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Editor’s Note JANUARY 2018 VOLUME 5, No. 1 Mind Over Matter


trol have been known to psychology for centuries. In the late 19th century and early 20th, the so-called depth psycholo- gists Freud, Jung and Adler made the un- conscious mind (more popularly known as the subconscious mind) the focus of their theories of mind and behaviour. In this century, the neuroscientists joined the discussion, pointing out that their research shows that much of the mind operates independent of our will, some- times — or most of the time — making us act in irrational ways that are contrary to our desires and interests. Economists, on the other hand, seem to have been out of step with all this and have theorized as if humans are perfectly rational; 20th-century neoclassical economic theory is especially based on axioms that state baldly that “rational economic man maximizes his utility.” Of course this has come under severe criticism and recently economists have started to take a hard look at real human behaviour rather than their purportedly scientific theories. Today, we have behavioural economics that looks at the irrational things many humans persistently do, such as buying high and selling low. In this special issue on financial planning, two of our features tackle the irrational


T


actions that we exhibit with money and investing. In “Battling Investment Bias” (p. 28), former managing editor Tamar Satov takes a look at the work of the be- havioural economists as they examine how real people behave in financial planning. She shows how people can turn the irrational biases they have into positive results. She quotes University of Chicago behavioural economist and 2017 Nobel laureate Richard Thaler, who was “among the first to observe and study such behavioural phe- nomena”: “If we are going to have useful theories about how typical people shop, save for retirement, search for a job or cook dinner, those theories had better not assume that people behave as if they were experts.” This is a story that will challenge your expectations as well as delight and inform you. In “Windfall” (p. 44), writer Yan Barcelo gets expert advice on what to do in the event


of a financial windfall. Here, again, no matter how rational you think you are, if $2 million drops into your lap either from a house sale, unexpected inheritance or some- thing else, your brain will short-circuit, at least in the short term. This feature looks at how to handle such good fortune and come out the other side of euphoria with performing investments. Three other stories complete the mix: there’s one on cryptocurrencies, another on


controversial issues that parents and their children need to know — e.g., does my stepmom, to whom my father leſt his estate, owe me anything? — and a feature about useful financial apps. Yes, there’s one for that.


Okey Chigbo editor-in-chief


2 | CPA MAGAZINE | JANUARY 2018


HE EXISTENCE of subterranean brain/mind processes that oper- ate outside our conscious con-


EDITOR-IN-CHIEF Okey Chigbo DEPUTY EDITOR Bernadette Kuncevicius ASSOCIATE EDITOR Yvette Trancoso ASSOCIATE FRENCH EDITOR Mathieu de Lajartre EDITOR, DIGITAL EDITIONS Margaret Craig-Bourdin MAGAZINE WEB PRODUCER Alan Vintar


ART DIRECTOR Bernadette Gillen ASSOCIATE ART DIRECTOR Kevin Pudsey


EDITORIAL ASSISTANT Harriet Bruser DIRECTOR, LANGUAGE SERVICES Jane Finlayson EDITOR, PROFESSIONAL MATTERS Anya Levykh CONTRIBUTORS Taryn Abate, Yan Barcelo, Mary Teresa Bitti, Dwayne Bragonier, Steve Brearton, Peter Carter, David Descôteaux, John Lorinc, Cathy Hutchinson, David Malamed, David Trahair, Lisa van de Geyn, Karen Wensley, Trevor Wilson


PUBLISHER Heather Whyte, MBA, APR


MANAGER OF ADVERTISING SALES Alexandra Garant (416) 204-3397 agarant@cpacanada.ca


QUEBEC ADVERTISING REPRESENTATIVE Serge Gamache (450) 651-4257 sergegamache@videotron.ca


MAGAZINE PRODUCTION AND ADVERTISING COORDINATOR Michael Marks (416) 204-3255


CIRCULATION MANAGER Jennifer Griffiths (416) 204-3366


CPA MAGAZINE EDITORIAL ADVISORY BOARD: Chair: Vinetta Peek, FCPA, FCMA; Fred Clifford, CPA, CA, CPA (Ill.); Debra J. Feltham, FCPA, FCGA; John Redding, CPA, CMA; Andrée Lavigne, CPA, CA; Ashley Kennedy, CPA, CA


CPA MAGAZINEis published 10 times a year (with combined issues in February/March and July/August) by the Chartered Professional Accountants of Canada. Opinions expressed are not necessarily endorsed by CPA Canada. Copyright 2018. TORONTO: 277 Wellington St. West, Ontario M5V 3H2, Tel. (416) 977-3222, Fax (416) 204-3409 MONTREAL: 680 Sherbrooke St. West, 17th floor, Quebec H3A 2S3, Tel. (514) 285-5002, Fax (514) 285-5695 SUBSCRIPTION INQUIRIES: Tel. (416) 977-0748 or 1-800-268-3793, Fax (416) 204-3416 ON THE INTERNET: cpacanada.ca/cpamagazine EMAIL: cpamagazine@cpacanada.ca letters.editor@cpacanada.ca advertising.cpamagazine@cpacanada.ca


Members of CPA Canada receive a subscription to CPA Magazine valued at $32. This amount is allocated from their dues and non-deductible therefrom. Additional annual subscriptions are available at the following rates: members $32; students $45; non-members $55. Single copy, $5.50. Outside Canada: $89 for a one-year subscription; $8.90 for a single copy. GST of 5% applies to all domestic sub scriptions. For subscription inquiries, call (416) 977-0748 or 1-800-268-3793 from 9 a.m. to 5 p.m., Monday through Friday; fax: (416) 204-3416. GST registration number 83173 3647 RT0001. Publications Mail Agreement No. 40062437. PRINTED IN CANADA: Return undeliverable Canadian addresses to: CPA Magazine, Chartered Professional Accountants of Canada, 277 Wellington Street West, Toronto, Ontario. M5V 3H2. CPA Magazine is a member of the Canadian Business Press and Magazines Canada. Submissions: CPA Magazine receives from time to time unsolicited manuscripts, including letters to the Editor. All manuscripts, material and other submissions to CPA Magazine become the property of CPA Magazine and the Chartered Professional Accountants of Canada, the publisher. In making submissions, contributors agree to grant and assign to the publisher all copyrights, including, but not limited to, reprints and electronic rights, and all of the contributor’s rights, title and interest in and to the work. The publisher reserves the right to utilize the work or portions thereof in connection with the magazine and/or in any other manner it deems appropriate. No part of this publication can be reproduced, stored in retrieval systems or transmitted, in any form or by any means, without the prior written consent of CPA Magazine. ISSN 2292-5627 CPA Magazine (print), 2292-5635 CPA Magazine (online)


Photo: Paul Orenstein


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