an individual level. But I'm curious. I
00:23:19
see this very interesting confluence of
00:23:21
a what I would call a terrible financial
00:23:24
behavior and a gigantic marketing
00:23:26
machine that's trying to like
00:23:28
proliferate that behavior. And not to
00:23:30
put you on the spot if you haven't dove
00:23:32
too deep on it, but I'd love to hear
00:23:33
your thoughts if if you have any. I
00:23:35
think I align with you. Like, you know,
00:23:37
if you're Charles Barkley and you've
00:23:39
just got absurd amounts of money, you
00:23:41
know, and you want to go blow a half
00:23:43
million at in Vegas this weekend, you
00:23:45
know, God bless you. But most people
00:23:47
don't have that kind of slack in their
00:23:48
budget. But let's say you're one of the
00:23:50
big gaming companies and we all see them
00:23:52
advertising all over the place. So
00:23:54
you've probably got what hundreds of
00:23:56
thousands if not millions of customers.
00:23:58
So I doubt they're really getting in on
00:24:00
people's profiles on an individual
00:24:02
level. But at the same time, there have
00:24:05
been issues that have come up in the
00:24:06
news recently of, okay, you guys have
00:24:08
been targeting sending more offers and
00:24:11
bigger offers and incentives to people
00:24:13
who clearly have a problem gambling.
00:24:16
Now, if you're in the data center of one
00:24:18
of these big gaming companies, you might
00:24:19
just see it, hey, this is one of our
00:24:20
best customers. So, what's the
00:24:22
difference between the a best customer
00:24:24
and someone who's ruining their life,
00:24:25
you know, and I think actually if you I
00:24:28
personally think you could probably flag
00:24:30
certain profiles and things like that,
00:24:32
but I would guess in a competitive
00:24:35
marketplace, gaming company one says,
00:24:38
well, if we stop this person or
00:24:40
discourage this person from gambling,
00:24:41
they're probably just going to go to the
00:24:43
next gaming company through the app. I
00:24:46
mean, they, you know, they can, if you
00:24:48
have not set your privacy settings
00:24:49
carefully, and most people don't, you
00:24:51
know, they know when you're near a
00:24:53
sporting event, know when you're near
00:24:55
one of their casinos, all of these
00:24:57
things. And they also have all this
00:24:59
extra data they've been able to compile
00:25:01
on you through that app and other apps
00:25:04
on your phone. So for certain goods, I
00:25:08
mean, I have to put gaming near the top
00:25:10
of goods that when heavily armed with
00:25:13
information in a digital environment
00:25:14
could really wreak havoc. This is my
00:25:17
total lay person's opinion, but just it
00:25:19
it seems the way that things are going
00:25:20
in the marketing and advertising world
00:25:23
or just maybe when I think about this
00:25:24
other broad issue of just like the the
00:25:26
social media kind of echo chamber slash
00:25:29
kind of addiction world of people just
00:25:31
falling down these these kind of bad
00:25:33
paths in the social media world. It's
00:25:35
that the service, whether it's a social
00:25:37
media site or a gambling site or just an
00:25:41
advertising agency, they know a lot more
00:25:43
about you and they know a lot more about
00:25:45
human brains than you do. And and to
00:25:48
some extent, we're all probably
00:25:50
relatively powerless against them. But
00:25:52
maybe not. I mean, I'm sure there are
00:25:53
some hopeful things we can do. So maybe
00:25:55
we can focus on that right now, John. I
00:25:57
mean, short of becoming a complete lite
00:25:59
and getting rid of all your electronics.
00:26:01
I mean, what are some other things that
00:26:03
we can all start doing on an individual
00:26:04
basis to at least become more aware of
00:26:06
these ways in which we're being
00:26:08
targeted? Part of it is, you know, check
00:26:11
your settings for your different
00:26:13
platforms and your different apps. I
00:26:15
have found personally, now maybe I
00:26:17
misjudged it, but I know I have found
00:26:18
personally I have set privacy settings
00:26:22
for like a certain social media and then
00:26:24
when I update the app, it reverts to a
00:26:26
default.
00:26:27
>> Oh boy.
00:26:28
>> So, you have to be pretty vigilant about
00:26:29
that stuff. And I think a big thing on,
00:26:32
you know, one of my favorite
00:26:33
psychological like tidbits is the people
00:26:36
who are most biased in the world are
00:26:39
people who think they aren't biased at
00:26:40
all because they're not monitoring
00:26:42
themselves and they're not adjusting for
00:26:44
it. Instead of bias, let's talk about
00:26:46
being vulnerable where if you think you
00:26:48
aren't vulnerable to this stuff, chances
00:26:51
are that you are because you have such a
00:26:53
feeling that you are invincible on this
00:26:56
stuff that you're going to be persuaded
00:26:58
without knowing it. So and so I think if
00:27:00
you can be you call it in psychology
00:27:02
call it self monitoring right so if you
00:27:04
can be sort of vigilant about your own
00:27:06
vulnerability and then also try and keep
00:27:09
platforms whether it's your browser or
00:27:12
your social media or various mobile apps
00:27:15
be vigilant about checking your privacy
00:27:17
settings uh I think that will help
00:27:19
>> that's interesting I feel there's a
00:27:20
parallel there I feel like sometimes
00:27:22
some of the worst investor stories I
00:27:24
hear are the people who are sure their
00:27:26
system beats the market you know they're
00:27:28
sure they're smarter than everyone else
00:27:29
or they're sure that they are um kind of
00:27:32
invulnerable to the things that befall
00:27:35
the rest of us. And usually those are
00:27:37
the people who maybe like one in a
00:27:39
hundred of them actually are as smart as
00:27:41
they think they are, but the other 99
00:27:43
aren't.
00:27:44
>> But let's let's pivot. So I know your
00:27:46
upcoming book is all about specifically
00:27:48
the marketing of debt.
00:27:50
>> And many retirees or many, you know, the
00:27:52
kind of pre-retirees who might be
00:27:54
listening are probably a little wary of
00:27:56
taking on new debt. So that's a good
00:27:58
thing.
00:27:59
>> But because they maybe are a little more
00:28:01
assetri, they've been saving for many
00:28:03
decades. They still tend to be heavily
00:28:06
targeted towards debt products. I'm
00:28:08
thinking of credit cards. Reverse
00:28:09
mortgages are a big one that that tend
00:28:12
to cover uh uh target retirees rather.
00:28:14
Maybe some sort of medical financing to
00:28:16
help alleviate the fear of future
00:28:19
medical costs. So I'm just I'm thinking
00:28:21
I I want to pivot a message a little bit
00:28:23
directly toward those current or future
00:28:25
retirees. if you have any thoughts. It
00:28:27
sounded like reverse mortgages were
00:28:28
something you were pretty aware of.
00:28:29
Maybe we can start with that or just any
00:28:31
thoughts you have on on what retirees
00:28:32
should be aware of.
00:28:33
>> I'm not especially, you know, more
00:28:35
versed than the average person on
00:28:37
reversed mortgages other than I guess
00:28:40
I'm in my 50s. So, I have my mom's
00:28:42
retired, my mother-in-law's, and I have
00:28:44
colleagues who have recently retired.
00:28:45
One of them actually who was we took him
00:28:47
out to lunch and he spent the whole time
00:28:48
talking about reverse mortgages. You
00:28:50
know, I will say as far as targeting
00:28:53
seniors, I mean, seniors are, you know,
00:28:56
among the most exploited populations out
00:28:59
there, right? You know, my
00:29:00
mother-in-law, we lost my father-in-law
00:29:02
a couple years ago, and my mother-in-law
00:29:04
is doing great. She has a very, you
00:29:05
know, she's in South Florida, as you
00:29:07
might expect, but it is very active
00:29:09
social life. She's doing really well.
00:29:11
But, you know, on Facebook, she's
00:29:13
getting targeted by more like
00:29:15
25-year-old Italian princes who just are
00:29:17
looking for the company of a single
00:29:21
woman in her 70s, right? And I mean,
00:29:24
thankfully, my mother-in-law is pretty
00:29:25
shrewd. She's not going for any of this,
00:29:27
but she has friends who have fallen for
00:29:28
these things, right? So, whether it's an
00:29:30
Italian prince in his 20s or it's
00:29:33
different financial products that are
00:29:35
being pitched hard to you, I mean, I
00:29:37
think it's these old truisms. If it
00:29:39
seems to be good to too good to be true,
00:29:41
it is. I think the other thing is most
00:29:44
people with finance, if you don't think
00:29:47
you understand or you have enough
00:29:48
information, get help from some a friend
00:29:51
or a family, family member who works in
00:29:54
finance because studies have shown
00:29:57
financial understanding or the effects
00:29:58
of financial education fade over time.
00:30:00
If you're not steeped in it and you can
00:30:03
feel yourself like, well, I think it's
00:30:05
okay, slow things down. Like if you're
00:30:07
dealing with someone who's not going to
00:30:08
allow you extra time to make a decision,
00:30:10
you don't want to be working with that
00:30:11
person anyways. But I think get, you
00:30:14
know, get the help you need. I mean,
00:30:15
especially as seniors who are being
00:30:18
targeted for this stuff more so than a
00:30:21
lot of the rest of us. I can think of a
00:30:23
couple examples in my kind of tenure
00:30:25
here working at a financial planning
00:30:27
firm where I feel like I've failed
00:30:29
clients is because only after the fact a
00:30:32
client came to me and said, "Hey, uh,
00:30:34
Joe, just by the way, last month I did
00:30:36
X, Y, and Z, and I just figured you you
00:30:38
would want to know that just to, you
00:30:39
know, so you know, on your end so we're
00:30:40
all on the same page." And I kind of
00:30:42
think back and I go, "I really wish you
00:30:44
had told me about X, Y, and Z
00:30:46
beforehand." Thankfully, it hasn't been
00:30:47
fraud. It hasn't been buying some awful
00:30:49
product. that hasn't been like a five
00:30:51
figure mistake, but it might have been a
00:30:53
a $500 mistake. And still, just the idea
00:30:56
of having someone in your life, again,
00:30:57
whether it's a trusted family member,
00:30:59
whether it's a a fiduciary, hopefully
00:31:01
adviser, anything like that, your
00:31:03
accountant, someone to bounce these
00:31:05
questions off of, a third party to help
00:31:07
you with some of that decision-m can be
00:31:09
huge. But let's transition, John. We,
00:31:11
you know, a few minutes left. Let's talk
00:31:13
a little bit more specifically about
00:31:14
your upcoming book cuz I will say, you
00:31:17
know, this this confluence of marketing
00:31:19
and finance is something that I've got
00:31:21
just a really I I I love both of those
00:31:24
topics and uh especially on the
00:31:25
marketing side, I know enough to be
00:31:27
dangerous in terms of like how
00:31:29
manipulative marketing can be.
00:31:31
>> Sure.
00:31:31
>> And then uh I also know and and for the
00:31:34
audio listeners right now, you can't
00:31:36
judge a book by its cover, but your book
00:31:38
cover is so cool. So uh I Well, again,
00:31:40
I'm glad you like it. Yeah. So maybe you
00:31:43
can describe for the listeners in 15
00:31:45
seconds what it looks like, but really
00:31:46
I'd love to you just to to dive a little
00:31:47
bit more into the contents of the book
00:31:49
itself and why we ought to pick it up.
00:31:51
It's called The Marketing of Debt: How
00:31:52
They Get You. It is actually just
00:31:54
recently out and so you can find it
00:31:56
online. It most any place online that
00:31:58
that sells books. I there have been
00:32:00
different books about kind of the
00:32:03
psychology of money. And so this is
00:32:06
about that, but I wanted to take it an
00:32:08
extra step to say, okay, here's where we
00:32:11
are most vulnerable and why, but here's
00:32:14
how marketers c can exploit those
00:32:17
vulnerabilities, right? Here are the
00:32:18
tactics they use and this is why they
00:32:20
work. So something you were talking
00:32:22
about like a client who would say, well,
00:32:24
I've it was a $500 bad decision. So, one
00:32:27
of the things I go into is okay, well,
00:32:29
if you're a marketer, you're seeking
00:32:33
simplicity and clarity for the things
00:32:35
that you think are a benefit that that
00:32:37
are attractive, right? But when you get
00:32:39
to things that are very complicated and
00:32:41
undesirable, like say pricing for these
00:32:43
products, you are seeking complexity,
00:32:46
right? You're breaking the price up into
00:32:48
a bunch of different parts. You're
00:32:49
calling the different parts of the price
00:32:51
different things. There's an interest
00:32:53
rate, right? There's prepayment
00:32:54
penalties. There's convenience fees.
00:32:56
There's all these things. And so that's
00:32:58
what I really wanted to get to was to
00:33:00
take, so here's why we're bad at this,
00:33:03
but here's how marketers make it worse
00:33:05
because that's the stuff that we're
00:33:07
going to we run into all the time. It
00:33:09
applies to things besides finance, but I
00:33:11
just kept it in a financial context
00:33:13
because well, I started writing a book
00:33:14
and I wanted to finish it. So if I tried
00:33:16
to incorporate everything, I'd be
00:33:17
writing this for the rest of my life. So
00:33:19
that's what the book is about. And you
00:33:21
know, I hope people find it interesting
00:33:22
and useful.
00:33:23
>> That's awesome. We'll send some links in
00:33:25
the show notes so people can find that
00:33:26
book really easily. Professor John
00:33:28
Dinsmore, thank you so much for stopping
00:33:30
by Personal Finance for Long-Term
00:33:31
Investors.
00:33:32
>> Thanks, Jesse.
00:33:33
>> Thanks for tuning in to this episode of
00:33:35
Personal Finance for Long-Term
00:33:37
Investors. If you have a question for
00:33:39
Jesse to answer on a future episode,
00:33:41
send him an email over at his blog, The
00:33:43
Best Interest. His email address is
00:33:45
00:33:48
Again, that's jessevestinterest.blog.
00:33:52
Did you enjoy the show? Subscribe, rate,
00:33:54
and review the podcast wherever you
00:33:56
listen. This helps others find the show
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and invest in knowledge themselves, and
00:34:01
we really appreciate it. We'll catch you
00:34:02
on the next episode of Personal Finance
00:34:05
for Long-Term Investors. Personal
00:34:07
Finance for Long-Term Investors is a
00:34:09
personal podcast meant for education and
00:34:11
entertainment. It should not be taken as
00:34:13
financial advice and it's not
00:34:15
prescriptive of your financial
00:34:16
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