January 16, 2025 • 30 mins
In this podcast episode, I welcome Sam Sivarajan, an expert in behavioral finance and a leader in coaching financial advisors, to explore the transformative intersection of artificial intelligence, behavioral finance, and human connection in financial advising.
This episode provides insights into how advisors can embrace technology while deepening their human connection with clients. It also highlights Sam's practical frameworks for thriving in an AI-driven world, along with lessons from his impressive career journey.
Sam's Journey: From Corporate Lawyer to Behavioral Finance Expert
- Career Transitions: Sam's career began as a corporate lawyer in Canada before transitioning to investment banking in London, England.
- Wealth Management Leadership: Returning to Canada, he led three major wealth management firms, serving some of Canada’s wealthiest families.
- Behavioral Finance Doctorate: His fascination with human behavior in financial decisions led him to earn a doctorate in behavioral finance and develop actionable frameworks for advisors.
Behavioral Finance: The Human Algorithm in Financial Advice
- Understanding Human Behavior: Sam emphasizes that the most critical financial decisions are driven by human emotions, motivations, and behavior rather than just technical analysis.
- The 3D Framework:
- Discovery: Digging deeper into clients’ goals, fears, and motivations using open-ended questions and active listening.
- Design: Collaborating with clients to create plans they feel ownership over, leveraging behavioral insights like the IKEA effect.
- Discipline: Preparing clients to stay calm and focused during market shocks by building adaptability and resilience.
Leveraging AI as a Tool, Not a Replacement
- Complementing Human Judgment: Sam underscores that while AI is a powerful tool for efficiency, it cannot replace the nuanced understanding and empathy of human advisors.
- Widening Perspectives: Using AI to analyze data and provide alternative viewpoints can enhance decision-making but requires human oversight to avoid blind spots.
Key Takeaways for Advisors
- Human Connection is Key: Advisors who prioritize emotional intelligence, adaptability, and simplification of complex ideas will stand out in the next decade.
- Behavioral Coaching as a Differentiator: Helping clients overcome emotional barriers and align their actions with their goals is crucial.
- Embrace Technology Thoughtfully: Use AI to enhance efficiency and broaden perspectives, but rely on human judgment for nuanced decision-making.
About our guest: Sam Sivarajan, an expert in behavioral finance and a leader in coaching financial advisors
You can learn more about his work:
https://www.samsivarajan.com/
About Your Host: Paul G. McManus is an accomplished author and expert in helping financial professionals grow their businesses. With over eight years of experience working exclusively with financial professionals, Paul has helped his clients generate tens of millions of dollars in fees and commissions.
Claim your free audiobook copy at: www.theshortbookformula.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
As financial advisors , we're caught at a fascinating
crossroads.
While artificial intelligenceand technology reshape our
industry, the most valuablething we offer may be more human
than ever before.
How do we balance the promiseof AI with the irreplaceable
power of human connection?
Our guest today brings auniquely qualified perspective
(00:21):
to this question.
Sam Sivarajan's journey fromcorporate lawyer to investment
banker, to leader of three majorwealth management firms, led
him to a profound realizationthat the most important
decisions in finance always comedown to human behavior.
With a doctorate in behavioralfinance and years of experience
serving some of Canada'swealthiest families, sam has not
(00:44):
only studied how investors andadvisors make decisions.
He's developed practicalframeworks to help advisors
thrive in an AI-enabled world.
He's the author of three books,including Making your Money
Work and Uphill, and today he'llshow us why mastering the human
side of advice isn't just niceto have.
It's the key to standing out inthe next decade.
(01:05):
Welcome, sam.
Great to have you on thepodcast today.
Speaker 2 (01:13):
Thank you for having me.
Paul, Delighted to be here.
Speaker 1 (01:15):
I'm excited for today's conversation.
The topics that you'repassionate about I'm also
passionate about.
You described the humanalgorithm and its mastering
behavior technology and trust inmodern financial advice and in
this era, algorithm and itsmastering behavior technology
and trust in modern financialadvice and in this era that
we're in today, with AI becomingmore and more prevalent, it's
really fascinating to see wherethe advisor stands in this
(01:35):
relation to everything.
Tell us a little bit about yourbackground.
So who are you and how did youget to where you are today?
Speaker 2 (01:40):
I started as a corporate lawyer of of all
things in Canada and then Ispent years as an investment
banker in London, england,advising on telecoms and
technology M&A deals.
Then, when my daughter was born, we moved back to Canada and I
built and led three large wealthmanagement businesses for three
(02:00):
big global firms.
In the process, I gotfascinated about the whole human
behavior side that you talkedabout and through that journey I
also did a doctorate inbehavioral finance, focusing on
how investors and advisors makedecisions.
Speaker 1 (02:15):
I'm very impressed.
I'm curious just to know alittle bit more which of those
careers or time periods were themost interesting for you or
most challenging.
Speaker 2 (02:22):
I think, look, they were all interesting and
challenging in different ways.
Investment banking the hourswere crazy.
I was younger so I could handleit, and London is a phenomenal
town and Europe is a lot of funbut the hours were tough and it
was a great learning experienceand it was financially rewarding
(02:42):
.
Coming back to Canada to wealthmanagement, being a father of a
young child was good and Ithink what I really enjoyed
about wealth management is thatdealing with the clients you
were dealing with personalissues as opposed to
professional issues and buildingand managing teams and
relationships.
To me that was a new facet ofmy career.
(03:03):
I really enjoyed that part andagain, maybe that was part of
what precipitated that studiesin behavioral finance, because I
saw human behavior firsthand.
Speaker 1 (03:14):
Definitely.
It's interesting as we diveinto today's podcast.
The next question I have foryou is, with that background,
what made you focus on theintersection of human behavior
and financial advice?
Speaker 2 (03:25):
I think throughout my career I'd seen that the most
important decisions come down tohuman behavior.
For example, my investmentbanking career taught me that
the value of preparation andbuilding trust in high stakes
environments it's very human.
The reality is that no onewants to meet you for just a cup
of coffee.
So I learned from that to comeprepared and be ready to offer
(03:46):
solutions to their specific painpoints, instead of just
pitching my products or my wares.
I think those lessons carriedover to wealth management, where
understanding human emotionsand motivations was even more
critical to buildingrelationships that lasted.
At UBS, which was my firstwealth management firm, we grew
to serve one in four of thehundred wealthiest Canadians,
(04:07):
john Hancock.
We launched Canada's firstgoals-based high net worth
wealth platform and in boththose cases success stemmed from
understanding what trulymattered to the clients.
So to me, it became very clearthrough this evolution and
journey that technology andproducts can only go so far.
What really differentiatesadvisors is their ability to
(04:29):
connect on a deeply human level.
Speaker 1 (04:31):
Absolutely.
And how would you assess thecurrent ability of the typical
or the average advisor, whateverthat may be their current
ability to do that?
And, if anything, what aretheir blind spots?
And with the advent oftechnological change and all
those great things, where dothey need to go to to be able to
service their clients better?
Speaker 2 (04:48):
Look, it's hard to generalize to an average advisor
.
I would say there is a group inmy experience of advisors that
are phenomenal at building thesedeep relationships, asking good
questions etc.
And I think typically thoseadvisors have learned this over
time through experience, throughthe School of Hard Knocks.
I don't know that it is as welltaught or trained and I think
(05:14):
newer advisors in many caseswill get there, but it will take
them time as experience,because it's not something that,
at least in my view, has beenemphasized.
We've been taught that thetechnical skills are important,
whether it's the investment sideor the insurance side of things
, but less on the importance andthe skills involved in building
(05:36):
relationships, asking goodquestions and deeper questions
and following up I think it'sless of that has a bit of focus.
Now.
I think things are changing.
I think people are starting tothink, especially with the
advent of technology, that thisis a core skill set and a core
differentiator and how do wedevelop it?
(05:56):
I think there are peoplestarting to focus on it as
advisors.
I think there are training andother things that are provided.
So a lot of what I write and alot of what I do on my podcast
and I've created a course onbehavioral coaching for advisors
.
It's an online course.
The idea is that these areskills that you can develop and
that you watch any televisionyou know.
(06:22):
You see the interrogators orthe police, detectives or
psychologists, etc.
Now they are trained on how toask better questions.
They're trained to give thequestion, make the subject
uncomfortable and sit there inthat discomfort.
I don't think advisorstypically are, and I think part
(06:44):
of it is.
It's asking these open endedquestions and having the
patience to let the client bequiet and think about it,
because in many cases thoseclients may not have thought of
these questions before, so it'sgoing to take them some time to
articulate what is there.
And then I think the key thingfor the advisors again, remember
(07:04):
that this might be theirinitial reaction.
So the follow up questiondigging deeper and really trying
to surface what the deepermotivations I think is critical,
not only to get a betterunderstanding of the client, but
I think it's going to build abetter, deeper, more trusted
relationship between advisor andclient.
Speaker 1 (07:25):
So, as our audience know, my company helps advisors
write and publish books, and I'mseeing a growing trend, at
least in one segment of theclients that we're working with,
who are much more focused onbehavior finance, and I don't
know if these advisors come fromspecific companies, I don't
know if there's an influencethere, but just for my own
limited perch here, I see thatbecoming more and more important
(07:46):
versus just the technicalaspects of investment.
One of the things that I heardyou say earlier was that I'll
take a specific example of risktolerance and how an advisor
asks questions and interpretsthat information.
Share with our audience alittle bit about your experience
and research when it comes tohelping advisors and assess risk
(08:06):
tolerance and ultimately whatthe behavior is behind that that
you find.
Speaker 2 (08:10):
Yeah, I think that's a great question.
So, just as background, I wasworking with billionaires in
2006, 2007, 2008.
So very sophisticatedindividuals with lots of money,
access to exotic products.
I remember 2006, 2007, the risktolerance questionnaires and
(08:31):
the risk attitudes that thesebillionaire clients had, and it
all disappeared in 2008 when wehad the Great Recession.
So everyone that said that Ican handle risk and that I can
invest for the next 10 years,deal with downturns, et cetera.
All of that good intentionsvanished when the 2008 recession
hit.
So that's what sparked myinterest in this whole concept
(08:52):
of risk tolerance.
So that was my doctoral researchlooking at whether risk
tolerance questionnairesactually predict risk taking
behavior by investors.
And it won't surprise youraudience to learn that in fact,
it didn't.
So the biggest factors weredemographics.
There's a lot of research beenwritten on that.
Gender determines a little bit.
(09:13):
Again, no surprise.
Men are more risk-taking.
They're also more overconfident.
Women their investmentportfolio.
One of the key factors that Ifound made a difference was that
did predict risk taking isreturn expectations.
So if, as an investor or evenas an advisor, you believe that
next year market returns weregoing to be higher, then you are
(09:35):
more inclined to take risk withyour portfolio than if the
expectation was that it wasgoing to be lower.
And one of the other keyinteresting factors that I found
from an advisor perspective isthat often advisors were giving
advice or making portfoliorecommendations based on their
own assessments of the market.
So they took into account theclient's demographics, the
(09:58):
client's risk tolerance, butonly a limited amount.
What really drove advisorrecommendations was their own
perception of returnexpectations and what would be
the right portfolio.
So it wasn't a conflict ofinterest.
It wasn't anything nefariouslike that.
It was more the idea that thisis how me, as an advisor, this
(10:18):
is how I would invest myportfolio and therefore I'm
going to make a recommendationto all my clients to invest in
the same way, irrespective ofwhat their demographics or their
risk tolerance might haveindicated.
Speaker 1 (10:31):
It sounds like it's a much more subjective advice
that the advisor is giving,based on what you're saying,
versus a truly objectiveanalysis.
It's so much driven Again, asyou said, it's the advisor
wanting to do what they think isin the client's best interest,
but a lot of it's still filteredthrough their own personal
experience and expertise, andthat amplifies what they
(10:52):
recommend to their clientele.
Speaker 2 (10:54):
A hundred percent and I think you hit a great point
there.
It's experience.
I would say it's advisors'experience, it's investors'
experience.
It drives a lot of ourbehaviors, what we've
experienced in the past.
So investors that have livedthrough an economic shock or a
market downturn, it influencestheir future behavior.
Advisors who would haveinvested or advised clients
(11:15):
through this period and then hadclients leave, etc.
It would influence theirbehavior.
It would influence theirbehavior.
But I think, to your point,trying to get to an objective
answer that is static in what isreally a dynamic world, because
people's preferences, theirinterests, their observations,
their views of the world arechanging, and that comes from
both advisor and client.
(11:38):
I think that becomes dangerousbecause it becomes a
one-dimensional approach to theworld, and I think part of what
I always talk about is that weneed to becomes a
one-dimensional approach to theworld and I think part of what I
always talk about is that weneed to have a multi-dimensional
view of risk, the way thatwe're encouraged in the industry
and by regulators, et cetera.
Risk is viewed as volatility,prices moving up and down, and
of course, nobody objects to theupside volatility, where your
(12:01):
stock goes up or your portfoliogoes up.
We only care about downsidevolatility, what is starting to
get into people's thinking.
What is missing in theconversation is that there is a
different risk that a lot ofclients are mostly worried about
, which is shortfall the idea ofrunning out of money, you know,
in a long retirement and thereality is those two risks need
(12:23):
to be balanced, because the waythat you're going to reduce
volatility risk is you're goingto put it into a bank account
that you have no volatility riskIf it's in a safe bank.
You need to balance the two.
I found what I'm passionateabout clients or investors and
advisors taking is thismultidimensional approach to
risk in their conversations.
It's different concepts of risk, but also the idea that there
(12:45):
is an emotional and a behavioralcomponent involved as well.
Speaker 1 (12:49):
Yeah, I want to segue a little bit to AI.
I think we'll both agree it'sprevalent.
I think ChatsPT took the worldby storm, I want to say almost
two years ago.
I use it a lot in my businessand there's different tools out
there.
So ChatsPT is probably just theone that the name that most
people recognize.
But there's a variety of toolsout there and it's getting
smarter and they have differentmetrics and that they put out.
(13:09):
But because I use it in my work, I can see the development of
it over time and it's gone from,I want to say, a grade schooler
a couple of years ago to nowit's getting into that more
graduate level reasoning.
And just in my own business, aninnovative way that I've
started using it and it getsback to that internal bias is
that in the books that we helpadvisors then publish, one of
(13:31):
the things that we've developedto assess the quality of the
product is that we'll take thedraft at the time that it's
getting to say a second draftand we'll put it into an AI tool
and we'll say, okay, analyzethis on a scale of one through
50 and tell us what works, whyit works and what needs
improvement.
And it does a fantastic job ofgiving an objective analysis of
(13:54):
the quality, the strains and theshortcomings, and I share that,
just to give as an example.
I'm just curious to know, fromyour perspective, when it comes
to AI, just the ways that can beused, including providing
possibly more objectivity or awider view of the world and not
just the singular person'sbackground.
How do you see AI playing outwhen it comes to the topics that
(14:14):
we're talking about?
Speaker 2 (14:15):
Maybe I can start with a quote.
Recently is a former chairmanof GE said that no amount of
sophistication is going tochange the fact that all our
knowledge is about the past andall our decisions are about the
future.
Okay, so I think, look, I'm afan of AI, I use it, I'm not
(14:35):
dismissing it, but AI is basedon past data.
Okay, and even in your examplethat you give that the
recommendations, the objectiveanalysis, it is basing it on
what's worked in the past.
It can't really opine in achanging world whether that will
continue to work in the future.
So I think, to me, I will sharean analogy that I use with a
(14:57):
lot of people.
I'm a big believer in GPS as atool.
Okay, I think it's veryvaluable, and I think today
there's most people that can'tdrive without one.
But the problem, yes, is thatevery year you still hear about
stories that people blindlyfollow GPS into a dry river, etc
.
And so to me, ai is the same.
It's not the tool.
(15:17):
There's nothing wrong withtools.
Does it substitute for humanjudgment?
I think human judgment isalways required to say does this
make sense or does it not makesense when a GPS gives you a
route you know the driver needsto sit there and say does this
actually make sense or am Igoing to be going into?
I'm sure you have it where youlive.
(15:38):
Where I live, the traffic ishorrendous and you know my GPS
always tells me to go and Icorrect and I ignore the GPS
because I know that road isgoing to be disastrous.
That's human judgment and Ithink it's the same with AI.
I think is a great tool.
What I worry about is that toomany people are going to use it
and shut their brain off andit's going to create answers or
(16:00):
items that don't make sense.
So I'll give you an example.
This was in the press a littlewhile ago.
One of the big banks wastesting credit scoring
algorithms for credit cards, etcetera.
Again, ai, and you say it'sobjective.
And look, in theory it'sobjective, but don't forget that
the algorithms that are enteredare programmed by a human being
, with whatever biases and viewsthat they have.
(16:22):
So the story on this one isthat Steve Wozniak's wife and
Steve Wozniak, for those of yourlisteners who don't know was
the co-founder of Apple alongwith Steve Jobs, so Wozniak is.
I don't know how much he'sworth, but I assume it's quite a
lot, but apparently his wifewas turned down by the credit
scoring algorithm for a creditcard.
(16:43):
I'm sure that the financialinstitution like if there's a
human that looks at that scoreand then says that doesn't make
sense they would have reactedthe way that you or I do.
So it's not that the tool itselfwas wrong.
I think it can get you thewrong result if you blindly
follow it without putting asense of human common sense, if
you will, into it.
Speaker 1 (17:02):
I'll jump in there because, going back to the
example that I shared, I wouldagree we don't just blindly take
the recommendations, becauseit'll make some recommendations
that are not always great, andthat's a given.
So it really does take thehuman to then judge the results.
But what I do find it does isthat it widens my perspective
and so things that, again, justusing my own example, I might
read a draft and say, wow, thisis great, I would score this.
(17:24):
I'm just making this up, butI'll give this a 48 out of 50.
And then I put it through theAI and it says it's a 40 out of
50.
So it's eight points less andit'll give me the reasons why.
And because of that quoteunquote, more objective analysis
, I'll say, okay, you know whatI agree with this and that don't
necessarily agree with that,but it helps to balance my
limited personal experience, Ithink, with a wider perspective
(17:47):
and personally finding thathelpful.
Speaker 2 (17:49):
And I agree with that .
I think that's a great way ofputting it.
In any decision making thatwe're making, I think if we can
widen our perspective, both interms of the stakeholders that
are involved, but also from atime perspective short term
versus long term I think you getthe better decisions.
So using AI for that purpose, Ithink, is a brilliant use.
Speaker 1 (18:09):
So let's talk about the quote unquote.
Advisor of the future.
Change is always happening.
I was just saying the other daythat people say that we live in
interesting times, but Iprobably said that at each stage
of my life, and so I think alltimes are interesting for their
own separate reasons.
Based on your amazingbackground in these different
areas and what you're doingtoday, based on your amazing
background in these differentareas and what you're doing
today, what core skills do youhelp teach advisors, train them,
(18:34):
coach them, consult withcompanies on?
I heard you say before you havea behavioral coaching course
what?
Speaker 2 (18:45):
are the core skills that you're putting a focus on
and helping advisors get betterat doing so.
Again, agreeing with you thatAI's capabilities is only going
to grow and that there is a rolefor it in every advisor's
toolbox, I think the advisor'srole will shift even further
towards the human side of things, towards being a behavioral
coach and strategic partner.
I think that advisors need tofocus not just on the what of
financial goals, because in myview, an AI can help you get the
(19:09):
right portfolio, because itlooks at the historical risk,
return parameters and assetclass correlations and says this
is the right one.
So that's the what.
But I think what is important,or perhaps even more important
than the what, is the why andthe how, because the why and the
how determine from the client'sperspective.
It determines what trade-offsthat they're willing to make,
(19:30):
and I think that's the criticalthing.
I've always believed that everydecision and choice that we make
in all walks of life involvestrade-offs, and I've always used
to say to clients my job is toflesh out the trade-offs for you
, okay, for instance, whetheryou want to buy a second home in
Florida, for example, or sendyour kids off to college.
(19:52):
I always used to joke.
My job I'm not making a valuejudgment.
My job is not to tell you sendyour kids off to college rather
than buy that home, et cetera.
My job is simply to make itclear that these are the
trade-offs that you have tothink about and decide on.
I'll give you the tools and theinformation to make those
trade-offs, but you need to makethem, and I think that's what
(20:12):
the advisor needs to focus on isthose trade-offs articulate
them, positioning it to them andthen understanding the client's
why and the how, so that theycan tailor the what.
Part of what I focus on thisbehavioral coaching is the
framework that I developed overthrough my doctoral research,
but also building goals basedwealth management businesses.
(20:33):
I call it a three-stepframework, a 3D framework, a
discovery, design and discipline, and so, for me, discovery is
about digging deeper to uncovera client's goals, fears and
motivations.
We talked about a little bitabout this at the beginning, but
it's about using open-endedquestions, actively listening,
being comfortable with theuncomfortable pauses, following
(20:55):
up with follow-up questions.
I think it can reveal insightsthat standard fact-finding
doesn't.
The second step, design,involves creating a
collaborative plan aligned withthose deeper insights.
It ensures that clients feelthat they're active participants
in their financial journey,that they own the solution.
I think many of your listenerswill be familiar with the IKEA
(21:16):
effect from behavioral science,and what that is is that when
people put together IKEA pieceof furniture, believe it or not,
they value it more than whatthey paid for it, simply because
of their effort.
Speaker 1 (21:27):
Interesting.
I haven't heard that analogybefore.
I can see the logic there.
Speaker 2 (21:30):
So if you take that insight, the point is that
you're still offering the sameadvice and insights to the
clients, but if you make theminvolved in the process of
coming to the conclusion, somaybe you give them two
different or three differentoptions, work through the pros
and cons and let them pick it.
They feel more involved inconstructing that solution, so
they own it, which means thatthey're going to stick with it
(21:52):
longer through market changes,et cetera.
Speaker 1 (21:54):
Yeah, I'll just jump in for a second.
I can relate to that because Ilike to, just so I can fully
appreciate the points.
Just related back to my worldand what I found before I used
to just simply ghostwrite booksfor people and simple, efficient
and people can afford it Greatbut what I found is that they
didn't own the book and theydidn't appreciate the book as
much as our current approach,which is to get them more
(22:15):
heavily involved in the processand we still do a lot of the
heavy lifting for them and allthat's good stuff.
But now, because they'reactively involved in it, they
completely own it.
It's a completely differentoutcome.
Speaker 2 (22:25):
No, that makes total sense and that's a great example
.
And the third element that Icover in my 3D framework is what
I call discipline, and that'sabout preparation and
adaptability, and I often use asports analogy here.
Look, successful teams practicerelentlessly, not because they
expect their next game to goexactly as how they practiced,
(22:46):
but to build muscle memory.
This way, they can adaptseamlessly to whatever
challenges their opponents throwat them.
And I think it's the same withclients, because by teaching
them to be prepared and to bedisciplined, you help your
clients stay calm and focusedduring the inevitable market
shocks, so that they're preparedto adapt rather than reacting
emotionally.
(23:06):
And I think this kind ofapproach to me, I think this is
where the advisor of the futurecan leverage the AI tools to
make their practice moreseamless, to free up time, et
cetera, so that time can then beused on the human element,
build the trust, design tailoredstrategies and ensure that
their clients are ready toweather any financial storm 100%
(23:27):
.
Speaker 1 (23:27):
I want to shift gears slightly and, as our audience
knows, definitely a big believerin advisors writing books and
you have written three bookswhich I'm very impressed with.
Can you share with our audiencewhat the books are that you
wrote and why you wrote them?
Absolutely.
Speaker 2 (23:42):
The first book I wrote.
I initially wrote it about 10years ago and then rewrote it
about three, four years ago.
It's called Making your MoneyWork and it's told as a story,
but it's a book that I would sayI wrote for my daughter and for
my parents and for all of thoseother people that need to make
financial decisions but aremystified by the jargon and the
(24:05):
seeming complexity of theinvestment world.
The book is really meant tocover the foundations, so things
like risk and return, thingslike compound interest, things
like financial planning I try toexplain it in everyday language
not volatility and standarddeviation and everything else.
Speaker 1 (24:22):
Those are two different languages, right.
Speaker 2 (24:24):
Two different languages and part of what I say
in the book is that investingis simple but it's not easy.
The point that I'm trying tomake there is that the concepts
itself are not hard, they're notrocket science, but they're not
easy because it's thebehavioral component of it and
so where I think the book, whatI tried to do with it, and
investors use it or clients useit.
(24:46):
I know a lot of advisors weregiving it to clients to get them
to feel independently thatthey've gotten some call it
education or background.
That makes the conversationseasier for the advisor to
provide advice.
The idea is the foundationalconcepts are important and
everything that you build aroundit is secondary.
I believe the behavioralcoaching is the secret sauce for
(25:11):
the future, because I don'tthink there's an issue that
clients don't know, for the mostpart, what the right things to
do from a financial point ofview, whether it's saving,
whether it's paying off debt,whether it's investing, et
cetera.
They know it because there'senough out there about it.
The problem is doing it, and Ithink being the behavioral coach
is where I think an advisor isgoing to differentiate
(25:31):
themselves is helping the clientget over those motivation or
those temptations that are goingto distract the client away
from doing what they know thatthey should do.
Speaker 1 (25:40):
I'll add this to the conversation is that I don't
know if you've noticed this ornot, but at the present level of
AI it certainly is agreeable.
It will agree with whatever Isay.
I'll say give me some feedbackon this.
It'll say that was fantastic,this is great.
I'll say oh wow, I feel so good.
I think the advisor, just fromthe perspective of having the
tougher conversations and sayingwas this really in your best
interest?
Does this align with your goalsand values, et cetera, that you
(26:02):
articulated, definitely there'sstill a role for that.
Speaker 2 (26:05):
Look, I totally agree with that.
I would say, some of the bestlong-lasting, billionaire client
relationships I had would be.
I would have told the clientlook, my job is not to be your
friend I'd like it that we'refriendly and that we can
socialize but my job is to beyour advisor, and that means I'm
going to tell you things thatyou don't like.
I'll say it in a nice way, butI'll tell you things that you
don't like because I thinkthat's what you pay me for.
Speaker 1 (26:26):
Tell me about the other two books.
Speaker 2 (26:27):
So the second book is called Uphill and I was
inspired during the COVID eraabout it because I think, look,
things happen that we're notready for, whether it's in our
personal life or a professionallife.
You get let go of a job or yourbusiness.
Your personal life isn't goingthe way you want to.
At that time I was reading alot of Stoic philosophy Marcus
(26:48):
Aurelius, seneca, epictetus, etc.
It suddenly struck me thatthere was an overlap between
what the Stoics were talkingabout and writing about 2,500
years ago and what modernbehavioral science that I
studied is, you know, findingright now in the research.
They're saying like pretty wellthe same things, and so just
with tools and frameworks thatare modern and have evidence to
(27:12):
back it.
So that inspired me to write ina story format, you know, a
framework for how people canapproach the tough choices in
their life and do it in a waythat is allows them to do it so
that their behavior is in linewith what they know and what
they want to do and that they'renot just acting out of raw
(27:34):
emotion.
Awesome.
Speaker 1 (27:35):
And then the third book.
Speaker 2 (27:36):
The third book is Am I Okay and it's actually an
anthology.
I also write personal financearticles for the national
newspaper in Canada and over theyears I've collected a number
of those articles, updated itand put it into the third book.
It's 22 questions that advisorsand investors should ask for
(27:56):
their financial health, etc.
I do think these are importantquestions to ask.
To me it's also a vehicle foradvisors and investors to get to
know my writing style and myother books.
Speaker 1 (28:06):
Fantastic.
A couple more questions while Ihave you here.
First one is simply is thereany question that I haven't
asked you that you think wouldbe important for our
conversation today?
Speaker 2 (28:15):
Maybe one thing I will say and I think we touched
on, is the skills that I thinkthat are going to be critical
for advisors in the next decade.
I think we've evolved from overthe last 20 years and technical
skills are very important, and Iwould say the majority of
advisors excel on theirtechnical skills.
The way that I think advisorscompete in a world of AI is to
(28:38):
lean in and embrace more of thehuman side and so to deal with
the client as the human beingacross the table and not just a
portfolio or as a policy or aplanning client.
So there, the emotionalintelligence, the adaptability,
the ability to simplify complexideas I think these are going to
be key to set top advisorsapart in the next decade, and I
(29:00):
think some of what you're doing,paul, in terms of getting that
authority or thought leadershipin the books that you're
encouraging advisors to write,this is another vehicle to
showcase that ability tosimplify complex ideas, your
emotional intelligence, etc.
I think technology will handlemany of the technical aspects of
advisory and the administrativeside of things, but I think
(29:22):
it's the advisors who canempathize with their clients,
demonstrate that they canempathize, understand their
motivations and guide themthrough their life's
uncertainties, they're the onesthat are going to thrive and be
successful.
Speaker 1 (29:34):
I would definitely agree.
Final question what's the bestplace for people to reach out,
learn more about you and allthose good things?
Speaker 2 (29:39):
Yeah, the best place is my website, so it's
wwwsamciarajancom, where peoplecan find my books and my podcast
, my newsletters and some of myspeaking engagements.
I'm also very active onLinkedIn and, yeah, love for
people to reach out and connect.
Speaker 1 (30:00):
I've enjoyed today's conversation, so I appreciate
your time today.
Speaker 2 (30:04):
Appreciate talking on something that's near and dear
to my heart.
Paul, Thank you for having meon the show.
As financial advisors , we're caught at a fascinating
crossroads.
While artificial intelligenceand technology reshape our
industry, the most valuablething we offer may be more human
than ever before.
How do we balance the promiseof AI with the irreplaceable
power of human connection?
Our guest today brings auniquely qualified perspective
(00:21):
to this question.
Sam Sivarajan's journey fromcorporate lawyer to investment
banker, to leader of three majorwealth management firms, led
him to a profound realizationthat the most important
decisions in finance always comedown to human behavior.
With a doctorate in behavioralfinance and years of experience
serving some of Canada'swealthiest families, sam has not
(00:44):
only studied how investors andadvisors make decisions.
He's developed practicalframeworks to help advisors
thrive in an AI-enabled world.
He's the author of three books,including Making your Money
Work and Uphill, and today he'llshow us why mastering the human
side of advice isn't just niceto have.
It's the key to standing out inthe next decade.
(01:05):
Welcome, sam.
Great to have you on thepodcast today.
Speaker 2 (01:13):
Thank you for having me.
Paul, Delighted to be here.
Speaker 1 (01:15):
I'm excited for today's conversation.
The topics that you'repassionate about I'm also
passionate about.
You described the humanalgorithm and its mastering
behavior technology and trust inmodern financial advice and in
this era, algorithm and itsmastering behavior technology
and trust in modern financialadvice and in this era that
we're in today, with AI becomingmore and more prevalent, it's
really fascinating to see wherethe advisor stands in this
(01:35):
relation to everything.
Tell us a little bit about yourbackground.
So who are you and how did youget to where you are today?
Speaker 2 (01:40):
I started as a corporate lawyer of of all
things in Canada and then Ispent years as an investment
banker in London, england,advising on telecoms and
technology M&A deals.
Then, when my daughter was born, we moved back to Canada and I
built and led three large wealthmanagement businesses for three
(02:00):
big global firms.
In the process, I gotfascinated about the whole human
behavior side that you talkedabout and through that journey I
also did a doctorate inbehavioral finance, focusing on
how investors and advisors makedecisions.
Speaker 1 (02:15):
I'm very impressed.
I'm curious just to know alittle bit more which of those
careers or time periods were themost interesting for you or
most challenging.
Speaker 2 (02:22):
I think, look, they were all interesting and
challenging in different ways.
Investment banking the hourswere crazy.
I was younger so I could handleit, and London is a phenomenal
town and Europe is a lot of funbut the hours were tough and it
was a great learning experienceand it was financially rewarding
(02:42):
.
Coming back to Canada to wealthmanagement, being a father of a
young child was good and Ithink what I really enjoyed
about wealth management is thatdealing with the clients you
were dealing with personalissues as opposed to
professional issues and buildingand managing teams and
relationships.
To me that was a new facet ofmy career.
(03:03):
I really enjoyed that part andagain, maybe that was part of
what precipitated that studiesin behavioral finance, because I
saw human behavior firsthand.
Speaker 1 (03:14):
Definitely.
It's interesting as we diveinto today's podcast.
The next question I have foryou is, with that background,
what made you focus on theintersection of human behavior
and financial advice?
Speaker 2 (03:25):
I think throughout my career I'd seen that the most
important decisions come down tohuman behavior.
For example, my investmentbanking career taught me that
the value of preparation andbuilding trust in high stakes
environments it's very human.
The reality is that no onewants to meet you for just a cup
of coffee.
So I learned from that to comeprepared and be ready to offer
(03:46):
solutions to their specific painpoints, instead of just
pitching my products or my wares.
I think those lessons carriedover to wealth management, where
understanding human emotionsand motivations was even more
critical to buildingrelationships that lasted.
At UBS, which was my firstwealth management firm, we grew
to serve one in four of thehundred wealthiest Canadians,
(04:07):
john Hancock.
We launched Canada's firstgoals-based high net worth
wealth platform and in boththose cases success stemmed from
understanding what trulymattered to the clients.
So to me, it became very clearthrough this evolution and
journey that technology andproducts can only go so far.
What really differentiatesadvisors is their ability to
(04:29):
connect on a deeply human level.
Speaker 1 (04:31):
Absolutely.
And how would you assess thecurrent ability of the typical
or the average advisor, whateverthat may be their current
ability to do that?
And, if anything, what aretheir blind spots?
And with the advent oftechnological change and all
those great things, where dothey need to go to to be able to
service their clients better?
Speaker 2 (04:48):
Look, it's hard to generalize to an average advisor
.
I would say there is a group inmy experience of advisors that
are phenomenal at building thesedeep relationships, asking good
questions etc.
And I think typically thoseadvisors have learned this over
time through experience, throughthe School of Hard Knocks.
I don't know that it is as welltaught or trained and I think
(05:14):
newer advisors in many caseswill get there, but it will take
them time as experience,because it's not something that,
at least in my view, has beenemphasized.
We've been taught that thetechnical skills are important,
whether it's the investment sideor the insurance side of things
, but less on the importance andthe skills involved in building
(05:36):
relationships, asking goodquestions and deeper questions
and following up I think it'sless of that has a bit of focus.
Now.
I think things are changing.
I think people are starting tothink, especially with the
advent of technology, that thisis a core skill set and a core
differentiator and how do wedevelop it?
(05:56):
I think there are peoplestarting to focus on it as
advisors.
I think there are training andother things that are provided.
So a lot of what I write and alot of what I do on my podcast
and I've created a course onbehavioral coaching for advisors
.
It's an online course.
The idea is that these areskills that you can develop and
that you watch any televisionyou know.
(06:22):
You see the interrogators orthe police, detectives or
psychologists, etc.
Now they are trained on how toask better questions.
They're trained to give thequestion, make the subject
uncomfortable and sit there inthat discomfort.
I don't think advisorstypically are, and I think part
(06:44):
of it is.
It's asking these open endedquestions and having the
patience to let the client bequiet and think about it,
because in many cases thoseclients may not have thought of
these questions before, so it'sgoing to take them some time to
articulate what is there.
And then I think the key thingfor the advisors again, remember
(07:04):
that this might be theirinitial reaction.
So the follow up questiondigging deeper and really trying
to surface what the deepermotivations I think is critical,
not only to get a betterunderstanding of the client, but
I think it's going to build abetter, deeper, more trusted
relationship between advisor andclient.
Speaker 1 (07:25):
So, as our audience know, my company helps advisors
write and publish books, and I'mseeing a growing trend, at
least in one segment of theclients that we're working with,
who are much more focused onbehavior finance, and I don't
know if these advisors come fromspecific companies, I don't
know if there's an influencethere, but just for my own
limited perch here, I see thatbecoming more and more important
(07:46):
versus just the technicalaspects of investment.
One of the things that I heardyou say earlier was that I'll
take a specific example of risktolerance and how an advisor
asks questions and interpretsthat information.
Share with our audience alittle bit about your experience
and research when it comes tohelping advisors and assess risk
(08:06):
tolerance and ultimately whatthe behavior is behind that that
you find.
Speaker 2 (08:10):
Yeah, I think that's a great question.
So, just as background, I wasworking with billionaires in
2006, 2007, 2008.
So very sophisticatedindividuals with lots of money,
access to exotic products.
I remember 2006, 2007, the risktolerance questionnaires and
(08:31):
the risk attitudes that thesebillionaire clients had, and it
all disappeared in 2008 when wehad the Great Recession.
So everyone that said that Ican handle risk and that I can
invest for the next 10 years,deal with downturns, et cetera.
All of that good intentionsvanished when the 2008 recession
hit.
So that's what sparked myinterest in this whole concept
(08:52):
of risk tolerance.
So that was my doctoral researchlooking at whether risk
tolerance questionnairesactually predict risk taking
behavior by investors.
And it won't surprise youraudience to learn that in fact,
it didn't.
So the biggest factors weredemographics.
There's a lot of research beenwritten on that.
Gender determines a little bit.
(09:13):
Again, no surprise.
Men are more risk-taking.
They're also more overconfident.
Women their investmentportfolio.
One of the key factors that Ifound made a difference was that
did predict risk taking isreturn expectations.
So if, as an investor or evenas an advisor, you believe that
next year market returns weregoing to be higher, then you are
(09:35):
more inclined to take risk withyour portfolio than if the
expectation was that it wasgoing to be lower.
And one of the other keyinteresting factors that I found
from an advisor perspective isthat often advisors were giving
advice or making portfoliorecommendations based on their
own assessments of the market.
So they took into account theclient's demographics, the
(09:58):
client's risk tolerance, butonly a limited amount.
What really drove advisorrecommendations was their own
perception of returnexpectations and what would be
the right portfolio.
So it wasn't a conflict ofinterest.
It wasn't anything nefariouslike that.
It was more the idea that thisis how me, as an advisor, this
(10:18):
is how I would invest myportfolio and therefore I'm
going to make a recommendationto all my clients to invest in
the same way, irrespective ofwhat their demographics or their
risk tolerance might haveindicated.
Speaker 1 (10:31):
It sounds like it's a much more subjective advice
that the advisor is giving,based on what you're saying,
versus a truly objectiveanalysis.
It's so much driven Again, asyou said, it's the advisor
wanting to do what they think isin the client's best interest,
but a lot of it's still filteredthrough their own personal
experience and expertise, andthat amplifies what they
(10:52):
recommend to their clientele.
Speaker 2 (10:54):
A hundred percent and I think you hit a great point
there.
It's experience.
I would say it's advisors'experience, it's investors'
experience.
It drives a lot of ourbehaviors, what we've
experienced in the past.
So investors that have livedthrough an economic shock or a
market downturn, it influencestheir future behavior.
Advisors who would haveinvested or advised clients
(11:15):
through this period and then hadclients leave, etc.
It would influence theirbehavior.
It would influence theirbehavior.
But I think, to your point,trying to get to an objective
answer that is static in what isreally a dynamic world, because
people's preferences, theirinterests, their observations,
their views of the world arechanging, and that comes from
both advisor and client.
(11:38):
I think that becomes dangerousbecause it becomes a
one-dimensional approach to theworld, and I think part of what
I always talk about is that weneed to becomes a
one-dimensional approach to theworld and I think part of what I
always talk about is that weneed to have a multi-dimensional
view of risk, the way thatwe're encouraged in the industry
and by regulators, et cetera.
Risk is viewed as volatility,prices moving up and down, and
of course, nobody objects to theupside volatility, where your
(12:01):
stock goes up or your portfoliogoes up.
We only care about downsidevolatility, what is starting to
get into people's thinking.
What is missing in theconversation is that there is a
different risk that a lot ofclients are mostly worried about
, which is shortfall the idea ofrunning out of money, you know,
in a long retirement and thereality is those two risks need
(12:23):
to be balanced, because the waythat you're going to reduce
volatility risk is you're goingto put it into a bank account
that you have no volatility riskIf it's in a safe bank.
You need to balance the two.
I found what I'm passionateabout clients or investors and
advisors taking is thismultidimensional approach to
risk in their conversations.
It's different concepts of risk, but also the idea that there
(12:45):
is an emotional and a behavioralcomponent involved as well.
Speaker 1 (12:49):
Yeah, I want to segue a little bit to AI.
I think we'll both agree it'sprevalent.
I think ChatsPT took the worldby storm, I want to say almost
two years ago.
I use it a lot in my businessand there's different tools out
there.
So ChatsPT is probably just theone that the name that most
people recognize.
But there's a variety of toolsout there and it's getting
smarter and they have differentmetrics and that they put out.
(13:09):
But because I use it in my work, I can see the development of
it over time and it's gone from,I want to say, a grade schooler
a couple of years ago to nowit's getting into that more
graduate level reasoning.
And just in my own business, aninnovative way that I've
started using it and it getsback to that internal bias is
that in the books that we helpadvisors then publish, one of
(13:31):
the things that we've developedto assess the quality of the
product is that we'll take thedraft at the time that it's
getting to say a second draftand we'll put it into an AI tool
and we'll say, okay, analyzethis on a scale of one through
50 and tell us what works, whyit works and what needs
improvement.
And it does a fantastic job ofgiving an objective analysis of
(13:54):
the quality, the strains and theshortcomings, and I share that,
just to give as an example.
I'm just curious to know, fromyour perspective, when it comes
to AI, just the ways that can beused, including providing
possibly more objectivity or awider view of the world and not
just the singular person'sbackground.
How do you see AI playing outwhen it comes to the topics that
(14:14):
we're talking about?
Speaker 2 (14:15):
Maybe I can start with a quote.
Recently is a former chairmanof GE said that no amount of
sophistication is going tochange the fact that all our
knowledge is about the past andall our decisions are about the
future.
Okay, so I think, look, I'm afan of AI, I use it, I'm not
(14:35):
dismissing it, but AI is basedon past data.
Okay, and even in your examplethat you give that the
recommendations, the objectiveanalysis, it is basing it on
what's worked in the past.
It can't really opine in achanging world whether that will
continue to work in the future.
So I think, to me, I will sharean analogy that I use with a
(14:57):
lot of people.
I'm a big believer in GPS as atool.
Okay, I think it's veryvaluable, and I think today
there's most people that can'tdrive without one.
But the problem, yes, is thatevery year you still hear about
stories that people blindlyfollow GPS into a dry river, etc
.
And so to me, ai is the same.
It's not the tool.
(15:17):
There's nothing wrong withtools.
Does it substitute for humanjudgment?
I think human judgment isalways required to say does this
make sense or does it not makesense when a GPS gives you a
route you know the driver needsto sit there and say does this
actually make sense or am Igoing to be going into?
I'm sure you have it where youlive.
(15:38):
Where I live, the traffic ishorrendous and you know my GPS
always tells me to go and Icorrect and I ignore the GPS
because I know that road isgoing to be disastrous.
That's human judgment and Ithink it's the same with AI.
I think is a great tool.
What I worry about is that toomany people are going to use it
and shut their brain off andit's going to create answers or
(16:00):
items that don't make sense.
So I'll give you an example.
This was in the press a littlewhile ago.
One of the big banks wastesting credit scoring
algorithms for credit cards, etcetera.
Again, ai, and you say it'sobjective.
And look, in theory it'sobjective, but don't forget that
the algorithms that are enteredare programmed by a human being
, with whatever biases and viewsthat they have.
(16:22):
So the story on this one isthat Steve Wozniak's wife and
Steve Wozniak, for those of yourlisteners who don't know was
the co-founder of Apple alongwith Steve Jobs, so Wozniak is.
I don't know how much he'sworth, but I assume it's quite a
lot, but apparently his wifewas turned down by the credit
scoring algorithm for a creditcard.
(16:43):
I'm sure that the financialinstitution like if there's a
human that looks at that scoreand then says that doesn't make
sense they would have reactedthe way that you or I do.
So it's not that the tool itselfwas wrong.
I think it can get you thewrong result if you blindly
follow it without putting asense of human common sense, if
you will, into it.
Speaker 1 (17:02):
I'll jump in there because, going back to the
example that I shared, I wouldagree we don't just blindly take
the recommendations, becauseit'll make some recommendations
that are not always great, andthat's a given.
So it really does take thehuman to then judge the results.
But what I do find it does isthat it widens my perspective
and so things that, again, justusing my own example, I might
read a draft and say, wow, thisis great, I would score this.
(17:24):
I'm just making this up, butI'll give this a 48 out of 50.
And then I put it through theAI and it says it's a 40 out of
50.
So it's eight points less andit'll give me the reasons why.
And because of that quoteunquote, more objective analysis
, I'll say, okay, you know whatI agree with this and that don't
necessarily agree with that,but it helps to balance my
limited personal experience, Ithink, with a wider perspective
(17:47):
and personally finding thathelpful.
Speaker 2 (17:49):
And I agree with that .
I think that's a great way ofputting it.
In any decision making thatwe're making, I think if we can
widen our perspective, both interms of the stakeholders that
are involved, but also from atime perspective short term
versus long term I think you getthe better decisions.
So using AI for that purpose, Ithink, is a brilliant use.
Speaker 1 (18:09):
So let's talk about the quote unquote.
Advisor of the future.
Change is always happening.
I was just saying the other daythat people say that we live in
interesting times, but Iprobably said that at each stage
of my life, and so I think alltimes are interesting for their
own separate reasons.
Based on your amazingbackground in these different
areas and what you're doingtoday, based on your amazing
background in these differentareas and what you're doing
today, what core skills do youhelp teach advisors, train them,
(18:34):
coach them, consult withcompanies on?
I heard you say before you havea behavioral coaching course
what?
Speaker 2 (18:45):
are the core skills that you're putting a focus on
and helping advisors get betterat doing so.
Again, agreeing with you thatAI's capabilities is only going
to grow and that there is a rolefor it in every advisor's
toolbox, I think the advisor'srole will shift even further
towards the human side of things, towards being a behavioral
coach and strategic partner.
I think that advisors need tofocus not just on the what of
financial goals, because in myview, an AI can help you get the
(19:09):
right portfolio, because itlooks at the historical risk,
return parameters and assetclass correlations and says this
is the right one.
So that's the what.
But I think what is important,or perhaps even more important
than the what, is the why andthe how, because the why and the
how determine from the client'sperspective.
It determines what trade-offsthat they're willing to make,
(19:30):
and I think that's the criticalthing.
I've always believed that everydecision and choice that we make
in all walks of life involvestrade-offs, and I've always used
to say to clients my job is toflesh out the trade-offs for you
, okay, for instance, whetheryou want to buy a second home in
Florida, for example, or sendyour kids off to college.
(19:52):
I always used to joke.
My job I'm not making a valuejudgment.
My job is not to tell you sendyour kids off to college rather
than buy that home, et cetera.
My job is simply to make itclear that these are the
trade-offs that you have tothink about and decide on.
I'll give you the tools and theinformation to make those
trade-offs, but you need to makethem, and I think that's what
(20:12):
the advisor needs to focus on isthose trade-offs articulate
them, positioning it to them andthen understanding the client's
why and the how, so that theycan tailor the what.
Part of what I focus on thisbehavioral coaching is the
framework that I developed overthrough my doctoral research,
but also building goals basedwealth management businesses.
(20:33):
I call it a three-stepframework, a 3D framework, a
discovery, design and discipline, and so, for me, discovery is
about digging deeper to uncovera client's goals, fears and
motivations.
We talked about a little bitabout this at the beginning, but
it's about using open-endedquestions, actively listening,
being comfortable with theuncomfortable pauses, following
(20:55):
up with follow-up questions.
I think it can reveal insightsthat standard fact-finding
doesn't.
The second step, design,involves creating a
collaborative plan aligned withthose deeper insights.
It ensures that clients feelthat they're active participants
in their financial journey,that they own the solution.
I think many of your listenerswill be familiar with the IKEA
(21:16):
effect from behavioral science,and what that is is that when
people put together IKEA pieceof furniture, believe it or not,
they value it more than whatthey paid for it, simply because
of their effort.
Speaker 1 (21:27):
Interesting.
I haven't heard that analogybefore.
I can see the logic there.
Speaker 2 (21:30):
So if you take that insight, the point is that
you're still offering the sameadvice and insights to the
clients, but if you make theminvolved in the process of
coming to the conclusion, somaybe you give them two
different or three differentoptions, work through the pros
and cons and let them pick it.
They feel more involved inconstructing that solution, so
they own it, which means thatthey're going to stick with it
(21:52):
longer through market changes,et cetera.
Speaker 1 (21:54):
Yeah, I'll just jump in for a second.
I can relate to that because Ilike to, just so I can fully
appreciate the points.
Just related back to my worldand what I found before I used
to just simply ghostwrite booksfor people and simple, efficient
and people can afford it Greatbut what I found is that they
didn't own the book and theydidn't appreciate the book as
much as our current approach,which is to get them more
(22:15):
heavily involved in the processand we still do a lot of the
heavy lifting for them and allthat's good stuff.
But now, because they'reactively involved in it, they
completely own it.
It's a completely differentoutcome.
Speaker 2 (22:25):
No, that makes total sense and that's a great example
.
And the third element that Icover in my 3D framework is what
I call discipline, and that'sabout preparation and
adaptability, and I often use asports analogy here.
Look, successful teams practicerelentlessly, not because they
expect their next game to goexactly as how they practiced,
(22:46):
but to build muscle memory.
This way, they can adaptseamlessly to whatever
challenges their opponents throwat them.
And I think it's the same withclients, because by teaching
them to be prepared and to bedisciplined, you help your
clients stay calm and focusedduring the inevitable market
shocks, so that they're preparedto adapt rather than reacting
emotionally.
(23:06):
And I think this kind ofapproach to me, I think this is
where the advisor of the futurecan leverage the AI tools to
make their practice moreseamless, to free up time, et
cetera, so that time can then beused on the human element,
build the trust, design tailoredstrategies and ensure that
their clients are ready toweather any financial storm 100%
(23:27):
.
Speaker 1 (23:27):
I want to shift gears slightly and, as our audience
knows, definitely a big believerin advisors writing books and
you have written three bookswhich I'm very impressed with.
Can you share with our audiencewhat the books are that you
wrote and why you wrote them?
Absolutely.
Speaker 2 (23:42):
The first book I wrote.
I initially wrote it about 10years ago and then rewrote it
about three, four years ago.
It's called Making your MoneyWork and it's told as a story,
but it's a book that I would sayI wrote for my daughter and for
my parents and for all of thoseother people that need to make
financial decisions but aremystified by the jargon and the
(24:05):
seeming complexity of theinvestment world.
The book is really meant tocover the foundations, so things
like risk and return, thingslike compound interest, things
like financial planning I try toexplain it in everyday language
not volatility and standarddeviation and everything else.
Speaker 1 (24:22):
Those are two different languages, right.
Speaker 2 (24:24):
Two different languages and part of what I say
in the book is that investingis simple but it's not easy.
The point that I'm trying tomake there is that the concepts
itself are not hard, they're notrocket science, but they're not
easy because it's thebehavioral component of it and
so where I think the book, whatI tried to do with it, and
investors use it or clients useit.
(24:46):
I know a lot of advisors weregiving it to clients to get them
to feel independently thatthey've gotten some call it
education or background.
That makes the conversationseasier for the advisor to
provide advice.
The idea is the foundationalconcepts are important and
everything that you build aroundit is secondary.
I believe the behavioralcoaching is the secret sauce for
(25:11):
the future, because I don'tthink there's an issue that
clients don't know, for the mostpart, what the right things to
do from a financial point ofview, whether it's saving,
whether it's paying off debt,whether it's investing, et
cetera.
They know it because there'senough out there about it.
The problem is doing it, and Ithink being the behavioral coach
is where I think an advisor isgoing to differentiate
(25:31):
themselves is helping the clientget over those motivation or
those temptations that are goingto distract the client away
from doing what they know thatthey should do.
Speaker 1 (25:40):
I'll add this to the conversation is that I don't
know if you've noticed this ornot, but at the present level of
AI it certainly is agreeable.
It will agree with whatever Isay.
I'll say give me some feedbackon this.
It'll say that was fantastic,this is great.
I'll say oh wow, I feel so good.
I think the advisor, just fromthe perspective of having the
tougher conversations and sayingwas this really in your best
interest?
Does this align with your goalsand values, et cetera, that you
(26:02):
articulated, definitely there'sstill a role for that.
Speaker 2 (26:05):
Look, I totally agree with that.
I would say, some of the bestlong-lasting, billionaire client
relationships I had would be.
I would have told the clientlook, my job is not to be your
friend I'd like it that we'refriendly and that we can
socialize but my job is to beyour advisor, and that means I'm
going to tell you things thatyou don't like.
I'll say it in a nice way, butI'll tell you things that you
don't like because I thinkthat's what you pay me for.
Speaker 1 (26:26):
Tell me about the other two books.
Speaker 2 (26:27):
So the second book is called Uphill and I was
inspired during the COVID eraabout it because I think, look,
things happen that we're notready for, whether it's in our
personal life or a professionallife.
You get let go of a job or yourbusiness.
Your personal life isn't goingthe way you want to.
At that time I was reading alot of Stoic philosophy Marcus
(26:48):
Aurelius, seneca, epictetus, etc.
It suddenly struck me thatthere was an overlap between
what the Stoics were talkingabout and writing about 2,500
years ago and what modernbehavioral science that I
studied is, you know, findingright now in the research.
They're saying like pretty wellthe same things, and so just
with tools and frameworks thatare modern and have evidence to
(27:12):
back it.
So that inspired me to write ina story format, you know, a
framework for how people canapproach the tough choices in
their life and do it in a waythat is allows them to do it so
that their behavior is in linewith what they know and what
they want to do and that they'renot just acting out of raw
(27:34):
emotion.
Awesome.
Speaker 1 (27:35):
And then the third book.
Speaker 2 (27:36):
The third book is Am I Okay and it's actually an
anthology.
I also write personal financearticles for the national
newspaper in Canada and over theyears I've collected a number
of those articles, updated itand put it into the third book.
It's 22 questions that advisorsand investors should ask for
(27:56):
their financial health, etc.
I do think these are importantquestions to ask.
To me it's also a vehicle foradvisors and investors to get to
know my writing style and myother books.
Speaker 1 (28:06):
Fantastic.
A couple more questions while Ihave you here.
First one is simply is thereany question that I haven't
asked you that you think wouldbe important for our
conversation today?
Speaker 2 (28:15):
Maybe one thing I will say and I think we touched
on, is the skills that I thinkthat are going to be critical
for advisors in the next decade.
I think we've evolved from overthe last 20 years and technical
skills are very important, and Iwould say the majority of
advisors excel on theirtechnical skills.
The way that I think advisorscompete in a world of AI is to
(28:38):
lean in and embrace more of thehuman side and so to deal with
the client as the human beingacross the table and not just a
portfolio or as a policy or aplanning client.
So there, the emotionalintelligence, the adaptability,
the ability to simplify complexideas I think these are going to
be key to set top advisorsapart in the next decade, and I
(29:00):
think some of what you're doing,paul, in terms of getting that
authority or thought leadershipin the books that you're
encouraging advisors to write,this is another vehicle to
showcase that ability tosimplify complex ideas, your
emotional intelligence, etc.
I think technology will handlemany of the technical aspects of
advisory and the administrativeside of things, but I think
(29:22):
it's the advisors who canempathize with their clients,
demonstrate that they canempathize, understand their
motivations and guide themthrough their life's
uncertainties, they're the onesthat are going to thrive and be
successful.
Speaker 1 (29:34):
I would definitely agree.
Final question what's the bestplace for people to reach out,
learn more about you and allthose good things?
Speaker 2 (29:39):
Yeah, the best place is my website, so it's
wwwsamciarajancom, where peoplecan find my books and my podcast
, my newsletters and some of myspeaking engagements.
I'm also very active onLinkedIn and, yeah, love for
people to reach out and connect.
Speaker 1 (30:00):
I've enjoyed today's conversation, so I appreciate
your time today.
Speaker 2 (30:04):
Appreciate talking on something that's near and dear
to my heart.
Paul, Thank you for having meon the show.
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