Episode 2.2 with Dan Richards

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Text transcript

Kevin Press:

Welcome to the Canadian Advisor.cast, a podcast dedicated to financial advisors and the people who work with them. My name is Kevin Press. I’m Editorial Director of Advisor.ca. My special guest today is Dan Richards, an old friend of both Advisor.ca and Investment Executive. He’s a Professor on the Faculty of Marketing at the University of Toronto’s Rotman School of Management. He’s Associate Director of the FinHub Student Fellows Program, which he helped launch in 2021 for students with an interest in the fintech space. Dan founded Marketing Solutions, an advisor consultancy from 1989 to 2002, and he published “Getting Clients, Keeping Clients” in 1998. Proud to say I was at that launch party. Welcome to the podcast, Dan.

Dan Richards:

Kevin, delighted to be here and delighted to see you again.

Kevin Press:

It is terrific to see you. Can you believe it’s been 34 years since you joined Rotman’s Marketing Faculty?

Dan Richards:

Well, yes. You know, Kevin, I did begin teaching here, you know, a very long time ago, but, you know, for most of the time I’ve taught at Rotman, I’ve taught part-time. This was while I was, you know, writing my book and, you know, building my business. I’ve really been at Rotman full-time since 2016, so coming up 10 years now.

Kevin Press:

What are you teaching these days?

Dan Richards:

So, I’m teaching a variety of courses. I teach actually in five programs: the executive MBA, executive programs, full-time MBA, commerce. I also teach 400 arts and science students on fundamentals of marketing. But the course that I’d say I get the most feedback on is a course called One-to-One Marketing, which is all about communicating effectively in all its forms, which I teach both in the MBA and the commerce program.

Kevin Press:

That’s really what marketing is about at the end of the day, isn’t it? It’s about delivering that message and a dialogue, truly, with the audience you’re targeting.

Dan Richards:

Sure, and I think that one of the things that I spend a lot of time going back to, when I was doing a lot of work with advisors and today with students, is talking about the most important part of any conversation is, in fact, the conversation, the dialogue, the back and forth. I point to research with students on the optimum amount of time in any conversation that you’re trying to make a sale-whether it be a financial advisor making a sale, or building deeper relationships, or a student applying for a job-the optimum amount of time talking versus listening is about one-third talking and about two-thirds, roughly, listening. Call it the 60/40 rule. And, by the way, that applies across many, many forms.

Kevin Press:

How have the students changed during your time as a prof?

Dan Richards:

Immeasurably. So when I began teaching in the early ’90s, you know, Rotman, frankly, was not that diverse, and I think business schools weren’t that diverse. It was mainly white males. Today, many, many more women; we’re close to 50/50. Much more ethnic diversity, diversity from around the world. And the MBA program, about 65% of our students are international. So that’s the composition.

But the other big change, when I began teaching, you know, remember, 1992, that was before the internet as we know it today. And, so, the transformation in the whole dynamic, in every form, in teaching, but also in business, is so fundamentally different compared to what it was.

Kevin Press:

Yeah, and, of course, following the introduction, the commercialization of the internet, you had the introduction of social media. I mean, the marketing profession is really barely recognizable now compared to those early days.

Dan Richards:

Absolutely. You know, I think barely recognizable is a good description, and, you know, social media has played a role, for sure. But I think there is a bigger shift that’s happened directly as a result of the internet.

And what we’ve seen in almost every category is a shift in power to the consumer. And that’s a function of the information that the students have, that consumers have, that clients have they didn’t have before. And that shift in power, it’s not going back. We know that, that is going to be a permanent shift. And, so, the challenge is-in every field, no matter what line of business you’re in- is how do you accommodate the way you operate to that new reality.

Kevin Press:

Can you talk for us about how that shows up in financial services marketing specifically?

Dan Richards:

Well, Kevin, you know, it shows up in many, many, many ways. So, for example, one of the things that I talk about in the courses that I teach is an article that was published in “Harvard Business Review” in 1960, so 65 years ago, by a professor at HBR, Harvard Business School, named Ted Levitt. And the article was called “Marketing Myopia.” That article is still the number one most republished article in the marketing field every year by “Harvard Business Review.” Remarkable. And Ted Levitt talked about examples of industries, like the train industry, the railroad industry, which was one of the most profitable industries at the turn of the 20th century in 1900, and what happened. How did it go off the rail, so to speak? And, of course, the automobile came along. And what Levitt went back and looked at and said, “What was the response from the railroad CEOs and the folks running the railroads to the car?” And they’d scoffed; they laughed. They said, like, “Who on earth would want to give up a comfortable, reliable form of transportation to deal with something that is, you know, unreliable, smelly, you know, kind of uncertain, expensive?” And got it completely wrong.

And what Ted Levitt said, “The problem with the railroad industry was that they saw themselves, they defined their business as being in the railroad industry, not the transportation industry.” And that’s a parallel when you take a look at businesses that go wrong, that you see time and time again, where they fundamentally misread the core benefit that they’re providing to customers.

And, you could look at BlackBerry and how dismissive they were when the iPhone was launched in 2008, you know, not that long ago. So, let’s come back to the financial industry. And, you know, something I think that the financial industry gets very wrong is they misdefine the business that they’re in.

You know, a lot of financial advisors say, “Well, I’m in the business of providing advice or, you know, getting returns or building portfolios or managing risk or optimizing taxes. And that’s the core business that I’m in. That’s the value that I provide.” I’m going to suggest to you, Kevin, there may be a few clients for whom that’s the key thing they look for, but only a few.

The large majority of Canadians and investors say, “What I’m really looking for is a sense that I have a plan that’s going to get me to where I want to go, that I’m going to be in control of my financial future.” And when I talk to financial advisors today, I still spend, you know, a lot of time talking to financial advisors that I’ve dealt with for many, many years. Very few, very few focus on that outcome. Most still talk about building portfolios and managing risk, and I think that, that is a big blind spot for the industry, and I think it creates a very big vulnerability if there’s a new alternative that comes along, someone like, let’s say, Wealthsimple, that begins to position themselves a little differently towards that core benefit.

Kevin Press:

It’s so true. You’re talking about focusing on process as opposed to outcomes. But the other interesting piece of what you’re describing is that peace of mind that I think advisors, if they’re really thoughtful about the service that they provide, it’s giving the client that sense of security about their long-term well-being, their future.

Dan Richards:

There’s no question. And, you know, one of the things, and look, I am a big fan of the financial advisor industry. I think that, that, on balance, it creates huge value for clients. But, that said, one of the things we know: What correlates with long-term financial success for clients? And Morningstar has done a study on this; this was some years ago, but I think it still applies today. The number one factor that correlated with long-term financial success was having a written financial plan.

And, you know, the fact is that when I talk to financial advisors, in many cases, some advisors, you know, as a matter of course, say to clients, new clients or existing clients, “Well, we need to do a plan. That plan will kind of create the road map.” But many advisors that I’ve talked to say, “Well, you know, it’s really time-consuming, and clients don’t want to spend the time. And I don’t really see the value, and I’ll be fine, you know, without it.” But I think that, that creates a very big point of vulnerability because, I mean, coming back to Wealthsimple, if Wealthsimple or someone like Wealthsimple, a new disruptor, said, “Using artificial intelligence, we are now able to create a customized, personalized financial plan that will track your progress against your peer group, against people like you, and create a map that you’ll be able to follow and know whether you’re on track.” I think for many, many Canadians, that would be something that would be quite compelling, particularly younger Canadians who are very uncertain today and are looking for that kind of guidance.

Kevin Press:

We’re a few years on from the initial introduction of that kind of digital financial advice experience. How is Wealthsimple doing in your estimation, and then, more broadly, how is that segment of the industry progressing?

Dan Richards:

So, you know, Wealthsimple, if you had asked this question three or four years ago, there would’ve been a lot of uncertainty as to whether they were really going to be able to get meaningful traction. Yeah, they’re kind of a niche player, but are they a mainstream player? And, one of the things, one of the courses that I teach relates to fintech marketing and strategy. And we actually have founders of companies like Wealthsimple and Zensurance and Borrowell and Neo and Koho out to talk to the class.

And one of the things that I talk about in that course is the hockey stick. So, around the world, founders of companies talk about the hockey stick, even though folks that have never played hockey, have never watched hockey, have no idea what hockey is. Because, what you see with almost every successful start-up is the growth is never a straight line up. There tends to be a long period where you’re seeing a little bit of progress, and that’s when you’re along the blade and then all of a sudden you get an upward turn and that’s when you move up the shaft. And that’s true of Netflix, that’s true of Facebook, that’s true of . It was also true of Wealthsimple. So from 2014 to about 2020, you know, they got some movement, but it wasn’t dramatic. They’ve seen dramatic improvement and growth since then. They’ve got real momentum. The last reported number, they’re at $100 billion in assets. The forecast is they’re going to gather more new assets this year, or last year in 2025, than any of the major banks except RBC.

So, Wealthsimple has kind of got that escape velocity. They’ve got that trajectory. They’ve got that momentum. But they’ve got something else that’s critically important. And that is, when I talk to my students, I talk to my former students. I’m in touch with a lot of my former students who are now in their late 20s, 30s, early 40s. They’re now, you know, doing well. They’ve got buying houses. They’re getting meaningful bonuses. They’re now starting to get significant wealth. And when I talk to them, most of them are dealing with Wealthsimple, and view Wealthsimple as kind of the best solution for them and someone like them. And the real threat, the real threat to the financial industry and to financial advisors goes back a little bit, Kevin, to the early days, in the early ’90s when the financial advice industry was starting to take off. And at that time, if you held GICs, you were kind of embarrassed to talk about it because that was viewed as a sign of someone not that sophisticated. But I think there’s a real risk that two, three, four years from now, unless things change, that if you’re in your 30s, early 40s, you’re a professional, you’re doing well, that you’ll be embarrassed to say that I’m working with one of the large banks. That will be a sign of a lack of sophistication. I’m positing that as a hypothesis. I’m not saying it’s going to happen, but it could happen when you look at the current trajectory.

Kevin Press:

Well, and certainly, if you look at what’s emerged as a standard practice across multiple channels, most appear happy to have young clients begin in a robo-advice environment, even if that means they’re working with the competition. They’re not interested until the client reaches a minimum asset level. That seems a dangerous bet for the industry to make.

Dan Richards:

So, absolutely. So let me give you a firsthand example. I had a conversation last fall with two former students who met at Rotman and they’re, you know, they ended up, you know, becoming partners, and they’ve been out now, I guess, what, maybe six or eight years. You know, one of them-both doing very well in their careers-one of them works for a consulting firm, another is at a senior level with a healthcare institution. And they started, you know, developing meaningful assets, meaningful wealth, and they said, “Geez, not sure whether we’re on the right track.” And so, they said, “Okay, so we maybe should look at figuring what to do.” And they’d read that they should have a financial plan. So one of them talked to someone who happens to be with one of the banks who introduced them to someone at the brokerage firm. But, you know, they paid off their tuition, and they bought a house. So they didn’t have a lot of liquid cash at this point. They maybe had a couple $100,000. It wasn’t enough. It wasn’t enough to kind of get the serious attention of that financial advisor to the point they might have been willing to accept them as a client, but wouldn’t be able to do a plan. And that’s a bit of an indictment, I think, of the mindset. And that’s so short-term thinking. So, guess what? They’re at Wealthsimple, and they’re quite happy at Wealthsimple. And I think there is a real risk to the financial industry that we’re going to wake up and discover that we’ve lost a generation of younger, ambitious, successful Canadians.

Kevin Press:

From a pure market development perspective, this strikes me as counterproductive. We risk losing a generation of new clients. I understand why firm executives need to focus on profitability, but this can’t be good for the industry, can it?

Dan Richards:

So that’s a great question, Kevin, and I think, you know, when you take a look at the once-dominant companies that have run into hard times or maybe vanished entirely, you know, we can think about names like Kodak, Sears. People, you know, forget the fact that in 1970, Sears had the level of sales in the U.S. that its top three competitors did combined. Their sales in 1970 were about $15 billion; Walmart was 30 million. And, you know, you can run down the list of once-leading dominant, successful players that have either become irrelevant or have vanished entirely.

And, the challenge is that it is hard to embrace fundamental change when you’re successful. Incredibly hard. Because, you know, incremental change, yes. Sure, of course. But fundamental change? That’s much harder. And, so, I participated in a session with Deloitte where they brought all of their consultants from Canada and the U.S. together, and it was all online, and spent some time talking about what’s happening in the challenger banking space. And we had someone from the UK where the challenger banks, in fact, are that’s the most developed market in the world for challenger banks. Revolut is based there, and Monzo, and some others. And we talked about Canada; we talked about the U.S. And I got to ask the question, so if I’m running a bank, you know, like what would I do to deal with the threat of challenger banks-whether it be Questrade, or whether it be Koho or Neo or Wealthsimple? And, you know, my response was, I don’t think you can do it with a business-as-usual kind of mindset. So if I was running one of the big banks and said, “Look, this is something that we need to give serious attention to,” I would say, “I want to put a team together, you know, 10, 12, 15, whatever number of my brightest, most tech-savvy, most with it, you know, high-potential managers in their late 20s, 30s, maybe early 40s,” and I would say, “Okay, I’m going to give you three months, or maybe three months isn’t enough, maybe it needs to be six months, but create kind of an entirely different entity outside of the established organization.” In the tech world, that’s called creating a skunkworks kind of mindset. So you’re basically not constrained by the normal bounds and parameters in terms of doing the exploratory thinking, and then come back with a plan that says, “Here are the trade-offs. Here’s what we could do.” Maybe you don’t embrace all of it, but at least you’re able to get outside of the conventional thinking.

Kevin Press:

I think a lot of individual financial advisors are aware of these industry trends and concerns. And I’m curious if you have recommendations for someone who works in the industry. In light of all of this, what can they do differently? What should they be thinking about as they market their own individual practice?

Dan Richards:

Well, you know, Kevin, that is a great question because, you know, if you’re working for a large firm, you’re constrained, clearly, by what you can do. So, for example, onboarding and compliance is a frigging nightmare. Every financial advisor I know complains about that. I was talking to a financial advisor who just got approval to hire-and he’s paying 100% of the cost-someone full-time just to do onboarding and paperwork. But, you know, that’s the reality for the advisor’s life. Other than doing what this advisor’s doing, there’s not much you can do. And even though you can say it’s insane, and if you take a look-I don’t want to keep coming back to Wealthsimple-but they are the obvious example of someone who’s figured it out. How is it possible the onboarding process for someone like Wealthsimple or Koho can be so much easier than for the incumbents?

But let’s come back to your question, which is, as a financial advisor, what can you do? I’m going to suggest to you a couple of things to think about. One of them is to really take a hard look at the mindset that you have with your existing clients. Many advisors believe that what makes clients, what leads to satisfaction is, you know, again, returns, results. So, two things on that. First of all, many advisors believe that having satisfied clients is, you know, that’s their goal. Well, frankly, satisfaction is a very, very, very low bar. The data is that if all that a client says-there was a study in the U.S. by Pershing, where they asked clients, “How satisfied are you?” Of those that said that they are “satisfied” as opposed to “totally satisfied,” 50% said they would be open to leaving. So the first thing as an advisor you have to do is to dramatically elevate your aspiration in terms of how satisfied you aspire your clients to be. I used to do a talk saying, talking about how do you create client ecstasy. And, why ecstasy? Because, you know, suppose you go to a restaurant. Someone says to you the next day, “How was it?” You say, “It was fine. I was satisfied.” That’s not much of a recommendation. So the first thing you need to do is raise your sights. Secondly, what creates satisfaction? Again, the research is clear.

The number one thing that creates satisfaction among clients generally is-yes, you need to have threshold acceptable performance, clearly-but it’s having a sense that my advisor listens, my advisor cares, my advisor knows my situation, and they put my interests first. And so, doing that, and then communicating that you’re doing that. So, for example, one of the things that I talked about 20 years ago, but I think it still pertains today, is every meeting should have a client agenda, should have an agenda, and the first item, maybe, should be blank. And you say, “Here’s the agenda we agreed to, but what else is there? What’s happened that’s important in your life that’s not on this agenda?” And I’ve had cases where clients said, you know, if something came up, might be related to a health issue with a spouse, or one of their kids was struggling, whatever. And the whole meeting got derailed, doesn’t matter. You’re still dealing with the most important issue. So developing a mindset where the standard of satisfaction that you aspire to is much higher than it’s been historically. And then, secondly, really focusing on building that trust. And how do you build that trust? You build that trust by asking good questions, by listening, by having clients feel that they’re heard.

Kevin Press:

One of the key customer experience best practices is proactive contact. Does that apply to the financial advice business?

Dan Richards:

The key is how do you, it’s not just being proactive, which is the quantity of communication, but it’s the quality of communication. It’s the, you know, again, the depth of communication and that dialogue. One of the things, coming back to your question, what can an advisor do? So, I have a series of articles that appear once a year. I do a series of articles in “The Globe and Mail,” and I had an article appear just a couple of weeks ago talking about the artificial intelligence and how transformative it’s already been and how transformative it’s inevitably going to continue to be and how people should respond. And I talked about you need to learn, you need to adapt, you need to get into the habit of building, and just making it part of your normal routine. And I was talking to a very successful financial advisor, and the advisor said, “Well, yeah, you know, I get that AI can help me draft emails, but it’s pretty trivial in terms of what its applications are beyond that.” Would you agree with that, Kevin, that for most advisors, that there’s limited utility today to artificial intelligence?

Kevin Press:

Absolutely. No question. A lot of fear there, but I think the opportunity is much greater than the industry seems to think so far.

Dan Richards:

Well, you know, so what’s interesting, so I said to this advisor, so I said, “Now, recognizing you’ve got some constraints in terms of the technology your firm lets you use. So, let’s accept that. But let’s suppose that you have a meeting coming with a client and you’re able to use an AI platform to help you draft the agenda for that meeting based on the previous conversations you’ve had. And, so, you look at the agenda, maybe you’re going to change it. We don’t accept.” I teach a course in communication; we use artificial intelligence. I talk about to my students about co-working, collaborating with artificial intelligence. So, you know, draft an email, but make it yours first, then say to AI, “How do I make this better?” Compare the two, cut and paste, so you end up with something that is better than what you do on your own, but it’s still yours. So coming back to what that advisor could do. So you’ve got the agenda. You send it to the client. When you meet, you say to the client, “Would you mind if we record this conversation so that I can review it afterwards for notes?” And most clients are going to say, “Sure.” So at the end of that, you get the platform you’re using to create a summary, maybe two versions of the summary: a detailed summary that goes into the client file, and a shorter-form summary that goes to the client. And, again, you’re going to amend that; you’re going to tweak it. But that then sets up the next meeting. But, beyond that, beyond that, what, today-this is not pie-in-the-sky technology-this is a platform that exists today for financial advisors. You can get a client-sentiment score. So, you actually can get a reading on how satisfied is this client. To what extent are they a flight risk based on the questions they asked, the tone of voice, how long their responses were. And then, on top of that, you’re able to get some suggestions saying, you know, “Next time, here are things you should talk about to that client.” This is not some kind of futuristic technology; this technology exists today. Now, most firms, in fact, I’m not aware of any firm in Canada. This is a U.S.-based technology called Jump AI that’s implemented this, but it’s coming. Meanwhile, if I’m an advisor, I want to get familiar and comfortable with artificial intelligence. I want to spend some time so that I’m conversant with what it’s capable of today.

Kevin Press:

And so that you can advocate at the firm level for what tools are available and should be adopted.

Dan Richards:

But you can advocate at the firm level, for sure. But there are things that you can do in terms of utilizing. Many firms are using Copilot, for example. So you’re able to use platforms like Copilot to improve your workflow, to help you improve and optimize the emails you send, your agendas, all of those things.

Kevin Press:

What concerns you on the AI front, Dan? It obviously has some implications for scamming and fraudsters. What’s on your radar?

Dan Richards:

So, you know, when you look at artificial intelligence, it’s a combination. My response is twofold. It’s incredibly exciting when you see the potential of what’s there. It’s also terrifying. And it’s terrifying on a number of fronts, in terms of, you know, there’s been lots of narrative about what the impact of jobs is going to be. The potential for fraud is real. The ability that AI has to, in one sentence, so, for example, Kevin, somebody could take this podcast, capture your voice, capture mine, and simulate our voices, and then reach out to friends or family, you know, creating, you know, that we’ve all perhaps read about those false claims, “Oh my God, you know, I’ve been in an accident. I need $2,000 right away or whatever.” That’s scary. That’s terrifying, but it’s real. And, you know, we have to accept that. Then there are some trivial things as well. I think that AI, I’ve used AI in my classes for three years, and I’ve used it, you know, particularly to when I have writing assignments. I will assign students writing assignments, but show here’s what artificial intelligence would do. Frankly, three years ago it was pretty bad. You know, the response to a prompt would be, was too long, too formal, too flowery. It clearly didn’t look like it was written by you or me. It’s gotten dramatically better. So, the pace of improvement is the other thing that’s remarkable. Again, both exciting and scary, but it’s real. It’s here today. And, you know, if as a financial advisor you’re saying, “Oh, you know, I’m only in the business for another year or two. I don’t have to worry.” Okay, fine, maybe. But if you’ve got a longer-term plan, you better get, you know, with the reality. By the way, we’ve been here before. I wrote in the article that I wrote in “The Globe” talking about how the resolution for 2026 for many people should be, today the data is only 10% of knowledge workers are using AI every day, become one of that 10%. It’s not going to be 10% for very long, but it’s 10% today. Become one of the 10% by building it into your workflow, opening a browser on your computer, setting a goal for I’m going to use AI six, eight, 10, whatever number of times a day. But I talk in that article, and even before. In 1980, we saw the introduction of personal computers, and many people saw personal computers as gimmicks, as toys, as gadgets. Did not take them seriously. They were dismissed. But those that saw the opportunity, saw the potential, that embraced PCs, ended up seeing their careers, you know, spike upwards as a result. So I think there’s going to be a similar division today, except it’s going to happen faster.

Kevin Press:

I want to spend some time talking about your career, Dan, because it really has been extraordinary. You emerged as an early thought leader in the practice management field. Did you have a sense in those early days of how much demand there would be for your services?

Dan Richards:

Kevin, you know, absolutely not. This was 1989, and I tell my students that sometimes in life, it’s much, much, much better to be lucky than to be smart. And I was just incredibly lucky, as was anybody else who ended up deciding to focus on, you know, financial advice as their career. Nobody could have seen this coming.

Kevin Press:

And then nine years later, “Getting Clients, Keeping Clients”-100,000 copies sold all over the world. And basically, it’s about a lot of what we’ve been talking about, right? Fundamentally about communicating with clients.

Dan Richards:

So, you know, one of the things that, at the core, you know, again, I think about the way I teach and I teach a concept, very simple concept called “inside-out thinking versus outside-in thinking.” So inside-out thinking starts from your point of view as a company or as an advisor, and how do we optimize things given how we’re working? And the classic example of that, going back to the 1920s, was Henry Ford who kind of pioneered the automobile, who said, “You can have a Model T in any color, provided it’s black.” And, you know, because that made sense operationally. When you’re making cars, it’s much more efficient to only have one colour. And then Alfred Sloan came along at General Motors and said, “A car for every purse and every purpose,” and operated rather than from an inside-out point of view, from an outside-in point of view, starting with the customer’s point of view. That does not mean we give customers everything they want, because if we did that, we’d give everything away for free. [We] wouldn’t have a business. But that core concept of starting from the customer’s point of view, and that is one of the things that I talked about from the very beginning when I was doing work with financial advisors, and that was the core concept underlying “Getting Clients, Keeping Clients,” whether it be the keeping-clients part or the getting-clients part-equally important- but, in both cases, starting where you’re 100% rooted in understanding where clients are. And I think that was true then, and guess what, I think it’s true today.

Kevin Press:

I was fortunate to have met you early in my career. That idea that you’ve just articulated had a big effect on me. It reminded me to think about the reader’s perspective as a journalist and later about the customer when I worked in the insurance industry. You’ve been a foundational contributor to the professionalization of the financial advice business. Are you proud of the influence that you’ve had?

Dan Richards:

Yes, Kevin. I am proud. I feel very gratified. You know, the most gratifying moment of my day comes when a student reaches out to me-either a current student or a former student-saying, you know, that I’ve made a meaningful difference in their careers. And, equally, I’ve had a lot of advisors who’ve said that as a result, either whether it be of “Getting Clients, Keeping Clients,” my book, the talks that I deliver, my columns in Investment Executive, that I made a meaningful difference in helping their success, that’s incredibly gratifying. It can’t not be gratifying. And so, I consider myself incredibly fortunate to have come into this industry. Now, I started in consumer packaged goods, and so I think that’s something that was incredibly helpful. So my early training after business school was working in consumer packaged goods for companies like General Foods and Pepsi-Cola. I was VP Marketing for Wrigley. And before I moved into the financial industry, that gave me a grounding that was invaluable, and it stayed with me to this day.

Kevin Press:

I wanted to ask you about business school, because I learned this about you preparing for this episode. You went straight to Harvard Business School after getting your undergrad at the age of 19. Why? What was the hurry?

Dan Richards:

Well, you know, so, Kevin, sometimes I’ve run into people who said, “I have my work career, I had a great plan, and I kind of gone through it.” I was the opposite of that. I did not have a plan. So what happened was, when I was in my third year at McGill, I got on a bus, and I happened to sit down beside someone. And I had known him; he was like three years ahead of me at McGill in the debating club. I was on the debating club, and he was in the debating club, but he was in fourth year, I was in first year. So I knew him a little bit. And so, I said-his name was Denis Gagnon-and so, I said, “So, Denis, tell me, what are you up to? How are things going?” He says, “Well, you know, I’ve been working for one of the banks, but actually, next fall, I’m going to Harvard Business School to do my MBA.” And I said, “Okay, so two questions. First of all, what’s an MBA? And secondly, I’ve heard of Harvard obviously, but what’s Harvard Business School?” And, like, my undergraduate degree was not in business; I did economics. So we talked about it a little bit. And so, I was planning to go to law school, but I said, “Well, maybe, just for fun, I’ll apply to Harvard Business School.” It was the only business school I applied to, and I had to take the standardized test. But I did that, and I did fairly well. Anyway, I got in. And so, I didn’t know any better. I think Harvard, frankly, would’ve done me a huge favour if they’d said, “Look, okay, fine, you know, we’re prepared to accept you, but go and work for two or three years first.” They would’ve done me a huge favour, but they didn’t. And, so I said, “Okay, so I’ve got law school, I’ve got business school, but business school’s two years, law school’s three years. Two sounds better than three.” That was the sum total of my logical thought process. I’m embarrassed to say that I didn’t do a more fundamental deep dive into that decision than that.

Kevin Press:

Do you worry about the number of young people who choose to become financial advisors these days? We’re seeing the industry age pretty rapidly.

Dan Richards:

So I think it is an issue, for sure. Absolutely. I think that there is, we’ve talked about potentially losing a generation of younger clients. I think there’s a risk of losing a generation of financial advisors as well coming up, I think, absolutely, for sure.

Kevin Press:

Is there something the industry can do?

Dan Richards:

Well, I think I’m going to suggest to you there are two things-maybe more than two-but at least two things the industry can do. First of all, you know, we need to recognize that the job market has changed and, you know, it’s easier, frankly, to recruit people than in the past. And there just aren’t that many proactive opportunities for starting roles as financial advisors that are just on the radar screen. Scotia, actually, a few years ago, ran a program where they brought in a cohort of, I think, you know, primarily commerce grads, but also some MBAs with a view to kind of getting them trained first and then into branches. And I think maybe as a result of cost-cutting, that ended. But that kind of an initiative, you know, I think makes a ton of sense where you’re bringing, you know, not just young talent. You know, look, today, it’s easier to hire people because it’s a tough job market, but that’s not what you want. You don’t want talent; you want the best talent. You want the very best talent. Banks are there. Banks are competing for the best talent for investment banking, for example, or for their, all of the banks have rotation programs that they’re hiring incredibly smart, you know, kind of graduates from MBA programs and commerce programs. That’s not happening in the financial advice space. So I think that’s the first thing, recognizing that there needs to be an investment, similar to what the banks are making and the life insurance companies are making in terms of hiring, you know, bright talent for rotation programs. It’s not that it’s not happening, it’s happening, but not in the financial, you know, advice firms. But the other thing is, I think the message has to change. Historically, the pitch to somebody to become a financial advisor was do this and you can, you know, you’ll work hard, but the financial rewards are outstanding. And that’s been the really, the bulk of the pitch. And my view is, yes, financial rewards are important, and, you know, it’s hard work. You know, building a book has never been easy. It’s not easy today. So, yes, you know, to justify the pain and the risk of failure, the financial rewards have to be attractive, but that’s not enough. What I don’t think the financial industry is talking about nearly enough is the opportunity to make a positive impact in people’s lives. And there are very few careers-and I talk about this to some of my students-there are very few careers where you can make the positive impact on many people’s lives that you can as a financial advisor. And I just think the financial industry isn’t talking about that. It’s a huge opportunity, and there are lots of people, I think, you know, when I look at my students, who would be interested if it was presented that way.

Kevin Press:

Such a perfect note to end on. Thank you, Dan. Appreciate your time.

Dan Richards:

Kevin, thank you for the opportunity to talk today. Great talking to you again.

Kevin Press:

My guest has been Dan Richards, Rotman Professor, long-time contributor to Investment Executive, Advisor.ca, “The Globe and Mail,” and the “Harvard Business Review.” Canadian Advisor.cast is a production of Newcom Media. It’s produced by Alisha Hiyate. Noushin Ziafati is our associate producer. My name’s Kevin Press. Thanks for being with us.