What Jonah Lehrer Has in Common with the Financial Services Sector

What on earth was Jonah Lehrer thinking?

As you probably now know, Lehrer, the acclaimed author of Proust Was a Neuroscientist and How We Decide, was outed earlier this week by Tablet Magazine for fabricating quotes by Bob Dylan for use in his most recent bestseller, Imagine: How Creativity Works. Lehrer was, you might say, a little too creative.

In the bare 24 hours since the news emerged, Lehrer has had to resign from his prestigious writing post at The New Yorker and his publisher Houghton Mifflin announced they would cease shipping Imagine, which is currently on multiple bestseller lists.

Lehrer's once promising career is no more. Yet his motives were likely quite mundane. He probably succumbed to the pressure of constantly needing to up his game.

As a society, we rarely celebrate simple competence and the ability to deliver. Instead, we demand superstars. This non-stop need to do better and better is, in fact, not just the underestimated part of Lehrer's scandal, but what unifies him with such Wall Street miscreants as Ponzi schemers like Bernie Madoff and would-be corporate titan Jon Corzine, who ran into trouble when he attempted to turn the solid, middle-of-the-road commodities firm MF Global into the next Goldman Sachs.

Keep in mind, this wasn't a first offence for Lehrer. Earlier this summer, numerous bloggers had come forward to claim Lehrer was plagiarizing his own work, recycling paragraphs from one article to another in myriad publications. At the time, he attributed his slip-up to stupidity and laziness. More than a few observers speculated that Lehrer was simply trying to do too much.

You can see the same pressures in play in financial services industry. It makes celebrities out of hedge funders like John Paulson, who became a billionaire by shorting the sub-prime mortgage market, but has since lost investors in his Paulson & Co hedge fund billions of dollars by making bad plays on everything from the on-going economic crisis in the Eurozone, to controversial Chinese logging company Sino-Forest.

Many financial advisors and firms believe the only way to obtain more and more clients is to intimate the prospect of outsized returns. In fact, such results are not possible. Study after study after study demonstrates the chances of beating the market year in and year out are in the very low single digits.

Yet the financial services industry rarely emphasizes the day-to-day business of helping investors reach their goals. Instead, they try to convince us that we can all be investing superstars.

I founded Betterment as a way of breaking this business model, to demonstrate that truthfulness is exactly what investors want. After all, telling people that they can do better than the indexes is as much of a fiction as Jonah Lehrer's quotes from Bob Dylan. All such dishonesty accomplishes, whether it is performed by Lehrer or the financial services sector, is to leave behind a crowd of angry and disappointed people, be they readers or investors.