The Impact of Language on Wealth Perception and the Diderot Effect

In episode 415 of The Brainy Business podcast, host Melina Palmer welcomes Anthony Damtsis, Deputy Head of Behavioral Finance at TD Wealth. Anthony shares his fascinating journey from leading the behavioral science practice at Discover Card in Chicago to his current role at TD Wealth, where he develops tools to help advisors integrate behavioral finance principles into their practice. The episode delves into his background, the importance of word choice in financial planning, and the intriguing concept of "wealth confidence."

Throughout the conversation, Anthony discusses how subjective feelings of wealth can differ significantly from objective measures, revealing that having more money doesn't always equate to feeling wealthier. He introduces the concept of wealth confidence, which includes intertemporal, social, and purpose and pleasure components, and explains how giving to charity can enhance one's sense of wealth. Anthony also shares insights from a research project that tested different value propositions for financial plans, leading to a significant increase in plan creation rates.

The episode is a treasure trove of insights for anyone interested in behavioral finance, the psychology of wealth, and the power of language in financial planning.

In this episode, you will learn:

• The concept of wealth confidence and its impact on financial well-being.
• How subjective feelings of wealth can differ from objective financial measures.
• The importance of word choice in financial planning and how it affects client engagement.
• The role of charitable giving in enhancing one's sense of wealth.
• Practical strategies for financial advisors to communicate the value of financial plans.

00:00:00 - Introduction Melina introduces Anthony Damtsis, Deputy Head of Behavioral Finance at TD Wealth, and sets the stage for a conversation about behavioral finance and wealth confidence.

00:02:30 - Anthony's Background and Journey Anthony shares his journey from Discover Card to TD Wealth and his passion for behavioral science and economics.

00:05:51 - Concept of Wealth Confidence Anthony introduces the concept of wealth confidence, explaining its components and how it differs from traditional measures of wealth.

00:09:00 - Subjective vs. Objective Wealth Anthony and Melina discuss how subjective feelings of wealth can differ from objective financial measures and the role of social comparisons.

00:13:38 - Impact of Charitable Giving Anthony explains how charitable giving can enhance one's sense of wealth and the psychological mechanisms behind it.

00:17:54 - Research on Financial Plans Anthony shares insights from a research project that tested different value propositions for financial plans, leading to a significant increase in plan creation rates.

00:21:31 - Importance of Word Choice Discussion on the importance of word choice in financial planning and how it affects client engagement.

00:24:54 - Practical Strategies for Advisors Anthony provides practical strategies for financial advisors to communicate the value of financial plans effectively.

00:28:36 - Wording Matters Anthony and Melina discuss the nuances around words used to describe feeling wealthy.

00:34:27 - The Importance of Financial Plans Anthony describes the outcomes of his research and applications for financial advisors.

00:37:12 - Conclusion What stuck with you while listening to the episode? What are you going to try? Come share it with Melina on social media -- you'll find her as @thebrainybiz everywhere and as Melina Palmer on LinkedI​​n.

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Get the Books Mentioned on (or related to) this Episode:

• Behavioral Science in the WIld, by Dilip Soman and Nina Mazar
• Behavioral Investor, by Daniel Crosby
• Dollars and Sense, by Dan Ariely and Jeff Kreisler
• Influence, by Robert Cialdini
• Designing for Behavior Change, by Stephen Wendel

Top Recommended Next Episode: Chuck Howard Interview (ep 213)

Already Heard That One? Try These: 

• Reciprocity (ep 238)
• Luke Freeman Interview (ep 239)
• Dilip Soman Interview (ep 241)
• Jeff Kreisler Interview (ep 397)
• Melaina Vinski Interview (ep 413)

Other Important Links: 

• Brainy Bites - Melina’s LinkedIn Newsletter
• London School of Economics
• BEAR @ Rotman
• The Diderot Effect