Why Financial Products Are Too Complicated and Expensive

What if capitalism itself is confusing your personal finance decisions? In this week’s episode, Harvard economist John Y. Campbell joins us to unpack his new book, Fixed: Why Personal Finance Is Broken and How to Make It Work for Everyone, co-authored with Tarun Ramadorai.

John argues that the financial system—while essential—is failing ordinary people through complexity, hidden costs, and misplaced incentives. Drawing on decades of research in household finance, he explains why products are too expensive, advice too conflicted, and decisions too difficult, and how policy and design can fix it.

Key Points From This Episode:

(0:04) Introduction – Rational Reminder’s focus on sensible investing and decision-making. (1:46) Why Canadian finance feels broken: complexity, branding, and lack of competition. (4:53) Introducing John Y. Campbell and his new book Fixed. (5:43) The role of the financial system in everyday life: smoothing income, enabling investment, and managing risk. (7:14) The two main problems in modern finance—products are too complicated and too expensive. (9:17) Why financial decisions are so hard: our brains didn’t evolve for math, and temptation bias wins. (11:36) How far financial literacy education really helps—and its limits for inequality. (14:26) The “corruption of capitalism”: how capitalists exploit consumer confusion and misperceived value. (18:15) Cross-subsidies: how the mistakes of the poor often subsidize the wealthy. (21:05) Competition only works when consumers can compare price and quality. (22:15) Financial innovation—when technology helps vs. when it deceives. (24:24) Conflicts of interest in advice: why “trusted” advisors often don’t act in clients’ best interests. (26:26) Why loyal, long-term bank customers often get worse deals. (27:20) The illusion of opting out: why avoiding finance (or choosing crypto) is “jumping out of the frying pan into the fire.” (30:24) The global emergency-savings problem—why volatility hits the poor hardest. (32:26) Is college worth it? Returns, costs, and who actually benefits. (35:47) How to think rationally about buying versus renting a home. (38:16) Housing in retirement—why reverse mortgages make sense but are misunderstood. (40:25) Mortgage mistakes: not shopping, not refinancing, and the racial gap that results. (44:41) Using utility theory to make better insurance and investment choices. (46:55) Principles for investing in stocks: participate, diversify, minimize fees, and ignore short-term noise. (48:24) How real investor behavior deviates from these principles—chasing returns and confusing investing with gambling. (51:17) Insurance mistakes: overinsuring small risks, underinsuring big ones. (54:11) How much to save for retirement—and how most people fall short. (55:40) Lifecycle investing: why target-date funds are good but could be better. (57:56) Why annuities make sense, and how better framing could make them more popular. (59:30) Technology’s double edge: lower costs but higher temptation and discrimination. (1:02:17) Lessons from crypto: why stablecoins matter and what regulators should learn. (1:05:26) From nudge to shove: how governments should actively design simpler, safer products. (1:10:02) Where regulation goes too far—and why governments shouldn’t run finance directly. (1:13:10) Priority areas for reform: retirement accounts, transaction accounts, and insurance. (1:14:49) The four design principles for a better system: simple, cheap, safe, easy.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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/

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)