I am a behavioral economist. That means I study how monetary incentives drive decision making and behavior. I even bring this knowledge to the dentist’s office.
Until I moved to a rural town in 2010, after my semiannual cleaning, the dentist usually spent a few minutes looking around my mouth and said, “Nice teeth!”
In the new town, I was told I needed a rinse solution (sold by the dentist), or had three cavities (that I didn’t feel yet, and were not shown to me on an x-ray), or, the greatest, that I needed $11,000 in gum grafts so my teeth wouldn’t fall out. (A periodontist had just joined the office, and happened to be the dentist’s dad. You do not have to be a behavioral economist to wonder about skewed incentives.)
At the time I was 44 years old. I walked every day, brushed twice a day, flossed and took my calcium citrate. I ate something sweet after dinner, but I didn’t smoke, drink alcohol or soda, had no chronic conditions, and no family history of periodontal disease. For nearly all my life I had been told I had “nice teeth,” and then all of a sudden, I didn’t?
Parallels in Finance
In finance, as you may be aware, there are powerful incentives for professionals to recommend and upsell products that are not always in the consumer’s best interest. For one example, variable annuities tend to pay the highest commission of any financial product. I am not surprised I get a lot of questions about them. People hear about their many benefits from those who are paid not to understand their downsides.
In response to conflicts of interest like this, an association of financial advisors who chose to be legally bound to “do the right thing” was formed in the 1980s. It is called NAPFA (www.napfa.org). I am a member. We all agree to submit our own work for peer review; to sign a fiduciary oath; and to accept compensation only from clients, never from product vendors. Our compensation method is called “fee-only.” All compensation must be fully disclosed. We must be Certified Financial Planners™, and agree to twice the biannual continuing education required to maintain the CFP® credential.
Nationwide, there are roughly 1,000,000 people who call themselves “financial advisors.” NAPFA membership is a whopping 3,700, but growing quickly. With the amount of product compensation at stake in this industry, is it surprising the group is so small?
As a result of being small, sometimes we’re hard to find. I get this complaint from new people I speak with every week. And, because of my dental experience, I understand how frustrated they feel.
What About Dentists?
Does the dental profession have an association of members who pledge to really, always, put the patients’ best interests ahead of their own? Who will actually tell a patient they have nice teeth? I searched and Googled and couldn’t find any such association. In fact, I found the opposite.
Perhaps with city water fluoridation and better dental habits, dentists don’t get as much routine work anymore, so it’s harder to make a living just filling cavities and doing root canals. This may mean there’s an economic incentive for dentists and hygienists (their best sales agents, according to the dental practice blogs I found) to make mountains out of molehills in your mouth. To make the unnecessary seem more necessary. Funny, financial professionals can do this, too.
One understandable result of this trend is the explosion in cosmetic dentistry. That’s fine by me. “Cosmetic” implies, “not necessary.” Calling a procedure “cosmetic” is being transparent. Perhaps I would have been happier back then finding a cosmetic dentist, because there would be a better chance of transparency.
Fortunately I left the little town and now live in a more urban setting, with more choices of dentists. Here I found one who proclaimed I definitely did not need gum grafts. I like his background – he served veterans. If I have a cavity or a problem, he shows me and explains using x-rays, data, and evidence.
As an uneducated dental services consumer, I had no reliable way to judge who the good guys and gals are. At least in finance, the public has NAPFA. The only problem is, they just have to find us.