I just finished reading The Behavior Gap from Carl Richards. There is no other way to put it, its a great book! The book is an easy read and Carl shares his insight working as a financial advisor/Certified Financial Planner and the observations he has made over the years of how people make the same mistakes over and over. This book is an ever-green read that will stand the test of time as it is generic enough to hold true now or a decade from now.
About the Author
Carl Richards is a certified financial planner and the director of investor education for the BAM ALLIANCE, a community of over 130 independent wealth management firms throughout the United States. He is the creator of the weekly Sketch Guy column in the The New York Times, and is a columnist for Morningstar Advisor.
Takeaways From the Book
- The author does not try to offer financial advise and does not have a particular stock recommended in the book. So, if that’s what you are looking, this isn’t the book for you.
- The book is more of an insight into the human psychology and how it plays havoc in our financial planning.
- The author offers plenty of stories to accompany his points and while some of the figures were a bit overdone and pointless, most sketches get the point across very clearly. My favorite is the sketch on the cover of the book which shows how people ride the greed/fear cycle over the years and let it dictate their investing decisions to lose their hard owned money.
- One of the central themes that I really liked from the book was how he points out that its more about life planning than financial planning per se. If you focus on planning your life, your financial plan will fit into (or will need to fit into that) accordingly.
- Plenty of stories that illustrates each of his points that I thought was a nice touch. By doing so, the author kept things fresh, which made for an easy and refreshing read.
- It is important to talk and trust your financial advisor. The author notes that one plan does not fit everyone and illustrates the point with stories where it might appear that something is a bad investment, but may make sense depending on the personal situation.
- The author makes it a point to drive across the point that it is important to stick to the plan – and not get swayed by what the stock market is doing on a day-to-day or week-to-week basis. It is the knee-jerk reactions that end up costing us over the long run.
I highly recommend this book to one and all. Whether you are a new investor just starting out, or a seasoned investor, I think its a great read. It is important to keep in mind that this book is not going to give out a secret to get rich quick or provide recommendations one way or another, but provides illustrations that are thought-provoking in understanding the human psyche and how it plays a huge part in market cycles. It is important to focus on the life planning and the financial planning will/should fit into that.
Have you read this book? What did you gather from the book? Share your thoughts below.
See my other book reviews here.