Serial Innovation in FinTech with Purpose Unlimited CEO Som Seif

26:54It beat every active fund, all the main index. It outperformed by 200 basis points. And that's a great accolade. Of course, in our industry, that's what you are really excited about. And I felt, wait a minute, I actually don't know if we actually did anything. Because it went down in 2008, just like the main index, 35 % or whatever it was. And I also looked at the journey. I said, if someone had bought it on day one when we launched it and held it all through that five years, they would have received that return. But the reality of what human nature was is that they were buying it at different times.

27:27When they got fearful, they were selling it. And their return was very different than the fund's return. And I asked myself, I said, did we actually change the industry? Did we do anything? Yes, we did something great technically. The product was excellent. We were moving the needle of how the industry operates. But we weren't changing the way the client and the customer was experiencing what we did. And so that informed me. And at the same time, I told you about Guggenheim was our partners. and they had been working on their wealth part of the business with Danny Kahneman. And I had this wonderful gift, again, to have the opportunity to learn and understand how Danny was brought in to help them understand how to help billionaires and wealthy families, and call it patriarchs and matriarchs, to understand the transition from wealth creation to wealth management.

28:15And it was so powerful, and the principles of what Danny talked about really resonated with me. I became a student of behavioral science. And that sort of became really paramount to my view of what a modern asset management firm needs to think about, which is not just beat the markets, but develop investment products that actually have outcomes and goal orientation towards them. How do you help advisors and investors, you know, ultimately communicate together and work collaboratively around the actual goal the customers are asking us to do, which is help them meet their goals. And so I just felt the asset management industry, wealth industry, both could ultimately optimize around that.

28:52And that was what Purpose's mission was going to be around is outcome-oriented modern investment management, optimizing for all the inputs and how we manage money, not being active, not being passive. And then second is how do we help restructure the way wealth management could ultimately be oriented towards the customer journey as opposed to, hey, we're just going to give you a 60-40 portfolio. Really, really fascinating. Tell us a little bit about Wealthsimple, which I described earlier as the default investing app for a young generation of Canadians. What did you see before apps like Robinhood were big and successful that was a thing that young people wanted?

29:33Yeah. So the principal insight that I sort of had was, if you looked at the way that the industry was operating, one of the big negatives was that because the industry made so much money, the margins were so good, we actually relied in a lazy way on what we call average economics. So what does that mean? Where do you see that? It comes out as, on average, I like to run money for bigger customers. On average, my bigger customers make me more money. And on average, my smaller customers don't make me any money. And how does that show up? You know, smaller customers get treated poorly, get high fees, get relegated to low quality services and larger investors ultimately get all the value and people are gravitating towards, hey, minimums and big fees for big, big services for high net worth and ultra high net worth.

30:21And I just felt that was stupid. The only economics class I took in engineering was something called ABC economics. And what that is, is actually activity-based economics. And so the idea of unit economics. And I said, what we need to understand in this industry is that I actually disagree that small accounts don't make you money. I just think that the systems, the principles of the infrastructure of the industry are poorly designed to serve smaller clients. And so what I felt my whole wealth model was, how do we restructure the infrastructure of the industry? How do we think about it from a unit economics using technology and structure and pipes that would ultimately allow for that?

31:02And then what you do is bifurcate the value for the different segments of customers, all early stage customers, middle of massive fluent, all the way to ultra high net worth, based on a service level offering. And the service level offering would change and increase based on the needs of those customers. So that was the principle. And I said, at the earliest stage, if you're 20 years old, 25 years old, this is the most amazing period to build for. But the industry was treating them awful. So I said, let's go build this. And so we started with the technology, the infrastructure and what WellSimple has done is really unbelievable.

31:38It has become, in Canada, the most competitive platform in financial services against the big six Canadian banks. Canada has never seen anything like this before. And it all is rooted on serving customers where they're needing us to serve them, right when they're getting started or along the earliest stage of their journey and then helping them compound not only their wealth, but also the overall financial experience as they grow from 25, 30, 35, 40. It has been an amazing experience. And today, Wells and Paul, I mean, I think we're around about 150 billion, but we're doing more in net deposits than the biggest bank in Canada, RBC.

32:17That is an unbelievable statistics. And I'm proud of what that team and what the organization is doing to challenge the industry and change the way Canadians are served. So let's stay with Wealthsimple a minute, because initially I assumed this was kind of a Robin Hood like app with free trading and gamification and, you know, up to but not quite sports betting like that sort of, hey, this isn't going to get anybody to their goals. It's fun, entertaining stuff during the lockdown of the pandemic. Tell us about Wealthsimple in terms of the differences with an app like Robinhood. Yeah. So the starting point actually is you start with the customer where they need you the most, right?

33:03When you're 25 or 30, you know, you're either just getting started. You might have$5 ,000,$10 ,000,$20 ,000,$30 ,000. And the principle of it is you want to help them ultimately get going. So building a discipline, a structure. So we have the managed money programs, which are you open an account very simply and clearly. You basically build your portfolio and your portfolio is basically a glide path on the markets and such. And then you surround that with the types of services and solutions. So direct trading accounts, cash management, credit cards, all the crypto, things like that, that are really important.

33:37So my principle is there's always a view of attention of these things. I come from a different way of it, which is these are things that people are going to be in pursuit of. And what you want as an organization is not to duck your head in the sand at any stage. If you're an advisor saying, hey, I don't do crypto, it's actually a wrong message. Because your customers are going to be in pursuit of it. We know that 60%, 70 % of high net worth individuals have a direct account. And many of them are curious and engaged in buying interesting areas like that. So I think an advisor firm or any firm, a financial service firm, has to find a way to balance the foundations of what is good long-term, call it disciplined investing, along with satiating the needs and the desires of what an individual wants so that they don't always turn their head to, I need something different.

34:24And that actually comes from the mindset of find a safe and secure way to do those types of things on behalf of the customers and educate them and size it effectively. so so you know like for example while simple recently got approval to do prediction markets and this is a really high tension area it's you know people have a you know binary view of this and my view is if customers are going to be doing it you want them to do it with you in a safe and secure way then to do it elsewhere and that's how you have to ultimately be building around but at the same time the whole business is oriented around helping someone where they need it the most around their financial journey so they can ultimately achieve their goals.

35:04That's it. So this discussion about whether or not you're a serial entrepreneur, I have to click through a bunch of things that you've built that are fascinating, starting with the world's first spot Bitcoin ETF back in 2021, long years before the US approved one. It crossed a billion dollars in the first month. How did you get the Canadian regulators to approve this? How'd you make them comfortable three years before the SEC was comfortable? So, first off, I've had a deep thesis on crypto for a long time. And that's the starting point is I wasn't doing it because, hey, cool, this is your idea.

35:48Let's launch this and throw something against the wall. I had, you know, in 2016, just like most people, you know, I'd been like, you know, been asked about Bitcoin and I was like, I don't know, it looks like a sort of scammy thing. And then I sort of self-reflected and said, wait a minute, people are actually asking my opinion on this. I should go and do some research. So I spent the time learning and understanding the space. I actually, the best way to do that is make an investment. And over the next 12 months, I just became this student of what was happening. And what really excited me was of course, Ethereum, which is this, call it, sister technology that was really around taking what Bitcoin had done and really expanding the capabilities of it around smart crypto and all the rest.

36:31Smart contracts. Exactly. And so I got very excited about that. And so what I said was, we're so early in this. The infrastructure is not there. The fraud risks for investors is going to be so high. So I actually launched the first publicly traded vehicle on Ethereum called Ether Capital, partnered with a group of people. And I said, we're going to raise some money. We're going to buy Ether on the balance sheet. Effectively, you know, we've seen these now become more popular in the last number of years, but it was the first one. And we did this in 2018. And I'll tell you, it was an amazing thing.

37:02And my message was, we're going to find a safe and secure way for people to co-invest alongside of us on this really great journey because of the asymmetric opportunity of this bet. That informed me on so much. And then at some point, and we used to do self-custody in that corporation and all the rest of it. And then at some point, we started to see the infrastructure change. And that's when we went into the regulator and said, look, there's an opportunity here. The infrastructure is changing around how you can custody and fit this into a liquid ETF structure. We worked with them for nine months and ultimately got them comfortable.

37:34And this is a really important principle that I believe. we as a registrant, as a money manager, we have great ideas, great innovation. And as long as our ideas are aligned with where the regulator wants the future to go, it's really important to engage with the regulator and have that dual relationship, that idea of helping them, educating them on where we need to get to. And so that was the kind of work we've done all throughout my career. And we did that on crypto. And frankly, we were really excited that we got the opportunity to launch it. And that model, what we did actually ultimately informed the series of products that launched in the U.S.

38:12a couple of years later on how ultimately to structure ETFs in the crypto space. And of course, the industry has grown. And we've moved an asset from the fringe all the way to the core, which is what ultimately my thesis was in a deep way. And ETH Capital today is in what structure? We actually converted it from that corporation to an ETF once that was available. And And the gain there, we built staking into it. And those things weren't, again, available in an ETF form or call it doable until they were. And when they were, we ultimately moved to the most efficient vehicle, which is the ETF structure.

38:43Let's talk about longevity pension funds launched in 2021. The world's first income for life mutual funds, which uses longevity risk pooling to pay lifetime income, like a defined benefit pension. Investors include Allianz and Omers. How is this different from what in the U.S. we think of as traditional annuities? So this is actually, so first of all, this was my original thesis on purpose, which was, you know, the industry was all solving for the accumulation phase. Let's build them investment products to call it solve for how we save money. But no one was really solving within the asset management industry around the challenges of decumulation.

39:28And it was kind of left to the insurers, you know, with annuities and with defined benefit pensions and such. And I just felt there was this gap there that was really critical. And you need to deeply understand the sort of the principles of, you know, how longevity and structure and all the rest of it were going to be critically in there. And so I asked the team, I said, we need to solve for decumulation. And we were in pursuit of it. We were spending a lot of time working on it. But ultimately, we came across a structure and I just got really excited. And the principles, we had to go to the regulator again and say, there are some exemptions we need to make this work.

40:05If I step back for a moment, the greatest financial product ever created in our business or in the financial industry is the defined benefit pension plan. And frankly, if you go back to what that represented, it was such an amazing bargain. You join a company. the company says we will, in an institutional way, organize to have a savings program alongside of your career. And it will not only solve for your savings needs while you're working, but once you retire, it will also solve for your income longevity for as long as you live, and in some cases, your spouse. If you think about the journey of a customer, it is the most unbelievably comforting and principled thing that we've done.

40:48And the industry has done everything over the last 40 years to break that down. Kill it, yeah. And with the concept of, hey, we're giving you choice. And that has been so bad for people. So I always believe that we needed to get back to bring the system back. If every Canadian, every American had access to a defined benefit benchmark, 95 % of them would be unbelievably better off. The reality is it's not good for the industry. The fragmentation allows for agency to increase. And so what I've always said is, how do we bring this back into the structure? And so longevity pension plan was designed on how do we build a pension plan for all?

41:27How do we do that in a mutual fund structure, which is accessible? The annuity structure that is, of course, it works similarly. The problem is it has the structure of you have to go off book for an advisor, so advisors don't really like them. Investors have to ultimately go through an insurance structure and it's individualized. Whereas the defined pension plan is a pool. And so when you get longevity risk pooling like that, which is done in a defined benefit pension plan, why couldn't you do that in a mutual fund? And that was our principle. And so we designed that. It's the first fund to really incorporate longevity risk pooling.

42:01So putting lives together with a mutual goal of, I'm putting money at work to ultimately solve for my lifetime comfort that I'm going to have income for life. And if I die early, I'm ultimately supporting the cohort, but I'm getting what I needed from it. So I want to click through four other innovative products, but I don't want to spend all week on it. Let's click through these four quickly, starting with cash management ETFs. Yeah, so cash is something I think that, of course, everybody needs access to. So we had launched the first money market ETF when I was running Claymore. When I came back with Purpose, we saw the movement towards deposit rates were much higher than money markets.

42:41So we actually went in, the unique thing we did there was we went and built a ETF that linked to a deposit account. So it's not to a security. So it's actually one of the first of its kind. And that was a hugely important thing back in 2014. And of course, the cash management industry has grown dramatically. We haven't seen this in the United States yet. So we haven't seen deposit-based cash ETFs. We've seen money market-based ETFs, but we haven't seen deposit-based. So it's based on the buck. It increases based on the value, doesn't fluctuate, and it goes right into the bank deposits of several banks.

43:17And you get, therefore, a higher rate. So we were really, really proud of that innovation. It goes to show the kind of principle or the first principle mindset that our organization always thinks about is solving problems. Because many advisors moving to discretionary were saying, like, I want to bulk trade cash, but my organization isn't making it easy. You have to sweep it in from the custodian at night. into it really is is it should be capable of being automated and maximizing yield without increasing risk but there are just a million impediments in the way i sell qqqs and i want to go into cash and my balance of my model i my administrative assistant has to go and do all the basically account by account now with the etf you're able to go from um uh from you know qqqs to cash and then back to qqqs or whatever you were doing in just a simple single trade Let's let's talk about option based income products.

44:11I've never been a fan of this as a brokerage product. It just felt like there was so much cost, so much commission built into it. It really when when you're dealing with relatively tight margins, it's a challenge as a retail investor to derive any value out of it. Real value. It's certainly great for generating fees. how do you manage an option-based income product that works for the retail investor? So let's start with the principle why, right? I believe that options and derivatives actually play a really important role for management of portfolios and return streams. So it goes back to that principle of can you design outcomes and the trade-offs that come with options, because that's ultimately what you're doing, whether it's call options or put options.

44:56And so for an investment return stream that you're designing, options can be really powerful. That said, to your point, they're high friction. For an advisor, very hard to execute and across your business. But two, for individuals, it's very hard and very expensive to the spreads and the costs and the sizing. But it's excellent. It's actually what option structures are really designed for ETFs and institutional money management in a great way because you can do at scale really amazing programs. So we've been doing these for 25 years. Back when I was at RBC, we used to help firms build them at Claymore.

45:30I built them and then at Purpose we've done it. And I find that they are so perfectly designed for the structural outcome that you want to ultimately create and manipulate in your return stream. But they do come with trade-offs. I'll give you a great example. One of the first things when I was starting in my career in talking to advisors, the thing that the old school advisor would say, oh, I write put options or call options for a couple of my clients on their large names, but I can't do it for all my clients. And I'd say, why do you do that? Well, because I'm owning this stock and if I'm going to own it for the next 10 years, why not generate some income along the way?

46:07And that was a really important mindset that people had, but they couldn't do it across their business. And I said, well, if I own a name like JP Morgan and I'm going to own, I love JP Morgan. The actual optimal way to own JP Morgan is to have 80 % long at JP Morgan and 20 % covered call overlay JP Morgan so that you're generating the long-term beta of JP Morgan, plus you're generating some ongoing return from the option income as volatility is there, and you're taking advantage of the volatility to generate a return stream. And that's the best way, optimally, from a risk-adjusted basis to generally own most stocks.

46:43So how do you do that? And so if you design product, we've designed something called the yield shares, which was designed specifically around single-name stocks that people most love, and then you write options against them to generate the option income so that it complements a long-only position. How do you avoid getting called away when the stock has a sudden surge? And the problem isn't merely, hey, you can always go out and rebuy it, but now you have a giant capital gains hit. You have to pay when the stock gets called. So one thing in Canada is we don't actually have the difference between short and long-term capital gains.

47:15Yeah, so it's a really nice thing. You can buy and sell something in a day and ultimately get capital gains treatment at the lowest rate. Our rate is a little higher, but still it's a different story. We're 23 % short-term, 30 % long-term. Yeah, so our long-term is 25%, 27%. The principle mindset, though, is this is what institutional programs are really great at. You don't write one option on one strike price on one position. You stack them. You stack them. So you might have... It's a whole matrix. Exactly. Different strikes, different dates. And then with technology today, you can optimize all the structural elements of do you roll it for tax efficiency?

47:51Do you ultimately buy it back? Do you wear it along the curve in the option? Do you basically roll the capital into at any point? So you're constantly in this, call it, vintaging of your portfolio overlay, which is really important. That's what institutional money management needs to do. If you're just singularly buying one option on one strike price, that's actually a very low quality execution. Yeah, we used to see a lot of that on the brokerage side. So the single stock yield shares, how many different versions of this are there or are they all tossed into one again? No, we have single names.

48:22So I think we might be at like 20-something, 25. I don't know the exact number, but it's north of 20. Canadian and U.S. names. And they've been very popular. You know, they've been very popular with both advisors and direct investors. Huh, really interesting. Coming up, we continue our conversation with Sam Saif, CEO and founder of Purpose Investments, discussing why he built Purpose Unlimited. I'm Barry Ritholtz. You're listening to Masters in Business. on Bloomberg Radio. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions, buying the dip, manually sweeping idle cash, putting on a hedge.

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49:45That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a Gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. And now, another appliance triumph from our friends at Grand Appliance. I love hosting summer parties, but dread reaching over a hot oven door to juggle appetizer trays.

50:28So I asked the experts at Grand Appliance for advice, and they recommended a Bosch wall oven with side swing doors for easier access. It's amazing. No reaching over the heat, and they installed it in no time. Host like a pro with expert advice from Grand Appliance. Shop GrandAppliance.com. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Sam Saif. He is the founder and CEO of Purpose Unlimited, which also owns Purpose Investments. He has founded and sold a variety of different companies over the past, let's call it 20, almost 25 years.

51:11So Purpose is now about$31,$32 billion Canadian or about$22 billion U.S. across ETFs, cash alternatives, private assets, etc. Tell us the problem that Purpose is trying to solve for your clients. Sure. So total Purpose actually is around$40 billion now. $40 billion, wow. So on the asset management side, just over$30 billion and on the wealth side now, just around$10 billion. growing quite fast. And the principal mindset has always been, so on the asset management side was, you know, let's build a modernization of investment management and products and services to meet clients where they need to be.

51:52How do you help advisors and investors build more resilient portfolios? Not just long-only equities and long-only bonds, but how do you optimize for the types of return streams that support a world where potentially bonds aren't your protective asset? How do you optimize for the types of return streams that ultimately are designed around an outcome as opposed to just a return of a beta. And so those are the first start. And we have the inputs of, we care about not only the quality of our investment product that we manufacture, but also the, call it artisan quality of our investment input. So the team, the capabilities, the process for investment strategy, using both quantitative methods, active methods in each of the different categories.

52:34I think the second component was then we have this big picture that goes back to this system. And I use the reference to the defined benefit pension plan as a phenomenal product. How do we redesign the way advice and investment management work together on ultimately achieving a client's goal? And so we've designed this whole infrastructure around the wealth management to support, one, the movement towards independent wealth management. So as you know, in the United States, you've seen the US RIA segment. Canada has a nascent segment there. And we saw this really important movement towards and a need for that.

53:09So we built the infrastructure to support a movement towards independent wealth management, but then also the services and the tools and the capabilities over and above that to support advisors in basically driving their businesses towards more planning-based, portfolio-outcome-oriented investment management and wealth management and experiences, as opposed to, you know, I pick better stocks than the next guy, I'm better at delivering better returns, more around how do we help customers ultimately achieve their goals. And so we've built all of this technology and systems around that outcome. So I like the idea of emphasizing outcomes over benchmarks.

53:45But, you know, we have half a century, maybe longer, of organizing portfolios around those benchmarks and trying to beat the index. Explain what's wrong with that approach. Well, it goes back to the behavioral science part. That's first. And second was it's also a structural thing. If you go back to the last 10 years or so, when I looked at the space, I felt that the industry had become a little bit complacent towards this idea that the best and optimal portfolio was a 60-40 portfolio. And the reason was, if you actually spanned yourself out and looked at the returns of the 60-40 portfolio going back 100, 110 years, which we did the research on, it actually only met its long-term goal of 7 % in five of, call it 11 or so decades.

54:39And this is a couple of years ago we did that research. And of those five, three of them were in the period of 1980 to 2020. 2020. And so I felt that that had created this bias, an anchoring bias in call it the industry. You know, Barry, the one thing you realize about our industry is that very few people have a historical experience beyond 1980. Most people's career spans are from 1980 onwards. And so, you know, you get biased towards what you know, what you see, what do you see? When interest rates go up, they pretty rapidly go back down. When you look at any three or four-year cycle, the 60-40 portfolio generally was giving you positive returns.

55:19And so that meant, hey, that's an optimal way to invest. I looked at it and said, wait a minute, if you actually look at periods where interest rates actually not just go up a little bit and then come back down, but actually go up and stay up, how does that affect bond portfolios? How does that affect the overall balanced portfolio? And so I said that we needed to be prepared for that. And that was a starting point. The second though, was this behavioral component. And I just said, look, Look, at the end of the day, you know, we've kind of lost touch with what the customer actually is asking us to do.

55:48And the customer wakes up and says, look, what I care about is I want to know when I wake up, I'm going to be okay. And you need to be in the business of serving me on helping me solve that question. Am I going to be okay? And like a pension plan, you should have a liability, a goal, and you should have an input, which is your portfolio, your savings program, and your portfolio all designed around are you going to be okay? And I felt that the idea that we should wake up and say, hey, we're here to beat the S &P 500 or we're here to beat some benchmark was a silly concept. All that matters to a customer is, am I going to be okay?

56:25And everything we do every day should be in service of that. And so that's how I always looked at it. And the principle of the design of an investment firm should be around the kinds of programs and asset strategies that help an advisor build better portfolios to answer the question of, am I going to be okay with their customers? So I have so many different ways to go with this that I'm very enthusiastic about. Maybe we'll put a pin in the whole idea of out-of-sample testing because everybody is so framed by it's not just their own hindsight bias, but the recency bias of what they just experienced.

57:01Entirely. Has such a big issue. But let's stick with the concept of behavioral finance and the 60-40. I have gotten a lot of pushback for saying, if you're in your 20s, 30s, 40s, do you really need bonds? If you're not going to retire for, well, a 20-something-year-old may not retire for 50 years. Yeah, there's some emotional salve from some ballast that's uncorrelated and doesn't have the volatility of equities. But if I go back in time, forget what the market did. if I was 20 today, I wouldn't own a single bond. And if I was 75 today, I would own a whole lot more tax-free munis. So it raises the question, 60-40, does that make sense for, forget 20-year old, for anybody under 50?

57:55It's actually a really important question. And in many cases, the answer is no, you don't need bonds. And the reality of it is that if you look at the last five, six years, bonds wouldn't have done you any good. And so, you know, especially if you're in an environment like we're in right now, where, you know, the greatest risk right now to a portfolio oftentimes is the volatility, the uncertainty and interest rates and inflation. And so I think it actually, the return, well, this was logical in 2018, 2019. Well, to be fair, you go from 1980 to 2020, you have 40 years of bonds. Phenomenal. Yeah.

58:28I mean, that was that's a unique era. But But the thing that was the big driving force was the movement between the 70s to the 80s when interest rates spiked into the teens. That was the thing that set up, of course, the next 40 years of declining interest rates. And so you have to step back and have that context. It's just like timing the market. The reality is that if you'd bought in the mid-70s, you would have had a horrible experience with that portfolio structure. There's pre and post Paul Volcker. Exactly. And that's the defining element. But it's actually different. that it's pre and post the economic situation that was happening that led to an inflationary spike that we ultimately had to address.

59:06And that was what you were dealing with. But to your point, recency bias drove people to believe that this was the optimal way to invest. I think for an individual, again, it goes back to, okay, yes, equity is a hope-based strategy. Investing is a hope-based strategy. And when you're in your 20s and 30s and 40s, and even potentially 50s, because you know, I'd say call it 20 years before retirement. Call it like a pension plan. T minus 20 years. Anything T minus 20 years plus is a lot of, you have a lot of room for hope. Hope is a wonderful thing that you should take advantage of because, you know, ultimately you want strength and momentum and you have the time to get it right.

59:42But once you get into that T minus 20 period, that's the period where you better have some structure and discipline to what you're ultimately achieving to get to T. Because the one good thing is you can move T. T can move. That's the time of, retirement. That can move. You could say it's 65, but if you really needed to and your advisor said, hey, it's a bad time, you need to move to 67, you can move to 67. Hey, it's going really well, we can move to 63. But T minus 20 is a really important window where structure, discipline in your portfolio has to be designed. Everything before that, absolutely.

1:00:10You can take as much hope as you want. You can take as much risk as you want because you haven't entered that window. That's how I look at it. Really interesting. As someone who's partial to the math and science half of my brain, I'm curious how you reconcile the rigorous, structured environment of being an engineer. There is an internal logic and a set of hard mathematical principles that govern that. How do you reconcile that with the squishy emotional side of all of Danny Kahneman's teachings, which is, hey, this is just how we are built. We weren't made for this sort of decision making. Yeah, I think the beauty of when you marry the first principles, you know, call it linear kind of thinking around what engineering can do.

1:01:07And then you apply that with the non-linearity of human behaviors. It's actually a phenomenal, we call it. mixture of thinking. And that's what you want. You want those multiple inputs to basically change your mental model of how to design and think. What I love about engineering in general is it is a reverse engineering mindset. It is going back to the hypothesis, the scientific method, right? Which is, I have an idea of what the answer will be, but I'm going to do everything I can to prove that. So if you apply that to any problem, which is, hey, I'd like to solve for this problem. I have an idea of how to solve it.

1:01:39And then you reverse engineer how to ultimately get there or you build around the scientific method of it. It's a wonderful way to approach problem solving in general. And then if you bring in the input, so one of the things we did a purpose is we've actually brought on behavioral scientists to actually support the organization in the way we think about product design, the way we think about marketing and all those things we do, because it actually helps influence the mental models and the way that we make decisions. Those are really powerful. So I just believe it goes back to that original comment around the creative mind and the, call it, structured discipline and mind, I think you bring those two together.

1:02:13It's a very powerful mixture to build with. Really interesting. So we've been speaking for an hour and artificial intelligence has not come up, which I think is a first this year. How do you think about AI from a managerial perspective? How do you think about it from an investment perspective, what do you see the impact of this going forward? Especially, I appreciate the opportunity to ask someone who's an engineer about this, because essentially, this is software engineering at the highest level. So I've never been more excited in my career. I feel a sense of energy in the last nine months, specifically coming into 2026 that I've just been excited about because of what this new technology is enabling us.

1:03:07And more importantly, it's not just how do we build features or solve some problems or create a little bit of incremental productivity. It is about the grassroots, go to first principles of how should we ultimately design the way we work, the way we optimize our business in and around a technology replatforming. It would be so different than in 2000, if you were going through this period and the internet was now becoming real and scalable and you were sitting there as a retailer or any other business saying, if I just think about the historical way to run a business and I've got this new thing, I think you lost.

1:03:41Whereas if you actually said, no, no, I need to redesign the way I work to this new platform. Mobile era, which was a different one, same thing. I need to redesign the way we work. And AI is the same thing. So we've been, at purpose, have been really deeply embedded in the way we operate the company. The first thing is we are effectively driving forward to play engineering, data science, and product across the whole organization. We are driving into smaller teams and squads. We are rolling that out across everything. And we're driving the company with this mindset that what a modern organization needs to design around is vulnerability, the ability to have innovation and intelligence moving through the organization constantly and data flowing and communication.

1:04:29And this is on top of, of course, leadership strength. In the past, the organization was all driven by leadership strength. How good was the leadership? And my view is vulnerability and communication are going to be the things that really drive. And AI enables for that in a really amazing way. What that is is a system of the way you work. So we are doing that in a great way. The same time, though, when I look at the industry, we are still stuck in this idea of AI as a feature set. So I'm going to design features. I'm going to design something I used to do that took me an hour. I can do it now in five minutes.

1:05:03Those are really cool, but that's no different than what Excel did for us. The accounting industry, you can imagine, when Excel came, was a little nervous, but then actually adopted it and wanted to do it. It created great value. But what this actually allows for is a way to change the way we operate. And that's what I hope that the industry really leans into more deeply. Really, really fascinating. All right. I only have you for a couple of more minutes. Let's jump into our favorite questions that we ask all of our guests, starting with who your early mentors who helped shape your career. So I talked about Rob Arnott, and Rob is someone that I care so deeply about.

1:05:39He not only introduced me to his own way of thinking. Rob has a special thing, and you've spent time with him. Rob is unbelievably intelligent that can go toe-to-toe with any Nobel Prize laureate from an academic perspective, but at the same time, actually is an excellent communicator and marketer. It's a very unique, rare combination. And he taught me that in such a deep way. So much of who I am was during that formative years of working alongside and seeing him in motion. So he's been an amazing person in my life. He also introduced me to his advisory group, which were people like Harry Markowitz, Peter Bernstein, Rick Roll, Keith Ambekshire, some of the most amazing deep thinkers that I got this immersive opportunity to spend time with that just informed so much of my principal thinking at a time when I was very raw and really open to that curiosity.

1:06:34It was exciting. Really, really interesting. I have some hilarious Rob Arnott stories that I will share with you off air. Let's talk about books. What are some of your favorites? What are you reading right now? So I love books and autobiographies are one of the things. I actually think, you know, people always say learn from failure. I love to talk about learn from success. So how do you learn from people's careers and lifetimes successes? So some of my favorite books, An Education of an American Dreamer by Peter G. Peterson. I don't know if you've read that one. A phenomenal, great story about an individual who, of course, ended up co-founding Blackstone later in life.

1:07:13but just an unbelievable journey about an immigrant family who just basically moved. He just did unbelievable things and the evolution of a career that's so fascinating. Creativity Inc. You were just talking about that. I literally just got it delivered two days ago. I love that because when I finished that book, I said to myself, if I was to ever write a biography about my career, I hope it would sound like this. It was the creativity of what Ed Katzmell did, But more importantly, the relationship of how he explained his partnership with Steve Jobs and the love he had for Steve and the way he was so intricate about that.

1:07:49It was just so inspiring for me. I loved it. And then, you know, I look at some of the, of course, recent books that have just really inspired me around Unreasonable Hospitality. I think one of the greatest business books, one of the best business books that has been written in the last couple of years. If you haven't read it, it's a critical book. And then I recently finished a couple of years ago, the Never Split the Difference by Chris Voss. And it is unbelievably strong. And in fact, yesterday we had the team from Chris Voss's group come in and train our people on how to apply that type of negotiation skill into our daily way we work.

1:08:24It's an unbelievable way to think about the concept of being comfortable with the word no. We're so afraid to hear no in life and in business. but actually allowing no to become something that lets you get to yes is really important. Whereas it's so counter to all the things that people have learned through the Harvard programs around getting to yes. It's actually an unbelievable way to think about negotiation and marketing. One of the people I work with just recommended that book, Never Split the Difference, and it's sitting on a pile. I'm holding my hand up this high, and I was like, all right, I'll get around to it one day.

1:08:57I'm going to have to move that up to a little higher in the pile. Let's talk about streaming. What are you either watching or listening to, either Netflix or podcasts or whatever? We have four kids at home. So, you know, my wife and I are always trying to find that hour to stream. The one show that, you know, has really touched me is the show Shrinking, of course, on Apple TV. And it's just the way that the writer, Brett Goldstein, talks about emotions and, you know, communicate. It's just such a touching. I finish every episode, and I think I'm teary-eyed every single time. That's been an amazing thing.

1:09:35But my wife and I, we love lots of different shows. We just don't get to it. We have like seven different series that we are in the middle of watching right now. But we try to find that time, and it's an important time for both of us. You mentioned Unreasonable Hospitality. We just finished the final season of The Bear. And throughout that show, you can see some of the ideas right from that book. You see it in season two. You really see it. Very much, yeah. That's when it really becomes prevalent. And they, of course - The little hot dogs and all the stuff they do to go over and above the Call of Duty.

1:10:12It's impressive. It really is. So our final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or financial innovation? So, you know, I'd say there's two answers to this that are important because you've got the tension of what's happening with AI around this industry. I'll start with the foundations. This is a wonderful industry to be in. And if you look at that sort of trajectory, financial services as an industry will continue to grow meaningfully. If you're in the wealth industry, it will double and the asset management industry will double just in the next 10 years by virtue of savings and market appreciation.

1:10:50So as an industry participant, the size of the pie is growing and continuously. So that's a really good thing. Two, you've got an aging demographic of individuals in the space, advisors are constantly aging. And so there's a huge opportunity for younger talent to come in. And so that's an awesome setup to be in the business. The principle I go back to is it's an amazing place that has high mission. But I want young people, if I was to come into it, to really focus on how do I achieve this to help the customer truly win? as opposed to the historical mindset of I'm here to basically manage money and do all these things.

1:11:28And I think there's a really amazing opportunity to do that in a great way and approach it. If I take the tension of AI, you know, there's always this question of like, what's it going to do to the advisor industry or the investment industry? And I look at it as only enabling. If you think about the opportunity for a young person today, this is going to be an unbelievable period. The way I would approach this, though, is recognize as a young person that a career in any financial service or any career is not a sort of a set of stairs. It actually looks more like a J-curve. And you're going to have to go through very difficult periods that look very uncomfortable, where you look like you're not doing great, to ultimately see this great outcome.

1:12:08And that comes from curiosity, learning, and immersing yourself to ultimately take risks and do really important things. It's an unbelievable time right now, I think, as an individual. individual and young person coming into the space. Good answer. And let's jump to our final question. What do you know about the world of investing, of ETFs, of, again, of financial innovation today might have been useful 25 years ago when you were really ramping up? Well, I mean, I think that I go back to the constant learning of, you know, how behaviors and emotions really drive outcome. And I wish, you know, I'd learned that earlier.

1:12:44I wish I'd kind of been exposed to it. I think the most important thing though, is it is this idea of how do we help truly solve problems along the journey of a customer? How do we put the customer and their moment of need at any point, whether they're 25, 45, 65, or 85, and ultimately help them with the types of services and solutions that drive that. If I had had that principle mindset 20 plus years ago, I think I would have built even more powerful businesses back then. It's really fun to do what we're doing, but I wish we had done this even earlier. Sam, I am so glad we finally got to do this.

1:13:22We've tried to set this up a couple of times and the dates just kept getting crossed. I'm thrilled you came in to do this. We have been speaking with Sam Saif, founder and CEO of Purpose Investment. If you enjoy this conversation, well, be sure and check out any of the 650 discussions we've had over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. Alexis Noriega is my video producer. Sean Russo is my researcher. Anna Luke is my podcast producer.

1:14:06I'm Barry Rittolz. You've been listening to Masters in Business on Bloomberg Radio.

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