The transcript from this week’s, MiB: Som Seif, Purpose Unlimited, is below.
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MASTERS IN BUSINESS Guest: Som Seif, Founder & CEO, Purpose Unlimited
Host: Barry Ritholtz • Bloomberg Radio
Transcript
ANNOUNCER (00:00:02): Bloomberg Audio Studios. Podcasts. Radio. News.
BARRY RITHOLTZ (00:00:08): This week on the podcast, yet another banger. Som Seif is founder and CEO of Purpose Unlimited. One of their holdings is Purpose Investments — about $40 billion Canadian. He is a serial entrepreneur and financial innovator. He created the world’s first Bitcoin ETF in Canada, long before the US came up with one. He built one of the larger ETF firms in Canada, sold it to BlackRock — on and on the conversation goes, about all these fascinating things. I thought the conversation was really, really intriguing, and I think you will also. With no further ado, my conversation with Purpose Investments’ Som Seif.
Som Seif, welcome to Bloomberg.
SOM SEIF (00:01:04): Oh, Barry, it’s great to be here. And thank you for that kind introduction.
BARRY RITHOLTZ (00:01:07): So I’m kind of fascinated by your background, your career, the whole multiple innovations, serial entrepreneurship. But let’s roll back to the early days. You wanted to be an architect, and then you went for a bachelor’s in industrial and systems engineering from the University of Toronto. What was the original career plan?
SOM SEIF (00:01:31): Yeah, I mean, since as long as I can remember, architecture was my key goal, and that fundamentally was something that just inspired me. I loved the mix of the creative side of my brain and the — call it systems and structural, mathematical — side of my brain, and bringing them together. Design was always something exciting. The interesting thing was, now you’re faced with this decision: you apply to school for architecture and for engineering. And I went and spoke to a couple of architects, and every single one of them said, “This is a stupid career choice. You won’t be doing anything that you think you’ll be doing. It’ll be grunt work. You won’t enjoy it, and there’s no money in it.” And I, of course, said, whoa, what am I signing up for? So I said, okay, I’m gonna go do engineering with the idea that maybe I’ll switch. And fundamentally, that was not gonna happen.
I was in first year of engineering and said, okay, what is my second choice? What else? And I really loved the concept of strategy and finance. I didn’t know anything about finance, and hadn’t been learning anything about it, but I got excited about investment banking and things like that. And so ultimately, I decided that was the path I was gonna pursue. And coming out of an engineering degree, I ended up — luckily, just the timing, really uniquely, at the end of 1998 — getting an opportunity to join the biggest bank in Canada, RBC, in their investment banking division. So engineering was a really interesting path towards it. At the time, the tech bubble was happening, and I guess someone in investment banking said, hey, we need more engineers in here to tell us how to think. And the learning curve was pretty amazing, in terms of starting with nothing and basically learning on the go.
BARRY RITHOLTZ (00:03:24): So you spent six years at RBC helping them build out their structured products group. Tell us about that experience. What did you learn?
SOM SEIF (00:03:32): So, investment banking is one of the amazing early learning experiences, and I’ve always been in pursuit of learning and, call it, pushing myself to certain limits. Investment banking today is very hard. Investment banking 25 years ago was even harder. As a young analyst, a young individual, you’re ultimately working on amazing things, but at the same time, you’re working like a dog — 80- to 100-hour weeks. That said, there is no better place as a 22-year-old, 23-year-old, 25-year-old to ultimately have immersive learning. So it was amazing for me when I went into it.
It’s funny — as a young individual, I was an immigrant to Canada. My family was a good middle-class family, but we didn’t have stuff. So I always dreamed about this idea of all the riches and gold and things like that. And one of the things that excited me about investment banking was this idea of, hey, you’re gonna make lots of money. And the interesting thing was, during the tenure, the first few years, you start making good money for a young individual, and then you kind of realize, wait a minute, this isn’t actually motivating me. I remember succinctly: I came home — I was 25 years old, it was three in the morning, or two in the morning — and I just sat down and kind of wept, because I said, I’m working like a dog, and I’m pursuing this goal, but I’m not happy. And I had to actually go through a deep-rooted perspective of, okay, what is the thing that actually drives me? What is the thing that actually motivates me to wake up on Monday morning and skip to work, because I’m still enjoying what I’m doing? And what I realized was that the thing I was actually in pursuit of was the idea of seeing my ideas progress — seeing the things that I was doing have real, tangible outcomes.
And I go back to that principle of, what was it that excited me about architecture or design? It was this very simple principle: when you build something or you design something, you can actually see it in front of you afterwards. So I actually correlate that really specifically to what was my intrinsic motivation. At that point, I just said, look, I’m still learning. I’m having an amazing time, but am I going to ultimately achieve what I want here? And I said, I won’t. So I kind of gave myself a put, I call it. I was 25 years old, and I said, okay, I am still here learning, I’m gonna build my networks, I’m gonna do all this stuff — but if I am in seat on my 30th birthday, I’m going to resign on that day. And that kind of woke up my mind to what else is out there. And over the next number of years, I started thinking about what was going to be the next thing for me. And that ultimately came when I was 28 and started Claymore.
BARRY RITHOLTZ (00:06:18): So let’s talk about Claymore. You launched this in 2005. Globally, ETFs were a thing, but not the giant thing they are today. They certainly were a tiny niche product in Canada back then. What did you see that all the other banks and all the other finance bros completely missed?
SOM SEIF (00:06:37): So you’re absolutely right. In Canada specifically, there were 14 ETFs listed on the Toronto Stock Exchange, basically all by Barclays iUnits — at the time, iShares. And in the United States, of course, ETFs were starting to become popular, specifically in the institutional crowd and retail crowd — firms like WisdomTree had just entered the business, and players like that. So it was not an area that was logical or, call it, clear. That said, I had the benefit that I’d actually covered asset management firms globally during my time at RBC, and I’d gotten the opportunity to cover Barclays and got to know the leadership of the organization, helped them raise some capital — but more importantly, I supported and understood what they were doing on the indexing and ETF side. And it got me really excited. I started to see the trends.
But what I struggled with was the fundamental principle of passive indexing. I really did. I actually love the principles of what indexing did. And at the time, ETFs were deemed as indexing, right? That was the concept — anything you did outside of pure indexing was a no-no. The industry players would say, “Well, this isn’t an index.” So I got really excited about the idea of what an ETF does: it’s low cost, a great product in terms of wrapper and structure, a transparent discipline in its approach, using an index. However, I just hated the fundamental principle of what market-cap indexing did, which is basically buy high and sell low, right? So around the time that I left RBC to start Claymore, I had actually read a research paper — it just serendipitously came out around the same time, in 2004 — by Rob Arnott and Jason Hsu, and we’ll spend some time on Rob, who’s a really important person in my life. And they had published this article around non-market-cap-weighted indexes —
BARRY RITHOLTZ (00:08:37): Smart beta.
SOM SEIF (00:08:38): Yes. And I read this article — I’m an engineer, so I love these technical things — and I just got excited. Basically, a couple months later, I reached out, and we went down and spent time with Rob in Pasadena. I remember Rob was a pretty big deal, but he took the time — he spent half a day with me — and I walked out of that office just having clarity on the future of what I was going to build, and more importantly, the future of where the industry opportunity was. And that was the principal starting point of the vision for building Claymore, and the future of what I felt was going to be a really amazing thing around indexing. And of course, we launched the first public investment fund on fundamental indexing, the RAFI indexes.
BARRY RITHOLTZ (00:09:31): Huh, really interesting. So you grow this to 34 ETFs and a couple of closed-end funds, and about $8 billion Canadian, I think — or $6 billion US. What was the hardest part of building that sort of asset manager, considering all the other products were giant bank-owned?
SOM SEIF (00:09:53): Well, Canada, of course, has many structural — I mean, it’s an amazing region for opportunity in financial services. That said, it is also highly concentrated, with the big banks and the control that they have with their distribution. So it’s a very challenging market for independents, as you can imagine. That said, I go back to the period: we had a really amazing product — no one knew what it was. I remember we’d go out in 2005, 2006, 2007, and we’d sit down and talk to advisors across the country. I’d walk into a room, and I’d have a sign-in sheet with name and email. But then I’d ask the question, “How many of you use ETFs?” And back then, it was one out of 10 who would say yes. Most people were like, “What’s an ETF?” — “It’s what, EFTs?” This was the time, right?
But I fundamentally believed what we were doing was important. And we grew — in Canada, of course; remember, we’re about one-tenth the size of the American market, so $8 billion aggregate would be like $80 billion in that timeframe. We actually, in the first couple years, grew to about a billion dollars. At the beginning of ’08, we got to about $800 million, which is a great, great outcome early on, from nothing. And then the real thing happened in 2008, and it was a really great wake-up call and, call it, learning for me. We went through 2008, and every single month in ’08, we grew positive — we had net positive sales. I think we were, despite —
BARRY RITHOLTZ (00:11:22): The ongoing carnage —
SOM SEIF (00:11:23): Well, despite the market environment. And in September and October specifically, we had positive net sales, and I think we were the only firm in the country that had that. The principle was that disruption was critical for us at a time when we were trying to build a challenger idea and tell a really strong narrative. We needed the complacency of our investor base — the advisor community, the institutions — to wake up and say, “Hey, wait a minute, what should I be thinking about next?” And that was a really important point. So we ended up in 2008 growing from $800 million to $1.1 billion, despite the headwind of the markets. And then in 2009, we went from $1.1 billion to $4.4 billion.
BARRY RITHOLTZ (00:12:04): Wow.
SOM SEIF (00:12:04): So, just an accelerant coming out of the financial crisis. The next year, we went from $4.4 billion to $5.7 billion, and then to $6.8 billion. And then ultimately, two months later, when we closed the deal with BlackRock to sell it, it was $8 billion. And the momentum was just so unbelievably strong. And the reason was because when the financial crisis occurred, people left the market and they were going to cash. And then, when they were re-entering the market, they were asking themselves, “Now what? Where do I go? What are the best investment vehicles?” And all of a sudden, ETFs became something that they were learning about, understanding, and we were right there. And it was amazing.
At the same time, we also saw the acceleration towards the trends that were happening in advice — the movement towards discretionary portfolio management. The historical mindset towards commission-oriented, new-issue-type business became challenged because of the market, and the banks and the broker-dealers wanted more stability. So advisors started to transition their practices towards more discretionary investment processes and model portfolios. And ETFs, of course, fit extremely well in this. We’ve of course seen the RIA movement coming out of that. And those were an amazing backdrop of trends that just drove the market and, in parallel, the ETF industry alongside of it. It’s been an unbelievable number of years for everyone.
BARRY RITHOLTZ (00:13:27): Really interesting. So the sale to BlackRock — what motivated the exit? What was the process like? And how hard was it to let go of this thing that you had built?
SOM SEIF (00:13:39): Very hard. So my financial partner in the, call it, latter years was a firm called Guggenheim Partners —
BARRY RITHOLTZ (00:13:50): Oh, sure.
SOM SEIF (00:13:51): An amazing partner, an organization I worked really well with, and I’m really proud of the relationship we built there. And the interesting thing was, of course, I had sort of approached them and said, “Let me buy you out.” They’d had a great outcome, and it was a wonderful outcome, but we just sort of couldn’t get to a price that made sense. So we decided to go through a process, and I, at the time, felt, okay, we’ll run a process, but I’m gonna also be a buyer in the process. And we agreed to that. At the end of the day, though, the process was very robust. BlackRock was a leading partner in that. And I remember pivoting multiple times, as the price kept going up, on who my partner was gonna be to finance my buyout. And then at the end — I remember, in December of 2011, it was my daughter’s birthday, and I was on the phone with one of my strategic partners around the purchase. We were having a conversation about strategy, execution plan. And I got off the phone, I walked down to my wife, and I said, “I’m holding on too much. The price has gotten well above what my target price was. I’m being too emotional. I think the right thing to do is to sell.” So I called the bankers, and I said, “I’ll put my name behind the BlackRock bid.” I flew down to New York on January 2nd. We spent a few days in a room negotiating the purchase and sale agreement. And we announced the deal, I think, on January 11th, and closed the deal on March 2nd.
And that was — it was a really difficult period for me. I had a chip on my shoulder. I built this thing — you used the words “serial entrepreneur” earlier, and I’ve actually never believed I’m a serial entrepreneur. I don’t build businesses to build businesses. I build businesses because I truly love what I do. I’m in pursuit of really building things that have endurance, have great value to our customers, that really think about changing the industry. And so this was a moment where I felt like something was being ripped out of me. And so I had a chip on my shoulder. We closed the transaction, and I said, I need to take the time. I actually ended up building the business plan for what I was gonna do next — which ultimately was Purpose — within 30 days. But I said to myself, if I start today, I’m going to fail, because I’m not doing it for the right motivation. I’m doing it for the wrong reasons — I wanna do it because I’m in pursuit of getting back in the business. So I ended up consulting for the regulator for a couple weeks, and then I ultimately went with my wife for three months overseas, to Southeast Asia. And I detached. Back then, we had BlackBerrys — I probably still have a BlackBerry; people famously know I love BlackBerrys — but I had a BlackBerry, and I turned it off, and no one could get ahold of me. We went throughout Southeast Asia, and it was the greatest thing. And I said to myself, if I come back and I have the energy and excitement around this business plan, then I’m gonna do it. And of course, we came back, and once we landed in North America, you get all the texts and all the news, and my energy just started to really powerfully go up. And I said, okay, let’s go. And I registered Purpose and started the business plan.
BARRY RITHOLTZ (00:16:50): So we’re gonna talk in a little bit about why I think you’re a serial entrepreneur. But you said something that I’m kind of fascinated by, and it requires a degree of self-awareness that many people in our industry sometimes don’t have — I don’t wanna say always don’t have; we all have blind spots. You said you became aware that you were too emotional, too self-involved — you were holding on too tightly. How did you come to that realization? Listeners are bored of hearing me talk about my early days on a trading desk, but I became very aware that, oh, this is just way too much fun — you’re trading for the dopamine hit, not for P&L. You either have to become more disciplined or shift your career. What was that insight that led you to say, oh, I’m gripping this way too tightly?
SOM SEIF (00:17:53): So I think self-reflection is one of the great virtues that we all should have. It’s one of the things I think often people don’t have enough of. And I actually think it’s something that requires anchoring, sort of early on, to the kind of goals and the things that matter to you, so you’re disciplined around what you’re self-reflecting around. And it’s hard — as humans, we’re not trained, our mental state is not trained this way. So it’s just something that I feel very confident in my ability to do — constantly be asking myself: Am I on the right track? Am I doing the right things? Am I pursuing the right goals? Am I going to achieve the things that I want to achieve on the path I’m on? I think it’s a critical learning, and the growth mindset that comes with that curiosity and willingness to be vulnerable is critical as a human. So this is, I think, a really important thing.
And I think our industry can always use that, because I love the financial services industry — one, because it starts with a really amazing mission. We are here in service of individuals, to help them ultimately achieve their outcomes, their goals. I mean, it is such an unbelievably high-mission industry, and we don’t do enough to talk about that. Instead, we talk too much about ourselves. We’re self-centered. We talk about, “Hey, let me tell you about me — and now that I’m done talking about me, let me talk to you more about me.” And you go to someone’s website — it’s always about me, me, me. It’s never about the customer. And so there’s this amazing opportunity as an industry to step back, reflect, and say: Why are we here? What’s the actual job that we are here to do? And it is ultimately in service of individuals and their outcomes, a hundred percent. And we complicate that so much. And so I think self-reflection on that, as an industry, is a big opportunity, and those who get it are those who stand out and differentiate more than anybody else.
BARRY RITHOLTZ (00:19:43): Huh, really, really fascinating. Coming up, we continue our conversation with Som Seif, founder and CEO of Purpose Investments, discussing financial innovation. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. I’m speaking with Som Seif. He is the founder and CEO of Purpose Investments. So we were talking earlier — you sold Claymore to BlackRock, and instead of taking a couple of years off, a month or two later, you essentially start Purpose, as well as co-founding Wealthsimple. So many people take a breather after an exit. Why go straight back in? And why two companies at once?
SOM SEIF (00:20:35): So, as I said earlier, I had a very clear eye on what I wanted to do next. I was really excited about where the industry was going, what we were doing, the momentum we were seeing. And it felt like now I had this amazing gift: I was blessed with a blank piece of paper. And when you have a blank piece of paper — oftentimes businesses wanna keep evolving, but you have to kind of deal with your legacy and technical debts and things like that. So I felt, blank piece of paper — I get to decide how I would start from scratch. And so I had this great energy, but I looked at both the continued evolution of the modernization of investment management, and I also saw a bigger-picture opportunity in wealth management. I said the opportunity is not just, “Let’s build asset management products.”
Because when I started Claymore, I came at it from a technical engineering perspective. And I said, when I look at all the billboards, and I look at all the advertising, all it says is, “Hey, we beat the market. We did this.” And I said, okay, well, the job to be done is to beat the markets — and I thought that’s what we were supposed to do. So I was in pursuit of building a product and a business that ultimately solved for helping people beat the markets. What I realized — and one of my great stories around this — was that the first product we launched was the Canadian RAFI Fundamental Index fund. And we launched that, and it was amazing. But it hit its five-year numbers in 2010, early 2011 — and of course, at five years, you start to see a real track record. And at the time, it was the number two Canadian equity fund. It beat every active fund and the main index — it outperformed by 200 basis points. And that’s a great accolade, of course, in our industry — that’s what you’re really excited about. And I felt, wait a minute, I actually don’t know if we actually did anything, because it went down in 2008 just like the main index — 35%, or whatever it was. And I also looked at the journey. I said, if someone had bought it on day one, when we launched it, and held it all through those five years, they would’ve received that return. But the reality of human nature was that they were buying it at different times. When they got fearful, they were selling it. And their return was very different than the fund’s return. And I asked myself, did we actually change the industry? Did we do anything? Yes, we did something great — technically, the product was excellent; we were moving the needle on how the industry operates — but we weren’t changing the way the client and the customer were experiencing what we did.
And so that informed me. And at the same time — I told you Guggenheim was our partner — they had been working on the wealth part of their business with Danny Kahneman. And I had this wonderful gift, again, of the opportunity to learn and understand how Danny was brought in to help them understand how to help billionaires and wealthy families — call it patriarchs and matriarchs — understand the transition from wealth creation to wealth management. And it was so powerful, and the principles of what Danny talked about really resonated with me. I became a student of behavioral science, and that became really paramount to my view of what a modern asset management firm needs to think about — which is not just beat the markets, but develop investment products that actually have outcomes and goal orientation towards them. How do you help advisors and investors ultimately communicate together and work collaboratively around the actual goal the customers are asking us to do — which is help them meet their goals? And so I just felt the asset management industry and the wealth industry both could ultimately optimize around that. And that was what Purpose’s mission was gonna be around: outcome-oriented, modern investment management, optimizing for all the inputs in how we manage money — not being active, not being passive. And then second is, how do we help restructure the way wealth management could ultimately be oriented towards the customer journey, as opposed to, “Hey, we’re just gonna give you a 60/40 portfolio”?
BARRY RITHOLTZ (00:24:23): Huh, really, really fascinating. Tell us a little bit about Wealthsimple, which I described earlier as the default investing app for a young generation of Canadians. What did you see, before apps like Robinhood were big and successful, that was a thing that young people wanted?
SOM SEIF (00:24:44): Yeah. So the principal insight that I sort of had was, if you looked at the way that the industry was operating, one of the big negatives was that, because the industry made so much money — the margins were so good — we actually relied, in a lazy way, on what we call average economics. So what does that mean? Where do you see that? It comes out as: “On average, I like to run money for bigger customers. On average, my bigger customers make me more money. And on average, my smaller customers don’t make me money.” And how does that show up? Smaller customers get treated poorly, get high fees, get relegated to low-quality services, and larger investors ultimately get all the value — and people were gravitating towards, hey, minimums and big fees and big services for high net worth and ultra high net worth. And I just felt that was stupid.
The only economics class I took in engineering was something called ABC economics — and what that is, is actually activity-based cost economics. So, the idea of unit economics. And I said, what we need to understand in this industry is — I actually disagree that small accounts don’t make you money. I just think that the systems, the principles, the infrastructure of the industry are poorly designed to serve smaller clients. And so what I felt my whole wealth model was, was: How do we restructure the infrastructure of the industry? How do we think about it from a unit-economics perspective, using technology and structure and pipes that would ultimately allow for that? And then what you do is bifurcate the value for the different segments of customers — from early-stage customers, to mass affluent, all the way to ultra high net worth — based on a service-level offering. And the service-level offering would change and increase based on the needs of those customers. So that was the principle. And I said, at the earliest stage — if you’re 20 years old, 25 years old — this is the most amazing period to build for. But the industry was treating them awfully. So I said, let’s go build this.
And so we started with the technology, the infrastructure. And what Wealthsimple has done is really unbelievable. It has become, in Canada, the most competitive platform in financial services against the big six Canadian banks. Canada has never seen anything like this before. And it all is rooted in serving customers where they need us to serve them — right when they’re getting started, or along the earliest stage of their journey — and then helping them compound not only their wealth, but also the overall financial experience, as they grow from 25 to 30, 35, 40. It has been an amazing experience. And today, Wealthsimple — I think we run about $150 billion, but we are doing more in net deposits than the biggest bank in Canada, RBC. That is an unbelievable statistic, and I’m proud of what that team and what the organization are doing to challenge the industry and change the way Canadians are served.
BARRY RITHOLTZ (00:27:37): So let’s stay with Wealthsimple a minute, because initially, I assumed this was kind of a Robinhood-like app, with free trading and gamification, and, you know, up to but not quite sports betting — that sort of “Hey, this isn’t gonna get anybody to their goals; it’s fun, entertaining stuff during the lockdown of the pandemic.” Tell us about Wealthsimple in terms of the differences with an app like Robinhood.
SOM SEIF (00:28:07): Yeah. So the starting point, actually, is you start with the customer where they need you the most, right? When you’re 25 or 30, you’re either just getting started — you might have $5,000, $10,000, $20,000, $30,000 — and the principle of it is you want to help them ultimately get going, building a discipline, a structure. So we have the managed-money programs, where you open an account very simply and clearly, you basically build your portfolio, and your portfolio is basically a glide path on the markets. And then you surround that with the types of services and solutions — so direct trading accounts, cash management, credit cards, all the crypto, things like that, that are really important.
So my principle is, there’s always a view of tension around these things. I come at it from a different view, which is: these are things that people are going to be in pursuit of. And what you want as an organization is not to duck your head in the sand at any stage. If you’re an advisor saying, “Hey, I don’t do crypto,” it’s actually a wrong message, because your customers are going to be in pursuit of it. We know that 60, 70% of high-net-worth individuals have a direct account, and many of them are curious and engaged in buying interesting areas like that. So I think an advisor firm — or any firm, a financial services firm — has to find a way to balance the foundations of what is good long-term, call it disciplined, investing, along with satiating the needs and the desires of what an individual wants, so that they don’t turn their head to “I need something different.” And that actually comes from the mindset of: find a safe and secure way to do those types of things on behalf of the customers, and educate them, and size it effectively. So, for example, Wealthsimple recently got approval to do prediction markets, and this is a really high-tension area — people have a binary view of this. And my view is, if customers are going to be doing it, you want them to do it with you, in a safe and secure way, rather than to do it elsewhere. And that’s how you have to ultimately be building. But at the same time, the whole business is oriented around helping someone where they need it the most around their financial journey, so they can ultimately achieve their goals. That’s it.
BARRY RITHOLTZ (00:30:14): So, this discussion about whether or not you’re a serial entrepreneur — I have to click through a bunch of things that you’ve built that are fascinating, starting with the world’s first spot Bitcoin ETF, back in 2021, years before the US approved one. It crossed a billion dollars in the first month. How did you get the Canadian regulators to approve this? How’d you make them comfortable three years before the SEC was comfortable?
SOM SEIF (00:30:48): So first off, I have had a deep thesis on crypto for a long time, and that’s the starting point — I wasn’t doing it because, “Hey, cool idea du jour — let’s launch this and throw something against the wall.” In 2016, just like most people, I’d been asked about Bitcoin, and I was like, I don’t know, it looks like a sort of scammy thing. And then I sort of self-reflected and said, wait a minute, people are actually asking my opinion on this. I should go and do some research. So I spent the time learning and understanding the space. Actually, the best way to do that is make an investment. And over the next 12 months, I just became this student of what was happening. And what really excited me was, of course, Ethereum, which is this, call it, sister technology that was really around taking what Bitcoin had done and really expanding the capabilities of it around smart contracts and all the rest. And so I got very excited about that.
And so what I said was, we’re so early in this — the infrastructure’s not there; the fraud risks, all of it, for investors are gonna be so high. So I actually launched the first publicly traded vehicle on Ethereum, called Ether Capital. I partnered with a group of people, and I said, we’re gonna raise the money, we’re gonna buy Ether on the balance sheet, effectively — we’ve seen these now become more popular in the last number of years, but it was the first one, and we did this in 2018. And I’ll tell you, it was an amazing thing. And my message was, we’re gonna find a safe and secure way for people to co-invest alongside of us on this really great journey, because of the asymmetric opportunity of this bet. That informed me on so much. And we used to do self-custody in that corporation, all the rest of it. And then, at some point, we started to see the infrastructure change, and that’s when we went into the regulator and said, look, there’s an opportunity here. The infrastructure’s changing around how you can custody and fit this into a liquid ETF structure. We worked with them for nine months and ultimately got them comfortable.
And this is a really important principle that I believe: as a registrant, as a money manager, we have great ideas, great innovation, and as long as our ideas are aligned with where the regulator wants the future to go, it’s really important to engage with the regulator and have that dual relationship — that idea of helping them, educating them on where we need to get to. And so that was the kind of work we’ve done all throughout my career. And we did that on crypto, and frankly, we’re really excited that we got the opportunity to launch it. And that model, what we did, actually ultimately informed the series of products that launched in the US a couple years later, on how ultimately to structure ETFs in the crypto space. And of course, the industry has grown, and we’ve moved an asset from the fringe all the way to the core — which is what ultimately my thesis was, in a deep way.
BARRY RITHOLTZ (00:33:34): And Ether Capital today is in what structure?
SOM SEIF (00:33:37): We actually converted it from that corporation to an ETF, once that was available. And again, there, we built staking into it — and those things weren’t available in an ETF form, or, call it, doable, until they were. And when they were, we ultimately moved to the most efficient vehicle, which is the ETF structure.
BARRY RITHOLTZ (00:33:54): Let’s talk about the Longevity Pension Fund, launched in 2021 — the world’s first income-for-life mutual fund, which uses longevity risk pooling to pay lifetime income, like a defined-benefit pension. Investors include Allianz and OMERS. How is this different from what, in the US, we think of as traditional annuities?
SOM SEIF (00:34:20): So, first off, this was my original thesis on Purpose, which was: the industry was all solving for the accumulation phase — let’s build investment products to, call it, solve for how do we save money — but no one was really solving, within the asset management industry, around the challenges of decumulation. And it was kind of left to the insurers, with the annuities, and with defined-benefit pensions and such. And I just felt there was this gap there that was really critical, and you need to deeply understand the principles of how longevity and structure and all the rest of it were gonna be critical in there. And so I asked the team — I said, we need to solve for decumulation. And we were in pursuit of it; we were spending a lot of time working on it. Ultimately, we came across a structure, and I just got really excited. And on the principles, we had to go to the regulator again and say, there are some exemptions we need to make this work.
If I step back for a moment: the greatest financial product ever created in our business — in the financial industry — is the defined-benefit pension plan. And frankly, if you go back to what that represented, it was such an amazing bargain. You join a company; the company says, we will, in an institutional way, organize to have a savings program alongside of your career. And it will not only solve for your savings needs while you’re working, but once you retire, it will also solve for your income longevity for as long as you live — and in some cases, your spouse’s. If you think about the journey of a customer, it is the most unbelievably comforting and principled thing that we’ve done. And the industry has done everything over the last 40 years to break that down —
BARRY RITHOLTZ (00:36:03): Kill it, yeah.
SOM SEIF (00:36:04): — with the concept of, “Hey, we’re giving you choice.” And that has been so bad for people. So I always believed that we needed to bring the system back. If every Canadian or every American had access to a defined-benefit pension fund, 95% of them would be unbelievably better off. The reality is, it’s not good for the industry — the fragmentation allows for agency to increase. And so what I’ve always said is, how do we bring this back into the structure? And so the Longevity Pension Fund was designed around: How do we build a pension plan for all? How do we do that in a mutual fund structure, which is accessible? The annuity structure — of course, it works similarly. The problem is it has this structure where you have to go off-book for an advisor, so advisors don’t really like them. Investors have to ultimately go through an insurance structure, and it’s individualized. Whereas the defined-benefit pension plan is a pool. And so, when you get longevity risk pooling like that, which is done in a defined-benefit pension plan — why couldn’t you do that in a mutual fund? And that was our principle. And so we designed that. It’s the first fund to really incorporate longevity risk pooling — so, putting lives together with a mutual goal of: I’m putting money to work to ultimately solve for my lifetime comfort, that I’m gonna have income for life, and if I die early, I’m ultimately supporting the cohort, but I’m getting what I needed from it.
BARRY RITHOLTZ (00:37:26): So I want to click through four other innovative products, but I don’t wanna spend all week on it. Let’s click through these four quickly, starting with cash-management ETFs.
SOM SEIF (00:37:38): Yeah. So cash is something that, of course, everybody needs access to. So we had launched the first money-market ETF when I was running Claymore. When I came back with Purpose, we saw the movement — deposit rates were much higher than money markets. So we actually went in — the unique thing we did there was we went and built an ETF that linked to a deposit account, not to a security. So it’s actually one of the first of its kind. And that was a hugely important thing back in 2014, and of course, the cash-management industry has grown dramatically. We haven’t seen this in the United States yet — so we haven’t seen deposit-based cash ETFs. We’ve seen money-market-based ETFs, but we haven’t seen deposit-based. So it’s based on the buck — the value doesn’t fluctuate, it increases — and it goes right into the bank deposits of several banks, and you get, therefore, a higher rate. So we were really, really proud of that innovation. And it goes to show the kind of first-principles mindset that our organization always thinks about, which is solving problems. Because many advisors moving to discretionary were saying, “I wanna bulk-trade cash, but my organization isn’t making it easy.”
BARRY RITHOLTZ (00:38:46): You have to sweep it in from the custodian at night. It really should be capable of being automated and maximizing yield without increasing risk. But there are just a million impediments in the way.
SOM SEIF (00:39:00): “I sell QQQs, and I want to go into cash in my rebalance of my model — my administrative assistant has to go and do it basically account by account.” Now, with the ETF, you’re able to go from QQQs to cash, and then back to QQQs, or whatever you were doing, in just a simple, single trade.
BARRY RITHOLTZ (00:39:18): Let’s talk about option-based income products. I’ve never been a fan of this as a brokerage product. It just felt like there was so much cost, so much commission built into it. When you’re dealing with relatively tight margins, it’s a challenge as a retail investor to derive any value out of it — real value. It’s certainly great for generating fees. How do you manage an option-based income product that works for the retail investor?
SOM SEIF (00:39:50): So let’s start with the principle of why, right? I believe that options and derivatives actually play a really important role in the management of portfolios and return streams. So it goes back to that principle of: Can you design outcomes, and the trade-offs that come with options? Because that’s ultimately what you’re doing, whether it’s call options or put options. And so, for an investment return stream that you’re designing, options can be really powerful. That said — to your point — they’re high-friction for an advisor, very hard to execute across your business; and two, for individuals, it’s very hard and very expensive: the spreads and the costs and the sizing. But what option structures are really designed for is ETFs and institutional money management, in a great way, because you can do really amazing programs at scale.
So we’ve been doing these for 25 years — back when I was at RBC, we used to help firms build them; at Claymore, I built them; and then at Purpose, we’ve done it. And I find that they are so perfectly designed for the structural outcome that you want to ultimately create and manipulate in your return stream. But they do come with trade-offs. I’ll give you a great example. One of the first things, starting in my career, in talking to advisors — the thing that the old-school advisor would say is, “Oh, I write put options or call options for a couple of my clients on their large names, but I can’t do it for all my clients.” And I’d say, “Why do you do that?” “Well, because I’m owning this stock, and if I’m gonna own it for the next 10 years, why not generate some income along the way?” And that was a really important mindset that people had — but they couldn’t do it across their business. And I said, well, if I own a name like a JPMorgan, and I’m gonna own it — I love JPMorgan — the actual optimal way to own JPMorgan is to have 80% long JPMorgan and a 20% covered-call overlay on JPMorgan, so that you’re generating the long-term beta of JPMorgan, plus you’re generating some ongoing return from the option income as volatility is there, and you’re taking advantage of the volatility to generate return stream. And that’s the best way, optimally, from a risk-adjusted basis, to generally own most stocks. So how do you do that? And so you design something called Yield Shares, which was designed specifically around the single-name stocks that people most love, and then you write options against them to generate the option income, so that it complements a long-only position in the stock.
BARRY RITHOLTZ (00:42:07): How do you avoid getting called away when the stock has a sudden surge? And the problem isn’t merely, hey, you can always go out and re-buy it — but now you have a giant capital gains hit you have to pay when the stock gets called.
SOM SEIF (00:42:21): So, one thing in Canada is we don’t actually have the difference between short- and long-term capital gains. So it’s a really nice thing — you can buy and sell something in a day and ultimately get capital gains treatment at the lowest rate. Our rate is a little higher, but still —
BARRY RITHOLTZ (00:42:35): We’re 23% short-term, 30% long-term.
SOM SEIF (00:42:37): So our long-term is 25, 27%. The principal mindset, though, is this is what institutional programs are really great at. You don’t write one option on one strike price on one position — you stack them. So you might have —
BARRY RITHOLTZ (00:42:52): It’s a whole matrix — different strikes, different dates.
SOM SEIF (00:42:55): Exactly. And then, with technology today, you can optimize all the structural elements of: Do you roll it for tax efficiency? Do you ultimately buy it back? Where along the curve and option do you basically roll the capital into at any point? So you’re constantly in this, call it, aging of your portfolio overlay, which is really important. That’s what institutional money management needs to do. If you’re just singularly buying one option on one strike, that’s actually a very low-quality execution.
BARRY RITHOLTZ (00:43:21): Yeah, we used to see a lot of that on the brokerage side. So the single-stock Yield Shares — how many different versions of this are there? Or are they all tossed into one ETF?
SOM SEIF (00:43:30): No, we have single names. So I think we might be at like 20-something — 25? I don’t know the exact number, but it’s north of 20 Canadian and US names, and they’ve been very popular — they’ve been very popular with both advisors and direct investors.
BARRY RITHOLTZ (00:43:46): Huh, really interesting. Coming up, we continue our conversation with Som Seif, CEO and founder of Purpose Investments, discussing why he built Purpose Unlimited. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra-special guest this week is Som Seif. He is the founder and CEO of Purpose Unlimited, which also owns Purpose Investments. He has founded and sold a variety of different companies over the past — let’s call it 20, almost 25 years. So Purpose is now about $31, $32 billion Canadian — or about $22 billion US — across ETFs, cash, alternatives, private assets, et cetera. Tell us the problem that Purpose is trying to solve for your clients.
SOM SEIF (00:44:45): Sure. So, in total, Purpose actually runs around $40 billion now.
BARRY RITHOLTZ (00:44:48): $40 billion?
SOM SEIF (00:44:50): Yeah, on the platform. So, on the asset management side, just over $30 billion, and on the wealth side, now just around $10 billion, and growing quite fast. And the principal mindset has always been — so, on the asset management side — let’s build a modernization of investment management, and products and services to meet clients where they need to be. How do we help advisors and investors build more resilient portfolios? Not just long-only equities and long-only bonds, but how do you optimize for the types of return streams that support a world where potentially bonds aren’t your protective asset? How do you optimize for the types of return streams that ultimately are designed around an outcome, as opposed to just a return of a beta? And so those are the first start. And we have the inputs of — we care about not only the quality of the investment products that we manufacture, but also the, call it, artisan quality of our investment input: the team, the capabilities, the process for investment strategy, using both quantitative methods and active methods in each of the different categories.
I think the second component was, then, we have this big picture that goes back to this system. I use the reference to the defined-benefit pension plan as a phenomenal product — how do we redesign the way advice and investment management work together on ultimately achieving a client’s goal? And so we’ve designed this whole infrastructure around wealth management to support, one, the movement towards independent wealth management. So, as you know, in the United States, you’ve seen the US RIA segment; Canada has a nascent segment there, and we saw this really important movement towards — and a need for — that. So we built the infrastructure to support a movement towards independent wealth management, but then also the services and the tools and the capabilities over and above that, to support advisors in basically driving their businesses towards more planning-based, portfolio-outcome-oriented investment management and wealth management and experiences — as opposed to, “I pick better stocks than the next guy; I’m better at delivering better returns” — more around, how do we help customers ultimately achieve their goals? And so we’ve built all of this technology and systems around that outcome.
BARRY RITHOLTZ (00:46:54): So I like the idea of emphasizing outcomes over benchmarks, but we have half a century, maybe longer, of organizing portfolios around those benchmarks and trying to beat the index. Explain what’s wrong with that approach.
SOM SEIF (00:47:13): Well, it goes back to the behavioral science part — that’s first. And second was, it’s also a structural thing. If you go back to the last 10 years or so, when I looked at the space, I felt that the industry had become a little bit complacent towards this idea that the, call it, best and optimal portfolio was a 60/40 portfolio. And the reason was, if you actually panned yourself out and looked at the returns of the 60/40 portfolio going back 100, 110 years — which we did the research on — it actually only met its long-term goal of 7% in five of, call it, 11 or so decades. And this was a couple years ago that we did that research. And of those five, three of them were in the period of 1980 to 2020. And so I felt that that had created this bias — an anchoring bias — in, call it, the industry.
You know, Barry, the one thing you realize about our industry is that very few people have a historical experience beyond 1980. Most people’s career spans are from 1980 onwards. And so you get biased towards what you know, what you see. What do you see when interest rates go up? They pretty rapidly go back down. When you look at any three- or four-year cycle, the 60/40 portfolio generally was giving you positive returns. And so that meant, hey, that’s an optimal way to invest. I looked at it and said, wait a minute — if you actually look at periods where interest rates not just go up a little bit and then come back down, but actually go up and stay up, how does that affect bond portfolios? How does that affect the overall balanced portfolio? And so I said that we needed to be prepared for that. And that was the starting point.
The second note was this behavioral component. And I just said, look, at the end of the day, we’ve kind of lost touch with what the customer is actually asking us to do. And the customer wakes up and says, “Look, what I care about is, I want to know that when I wake up, I’m going to be okay — and you need to be in the business of serving me on helping me solve that question: Am I going to be okay?” And like a pension plan, you should have a liability — a goal — and you should have an input, which is your portfolio: your savings program and your portfolio, all designed around, are you going to be okay? And I felt that the idea that we should wake up and say, “Hey, we’re here to beat the S&P 500,” or “We’re here to beat some benchmark,” was a silly concept. All that matters to a customer is: Am I going to be okay? And everything we do every day should be in service of that. And so that’s how I always looked at it. And the principle of the design of an investment firm should be around the kinds of programs and asset strategies that help an advisor build better portfolios to answer the question of “Am I going to be okay?” with their customers.
BARRY RITHOLTZ (00:49:56): So I have so many different ways to go with this that I’m very enthusiastic about. Maybe we’ll put a pin in the whole idea of out-of-sample testing, because everybody is so framed by — it’s not just their own hindsight bias, but the recency bias of what they just experienced. It has such a big issue. But let’s stick with the concept of behavioral finance and the 60/40. I have gotten a lot of pushback for saying, if you’re in your twenties, thirties, forties, do you really need bonds? If you are not gonna retire for — well, a 20-something-year-old may not retire for 50 years. Yeah, there’s some emotional salve from some ballast that’s uncorrelated and doesn’t have the volatility of equities. But if I go back in time — forget what the market did — if I was 20 today, I wouldn’t own a single bond. And if I was 75 today, I would own a whole lot more tax-free munis. So it raises the question: 60/40 — does that make sense for — forget the 20-year-old — for anybody under 50?
SOM SEIF (00:51:10): It’s actually a really important question. And in many cases, the answer is no, we don’t need bonds. And the reality of it is that, if you look at the last five, six years, bonds wouldn’t have done you any good. And so, especially if you’re in an environment like we’re in right now — where the greatest risk right now to a portfolio oftentimes is the volatility, the uncertainty, and interest rates and inflation. Well, this was logical in 2018, 2019, when interest rates —
BARRY RITHOLTZ (00:51:37): Went to zero, right?
SOM SEIF (00:51:38): Right.
BARRY RITHOLTZ (00:51:38): You go from 1980 to 2020 — 40 years of bond appreciation.
SOM SEIF (00:51:42): Phenomenal. Yeah. I mean, that was the —
BARRY RITHOLTZ (00:51:43): That’s a unique era.
SOM SEIF (00:51:45): But the thing that was the big driving force was the movement between the seventies to the eighties, when interest rates spiked into the teens. That was the thing that set up, of course, the next 40 years of declining interest rates. And so you have to step back and have that context. It’s just like timing the market. The reality is that, if you had bought in the mid-seventies, you would’ve had a horrible experience with that portfolio structure.
BARRY RITHOLTZ (00:52:08): There’s pre- and post-Paul Volcker. And that’s the defining element.
SOM SEIF (00:52:12): It’s actually pre and post the economic situation that was happening, that led to an inflationary spike that we ultimately had to address. And that was what you were dealing with. But, to your point, recency bias drove people to believe that this was the optimal way to invest. I think, for an individual, again, it goes back to — okay, yes, equity is a hope-based strategy. Investing is a hope-based strategy. And when you’re in your twenties and thirties and forties — and even potentially, you know, fifties — because I’d say, call it 20 years before retirement, like a pension plan, T-minus-20 years: anything T-minus-20-years-plus, you have a lot of room for hope. Hope is a wonderful thing that you should take advantage of, because ultimately, you want strength and momentum, and you have the time to get it right. But once you get into that T-minus-20 period, that’s the period where you’d better have some structure and discipline in what you’re ultimately achieving to get to T. Because the one good thing is, T can move — that’s the time of retirement. That can move. You could say it’s 65, but if you really need to, and your advisor says, “Hey, it’s a bad time — you need to move to 67,” you can move to 67. And if it’s going really well, we can move it to 63. But T-minus-20 is a really important window where structure and discipline in your portfolio have to be designed. Everything before that — absolutely, you can take as much hope as you want, you can take as much risk as you want, because you haven’t entered that window. That’s how I look at it.
BARRY RITHOLTZ (00:53:31): Huh, really interesting. As someone who’s partial to the math and science half of my brain, I’m curious how you reconcile the rigorous, structured environment of being an engineer — like, there is an internal logic and a set of hard mathematical principles that govern that — how do you reconcile that with the squishy, emotional side of all of Danny Kahneman’s teachings? Which is: hey, this is just how we are built; we weren’t made for this sort of decision-making.
SOM SEIF (00:54:13): Yeah. I think the beauty of when you marry the first-principles — call it linear — kind of thinking around what engineering can do, and then you apply that with the non-linearity of human behaviors, is that it’s actually a phenomenal, call it, mixture of thinking. And that’s what you want. You want those multiple inputs to basically change your mental model of how to design and think. What I love about engineering in general is it is a reverse-engineering mindset. It is going back to the hypothesis, the scientific method, right? Which is: I have an idea of what the answer will be, but I’m going to do everything I can to prove that. So if you apply that to any problem — which is, hey, I’d like to solve for this problem, I have an idea of how to solve it — then you reverse-engineer how to ultimately get there, or you build around the scientific method of it. It’s a wonderful way to approach problem-solving in general.
And then you bring in the inputs. So one of the things we did at Purpose is we’ve actually brought on behavioral scientists to actually support the organization in the way we think about product design, the way we think about marketing, and all those things that we do — because it actually helps influence the mental models and the way that we make decisions. Those are really powerful. So I just believe it goes back to that original comment around the creative mind and the, call it, structured, disciplined mind. I think if you bring those two together, it’s a very powerful mixture to build with.
BARRY RITHOLTZ (00:55:30): Really, really interesting. So we’ve been speaking for an hour, and artificial intelligence has not come up — which I think is a first this year. How do you think about AI from a managerial perspective? How do you think about it from an investment perspective? What do you see as the impact of this going forward? I appreciate the opportunity to ask someone who’s an engineer about this, because essentially, this is software engineering at the highest level.
SOM SEIF (00:56:04): So I’ve never been more excited in my career. I feel a sense of energy in the last nine months, specifically coming into 2026, that I’ve just been excited about, because of what this new technology is enabling us to do. And, more importantly, it’s not just how do we build features, or solve some problems, or create a little bit of incremental productivity. It is about the grassroots — go to first principles — of how should we ultimately design the way we work, the way we optimize our business, in and around a technology re-platforming. It would be no different than in 2000, if you were going through this period when the internet was now becoming real and scalable, and you were sitting there as a retailer or any other business: if you just thought about the historical way to run a business, and I’ve got this new thing — I think you lost. Whereas if you actually said, no, no, I need to redesign the way I work for this new platform — the mobile era, which was a different one: same thing, you need to redesign the way you work. And AI is the same thing.
So we at Purpose have been really deeply embedding it in the way we operate the company. The first thing is, we are effectively driving forward-deployed engineering, data science, and product across the whole organization. We are driving into smaller teams and squads. We are rolling that out across everything. And we are driving the company with this mindset that what a modern organization needs to design around is vulnerability — the ability to have innovation and intelligence moving through the organization constantly, and data flowing, and communication. And this is on top of, of course, leadership strength. In the past, the organization was all driven by leadership strength — how good was the leadership? And my view is, vulnerability and communication are gonna be the things that really drive, and AI enables that in a really amazing way. What that is, is a system of the way you work. So we are doing that in a great way.
At the same time, though, when I look at the industry, we are still stuck in this idea of AI as a feature set. So, “I’m gonna design features” — “Something I used to do that took me an hour, I can do it now in five minutes.” Those are really cool, but that’s no different than what Excel did for us. You know, the accounting industry, you can imagine, was a little nervous when Excel came, but then actually adopted it, and it created great value. But what this actually allows for is a way to change the way we operate. And that’s what I hope the industry really leans into more deeply.
BARRY RITHOLTZ (00:58:34): Huh, really, really fascinating. All right, I only have you for a couple of more minutes. Let’s jump into our favorite questions that we ask all of our guests, starting with: Who are your early mentors who helped shape your career?
SOM SEIF (00:58:48): So I talked about Rob Arnott, and Rob is someone that I care so deeply about. He not only introduced me to his own way of thinking — Rob has a special thing when you spend time with him. Rob is unbelievably intelligent — he can go toe to toe with any Nobel Prize laureate from an academic perspective — but at the same time, he’s actually an excellent communicator and marketer. That’s a very unique, rare combination. And he taught me that in such a deep way. So much of who I am was formed during those years of working alongside and seeing him in motion. So he’s been an amazing person in my life. He also introduced me to his advisory group, which were people like Harry Markowitz, Peter Bernstein, Richard Roll, Keith Ambachtsheer — some of the most amazing deep thinkers, who I got this immersive opportunity to spend time with. That informed so much of my principal thinking at a time when I was very raw and really open to that curiosity. It was exciting.
BARRY RITHOLTZ (00:59:50): Huh, really, really interesting. I have some hilarious Rob Arnott stories that I will share with you off-air. Let’s talk about books. What are some of your favorites? What are you reading right now?
SOM SEIF (01:00:01): So I love books, and autobiographies are one of the things — people always say, learn from failure. I love to talk about learning from success. So, how do you learn from people’s careers and lifetime successes? So some of my favorite books: The Education of an American Dreamer, by Peter G. Peterson — I don’t know if you’ve read that one — a phenomenal, great story about an individual who, of course, ended up co-founding Blackstone later in life, but just an unbelievable journey about an immigrant family — he just did unbelievable things — and the evolution of a career that’s so fascinating. Creativity, Inc. — we were just talking about that.
BARRY RITHOLTZ (01:00:40): I literally just got it delivered two days ago.
SOM SEIF (01:00:44): I love that, because when I finished that book, I said to myself, if I was to ever write a biography about my career, I hope it would sound like this. It was the creativity of what Ed Catmull did — but, more importantly, the relationship, how he explained his partnership with Steve Jobs, and the love he had for Steve, and the way he was so intricate about that. It was just so inspiring for me. I loved it. And then, some of the recent books that have just really inspired me: Unreasonable Hospitality — I think one of the greatest business books —
BARRY RITHOLTZ (01:01:13): Fabulous.
SOM SEIF (01:01:14): One of the best business books that has been written in the last couple years. If you haven’t read it, it’s a critical book. And then I recently finished, a couple years ago, Never Split the Difference, by Chris Voss, and it is unbelievably strong. And in fact, yesterday, we had the team from Chris Voss’s group come in and train our people on how to apply that type of negotiation skill into the daily way we work. It’s an unbelievable way to think about the concept of being comfortable with the word “no.” We are so afraid to hear no in life and in business, but actually allowing no to become something that lets you get to yes is really important. And it’s so counter to all the things that people have learned through the Harvard programs around getting to yes. It’s actually an unbelievable way to think about negotiation and marketing.
BARRY RITHOLTZ (01:02:00): One of the people I work with just recommended that book, Never Split the Difference, and it’s sitting on a pile — I’m holding my hand up this high — and I was like, all right, yeah, I’ll get around to it one day. I’m gonna have to move that up a little higher in the pile. Let’s talk about streaming. What are you either watching or listening to — either Netflix or podcasts or whatever?
SOM SEIF (01:02:23): We have four kids at home, so my wife and I are always trying to find that hour to stream. The one show that has really touched me is the show Shrinking, of course, on Apple TV.
BARRY RITHOLTZ (01:02:34): Delightful.
SOM SEIF (01:02:35): Yeah. And the way that the writer, Brett Goldstein, talks about emotions and communication — it’s just such a touching show. I finish every episode, and I think I’m teary-eyed every single time. That’s been an amazing thing. But my wife and I, we love lots of different shows — we just don’t get to them. We have like seven different series that we are in the middle of watching right now. But we try to find that time, and it’s an important time for both of us.
BARRY RITHOLTZ (01:03:02): You mentioned Unreasonable Hospitality — we just finished the final season of The Bear.
SOM SEIF (01:03:10): Oh, yeah.
BARRY RITHOLTZ (01:03:11): And throughout that show, you can see some of the ideas right from that book on film.
SOM SEIF (01:03:14): You see it in season two — you really see it very much. That’s when it really becomes prevalent. And of course —
BARRY RITHOLTZ (01:03:19): The little hot dogs, and all the stuff they do to go over and above the call of duty. It’s impressive, it really is. So, our final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or financial innovation?
SOM SEIF (01:03:40): So I’d say there’s two answers to this that are important, because you’ve got the tension of what’s happening with AI around this industry. I’ll start with the foundations. This is a wonderful industry to be in, and if you look at the trajectory, financial services as an industry will continue to grow meaningfully. If you’re in the wealth industry, it will double, and the asset management industry is doubling, just in the next 10 years, by virtue of savings and market appreciation. So, as an industry participant, the size of the pie is growing, and continuously — so that’s a really good thing. Two, you’ve got an aging demographic of individuals in this space — advisors are constantly aging — and so there’s a huge opportunity for younger talent to come in. And so that’s an awesome setup to be in the business. The principle I go back to is, it’s an amazing place that has high mission, but I want young people, if I was to come into it, to really focus on: How do I approach this to help the customer truly win? As opposed to the historical mindset of, I’m here to basically manage money and do all these things. And I think there’s a really amazing opportunity to do that in a great way.
If I take the tension of AI — there’s always this question of, what’s it gonna do to the advisor industry or the investment industry? And I look at it as only enabling. If you think about the opportunity for a young person today, this is going to be an unbelievable period. The way I would approach this, though, is to recognize, as a young person, that a career in any financial service — or any career — is not a sort of set of stairs. It actually looks more like a J-curve, and you’re gonna have to go through very difficult periods that look very uncomfortable — where you look like you’re not doing great — to ultimately see this great outcome. And that comes from curiosity, learning, and immersing yourself, to ultimately take risks and do really important things. It’s an unbelievable time right now, I think, for an individual and a young person coming into this space.
BARRY RITHOLTZ (01:05:33): Good answer. And let’s jump to our final question. What do you know about the world of investing, of ETFs, of — again — financial innovation today that might’ve been useful 25 years ago, when you were really ramping up?
SOM SEIF (01:05:47): Well, I think I go back to the constant learning of how behaviors and emotions really drive outcomes. And I wish I’d learned that earlier. I wish I’d kind of been exposed to it. I think the most important thing, though, is this idea of: How do we help truly solve problems along the journey of a customer? How do we put the customer and their moment of need at any point — whether they’re 25, 45, 65 or 85 — and ultimately help them with the types of services and solutions that drive that? If I had had that principle mindset 20-plus years ago, I think I would’ve built even more powerful businesses back then. It’s really fun to do what we’re doing, but I wish we had done this even earlier.
BARRY RITHOLTZ (01:06:33): Som, I am so glad we finally got to do this. We’ve tried to set this up a couple of times, and the dates just kept getting crossed. I’m thrilled you came in to do this. We have been speaking with Som Seif, founder and CEO of Purpose Investments.
If you enjoy this conversation, well, be sure to check out any of the 650 discussions we’ve had over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube — wherever you get your favorite podcasts. And I would be remiss if I didn’t thank the crack team that helps put these conversations together each week: Alexis Noriega is my video producer; Sean Russo is my researcher; Anna Luke is my podcast producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.
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