BEHAVIORAL FINANCE

UNDERSTANDING THE
SECRET LANGUAGE OF
MONEY -JOHN E. MORIARTY

Presented by | Group 3
Abhinandan Chakraborty(2021PGP192)
Amit Shete(2021PGP071)
Ishaan Thaapar(2021PGP086)
Ritesh Baghole(2021PGP169)
Ruchi Sharma(2021PGP171)
Shrey Chheda(2021PGP181)
John E. Moriarty

Saint Louis University (BSBA in Finance (1996)

Has been an entrepreneur in the wealth management industry

since 1995

Founder and president of E3 Consultants Group.

Member of financial service organizations, including the Financial

Planning Association (FPA), National Association of Insurance and
Financial Advisors (NAIFA) and the Society of Financial Services
Professionals.
 1.The Era of Financial Dependence on the Status Quo

1. To fully comprehend the economic and societal problems we face as a country because of misperceptions
regarding finances, one must first grasp the magnitude of our collective actions over the past hundred years.
2. The vast majority of Americans have forgotten that the most important characteristics of a good financial picture
are flexibility and control—because they give you the personal freedom to choose.
3. That freedom has been lost by the government’s actions over the last hundred years, especially the two big ones
in 1913:
Introduction of the federal income tax
Creation of the Federal Reserve

The state maintains our society’s status quo by relying on other entities besides ourselves for creativity and
innovation.

There is lack of entrepreneurial drive in following areas:

• Education
• Housing
• Banking
• Employment
• Retirement
 1.The Era of Financial Dependence on the Status
Quo
Education Housing Banking Employment Retirement

Knowledge is power The house you own,

Fed allows After the Great Post WW-II
Do what you are best at and should be one you
commercial Depression, people (Pension,Lower
elegate other things to can afford.
banks to create were taught to rely cost of living,
competent people. Structuring the
money out of for security on the simple lifestyle,
The fear of making the wrong terms of the loan so
thin air. government more less longetivity)
decision is causing people to that they benefit you
Govt has high and more and less vs
make no decisions about as well as the bank is
level of debts, on themselves. Current
where they should invest their all about controlling
how will they Keynesian Economics situation
hard-earned life savings. the flow of your
ever pay this. Jobless recoveries (401k, high cost
High fees , low qualiity of our money—which is
Dependent on govt. of living,
education (lacking the American dream
for jobs. consumerism,
enterprenuial drive, lacking I subscribe to based
Govt increases deficit more longetivity)
financial literacy) on today’s economic
Good cash flow management Tax more or prints
uncertainty.
Spending awareness more money.
Housing bubble
Why it's imp to pay yourself
first (i.e., save)
Debt Trap (delayed
gratification)
 1.The Era of Financial Dependence on the Status Quo

Conclusion :

1. Don’t look to the government for answers.

2. Entitlements are a trap. Why? They rob you of your creativity and innovation—perhaps not right away but slowly
over time as they lull you into a fall sense of security. Once those promises cannot be kept, all you are left with are
excuses.
3. The state doesn’t make, produce, or create anything. Focus on minimizing risk in your financial picture because
you are not entitled to anything.
4. Save more (or create more money to save).
Spend less (or figure out ways to control more of your money).
Work longer (or smarter).
 2 : How I See People Make Financial Decisions
New Grownups: Life in Our Thirties Life in Our Fifties Getting to Your Seventies,
Our Twenties and Forties and Sixties Eighties, and Nineties

Very few people goto school Risk vs reward myth Series of financial Questions and concerns
with enterprenuial drive. (assuming have time to decisions. Volatility of the markets
No skills of personal finance, make mistakes.) In today's economy you What if run out of
habit of savings. Finite time (protecting cannot just focus on money in retirement?
Student debts high against loss is more getting retirement. Cost of healthcare over
No value of delayed valuable) Unfortunately, the majority next ten to twenty years
gratification. Without good savings of Americans have not etc.
habits, at the mercy of prepared for retirement,
the markets. and
The American personal they are not properly
savings rate has not educated to figure out this
been above 10 percent dilemma on their own.
for thirty years. Ever-increasing
Have to save for government debt to
(retirement, education, support our entitlement
emergency fund, programs (Social Security,
vacations etc.) Medicare, and Medicaid)
2 : How I See People Make Financial Decisions

Conclusion :

Let’s face it—the threelegged stool of retirement (the company pension, Social Security benefits,
ample personal savings) is barely a memory.
Entrepreneurs don't take retirement.
Why would you ever stop doing something that you are passionate about, very good at, and highly
compensated for?
Without true good habits, most people’s financial futures are very uncertain. It is when you match
the purpose of your money with the appropriate financial vehicles that you can actually protect your
personal economy.
 3. Your Resources- Time, Talent, and Capital

TIME TALENT CAPITAL

Delivering information Talent is habits, skills, abilities Investing utilize capital to
clearly/concisely is at the core create more capital
of time management. Knowing the talent gives ability
to create capital Investment requires
Do what you are best at and commitment of all
delegate other things to Unique abilities require resources- time, talent and
competent people. continual learning and growing capital.

Surround with like-minded Unique ability is a result of Reducing risks helps in

people who value your time time and focus, emerges keeping more of what we
and bring other resources. through delegation. make.
LEARNINGS

Delegation is the key- The identify your talent, surround Investing requires commitment
more time we focus on our yourself with capable people to of all resources and risk
talent, the more capital we can delegate tasks that do not require evaluation
generate your talent.
4. Understanding your Personal Economy

Protecting your Personal economy

Comprehend difference between needs and wants

Create good saving and spending habits
Minimizing risk is very important

ACCUMULATION UTILIZATION
Buy-and-hold approach to make Saving first and spending less
money on money. that what we have.

Dollar-cost averaging when buying Several ways to create returns-

investments
1. Internal Return
Due to economic uncertainty, we
should consider changing the type 2. External Return
of assets we invest in and also its
purpose. 3. Eternal Return
 INTERNAL RETURN EXTERNAL RETURN ETERNAL RETURN
The return that asset generates Culmination of time, talent and
through its performance. Rarely considered while making capital passed on to the next
investment but has great generation.
Specific to timeline of action. advantage.
Includes a a lot of intangibles.
Utilizing asset classes that Return on cash flow
generate growth through income Improves family's personal
first helps in creating a more Subjective as everyone's financial economy as its members are
stable internal return. picture is different. now working with a more robust
foundation.

PAST BASED PRESENT BASED FUTURE BASED

PERSPECTIVE PERSPECTIVE PERSPECTIVE
PAST, PRESENT AND
FUTURE MENTALITIES
 5. Why a Solution Matters Today More Than Ever
What is Wealth ?
Habits to create wealth -
The "status quo" of
Wealth is the asset that supports a balanced lifestyle taking care of crucial Saving 15% - 20% of the
financial education
entities like: annual income
relies on mainly -
Happiness and comfort living in the moment Saving this amount for
The Government
Enjoying their big-ticket items (second home, travel, hobbies) big-ticket items
Federal Reserve
Good health for themselves (and their parents) Put 10%-15% of the
Financial
A multigenerational family presence (parents, kids, and grandchildren ) fixed salary into
institutions
Giving back to society, paying it forward (fundraising for charities) retirement vehicles
The media
Put the bonus for big
Conventional
Where does Wealth come from? ticket items
wisdom

Generally, the sources can be compartmentalized as:

Inherit it - Over 45% individuals in the 2013 Forbes list inherited their wealth.
Concerns like, what to do with the fund, how to protect the amount.
Make it yourself - The tried-and-tested way. Saving and investing the money over
decades. Stock market plays a big part in this process
Create the wealth - Add value for others and earn compensation in the process. Its
more about controlling the environment, he/she is in
 6. Think like the Rich

What makes "the Rich" different ?

Difference between "The Rich" and everyone else :

Access to information,
Confidence in their own abilities,
The resources they utilize when taking action

The Rich people -

Few ways they tend to embrace

Own equity stakes in enterprises, that seem to grow Types of Financial Elites -
Build an effective team around themselves Wealth Preservers - They are more
Maintain a small but effective and deep network of affluent, but assets are not as liquid. Focus
relationships, of power and influence on maintaining wealth
Learning from experience and failure for future Wealth Creators - Less affluent but assets
Highly focused on their goals have higher liquidity. Focus on multiplying
the wealth
 7. NLP - the study of excellence

Science about which actions work and how to repeat Strategies

them to achieve continuing success

Process of modelling unique conscious and unconscious

patterns to constantly move us towards higher potential

Modelling Mentoring Performance

Other Concepts

Neuro Linguistic Programming

Related to brain Examines Putting
- Conscious and verbal and patterns
Unconscious nonverbal together to get The Power Art of Power of
habits language results of State Framing Questions
8. How can you take care of your financial picture?

Education Confidence Action Trust

Specific areas Core principles in Transparent Trust has 2 major
line communication components:
Relevance
Philosophy should Transparent, one Character of the
Past-based data or meet mindset size fits one people you interact
future-based solution with
guidance Be certain about
next financial move Integrate resources Competency to
Conducive for and decision to achieve end measure and
reaching a decision results monitor
 9. What You Can Do to Protect Your Personal Economy?

Diversify Your
Risk Using Implement Tax Protect the Coordinate Every Minimizing
Alternative Diversification Purpose of Piece of Your Risk
Asset Classes of Your Assets Your Money Financial Picture

Pension plans, Minimizing Team of financial Market

Safety
endowments, income tax is professionals in all Volatility
financial an essential Liquidity areas that deal with Inflation
institutions. part of money. Taxes
Growth
Alternative planning Proactive strategies Longevity
investments to your that simplify your
mitigate these financial financial life are
risks. future. essential.
10. Thinking and Acting Differently with Your Financial Home

Defining your personal economy A Message to all of the Entrepreneurs

What are your worries about the economy? Cash Flow Management
What was money like for you growing up? Access to Credit
What are you looking for in an advisor? Economic Uncertainty
Describe your ideal day in retirement Employee Benefits
Executive Compensation

The elements of a financial picture Create Value through Customization

Reducing market volatility through non

What is the purpose of the money in each of
corelated assets
your accounts?
Hedging against inflation and income tax woes
Can I see your most recent quarterly account Prioritize proper tax diversification strategies
statements? and balance your liquid net worth with help of
The Clients’ Savings and Investments, Cash financial advisor
Flow, Your Tax Return
Thank You