WEBVTT - Serial Innovation in FinTech with Purpose Unlimited CEO Som Seif 0:00:02.480 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.280 --> 0:00:12.520 This week on the podcast Yet Another Banger. Sam Safe 0:00:12.800 --> 0:00:16.720 is founder and CEO of Purpose Unlimited. One of their 0:00:16.720 --> 0:00:21.439 holdings is Purpose Investments, about forty billion Canadian He is 0:00:21.480 --> 0:00:25.680 a serial entrepreneur and financial innovator. He created the world's 0:00:25.720 --> 0:00:30.040 first bitcoin etf in Canada, long before the US came 0:00:30.120 --> 0:00:33.360 up with one. He built one of the larger etf 0:00:33.400 --> 0:00:37.440 firms in Canada, sold it to Blackrock. On and on 0:00:37.520 --> 0:00:41.120 the conversation goes about all these fascinating things. I thought 0:00:41.120 --> 0:00:44.479 the conversation was really really intriguing, and I think you 0:00:44.560 --> 0:00:50.560 will also with no further ado, my conversation with Purpose Investments. 0:00:51.080 --> 0:01:02.440 Some Safe, Some Safe. 0:01:02.920 --> 0:01:05.880 Welcome to Bloomberg, Barry, It's great to be here, and 0:01:05.920 --> 0:01:07.360 thank you for that kind introduction. 0:01:08.040 --> 0:01:11.920 So I'm kind of fascinated by your background, your career, 0:01:12.080 --> 0:01:18.200 the whole multiple innovations, serial entrepreneurship. But let's roll back 0:01:18.240 --> 0:01:21.559 to the early days. You wanted to be an architect 0:01:22.120 --> 0:01:25.600 and then you went for a bachelor's in Industrial and 0:01:25.640 --> 0:01:29.760 Systems engineering from the University of Toronto. What was the 0:01:29.760 --> 0:01:30.760 original career plan. 0:01:31.080 --> 0:01:33.959 Yeah, I mean, since as long as I can remember, 0:01:34.040 --> 0:01:39.600 architecture was my kind of goal, and that fundamentally was 0:01:39.640 --> 0:01:42.319 something that just inspired me. I loved the mix of 0:01:42.480 --> 0:01:45.080 the creative side of my brain and the call it 0:01:45.360 --> 0:01:49.160 systems and structural mathematical side of my brain and bring 0:01:49.200 --> 0:01:49.960 them together. 0:01:49.680 --> 0:01:52.200 And just design was always something exciting. 0:01:52.680 --> 0:01:55.240 The interesting thing was that, you know, so now you're 0:01:55.320 --> 0:01:58.680 faced with this decision, you apply to you know, school 0:01:58.840 --> 0:02:02.160 for architecture and for engineering. And then in my you know, 0:02:02.160 --> 0:02:03.920 I went and spoke to a couple of architects and 0:02:04.360 --> 0:02:06.720 every single one of them said, this is. 0:02:06.720 --> 0:02:08.880 A stupid career choice. 0:02:09.720 --> 0:02:12.200 You won't be doing anything that you will you think 0:02:12.240 --> 0:02:14.680 you'll be doing. It'll be gruntwork, you won't enjoy it, 0:02:15.040 --> 0:02:16.320 and there's no money in it. 0:02:16.880 --> 0:02:19.560 And I, you know, of course, said well what am 0:02:19.600 --> 0:02:20.280 I signing up for? 0:02:20.440 --> 0:02:23.239 So I said, okay, I'm going to go do engineering 0:02:23.240 --> 0:02:25.520 with the idea that maybe I'll switch, and fundamentally that 0:02:25.639 --> 0:02:26.560 was not going to happen. 0:02:27.919 --> 0:02:29.760 And you know, I was in first year of engineering 0:02:29.800 --> 0:02:32.840 and said, okay, what is my second choice? What else? 0:02:32.880 --> 0:02:37.480 And you know, I really loved the concept of strategy 0:02:37.680 --> 0:02:41.959 and finance. I didn't know anything about finance and I 0:02:42.000 --> 0:02:44.040 hadn't been learning anything about it, but I got excited 0:02:44.080 --> 0:02:47.200 about investment banking and things like that, and so, you know, 0:02:47.280 --> 0:02:49.560 ultimately I decided that was the path I was going 0:02:49.600 --> 0:02:52.840 to pursue, and coming out of an engineering degree, I 0:02:52.960 --> 0:02:56.800 ended up, luckily just a timing really uniquely. At the 0:02:56.919 --> 0:03:01.280 end of nineteen ninety eight, got an opportunity to join 0:03:01.320 --> 0:03:04.520 the biggest bank in Canada, RBC, in their investment banking division, 0:03:04.560 --> 0:03:09.240 and so engineering was a really interesting path towards it. 0:03:09.680 --> 0:03:11.280 And you know, at the time. 0:03:11.200 --> 0:03:13.880 The tech bubble was happening, and I guess someone in 0:03:13.880 --> 0:03:16.040 investment banking said, hey, we need more engineers in here 0:03:16.120 --> 0:03:18.560 to tell us, you know, how to think. And the 0:03:18.639 --> 0:03:21.160 learning curve was pretty amazing in terms of starting with 0:03:21.200 --> 0:03:23.440 nothing and basically learning on the go. 0:03:23.880 --> 0:03:27.480 Huh. So you spend six years at RBC helping them 0:03:27.520 --> 0:03:31.280 build out their structured products group. Tell us about that experience. 0:03:31.320 --> 0:03:32.000 What did you learn? 0:03:32.240 --> 0:03:36.880 So investment banking is one of the amazing early learning experiences. 0:03:36.880 --> 0:03:39.400 And I've always been in sort of pursuit of you know, 0:03:39.600 --> 0:03:42.680 learning and call it pushing myself to certain limits. And 0:03:43.040 --> 0:03:45.480 you know, investment making today is very hard. Investment banking 0:03:45.560 --> 0:03:47.800 twenty five years ago was even harder. And you know, 0:03:47.960 --> 0:03:52.600 young analysts, young individually, you're ultimately working on you know, 0:03:52.640 --> 0:03:55.360 amazing things. But at the same time you are you know, 0:03:55.800 --> 0:03:57.920 being you know, you're working like a dog, like eighty 0:03:57.920 --> 0:04:01.520 to one hundred hour weeks. That's there is no better 0:04:01.560 --> 0:04:03.400 place as a twenty ey two year old, twenty three 0:04:03.440 --> 0:04:06.320 year old, twenty five year old to ultimately have immersive 0:04:06.400 --> 0:04:11.440 learning like and so it was amazing for me when 0:04:11.520 --> 0:04:12.400 I when I went into it. 0:04:12.400 --> 0:04:12.960 It's funny I. 0:04:13.360 --> 0:04:16.440 Had as a young individual always you know, I was 0:04:16.440 --> 0:04:18.479 an immigrant to Canada. You know, I didn't you know, 0:04:18.680 --> 0:04:22.000 my family was a good middle class family, but we didn't, 0:04:22.240 --> 0:04:23.000 you know, have stuff. 0:04:23.000 --> 0:04:25.599 So I always dreamed about this idea of. 0:04:25.480 --> 0:04:28.400 All the riches and golds and things of that, and 0:04:28.480 --> 0:04:30.240 you know, investment making kind of one of the things 0:04:30.240 --> 0:04:32.320 that kind of excited me was this idea of you know, hey, 0:04:32.360 --> 0:04:35.520 you're going to make lots of money. And and you know, 0:04:35.560 --> 0:04:38.560 the interesting thing was during the tenure, you know, the 0:04:38.600 --> 0:04:40.839 first few years, you know, you start making good money 0:04:40.920 --> 0:04:43.880 for a young individual, and then you kind of realize, 0:04:43.960 --> 0:04:47.400 wait a minute, this isn't actually motivating me. I remember succinctly, 0:04:47.440 --> 0:04:48.960 I came home. I was twenty five years old. It 0:04:49.000 --> 0:04:50.279 was three in the morning or two in the morning, 0:04:50.279 --> 0:04:52.720 and I just sat down and kind of weeped because 0:04:52.720 --> 0:04:54.960 I said, you know, I'm working like a dog, and 0:04:55.560 --> 0:04:58.640 I'm pursuing this goal, but I'm not happy. And I 0:04:58.680 --> 0:05:01.360 had to actually go through a deep perspective of like, Okay, 0:05:01.360 --> 0:05:03.640 what is the thing that actually drives me? What is 0:05:03.680 --> 0:05:06.560 the thing that actually motivates me to wake up on 0:05:06.600 --> 0:05:08.680 Monday morning and skip to work because I'm still. 0:05:08.760 --> 0:05:09.960 Enjoying what I'm doing. 0:05:10.640 --> 0:05:14.239 And what I realized was that the thing that actually 0:05:14.279 --> 0:05:17.920 I was in pursuit of was the idea of seeing 0:05:18.000 --> 0:05:20.640 my ideas progress, seeing the things that I was doing 0:05:20.800 --> 0:05:24.200 have real tangible outcome. And I go back to that 0:05:24.320 --> 0:05:27.280 principle of what was it that excited me about architecture 0:05:27.480 --> 0:05:30.800 or design. It was this very simple principle of you know, 0:05:30.800 --> 0:05:33.360 when you build something or you design something, you can 0:05:33.400 --> 0:05:35.159 actually see it in front of you afterwards. And so 0:05:35.480 --> 0:05:40.360 I actually correlate that really specifically around what was the 0:05:40.360 --> 0:05:43.400 thing that was my intrinsic motivation. So at that point 0:05:43.400 --> 0:05:45.080 I just said, look, I'm still learning, I'm having an 0:05:45.120 --> 0:05:48.880 amazing time, but am I going to ultimately achieve what 0:05:48.920 --> 0:05:51.520 I want here, and I said I won't, so I 0:05:51.600 --> 0:05:55.120 kind of gave myself a put I call it. I 0:05:55.160 --> 0:05:57.480 was twenty five years old and I said, Okay, I'm 0:05:57.560 --> 0:05:59.360 still here learning, I'm going to build my networks. I'm 0:05:59.360 --> 0:06:01.240 going to do all this stuff. But if I am 0:06:01.360 --> 0:06:04.280 in seat on my thirtieth birthday, I'm going to resign 0:06:04.279 --> 0:06:08.120 on that day. And that kind of woke up my 0:06:08.520 --> 0:06:11.120 mind to what else is out there, And over the 0:06:11.120 --> 0:06:13.240 next number of years, I started thinking about what was 0:06:13.279 --> 0:06:14.800 it that was going to be the next for me, 0:06:14.880 --> 0:06:17.240 and that ultimately came when I was twenty eight and 0:06:17.480 --> 0:06:18.240 started Claymore. 0:06:18.360 --> 0:06:20.880 So let's talk about Clay Moore. You launched this in 0:06:20.920 --> 0:06:25.680 two thousand and five. Globally, ETFs were a thing, but 0:06:25.880 --> 0:06:29.040 not the giants than they were today. They certainly were 0:06:29.080 --> 0:06:32.600 a tiny niche product in Canada back then. What did 0:06:32.640 --> 0:06:35.080 you see that all the other banks and all the 0:06:35.120 --> 0:06:37.480 other finance bros Completely missed? 0:06:38.000 --> 0:06:39.279 So you're absolute right. 0:06:39.279 --> 0:06:42.200 So in Canada specifically, there were fourteen ETFs listed on 0:06:42.200 --> 0:06:46.679 the Toronto Stock Exchange, basically all by Barclay's Eye units 0:06:47.000 --> 0:06:50.560 at the time I shares, and in the United states. 0:06:51.160 --> 0:06:55.120 You know, of course ETFs were starting to become popular, 0:06:55.320 --> 0:06:58.360 specifically in the institutional crowd, retail crowd. You had I think, 0:06:58.360 --> 0:07:00.960 perhaps like wisdomsr had just sort of entered the business 0:07:01.040 --> 0:07:03.720 and players like that, and so it was it was 0:07:03.760 --> 0:07:07.920 not an area that was logical or call it clear 0:07:08.520 --> 0:07:10.840 that said, I had. One of the things I had 0:07:10.840 --> 0:07:13.600 the benefit of, I'd actually covered some management firms globally 0:07:13.680 --> 0:07:16.760 and during my time at RBC, and i'd actually got 0:07:16.800 --> 0:07:19.760 the opportunity to cover Barclays and got to know the 0:07:19.840 --> 0:07:22.600 leadership of the of the organization and help them raise 0:07:22.600 --> 0:07:25.720 the capital. But more importantly, was supported and understood what 0:07:25.760 --> 0:07:28.200 they were doing on the indexing ETS side. And it 0:07:28.200 --> 0:07:30.280 got me really excited. I started to see the trends. 0:07:30.880 --> 0:07:35.280 But what I struggled with was the fundamental principle of 0:07:36.240 --> 0:07:37.240 you know, passive indexing. 0:07:37.400 --> 0:07:38.040 I really did. 0:07:38.080 --> 0:07:43.000 I actually love the principles of what indexing did. And 0:07:43.080 --> 0:07:47.160 at the time ETFs were deemed as indexing, right, that 0:07:47.280 --> 0:07:49.200 was the concept, right, It was actually anything you did 0:07:49.200 --> 0:07:52.160 outside of pure indexing was a no no. The industry 0:07:52.240 --> 0:07:55.120 players would say, well, this isn't an index. And so 0:07:55.880 --> 0:07:59.200 I got really excited about you know, the idea of 0:07:59.480 --> 0:08:02.640 you know what an ETF does, It's low cost, great 0:08:02.680 --> 0:08:07.040 product in terms of rapper and structure, transparent discipline, and 0:08:07.080 --> 0:08:11.680 its approach using an index. However, I just hated the 0:08:11.720 --> 0:08:15.120 fundamental principle of what market cap indexing did, which is 0:08:15.200 --> 0:08:16.520 basically by high and sell low. 0:08:16.680 --> 0:08:19.200 Right. So, in around the time. 0:08:19.000 --> 0:08:23.360 That I left our received started Claymore, I had actually 0:08:23.440 --> 0:08:26.560 read a research paper just serendipitously came out around the 0:08:26.560 --> 0:08:28.920 same time in two thousand and four by Rob are 0:08:28.960 --> 0:08:31.880 Not and Jason Sue, We'll spend some time on Rob, 0:08:31.880 --> 0:08:35.240 who's a really important person in my life, and they 0:08:35.280 --> 0:08:38.000 had published this article around non market cap weated indexes, 0:08:38.040 --> 0:08:41.920 smart data, Yes, and it was I read this article 0:08:41.920 --> 0:08:45.440 and I'm engineer, so I love these technical things, and 0:08:45.640 --> 0:08:50.440 I just got excited, and basically a couple of months later, 0:08:50.559 --> 0:08:53.440 I reached out, We went down and spent time with 0:08:53.559 --> 0:08:55.760 Rob in Pasadena. 0:08:55.240 --> 0:08:56.079 And he was a big thing. 0:08:56.160 --> 0:08:58.480 I remember Rob was a pretty big deal, but he 0:08:58.520 --> 0:09:00.280 took the time, he spent half a day with me, 0:09:00.840 --> 0:09:04.520 and I walked out of that office just having clarity 0:09:04.960 --> 0:09:07.360 on the future of what I was going to build, 0:09:07.520 --> 0:09:11.680 and more importantly, the future of where the industry opportunity was. 0:09:12.240 --> 0:09:16.000 And that was the principal starting point of the vision 0:09:16.120 --> 0:09:19.679 for building Claymore and you know the future of what 0:09:19.720 --> 0:09:21.480 I felt was going to be a really amazing thing 0:09:21.520 --> 0:09:23.760 around indexing and the future of indexing around and we 0:09:23.880 --> 0:09:28.080 used of course, we launched the first public investment fund 0:09:28.600 --> 0:09:31.040 on fundamental index and the RAFFI indexes. 0:09:31.480 --> 0:09:35.040 Huh really interesting. So you grow this to thirty four 0:09:35.080 --> 0:09:38.479 ETFs and a couple of closed end funds and about 0:09:39.040 --> 0:09:42.920 eight billion dollars Canadian I think, yeah, six billion US. 0:09:43.840 --> 0:09:46.320 What was the hardest part of building that sort of 0:09:46.360 --> 0:09:52.560 asset manager considering all the other products were giant bank owns. 0:09:53.120 --> 0:09:56.960 Well, you know, Canada of course has many structural I mean, 0:09:57.000 --> 0:10:01.080 it's an amazing region for opportunity financial services. That said, 0:10:01.120 --> 0:10:04.520 it is also you know, highly concentrated with the big 0:10:04.559 --> 0:10:07.160 banks and the control that they have with their distribution, 0:10:07.840 --> 0:10:10.280 and so it's a very challenging market for independence as 0:10:10.280 --> 0:10:11.079 you can imagine. 0:10:11.240 --> 0:10:14.520 That said, you know what, I really I go back 0:10:14.559 --> 0:10:17.400 to the period we had a really amazing product. No 0:10:17.400 --> 0:10:18.320 one knew what it was. 0:10:18.360 --> 0:10:21.400 I remember we'd go out in two thousand and five, 0:10:21.440 --> 0:10:23.679 two thousand and six, two thousand and seven. We'd sit 0:10:23.720 --> 0:10:26.959 down and talk to advisors across the country and you know, 0:10:26.960 --> 0:10:28.880 I'd walk into a room and I'd have a sign 0:10:28.880 --> 0:10:31.280 in sheet and saying, you know, name and email. But 0:10:31.320 --> 0:10:33.679 then I'd ask the question, how many of you use ETFs? 0:10:33.960 --> 0:10:36.280 And back then it was one out of ten would 0:10:36.320 --> 0:10:39.000 say yes. Most people were like, what's an ETF? It's 0:10:39.040 --> 0:10:41.719 what EFTs? You know, like, this is the time, right, 0:10:43.000 --> 0:10:46.280 But I fundamentally believe what we were doing is important, 0:10:46.880 --> 0:10:49.800 and it was, you know, we grew in Canada. Of course, 0:10:49.800 --> 0:10:52.040 remember about one tenth size of the American market, so 0:10:52.120 --> 0:10:55.120 you know, eight billion aggregate would be like eighty billion 0:10:55.240 --> 0:10:58.000 in that timeframe. But we actually in the first couple 0:10:58.000 --> 0:11:00.559 of years grew to about a billion dollars. So at 0:11:00.800 --> 0:11:02.679 the beginning of a weight, we got to eight hundred million, 0:11:03.320 --> 0:11:06.720 which is a great, great outcome early on in you know, 0:11:06.760 --> 0:11:10.240 from nothing, and then in the real thing happened in 0:11:10.240 --> 0:11:12.400 two thousand and eight, you know, and it's you know, 0:11:12.440 --> 0:11:14.560 it was a really great wake up call and called 0:11:14.640 --> 0:11:17.079 learning for me. We went through two thousand and eight 0:11:17.120 --> 0:11:20.480 and every single month and o eight we grew positively. 0:11:20.520 --> 0:11:21.960 We had the net positive sales I think we were 0:11:22.960 --> 0:11:27.319 going to bite the market environment. And in September October specifically, 0:11:27.320 --> 0:11:30.240 we had positive net sales, and I think we were 0:11:30.240 --> 0:11:32.280 the only firm in the country that had that. The 0:11:32.600 --> 0:11:36.680 principle was that disruption was critical for us at a 0:11:36.720 --> 0:11:39.320 time when we were trying to build a challenger idea 0:11:39.800 --> 0:11:44.200 and tell a really strong narrative. We needed the complacency 0:11:44.280 --> 0:11:47.839 of our investor base, of the advisor community of institutions 0:11:48.280 --> 0:11:50.760 to wake up and say, hey, wait a minute, you 0:11:50.800 --> 0:11:54.000 know what should I be thinking about next? And that 0:11:54.120 --> 0:11:56.360 was a really important point. So coming out of two thousand, 0:11:56.440 --> 0:11:57.920 we ended up in two thousand and eight growing from 0:11:57.960 --> 0:11:59.719 eight hundred million to one point one billion, despite the 0:11:59.720 --> 0:12:02.080 head of the markets, and then in two thousand and 0:12:02.160 --> 0:12:03.880 nine we went from one point one billion to four 0:12:03.880 --> 0:12:07.360 point four billion. Wow, So just an accelerant coming out 0:12:07.360 --> 0:12:09.960 of the financial crisis. The next year we went from 0:12:09.960 --> 0:12:12.760 four point four to five point seven, and then to 0:12:12.800 --> 0:12:15.559 six point eight, and then ultimately two months later when 0:12:15.559 --> 0:12:17.920 we closed the deal with black Rock to sell it, 0:12:17.920 --> 0:12:20.080 it was eight billion. And the momentum was just so 0:12:20.320 --> 0:12:24.319 unbelievably strong. And the reason was because when people the 0:12:24.559 --> 0:12:29.080 financial crisis occurred people left the market and they were 0:12:29.080 --> 0:12:30.920 going to cash, and then when they were re entering 0:12:30.920 --> 0:12:33.880 the market, they were asking themselves, now, what where do 0:12:33.960 --> 0:12:34.200 I go? 0:12:34.280 --> 0:12:35.920 What's the best investment vehicles? 0:12:35.960 --> 0:12:38.960 And all of a sudden, easys became something that they 0:12:38.960 --> 0:12:40.840 were learning about, understanding, and we were. 0:12:40.840 --> 0:12:42.440 Right there and it was amazing. 0:12:42.720 --> 0:12:45.640 At the same time, we also saw the acceleration towards 0:12:45.679 --> 0:12:47.760 the trends that were happening in advice as you know, 0:12:48.200 --> 0:12:53.520 the movement towards discretionary portfolio management, you know, the historical 0:12:53.760 --> 0:12:58.240 mindset towards commission oriented new issue type business that became 0:12:58.360 --> 0:13:01.720 challenged because of the market and the banks and the 0:13:01.720 --> 0:13:05.160 broker dealers wanted more stability, so advisors started to transition 0:13:05.200 --> 0:13:09.199 their practices towards more discretionary investment processes and model portfolios 0:13:09.480 --> 0:13:12.600 and ETFs of course, you know, fit extremely well. 0:13:12.600 --> 0:13:13.120 In the US. 0:13:13.120 --> 0:13:15.440 We've of course seen the RAA movement coming out of that, 0:13:16.200 --> 0:13:20.240 and those were an amazing backdrop of trend that that 0:13:20.520 --> 0:13:23.679 just drove the market and in parallel, the ETF industry 0:13:23.760 --> 0:13:26.160 alongside of it, and it's been an unbelievable number of 0:13:26.240 --> 0:13:27.640 years for everyone. 0:13:27.760 --> 0:13:32.280 Really interesting. So so the sale to Blackrock what motivated 0:13:32.320 --> 0:13:35.679 the exit, what was the process like, and how hard 0:13:35.800 --> 0:13:38.160 was it to let go of this thing that you 0:13:38.240 --> 0:13:38.880 had built? 0:13:39.280 --> 0:13:39.720 Very hard. 0:13:40.240 --> 0:13:43.920 So there's a My financial partner in the call it 0:13:43.960 --> 0:13:47.360 latter years was a firm called Googa IM Partners and 0:13:47.400 --> 0:13:51.040 an amazing partner, an organization. Worked really well with them, 0:13:51.200 --> 0:13:53.880 and you know, really proud of the relationship we built there. 0:13:54.960 --> 0:13:58.199 And the interesting thing was, of course I had sort 0:13:58.240 --> 0:14:01.160 of approached them and said, let's let's sort of, you. 0:14:01.120 --> 0:14:02.560 Know, let me buy you out. 0:14:03.559 --> 0:14:06.880 You know, they'd had a great outcome and it was 0:14:06.880 --> 0:14:09.200 a wonderful locome, but you know, we just sort of 0:14:09.200 --> 0:14:10.840 couldn't get to a price that made sense. 0:14:10.840 --> 0:14:12.400 So we decided to go through a process. 0:14:12.800 --> 0:14:15.080 And I at the time felt, Okay, we'll run a process, 0:14:15.160 --> 0:14:17.040 but I'm going to also be a buyer at the process, 0:14:17.040 --> 0:14:17.520 and I agreed. 0:14:17.559 --> 0:14:19.600 We agreed to that. At the end of the day 0:14:19.640 --> 0:14:21.840 though the process was very robust. 0:14:22.320 --> 0:14:27.239 Blackrock was a leading partner at that and I remember 0:14:27.720 --> 0:14:30.160 pivoting multiple times as the price kept going up on 0:14:30.280 --> 0:14:33.320 who my partner was going to be to finanza my buyout. 0:14:33.720 --> 0:14:36.760 And then at the end, I remember, on in December 0:14:36.800 --> 0:14:39.760 of twenty eleven, I was was my daughter's birthday. I 0:14:39.800 --> 0:14:42.200 was on the phone with one of my strategy partners 0:14:42.240 --> 0:14:46.160 around the purchase and we were having conversation about strategy, 0:14:46.280 --> 0:14:48.560 execution plan. And then I got off the phone. I 0:14:48.560 --> 0:14:50.560 walked down to my wife and I said, I'm holding 0:14:50.560 --> 0:14:53.240 on too much. The price has gotten well above what 0:14:53.400 --> 0:14:54.440 my target price was. 0:14:54.840 --> 0:14:57.680 I'm being too emotional. I think that the right thing 0:14:57.720 --> 0:14:58.440 to do is to sell. 0:14:58.920 --> 0:15:01.320 So I called the bankers. I said, I'll put my 0:15:01.400 --> 0:15:03.640 name behind the black Rock bid. I flew down to 0:15:03.680 --> 0:15:06.000 New York on January second. We spent a few days 0:15:06.000 --> 0:15:08.200 in a room negotiating the purchase. Still agreement. 0:15:08.200 --> 0:15:08.920 I mean, now it's the deal. 0:15:08.960 --> 0:15:12.320 I think on January eleventh and close a deal on 0:15:12.400 --> 0:15:16.320 March second, and that it was a really difficult period 0:15:16.360 --> 0:15:18.520 for me. I had a chip on my shoulder. I'd 0:15:18.520 --> 0:15:21.680 built this thing. You used the word serial entrepreneur earlier, 0:15:21.720 --> 0:15:24.640 and I actually have never believed I'm a serial entrepreneur. 0:15:24.640 --> 0:15:27.000 I don't build businesses to build businesses. I build business 0:15:27.000 --> 0:15:29.920 because I truly love what I do. I'm in pursuit 0:15:30.000 --> 0:15:33.120 of really building things that have endurance, have great value 0:15:33.160 --> 0:15:37.720 to our customers, that really think about changing the industry, 0:15:36.560 --> 0:15:40.160 and so this was a moment where I felt like 0:15:40.200 --> 0:15:43.640 something was being ripped out of me, and so I 0:15:43.680 --> 0:15:46.080 had a chip on my shoulder. We closed the transaction 0:15:47.440 --> 0:15:50.360 and I said, I need to take the time. I 0:15:50.400 --> 0:15:53.760 actually ended up building the business plan for what I 0:15:53.800 --> 0:15:55.640 was going to do next, which ultimately is purpose and 0:15:55.720 --> 0:15:58.880 while simple, within thirty days. But I said to myself, 0:15:58.880 --> 0:16:01.800 if I start today, I'm going to fail because I'm 0:16:01.800 --> 0:16:03.000 not doing it for the right motivation. 0:16:03.040 --> 0:16:04.360 I'm doing it for the wrong reasons. 0:16:04.520 --> 0:16:06.080 I want to do it because I'm in pursuit of 0:16:06.120 --> 0:16:07.240 getting back in the business. 0:16:07.800 --> 0:16:08.840 And so I ended up. 0:16:09.120 --> 0:16:11.480 Consulting for the Irregulator for a couple of weeks, and 0:16:11.520 --> 0:16:14.840 then I ultimately went to with my wife for three 0:16:14.840 --> 0:16:20.640 months overseas to Southeast Asia and I detached. I Back then, 0:16:20.720 --> 0:16:24.200 we had blackberries. I still probably have BlackBerry. People famously 0:16:24.240 --> 0:16:26.480 know I love blackberries. But I had BlackBerry and I 0:16:26.480 --> 0:16:27.760 turned it off and no one could get a hold 0:16:27.800 --> 0:16:29.680 of me. We went throughout Southeast Asia and it was 0:16:29.720 --> 0:16:31.800 the greatest thing. And I said to myself, if I 0:16:31.840 --> 0:16:35.120 come back and I have the energy and excitement around 0:16:35.120 --> 0:16:37.440 this business plan, then I'm going to do it. And 0:16:37.480 --> 0:16:41.280 of course we came back and you know, I once 0:16:41.280 --> 0:16:44.120 we landed in North America, you get all the texts 0:16:44.120 --> 0:16:46.560 and all the news, and my energy just started to 0:16:46.560 --> 0:16:48.440 really powerfully go up. And I said, okay, let's go, 0:16:48.480 --> 0:16:50.560 and I registered purpose and started the business plan. 0:16:50.640 --> 0:16:52.360 So we're going to talk in a little bit about 0:16:52.400 --> 0:16:56.400 why I think you're a serial entrepreneur. But you said 0:16:56.400 --> 0:17:01.240 something that I'm kind of fascinated by. And it requires 0:17:01.760 --> 0:17:06.919 a degree of self awareness that many people in our 0:17:07.200 --> 0:17:12.400 industry sometimes don't have. I don't want to say always 0:17:12.400 --> 0:17:16.439 don't have. We all have blind spots. You said you 0:17:16.520 --> 0:17:21.879 became aware that you were too emotional, too self involved, 0:17:21.960 --> 0:17:26.560 too you were holding too tightly. How did you come 0:17:26.600 --> 0:17:30.679 to that realization? You know, listeners aboard of hearing me 0:17:30.760 --> 0:17:33.879 talk about my early days on a training desk, But 0:17:33.960 --> 0:17:37.320 I became very aware that, oh, this is just way 0:17:37.359 --> 0:17:40.879 too much fun. You're trading for the dopamine hit, not 0:17:41.000 --> 0:17:44.480 for P and L. You either have to become more 0:17:44.520 --> 0:17:49.640 disciplined or shift your career. What was that insight that 0:17:50.000 --> 0:17:53.000 led you to say, Oh, I'm gripping this way too tightly. 0:17:53.400 --> 0:17:55.440 So I think self reflection is one of the great 0:17:55.480 --> 0:17:57.720 virtues that we all should have. It's one of the 0:17:57.720 --> 0:18:00.520 things I think often people don't have enough of. And 0:18:00.680 --> 0:18:04.639 I actually think, you know, it's something that requires anchoring 0:18:04.760 --> 0:18:07.080 to sort of early on to the kind of goals 0:18:07.119 --> 0:18:09.200 and the things that matter to you. So you're disciplined 0:18:09.200 --> 0:18:12.679 around what you're self reflecting around and it's hard as humans, 0:18:12.680 --> 0:18:15.600 like we're not trained, our mental state is not trained 0:18:15.600 --> 0:18:20.000 this way. So it's just something that I feel very 0:18:20.040 --> 0:18:24.160 confident in my ability to constantly be asking myself, Am 0:18:24.200 --> 0:18:26.399 I on the right track? Am I doing the right things? 0:18:26.480 --> 0:18:29.639 Am I pursuing the right goals? Am I going to 0:18:29.680 --> 0:18:31.439 achieve the things that I want to achieve on the 0:18:31.480 --> 0:18:34.800 path I'm on? And that that's just I think it's 0:18:34.840 --> 0:18:37.600 a critical learning and you know, the growth mindset that 0:18:37.640 --> 0:18:42.320 comes with that curiosity and willingness to be vulnerable is 0:18:42.400 --> 0:18:45.600 critical as a human. So this is this is I 0:18:45.640 --> 0:18:48.440 think a really important thing. I think our industry can 0:18:48.480 --> 0:18:52.000 always use that because you know, I like, I love 0:18:52.040 --> 0:18:54.720 the financial services industry one because it starts with a 0:18:54.760 --> 0:18:58.720 really amazing mission. We are here in service of individuals 0:18:58.720 --> 0:19:00.800 to help them ultimately achieve their out comes, their goals. 0:19:00.800 --> 0:19:03.879 There it is such an unbelievably. 0:19:03.440 --> 0:19:06.320 High mission industry, and we don't do enough to talk 0:19:06.359 --> 0:19:09.680 about that. Instead, we talk too much about ourselves. We're 0:19:09.680 --> 0:19:12.280 self centered. We talk about you know, hey, let me 0:19:12.320 --> 0:19:14.080 tell you about me, and now that I'm done talking 0:19:14.080 --> 0:19:15.679 about me, let me talk to you more about me. 0:19:15.760 --> 0:19:18.080 And you go to someone's website, it's always about me, me, me, 0:19:18.119 --> 0:19:20.520 it's never about the customer. And so there's this amazing 0:19:20.560 --> 0:19:23.360 opportunity as an industry to step back, reflect and say, 0:19:23.359 --> 0:19:25.960 why are we here? What's the actual job that we're 0:19:25.960 --> 0:19:29.280 here to do? And it is ultimately in service of 0:19:29.800 --> 0:19:34.040 individuals and their outcomes one hundred percent, and we complicate 0:19:34.080 --> 0:19:36.639 that so much, and so I think self reflection on 0:19:36.680 --> 0:19:39.520 that as an industry is a big opportunity, and those 0:19:39.520 --> 0:19:42.480 who get it are those who stand out and differentiate 0:19:42.760 --> 0:19:43.720 more than anybody else. 0:19:44.320 --> 0:19:48.400 Really really fascinating. Coming up, we continue our conversation with 0:19:48.440 --> 0:19:55.480 some safe founder and CEO of Purpose Investments discussing financial innovation. 0:19:56.119 --> 0:19:59.000 I'm Barry rich Alts. You're listening to Masters in Business 0:19:59.560 --> 0:20:03.280 on blue Berg Radio. I'm Barry Redhults. You're listening to 0:20:03.400 --> 0:20:06.320 Masters in Business on Bloomberg Radio. I'm speaking with some 0:20:06.600 --> 0:20:10.520 Safe he is the founder and CEO of Purpose Investments. 0:20:11.119 --> 0:20:14.880 So we were talking earlier. You sold Claymore to black Rock, 0:20:15.520 --> 0:20:18.879 and instead of taking a couple of years off, a 0:20:19.000 --> 0:20:24.240 month or two later you essentially start Purpose as well 0:20:24.280 --> 0:20:28.560 as co founding Wealth Simple. So many people take a 0:20:28.680 --> 0:20:32.360 breather after an exit. Why go straight back in? And 0:20:32.600 --> 0:20:34.280 why two companies at want? 0:20:35.359 --> 0:20:38.000 So I had, As I said earlier, I had a 0:20:38.720 --> 0:20:40.640 very clear eye on what I wanted to do next. 0:20:40.680 --> 0:20:43.960 I was really excited about where the industry was going, 0:20:44.000 --> 0:20:45.720 what we were doing, with the momentum we were seeing. 0:20:46.480 --> 0:20:50.240 And it felt actually now I had this amazing gift. 0:20:50.720 --> 0:20:52.840 I was blessed with a blank piece of paper. And 0:20:52.880 --> 0:20:54.119 so when you have a blank piece of paper, so 0:20:54.160 --> 0:20:56.720 oftentimes businesses want to keep evolving, you want to, but 0:20:56.960 --> 0:20:58.959 you have to kind of deal with your legacy, you know, 0:20:59.040 --> 0:21:01.800 and technical data and things like that. And so I felt, 0:21:01.880 --> 0:21:03.600 blank piece of paper I can get to do. How 0:21:03.640 --> 0:21:06.080 would I start from scratch? And so I had this 0:21:06.160 --> 0:21:09.080 great energy. But I looked at both the continued evolution 0:21:09.119 --> 0:21:12.199 of modernization of investment management, but I also saw a 0:21:12.200 --> 0:21:15.639 bigger picture opportunity in wealth management. I said, the opportunity 0:21:15.680 --> 0:21:18.040 is not just you know, let's build ass some management products. 0:21:18.040 --> 0:21:20.760 Because when I started claymar I came from it from 0:21:20.760 --> 0:21:23.680 a technical engineering perspective, and I said, when I look 0:21:23.720 --> 0:21:26.280 at all the billboards and I look at all the advertising, 0:21:26.400 --> 0:21:28.119 all it says is, hey, we beat the market. 0:21:28.160 --> 0:21:28.600 We did this. 0:21:28.640 --> 0:21:30.760 And I said, okay, well, the job to be done 0:21:30.920 --> 0:21:32.480 is to beat the markets. And I thought that's what 0:21:32.520 --> 0:21:35.280 we were supposed to do. So I was in pursuit 0:21:35.359 --> 0:21:38.479 of building a product and a business that ultimately solved 0:21:38.480 --> 0:21:41.879 for helping people beat the markets. What I realized and 0:21:41.920 --> 0:21:44.760 one of my great stories around this was the first 0:21:44.760 --> 0:21:48.840 product we launched was the Canadian Fundamental RAFFI Fundamental Index, 0:21:49.119 --> 0:21:52.920 and we launched that and it was amazing. But it 0:21:53.000 --> 0:21:57.000 hit its five year numbers in twenty ten, just early 0:21:57.000 --> 0:21:59.600 twenty eleven, and of course five years you start to 0:21:59.600 --> 0:22:02.439 see real track record. And at the time it was 0:22:02.560 --> 0:22:07.000 the number two Canadian equity fund. It beat every active fund, 0:22:07.320 --> 0:22:11.520 all the main index. It outperformed by two hundred basis points, 0:22:11.920 --> 0:22:14.240 and that's a great accolade, of course in our industry. 0:22:14.400 --> 0:22:16.879 That's what you know, you were really excited about. And 0:22:16.960 --> 0:22:19.960 I felt, wait a minute, I actually don't know if 0:22:19.960 --> 0:22:22.680 we actually did anything, because it went down in two 0:22:22.680 --> 0:22:25.720 thousand and eight, just like the Maid Index thirty five 0:22:25.760 --> 0:22:28.320 percent or whatever it was. And I also looked at 0:22:28.320 --> 0:22:30.080 the journey and I said, if someone had bought it 0:22:30.119 --> 0:22:31.919 on day one when we launched it and held it 0:22:31.920 --> 0:22:34.080 all through that five years, they would have received that return. 0:22:34.280 --> 0:22:36.240 But the reality of what human nature was is that 0:22:36.280 --> 0:22:39.000 they were buying it at different times when they got fearful, 0:22:39.000 --> 0:22:41.919 they were selling it, and you know, their return was 0:22:42.040 --> 0:22:44.959 very different than the fund's return. And I asked myself, 0:22:45.000 --> 0:22:47.880 I said, did we actually change the industry? 0:22:47.920 --> 0:22:48.520 Did we do anything? 0:22:48.560 --> 0:22:50.920 Yes, we did something great technically, the product was excellent. 0:22:51.119 --> 0:22:53.720 We were moving the needle of how the industry operates, 0:22:53.960 --> 0:22:56.320 but we weren't changing the way the client and the 0:22:56.320 --> 0:22:58.360 customer was experiencing what we did. 0:22:58.920 --> 0:23:00.159 And so that for me. 0:23:00.200 --> 0:23:02.560 And at the same time I told you about Guggenheim 0:23:02.680 --> 0:23:05.040 was our partners and they had been working on their 0:23:05.040 --> 0:23:07.600 wealth part of the business with Danny Knoman, and I 0:23:07.600 --> 0:23:10.720 had this wonderful gift again to have the opportunity to 0:23:10.800 --> 0:23:14.480 learn and understand how the Danny was brought in to 0:23:14.600 --> 0:23:18.960 help them understand how to help billionaires and wealthy families 0:23:19.000 --> 0:23:23.200 and call it patriarchs and matriarchs to understand the transition 0:23:23.280 --> 0:23:26.960 from wealth creation to wealth management. And it was so 0:23:27.080 --> 0:23:31.040 powerful and the principles of what Danny talked about really 0:23:31.160 --> 0:23:33.920 resonated with me. I became a student of behavioral science 0:23:34.400 --> 0:23:37.960 and that sort of became really powermount to my view 0:23:38.000 --> 0:23:40.120 of what a modern assa management firm needs to think about, 0:23:40.119 --> 0:23:43.320 which is not just beat the markets, but develop investment 0:23:43.320 --> 0:23:46.679 products that actually have outcomes and goal orientation towards them. 0:23:46.720 --> 0:23:51.480 How do you help advisors and investors ultimately communicate together 0:23:51.560 --> 0:23:54.959 and work collaboratively around the actual goal the customers are 0:23:54.960 --> 0:23:57.439 asking us to do, which is help them meet their goals. 0:23:57.800 --> 0:23:58.400 And so I just. 0:23:58.320 --> 0:24:02.040 Felt the asse management industry, wealth industry both could ultimately 0:24:02.080 --> 0:24:02.879 optimize around that. 0:24:03.320 --> 0:24:06.160 And that was what Purpose's mission was going to be around. 0:24:06.320 --> 0:24:09.960 Is outcom oriented modern investment management, optimizing for all the 0:24:10.000 --> 0:24:12.520 inputs and how we manage money, not being active, not 0:24:12.560 --> 0:24:15.760 being passive. And then second is how do we help 0:24:16.600 --> 0:24:19.800 restructure the way wealth management could ultimately be oriented towards 0:24:19.800 --> 0:24:22.000 the customer journey as opposed to, Hey, we're just going 0:24:22.080 --> 0:24:23.480 to give you a sixty to forty portfolio. 0:24:23.640 --> 0:24:27.000 Huh really really fascinating. Tell us a little bit about 0:24:27.040 --> 0:24:31.920 wealth Simple, which I described earlier as the default investing 0:24:31.960 --> 0:24:36.119 app for a young generation of Canadians. What did you 0:24:36.200 --> 0:24:41.800 see before apps like Robinhood were big and successful that 0:24:42.320 --> 0:24:43.919 was a thing that young people wanted. 0:24:44.280 --> 0:24:48.399 Yeah, So the principal insight that I sort of had was, 0:24:49.680 --> 0:24:50.879 you know, if you looked at the way that the 0:24:50.880 --> 0:24:54.320 industry was operating, one of the big negatives was that 0:24:54.720 --> 0:24:57.600 because the industry made so much money, the margins were 0:24:57.600 --> 0:25:00.560 so good, we actually relied in a l easy way 0:25:00.560 --> 0:25:03.240 on what we call average economics. So what does that mean? 0:25:03.400 --> 0:25:06.359 Where do you see that It comes out as on average? 0:25:06.520 --> 0:25:08.640 You know, I like to run money for bigger customers. 0:25:08.680 --> 0:25:11.200 On average, my bigger customers make me more money, and 0:25:11.280 --> 0:25:13.919 on average, my smaller customers don't make any money. And 0:25:14.000 --> 0:25:16.400 how does that show up? You know, smaller customers get 0:25:16.400 --> 0:25:21.520 treated poorly, get high fees, get relegated to lower quality services, 0:25:21.840 --> 0:25:25.879 and larger investors ultimately get all the value. And people 0:25:25.880 --> 0:25:29.040 are gravitating towards hey minimums and big fees for big, 0:25:29.080 --> 0:25:31.600 big services for high net worth and ultra high networth. 0:25:31.800 --> 0:25:34.520 And I just felt that was stupid. The only economics 0:25:34.520 --> 0:25:38.880 class I took in engineering was something called ABC economics, 0:25:39.119 --> 0:25:43.439 and what that is is actually activity based economics. And 0:25:43.480 --> 0:25:46.760 so the idea of unit economics, and I said, what 0:25:46.760 --> 0:25:49.480 we need to understand in this industry is that I 0:25:49.520 --> 0:25:53.199 actually disagree that small accounts don't make you money. I 0:25:53.280 --> 0:25:55.920 just think that the systems, the principles of the infrastructure 0:25:55.920 --> 0:25:58.919 of the industry are poorly designed to serve smaller clients. 0:25:59.400 --> 0:26:01.560 And so what I I felt my whole wealth model 0:26:01.720 --> 0:26:06.240 was how do we restructure the infrastructure of the industry. 0:26:06.440 --> 0:26:08.520 How do we think about it from a unit economics 0:26:08.920 --> 0:26:12.280 using technology and structure and pipes that would ultimately allow 0:26:12.320 --> 0:26:15.919 for that. And then what you do is bifurcate the 0:26:16.040 --> 0:26:20.679 value for the different segments of customers fall early stage customers, 0:26:20.920 --> 0:26:23.200 middle of massiffluent all the way to ultra high net 0:26:23.200 --> 0:26:25.960 worth based on a service level offering. And the service 0:26:26.040 --> 0:26:28.840 level offering would change an increase based on the needs 0:26:28.840 --> 0:26:29.639 of those customers. 0:26:29.960 --> 0:26:31.240 So that was the principle. 0:26:31.640 --> 0:26:34.879 And I said, at the earliest stage, if you're twenty 0:26:34.920 --> 0:26:36.840 years old, twenty five years old, this is the most 0:26:36.880 --> 0:26:41.439 amazing period to build for. But the industry was treating 0:26:41.480 --> 0:26:43.320 them awful. So I said, let's go build this, and 0:26:43.359 --> 0:26:45.240 so we started with the technology, the infrastructure, and what 0:26:45.240 --> 0:26:49.520 will Simple has done is really unbelievable. It has become 0:26:49.880 --> 0:26:54.879 in Canada the most competitive platform in financial services against 0:26:54.920 --> 0:26:57.439 the big six Canadian banks. Canada has never seen anything 0:26:57.520 --> 0:27:00.159 like this before. And it all is rooted on on 0:27:00.720 --> 0:27:03.760 serving customers where they're needing us to serve them right 0:27:03.800 --> 0:27:06.440 when they're getting started or along the earliest stage of 0:27:06.440 --> 0:27:09.960 their journey, and then helping them compound not only their 0:27:10.040 --> 0:27:13.560 wealth but also the overall financial experience as they grow. 0:27:13.600 --> 0:27:16.959 From twenty five thirty thirty five, forty it has been 0:27:17.000 --> 0:27:18.160 an amazing experience. 0:27:18.240 --> 0:27:19.919 And you know today Well. 0:27:19.800 --> 0:27:21.760 Simple, I mean, I think we're we run about one 0:27:21.840 --> 0:27:24.760 hundred and fifty billion, but we're doing more in net 0:27:24.800 --> 0:27:28.119 deposits than the biggest bank in Canada, RBC. That is 0:27:28.160 --> 0:27:31.399 an unbelievable City six and I'm proud of what that 0:27:31.680 --> 0:27:34.800 team and what the organization is doing to challenge the 0:27:34.840 --> 0:27:37.760 industry and change the way Canadians are served. 0:27:37.960 --> 0:27:41.560 So let's stay with wealth Simple a minute, because initially 0:27:41.960 --> 0:27:44.840 I assumed this was kind of a rub and hood 0:27:44.960 --> 0:27:49.280 like app with free trading and gamification and you know 0:27:49.680 --> 0:27:53.960 up to but not quite sports betting like that sort of. Hey, 0:27:54.000 --> 0:27:56.160 this isn't going to get anybody to their goals. It's 0:27:56.600 --> 0:28:01.040 fun entertaining stuff during the lockdown of the pandemic. Tell 0:28:01.119 --> 0:28:06.520 us about wealth simple in terms of the differences with 0:28:06.640 --> 0:28:07.840 an app like Robinhood. 0:28:07.920 --> 0:28:11.400 Yeah, So the starting point actually is you start with 0:28:11.680 --> 0:28:13.960 the customer where they need you the most. Right when 0:28:14.000 --> 0:28:16.920 you're twenty five or thirty, you know, you're either just 0:28:16.960 --> 0:28:19.520 getting started, you might have five, ten, twenty, thirty thousand dollars, 0:28:20.000 --> 0:28:21.760 and the principle of it is you want to help 0:28:21.800 --> 0:28:22.800 them ultimately get going. 0:28:23.080 --> 0:28:24.640 So building a discipline, a structure. 0:28:24.680 --> 0:28:26.800 So we have the manage money programs, which are you 0:28:27.080 --> 0:28:29.800 open an account very simply and clearly, you basically build 0:28:29.840 --> 0:28:32.680 your portfolio, and your portfolio is basically a glide path 0:28:32.800 --> 0:28:35.680 on the markets and and such, and then you surround 0:28:35.720 --> 0:28:39.280 that with you know, the types of services and solutions, 0:28:39.320 --> 0:28:43.680 so direct trading accounts, you know, cash management, credit cards, 0:28:44.520 --> 0:28:47.200 you know all the crypto things like that are really important. 0:28:47.360 --> 0:28:50.040 So my principle is there's always a view of attention 0:28:50.240 --> 0:28:50.840 of these things. 0:28:51.240 --> 0:28:52.880 I come from a different way of it, which is, 0:28:53.200 --> 0:28:54.720 these are things that people are going to be in 0:28:54.720 --> 0:28:57.160 pursuit of, and what you want as an organization is 0:28:57.160 --> 0:28:59.240 not to duck your head in the sand at any stage. 0:28:59.280 --> 0:29:01.000 If you're an advisor, you know, saying hey, I don't 0:29:01.040 --> 0:29:03.440 do crypto is actually a wrong message or because your 0:29:03.440 --> 0:29:04.960 customers are going to be in pursuit of it. We 0:29:05.000 --> 0:29:08.080 know that sixty seventy percent of highit worth individuals have 0:29:08.280 --> 0:29:11.240 a direct account and many of them are curious and 0:29:11.320 --> 0:29:15.960 engaged in buying interesting areas like that. So I think 0:29:16.000 --> 0:29:19.000 an advisor firm or any firm, a financial service firm, 0:29:19.040 --> 0:29:22.240 has to find a way to balance the foundations of 0:29:22.280 --> 0:29:25.760 what is good long term you know, call it discipline investing, 0:29:26.120 --> 0:29:29.160 along with saytiating the needs and the desires of what 0:29:29.200 --> 0:29:33.080 an individual wants so that they don't always you know, 0:29:33.200 --> 0:29:35.400 turn their head to I need something different. And that 0:29:35.480 --> 0:29:38.040 actually comes from the mindset of find a safe and 0:29:38.080 --> 0:29:40.320 secure way to do those types of things on behalf 0:29:40.320 --> 0:29:43.680 of the customers and educate them and size it effectively. 0:29:44.320 --> 0:29:47.320 So you know, like for example, while Simple recently got 0:29:47.320 --> 0:29:49.240 approval to do prediction markets, and this is a really 0:29:49.320 --> 0:29:50.520 high tension area. 0:29:50.680 --> 0:29:53.200 It's you know, people have a you know, binary. 0:29:52.840 --> 0:29:55.680 View of this, and my view is if customers are 0:29:55.680 --> 0:29:57.480 going to be doing it, you want them to do 0:29:57.520 --> 0:30:00.280 it with you in a safe and secure way, then 0:30:00.360 --> 0:30:02.600 to do it elsewhere, and that's how you have to 0:30:02.640 --> 0:30:06.320 ultimately be building around. But at the same time, the 0:30:06.400 --> 0:30:10.200 whole business is oriented around helping someone where they need 0:30:10.240 --> 0:30:12.760 it the most, around their financial journey so they can 0:30:12.840 --> 0:30:14.000 ultimately achieve their goals. 0:30:14.160 --> 0:30:14.600 That's it. 0:30:15.120 --> 0:30:20.560 So this discussion about whether or not you're a serial entrepreneur, 0:30:20.800 --> 0:30:24.560 I have to click through a bunch of things that 0:30:24.640 --> 0:30:28.960 you've built that are fascinating. Starting with the world's first 0:30:29.000 --> 0:30:33.880 spot bitcoin ETF back in twenty twenty one, long years 0:30:33.920 --> 0:30:38.920 before the US approved one. It crossed a billion dollars 0:30:38.960 --> 0:30:41.960 in the first month. How did you get the Canadian 0:30:42.000 --> 0:30:44.959 regulators to approve this? How did you make them comfortable 0:30:45.600 --> 0:30:48.400 three years before the SEC was comfortable. 0:30:48.760 --> 0:30:52.360 So, first off, I've had a deep thesis on crypto 0:30:53.000 --> 0:30:55.160 for a long time, and that's the starting point is 0:30:55.200 --> 0:30:58.120 I wasn't doing it because hey, cool, dos your idea. 0:30:58.440 --> 0:31:01.440 Let's launch this and throw some thing against the wall. 0:31:01.600 --> 0:31:05.000 I had, you know, in twenty sixteen, just like most people, 0:31:05.320 --> 0:31:06.920 you know, I had been like, you know, been asked 0:31:06.960 --> 0:31:08.560 about bitcoin, and I was like, I don't know, it 0:31:08.560 --> 0:31:09.520 looks like a sort. 0:31:09.400 --> 0:31:10.120 Of scammy thing. 0:31:10.160 --> 0:31:12.280 And then I sort of self reflected and said, wait 0:31:12.280 --> 0:31:14.120 a minute, people are actually asking my opinion on this. 0:31:14.160 --> 0:31:16.120 I should go and do some research. So I spent 0:31:16.160 --> 0:31:18.960 the time learning and understanding the space. I actually the 0:31:18.960 --> 0:31:21.360 best way to do that is make an investment. And 0:31:21.800 --> 0:31:24.760 you know, over the next twelve months, I just became 0:31:24.840 --> 0:31:28.000 this student of what was happening. And you know what 0:31:28.040 --> 0:31:30.479 really excited me was, of course Ethereum, which is this 0:31:30.680 --> 0:31:35.280 call it sister technology that was really around taking what 0:31:35.280 --> 0:31:38.479 Bitcoin had done and really expanding the capabilities of it, 0:31:38.520 --> 0:31:41.240 around smart crypto and. 0:31:41.200 --> 0:31:44.520 All the ust it exactly. And so I got very 0:31:44.520 --> 0:31:46.160 excited about that. And so what I. 0:31:46.080 --> 0:31:48.320 Said was, we're so early in this, the infrastructure is 0:31:48.360 --> 0:31:52.240 not there, The fraud risks all of it for investors 0:31:52.320 --> 0:31:53.840 is going to be so high. So I actually launched 0:31:54.240 --> 0:31:59.880 the first publicly traded vehicle on Ethereum, called ether cap 0:32:00.440 --> 0:32:02.120 Partner with a group of people and I said, we're 0:32:02.120 --> 0:32:03.960 going to raise the money. We're going to buy a 0:32:04.160 --> 0:32:05.200 ether on the balance sheet. 0:32:05.320 --> 0:32:05.640 Effect. 0:32:05.840 --> 0:32:07.920 You know, we've seen these now become more popular in 0:32:07.960 --> 0:32:09.680 the last number of years, but it was the first 0:32:09.680 --> 0:32:11.840 one and we did this in twenty eighteen, and I'll 0:32:11.840 --> 0:32:13.680 tell you it was an amazing thing. And my message wise, 0:32:13.720 --> 0:32:15.120 we're going to find a safe and secure way for 0:32:15.120 --> 0:32:18.440 people to co invest alongside of us on this really 0:32:18.440 --> 0:32:22.200 great journey because of the asymmetric opportunity of this bet 0:32:22.840 --> 0:32:24.760 that informed me on so much. And then at some 0:32:24.920 --> 0:32:27.000 point and we used to do self custody in that 0:32:27.040 --> 0:32:29.360 corporation and all the rest of it, and then at 0:32:29.360 --> 0:32:31.400 some point we started to see the infrastructure change and 0:32:31.440 --> 0:32:33.400 that's when we went into the regulator and said, look, 0:32:33.600 --> 0:32:36.760 there's an opportunity here. The infrastructure is changing around how 0:32:36.960 --> 0:32:40.960 you can custody and fit this into a liquid ETF structure. 0:32:41.200 --> 0:32:44.160 We worked with them for nine months and ultimately got 0:32:44.160 --> 0:32:46.920 them comfortable. And this is a really important principle that 0:32:46.960 --> 0:32:51.160 I believe we as a registrant, as a money manager, 0:32:51.840 --> 0:32:54.000 we have great ideas, great innovation, and as long as 0:32:54.040 --> 0:32:57.000 our ideas are aligned with where the regulator wants the 0:32:57.040 --> 0:32:59.680 future to go, it's really important to engage with the 0:32:59.720 --> 0:33:04.040 regus later and have that dual relationship. That idea of 0:33:04.080 --> 0:33:07.320 helping them, educating them on where we need to get to. 0:33:07.880 --> 0:33:09.560 And so that was the kind of work we've done 0:33:09.680 --> 0:33:12.440 all throughout my career, and we did that on crypto 0:33:12.640 --> 0:33:15.200 and frankly, we really excited that we got the opportunity 0:33:15.200 --> 0:33:18.120 to launch it and that model. What we did actually 0:33:18.200 --> 0:33:22.000 ultimately informed the series of products launched in the US 0:33:22.240 --> 0:33:25.320 a couple of years later on how ultimately to structure 0:33:25.560 --> 0:33:28.680 ETFs in the crypto space. And of course the industry 0:33:28.680 --> 0:33:31.560 has grown and we've moved an asset from the fringe 0:33:31.600 --> 0:33:33.280 all the way to the core, which is what ultimately 0:33:33.280 --> 0:33:34.720 my thesis was in a deep way. 0:33:34.720 --> 0:33:37.480 And ef capital today is in what structure we. 0:33:37.400 --> 0:33:40.320 Actually converted it from that corporation to an ETF once 0:33:40.800 --> 0:33:43.840 that was available, and the gain there we built staking 0:33:43.840 --> 0:33:46.800 into it and those things weren't again available in an 0:33:46.800 --> 0:33:50.200 ETF form or call it doable, until they were, and 0:33:50.240 --> 0:33:52.920 when they were, we ultimately moved to the most efficient vehicle, 0:33:52.920 --> 0:33:54.080 which is the ETF structure. 0:33:54.240 --> 0:33:58.960 Let's talk about longevity pension funds, launched in twenty twenty one, 0:33:59.800 --> 0:34:04.520 the world's first income for life mutual funds, which uses 0:34:04.640 --> 0:34:09.120 longevity risk pooling to pay lifetime income like a defined 0:34:09.200 --> 0:34:14.759 benefit pension investors include allions and omers. How is this 0:34:14.960 --> 0:34:18.200 different from what in the US we think of as 0:34:18.320 --> 0:34:19.680 traditional annuities. 0:34:20.080 --> 0:34:22.960 So this is actually so first of this was my 0:34:23.200 --> 0:34:26.880 original thesis on purpose, which was, you know, the industry 0:34:26.920 --> 0:34:28.720 was all solving for the accumulation phase. 0:34:28.800 --> 0:34:29.439 Let's build them. 0:34:29.320 --> 0:34:32.200 Investment products to call it, solve for how do we 0:34:32.239 --> 0:34:34.880 save money? But no one was really solving within the 0:34:34.920 --> 0:34:39.319 asset management industry around the challenges of decumulation. And it 0:34:39.360 --> 0:34:41.200 was kind of left to the insurers, you know, with 0:34:41.520 --> 0:34:45.160 annuities and with defined benefit pensions and such. And I 0:34:45.200 --> 0:34:47.040 just felt there was this gap there that was really 0:34:47.080 --> 0:34:51.400 critical and you need to deeply understand the sort of 0:34:51.400 --> 0:34:55.840 the principles of you know how, longevity and structure and 0:34:55.880 --> 0:34:57.600 all the rest of it. We're going to be critically 0:34:57.640 --> 0:35:01.000 in there. And so I asked the team, I said, 0:35:01.040 --> 0:35:02.759 we need to solve for decumulation. And we were in 0:35:02.840 --> 0:35:04.279 pursuit of it. We were spending a lot of time 0:35:04.280 --> 0:35:07.760 working on it. Ultimately we came across a structure and 0:35:08.120 --> 0:35:09.600 I just got really excited. 0:35:09.640 --> 0:35:10.800 And the principles. 0:35:10.800 --> 0:35:12.919 We had to go to the regulator again and say 0:35:12.960 --> 0:35:15.040 there are some exemptions we need to make this work. 0:35:16.280 --> 0:35:19.160 If I step back for a moment, the greatest financial 0:35:19.200 --> 0:35:22.680 product ever created in our business or in the financial 0:35:22.680 --> 0:35:26.680 industry is the divine benefit pension plant. And frankly, if 0:35:26.719 --> 0:35:29.359 you go back to what that represented, it was such 0:35:29.360 --> 0:35:33.000 an amazing bargain. You join a company, the company says, 0:35:33.040 --> 0:35:37.239 we will, in an institutional way, organize to have a 0:35:37.400 --> 0:35:40.960 savings program alongside of your career, and it will not 0:35:41.000 --> 0:35:44.200 only solve for your savings needs while you're working, but 0:35:44.320 --> 0:35:47.600 once you retire, it will also solve for your income 0:35:47.920 --> 0:35:50.080 longevity for as long as you live and in some 0:35:50.160 --> 0:35:53.640 cases your spouse. That is like, if you think about 0:35:53.719 --> 0:35:56.719 the journey of a customer, it is the most unbelievably 0:35:56.760 --> 0:35:59.600 comforting and principal thing that we've done. And the industry 0:35:59.600 --> 0:36:03.040 has done everything over the last forty years to break 0:36:03.040 --> 0:36:07.719 that down, kill it and on with the concept of hey, 0:36:07.760 --> 0:36:10.959 we're giving you choice, and that has been so bad 0:36:11.000 --> 0:36:14.040 for people. So I always believe that we needed to 0:36:14.040 --> 0:36:18.000 get back to bring the system back. If every Canadian, 0:36:18.200 --> 0:36:20.960 every American had access to a defined benefit pench plon, 0:36:21.320 --> 0:36:24.040 ninety five percent of them would be unbelievably better off. 0:36:24.320 --> 0:36:27.239 The reality is it's not good for the industry. The 0:36:27.320 --> 0:36:30.799 fragmentation allows for agency to increase. And so what I've 0:36:30.840 --> 0:36:32.960 always said is how do we bring this back into 0:36:33.000 --> 0:36:35.880 the structure, And so Longevity Pension Plan was designed on 0:36:35.960 --> 0:36:38.200 how do we build a pension line for all? How 0:36:38.200 --> 0:36:40.359 do we do that in a mutual fund structure which 0:36:40.400 --> 0:36:44.359 is accessible the annuity structure that is of course it 0:36:44.400 --> 0:36:48.800 works similarly. The problem is it has it has the 0:36:48.800 --> 0:36:50.880 structure of you have to go off book for an advisor, 0:36:51.000 --> 0:36:54.000 or advisors don't really like them. Investors have to ultimately 0:36:54.080 --> 0:36:57.120 go through an insurance structure and it's individualized. Whereas the 0:36:57.160 --> 0:36:59.799 defined bension plane is a pool. And so when you 0:36:59.800 --> 0:37:02.960 get longevity risk pooling like that which is done in 0:37:03.000 --> 0:37:05.520 a defined benefit BENSUIP plan, why couldn't you do. 0:37:05.520 --> 0:37:06.439 That in a mutual fund. 0:37:06.480 --> 0:37:08.400 And that was our principle and so we designed that 0:37:08.440 --> 0:37:11.760 it's the first fund to really incorporate longevity risk pooling. 0:37:12.120 --> 0:37:15.440 So putting lives together with a mutual goal of. 0:37:15.640 --> 0:37:18.960 I'm putting money at work to ultimately solve for my 0:37:19.120 --> 0:37:21.760 lifetime comfort that I'm going to have in number life 0:37:21.840 --> 0:37:25.120 and if I die early, I'm ultimately supporting the cohort 0:37:25.280 --> 0:37:26.680 but I'm getting what I needed from it. 0:37:27.040 --> 0:37:30.400 So I want to click through four other innovative products, 0:37:30.600 --> 0:37:32.840 but I don't want to spend all week on it. 0:37:33.239 --> 0:37:37.840 Let's click through these four quickly, starting with cash management ETFs. 0:37:38.280 --> 0:37:40.160 Yeah, so cash is something I think that of course 0:37:40.160 --> 0:37:43.600 everybody needs access to. So we had launched the first 0:37:43.600 --> 0:37:46.920 money market ETF in when I was running Claymore. When 0:37:46.920 --> 0:37:49.240 I came back with Purpose, we saw the movement towards 0:37:49.239 --> 0:37:52.319 deposit rates were much higher than money markets, so we 0:37:52.360 --> 0:37:54.640 actually went in. The unique thing we did there was 0:37:54.960 --> 0:37:58.279 we went and built a ETF that linked to a 0:37:58.280 --> 0:38:00.440 deposit account, so it's not to a security so it's 0:38:00.440 --> 0:38:03.200 actually one of the first of its kind, and that 0:38:03.280 --> 0:38:05.600 was a hugely important thing back in twenty fourteen. And 0:38:05.640 --> 0:38:08.600 of course the cash management industry has grown dramatically. We 0:38:08.640 --> 0:38:10.840 haven't seen this in the United States yet, so we 0:38:10.880 --> 0:38:15.520 haven't seen deposit based cash ETFs. We've seen money market 0:38:15.880 --> 0:38:18.959 based ETFs, but we haven't seen deposit based. So it's 0:38:19.320 --> 0:38:21.160 you know, based on the buck you know, it increases 0:38:21.160 --> 0:38:24.440 based on the on the value doesn't fluctuate, and it 0:38:24.440 --> 0:38:26.920 goes right into the bank deposits of you know, several 0:38:26.920 --> 0:38:29.239 banks and you get therefore a higher rate. 0:38:29.440 --> 0:38:31.560 So we were really really proud of that innovation. It has. 0:38:31.640 --> 0:38:33.960 It goes to show the kind of principal first or 0:38:34.000 --> 0:38:36.600 the first principle mindset that our organization always thinks about 0:38:36.680 --> 0:38:39.680 is solving problems because many advisors moving to discretion and 0:38:39.719 --> 0:38:42.319 we're saying, like, I want to bulk trade cash, but 0:38:42.480 --> 0:38:45.160 it's my organization isn't making it easy. 0:38:45.400 --> 0:38:48.480 So I have to sweep it exactly Sodian at night 0:38:48.600 --> 0:38:53.200 into it really is is it should be capable of 0:38:53.239 --> 0:38:58.439 being automated and maximizing yield without increasing risk. But there 0:38:58.440 --> 0:39:00.000 are just a million impediments. 0:39:00.480 --> 0:39:03.000 I sell qqqs and I want to go into cash 0:39:03.000 --> 0:39:06.520 in my balance of my model, my administrative assistant has 0:39:06.560 --> 0:39:08.440 to go and do all the basically account by account. 0:39:08.680 --> 0:39:12.000 Now with the ETF, you were able to go from 0:39:12.719 --> 0:39:15.200 from you know, qqs to cash and then back to 0:39:15.280 --> 0:39:17.560 qqqs or whatever you were doing in just a simple 0:39:17.719 --> 0:39:18.279 single trade. 0:39:18.480 --> 0:39:22.319 Let's let's talk about option based income products. I've never 0:39:22.360 --> 0:39:26.200 been a fan of this as a brokerage product. It 0:39:26.360 --> 0:39:30.359 just felt like there was so much costs, so much 0:39:30.400 --> 0:39:33.759 commission built into it. It really when when you're dealing 0:39:33.840 --> 0:39:37.920 with relatively tight margins, it's a challenge as a retail 0:39:37.960 --> 0:39:40.920 investor to derive any value out of it, real value. 0:39:41.200 --> 0:39:44.920 It's certainly great for generating fees. How do you how 0:39:44.920 --> 0:39:48.880 do you manage an option based income product that works 0:39:49.360 --> 0:39:50.520 for the retail investor. 0:39:50.640 --> 0:39:53.040 So let's start with the principle why right? 0:39:53.520 --> 0:39:55.799 I believe that options and derivatives actually play a really 0:39:55.840 --> 0:39:58.879 important role for management of portfolios and return stream. 0:39:58.920 --> 0:39:59.960 So it goes back to that principle. 0:40:00.160 --> 0:40:02.920 Can you design outcomes and the trade offs that come 0:40:02.920 --> 0:40:04.920 with options, because that's ultimately what you're doing, whether it's 0:40:04.960 --> 0:40:08.280 call options or put options, and so for an investment 0:40:08.320 --> 0:40:11.440 return stream that you're designing, options can be really powerful. 0:40:11.719 --> 0:40:15.279 That said that, to your point, they're high friction for 0:40:15.320 --> 0:40:18.160 an advisor, very hard to execute and you know, across 0:40:18.160 --> 0:40:20.640 your business, but too for individuals. It's very hard and 0:40:20.760 --> 0:40:23.000 very expensive to you know, the spreads and the costs 0:40:23.080 --> 0:40:23.720 and the sizing. 0:40:24.280 --> 0:40:25.160 But it's excellent. 0:40:25.200 --> 0:40:28.960 It's actually what option structures are really designed for ETFs 0:40:28.960 --> 0:40:31.360 and institutional money management in a great way because you 0:40:31.400 --> 0:40:34.640 can do at scale really amazing programs. So we've been 0:40:34.640 --> 0:40:37.000 doing these for twenty five years. You know, back when 0:40:37.000 --> 0:40:39.200 I was at RBC, we used to help firms build them. 0:40:39.239 --> 0:40:42.719 At Claymore, I build them, and then at Purpose we've 0:40:42.760 --> 0:40:45.440 done it, and I find that they are so designed, 0:40:45.960 --> 0:40:50.279 so perfectly designed for the structural outcome that you want 0:40:50.320 --> 0:40:52.680 to ultimately create and manipulate in your return stream. 0:40:52.960 --> 0:40:54.960 But they do come with trade offs. I'll give you 0:40:54.960 --> 0:40:55.600 a great example. 0:40:55.840 --> 0:40:57.200 One of the first things when I was in my 0:40:57.400 --> 0:40:59.960 you know, starting in my career in talking to advisors, 0:41:00.760 --> 0:41:03.360 the thing that they the old school advisor would say, oh, 0:41:03.440 --> 0:41:05.560 I write put options or call options for a couple 0:41:05.600 --> 0:41:08.919 of my clients on their large names, but I can't 0:41:08.920 --> 0:41:09.880 do it for all my clients. 0:41:10.239 --> 0:41:11.360 And I'd say, why do you do that? 0:41:11.360 --> 0:41:13.799 Well, because you know I'm owning this stock, and you know, 0:41:13.880 --> 0:41:15.319 if I'm going to own it for the next ten years, 0:41:15.320 --> 0:41:18.320 why not generate some income along the way. And that 0:41:18.719 --> 0:41:21.080 was a really important mindset that people had, but they 0:41:21.120 --> 0:41:23.400 couldn't do it across their business. And I said, well, 0:41:23.480 --> 0:41:26.960 if I own a name like a JP Morgan and 0:41:27.000 --> 0:41:29.280 I'm going to own I love JP Morgan. The actual 0:41:29.320 --> 0:41:31.879 optimal well way to own JP Morgan is to have 0:41:32.080 --> 0:41:35.920 eighty percent long JP Morgan and twenty percent covered call 0:41:36.000 --> 0:41:39.160 overlaid JP Morgan, so that you're generating the long term 0:41:39.160 --> 0:41:43.200 beta of JP Morgan. Plus you're generating some ongoing return 0:41:43.320 --> 0:41:46.120 from the option income as volatility is there, and you're 0:41:46.120 --> 0:41:48.239 taking advantage of the volatility to generate a return trip. 0:41:48.719 --> 0:41:50.800 And that's the best way, optimally from a risk adjust 0:41:51.120 --> 0:41:53.040 basis to generally own most stocks. 0:41:53.400 --> 0:41:54.399 So how do you do that? 0:41:54.719 --> 0:41:57.080 And so if you design product We've designed something called 0:41:57.080 --> 0:42:00.560 the Yield Chairs which was designed specifically around single name 0:42:00.640 --> 0:42:02.759 stocks that we people most love, and then you write 0:42:02.800 --> 0:42:05.120 options against them to generate the option income so that 0:42:05.239 --> 0:42:07.080 it complements a long only position. 0:42:07.239 --> 0:42:09.680 How do you avoid getting called away when the stock 0:42:09.800 --> 0:42:15.120 has a sudden surge and all the problem isn't merely hey, 0:42:15.160 --> 0:42:17.600 you can always go out and re buy it, but 0:42:17.760 --> 0:42:20.239 now you have a giant capital gains hit you have 0:42:20.280 --> 0:42:21.880 to pay when the stock gets called. 0:42:21.800 --> 0:42:24.000 So in one thing in Canada is we don't actually 0:42:24.040 --> 0:42:25.960 have the difference between short and long term capital gains. 0:42:26.040 --> 0:42:27.080 Yeah, so it's a really nice thing. 0:42:27.400 --> 0:42:29.040 You know, you can buy and sell something in a 0:42:29.120 --> 0:42:31.920 day and ultimately get capital gain streatment at the lowest rate. 0:42:32.680 --> 0:42:34.520 Our rate is a little higher, but but still it's. 0:42:34.480 --> 0:42:37.640 A short term thirty percent long term. 0:42:37.719 --> 0:42:40.520 Yeah, so our long term is twenty five twenty seven percent. 0:42:42.000 --> 0:42:46.080 The principal mindset, though, is this is what institutional programs 0:42:46.120 --> 0:42:48.520 are really great at. You don't write one option on 0:42:48.520 --> 0:42:50.280 one strike, price on one position. 0:42:50.840 --> 0:42:52.759 You use stack them, so you might have if you have. 0:42:52.760 --> 0:42:55.640 A whole matrix exactly different strikes, different dates. 0:42:55.719 --> 0:42:58.560 And then with technology today you can optimize all the 0:42:58.640 --> 0:43:01.319 structural elements of do you roll it for tax efficiency? 0:43:01.640 --> 0:43:04.160 Do you ultimately buy it back? Do you do you 0:43:04.480 --> 0:43:06.799 wear along a curve an option? Do you basically roll 0:43:06.800 --> 0:43:09.680 the capitol into at any point? So you're constantly in 0:43:09.680 --> 0:43:13.320 this call it vintaging of your portfolio overlay, which is 0:43:13.320 --> 0:43:15.759 really important. That's what institutional money management needs to do. 0:43:15.960 --> 0:43:18.719 If you're just singularly buying one option on one strike byce, 0:43:18.760 --> 0:43:21.239 that's actually a very low quality execution. 0:43:21.560 --> 0:43:22.880 Yeah, we used to see a lot of that on 0:43:22.920 --> 0:43:26.560 the broker side. So the single stock yield chairs. How 0:43:26.560 --> 0:43:29.520 many different versions of this are there or are they 0:43:29.560 --> 0:43:30.560 all tossed into. 0:43:30.320 --> 0:43:34.279 Twenty No, we have a single names, so I think 0:43:34.320 --> 0:43:36.560 we might be at like twenty something twenty five. I 0:43:36.719 --> 0:43:38.279 don't know what the exact number, but it's north of 0:43:38.320 --> 0:43:40.440 twenty Canadian and US names. 0:43:40.520 --> 0:43:42.240 And they've been very popular. 0:43:42.760 --> 0:43:44.799 You know, they've been very popular with both advisors and 0:43:44.880 --> 0:43:45.719 direct investors. 0:43:46.200 --> 0:43:50.040 Huh. Really interesting. Coming up, we continue our conversation with 0:43:50.120 --> 0:43:55.239 Sam Safe, CEO and founder of Purpose Investments, discussing why 0:43:55.320 --> 0:43:59.280 he built Purpose Unlimited. I'm Barry rich Alts. You're listening 0:43:59.320 --> 0:44:04.080 to Masters Business on Bloomberg Radio. I'm Barry Redults. You're 0:44:04.120 --> 0:44:07.440 listening to Masters in Business on Bloomberg Radio. My extra 0:44:07.520 --> 0:44:11.239 special guest this week is Some Safe. He is the 0:44:11.320 --> 0:44:16.719 founder and CEO of Purpose Unlimited, which also owns Purpose Investments. 0:44:17.440 --> 0:44:22.000 He has founded and sold a variety of different companies 0:44:22.200 --> 0:44:27.200 over the past let's call it twenty almost twenty five years. 0:44:26.880 --> 0:44:31.600 So Purpose is now about thirty one thirty two billion 0:44:32.120 --> 0:44:37.239 Canadian or about twenty two billion US across ETF's cash, alternatives, 0:44:37.280 --> 0:44:42.320 private assets, et cetera. Tell us the problem that Purpose 0:44:42.440 --> 0:44:45.080 is trying to solve for your clients. 0:44:45.440 --> 0:44:49.120 Sure, so total Purpose actually run over around forty billion, 0:44:49.200 --> 0:44:51.520 now forty BILLI yeah, on the platform. So on the 0:44:51.520 --> 0:44:54.120 asset management side, just over thirty and on the wealth 0:44:54.160 --> 0:44:57.239 side now just round ten and growing quite fast, and 0:44:57.280 --> 0:44:59.600 the principal mindset has always been so on the asset 0:44:59.600 --> 0:45:03.080 management side, was you know, let's build a modernization of 0:45:03.120 --> 0:45:06.319 investment management and products and services to meet clients where 0:45:06.320 --> 0:45:08.360 they need to be. How do we help advisors and 0:45:08.440 --> 0:45:11.920 investors build more resilient portfolios, not just long only equities 0:45:11.920 --> 0:45:14.319 and long only bonds, but how do you optimize for 0:45:14.400 --> 0:45:18.000 the types of return streams that support a world where 0:45:18.000 --> 0:45:22.480 potentially bonds aren't your protective assets. How do you optimize 0:45:22.480 --> 0:45:25.120 for the types of return streams that ultimately are designed 0:45:25.160 --> 0:45:27.560 around an outcome as opposed to just the return of 0:45:27.560 --> 0:45:28.160 a beta. 0:45:28.360 --> 0:45:29.560 And so those are the first start. 0:45:29.600 --> 0:45:31.799 And we have the inputs of we care about not 0:45:31.800 --> 0:45:35.279 only the quality of our investment product that we manufacture, 0:45:35.280 --> 0:45:39.920 but also they call it artisan quality of our investment inputs. 0:45:39.920 --> 0:45:44.239 So the team, the capabilities the process for investment strategy 0:45:45.000 --> 0:45:48.000 using both quantitative methods active methods in each of the 0:45:48.120 --> 0:45:51.400 different categories. I think the second component was then we 0:45:51.480 --> 0:45:54.320 have this big picture that goes back to this system 0:45:54.400 --> 0:45:57.280 and I use the reference to the defined benefit pension 0:45:57.320 --> 0:45:58.600 plan as a phenomenal product. 0:45:58.600 --> 0:45:59.120 How do we. 0:45:59.320 --> 0:46:04.920 Redesigning the way advice and investment management work together on 0:46:05.040 --> 0:46:08.040 ultimately achieving a client's goal. And so we've designed this 0:46:08.080 --> 0:46:11.640 whole infrastructure around the wealth management to support one the 0:46:11.680 --> 0:46:15.080 movement towards independent wealth management. So as you know in 0:46:15.080 --> 0:46:18.160 the United States, you've seen the US RIA segment. Canada 0:46:18.320 --> 0:46:20.680 has a nascent segment there, and you know, we saw 0:46:20.760 --> 0:46:23.520 this really important movement towards and a need for that. 0:46:23.600 --> 0:46:25.759 So we built the infrastructure to support and movement towards 0:46:25.800 --> 0:46:28.480 independent wealth management. But then also the services and the 0:46:28.520 --> 0:46:31.280 tools and the capabilities over and above that to support 0:46:31.600 --> 0:46:36.280 advisors in basically driving their businesses towards more planning based, 0:46:36.640 --> 0:46:42.080 portfolio outcome oriented investment management and wealth management and experiences 0:46:42.080 --> 0:46:45.080 as opposed to you know, I pick better stocks in 0:46:45.120 --> 0:46:48.600 the next guy, I'm better at delivering better returns. More 0:46:48.680 --> 0:46:51.080 around how do we help customers ultimately achieve their goals, 0:46:51.120 --> 0:46:53.560 And so we've built all of this technology and systems 0:46:53.600 --> 0:46:54.480 around that outcome. 0:46:54.800 --> 0:46:59.120 So I like the idea of emphasizing outcomes over benchmarks, 0:46:59.640 --> 0:47:03.080 but you know, we have half a century maybe longer, 0:47:03.640 --> 0:47:09.799 of organizing portfolios around those benchmarks and trying to beat 0:47:09.840 --> 0:47:12.640 the index. Explain what's wrong with that approach? 0:47:12.800 --> 0:47:15.319 Well, it goes back to the behavioral science start. That's 0:47:15.360 --> 0:47:17.680 first and second ones. It is also a structural thing. 0:47:18.000 --> 0:47:21.600 If you go back to the last the last ten 0:47:21.680 --> 0:47:24.880 years or so, when I looked at the space that 0:47:25.080 --> 0:47:28.279 I felt that the industry had become a little bit 0:47:28.280 --> 0:47:32.520 complacent towards this idea that the call it the best 0:47:32.560 --> 0:47:35.160 and optimal portfolio was a sixty forty portfolio. And the 0:47:35.200 --> 0:47:37.760 reason was if you actually span yourself out and looked 0:47:37.800 --> 0:47:41.440 at the returns of the sixty forty portfolio going back, 0:47:41.719 --> 0:47:43.560 you know, one hundred, one hundred and ten years, which 0:47:43.600 --> 0:47:47.919 we did the research on, it actually only met its 0:47:47.960 --> 0:47:51.799 long term goal of seven percent in five of call 0:47:51.840 --> 0:47:54.359 it eleven or so decades. And this is a couple 0:47:54.320 --> 0:47:57.080 of years ago we did that research, and those of 0:47:57.120 --> 0:47:59.600 those five, three of them were in the period of 0:48:00.000 --> 0:48:04.920 teen eighty to twenty twenty, and so I felt that 0:48:04.920 --> 0:48:08.480 that had created this bias and anchoring bias in call 0:48:08.520 --> 0:48:10.759 it the industry. You know, Barry, the one thing you 0:48:10.800 --> 0:48:13.200 realize about our industry is that very few people have 0:48:13.280 --> 0:48:18.160 a historical experience beyond nineteen eighty. Most people's career spans 0:48:18.200 --> 0:48:21.080 are from nineteen eighty onwards, and so you know, you 0:48:21.120 --> 0:48:23.120 get biased towards what you know, what you see? 0:48:23.160 --> 0:48:24.880 What do you see when interest. 0:48:24.719 --> 0:48:28.520 Rates go up, they pretty rapidly go back down. When 0:48:28.640 --> 0:48:30.759 you look at any three or four year cycle, the 0:48:30.800 --> 0:48:33.720 sixty to forty portfolio generally was giving you positive returns, 0:48:34.160 --> 0:48:36.960 and so that meant, hey, that's an optimal way to invest. 0:48:37.280 --> 0:48:39.200 I looked at it and said, wait a minute, if 0:48:39.200 --> 0:48:42.000 you actually look at periods where interust rates actually not 0:48:42.160 --> 0:48:43.920 just go up a little bit and then come back down, 0:48:43.960 --> 0:48:47.000 but actually go up and stay up, how does that 0:48:47.040 --> 0:48:48.120 affect bond portfolios? 0:48:48.120 --> 0:48:50.440 How does that affect the overall balanced portfolio? 0:48:50.640 --> 0:48:52.560 And so I said that we needed to be prepared 0:48:52.560 --> 0:48:54.280 for that, and that's what was the starting point. 0:48:54.400 --> 0:48:57.279 The second though, was this behavioral component, and I. 0:48:57.239 --> 0:48:58.880 Just said, look at the end of the day, you know, 0:48:58.920 --> 0:49:01.720 we've kind of lost touch with what the customer actually 0:49:01.760 --> 0:49:04.160 is asking us to do. And the customer wakes up 0:49:04.200 --> 0:49:06.799 and says, look, what I care about is I want 0:49:06.800 --> 0:49:08.960 to know when I wake up, I'm going to be okay. 0:49:09.480 --> 0:49:12.440 And you need to be in the business of serving 0:49:12.480 --> 0:49:15.280 me on helping me solve that question. 0:49:15.600 --> 0:49:18.960 Am I going to be okay? And like a pension plan, you. 0:49:18.880 --> 0:49:21.640 Should have a liability a goal, and you should have 0:49:21.760 --> 0:49:24.560 an input, which is your portfolio, your savings program and 0:49:24.600 --> 0:49:27.640 your portfolio all designed around are you going to be okay? 0:49:28.160 --> 0:49:30.480 And I felt that, you know, the idea that you. 0:49:30.400 --> 0:49:32.040 Know, we should wake up and say, hey, we're here 0:49:32.080 --> 0:49:33.440 to beat the S and P five hundred or we're 0:49:33.440 --> 0:49:36.480 here to beat some benchmark was a silly concept. All 0:49:36.520 --> 0:49:39.239 that matters to a customer is am I going to 0:49:39.280 --> 0:49:41.160 be okay? And everything we do every day should be 0:49:41.200 --> 0:49:43.600 in service of that. And so that's how I always 0:49:43.600 --> 0:49:46.480 looked at it, and the principle of the design of 0:49:46.520 --> 0:49:50.680 an investment firm should be around the kinds of programs 0:49:50.840 --> 0:49:54.240 and asset strategies that help an advisor build better portfolio 0:49:54.320 --> 0:49:56.200 to answer the question of am I going to be okay? 0:49:56.200 --> 0:49:56.800 With their customers? 0:49:56.840 --> 0:49:59.120 So I have so many different ways to go with 0:49:59.160 --> 0:50:03.400 this that I'm very enthusiastic about. Maybe we'll put a 0:50:03.440 --> 0:50:06.600 pin in the whole idea of out of sample testing 0:50:06.680 --> 0:50:12.319 because everybody is so framed by it's not just their 0:50:12.320 --> 0:50:15.279 own hindsight bias, but the recency bias of what they 0:50:15.440 --> 0:50:20.000 just experienced entirely has such a big issue. But let's 0:50:20.040 --> 0:50:22.800 stick with the concept of behavioral finance and the sixty 0:50:22.920 --> 0:50:26.720 forty I have gotten a lot of pushback for saying, 0:50:27.360 --> 0:50:30.320 if you're in your twenties, thirties, forties, do you really 0:50:30.360 --> 0:50:35.359 need bonds if you're not going to retire for well, 0:50:35.520 --> 0:50:40.200 twenty something year old might not retire for fifty years. Yeah, 0:50:40.239 --> 0:50:46.040 there's some emotional salve from some ballast that's uncorrelated and 0:50:46.560 --> 0:50:50.319 doesn't have the volatility of equities. But if I go 0:50:50.440 --> 0:50:53.480 back in time, forget what the market did. If I 0:50:53.560 --> 0:50:56.799 was twenty today, I wouldn't own a single bond, and 0:50:56.840 --> 0:50:59.320 if I was seventy five today, I would own a 0:50:59.360 --> 0:51:05.080 whole lot more tax premunis. So raises the question, sixty 0:51:05.200 --> 0:51:07.960 forty does that make sense for a forget twenty year old, 0:51:08.040 --> 0:51:09.280 for anybody under fifty. 0:51:10.280 --> 0:51:13.040 It's actually a really important question, and in many cases 0:51:13.080 --> 0:51:13.759 the answer is. 0:51:13.840 --> 0:51:15.080 No, you don't need bonds. 0:51:15.080 --> 0:51:17.719 And you know, the reality of it is that if 0:51:17.760 --> 0:51:19.960 you look at the last five six years, bonds wouldn't 0:51:19.960 --> 0:51:22.720 have done you any good. And so you know, especially 0:51:22.760 --> 0:51:24.479 if you're in an environment like we're in right now, 0:51:24.600 --> 0:51:27.000 where you know the greatest risk right now to a 0:51:27.040 --> 0:51:30.560 portfolio oftentimes is the volatility the uncertainty and interest rates 0:51:30.560 --> 0:51:33.840 and inflation, and so I think it actually the return 0:51:34.520 --> 0:51:38.600 this was logical in twenty eighteen twenty nineteen zero. 0:51:38.440 --> 0:51:41.520 Right, You go from nineteen eighty twenty twenty forty years 0:51:41.560 --> 0:51:42.319 of bonds. 0:51:42.000 --> 0:51:42.839 Of phenomenal Yeah. 0:51:42.880 --> 0:51:45.080 I mean that's a unique. 0:51:45.400 --> 0:51:45.600 Yeah. 0:51:46.000 --> 0:51:48.000 But the thing that was the thing that was the 0:51:48.000 --> 0:51:50.760 big driving for us was the movement between the seventies 0:51:50.800 --> 0:51:53.280 to the eighties when interest rates spiked into the teens. 0:51:53.760 --> 0:51:55.560 That was the thing that's set up, of course, the 0:51:55.600 --> 0:51:59.480 next forty years of declining interest rates, and so you 0:51:59.560 --> 0:52:01.000 have to step back and have that context. 0:52:01.040 --> 0:52:02.200 It's just like timing the market. 0:52:02.480 --> 0:52:04.400 The reality is that if you had bought in the 0:52:04.400 --> 0:52:06.560 mid seventies, you would have had a horrible experience. 0:52:06.600 --> 0:52:08.120 Right with that portfolio structure. 0:52:08.239 --> 0:52:12.560 There's pre and post pull fulker that's the defining But it's. 0:52:12.400 --> 0:52:16.080 Actually different that it's pre and post the economic situation 0:52:16.200 --> 0:52:19.239 that was happening that led to an inflationary spike that 0:52:19.280 --> 0:52:22.040 we ultimately had to address, and that was what you 0:52:22.040 --> 0:52:25.279 were dealing with. But to your point, recency bias drove 0:52:25.320 --> 0:52:28.480 people to believe that this was the optimal way to invest. 0:52:28.719 --> 0:52:31.759 I think for an individual, again, it goes back to Okay, Yes, 0:52:31.800 --> 0:52:33.160 equity is a hope based strategy. 0:52:33.520 --> 0:52:35.040 Investing is a hope based strategy. 0:52:35.440 --> 0:52:37.560 And when you're in your twenties and thirties and forties 0:52:37.560 --> 0:52:40.560 and even potentially you know, fifties, because you know, I'd 0:52:40.600 --> 0:52:43.080 say call it twenty years before retirement, call it like 0:52:43.080 --> 0:52:45.919 a pension plot. T minus twenty years anything T minus 0:52:45.920 --> 0:52:48.200 twenty years plus is a lot of You have a 0:52:48.280 --> 0:52:50.439 lot of room for hope. Hope is a wonderful thing 0:52:50.440 --> 0:52:53.000 that you should take advantage of because you know, ultimately 0:52:53.000 --> 0:52:55.160 you want strength and momentum, and you have the time 0:52:55.280 --> 0:52:57.520 to get it right. But once you get into that 0:52:57.560 --> 0:53:00.279 T minus twenty period, that's the period where you better 0:53:00.280 --> 0:53:02.360 have some structure and discipline to what you're ultimately achieving 0:53:02.400 --> 0:53:04.640 to get to T. Because the one good thing is 0:53:04.640 --> 0:53:06.560 you can move T T can move. That's the time 0:53:06.560 --> 0:53:09.279 of retirement that can move. You could say it's sixty five, 0:53:09.320 --> 0:53:11.080 but if you really needed to and your advisor said, 0:53:11.080 --> 0:53:12.360 hey it's a bad time, you need to move to 0:53:12.400 --> 0:53:14.040 sixty seven, you can move to sixty seven. A it's 0:53:14.080 --> 0:53:16.040 going really well, we can move to sixty three. But 0:53:16.480 --> 0:53:20.600 T minus twenty is a really important window where structure 0:53:20.680 --> 0:53:24.880 discipline in your portfolio has to be designed. Everything before that, Absolutely, 0:53:24.880 --> 0:53:26.840 you can take as much hope as you want, you 0:53:26.880 --> 0:53:28.880 can take as much risk as you want, because you 0:53:28.920 --> 0:53:29.960 haven't entered that window. 0:53:30.000 --> 0:53:30.879 That's how I look at it. 0:53:31.440 --> 0:53:37.680 Really interesting as someone who's partial to the math and 0:53:37.760 --> 0:53:42.360 science half of my brain, I'm curious how you reconcile 0:53:43.160 --> 0:53:50.520 the rigorous, structured environment of being an engineer, Like there 0:53:50.560 --> 0:53:56.239 is an internal logic and a set of hard mathematical 0:53:56.280 --> 0:53:59.880 principles that govern that. How do you reconcile that with 0:54:00.160 --> 0:54:06.880 the squishy emotional side of all of Dannie Kahneman's teachings, 0:54:07.239 --> 0:54:10.600 which is, hey, this is just how we are built. 0:54:11.120 --> 0:54:13.760 We weren't made for this sort of decision making. 0:54:14.040 --> 0:54:14.239 Yeah. 0:54:14.280 --> 0:54:18.399 I think the beauty of when you marry the first principles, 0:54:19.040 --> 0:54:21.160 you know, call it linear kind of thinking around what 0:54:21.239 --> 0:54:23.840 engineering can do, and then you apply that with the 0:54:23.920 --> 0:54:27.239 nonlinearity of human behaviors. It's actually a phenomenal. We call 0:54:27.280 --> 0:54:30.960 it a mixture of thinking. And that's what you want. 0:54:31.000 --> 0:54:33.520 You want those multiple inputs to basically change your mental 0:54:33.520 --> 0:54:36.040 model of how to design and think. What I love 0:54:36.080 --> 0:54:38.720 about engineering in general is it is a reverse engineering 0:54:38.719 --> 0:54:42.200 mindset is going back to the hypothesis a scientific method, right, 0:54:42.239 --> 0:54:44.960 which is I have an idea of what the answer 0:54:44.960 --> 0:54:46.799 will be, but I'm going to do everything I can 0:54:46.880 --> 0:54:49.920 to prove that. So if you apply that to any problem, 0:54:50.200 --> 0:54:52.080 which is, hey, i'd like to solve for this problem, 0:54:52.120 --> 0:54:53.440 I have an idea of how to solve it, and 0:54:53.440 --> 0:54:55.520 then you reverse engineer how to ultimately get there, or 0:54:55.600 --> 0:54:57.719 you build around a scientific method of it. It's a 0:54:57.760 --> 0:55:00.680 wonderful way to approach problem solving in general. And then 0:55:00.719 --> 0:55:02.320 if you bring in the input. So one of the 0:55:02.320 --> 0:55:04.560 things we did a purpose is we've actually brought on 0:55:05.080 --> 0:55:08.640 behavioral scientists to actually support the organization in the way 0:55:08.680 --> 0:55:11.600 we think about product design, the way we think about marketing, 0:55:11.640 --> 0:55:13.560 and all the things that we do, because it actually 0:55:13.560 --> 0:55:16.440 helps influence the mental models and the way that we 0:55:16.520 --> 0:55:17.279 make decisions. 0:55:17.520 --> 0:55:18.600 Those are really powerful. 0:55:18.640 --> 0:55:21.560 So I just believe it's goes back to that original 0:55:21.560 --> 0:55:24.880 comment abound the creative mind and the call it structured 0:55:25.239 --> 0:55:27.520 discipline and mind. I think you bring those two together, 0:55:27.640 --> 0:55:30.319 it's a very powerful mixture to build with. 0:55:31.080 --> 0:55:35.120 Really interesting. So we've been speaking for an hour and 0:55:35.440 --> 0:55:38.600 artificial intelligence has not come up, which I think is 0:55:38.640 --> 0:55:43.000 a first this year. How do you think about AI 0:55:43.800 --> 0:55:46.560 from a managerial perspective, how do you think about it 0:55:46.560 --> 0:55:52.280 from an investment perspective? What do you see the impact 0:55:52.360 --> 0:55:56.880 of this going forward? Especially, I appreciate the opportunity to 0:55:56.920 --> 0:56:01.839 ask someone who's an engineer about this because essentially this 0:56:01.920 --> 0:56:04.440 is software engineering at the highest level. 0:56:04.960 --> 0:56:07.080 So I've never been more excited in my career. 0:56:07.160 --> 0:56:12.640 I feel a sense of energy in the last nine months, 0:56:13.239 --> 0:56:16.600 specifically coming into twenty twenty six that I've just been 0:56:17.320 --> 0:56:21.480 excited about because of what this new technology is enabling us. 0:56:21.880 --> 0:56:23.800 And more importantly, it's not. 0:56:23.719 --> 0:56:26.239 Just how do we build features or you know, solve 0:56:26.280 --> 0:56:29.000 some problems or create a little bit of incremental productivity. 0:56:29.239 --> 0:56:32.080 It is about the grassroots, you know, go to first 0:56:32.080 --> 0:56:35.239 principles of how should we ultimately design the way we work, 0:56:35.320 --> 0:56:38.600 the way we optimize our business in and around a 0:56:38.719 --> 0:56:42.320 technology a replatforming. You know, it would be no different 0:56:42.360 --> 0:56:44.000 than in two thousand if you were going through this 0:56:44.000 --> 0:56:47.360 period and the Internet was now becoming real and scalable, 0:56:47.640 --> 0:56:49.680 and you were sitting there as a retailer or any 0:56:49.680 --> 0:56:52.600 other business saying, if I just think about the historical 0:56:52.640 --> 0:56:54.560 way to run a business, and I've got this new thing. 0:56:55.000 --> 0:56:55.840 I think you lost. 0:56:56.080 --> 0:56:58.239 Whereas if you actually said no, no, I need to 0:56:58.320 --> 0:57:01.759 redesign the way I work to this new platform Mobile Era, 0:57:01.800 --> 0:57:04.040 which was a different one, same thing I did redesign 0:57:04.080 --> 0:57:06.279 the way we work, and AI is the same thing. 0:57:06.680 --> 0:57:08.960 So we've been at purpose. 0:57:08.719 --> 0:57:12.280 Have been really deeply embedded in the way we operate 0:57:12.320 --> 0:57:16.880 the company. The first thing is we are effectively driving 0:57:16.880 --> 0:57:20.760 forward deploy engineering, data science, and product across the whole organization. 0:57:21.200 --> 0:57:24.520 We are driving into smaller teams and squads. We're rolling 0:57:24.560 --> 0:57:27.720 that out across everything, and we're driving the company with 0:57:27.800 --> 0:57:31.960 this mindset that we What a modern organization needs to 0:57:32.040 --> 0:57:38.080 design around is vulnerability, the ability to have innovation and 0:57:38.200 --> 0:57:42.160 intelligence moving through the organization constantly and data flowing and communication, 0:57:43.320 --> 0:57:44.880 you know, and this is on top of, of course, 0:57:44.960 --> 0:57:48.240 leadership strength. In the past, the organization was all driven 0:57:48.280 --> 0:57:51.200 by leadership strengths. How good was the leadership And my 0:57:51.280 --> 0:57:54.320 view is vulnerability and communication are going to be the 0:57:54.320 --> 0:57:57.080 things that really drive and AI enables for that in 0:57:57.120 --> 0:58:00.360 a really amazing way. What that is is a system 0:58:00.360 --> 0:58:02.440 of way you work. So we are doing that in 0:58:02.480 --> 0:58:05.280 a great way. The same time, though you know, when 0:58:05.280 --> 0:58:08.160 I look at the industry, we are still stuck in 0:58:08.240 --> 0:58:11.480 this idea of AI as a feature set. So I'm 0:58:11.480 --> 0:58:14.160 going to design features. I'm going to design something I 0:58:14.240 --> 0:58:16.520 used to do that took me an hour. I can 0:58:16.560 --> 0:58:18.600 do it now in five minutes. Those are really cool. 0:58:18.760 --> 0:58:20.520 But that's no different than what excelled it for us. 0:58:20.560 --> 0:58:22.640 You know, you know the accounting industry. You can imagine, 0:58:22.760 --> 0:58:24.680 you know when excel came, was a little nervous, but 0:58:24.720 --> 0:58:26.640 then actually adopted it and wanted to do and it 0:58:26.680 --> 0:58:29.600 created a great value. But what this actually allows for 0:58:29.720 --> 0:58:32.000 is a way to change the way we operate. And 0:58:32.000 --> 0:58:34.120 that's what I hope that the industry really leans into 0:58:34.160 --> 0:58:35.000 more deeply. 0:58:35.120 --> 0:58:37.520 Really really fascinating. All right, I only have you for 0:58:37.560 --> 0:58:42.000 a couple more minutes. Let's jump into our favorite questions 0:58:42.040 --> 0:58:45.360 that we ask all of our guests, starting with who 0:58:45.320 --> 0:58:48.440 are your early mentors who helped shape your career? 0:58:49.080 --> 0:58:51.480 So I talked about Rob or not. And Rob is 0:58:51.520 --> 0:58:54.360 someone that I care so deeply about. He not only 0:58:54.480 --> 0:58:57.680 introduced me to his own way of thinking. Rob has 0:58:57.680 --> 0:59:00.440 a special thing and you spend time with him. Rob 0:59:00.640 --> 0:59:05.720 is you know, unbelievably intelligent that can go toe to 0:59:05.720 --> 0:59:08.160 toe with any Nobel Prize laureate, you know, from an 0:59:08.200 --> 0:59:11.160 academic perspective, but at the same time actually is an 0:59:11.160 --> 0:59:16.960 excellent communicator and marketer. It's a very rare combination, and 0:59:17.040 --> 0:59:18.800 he taught me that in such a deep way. So 0:59:18.920 --> 0:59:21.400 much of who I am was during that format of 0:59:21.440 --> 0:59:23.960 the years of working alongside and seeing him in motion. 0:59:24.680 --> 0:59:26.920 So he's been an amazing person in my life. 0:59:27.520 --> 0:59:31.040 He also introduced me to his advisory group, which was 0:59:31.080 --> 0:59:35.200 people like Harry Markowitz, Peter Bernstein, Rick Roll, you know, 0:59:35.560 --> 0:59:38.440 Keith ambecksh here, some of the most amazing deep thinkers 0:59:38.840 --> 0:59:41.560 that I got this immersive opportunity to spend time with 0:59:41.640 --> 0:59:45.960 that just informed so much of my principal thinking at 0:59:46.000 --> 0:59:48.280 a time when I was very raw and really open 0:59:48.320 --> 0:59:49.200 to that curiosity. 0:59:49.240 --> 0:59:53.600 It was exciting, really really interesting. I have some hilarious 0:59:53.760 --> 0:59:56.080 rob or not stories that I will share with you 0:59:56.440 --> 0:59:59.520 off air. Let's talk about books. What are some of 0:59:59.560 --> 1:00:01.240 your favorite What are you reading right now? 1:00:01.560 --> 1:00:05.120 So I love books, and autobiographies are one of the 1:00:05.160 --> 1:00:06.920 things I actually think. You know, people always say learn 1:00:06.960 --> 1:00:09.600 from failure. I love to talk about learn from success. 1:00:09.800 --> 1:00:12.200 So how do you learn from people's you know, careers 1:00:12.240 --> 1:00:17.560 and lifetimes successes. So some of my favorite books An 1:00:17.680 --> 1:00:19.480 Education of an American Dreamer by Peter G. 1:00:19.560 --> 1:00:19.880 Peterson. 1:00:19.920 --> 1:00:21.640 I don't know if you've read that one. A phenomenal, 1:00:21.840 --> 1:00:25.400 great story about an individual who of course ended up 1:00:25.520 --> 1:00:29.400 co founding Blackstone later in life. But just an under 1:00:29.360 --> 1:00:31.600 the little journey about an immigrant family who. 1:00:31.440 --> 1:00:32.360 Just basically moved. 1:00:32.640 --> 1:00:36.360 He just did unbelievable things and the evolution of a career. 1:00:36.400 --> 1:00:40.160 That's so fascinating. Creativity, inc you know, we're just talking 1:00:40.160 --> 1:00:40.520 about that. 1:00:41.040 --> 1:00:44.320 I literally just got it delivered two days ago. 1:00:44.480 --> 1:00:46.800 I love that because when I finished that book, I 1:00:46.800 --> 1:00:49.680 said to myself, if I was to ever write an 1:00:49.760 --> 1:00:51.240 autobiography about my career. 1:00:51.040 --> 1:00:52.760 I hope it would sound like this. 1:00:53.360 --> 1:00:56.000 It was the creativity of what Ed Katsmill did, but 1:00:56.240 --> 1:00:59.680 more importantly, the relationship of how he explained his partnership 1:00:59.680 --> 1:01:02.440 with jobs and the love he had for Steve and 1:01:02.480 --> 1:01:03.960 the way he was so intricate about that. 1:01:03.960 --> 1:01:06.360 It was just so inspiring for me. I loved it. 1:01:07.200 --> 1:01:09.720 And then you know, I look at some of them, 1:01:09.720 --> 1:01:11.720 of course, recent books that have just really inspired me 1:01:11.840 --> 1:01:15.040 around unreasable hospitality. I think one of the greatest business 1:01:15.040 --> 1:01:17.160 books one of the best business books has been written 1:01:17.160 --> 1:01:18.640 in the last couple of years. If you haven't read it, 1:01:18.640 --> 1:01:22.640 it's a critical book. And then I recently finished a 1:01:22.720 --> 1:01:25.680 couple of years ago. It Never Split the Difference by 1:01:25.760 --> 1:01:29.200 Chris Voss, and it is unbelievably strong, and in fact, 1:01:29.280 --> 1:01:32.400 yesterday we had the team from Chris Voss's group come 1:01:32.440 --> 1:01:35.440 in and train our people on how to apply that 1:01:35.520 --> 1:01:38.479 type of negotiation skill into our daily way we work. 1:01:38.880 --> 1:01:42.400 It's an unbelievable way to think about the concept of 1:01:42.440 --> 1:01:46.120 being comfortable with the word no. We're so afraid to 1:01:46.160 --> 1:01:49.720 hear no in life and in business, but actually allowing 1:01:49.840 --> 1:01:52.040 no to become something that lets you get to yes. 1:01:52.080 --> 1:01:54.480 It's really important, whereas it's so counter to all the 1:01:54.520 --> 1:01:56.640 things that people had learned through the Harvard programs around 1:01:56.720 --> 1:01:59.320 getting to yes. It's actually an unbelievable way to think 1:01:59.320 --> 1:02:00.520 about Nico and. 1:02:00.800 --> 1:02:03.160 One of the people I work with just recommended that 1:02:03.200 --> 1:02:06.160 book Never Split the Difference. And it's sitting on a pile. 1:02:06.320 --> 1:02:09.760 I'm holding my hand up this high and I'm like, 1:02:09.800 --> 1:02:11.880 all right, I'll get around to it one day. I'm 1:02:11.880 --> 1:02:14.560 gonna have to move that up to the a little 1:02:14.640 --> 1:02:18.680 higher in the pile. Let's talk about streaming. What are 1:02:18.720 --> 1:02:22.280 you either watching or listening to, either Netflix or podcasts 1:02:22.320 --> 1:02:22.720 or whatever. 1:02:23.360 --> 1:02:26.080 We have four kids at home, so you know, my 1:02:26.160 --> 1:02:28.600 wife and I are always trying to find that hour 1:02:28.720 --> 1:02:32.680 to stream. The one show that you know has really 1:02:32.680 --> 1:02:35.960 touched me is the show Shrinking, of course on l TV. 1:02:36.520 --> 1:02:38.720 And it's just the way that the. 1:02:38.680 --> 1:02:43.280 Writer, Brett Rolstein talks about emotions and you know, communicating. 1:02:43.280 --> 1:02:46.040 It's just such a touching I finish every episode that 1:02:46.040 --> 1:02:48.760 I think. I'm teary eyed every single time. That's been 1:02:48.760 --> 1:02:50.680 amazing thing about my wife and I. We love, you know, 1:02:50.760 --> 1:02:52.320 lots of different shows we just don't get to We 1:02:52.320 --> 1:02:55.640 have like seven different series that we are in the 1:02:55.640 --> 1:02:58.880 middle of watching right now. Uh and but but we 1:02:59.080 --> 1:03:01.360 try to find that time and it's an important time 1:03:01.360 --> 1:03:01.960 for both of us. 1:03:02.600 --> 1:03:06.240 You mentioned on Reasonable Hospitality. We just finished the final 1:03:06.240 --> 1:03:11.160 season of The Bear and throughout that show you can 1:03:11.240 --> 1:03:14.160 see some of the ideas right from that book. 1:03:14.240 --> 1:03:16.880 You see it in season two, you really so much. Yeah, 1:03:16.920 --> 1:03:19.440 that's when it really becomes prevalent and they of course. 1:03:19.400 --> 1:03:22.400 A little hot dogs and all the stuff they do 1:03:22.600 --> 1:03:26.760 to go over over and above the call of duty. 1:03:26.800 --> 1:03:30.960 It's impressive, it really is. So our final two questions 1:03:31.800 --> 1:03:33.920 what sort of advice would you give to a recent 1:03:34.000 --> 1:03:38.680 college grad interest in a career in either investing or 1:03:39.000 --> 1:03:40.000 financial innovation. 1:03:40.920 --> 1:03:43.360 So, you know, I'd say there's two answers to this 1:03:43.440 --> 1:03:44.880 that are important because we're you know, you got the 1:03:44.920 --> 1:03:47.880 tension of what's happening with AI around this industry. 1:03:48.040 --> 1:03:51.440 I'll start with the foundations. This is a wonderful industry 1:03:51.480 --> 1:03:51.760 to be in. 1:03:52.520 --> 1:03:54.760 And if you look at the sort of trajectory, financial 1:03:54.800 --> 1:03:57.360 services as an industry will continue to grow meaningfully. 1:03:57.480 --> 1:03:59.040 If you're in the wealth industry, it will double. 1:03:59.040 --> 1:04:00.960 In the ESSA management inustry double just in the next 1:04:00.960 --> 1:04:05.080 ten years by virtue of savings and market appreciation. So 1:04:05.520 --> 1:04:08.120 you know, as an industry participant, the size of the 1:04:08.160 --> 1:04:09.920 pie is growing and continuously. 1:04:10.000 --> 1:04:11.360 So that's a really good thing too. 1:04:11.400 --> 1:04:15.120 You've got an aging demographic of individuals in the space, 1:04:15.160 --> 1:04:18.040 you know, advisors of constantly aging, and so there's a 1:04:18.080 --> 1:04:21.200 huge opportunity for younger talent to come in and so 1:04:21.600 --> 1:04:24.760 that's an awesome setup to be in the business. The 1:04:24.800 --> 1:04:27.320 principle I'll go back to is it's an amazing place 1:04:27.480 --> 1:04:30.480 that has high mission. But I want young people if 1:04:30.520 --> 1:04:32.600 I was to come into it, to really focus on 1:04:32.640 --> 1:04:36.520 how do I achieve this to help conduct the customer 1:04:36.720 --> 1:04:40.480 truly win, as opposed to the historical mindset of I'm 1:04:40.480 --> 1:04:42.000 here to basically manage money and do. 1:04:41.960 --> 1:04:42.600 All these things. 1:04:42.800 --> 1:04:44.880 And I think there's a really amazing opportunity to do 1:04:44.920 --> 1:04:47.440 that in a great way and approach it if I 1:04:47.440 --> 1:04:49.920 take the tension of AI. You know, there's always this 1:04:50.000 --> 1:04:51.560 question of like what's it going to do to the 1:04:51.560 --> 1:04:55.080 advisor industry or the investment industry, And I look at 1:04:55.080 --> 1:04:58.000 it as only enabling. If you think about the opportunity 1:04:58.000 --> 1:05:00.160 for a young person today, this is going to to 1:05:00.200 --> 1:05:04.040 be an unbelievable period. The way I would approach this, though, 1:05:04.520 --> 1:05:07.440 is recognize as a young person that a career in 1:05:07.520 --> 1:05:10.400 any financial service or any career is not a sort 1:05:10.440 --> 1:05:13.240 of a set of stairs. It's actually looks more like 1:05:13.280 --> 1:05:15.720 a J curve, and you're going to have to go 1:05:15.800 --> 1:05:19.360 through very difficult periods that look very uncomfortable, where you 1:05:19.440 --> 1:05:22.040 look like you're not doing great to ultimately see this 1:05:22.120 --> 1:05:25.000 great outcome. And that comes from curiosity, learning and immersing 1:05:25.040 --> 1:05:28.160 yourself to ultimately take risks and do really important things. 1:05:28.320 --> 1:05:30.160 It's an unbelievable time right now, I think as an 1:05:30.200 --> 1:05:32.840 individual and a young person coming into this space. 1:05:33.600 --> 1:05:37.040 Good answer, and let's jump to our final question, what 1:05:37.080 --> 1:05:40.000 do you know about the world of investing, of ETFs, 1:05:40.080 --> 1:05:44.000 of again, of financial innovation today might have been useful 1:05:44.120 --> 1:05:47.120 twenty five years ago when you were really ramping. 1:05:46.840 --> 1:05:50.000 Up Well, I mean, I think that I go back 1:05:50.040 --> 1:05:55.040 to the constant learning of how behaviors and emotions really 1:05:55.240 --> 1:05:58.720 drive outcome. And I wish, you know, I'd learned that earlier. 1:05:58.720 --> 1:06:01.120 I wish I'd kind of been exposed to it. I 1:06:01.160 --> 1:06:03.080 think the most important thing, though, is it is this 1:06:03.200 --> 1:06:07.960 idea of how do we help truly solve problems along 1:06:08.000 --> 1:06:09.800 the journey of a customer. How do we put the 1:06:09.800 --> 1:06:13.680 customer and their moment of need at any point, whether 1:06:13.680 --> 1:06:17.040 they're twenty five, forty five, sixty five, or eighty five, 1:06:17.440 --> 1:06:20.680 and ultimately help them with the types of services and 1:06:20.680 --> 1:06:23.160 solutions that drive that. If I had had that principal 1:06:23.240 --> 1:06:25.680 mindset twenty plus years ago, I think I would have 1:06:25.680 --> 1:06:29.080 built even more powerful businesses back then. It's really fun 1:06:29.400 --> 1:06:31.880 to do what we're doing, but I wish we'd done 1:06:31.920 --> 1:06:32.680 this even earlier. 1:06:33.040 --> 1:06:36.600 Some I am so glad we finally got to do this. 1:06:36.720 --> 1:06:39.080 We've tried to set this up a couple of times 1:06:39.400 --> 1:06:44.080 and the dates just kept getting crossed. I'm thrilled you 1:06:44.160 --> 1:06:47.000 came in to do this. We have been speaking with 1:06:47.080 --> 1:06:51.920 some say founder and CEO of Purpose Investments. If you 1:06:52.120 --> 1:06:55.040 enjoy this conversation, we'll be sure to check out any 1:06:55.080 --> 1:06:58.400 of the six hundred and fifty discussions we've had over 1:06:58.440 --> 1:07:03.680 the past twelve years. You can find those at iTunes, Spotify, 1:07:03.920 --> 1:07:08.120 Bloomberg YouTube, wherever you get your favorite podcasts. I would 1:07:08.120 --> 1:07:10.040 be remiss if I didn't thank the correct team that 1:07:10.080 --> 1:07:14.480 helps put these conversations together each week. Alexis Noriega is 1:07:14.520 --> 1:07:19.120 my video producer. Joan Russo is my researcher. Anna Luke 1:07:19.320 --> 1:07:23.720 is my podcast producer. I'm Barry Ritoults. You've been listening 1:07:23.800 --> 1:07:26.760 to Masters in Business on Bloomberg Radio.