E47: Wealth Innovations with Som Seif

This podcast is brought to you by Gensler Wealth. The information discussed today is meant to be general in nature and not tailored to your specific investing circumstances. This means that you should talk to your regular Gensler wealth advisor or your own advisor before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation and past performance does not not guarantee future returns. We're calling this the sexy episode of the Unlimited podcast because of my post laryngitis voice. But don't worry, Sam and I will keep things clean. Today on the Unlimited podcast, we speak with SOM C founder and Chief Executive Officer of Purpose Unlimited. We talk about innovation in the wealth management space industry. First and Psalms, key to success. Let's go. Well, welcome everybody, to a new episode of the Unlimited podcast. You know, people always think that maybe the world revolves around them and everyone's always thinking about them all the time. And I truly don't believe that whatsoever about me and us. I don't think anyone's really thinking about us. But if you are, you may have noticed that it's been a little bit of a gap since our last podcast. And you may also have noticed already that my voice sounds a little bit off. I've had laryngitis for the last week or two and with my guest here, we were supposed to record a little while back and I had to reschedule because I, while I'm told I sounded very sexy, that wasn't the sort of sound that I was going for on the podcast. So here we are, we're back and very excited to have a great guest with us today. We're going to talk about innovation and the wealth management sector or the wealth management space and a whole bunch of other things, which just happens to be some of my favorite topics and some of my favorite industries, I guess. So. I want to welcome Sam Ceif to our show today and very much appreciate it. I'll give an intro in a second, but thanks. Thanks for joining.

Tom, Brian, it's great to be here. And you sound sexy always. So, you know, I think it's, it's a wonderful, you know, that we got to delay it to get to a little bit more sexy, so.

Right. And you told me before we started you may have a little scratch in your throat. So this may be the sexy episode of the.

We're going to. We're going to promote the unlimited sexy episode.

Right. So let me give a quick intro and some of our listeners. If you've been frequent flyers, you may recognize our guest. You may have seen them on your airplane TVs. Sahm is the founder and Chief Executive Officer of Purpose Unlimited, which he formed following the sale of Claymore Investments to BlackRock in March of 2012, and the co founder of Wealthsimple Technologies, known mostly as Wealthsimple. Prior to Claymore Investments, SAHM was an investment banker with RBC Capital Markets and he has a strong commitment to community. Currently the co chair of the U of T Defy Gravity campaign, a member of the AGO foundation board and Next Canada board and in 2011 SOM was recognized as one of Canada's Top 40 under 40 by Caldwell Partners. That's the official bio. There'll be a little bit more in the show notes but I also wanted to mention very importantly for the for this episode, some of the financial and wealth innovations SOM has been responsible for and that includes, as I've described, already launching one of Canada's first major exchange traded fund companies. Launching Purpose, which we're going to learn a little bit about, co founding wealthsimple, which I've already mentioned, launching the world's first bitcoin and Ethereum ETFs which we're going to dive into because that was pretty amazing. And launching Canada's only I think non pension and quotes pension fund for everyday Canadians. So really this is a true, not to toot your horn, but a true innovator in the Canadian and frankly global wealth management space. Again sahm, welcome again and thanks. Look forward to hearing how you've done all this stuff.

Well it's first off thanks for again conversation. It's always uncomfortable when you hear people talk about your bios. But you know, I'm always excited about the things that we are doing and doing in the past because I think all of it comes down to just like solving problems on behalf of Canadians. And you know, it's a lot of fun actually. I don't think of them as like you, you know, not just on a bedside. I just look at it as like how can we ultimately really win and help, you know, the market improve? How do we help Canadians ultimately succeed in achieving their goals? And it these innovations come out of that ultimately.

Yeah. Amazing. Well, let's get to the path of those innovations. And for listeners who have heard a few of these episodes, you know, I always like to go right back to the beginning. So can you give a little bit of background like you know, the superhero origin story as they'd call it if it was Marvel or DC Comics or something, you know, where are you from when and why and how did you get to Canada? What was your path to all the way through to what you're doing today? You know, you don't have to take two hours to do, but you know, the quick, the quick overview, I guess.

The quick Coles notes are, you know, so I'm going to immigrant to this country. I came here in, you know, 79, 80. My parents made the greatest choice of my, my life. Ultimately the greatest gift they gave me was to make the decision to come to Canada. And I'm a big, you know, mathematics and probability guy. And you know, that that simple decision changed the course of my probability of outcome quite materially. And you know, there's a lot of history as to why they chose Canada. But, but you know, it was a progressive growing country that welcomed immigrants at the time and it was very important and you know, that was very foundational for me because, you know, I love this country. I feel a debt of gratitude to what it has given me and my family. But more importantly, it's pushed me in many ways to give back in a meaningful way. You know, my goals as an individual were always kind of very, you know, similar to others. Like I just wanted to, to, to really make things happen and have a lot of fun. And you know, I didn't come from, you know, wealth. My, my family created in this country, a, A, a really nice middle class lifestyle for us and you know, gave us wonderful foundations. But I always had this ambition of, you know, wanting more. And that drove me all throughout my high school career and into university and onwards. And so, you know, actually when I was a young kid, you know, I always wanted to be an architect. It was one of my dreams ambitions. I actually for I think 15 years, from the age of like five, had always said architecture was a thing that was going to drive me. And then, you know, right before I was making the final decision to which university to go to, which program to go to, and I had been accepted to architecture and engineering courses to undergrads. You know, I went and met with a couple of architects and the architects I met with all told me that you shouldn't do this. This is a silly career profession. You're gonna, you know, it's gonna be a big grind. You're never gonna do the things you actually love, which is actually designing and developing beautiful buildings and you're never gonna make any money. And you know, to me that was a real sort of shock and concern because you had real people telling me that and it scared me. So I made a decision to start with engineering, went to U of T, studied engineering and frankly, you know, very quickly from there made a decision that okay, engineering is wonderful, but, but I think I want to do something in business. And that led to a thought process of, you know, sort of a career planning and career sort of perspective of what are the things that are going to excite me, where am I going to learn the most. And, and that's how I ultimately kind of built my career.

Amazing.

Good.

Anytime someone says want to be an architect, I think of George Costanza and Vanderlay Industries, but we won't go there. It's always good to say that you're an architect, you know, but, but I will say actually when I was at Gleskin Chef, we moved from Brookfield Place or BCE Place to the new Bay Adelaide and we had 50,000 square feet of concrete on the top, top two floors. And we hired KPMB Architects. Probably, probably, I don't know this industry very well, but probably the top, you know, close to the top architects in the country, maybe the world and designed the most beautiful place. Unfortunately, Glesk and Chef doesn't exist anymore. It was great firm and I will say no one there was, was crying over, you know, their salaries or anything like that. But I will say the rate that the top architects in the world were charging relative to the rates we were paying for lawyers, accountants and other things, it was a dramatic, dramatic difference. And so I, I, I, I get your, your thought process there. Amazing people, amazing designers, amazing creativity, absolutely spectacular. It, it seemed like there was a big difference between what architects were, are earning and, and other professions. I don't know why.

Well, you know, it's funny because one of the best pieces of advice my mom gave me at the time and I didn't listen to, because I came back and talked to her about it and she said, you know, if you're, if you're passionate about something and you're good at it, you'll always find a way to make great money at it. And I think that that's the point. I mean, look at the end of the day, you know, the great architects are great architects for a reason and you know that, that you could be a great anything and be passionate about it. And you know, that's really the, the value that you're going to capture from it. So, and I've learned a lot in my career. You should never ever do anything in pursuit of money. You should always do it because you're truly, you know, something that will actually make you long term happy. And default Happy. Yeah.

Okay, so you, you made that switch, I guess or in our thought process to move to the business world. You. I, I believe you started your career in investment banking at rbc. I, I started an investment banking at firm called First Marathon securities before it got bought by national bank and so on. So I, so I know the business reasonably well, but can you describe your sort of start and actually a lot of students, every year people want to and think they want to go into investment banking. When I went into investment banking and did the interviews, I almost faked my answers to questions because I had no clue in the world what the heck investment banking was during the interview process. And luckily I got a job. But what, what was investment banking like? And obviously you, you eventually change. So you maybe just a little color there and.

Yeah, no. So first of all, it's very similar story. Everything I learned about investment banking was from a TV show called Traders, if you recall, in the late 90s. And it sort of sounded like a really cool job. So I kind of went after it. Look, RBC was a wonderful place to work. It was the biggest investment bank in Canada, you know, at a time that was really exciting. I joined right in the middle of 99, right around the tail end of the, you know, tech bubble. And it was an unbelievable experience for the first six, nine months. I think I did more activity as a junior banker than I will do I did for the next several years. But what I will say to you is that it was a grind. And one of the things that's been important and foundational in my career is I've always, whenever given the opportunity, whether it was engineering, whether it was, you know, investment banking, whether it was a life of entrepreneurship, I've always chosen the hard path. You know, I'll tell you, investment banking was one of the great foundational learning experiences. I was there for six years, you know, for six years, you know, you worked effectively, a double career. So, you know, when I, when I exited RBC, I had a 12 year foundational career of learning of experiences that I had been built and networks that I had kind of learned from and built relationships around. And the thing that was foundational though for me was, um, in about, you know, about two, three years when I first entered investment banking, my first thinking was, oh, this is going to be a great place to go and generate and make money. Right? Because that's what was one of the things I thought was my goal. And you know, about two years into it, I actually had a little bit of a meltdown because I realized that, like, yeah, it was a place that I was making money, but I wasn't happy for that. That wasn't the reason why I wanted to do this. And, you know, it was a very empty moment for me because, you know, I was working like crazy. I was learning a ton, but I was. Something was not driving me to be happy with this, this opportunity, and I had to sort of stop back. And I don't know if you ever saw this, Brian, when you were in, you know, in your career at any point where you've actually said, look, I'm pursuing the wrong goals. And it was a moment to really reflect on what really mattered. If I go back to my principle of why I wanted to be an architect, it wasn't about, you know, yes, I love design, I love, I love buildings. But it was always this pursuit of progress, of seeing the things and the ideas that I had ultimately come to fruition and see that I'd accomplish something of real value. And so when I looked at this, I said, this is what really makes me skip to work on Monday mornings. I still was having fun in investment banking, but I, I, you know, needed to know that I was going to do something different over time. And one of the things that drove me there was I looked up and I said, you know, whose job in this company do I want at the age of 45? Like, who, who do I admire to be? Like their life? Like. And I couldn't find one person that was a senior banker that I said, I want that job. And I said, okay, that's gotta be, that's my indication, I gotta leave. And, but, but it was an unbelievable learning experience. I mean, I'll tell you, for any young person, you want to have a massive amount of every part of an early stage of a career. Benefit of learning people, engagement, projects, capital markets, experiences, strategy, everything. All, you know, call it squeezed into a very tight bucket. It's a, it's an unbelievable experience, but it's hard. I saw so many people join investment banking coming out of their MBA or their undergrad in BCom, and within, you know, 30, 60, 90 days actually quit because all through their undergrad it was. Investment banking was a thing to do. But then, you know, so they were doing it because that's what they were told to do. And then when they got there, they said, this isn't really for me. And that's the worst outcome because you just spent four years or two years doing a degree. You go through the networking cycles and you chose a career path that ultimately was wrong for you for the wrong reasons. So, you know, what I always tell people is it's an unbelievable experience, but you gotta know what you're getting into and you gotta do it for the right reasons, which is, you know, and for me it was all about consumption of learning, consumption of foundations of my career that really, you know, call it catapulted me to my next stage.

Yeah, yeah, I, look, I had a similar experience as well. I realized about four years in, I stopped halfway through, did an mba, came back another couple years, I realized four years and similar to you, there wasn't the path there that I wanted to take and it was the wealth management area that I wanted to move to, which I did. But I agree, huge learning. And in particular, I would say for me, I don't know, for you, a skill that you'll have forever, attention to detail. Because you're putting together these huge decks and you're doing it at, you know, one in the morning for the next day, you can barely see straight. You gotta be really thorough.

And every first year, second year analyst knows that the most common critique is attention to detail. And it's like, because what you're doing is you're working 80 to 100 hour weeks, you are, you know, you're, you're tired, you're, you know, in every way possible, you can, you can hardly stop and think, but you're expected to deliver, you know, really deep quality. And the transition from first year, second year to third year is actually the hardest because in first year and second year, there's always someone who's overseeing what you do and someone who's going to, you know, check your work. When you get into third, second and third year, that's the year when actually your work goes direct to the client. And so the stress and the extra kind of level, plus you're still working those extra hours, those, the crazy hours. And so it's a level of kind of like stepping up that is required of you. And you know, it was really amazing. One of the things I pursued through it was, you know, I didn't just wait for people to come to me with kind of know, here's the projects. Of course that's what you're, you know, as a young junior banker, you're constantly being told, here's the project we're working on.

Yeah.

What I tried to take a pursuit of was how do I take my ideas and share them with others. So I would, you know, often pitch ideas to the managing directors to go to customers with, to you know, target opportunities. And, you know, look, at the end of the day, some of my ideas were really stupid. I still have some of those old memos I put together, but it kind of built my muscle of wanting to sort of say, I'm going to take a little more control of this, you know, identity I'm going to create and this opportunity that I'm going to create. And it built a relationship with the MDs that they would actually critique the ideas and give me good feedback. And they looked at me slightly differently as a result of that.

Yeah, yeah, actually similar. Did the same as well. And that's sort of how you differentiate yourself and potentially move up. But let's talk about. So then you've decided it's, you know, it's time to move on because of what you've just described. And you found and launch, I guess, Claymore in Canada. Can you describe what. What was Claymore? How did you decide that was what you were going to do? How'd you build it so fast, by the way? And maybe, you know, that story, you know, with Blackstone acquiring it and all that.

Yeah, it's a. It's a really amazing story. In retrospect, at the time, you know, had no clue what I was doing, you know, so the big catalyst for me was, you know, at that moment when I realized that I didn't want to be a banker for life, I kind of said to myself, okay, well, I've got till 30. You know, I'm 25. I've got five more years. If at the age of 30, I'm still here, I'm going to resign and do something, but hopefully something comes up before that. And that was sort of the thing that said, okay, I'm still in learning mode. I'm still in, you know, I'm still enjoying what I'm doing, but I got to make sure there's a moment that gets me to focus on my next step. And that moment came, you know, 2004, end of 2004, I was working with a client in the United States. So I'd been focusing in the last year and a half on the asset management space. I've been advising asset management companies on ideas of how to raise funds and money. One of the clients that I was working with was a US firm startup, and I kind of went to them, I said, look, I think there's an opportunity for you to build your business in Canada, and we at RBC would love to partner with you. We'll support you in doing so. I put together a business plan for them to basically go through it, but really with an indication or intention that we were going to be partnered with them. And they called me up one day and said, look, I love the idea but you know, why don't you do it? We'd love you to do it and we'll back you. And you know, that was sort of like a, an interesting kind of moment. And I stopped and I said, that's right. And 30 days later I resigned. And that was the end of 20 2004. January 1st, 2005, I started Claymore. And the reality was at the time I advised them on a business plan and I said, now that I'm actually running this and building this, that's not the business I want to run.

And so what was the business, the.

Business that I sort of saw as the opportunity? I had been advising Barclays and who, who used to own the iShares business. And you know, I was kind of really intrigued by the, the future of the ETF industry and the indexing business. But I also at the time had read a really amazing early research report from a gentleman named Rob Arnott on the concept of what they call fundamental indexing, which was this idea of non market cap indexing using the fundamental values of a stock and, and, but, but benefiting from indexing principles. And I said look, this is the future of the business. This is going to be what I think is going to be amazing. And I was really focused on my math principles of, you know, how do you optimize to. What I thought the job to be done of an asset management firm was, was beat the markets. Like how do you build a money manager that's ultimately geared and structured to beat the markets? So you know, what I focused on was one efficiency of strategy, low costs. You know, I, I'm a big believer in indexing. However, you know, I, I never liked the market cap indexes because they're structurally flawed. Um, and you know, so I love the fundamental index approach and the idea of like then taking the human nature out of the, this sort of equation and really focusing on discipline. And this isn't to say that active money management is bad. It was more that I was structuring this mathematically to give me the best advantage to actually outperform. And my view was if you can slightly do this compounding year after year after year, after three, five years you're going to be a top quartile money manager. And that's how ultimately you build a firm is going to outperform the markets. And so I started the firm. It was a grind, but ultimately I actually found some early success. It was, you know, telling people about ETFs. At the time, there were 11 ETFs on the Toronto Stock Exchange, all run by iShares.

Right.

Back then, they were called I units, if you recall. And no one knew what an ETF was like. They were really used. Some institutional clients, some early adopter diy, and some early adopter advisors were using them. But I was going out there and telling people why ETFs were the future. And I remember, you know, I'd go talk to advisors and I'd always ask them how many you know, of you use ETFs. And in. In 2006, 2005, 2007, 1 out of 10 would say, I know I use an ETF today. Of course it's a hundred percent, you know.

Right.

The big catalyst was, for me was 2008. And the reason why it grew so aggressively. Look, we had a really great story. We had a great business, we had a great product suite. We were innovating, we were doing some amazing things. We were driving the market forward and we were winning, you know, in a meaningful way. But what happened in 08 was, you know, this was the moment when Canadians started to get fearful. And as, you know, when they're fearful, they make decisions. And, you know, when they're not fearful, they don't make decisions or, you know, you don't ask questions. How much am I paying for money management? How much am I, you know, getting in return? How much better I could, I've been doing. But when you're losing money, like they were in 08, they were actually asking these questions, how much am I paying to lose money? How much am I ultimately, you know, could I be doing better? And, you know, they, of course, you know, moved. And, you know, we were a big winner of that. But then in 09, when people came back in the market, you know, they went to GICs, they did things, they made decisions irrationally to go out of the markets. When they came back in, our business took off. We forexed. So we went, I grew to a billion dollars at the end of 08. We were the only firm in Canada that actually saw net positive sales in September and October of 08. And then in 2009, we went from 1 billion to 4 billion. And then it just. Momentum was really amazing. And, you know, 2010, 2011, we went to 5, 7, and 6, 8. And then the two months from the time that we announced the deal with BlackRock to the closing, it went from 6.7 to 11. Sorry to 8 billion, which was a unbelievable momentum and it was exciting.

I mean, it's easy to say now or look back now. Cause as you say, there's more ETFs than there are stocks. And everyone's investing in ETFs. Exchange traded funds like this 8 billion potentially could have become a trillion. But you decided you've done a whole bunch of other things that have been super successful. But you decided at that point to sell. What was that decision point as opposed to, wow, this is going great. Why don't we hold on for get to the 16 billion and then 32, you know, et cetera.

So there's no one in the world that would have wanted that to happen and be true. You know, the reality is when I was 28, I started the company and I had a, you know, partner in the US that gave me capital. I didn't get to control the company as a result of that, but they went through lots of challenges and they actually, the my partners actually switched. So my ultimate partner was a firm called Guggenheim. And you know, we both ran the business. I ran the business in a really amazing way. But there was a moment where we were trying, I was trying to buy them out. And reality was is that the business just kept growing to the point where they really wanted liquidity. And you know, it was sort of a decision. The challenge was is that the price that, you know, BlackRock was willing to pay was just well above what I think it made sense to buy it at. And it was a moment that, you know, ultimately made a lot of sense to ultimately sell was really difficult for me personally. It was a sore moment. I had a real chip on my shoulder because of the sort of, you know, you can imagine there's a lot of depth behind a lot of the conversations, a lot of the work that went through this. I was did a lot for two years to try to buy out my partners. And in the end of the day though, it was a gift in many ways too because, you know, I built that business. I was very proud of it. I think Claymore was an unbelievable company. But I had already in the last, you know, 18 months, started to see where the flaws in my call it business plan were and were very focused on where the future was going. And what the gift was that I didn't know at the time was it gave me a blank piece of paper to start again and to do it differently and better with all the knowledge and foundations that I had now built for seven years of building that company.

Okay, so you've got the segue right there. So I don't know where wealthsimple comes in it in this sort of timeline here, but I think it was Claymore. And then Purpose was sort of, we, we met when you were starting Purpose. So maybe you want to talk about that. You sell Claymore, you've got your, your, your lessons and you know what you want to do and you, what were you then trying to build at that time? And what does Purpose look like now?

So first is to kind of give the origination story. When I talked about Claymore, remember I thought my job to be done was as an asset management firm was to beat the markets. And frankly that's what I optimized for. And you know, I'm very proud that we, we did some amazing things. So just to give you an example, the very first etf, I launched the Canadian Fundamental Index. It, it of course when it hit its five year number, it was not the number three, number four, it was the number one Canadian equity fund in Canada. It beat every single Canadian index, every, every single Canadian active money manager. It did amazing. Now that was through 2008. And you know, I'm very proud of that. You know, that, that we built these products that were ultimately going to be top quartile or top decile in, in that case, you know, number one, the reality was that our investor flows, the decisions of our investors didn't mimic the return. If, if an investor had bought the fund on the very first day and so held it to the fifth year, then yes, they would've gotten that return. But the reality was people were buying it all through 2005, 2006, 2007 and then in 08 there were people who were selling it and then in 2009 they were buying it. And the reality of the investor decision was different than the actual fund. And what I said was, it doesn't matter if I build the best investment products in the world. If my clients don't use it effectively, if they don't know how to ultimately stay invested through both good and bad times, then ultimately it's not adding value to the marketplace. So I said I've got to change that. So we built purpose with one starting a foundation of let's build similar concepts of keep costs low compound, you know, long term accrued value, you know, keep, you know, use the best and most modern ways to invest both active and passive principles. But what we focused on was how do we deliver more outcome oriented More purposeful structure outcomes as opposed to just returns to beat the markets. Frankly I believe that no, most people don't really care what The S&P 500 does in a year. But what they do care about is their goals. And the principle of. When I looked at the wealth industry and the asset management industry, they're so critically important to each other, they work so symbiotically, they're supposed to be however they don't talk to each other. Well the asset management industry is telling them how we're going to beat the markets and the wealth industry saying I just want to solve clients outcomes. And so our goal was how do we build investment products that allow advisors to build more resilient structured portfolios. Just like you would if you were building a sports team, right? You wouldn't put five Sidney Crosby's on a team to win a championship you have to build people who have very specific purposeful roles. And same with investment strategies. And so we built that. At the same time though, I had a bigger vision from the start on asset and wealth and I wanted to help really modernize the wealth industry. And so in fact I had a whole principle of the future of how technology infrastructure, how, you know, the principles of understanding service level offering to an individual who has $5,000 all the way to someone who has $50 million could ultimately be structured on top of a really modern way of building the practice of, of wealth. And you know, we had sort of built this principle and we were going to go and pursue that and you know that was broken up into three different pieces. A ultra high net worth platform support model, a advisor platform support model, and then a call it early stage investor, you know, call it support model. The interesting thing was so I was kind of actively working on, you know, so about a year into the business 2013, year into the business 2014, I had been, you know, kind of working forward on let's go build this call early stage technology platform. And I got introduced at the time to a friend of mine, through a friend of mine, to Michael Katje. He said yeah, I know this young guy who just came back from the valley, he wants to do the same thing, you should meet with him. So Mike comes in, in the office and he and I sit down and Mike is my co founder with wellsimple and the two of us are chatting about Mike wants to do this, I want to do this. I said look Mike, we both want to do this, why don't we do this together? And that was ultimately the starting point. A week later the two of us agreed to terms on a partnership and we created Wealthsimple from there. And you know, I couldn't be more proud of the business that we've created there. The principles of it were very simple. I believe that our industry has failed a large part of the broad investor community because it has ignored smaller investors, early stage or individuals who have less than half a million bucks. Because it's based on average economics. You know, our technology, our infrastructure, our services, everything are based on this concept of average economics. What it assumes is someone who is larger makes you good, well, you know, returns and, and, and profits. And someone who's smaller is very hard to make profits from. So they ignore the smaller end or they treat them like crap, you know. And my principle was let's go and build the systems that are based on unit economics of how you can operationalize and structure at scale how to run money for someone who has $3,000 and upwards and then build the service level on top of that of what those customers need at different moments in the journey of the customer. And that was the principles of what Will simple was all about. And today that business is now grown to over three and a half million Canadians. It's servicing over 55 billion in assets in Canada. And you know, it's unbelievable what it's doing. And you know, I will tell you in, in, in the next decade I believe Wealthsimple will become the most important challenger to Canadian big six banks that has ever been seen. And I'm excited about the vision of what Michael has done with the team and executing on that business.

Yeah, that's amazing. And yeah, so it's well known you're, you're a co founder of Wealthsimple, but you've been actually in some ways the face of the wealth management industry in Canada in a variety of roles. But you don't seem to be tied too closely to Wealthsimple on a day to day basis. Are you actively involved there? Are you just a core investor? Obviously Michael is I guess the face of the firm at this point.

My role has changed dramatically. But one of the things that was very important about to me at the beginning was I had a bit of a brand already and Michael didn't. He was 26 years old. If we had ever made this about Sam and Michael, then it would have become about Sam at that stage.

Right.

And I needed Michael. I wanted Michael to have his own wings and build his own position and, and, and voice. And I could tell you that like I think he has built an unbelievable voice in the market, in a position. I'm very proud of what he's done. And you know, my role at Wealthsimple has adapted and changed dramatically over the last decade. You know, from early stage, you know, with working with, alongside of them to kind of help them with the business plan and strategy all the way to now being a really strong advisor to the company and to I'm on the board and, and really focused on helping and supporting them on the next part of their journey. And you know, to me I'm the biggest champion. Good.

Well, it looks like a huge success and I can see it's really growing. I was speaking with Paul Demaray III a few weeks ago, who's also a big investor in Wealthsimple and he was giving me some indication of just how quickly, well, simple is growing and the economics and whatever. And it's. Yeah, not for me to repeat, but very, very exciting. So.

Well, it's amazing and I'll just say one thing is so Paul PD3 is one of my very dear friends. And um, it was actually over a lunch that Paul and I were chatting and I said, Paul, you gotta meet this group. And we went over, we walked over to the offices and I introduced em to the team. I said, you know, what they're doing is pretty amazing. And we had been contemplating at the time some capital investment from some large strategic investors. And you know, I told Paul that like we should be working with you guys instead. And that was the catalyst for, you know, structuring a really amazing partnership transaction that I think formed an unbelievable opportunity and really helpful, simple scale need the capital it needed to kind of build its position early on, but more importantly also, you know, really help Paul and Power in a meaningful way to build their position and innovation kind of agenda that they've kind of gone off and does some amazing things around. So really, really amazing kind of win, win partnership across everything that we've done. And I think everyone is extremely proud of the relationship that was built between power and muscle.

Yeah, that looks great. Let's switch gears a little bit. Let's talk a little bit about digital assets. So, you know, sometimes you're allowed to talk about digital assets because they're hot and other times no one wants to talk about them. And now, you know, as I saw, I think on X or somewhere, you know, we're back, baby. You know, obviously with Trump and maybe Gary Gensler is not going to be around for too much longer as chair of the SEC. Digital assets, Bitcoin, Ethereum, etc. Not super easy to get exposure to and especially, you know, through your advisor and whatnot. Regulated like crazy. And you were the first person or first firm to launch Bitcoin ETF and Ethereum etf and that sort of reverberated around the world and that could not have been easy. Can you just describe first of all, why did you do that, how did you do that and what's your view and thesis on digital assets? Or maybe Bitcoin specifically? This could be a good case study on how to work with regulators to get something really, really, really hard done.

So there's a lot to pack there. We could talk for hours on it.

I'm sorry, I asked like eight questions in a bind.

I'll start with, I'll start with the why. I mean so I look, I, I'm a person that I believe in always thinking about what's next, where is it going, how's the future. And I'm trying to build a mental model of the future. When I first heard about Bitcoin and stuff, I was kind of a little bit skeptical. Like others 2015, I would talk negatively and say I think this is a fad or a scam or whatever it be. And then I kind of realized that actually people were listening to my words and so I should go and actually spend some time digging in and understanding what this is all about. And I spent the next year really trying to educate myself. I made an investment in a, backing a company that was in the space just to say that's the best way to learn. I mean I just always find that making an investment teaches you a ton. And the founder of that company, a guy named Ben Roberts, was just an unbelievably young individual who just taught me a ton. You know, I would be, you know, riding home on my bike at nighttime and calling him and, and for 30 minutes just grilling him on all these different components of like the space. And I just found it really fascinating and it, it was really important to me because when I. And specifically I'll talk about Bitcoin in a second but, but my first love came to Ethereum and the reason was that Ethereum has this unbelievable non linearity to its opportunity. The system that it's building and specifically around the smart contract structure and the protocol that it ultimately allows for so much tokenization of things that could be really done. Whereas Bitcoin is a really amazing for it's a single token that basically allows for a medium exchange value ultimately between one party and a trustless another party in a trustless environment. Ethereum was all about how can you create multimodal kind of principles of exchange and then ultimately allow for tokenization of anything. And what was really critical for me was this was the, I was finding a blocker in the fintech innovation space because everything that was happening in Fintech was really amazing on the cosmetic front end of the experience, but it was falling into a trap of, of hitting a wall on the infrastructure. And when I first heard about this, I said, look, this could be the thing that closes the gap, that actually gets rid of the need for the. Why do, why is everything still clear through JP Morgan Chase on the payments side? Why do we still work with payments principles? Why do we have a bank infrastructure on everything that happens? Like all of this? You can't really innovate if you can't get rid of that. And so, but at the time it was so early and so I said this is going to be an amazing asymmetric bet. It has, you know, the worst case scenarios, I'm going to lose my money. But the best case is it has a 1050, a hundred thousand, ten thousand, whatever upside if they get it right. And they had to solve for three things. One was, you know, governance, which I think Ethereum did really well. Security, which Ethereum did really well. And then scalability and scalability was the big question. Could it ultimately be a platform that could change and execute billions and billions of transactions in an efficient way? So I said, let's go on that journey. So the first thing I actually did was I, I put together a group of partners that I found were going to be all, you know, both crypto natives, financial expert and just really great partners. And we created something called Ether Capital and we launched that in 2018. We went public with the idea with, let's just own a whole bunch of Ether and go on this journey of learning about how this is going to play. And then that informed us a ton about, you know, what was happening. And it was the first real way for people to buy in a safe and secure way. The Ethereum, you know, native token, ether. And then in 2020, the team and I had been working on, we wanted to ultimately launch a bitcoin and crypto etf. But what was happening was the change in infrastructure was happening. Whereas when we launched Ether Capital we had to self custody everything. I mean ultimately when we, when we turned the thing into an ETF in 2014, just this year, we was, you know, up until, yeah, sorry, 20, 20, 24, thank you. Sorry. You know, when we turned it into an etf. It was like we were still self as a board, the asset. We had a multimodal, we had to worry about security, all that stuff ourselves. Yeah, somewhere in about 2019, 2020, the world changed on the infrastructure side, you know, where custodians came to the market with a really secure and safe way to structure execution, you know, for an institutional kind of ization of a product. The market for trading and efficiency of futures and things that change. So we went and worked for the regulars. It took us nine months and our message was this is the most safe and secure way to ultimately build and have investors have access to it. Whether someone should buy it or not, not buy it is another question. But our view was, you know, all the scams, all the things that you were worried about, an ETF is the most safe and secure way to do it. And we ultimately convinced them and allowed us to launch the first Bitcoin ETF and then subsequently a couple months later, the first Ether ETF in the world. And we're very proud of that because the infrastructure we built has now reverberated around the world and now ETFs are ubiquitous around the world. In the United States most, of course, most notably recently. And it's a large part of the infrastructure that we built here in Canada that allowed for those things to ultimately come to, to fruition. So I'm really excited about it and you know I, I do have a deep thesis on, on the space. I'm happy to talk about Bitcoin as well, which is, we'd love to, we'd.

Love to get a little bit more thoughts on. Yeah. What's your thesis? What's your long term view? And do you, you know, because with purpose you have an advisor group there that you know, many advisor groups that advise clients. Do you have a general view as to what percentage of a portfolio might be appropriate for a client to have in Bitcoin? Ethereum, Something else. Yeah, I would love to hear a little bit about that.

So first off, you know, I would just say that these assets are really today very different than they were three years ago. Even five years ago when I started getting involved, six, seven years ago, it was still a, it could go to zero today. They're not going to zero anymore. And that's a really important thing. So there's still a lot of prognosticators out there who say oh, because it's worthless or you know, these assets are worthless. But I think that that's actually a, a historic perspective that is wrong what's fascinating about Bitcoin, Bitcoin is a very different. So I'm a big Ether fan. I love Ether because I love this, the technology, the infrastructure and the, and, and the potential of what it can be from a system structure perspective and innovation perspective. Bitcoin is a very different thing. Bitcoin is actually a very linear concept and it's actually really a social experiment. And I, I, I, as sad as that sounds, it is a fascinating one. You know, a lot of us did not get to witness and watch the 3,000 years of formation of value of what gold is as a foundational asset. And you know, we didn't get to see that. We just know that gold is worth something and people are willing to exchange value for it. Bitcoin in effectively 16 years is going through that same principle in front of us. And so for a lot of people it's hard, it's hard to think non linearly about that. But it is a truly fascinating social experiment. There is a set number of tokens out in the world that could ever be in existence and there is a lot of people that ultimately will ultimately want to own it or not own it. It's all a supply and demand fundamental principle. And that's how you ultimately say, is it worth something? And that's also why I don't believe it'll ever go back to zero. Because there's enough people always who will say it's worth something. I don't know what it'll be worth in the future, if it'll be worth a hundred thousand dollars or a hundred million dollars or sorry, a million dollars or $5,000. But I do know very clearly that more and more people are going to find this as a very important stage of medium. And you know, the volatility of it over time will ultimately become more like a currency like gold or anything like that. It's just because it's forming and going from a fringe asset to a core asset. It's got this high volatility of future expectation of value. So you know, that's an important principle. So you know, from an investor's perspective, my belief has always been that I think every investor should have, you know, and I say every because, you know, with an asterisk there's always, you know, some people who just don't need to have exposure to it. But ultimately most investors should have 0.5 to 1% of their portfolio in crypto. I just, I don't understand why someone wouldn't have that kind of exposure. It's A critical foundational thing depending on the future of the state. And I'm a big believer in this kind of concept of get off zero. If you have nothing, have something and participate in one way. And that's the kind of way that I think about advisor utilization, investor utilization in their portfolios.

Nice. Yeah, no, I think that makes sense. And when you say, you know, have something 0.51%, whatever it is, and obviously, you know, you've launched the ETFs for this. But in a perfect world, are those folks getting exposure through ETFs or are they holding these currencies somehow themselves? And I say somehow because it's. On the one hand it's easy, on the other hand it could be more complicated. What would you recommend?

So first and foremost, I think that most investors, I mean, want to use them in their normal portfolio. So brokerage accounts, things like that, investor accounts are, you know, ETFs are the best and most efficient way to do it. So there are people who will open up a separate account, go to wealthsimple or whatever, be in, buy their, their, you know, crypto that way. And, and you know, we actually have found that like a lot of young people and also high net worth people want to have direct exposure to it and their advisor may not ultimately want to buy it for them. So they'll go and open up a, an account, either a DIY account or an account at one of the crypto firms. And frankly, my view is, you know, all these, you want to make sure you're in a legit place. But the beautiful principle about ETFs is they're the most safe and secure way. They're custody, they're structured in a really great way. So for most investors, I'd say the largest core of investors, they're going to use ETFs in my opinion, as a core way to ultimately access the market. There'll always be some small group of native people who will go and own the, directly on the, you know, they'll go buy it with their ledger wallets and actually do it. But those are, you know, people who really are sophisticated and understand how to do it because there's so much risk fraught in, you know, the principle of, of self. It's like kind of like if you remember the old bearer bonds, it's like, you know, you own the asset and, and if, if, if you lose them, they're gone. Like so, you know, the Beautiful thing about ETFs and, and you know, kind of working with a firm is that you can actually have them. Custody in a great way.

So my, my best friend called me this morning, lives in Detroit. I don't know if he listens to the podcast, but Todd, if you're listening, I'm talking about you. And he said, you know, my, my crypto is now getting a little bit large. That may be keeping it on. And he named an exchange. I won't say which one it is, but it was a totally fine one, he said. And I got him a gift of a ledger, him and his son, to get sort of to understand this technology. But, you know, with me guiding him through the whole process, he. They still struggled a bit to deal with this hardware hard wallet. So my point is it's, it's hard. Like, it's hard to do this on your own. You, you make a mistake, you forget your seed phrase or, you know, you lose your, your, your wallet. You could lose all your assets. There's a reason why there's banks.

Well, when we launched Ether capital, we had 45 million of eth. You know, we had again in our ledgers, and we would do transactions with our ledgers of the board.

Right.

When we, when at the end of it, we had 250 million of you. So you can imagine the amount of value that was like, created. But also you're sitting there every day, you're trying like, oh, shoot, I really hope I don't make a mistake on this, like this transaction. That we had a lot of structure around it because we had, you know, seven board members had to make decisions on every single transaction and things like that. But the point was, it was really scary. Sometimes when you're thinking about, am I making a mistake ultimately with this transaction? And you controlled that decision. Right. Whereas we lose, we lose that perspective in the normal capital market. You know, you trade a stock, if, if a trade goes wrong, you can always reverse a trade. You can do these things like that. But in, in, there's so much system structure there. But in crypto, it is know that system has to ultimately be built still on top of it, the controls.

Yeah, it's hard. Really appreciate that, that detail. Okay, so talked a lot about some of the innovations that you've brought to market and have done. I don't want to keep telling you what you've done. Is there anything that you're super proud of that we haven't talked about that might be interesting to mention?

Look, my most. I mean, I've done some amazing things I'm really proud of through the years. But the thing that I'm, you know, most proud of is our longevity pension fund. You know, this was something that was really important to me. I, I, you know, when I started purpose, I said look, we're going to solve for, you know, the, the industry continued accumulation phase of like how to give people good investment portfolios. But, but I also want to solve for the decumulation phase, the period of like retirement when someone goes from, you know, saving and, and you know, kind of all the rest of it to ultimately I need to have the portfolio generate the income to live my life off of. How do I ultimately structure that? And different people have different goals, but the foundational principle was how do I have enough for as long as I'm going to live? And you know, as we moved away from DB pension plans, you know, in the 80s, 90s and 2000s, most, most Canadians today are not covered under a DB pension plan unless you work with.

DB being defined benefit.

So that means that you, you work for a company. The bargain is you work for a company, you, you know, they, they basically take a portion of your salary, put it into a savings, they match that and they basically manage that on an institutional grade. And then once you retire they will now give you a stream of income for the rest of your life no matter how long you live. And that is the DB pension plan. It's a really powerful accumulation and declaration bargain and in fact was the reason why many people stuck with the companies that they work. When that bargain shifted and people companies wanted, didn't want to take the liability of giving income for life anymore, they moved to what they call defined contribution plans, which is just a savings plan, it's just an investment portfolio savings plan that the company ultimately has organized for you. And so there's no lifetime income, there's no kind of plan for, you know, once you retire, it's kind of your responsibility. And so most Canadians today have the, the, the responsibility of retirement has gone from the corporate responsibility relationship to an individual responsibility. And as a result of that, most Canadians don't have the benefit of a structured pension, but most importantly a structured income stream that is matched to the term of their life. And I saw all this opportunity to really help change that. We innovated this product. We were the first in the world to do something like this, which was basically build a pension solution, income for life solution in a structure of a mutual fund. And the reason why we did it in that is that the mutual fund is so beautiful because it allows for everybody to have access to it. And we launched that three years ago and I can tell you like globally the conversations I have with firms around the world about what we've done here in Canada, it is amazing and the pension community on a global basis. And so you know, I'd love to see that really go to another level and really take like help Canadians really have confidence post work, you know, how do I know post work that I'm going to have enough no matter how long I live is a really critical thing that I'm really focused on.

That's awesome. Maybe last question on the industry because you've done so many different things and maybe your answer will be something you've already done, but you have a real amazing view of what's happening today and where the industry and where the future is going. If I said to you, okay sahm, I'm taking away everything you have right now, all your businesses, everything you've launched, everything you've done and but you get to start a new company today. You can have one product and you're going to that product. You will, you know, launch and run and that's going to be how you generate your income for the rest of your life.

So for I don't think it's, I don't think that it's that different than what the problem to solve today is. I think that a planning based service to Canadians to help them ultimately achieve their goals is still the most important. Call it intermediary value that can be given to any Canadian. And so a wealth firm, a wealth advisor that ultimately can help Canadians succeed not just by hey, I gotta give you better access to the markets but I'm actually going to help you achieve your goals and ensure that you have your liabilities met and you know, really be focused on everything from your state to your taxes and ultimately your portfolio.

Sounds like a business I'm familiar with.

That's right. And now there's a large part of that can be done in an effective infrastructure, technology, operational and call it marketing and principle of telling the story in a great way, which I would be really excited but I think that that's the innovation that can be done in that and really being focused on how do you tell that story to Canadians, how do you help them, how do you build the systems around reporting and structure around really doing that in a wonderful and delightful way. How do you get, get the experience on the back end and the infrastructure that could be really amazing but ultimately that's the service that what financial services here for and what, what we're all here that's A job that we need to do. And it's all about how do we do that better and better and better and better. And so that's the one problem to solve continuously. And it never ends until everyone has solved.

Right. Beauty. Love it. Okay, last question again, we've reviewed all your career and what you've achieved. Is there like a single key lesson you might have for folks, whether they're early in their career, whether they're in the middle, wherever they are, that if you had one piece of advice, you'd say this advice, you know, this will help you really achieve in life. Whatever achieve means, doesn't necessarily mean money, but you know, or success at work. But, you know, what's your piece of advice to listeners?

Yeah, so, so first off, like, I think my whole life I've been chasing or running away from complacency. It's something that really is important to me. I've always focused on this idea of how can I always get better, improve, be somewhat unidentifiable every two years, like, meaning like someone can sees me and says like, wow, like how much you've grown and changed. And so that's a really important thing and I think I tell everybody is compound your growth, compound your constant learnings on a day to day basis. And my biggest thing is don't fear failure in life. Fear average. You know, that's the thing that we all should be focused on is, you know, the worst thing in life is just to be average. You know, be something better than that. And I think too so many people will be settled for average because they're afraid to fail. And that's just not the way I've ever lived my life.

That's amazing. What a great way to end. So listen, Sam, thanks for your time. I really appreciate it. Thanks for the reschedule for my voice here. You know, you're doing amazing things. We use some of your products, as you may or may not know, for our clients. So we appreciate that and yeah, just all the best and thank you. Enjoy the holidays and look forward to seeing you soon.

Great to see you, Brian. It was a wonderful conversation. Thanks for having me on. The unlimited podcast is hosted and produced by Brian Gensler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment advice. If you like what you heard, don't forget to rate the podcast and follow us on social medianslerwealth. Thanks for listening and see you next time. Sam.