In this long overdue episode of the NZ Wealth & Risk podcast, I speak about conflicts of interest. I talk about conflicts in general, but also how my understanding of how conflicts of interest have the potential to influence advice has informed some of the important decisions I've made in relation to my business, Fairhaven Wealth.
You won't walk away from this podcast with anything immediately actionable. But it will increase your awareness of, and sensitivity, to conflicts of interest and a greater appreciation about how they can influence our own behaviour and the behaviour of others.
- "The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest" by Daylian M. Cain, George Loewenstein, and Don A. Moore. The abstract reads:
Conflicts of interest can lead experts to give biased and corrupt advice. Although disclosure is often proposed as a potential solution to these problems, we show that it can have perverse effects. First, people generally do not discount advice from biased advisors as much as they should, even when advisorsâ€™ conflicts of interest are disclosed. Second, disclosure can increase the bias in advice because it leads advisors to feel morally licensed and strategically encouraged to exaggerate their advice even further. As a result, disclosure may fail to solve the problems created by conflicts of interest and may sometimes even make matters worse.
- "Meditations on Molech" by Scott Alexander. It's a long read, but worth it.