Peter Egolf | (802) 999-2321

I seek to eliminate many of the problems common in the financial industry: conflicts of interest, excessive fees for advice, and significant investment fees. I experienced these issues as an investor and joined the firm as a fiduciary financial advisor to teach other investors how to avoid these financial mistakes and build their wealth.

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The Psychology of the Financial Industry

By financial advisor Peter Egolf

Investors who are less than thrilled with their existing investments, advisor, or firm can feel trapped due to internal and external pressures. Feeling stuck leads to inertia. Inertia leads to opportunity costs. And opportunity costs erode wealth.

At One Day In July, we work with prospective clients to mitigate the impacts of psychological barriers (e.g., emotion, time, effort, money) that often can prevent investors from making decisions in the best interest of their financial health and wealth. Even seasoned investors prepared to change may face external obstacles, complexities, and systems that promote inertia. This article illustrates some of these psychological barriers and suggests methods for investors to overcome these barriers to meet their financial goals.

Sunk Cost

An underlying theme throughout this article is the behavioral economics term sunk cost. Sunk cost refers to an unrecoverable expenditure. The expenditure is most often time, money, effort, or emotion.

For example, if I spend 100 hours writing this article and no one ever reads it, those 100 hours are my sunk cost. No matter what I do moving forward, I cannot recover that time or effort. Even if I edit this article for an additional 20 hours, I will still never recover the original time. The behavior of expending additional resources to recover the initial time, money, effort, or emotion is known as the Sunk Cost Fallacy.1 Let’s see how this applies to investing.

At One Day In July, we view sunk costs as just that, sunk. We work with clients to understand their sunk costs, but more importantly, what the prospective (future) opportunity costs are for not making a change! Paying 1% for an advisor for the past 30 years is terrible but paying 1% for the next 30 years is even worse. Fees matter.


Emotions are natural human responses yet should have no place in investing. Emotions can cause counter-intuitive or even illogical investor behavior that can hinder optimal results. The list is long, but some examples include:

  • Staying with your current advisor or firm who underserves you financially but is a family friend or long-time partner.
  • The inability to sell investments that were gifted, inherited, or employee-earned yet underserve you financially.

At One Day In July, we look to minimize emotion. It does not matter if your current financial advisor is a friend or family member if their fees and investment advice lead to an erosion of your wealth. As fiduciaries, our role is to put our clients’ financial interests first. We enjoy difficult conversations, as they often lead to superior results.


Time is one of the most significant resources but can also be an antagonist to change. Investors who have spent time getting to know their existing advisor and investments may be opposed to a change that would be in their best interest. Additionally, the future cost of time required to make a switch in investments or advice looms over investors.

The financial industry can magnify the cost of time by drawing out transactions. For example, TIAA requires participants to roll out of their plan within 120 days of ending employment or do so in annual installments over nine years.2 Who wants to make a change in your best interest when it takes nearly a decade? TIAA knows this psychology and uses it to its advantage to keep client assets at their firm.

At One Day In July, we are committed to simplicity. Advisors work with prospective clients to minimize the amount of time required to join the firm and design an investment plan that minimizes the client’s future expenditure of time.


Have you ever noticed that there can be an absurd number of forms and steps to complete simple tasks in the financial industry? If your first experience setting up your investments required significant effort, this cost could stick with you moving forward. The industry knows that complexity slows decision making. It can use the effort needed to make a change as a method of stalling and keeping you where you are, even if it is against your best interest.

At One Day In July, our personal attention is focused on reducing effort for our clients. Beginning with our transparent, five-page contract, we will look to consolidate your accounts and create an investment plan that you can understand while managing your investments in liquid ETF index investments, minimizing your effort.


Finally, the financial industry uses money as a carrot for investing and as a hard stick to your psychology when deciding whether to make a change. Fees abound in nearly every facet of the industry to justify the industry’s actions and promote inaction from individual investors. Simply put, the industry makes money through transactions and penalties.

Another typical psychology that the financial industry uses with investors is if something costs more, it must be better. The higher cost fallacy can lead investors to expensive advice and investments that may promote suboptimal, wealth eroding results. Ironically, the industry avoids low-cost investments. While seemingly obvious, many investors do not understand the financial industry’s aversion to low-cost advice and investing. A potential explanation is the lower profitability for the financial sector. It is right to be skeptical of the industry, as we are at One Day In July.

While seemingly daunting, fees can be reduced to a minimal presence, and at the very least, can often be significantly minimized. At One Day In July, we have uncovered the fees within the industry to educate prospective clients, and we assist our clients in avoiding these fees. As fiduciaries, we do not sell products and have controlled for many unnecessary costs by using index funds.


Investing should be simple and can be with an understanding of how the financial industry operates. At One Day In July, our goal is to simplify your investments by minimizing the psychological burdens found within the financial industry.


Contact a fiduciary Financial Advisor now.

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