Dr. Daniel Crosby, Orion Advisor Solutions – You Want The Best Anxiety Adjusted Returns | #301

Episode Summary

Executive Summary: Dr. Daniel Crosby, Orion’s Chief Behavioral Officer, argues that investing success is mostly about behavior, not technical skill: advisors must coach clients through panic, but they also need their own support systems. He links the pandemic, market volatility, loneliness, and speculative manias to deep human biases, then advocates for simple guardrails, better incentives, and goal-focused investing over chasing returns.

Main Topics: Behavioral coaching as the core value of advisors: Crosby says advisors add most value by keeping clients out of their own way during stress, uncertainty, and drawdowns, not by trying to outsmart markets. Advisor mental health and the need for support: He emphasizes that advisors experience secondary trauma and burnout, making therapists and peer support important for sustaining good client work. Pandemic market psychology and investor stress: The conversation revisits March 2020, showing how fear, unprecedented uncertainty, and constant client demand strained both investors and advisors. Loneliness, social isolation, and speculative behavior: Crosby connects post-pandemic isolation to Reddit trading, crypto, NFTs, and other tribal/speculative behaviors as people seek belonging and excitement. Robinhood, fintech incentives, and behavioral friction: He criticizes apps that make trading too easy and profitable for the platform while encouraging overtrading and harmful decisions for users. Personal investing rules and guardrails: Crosby explains his own boring, systematic approach: international/value tilt, house paid off for peace of mind, and a small play-money account for experimentation. Enough, goals, and habit formation: He reflects on the idea of ‘enough’ and on using small habits, environmental design, and nudges to make long-term goals more salient and achievable.

Key Arguments: Behavioral coaching is the primary value-add of a financial advisor; the data and industry consensus support this, but advisors must also manage their own psychology. Advisors face real emotional and physical strain because they are the last line of defense against clients making catastrophic decisions during crises. A therapist is useful for advisors because rapport matters more than credentials; the best predictor of therapy success is whether you connect with the therapist. Human beings extrapolate the present too far into the future: panic in crashes and euphoria in bubbles both lead to poor decisions. Loneliness and social isolation increase the desire for tribe-like investing behavior, helping explain meme stocks, crypto communities, and NFT enthusiasm. Fintech products often align with company revenue but not investor welfare; making trading easy, gamified, and frictionless encourages worse outcomes. Investing should be organized around goals and anxiety-adjusted returns, not maximizing headline returns or chasing 15% targets. Simple guardrails—education, environment, and encouragement—are more effective than willpower alone for changing investor behavior. The best investments often come from owning productive businesses; speculative trading is generally inferior to patient ownership and disciplined saving.

Data Points: Advisors with clinical PTSD/anxiety/depression (2007-2009 study): 93% - Crosby cites research on financial professionals during the financial crisis Pandemic years’ market returns: 11% to 27% up years - He notes prior pandemics (SARS, MERS, Ebola, swine flu) coincided with strong market performance Suicide hotline calls in Atlanta: up 450% year over year - Used to illustrate pandemic-era loneliness and distress Health impact of social isolation: equivalent to smoking 15 cigarettes a day - Crosby cites research on isolation’s severity Social isolation vs obesity: twice as damaging as obesity - He compares isolation to other health risks U.S. investor expected returns: 15% - He references a Schroeder survey showing investors extrapolating recent gains Weight-loss predictor: five best friends’ weight loss/gain - Illustrates how environment and peer group shape behavior Liquor-store music effect: 75% increase in champagne purchases; 50% increase in beer purchases - Example of nudges shaping consumer behavior without awareness Private-label/food labeling effect: U.S. became twice as fat and three times as morbidly obese - He argues information alone does not change behavior

Pivotal Quotes: "every financial advisor needs their own advisor and a therapist" — Dr. Daniel Crosby: His tweet and central point about advisor self-care and behavioral support "behavioral coaching is the primary value add of a financial advisor" — Dr. Daniel Crosby: Explaining why advisory relationships matter most in turbulent markets "The best predictor of patient outcomes is rapport" — Dr. Daniel Crosby: Advice on how to choose a therapist

Implications: Listeners should focus less on prediction and more on systems: good advisors, good habits, honest guardrails, and appropriate incentives. For the industry, better UX alone is not enough; products must be designed to improve behavior, not merely trading volume.