Good Financial Reads: The Behaviour Gap

Good Financial Reads: The Behaviour Gap


Book Review: The Behviour Gap

How not to do dumb things with your money!

In his short book, The Behaviour Gap – Simple Ways to Stop Doing Dumb Things with Money, Carl Richards has drawn delightful sketches on a table napkin to illustrate his point.

For example, $ Problems on the Y axis and Instant Gratification on the X axis. I guess I don’t need to explain the direction of that graph. These drawings are used to illustrate what should be important to you rather than making the same mistakes over and over again.

Carl Richards is an American financial planner and director of investor education for BAM Alliance. They’re a community of investors and advisors who, according to their website, have discovered a better way to take control of financial futures and achieve life’s most important goals. He is also a weekly contributor to The New York Times and Morning Star Advisor, and has become a keynote speaker for financial planning and visual learning events around the world. This man has studied human behavior when it comes to talking money. I believe that what he says will help you clarify how to focus on the important issues related to money.

Carl goes through the types of dumb things people do when they are forever chasing the best return or the next hot tip on the share market. He talks about how we are exposed too much information, most of which is just ‘noise’ made by journalists who have to report something very day. He shows you why a lot of time can be saved by simply ignoring all this ‘noise’ and get on with the real things which should matter to you. He considers Life Planning is more important than Financial Planning. If you do the first, the latter will overtime fall into place.

Not once in his book, will he try to sell you financial products or services. This book is about you and how you need to focus on the important things in your life. In his book he states ‘Financial plans are worthless, but the process of financial planning is vital’.

For those of you who want to simplify and improve the way you manage money, I would recommend this book. It is a book I thoroughly enjoyed. However, I am probably one of the 5% of the population who will take more time to understand my finances and try to get that extra return on my investments. In either case, I think this book is worth the read.

I was given this book when I was at the Australian Investor’s Association conference from the display stand for Sornem Private Wealth. My first attraction was they had on their display stand the book, Good Advice – A Guide for Investors and Advisers by Austin Donnelly. I have a copy of this book in my library, which I purchased it in 1998, and is now out of print. At the time Austin Donnelly was considered Australia’s No 1 Financial Advisor. If you ever see the book in a second hand bookshop, this book will give you some straight talking about how to invest and how to choose your adviser.

I found it interesting that Sornem Private Wealth originated from Austin Donnelly’s financial planning company. They still try to emulate the philosophies of Austin Donnelly.

In addition to being financial planners, Sornem, also produce a hard copy journal called Unconventional Wisdom. The journal is produced quarterly with two additional thematic editions. The last of the thematic editions related to the food supply chain, starting with the agricultural supply-driven companies to the food demand-driven companies. It makes for interesting reading and may offer some valuable information where you can see the whole picture for one industry perfectly laid out for you.

It’s nice to see a financial planning group actively promoting educational material for their clients. I thank them for giving me the opportunity to read both The Behaviour Gap and Unconventional Wisdom.

This review was written by Glenis Phillips, F Fin.

Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

I am a founding board member of Plencore Wealth Ltd and Plencore Online Pty Ltd. I am the designer of the product Financial Mappers and Financial Mappers PRO, cloud based modelling software for Personal Finance. This software is sold on the web site am an educator, investor and expert in both personal finance and mathematical modelling and the author of 'Map Your Finances'.I have both a Graduate Diploma in Applied Finance and Investments and a Diploma in Financial Advising from the Securities Institute of Australia. I also have a Financial Analysis Certificate, by Distance Learning from University of Technology, Sydney. I am a Senior Fellow and Senior Mentor of FINSIA.
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