Behaving Your Way to a Better Retirement with Greg Davies

This is episode 75! And I’m thrilled to introduce my guest today. He is a true pioneer in the field of behavioural finance, Dr. Greg Davies.

Greg is the Head of Behavioural Finance at Oxford Risk and has spent his career shaping how we understand investor psychology, financial decision-making, and the emotional complexities that come with managing money—especially in retirement.

In this episode, we’ll explore the behavioural traps that retirees often fall into, how to build financial resilience, and why understanding your own psychology is just as important as having a well-structured portfolio.

Throughout our conversation, Greg and I explore the multifaceted aspects of retirement planning, emphasizing the importance of guaranteed income and its psychological benefits.

We discuss how behavioural finance plays a crucial role in spending habits during retirement, the impact of inflation on purchasing power, and the distinction between risk and volatility in investment strategies.

We also touch on future trends in retirement planning, particularly the potential need for and benefits of health insurance and a shift in focus from bequest to spending during retirement.

Key Takeaways

• Greg Davis shares his journey from economics to behavioral finance.
• Behavioral finance combines psychology, economics, and finance.
• The importance of practical applications of behavioral science in finance.
• People often make poor financial decisions due to cognitive biases.
• Simplifying complex financial concepts is crucial for better decision-making.
• Emotional comfort plays a significant role in financial decisions.
• Retirement planning today is more complex than in previous generations.
• Technology can help simplify financial decision-making processes.
• Understanding personal values is essential for effective retirement planning.
• The removal of guaranteed income streams complicates retirement planning.
• Financial advisors often overlook the emotional aspects of retirement planning.
• Guaranteed income can alleviate fears of running out of money.
• Behavioral finance significantly influences spending habits in retirement.
• People with guaranteed income tend to spend more comfortably.
• Inflation poses a significant risk to retirement savings.
• Understanding the difference between risk and volatility is crucial for investors.
• Many retirees are too conservative with their investment strategies.
• Health insurance will become increasingly important in retirement planning.
• The focus of retirement planning is shifting from bequest to spending.
• Planning for retirement should consider both financial and emotional factors.

Chapters

00:00 - Introduction to Greg Davis and His Journey
01:22 - The Intersection of Behavioral Science and Finance
05:45 - Building a Behavioral Finance Team at Barclays
10:53 - Understanding Behavioral Challenges in Retirement
21:57 - Navigating Retirement in a Complex World
29:50 - The Emotional and Financial Aspects of Retirement Planning
32:04 - The Role of Guaranteed Income in Retirement
36:16 - Behavioral Benefits of Guaranteed Income
40:05 - Real-Life Impacts of Guaranteed Income
44:23 - Inflation and Its Impact on Retirement Planning
48:37 - Understanding Risk vs. Volatility in Investments
57:27 - Future Trends in Retirement Planning

Books & Authours Mentioned

• Nudge by Richard Thaler

• Misbeahving by Richard Thaler

• Thinking, Fast and Slow By Daniel Kahneman

Research & Papers Referenced

• "A License to Spend" by David Blanchett, Michael Finke, and Wade Pfau

• The Jam Study (Choice Overload Study) by Shenna Lyengar and Mark Lepper

Other Things to Note

• Oxford Risk
• Connect with Greg on LinkedIn

Humans vs Retirement

• The Super Sunday Retirement Roundup Newsletter

• The Skill of Spending Money in Retirement Whitepaper

• The Humans vs Retirement Sketchstore

• Book in a Time For us to Chat About Your Retirement