Jason Pereira MBA CFA CFP (Can & US) RFP TEP is a well-known and accomplished financial planner and industry advocate. He is a director of the Institute of Advanced Financial Planners and the Individual Finance and Insurance Decision Centre and was the founding President of the Financial Planning Association of Canada. In addition, he has held various volunteer positions with IIROC, FP Canada, The FPSB, CIRO and the CFA Institute, among others.
Jason has also worked to educate the public and his peers on financial planning and practice management topics. He has worked as an Instructor at the Schulich School of Business, recorded over 5000 podcasts on financial planning and fintech, written several regulatory commentaries, published dozens of articles, and is a frequent contributor to the media advocating for financial planners and consumers and is an advisory board member of the Globe & Mail's Globe Advisor and multiple fintech startups.
Beyond the sales pitches, acronyms, and product talk, what does it mean to be a financial planner? In this episode of the Rational Reminder Podcast, we sit down with long-time industry leader and advocate Jason Pereira. Jason is a Canadian financial planner with over 20 years of experience, dual CFP certification (Canada and US), and a passion for professionalizing the field. In our conversation, Jason shares details about his client-centred investment philosophy, explains why fiduciary duty is foundational, and unpacks the complexities of index fund adoption in Canada. We also delve into the barriers to transparent, evidence-based advice, the true role of a financial planner, the impact of the Fintech revolution, and the pros and cons of mortality pooling. He also challenges common myths surrounding financial planning, shares best practices for vetting financial advisors, and explains why the industry is long overdue for a transformation. Join us for career insights, cautionary tales, and forward-looking ideas that challenge the conventional thinking of what financial planning is, with Jason Pereira!
Key Points From This Episode:
(0:05:13) Jason’s core investment philosophy and perspective on factor-based indexing.
(0:07:15) Environmental, Social, and Governance (ESG) trends and client conversations.
(0:12:36) What fiduciary duty means, why it matters, and why some institutions fight against it.
(0:18:09) Unpack the complexities of why Canada is behind the US in index fund adoption.
(0:20:52) Learn about the true role and common misconceptions of a financial planner.
(0:24:30) Explore how technology and the rise of generative AI are changing financial planning.
(0:31:55) How advisors can maintain strong personal relationships with clients in a digital world.
(0:37:00) Find out what a high-quality financial plan looks like and what it covers.
(0:39:44) His favourite financial planning-related argument to get into on the internet.
(0:41:20) Uncover how mortality and annuities should influence financial planning.
(0:48:06) Permanent life insurance explained: best use cases and when to avoid.
(0:50:48) Jason shares his nerdiest and most broadly applicable financial planning advice.
(0:53:29) He explains the best practices for estimating a client’s life expectancy.
(0:56:48) A breakdown of financial planner designations and how to vet a financial planner.
(1:03:59) Hear about his expert witness work and the costs of bad advice.
(1:08:55) Discover why Jason chooses to fight against financial misinformation online.
(1:11:18) The origins and vision of FPAC and Jason’s definition of success.
Read The Transcript:
Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision making from two Canadians. We are hosted by me, Benjamin Felix, Chief Investment Officer at PWL Capital, and Cameron Passmore, Chief Executive Officer at PWL Capital.
Cameron Passmore: Welcome to episode 354. Great to see you, Ben. Super fun for us to welcome this week a long-time professional colleague and friend of both of us. Ben, we've known Jason Pereira for a long time. He's been a financial planner for a long time. He's extremely active in the industry, knows lots of people at all different corners of the industry, both in Canada and in the US. He's an incredible source of financial planning knowledge, industry knowledge, consumer knowledge, regulators, and he's worked at this crash for a long time. It was super fun to have a great conversation with Jason.
Ben Felix: You know the story, Cameron, I think, although we haven't talked about it in a long time, but Jason is at least part of the reason that I ended up at PWL, because I was weighing a few different options for where I was going to go. I knew I was going to leave the place that I had started my career in financial services at. I was weighing a few different options, and in just doing my due diligence on the places that I was considering, I ended up coming across Jason's name. I cold-called him. I'd never met him before. He picked up the phone, and I explained to him what I was considering. He told me, “Hands down, you got to go work at PWL out of the options that you're presenting here.”
Cameron Passmore: I don't think I knew that story.
Ben Felix: Oh, I thought you did.
Cameron Passmore: See, you must have found him from the Globe and Mail, or something, because he has a pretty good public profile and has had a public profile for a long time.
Ben Felix: Yeah. I found him through, as I was doing the due diligence on the different places that I was considering working at, his name came up. Anyway, called him and he was gracious enough to answer, but then also gave me some very clear advice like, “Go to PWL. That's going to be the best place.” I didn't talk to him for years after that. Then we've become quite good friends. But it's just funny how I've known him as long as I've been in the industry. Yeah, he's a big reason that I ended up at PWL.
Cameron Passmore: Interesting.
Ben Felix: Cool. Yeah, so Jason's been a financial planner for over 20 years here in Canada. He is a sought-after speaker. He does the conference circuit in both Canada and the US. We talked briefly about the talk that he's been asked to do recently, been being asked to do recently on digital intimacy, which is having, well, I guess, what it sounds like, building human relationships using technology when a lot of the relationships are digital. He's a massive source of financial planning knowledge on both Canadian and US financial planning matters. He has a CFP both in Canada and the US.
He also hosts a FinTech podcast. We talk a little bit about how technology is impacting financial planning in our conversation here. His knowledge of corporate financial planning is incredible. Like, when we do a Money Scope episodes, Jason's typically one of the guys that's helping us review the content for accuracy. Yeah, like you said, Cameron, he's all over the financial advice and financial planning industry here in Canada. He also does expert witness work, which is just fascinating stuff. He'll be called in as an external expert to evaluate whether the advice that a different financial planner has given to a client was wrong. Advisors being sued, for example, Jason will be brought in to evaluate whether they were in the wrong or not, which leads to some pretty interesting stuff that he gets to see.
He's got a real passion for professionalizing the financial planning industry in Canada, which is a motivation that I really respect. We have talked about Jason throughout the history of this podcast multiple times, which is a funny story. The first time you, Cameron, brought him up in the most comically vague way possible, where you refer to him as an advisor, we both know who is active on Twitter, or something like that.
Cameron Passmore: I try to respect privacy, Ben.
Ben Felix: When I later became pretty good friends with Jason, he brought that up and just thought it was the funniest thing ever. Then, eventually, he got mentioned by name, Harold Geller, who was a guest that Jason mentions in this episode, gave Jason a shout-out in his episode. Then when Mark McGrath, who's also friends with Jason, came on the podcast, we started talking about Jason more frequently, but Mark would pretend not to know who he is.
Anyway, so he's been scattered throughout the lore, the history of the podcast. Now, we finally get to have a conversation with him. We talk about financial planning, asking him questions as a financial planner, how do you approach this with clients? Then we also talk to him about the industry, where he thinks it is and where he thinks it has to go.
Cameron Passmore: Great conversation.
Ben Felix: All right. Let's go ahead to our conversation with Jason Pereira.
[INTERVIEW]
Ben Felix: Jason Pereira, we finally welcome you to the Rational Reminder Podcast.
Cameron Passmore: Finally.
Jason Pereira: How many episodes have been? I mean, honestly.
Ben Felix: Yeah, it's been a while. Great to finally have you on here.
Jason Pereira: Thanks. I'm going to shout out to Luke Swanson who's been lobbying for this, apparently, so.
Ben Felix: That is true. He has brought it up multiple times in the guest suggestion thread in the Rational Reminder community. All right, let's get into some meat here. Jason, what are the core principles of your investment philosophy?
Jason Pereira: Well, I mean, preaching to the choir here, first off, it starts off with evidence. The foundation of everything should be what the evidence points to, which we know it's pointing overwhelmingly to the fact that “Good luck on the active side.” The default should start off with the passive option. The 100% pure broad-based index option. Then from there, I think it's only fair to ask ourselves, is there anything else that can be done? If so, what's the trade-off? That's where, I think, both of our affinity for factor-based investing comes from. There's academic evidence supporting that there is an alternative way of indexing through these types of factors to try to capture some of that premium. It can be done at a cost that does not make the premium evaporate. It's a fair trade-off. That's the second piece.
Then, I also layer on the potential service clients in certain preferences. Now, we've had a lot of clients come to us about ESG investing, or wanting to have their morality and their values reflected in their investing. I respect that. I respect the desire; that's their freedom, it's their money. But I will tell them is, look, we can't delegate your values. They can't outsource to whatever you think is right with the universe. This just doesn't exist. No product or one exists. What we can do is we can look at what the marketplace gives us and see what's possible.
In our practice, we do two different forms of it. The first is a broad-based screening methodology and waiting methodology around ESG. That's a combination of factor and index options. Then the last piece came out of some clients, very, very deep personal reasons for not wanting exposure to oil and gas. The marketplace got to a point where we could do that, again, with passive and factor-based options. Now, we do coach them around the deviation between the normal market returns, the further down the spectrum they go. It's really about that. It starts with evidence based on trade-offs. It's also reflective of people's preferences around their moral issues. That's really how we cornerstone it all.
Ben Felix: Like you said, preaching the choir. That all makes perfect sense to me. I do want to ask about ESG. Have you noticed, I don't know, maybe five years ago when that was more of a trendy thing? We used to hear about it a lot. Not hearing a lot of questions about ESG these days.
Jason Pereira: Well, the term has become politically loaded in the US as we know, right? Unfortunately, it's been targeted as being negative for a number of reasons. I don't look at it that way. I value democratic processes. I think democratic processes should also be reflected in your ability to spend your money. No one should tell you how to invest your money based on your values. Full stop. Is there more demand for it? Look, we, by default, every conversation we have with the client includes a question around it. The reason for that is because, first off, we want to make sure we're addressing it. We want to make sure that we're educating them. If they express an interest, and it's really one question on a question that says, how important is it that environmental, social, and governance issues are taken into consideration in the management of your portfolio? Not at all. Fair amount of importance. I'd like to learn more. We have a conversation. We explain the realities. If it's important to them, they make a personal decision around that. To answer your question in terms of new inbound, I haven’t noticed a difference. Now, marketing-wise, yeah, there's a difference. Inbound, not at all.
Ben Felix: Yeah, but you're asking about it. That's interesting. It's part of your onboarding process.
Cameron Passmore: How do you approach arriving at an asset allocation with your clients, Jason?
Jason Pereira: Again, let's start with evidence. On the equity side, we're going to default to the market-cap-weighted global portfolio. As we know, for next to a lot of the stuff that some of the people who've been on your podcast have done, there is an actual quantifiable reason to have a home country bias in terms of reduction of risk. Some of that comes from currency, but your guests did a better job than I ever will at that. We will tilt that to approximately one-third of the equity portion.
As for the fixed income side, a similar approach, but looking at, again, the factors and evidence around that, which is, let's take a broad-based approach. Let's basically, specifically target investment grade, because the trade-offs on I yield are just not – the risk return is just not what it should be. Duration around five years, which really is a sweet spot for risk return, based on what the academic risk return is. Basically, with the exception, of course, of when there's an inverted yield curve, and then you start piling up the cash. Effectively, you pick those two goalposts, the far ends. You got the stocks on one side, bonds on the other side, and you control for risk by exposure to each of them. We come up with their default portfolios based off of that. We also apply the same logic to the four different model portfolios we do, which are, again, passive factor, ESG, and impact.
Ben Felix: How do you approach determining each client's risk profile?
Jason Pereira: We take a very multidimensional approach to it. One that's based, again, on a culmination of a number of academic pieces that are out there. We start, first and foremost, in the initial meeting with the client, we start off talking about experience. Talking about their experience with the industry, about their experience in investing, and understanding not just their level of sophistication, but looking for signs of a couple of parameters, specifically risk composure. How do they react in markets? Are they coming to me because markets are down, they're really annoyed by what's going on in their portfolio.
Perception of risk. Anyone who's worked in the industry knows that there's lots of misperceptions in this, right? People will think, “Well, I'm in Apple, because that's safe.” Wait, no. That's one single security in a volatile sector. You feel it's safe, but that's not necessarily reality. Then preference. How much risk do they actually as an investor think that they want to take? We look for those in conversation.
By the way, let me take a step back. All of this is basically found out of work that we read in both Shawn Brayman's paper for the OSC on risk methodologies, and also, which I think was a subsequent paper that was done by the CFA Institute on risk tolerance and risk methodology. We start there. Then the questionnaire includes a risk tolerance questionnaire, and that is based on the old Finometric, now Morningstar questionnaire, which is a gold standard in the industry. That gives us, between those two, all that data, when we're doing the financial plan, we pick the target allocation we think is the best fit for that. In the financial plan, we then test for capacity based on their goals and throwing Monte Carlo analysis, and see if they can absorb the market shocks.
We also test for need. What weighted return do they need to earn? Because anything between tolerance and need is an acceptable portfolio that they can choose from. Then in the meetings, we test this. We show them, basically, the historical upside and downside of not just the portfolio we're looking at, but also other portfolios. What we're doing there is testing further actual, validating that their tolerance or capacity is correct. We tell them what's there, but then we basically just see what the reaction is. Telling them, “Hey, okay, this is entirely possible that the worst-case scenario is portfolio is negative 16% in one year. That's $160,000 on a million-dollar portfolio.”
If they have a problem with that, they're going to have a visceral reaction at the moment that I say that. That in the case of a Roth, right? It becomes a discussion around where they would be comfortable. Then, the last and final and truest test of it all is composure. When things are going on the market, good or bad, how are they reacting? Are they actually, especially when things go bad, are they calling any panic? I will say, maybe it's a little bit glib. We get very few calls on market downtrends. I tribute that to all the work we do around planning and making sure that we're not exposing them more than they need to.
Oftentimes, the new ones will call me in the first downturn and say, “Well, things must be terrible.” “Okay, let's play a game. How much do you think you're down?” “Oh, the market's down 10. I must be close to that.” “You're down four.” “Oh, so you're telling me not to worry about this?” “Yeah.” Sure enough, sooner or later, they learn.
Ben Felix: They're down four, not because of active management or anything like that. They're down four because they're in an appropriate asset allocation.
Jason Pereira: That's it, right? The best way to prevent an error is to basically not put yourself in that situation in the first place. We meet plenty of advisors who think 100% equity fits everybody, because they deal with the emotional aspect of it. That's great, until you can't. Then that client does the wrong thing. That can be irreparably damaging.
Cameron Passmore: Let's talk about what might be your favourite F word, fiduciary. Why is it important for investors to seek advice from a fiduciary?
Jason Pereira: If you were to walk down the street and pull the average person and say, do you think your financial advisor has a legal obligation to act in your best interest at all times? I think, mostly people are going to respond, “Yeah,” or, “I sure as heck, hope so.” Because the reality is that we're holding ourselves out as people who are there to benefit them. We should be held to that level of standard of care. It's all about making sure that we as an industry are not only talking the talk, but walking the walk.
Here's the other thing, too. I'm a firm believer that the language around this, the understanding of the obligation, will change behaviours. Knowing that you're a fiduciary, knowing that you have that obligation, that legal responsibility, that you're going to be held to account, I believe changes actions. Frankly, I think I see that anecdotally across borders when I talk to advisors in Canada, the US, elsewhere, higher standards seem to lead to better understanding of markets and planning, at least anecdotally.
I can point to it leading to better outcomes for clients, because it does. In reality, that's, I think, the foundation of it. I'll also say this much. There are certain organizations, I won't call out, who have literally fought this at every turn, fought the implementation of fiduciary responsibility to return. Why do you think that is? Why fight an obligation to do what's best for your clients? The only answer is that because it gets in the way of the thing you want to do for yourself.
Ben Felix: Yup. There's academic research on that too, that when a fiduciary standard is imposed, the costs of products being recommended drop pretty significantly. It's a real thing.
Jason Pereira: Weird. Weird how that happens.
Ben Felix: Why do you think Canada has lagged behind the US so much in the movement toward the fiduciary invite? I'm thinking about the RA model in the States, where they are fiduciaries. In Canada, that model is just – it’s not at the same level.
Jason Pereira: There's some cultural issues, there's some structural issues, and there's some luck. We'll start with the US. There's luck around two things. First off, the Investment Advisors Act, which established the ability to become an RA, which dates back to the length 1930s, basically entrenched within itself the fiduciary responsibility. As the breakaways started to happen way back, these people were basically becoming fiduciaries by nature. The registration, which I think started the entire dialogue and moved things along. You also have a greater history in case law and in other laws like ERISA that govern the retirement plans in the US, where this has been an ongoing dialogue about degrees of obligation. The law in the US is more conducive towards basically imposing it on the industry based on registration. That's your first piece.
Your second piece comes into, and now let's look at Canada and say, how is it different? Well, A, large financial institution domination. What does that lead to? Roll the clock back to the US years ago and they were not, the RA market was not very big. The market was still growing. You see a lot of the same shenanigans you see here. It's a lot of proprietary product, high-priced stuff. You have their profit line as being the primary driver of what gets distributed. Do they want to be in a position where they're held to hire legal obligation? Absolutely not. I mean, there's public statements made by heads of associations lobbying on behalf of banks that say this outright. The industry concentration is a problem. There's not enough competition in this country to drive and differentiate the need for people to say, “No, we're going to step out and basically be the leaders in this,” except for outliers like yourselves.
I also like to say, sadly, these have the worst case of Stockholm syndrome when it comes to banks I’ve ever seen in my life. They simultaneously love and hate them, and simultaneously are willing to pay exorbitant fees to them and just get gouged. If you try to basically become this competitor, no, no, you don't have enough bank branches, like, whatever else it is. The other piece of it is transparency. Embedded compensation is easier to hide. It's easy to pay pre-CRM2, or basically, there was no disclosure of what the advisor was paid. There were plenty of people who basically, the advisor just said, “Well, we're paid by the companies you invested in, ‘whatever’ nonsense. You guys have heard all of this, right?
Then CRM2 happened, and suddenly, the advisor's comp started showing up on statements. But that didn't change that much, because it was part of the picture, only part of the picture. The other part was the embedded fees. Plenty of advisors, and I see this all the time when I'm in competition, “Oh, I only charge you 1%.” Okay, but the MERS and the funds that you're getting a 1% trail, the MERS in the funds are 1.4% on top of that. The number of times I've had clients’ jaws drop when they suddenly find out it's more than double what they thought they were paying, and they never disclose the account fees or anything else. Lack of transparency has been an issue.
Now, this is changing as a January 1 with total cost reporting, where all of this is going to show up on statements. Classic Canadian advisor mentality, many of them have no idea this is coming, even though it's been announced for years. Guess what? Clients are going to start getting a rude awakening next year when they start seeing those fee numbers double.
Then lastly, I'm going to blame Canadian culture to some degree. Guys, you know what it's like in the US. These people are born entrepreneurs. I can't set foot in the US without having business opportunities thrown at me left, right and centre. They constantly want to do business. Fantastic. I love that. Here, think about how much more lucrative the independent side is than working in the bank channel. The bank channel will take 50% of the top best-case scenario. Best case.
I've sat down with advisors at major banks and said, “Listen, you can leave with two-thirds of your practice, incorporate, make more money, get the lifetime capital gains exception, get corporate tax treatment, all of this.” Their eyes widen thinking about how much money they're going to make for having a smaller book. They're like, “Why is everyone not doing this the same time?” Let's see if you have the courage to do it in six months. We're just not. Lack of entrepreneurship in this country. Whatever you want to say to this, unfortunately.
Cameron Passmore: Let's keep going in the US versus Canadian comparison. You talked to lots of people, Jason, all over the industry. What's your sense as to why Canada has lagged the US so much on index fund adoption?
Jason Pereira: It's multi-dimensional, no pun intended. Let's start off with advisor education. This is one that I think is underappreciated. There were some changes back in the 90s around mutual fund sales practices, specifically around sponsorship of conferences by mutual fund companies, which that money is important to actually have these conferences held. It limited the sponsorship to only events that have two-thirds mutual fund-related content, which led to nothing but multi-decades of talking heads on stage, talking about predicting the future.
There's no room for practice management, for evidence, for everything else, so crowds it out. Because of the overreliance on actual manufacturers to provide education, where are advisors getting exposure to this other than, God bless, your conduits, your channels, and other people we know out there who are preaching the good word? That's the first thing. The second piece is, again, it's easier to hide. It's easier to hide what you're actually making under these things. Incentives drive actions. Fear of pushback on fees. I can say, “I'm charging 1%.” That's all they see, but they haven't looked at the MER. There's that.
The product sales focus of this industry in general. I think one of the things that led to, and I see it – we both see when we go to the US, there's this beautiful reinforcing cycle in the US and the public consciousness of a greater understanding of what financial planning is. More people are looking for it, more advisors specifically leading with planning, always talking about planning, right? The CFP has done a great job of publicizing it, and you're at this really serendipitous reinforcing circle going on, to the point where you can even get undergraduate, graduate, and PhD degrees in financial planning. You can't do that in Canada. They're so much further ahead on the business model, because of, I'll credit the independent channel in particular.
One of the reasons that the independent channel, basically, how they differentiate it, because think about it you're competing with these big guys, how do you differentiate? Differential costs and on service. Adoption of ETFs largely was basically, one of the things pushed by independence as well. You have that. That's a big issue. The lack of an independent channel in Canada is part of the issue, because you think the banks want you selling ETFs? Okay, well, there's different tiers. The branches aren't going to do that, because they want to make high revenue off of small-dollar accounts. The mid-tier isn't going to do that, because it's too lucrative, especially because they're paying salary the advisors opposed to what they pay at the brokerage level. At the brokerage level, they want these guys focused on just selling, not planning. They got planning teams off in the corner doing the plans, but not actually implementing them.
If you're there, an investment is your primary means of value proposition. Saying, I'm going to do the market, I'm going to do average is not exactly a compelling argument. They're out there trying to beat the guy next to them. There's just a lot of reasons, and again, I'll also say just advisor education, incentive, structure, lack of independence, all of it feeds into itself.
Ben Felix: Switching gears a little bit here. What is the most important role of the financial planner in a client's life?
Jason Pereira: I wish it was more uniform, but it's not. It depends. Let's talk about what the end-state, the best version of this industry is. The best version of a financial planner is one who basically sits across from another individual and asks them, what is it you want out of life and let me help you get there. Is your advocate for basically progressing through life and the challenges that basically happen there? To put planning ahead of simple pursuit of wealth. Don't get me wrong, the pursuit of wealth is what gets us to be able to achieve the goals we have. But our mutual friend, Brian Portnoy, once coined the term ‘funded contentment’. Unless you figure out what's going to make you happy, unless you figure out what it is you want, the non-stop pursuit of wealth and more just never stops. The hedonistic adaptation. You just keep on moving up.
Oftentimes, what's more important than a client saying, how much money can I make, or how much money, what I flip on clients all the time is I say, listen, if I get you to live the life you want to live, leave behind the legacy you want to leave behind, does it matter what the return number was as long as it was fair? They all stop, and they're just like, “You're right, it doesn't.” Taking the focus away from the product, from the noise, and specifically getting the focus on what matters to them, first and foremost, and guiding them through the actions that will basically help them succeed. That is what planning is at its best. That basically, when you take that attitude of they're there to help them succeed in life, the zone for what you're going to involve yourself with, the things you're going to concern yourself with increases.
The value that you provide starts to exponentially increase because you're not focused on the next sale. You're focused on improving people's lives. You keep on asking yourself that question, and your service offering spans to meet that need. That is the best version. It's one who basically is going to expand their service to be as many things to a few people in a deep and powerful way to help them self-actualize the best version of their lives.
Cameron Passmore: What is the most common misconception you see about what a financial planner actually does?
Jason Pereira: I think it's twofold. A, I mean, the general populist thinks it's just about product sales. “I'm going to invest your money.” Very few people understand what a financial plan is. If you look at some of the surveys that come out, they're hilarious. There was one, I think BMO did years ago. They said that 50% of Canadians have financial plans, and I am sitting there going like, “All right, sure. Yeah, right.” Then, when you dug into the numbers, a full 25% of them said it was in their head. Okay, sure. I've got a unicorn in my head. This doesn't mean I got a unicorn. Then you dug even deeper, and it was, when I actually investigated, some of them are more “investment plans,” written or unwritten. I think the only data I've ever seen on – I think JB Power and Associates does a survey on this. I think they pegged the number at 7% of the Canadian population has a financial plan. I'm willing to bet it's half of that.
Now, that being said, the US number’s closer to 15, I think. It was more than double. We got a long way to go educating people on what planning is. It's not about product. It's about life planning. It's about basically enabling what it is you want out of life. That's the first thing. The second thing is, is this concept of the plan is a plan. It's a product. It's a noun, a document. Yeah, it is. The document's a snapshot. But that's just a snapshot. It doesn't mean anything unless you implement. There is a saying that the honest ones around of us say it all the time. It's like, look, it's stale the day where it's written. Absolutely. Because your life is going to change.
Now, it's close enough to reality, the day it's written and printed that we can move forward with that. Then over time, it needs to be constantly updated. It needs to be constantly updated as your life changes, as the situations change around you, because all this information is going to change. It's not a noun. It's a verb. I like to use the verb financial planning, because that is exactly what we're doing. We are doing actions. We are not simply creating something.
Ben Felix: Yeah, more of a process than a document.
Jason Pereira: It's a journey, not an end state.
Ben Felix: You've got a podcast dedicated to FinTech. What do you think are the most impactful ways that technology is changing financial planning?
Jason Pereira: Well, I mean, you're asking me this a couple of years ago, other gen AI came out. Artificial intelligence is changing financial planning, and it's changing every aspect of it. Now, the thing is, is that for the most part, most of the actual work that it's going to do is largely centred around productivity. It's going to be more geared towards, how do I reduce the administrative burden, or expedite the administrative burden and make things move faster? That's going to benefit the entire community, because the less overhead we have, the lower the entry level for clients, right? Because our costs, if they diminish, then we can offer the same level of service to an ever larger number of people, or a lower price point. That's great.
Now, the other aspect of this is happening is that it's also helping with things like financial planning. Our friends over at Conquest Planning applied artificial intelligence in multiple forms, pre-gen AI to financial planning, and they created a tool that can produce a financial plan as good as any basic financial planner ever could very, very quickly, testing more variables than any human being has the time to. I say that coyly, because less basic financial plans get done quickly, but it lets really great financial planners accelerate their ability to a way they never could before.
One of the guys there refers to is caddy for planning. It's all what club to use next. It helps you make the decision, but that's a quantitative output. You still got to bring the human aspects into it. But overall, it's allowing me to be more productive and more accurate and get more research done. I mean, just look at ChatGPT's research capabilities alone. The ability to geek out over something that Ben, we can post it on Common Sense Investing and say, is that right? Look at the papers, look at the counterpoints, and just do a deep research dive that we're in 15 minutes. I get 10 pages dedicated to the thing. My ability for learning, my ability for challenging more questions, my ability for research has increased substantially. My ability to produce the end takeaways, reports, whatever else it is, is doing that. My reduction of administration has done that.
The great thing about all this is it's taking away all the heavy lifting, all the heavy work that is involved with this, and really going to let me focus more on the actual client and the human being and focus more on what is it beyond the numbers that's not letting this person succeed? How is it I can provide more value to this person and expand that offering?
Cameron Passmore: What do you think are the wrong uses of AI in our world?
Jason Pereira: Putting private information into a public LLM with no good use case. I mean, no security. Security is the thing people will have to be cognizant of. I don't put any clients’ information in these things. I go so far as to, I need to extract something from a document. Fine. I'm going to redact all of the personal information, but I'll extract whatever else I need. Really, it's too early right now, but there's already, I think, Australia, last I looked, was already saying that look, using ChatGPT with client information can be a violation of privacy laws. We're going to hear a lot more about this. Think if anything, there's a lot of privacy law movement around the world, and it's going to continue on that trend, and AI is going to accelerate that.
Also, I mean, reinforcing your own biases. As we know, the way you prompt an AI can deeply result in, can change the answer, right? I can go in and say, “Please tell me why dividend investing is the single greatest way to invest blah, blah, blah, blah, blah, blah,” and it will reinforce that behaviour, as opposed to prompting it to say, “I would like to see the academic literature regarding dividend investing and its validity.” It can be a tool in the hands of a craftsman can build something beautiful. A tool in the hands of someone who knows what they're doing can build something dangerous. That, unfortunately, because it's seen as validity, can reinforce false beliefs. Then, of course, we get into the entire fake news issue that are a big problem.
Ben Felix: I was thinking about the same thing as you're talking about ChatGPT and AI. I use it daily for research, but I find that if I didn't have a baseline level of knowledge and expertise on a lot of different topics, on the topics that I'm asking about, there are a lot of cases where it'll tell me something that I know is wrong, but that it comes across very authoritatively.
Jason Pereira: It sounds so right.
Ben Felix: Which is scary, right?
Jason Pereira: Just sitting in the quadrant of confidence and a confidence and accuracy, but it could be the confidence inaccuracy quadrant, too. It's funny, because my first reaction when sitting down and playing with ChatGPT the first time, I was blown away. Took a deep breath and thought to myself, okay, this is interesting. I'm not too threatened by this. Because what this has done is it's made the value of the person who can call BS on the AI significantly higher. Because at the end of the day, the basic stuff can be done. If anything can be researched, the most important person in the room is the person who knows if it's true or not. It doesn't eliminate my need for knowledge. It basically validates, it's more important now, because everybody's going to be thinking these things if they're not careful.
I'll tell you one of the other cool things of dealing with AI lately doing research capabilities is that your ability to build programs with this stuff is unprecedented. I may host a podcast on fintech, but I can't code to save my life. I'm currently working on a case right now for my expert witness cases, where I have to stress test with volatility, a specific type of universal life policy. I was trying to figure out how to build this in an Excel document. I wrote it out a page and a half of formulas. I thought to myself, wait it a sec. I get in a spreadsheet, wrote a two-paragraph explanation of what I wanted to build, took the formulas and the experimentation, put it into something called Replit. Ten minutes later, I had a version one. It looks pretty accurate. I got to finish stress testing it.
When you start thinking about all the things that – and Ben will get this too, when we're researching things, we say, okay, be really cool if I could stress test this to the Nth degree, if I can build something that does that, I mean, you guys got Brayden. You're lucky enough to have him be able to do that stuff. For those of us who don't have a rocket scientist in their office, the reality is, is that now we're actually able to potentially even test our theories and our research in a way we never could before.
Ben Felix: The coding aspect of it is really cool. Brayden has tried using Replit specifically. Like you said, it's not a super fair comparison, because Brayden is literally a rocket scientist. He did not love using Replit. It didn't write code that he would write. A good friend of mine, he's a data engineer. Currently works for big tech companies, worked for a bunch of them. We talk about this a lot as well. He says something similar to what we were just talking about, where it gives us occasionally information that we know with our domain expertise is not perfect, but it comes across really authoritatively. It does that with code, too. It'll write code that for you who otherwise couldn't code, it's still super useful. For someone who's an expert in coding, it'll spit out code that an expert would never write.
Jason Pereira: One hundred percent. And sloppy code. I've had friends of mine review it, and they're like, “This is trash, but it's doing the job, right?” The most important thing, and this is where people got to be careful, this is why one of the things I've built into the screen was the most important thing is that you have to audit to make sure it's right.
Ben Felix: Right.
Jason Pereira: I can't take it at face value that's right. I've literally programmed auditing screens, where I can see every entry of every Monte Carlo to basically say, okay, how did you arrive at this, and work backwards and validate? If I can test that, I don't have to test every Monte Carlo instance over a thousand, but if I can do a couple of cases and then test a few of them and make sure it's all working right, pretty solid probability just nailed it. If not, I can take corrective steps.
Ben Felix: Yeah, but you have to be able to audit it. That's the interesting thing about it is it's super useful and it helps scale your time, but you still have to have knowledge and expertise to use it.
Jason Pereira: There's the moral hazard, just like taking the answers straight from ChatGPT. If you take straight from there and you don't know enough to call BS, if you just assume that the software you built is 100% accurate, you're in trouble. Also, I would say, be smart about it. What's the mission-critical thing you're trying to build? Am I going to try to replace Salesforce with it? Absolutely not. A portfolio management software with it? Not even close. But testing Monte Carlo on a universal life policy, sure.
Ben Felix: Yeah, and you can audit the results.
Jason Pereira: Exactly.
Ben Felix: Relatively easily.
Jason Pereira: Exactly.
Ben Felix: On the topic of technology, we have a ton of our client relationships that are 100% remote at this point, where we never meet the client, or rarely meet the client in person. What should advisors do to maintain strong personal relationships with clients in a primarily digital relationship?
Jason Pereira: This is something I've been talking about quite a lot. It's a concept of digital intimacy. It was a term I – it sounds weird, but I coined with my friends, Adam Holt and Derek Notman on their podcast. I was basically saying, look, digital experience and client intimacy are not things that are separate. You can use one to augment the other. What you really need is to think about digital intimacy. How do we create client intimacy over digital means? Most of my meetings, the vast majority of them are over Zoom. Now, the great thing about it is that that's a new medium. It's a new medium that when I'm facing you face to face, I can't put something up the same way between us that I would in person.
Unfortunately, for most of us, we failed to listen to Marshall McEwan, the medium being the message, and we try to apply the old medium to the new message. What I mean by that is, great, we got to talk to a client. Let me pull up a PDF with their statement. I'm taking digital representations of paper and sharing that. You know what’s better than that? A lot of these software that we are using day to day now, whether they be portfolio management softwares, financial planning softwares, some of the insurance illustration softwares out there, they are built almost with a consumer mindset in terms of how they're designed. Because of that, there's plenty of times now where I don't even open up a statement.
What I'll do is I'll actually open up their portfolio in my portfolio management system, and I'll walk them through a narrative through some screens. I'll be able to have an interactive conversation with them. Another one of my favourite ways to use my financial planning software is Conquest, where I'll turn off all the recommendations. One by one, I'll turn them on. They'll see the animation of all the red bars turning to green. They can stop and ask questions. “Well, wait a sec. Why would I start CPP at age 70? Why wouldn't I start it now, because I can take it now?” Great question. Let me show you what happens. Slide. Boom. They see it immediately.
They basically are not only being able to challenge you, but we were able to respond and get validation and understanding around the recommendation. The great thing is, is that they can, again, what they're doing is they're taking over part of the journey. Whereas before with slide deck, I have 10 slides, we can go through 10 slides on this journey. You want me to deviate? I don't have an extra slide here. You want me to deviate and talk about, okay, I'll stop talking about your retirement, and I'll focus on that big trip you have coming up and you want to finance for a year off. Okay, great. Let's go over there. This is how we're going to fund it. It allows them to be a participant in the journey.
What I'm saying is that, when I'm talking about this, I say, look, look at your softwares that are out there. Look at how they can be used and engaged. Many of them can already. When you're looking at onboarding new things, or finding tools that are valuable, can they actually produce something that can be put in front of a client? More importantly, when I actually consult with technology companies regarding what they're building, I'm telling them to start thinking this way. It's like, don't make me open up a PDF. Give me something dynamic, interactive that I can even send to the client, that can have a dynamic and interactive experience with. Let's embrace the medium more.
We're still very early in our thinking around this. I mean, I'm thinking about it. I'm not sure how many people are really, but it makes for so much more of an entertaining experience, but also, and I show this once to Meghaan Lurtz. I'm not sure if she's been on your podcast before, but well-known behavioural finance expert. She basically said that I had stumbled into the trans-theoretical model change. I had basically, through doing this validation, showing explanation thing and basically, letting them challenge it, I was hitting two or three steps of this model that allows people to accept change and accept what they're being told, versus being given a checklist and saying, here it is. This is the end result. Trust me. They're actually getting to be able to see it.
Ben Felix: We were doing, we called just interactive planning, but same idea, in office before things went super remote. We still do it now. People are blown away by going through the whole planning process, and like you said, seeing how the outputs change as you change different inputs, I think it's the only way to do it, in my opinion.
Jason Pereira: Well, I think that having a plan is empowering to a client, a plan that can understand. I think that the interactive understanding that helps them understand what it is and why, and where the variations are, is an education, and it's incredibly empowering. I've had people who felt overwhelmed by the initial presentation saying, “Well, I'm not really getting how this works.” I said, okay, let me try it this way. I show them an interactive like, “Oh, my God. I get exactly where you're coming from.” They feel so empowered and excited, and happy about it. Really, how are they going to listen to us unless they actually buy in? Anything that helps build that understanding is powerful and can really move the needle for them.
Ben Felix: I think it was Ayelet Fishbach, who is a past guest who studies motivation, hopefully, I’m not misquoting, but I'm pretty sure she talked about how when someone participates in arriving at something like the amount that they need to save, they'll be much more motivated to actually stick to it. That makes a lot of sense from that perspective, too.
Jason Pereira: Absolutely. The thing is, is that you can literally modify on the fly with some of these softwares now. We've had times where clients are like, “Wait a minute. I told you I had 1,500 per month. Okay, maybe it's more 1,200.” No problem. I mean, modify this now. Let's see where this ends up and see if that's material or not. Then lo and behold, you're creating so many different points of buy-in and communication, or they can turn around and say like, “Listen, what if I spent more over a year? Because maybe I'm not comfortable.” My question becomes, well, do you feel you should be spending more of the things you're not doing? Yeah, let them go and do whatever. Okay, great. Let's do that. Show them the net impact and let them make an informed decision.
Cameron Passmore: You're talking about planning, Jason. Let's go back to basics. Can you talk about what a high-quality financial plan covers?
Jason Pereira: I'm a big believer in keeping this simple. I do a lot of complex planning. But at the end of the day, I like to say it's a process of distillation. All the super brainy, nerdy things we do up here with numbers get distilled down to a financial plan that gets distilled down to a 10-page or 10-slide presentation, is the way I look at it. I want people to take in the keystrokes in 10 minutes, because their attention starts to drop off pretty heavily after 10 minutes of listening to someone. You want to be clear.
Then you want to have the validation piece, which is the actual plan itself, besides the presentation. That, really, I have never been a fan of this concept of this 100-page plan that used to go around for so long, where we're just like, here's everything. I'm showing you why you pay me to do this. It's like, to me, there's something so insecure about not being able to speak simply. What goes into it? To me, I'm like, keep this simple. Who am I doing this for? Who's the profile page of the people involved? What are the goals and objectives in life? What's their balance sheet? That's their starting point. What's their income statement? Where's the money coming from and going to? How's that changing? What's their asset allocation return assumptions that we're making here? Because that's what's going to take to go forward.
What does the projection look like? Where's the bar graph that shows them how they're going to do? Where's the stress test that shows them that they're going to be okay, even if something goes wrong? Then, what are the recommendations on how they achieve it? Then an appendix. Frankly, what I just mentioned there should be less than 10 pages before you get to the appendix.
You want to hand someone a big 30-page plan? That's fine. I've done that. Our plans were basically kept down to about 20-ish. I would say, look, don't be overwhelmed by this. It's between these five leaves of paper that everything is explained. Now, the appendix, of course, there's some people who want to go deeper. I would keep it down to cash flow sheets and asset projections and leave it at that. I always jokingly, at the end of our presentation, have a picture of a stack of files and say, okay, this is my coy way of saying that if you want the 200-page plan, I'll give it to you, be able to read it. I'll tell you, maybe five times in my career, people are like, “I’m not understanding this fully. Give me everything.” Then they turn around and say, “Okay, now I know what you're saying. Can we go over the spreadsheet in the back?” Yes, we can. I think sometimes people just want to feel they're getting value for money. Anyone who has been to a buffet trying to get value for money knows they leave feeling not so good.
Ben Felix: What is the nerdiest piece of financial planning knowledge you can think of that's broadly applicable though? I don't want to hear about insurance shares, for example. Broadly applicable to listeners in the audience.
Jason Pereira: Nerdiest piece of financial advice. Is it one of the things that drives me nuts?
Ben Felix: No. We have questions about that, too.
Jason Pereira: Nerdiest piece. Nerdiest piece of financial —
Cameron Passmore: Hypothetically speaking.
Jason Pereira: Oh, man. There's so many. I don't know which one. To me, it's just everything. Can we come back to this? Let's part from this. I’m going to try to come back to this later.
Ben Felix: Okay, okay. We'll come back to that one later.
Cameron Passmore: Okay, here's one for you then. What's your favourite, again, hypothetically speaking, what's your favourite financial planning-related argument to get into on the Internet? Think outside the box here, Jason. I mean, just imagine you get into arguments.
Jason Pereira: Outside the box. Well, Tabasco's not the best hot sauce. I'm going to call it out right now. The McGrath, you know I'm right. You just won't admit it. First to fourth most, okay? Now, that is semi-related to financial planning. As for the rest of it, I mean, take your pick. The 4% rule. As if God shizzled on stone that thou shall take 4% and you'll be perfectly fine. Never mind the fact people can't quote it right, and think it’s 4% per year. Dividends are a way to alpha. Give me a break. Whole life is immune from market volatility. Don't get me started on that one. Alts have low risk. I have very little hair left in my head and Cliff Asness got there first and part of it was probably because he's raving about volatility laundering and how that's just not the case.
The fact that people think they can read a newspaper, or stuff online, and that's how I pick my stocks. I'm going to outperform managers. It's just like, have you not read enough Michael Lewis books? Patrick O'Shaughnessy said early on in his podcast, it was like, 50, 60 episodes that he's like, “I realized I should have called this podcast This is Who You're Up Against.” This is a guy talking to the most sophisticated hedge fund managers in the world and the resources they bring to bear. When you realize that this is like, you're either beating the old, or the killer in the market, really, or you're taking the average, you're either that, you're either the prey or the predator. There's no way reading yesterday's stale news has anything to do with actually succeeding. You know what? The reality is, is that if you want to argue with me about that, usually you’re just arguing vibes and feelings, because I'm throwing stuff at you that proves it. It is what it is.
Ben Felix: I have definitely seen you get into all of those arguments on the Internet.
Jason Pereira: Yes, it's a wonderful place.
Ben Felix: What rule should mortality pooling theoretically play in financial planning?
Jason Pereira: Okay, so to define that for those who aren't going to know, mortality risk pooling is what you get when you're in a member of pension, or an annuity, and you benefit the longer you live, because people who died before you basically left behind you to return, or their money, whatever else it is. That's basically it. The classic, classic financial advisor and planner answer, it depends. Look, for some people, it doesn't matter at all. We're privileged enough to deal with clients who are so wealthy that they earn a 0% rate of return for the rest of their lives, they're going to be perfectly fine. Even for them, maybe they want to simply lock in an annuity, for example, guarantee themselves an income stream for life, take greater risk in the rest of their portfolio and leave a larger estate. That's possible. If that's what they want to do.
For others, where it's not the case, look, there's a middle ground. There's those who have so little that they're not going to be able to hit their goals, and no amount of mortality risk pooling is going to do anything. There's a middle ground in between, where we do a financial plan, we test the Monte Carlo test, or whatever test we're going to test, and we find that, look, the probability is not great. Is there a way to enhance this? The answer, if we throw an annuity in, sometimes can increase something that was in the 60s to the 90s. What role does it play? It's case-specific. Can it help people? Absolutely. Especially, I mean, selection bias here, especially if you are someone with longevity and health in your family and all this other stuff, you're basically going to win this bet.
I mean, I like to joke, my wife is the teacher's pension plan's worst nightmare. Her grandmother died six months before her 101st birthday. I'm sitting there going like, “She's going to retire at 56. This is a no-brainer to me. She's going to win this thing. God touch what? God bless.” The answer is, again, it depends. It depends on the personal financial situation, but also, are you the person with three heart attacks and the stroke and everything else? You're not long for this world. Are you the person with longevity in the family? You are, right? There's a middle ground.
There's also, again, I think, frankly, when I get to the age where maybe I look at an annuity, or whatever products exist in the market, do I consider locking in some of my spending in such a manner? Yeah, probably would, because again, I think on the longer tail, probably based on health and history. If that's the case, then hey, why not take some of that stress out of the marketplace? Why not basically benefit from the mortality risk pooling and make my situation more secure?
Cameron Passmore: Totally sensible. Why is mortality pooling such a hard sell to clients?
Jason Pereira: Different theories on this. I think first off, it comes down to when it comes to buying annuities, it's the endowment effect. You're asking people to part with a cheque, which might be the second biggest cheque to buy something that they've done short of buying a house. We're talking usually five, six, seven-figure numbers, right? There's a lot of fright there. It's something that they're not going to be able to undo the next day. There's a cooling-off period, but next month. They're not going to be able to do it next month. The point is, is that that endowment effect, I think, is incredibly powerful.
There's also, I think, a lack of understanding of the upside of mortality risk pooling. Everybody's like, “Well, interest rates could be higher in six months. I can do better.” That’s beside the point, because that's six months from now. The reality is, is that if you're beyond life expectancy, average life expectancy, the mortality credits are so much bigger than you would ever earn in that delta and interest. It's an issue. You're going to basically make a lot more.
Then, the other idea is that the entire idea of not keeping, again, an endowment effect, the entire idea of not getting back what you put into it, you can get refund annuities, but they pay less. I think that bothers people. Then there is an entire morbid aspect of this. It's like, wait a minute, I'm benefiting from people dying? Yeah, you are. You want to be part of the teacher's pension plan, or hoop? Most people do. You take that. The reality is when you're making a decision on a personal level, that you learn about that; that's how it works, some people think it's pretty morbid.
One last thing, we don't have a lot of good options in Canada. We don't have a variable annuity market like the US does, where it comes with additional tax-deferral benefits. I think that tax deferral benefit really does basically lead to more sales in that marketplace as well. Whereas, because we just don't have that benefit, it's purely a play on longevity, which is not as compelling.
Ben Felix: Canada had these products launched, I don't know, over the last five or so years. We called them Tontines, which they weren't technically, but it's like a blend of an annuity and an investment product. They seem really interesting. Like, you and I, Jason, chatted about them a ton when they first came out and were like, this is pretty cool, but they have not been successful. Why do you think they've failed?
Jason Pereira: I was actually looking back here from Milevsky’s book on Tontines, somewhere around there. Look, these are products which are investment products with a mortality risk point. No insurance company, but you are basically putting money into a pool. If you live longer, you win. If you don't, you basically are giving something up, whether that be the entire amount or just your return. It's a way of getting an annuity, or a variable payout on the annuity, because it depends on what happens to the pool. That is far more affordable than an annuity. The reason why, I mean, why did it not take off in Canada? Look, first and foremost, advisor education, lack of understanding. I just know, even online, the conversations, or arguments, or debates I get into with advisors regarding longevity planning is orders of magnitude more sophisticated with American advisors than it is in Canada. We just don't talk about it here.
Retirement planning, retirement income planning is like, let's shift them to dividend-paying stock and put a cash wedge in, which by the way, the term that only exists in Canada. That tells you something's wrong. It's a complete and total lack of appreciation for the challenges of mortality, or mortality in Canada. I even wrote a series in the Globe and Mail on this on looking at different products, but also explaining mortality planning in general. That, I think, first and foremost is if you don't understand how the problem really works, or how the problem actually exists, then you don't understand the need to solve it. Then you have the second piece, which is on the product side. Again, there's some complexity to this.
I mean, I reverse-engineered the math on some of this stuff and it's not easy. The reality is I looked at this and said like, hey, I'll call out purposes, the only one that's still got one left and I'll call them out on it. The assumptions they use on that thing were very conservative. Very conservative. I was like, okay, great. You set yourself up for future distributions, increasing at a faster rate than what otherwise. Whether that happens or not, that's entirely up the chance in the market. The reality is I'm looking at this and I've spoken to them about marketing it and I said, listen, what you really need to do, lay to greed. Show them charts on what the projection pay-outs are later on in life and how much of that's made up of mortality credits.
Because right now, the distributions are largely returned. Tiny little bit of mortality credit if that at all. Over time, move the camera forward 20 years, mortality credits will start to far exceed the interest payment. When you start to, you actually, – if people understood the upside of mortality credits, I think there would be far more demand for it.
The last part is, and I'll say this much, there unfortunately is no model framework that's fully accepted in academia for a calculator on, okay, I've got conventional investments, annuities, and tontines. How do I allocate between the three to get the optimal scenario? It's not there. This doesn't exist yet. There used to be one of those for older products called Guarantee Minimum Drop Benefits, which again, I’ll credit Milevsky, he created that, which you hit a button and boom. It was like, here's the product allocation between the three that gives you the optimal outcome. It doesn't exist for tontines. Not knowing exactly how much of this you should even expose people to was a challenge.
Cameron Passmore: When does permanent life insurance make sense?
Jason Pereira: Okay, let's look at insurance, life insurance in general. There's three different needs it services. First is indemnity. I die today, I'm taking care of the people I left behind, because I haven't amassed enough wealth to make sure my kids and my wife are going to be fine. That's the first piece. The second piece of the spectrum is that I have a permanent need, or a semi-permanent need. I want a business. I have no plans on selling it anytime soon. I'm going to eventually die. I'm going to pass it on to my kids, or whatever else it is. I have a tax bill associated with that business, or cottage, which is far more common. Maybe I even take steps to freeze that, so I know for certainty what the amount is going to be. I have a need that is 100% conducive to my death, whether it happens today or 50 years in the future. I have effectively a permanent need, 100%.
Where things get muddy is when we start using it for the third reason, which is for an investment vehicle. What does it make sense? It makes sense when, first and foremost, there is a permanent need. Now, on the investment vehicle piece, that's debatable. Of course, Ben and I have been doing some early work on use of whole life as an investment vehicle. I will say right now that it should not be the first investment vehicle, RSPs, TFSAs, FHSAs, everything else, they have benefits. When you start getting into a taxable environment, is there a benefit to this stuff? The answer is it depends, as always, but it depends, first and foremost, on risk tolerance.
The more conservative an investor you are, the more likely it is to be a positive outcome with that. Compare it to being a GIC owner, or USCDs, where you are taking no risk. In that type of investment, when you compare it to a whole life policy, it starts to look a little similar. The value can drop, you get returns every year, and you reinvest those, and they can't drop. Now, the return, or the dividends, will change over time, or the projected schedule will change over time, depending on age and market performance, but it can actually be a reasonable substitute for really conservative investments. Especially because that par pool is invested in diversified investments, you're getting the benefit of returns that are conducive to those higher investments that you normally would invest yourself.
There is potentially a place here, but we also remember that even though people tout the fact that you can borrow against it and it's flexible as other stuff, there is an inherent inflexibility to it as well. You cash it out, you get to pay tax. A number of things you got to be aware of when it comes to the handcuffs. That is the first option. But as an option for the people where it works, yeah, it's reliable.
Ben Felix: There's a place for it. It's often talked about or sold as if everybody should have a lot of it.
Jason Pereira: Yes, to a man with a hammer, everything's a nail, and this is the problem. Is it appropriately sold? I would say that it's oversold. Have you had Cole on the podcast?
Ben Felix: No.
Jason Pereira: We've seen his work before, and he talked about incentives in various studies and found that yes, it tends to be sold. But when you change compensation models, suddenly, other stuff as expensive starts to be sold, so lo and behold. Okay, nerdiest piece of financial trivia. I'll give it for you. I think I got it.
Ben Felix: You thought of it.
Jason Pereira: Is that, and I get into arguments about this, dividends are not tax-effective. Everybody always points and says, “Oh, look. I pay less tax on dividends.” Now, for anyone who works with small business owners in Canada, we know how things work. There's something called integration. That means that by the time you add the corporate tax bill and the personal tax bill, it's the same thing as you were earning it personally. When people say, well, dividends are a way for companies to tax effectively return money to investors, no. They paid tax. You pay tax. Total equals the same. It's like, basically, you ordered up fries and the delivery guy ate 15%, 20% of your fries before they arrived, and then you imagine it didn't happen.
Cameron Passmore: Exactly.
Jason Pereira: You have less. Then, when you look at foreign dividends, it's even worse, because they're not tax-efficient at all. In fact, in a corporation, they're even worse off. They’re in no way a tax-efficient means of returning to investors, money to investors, except for in TFSAs and tax-sheltered vehicles. That just puts them on par with capital gains in other forms, too. It's not a big deal. When you think about it, and you realize that interest gets deducted from an income statement on a corporation and paid out and then it's taxed fully in an individual's hands, you're literally paying the same tax bill on dividends and interest, whether you own the bond or the stock.
Capital gains are the only thing that I actually have a tax preference. In particular, and I'll never understand people who think buybacks are a bad thing. I think Ken French said, they separate the people who understand corporate fines from those who don't. I love that line because at the end of the day, I don't have to participate in the capital. I don't have to realize tax I don't want to, but I can participate when I choose to. Then I get the preferential rate. It's just the same amount of money leaving a corporation, so what's the point? That's the nerdiest piece, is that what you think is tax efficient, sorry to break it to you, it ain’t.
Ben Felix: That's a good one. People look at the amount of tax that you pay on dividends at low tax brackets in Canada, and they think that it's tax-free, that you're not paying any personal income tax. But the reason you're not is because the corporation paid your personal tax bill for you effectively. The tax was still paid.
Jason Pereira: Yeah. People will say to me, “I don't care what the corporation paid.” It's like, wait a minute. Then, you think that they wouldn't pay you more if they didn't have this tax bill? Oh, well, they're just going to pay themselves more. I’m like, then why do they pay dividends at all? There's this never-ending, this is the online arguments. These a never-ending trail of nonsense arguments. If they're paying dividends, because they have excess capital and they have a retention ratio, that they pay less tax, that retention ratio stays the same, more money comes out. End of story.
Ben Felix: Your capital goes down by the amount of tax that the corporation paid. There's no free money.
Jason Pereira: There is no free money. Dividends are free money. Let's walk away from that one.
Ben Felix: That was good, though. That's a good, broadly applicable and very nerdy piece of financial planning knowledge. Nailed it. You had some good articles in the Globe and Mail recently on this. How should financial planners approach estimating a client's life expectancy?
Jason Pereira: Yeah, it's a tricky one. I will say, first and foremost, you start with the FP Canada guidelines. FP Canada is, of course, the certifying, buying the CFP board. Ben, you serve on the committee for guidelines. Thank you very much for your service. They included the back of that in that report, the CPM 2000 tables. This is for Canadian pensioners. Now, here's the thing. People understand this is more than one type of mortality table. There are gender-based mortality tables. There's smoking, non-smoking based, but CPM is for pensioners.
Now, there's a phenomenon where people who collect pensions live longer than people who don't. Maybe it's due to income security. We can speculate. I'm not going to get into that. The point is, is that inherently, by using the longer-lived mortality tables, FP Canada is saying, use the more conservative assumption. That's a great starting point. You start with that. They will tell you that you should start there. Now, the thing you got to remember about mortality is that life expectancy is a 50% interval, which means your odds will be on it are 50% exactly. You can't just use the 50% interval.
I think FP Canada's guidelines are to use the 25% interval, and then potentially add another couple of years. I think that's a great starting point. I think that they've done the right conservative thing. Now, people hate the conservative thing, because it means, theoretically, if you're trying to balance the last check, you spend less money. Frankly, I always make the bad joke that if you're balancing the last check, it better be for the thing that kills you, because there's no way to guarantee that. You start with that, and then you have to take your personal situation into consideration. Again, are they super healthy, like a member of another clinic jog all the time, long live parents, those old things all point towards, you're probably going to win this bet.
Then on this other side of it, are you the guy who's had three heart attacks and is massively overweight and doesn't work out at all? Adjust it. The other thing is that doesn't get mentioned. This was mentioned in an article by an advisor who services the indigenous community in Canada, basically said, First Nations' average life expectancy is lower in general, because of various issues and social issues. When you tell them that you're planning for age 90, it's almost insulting to them. I think we have to be as planners, aware of who the individual is across from us from health-wise and maybe other issues to inform that decision, to inform that talk, as opposed to just applying a simple rule all the time.
Now, that being said, if you want to start with that simple rule and the client says, “Look, I'm not going to live that long.” It's like, okay, great. Let's have that conversation. “Why do you think that?” “Well, none of my parents lived that long.” Okay. Well, life spans have gone on. How do they pass away? “Well, natural.” Okay, fine. You can have this back and forth, and educate them to say, like, oftentimes people say, “Why are you doing that?” Life expectancy is only 84. I'm like, “Okay, here's how life expectancy works. 50% chance you live beyond it. You have a, believe it or not, you and your spouse have a one in 10 chance of one of you living past that age.” “Really?” Yeah. That's real. That's something we've got to plan for.
Ben Felix: The data on income and both life expectancy and health span, I find those data to be super uncomfortable. There's big gaps between the lowest income and highest income life expectancy and health span in Canada, which is a pretty ugly fact.
Jason Pereira: Look, it is ugly. At the end of the day, there's a correlation between wealth and health. That's just it. Some of his job determination, because, again, higher paying jobs, but some exceptions tend to be more white collar and less brutal. Then, of course, yeah, health spend. It's a big delta. I mean, some of us have the option of going to the US or elsewhere, if we feel the lines are too long here. It's a thing. Not everyone has that option.
Ben Felix: Yeah.
Cameron Passmore: Here's a subject, Jason, you know a little bit about. What financial designations should clients be looking for when they hire a financial advisor?
Jason Pereira: Good question. You said advisor, right? Let's just establish something. Financial planner is a term that's well defined and has an ISO code, and has an international standards body and has regional standards councils that put in place regional designations. Financial advisor is two words put together, that even though some provinces license it, I was not in favour of that, because there's no clearer definition as to what that means. Let's talk about planners. We'll talk about designations and go back to that.
First off, you can't take titles at face value. At least there's been some work done in Canada to stop making everyone in the Bank of Vice President, which was just absurd. It's still a thing to some lesser degree. There are some provinces that prevent you from using the term financial plan, unless you actually have certain designations. All positive steps. First and foremost, the CFP, the certified financial planner, except no mutations. There is an imitator out there, but it's the only one that can, acronym CFP. That is the global standard. That is the first thing you should be looking forward when you deal with a planner. They've done a lot of work to bring that standard up. I'm very happy and confident with the level of testing and the level of what is expected to be known for someone in there.
Then from there, there's the other financial planning. Again, I'm biased here. I must sit on the board, but the RFP Designation, the Registered Financial Planning Designation, is a secondary designation beyond the CFP. That is a small group of financial planners who are actually actively engaged in the business of doing, producing actual financial plans. You can get a CFP and never produce a financial plan, but in RFP, you can't be that. Not to say the CFP isn't great. It's great, but it's a different level of specialization to me.
Of course, on the investing side, CFA, Ben and I both survived PTSD with that one. It was brutal. It's not fully necessary, but it is something that does say that that person's committed themselves to a level of understanding of the markets.
Cameron Passmore: Sure does.
Jason Pereira: Sorry?
Cameron Passmore: Sure does. Agree.
Ben Felix: Agree. Yeah.
Jason Pereira: It really does. You're committing yourself to pain and possibly breaking up your relationships when you take that. I saw it happen to other people. The TEP, trust in the state practitioners, is basically a very grown one in Canada. Not as recognized in the US. There's other ones in the US, but actually, Canada has the highest number of TPs in the world. This is one where it's an estate planning and tax planning designation, specifically around estates. If you're doing that, you've got a certain level of proficiency around trusts and estates that, frankly, no other designation can touch. Of course, one of the things that the industry does lack is an accounting designation, or sorry, a tax designation other than someone having a CPA, or whatever. A CPA is not necessary for financial planning, but I would love to see someone come up with a highly credential, a highly credible tax and accounting designation that advisors could flock to that would teach us about specifically.
I would also say, I'd love to see that happen around corporate planning, because there's a separate level there. Unfortunately, there’s a lot way too many designations out there. I myself dropped all my CSI designations because I felt they weren't valid, or weren’t living up to a standard that I held myself to. Too bad, CSI. Live with it. The ones I named are all stellar. What I would love to see is a lot of the lower bar designations that are out there that exist to get certifications, to give someone some three letters behind their name. I want to see them disappear. I want to see them replaced with high-calibre things that focus on areas that truly matter. Things like cross-border planning, things like, oh, geez, what is the one in the US? The Financial Therapy Association. Can't remember if they have a designation or not, but the reality is actually being able to deal with the human side of advice.
These are the things that we need to basically hold ourselves up to as to a professional level designation. Not something that checks a box. Those ones. CFP, RFP, CFA, TEP, CPA. Good luck finding all of those in one person. If you do, you found someone who actually cares about learning.
Ben Felix: RFP is specific to Canada, right?
Jason Pereira: It is. One other one to mention, I mean, the CLU needs an overhaul. It used to be better. I would say that much. It also is not connected to the actual CLU in the US. It's just its own Canadian version. Hopefully, they will overhaul that. I know people who've been lobbying for that, but we'll see what happens. That's a specific life insurance one.
Ben Felix: CLU in Canada, maybe not so interesting. CLU in the US, different though?
Jason Pereira: Absolutely, it is. I know people who've taught it at the American College, and I know people at the American College, and they hold themselves to a very high standard around responsibility and best duty of care to the clients. It's a different bar in different countries. Well, I mean, sorry, the American College controls the CLU in many countries, not Canada. No alignment.
Ben Felix: Financial designations don't always tell the whole story. They show dedication. They show a baseline level of knowledge. How else do you think people should approach evaluating a potential advisor before hiring them?
Jason Pereira: Well, I wish it were easier. I wish that there was a level of professional standard that basically made you feel like you could go to anyone and at least get a base level of knowledge. Doctor, you walk into a doctor's office and you believe you should, because they're an MD, you have a base level of knowledge. CPAs, there's a base level of knowledge established. They should hopefully be able to file your taxes without major errors. But we don't have the same criteria yet in Canada. We're starting to get there around planning and everything else.
Look, there's lots of checklists online around this. I think that's something you should always consider. A former guest of yours, Harold Geller and I have done a couple of podcasts on what to look for and red flags and whatever. I'll tell you some of the key takeaways. First off, you don't want someone who's coming out selling product. I've literally had cases where we sat down with a client with prospects and we've gone through, they've asked us like, “Well, what would you invest me?” I'm like, we have no idea. We have no idea. We just met you. We got to do the financial plan, the profiling, all this other stuff. They're like, “Wow, that's a really different answer than the other people I went to go see.” I’m like, what did they say to you? It's like, “Oh, they said, well, this is how I work. Then they pull that up a sheet and say, this is the portfolio I put you in. Don't worry, if you want to change anything, we can.”
I'm just like, they had the solutions magic box that somehow met your needs exactly without ever speaking to you? What a magic box that was. I would love to have this magic box that can pull things that are just answers to questions that haven't been asked yet. If they're coming out trying to lead with how they're going to outperform, how they're going to protect you, how they're going to give you all this, walk away. You've run into a product salesperson.
Second piece, is there a process? Is there a process that basically, that you can hold into account? I'm going to do this, that and the other thing. Everybody promises everything in this business. How much of it gets delivered? Basically this, that and the other thing. Okay, great. How is it going to check all the boxes that need to matter to me and my life? In that conversation, it should be very planning-centric. What are the objectives you're trying to do? Is there an inherent amount of, when you're onboarding, an inherent amount of financial literacy happening that were basically, they are helping you understand why you're making these decisions?
Are they focused on your objectives? Our conversations are all about, okay, well, that's nice. We'll get to that. Tell us about you. Tell us about your kids. Tell us about what you want out of life. Is that what you want? We're fishing for understanding, what's making them tick. Are they doing that? Or are they too busy talking about markets? Then, when it comes time to talk about markets, are they properly risk-profiling you? Are they taking that into consideration? Are they talking more about the downside potential than the upside? Because look, we're all going to get upside over time, but we all got to live with the downside. Are they coaching you and getting you ready for that? Are they basically, if they're going to sell you an insurance product, have they actually quantified the why? Have they done a needs analysis to show you all that?
Not to say that, again, I don't want to denigrate sales, because sales is a necessary component of what we do. But when it's the thing that is the reason why you're doing it, it's wrong. It should be following the actual line of logic that fits the person's situation. It's all of those things. I will say, unfortunately, people will often go to the people they know and say, “Oh, you like your financial advisor. Great, making introduction.” It's the blind leading the blind. They don't know. They don't know if the person's doing a good job or not.
Cameron Passmore: Speaking of a good job, you do a fair amount of expert witness work. What are the biggest red flags you look for when you review a case?
Jason Pereira: Usually, they're pretty easy to find. First off, show your work. Okay, great. You made recommendations. How did you even arrive at this? Was a risk tolerance assessment of any shape or form done? Did you even take the time to even fill out the KYC documents properly? Where are your notes? You made a recommendation. What led to this recommendation? Is this actually valid?
Ben Felix: For context for listeners, so you'll be pulled in as an expert witness to a case where an advisor has apparently done something wrong to harm a client.
Jason Pereira: Yes.
Ben Felix: You're brought in as the third-party expert to evaluate whether they have in fact done something wrong.
Jason Pereira: Yeah. I'll evaluate the work that was done. I'll evaluate it both from a quantitative standpoint, where they’re basically doing that, and a regulatory standpoint that they live up to their duty of care. Potentially, any of those standards that person's held up to. Oftentimes, I'll have to assess damages. I'll talk about that at the end. You made a bunch of recommendations. What was it based on? Did it come out of thin air? Here's the reality. If you have a minted portfolio and nothing leading up to that, then my response is, I have no idea how they arrived at this. Do you, or KYC entries even make any sense? I've literally seen, because we had up in our, or your client documents, we had to say, okay, the goals of this account are this much income, this much growth, this much security, high, or medium risk, low risk.
Then I've seen these ones where it's like, oh, they want 80% income, 20% capital preservation, yet somehow you have them in 95% high risk and speculative? Explain to me how they're like –You're either demonstrating to me that you had a line of logic and reasoning that led to a conclusion that basically did the best thing for the client, or if you haven't done that, there's deficiencies all the way that I'm looking for. That's the first thing. Then, did you even understand what it was you were recommending? With the things you said, did they betray the fact that you do not have any knowledge of what the heck you're talking about? Because I will see that.
I've got a case right now where I’ve got some insurance statements from just like, that's empirically invalid. That's not true. That's absolutely not true. You don't even understand the technical things you're talking about. Back to designations, licensing, unfortunately, is not really a bar. It's a line on the floor that's easy to step over in some places. The reality is, is that if you're not trying to uplift your knowledge and understand these things, odds are you're going to make these mistakes. You have to really understand what it is you're saying, a complete and total lack of process. What was the journey you were taking the client through? What did you promise them, versus what they actually did?
Lack of continuous updating of communication, lack of records. I got one right now with a five-year gap in records. There were changes in the portfolio explained to me how this happened. You're not a discretionary manager, but the changes happened. Or the same solution for every case. Hey, everybody should be 100% equity. That's an opinion. That ain't backed and that ain't the law. That ain't regulation. Guess what? The second that the client complains about you and files suit, they've got grounds. Now, how do I assess damages? Any number of ways.
The simplest way is to basically say, you gave them a bunch of money over time. What does that line look like? Now, I'm going to properly risk profile them. I'm going to maybe do a bit of a financial plan for them. I'm going to do the proper job along the way. Again, depends on how long it was, and if the person's still around a number of issues and say, okay, based on reasonable assumptions, by the way, your projections assumptions are one of the things people are constantly screwing up. They're like, “Oh, you're going to grow conservatively at 7.50% to 12%.” “Excuse me, 12%? Twelve percent conservatively. You looked at the projection guidelines recently?”
Anyway, and then basically say, this portfolio, your portfolio ended up here. If you had done the right job and put them in a diversified portfolio, they’d end up here. Here's the thing. Let's say they're 100% equity and they end up down here. I had a case, very similar to this, where they lost 1.2 million dollars. If they had, basically, been in a conservative portfolio, look, it was a hard time. It wasn't great. They would have lost $200,000. A million dollars in damages. Here's the problem. You exposed them to 100% equity risk. They should have been rewarded for that. Never mind what I say, the portfolio should have been. What did the globally diversified market portfolio do at the time? Oh, look, it's up here, 100% equity. What did the 100% equity index do at the time for the US?
Guess what? Now I have three data points, and I can argue that if you’ve done it right, it should be here. They should be there. Great. You've done this right, would’ve been here. What actually happened, what you should have done based on your decisions, because you were too busy stock picking and thinking you'd beat the market, if you just put it in that market, you would be up here. Suddenly, a 1.2-million-dollar loss was 2.5 million dollars in damages.
Ben Felix: It's an issue, because the client probably didn't realize that they were taking not only equity risk, but they were taking speculative risk from individual security selection and neither of those probably matched with the appropriate amount of risk for their case.
Jason Pereira: Let's look at this from an advisor's business perspective. You are going to be held to what the benchmark did. You’re going to be held to an appropriate portfolio of benchmarks, and you're also be held to the benchmark of your underlying decisions. Both of those could be taken into consideration. The higher of the two is probably going to be argued. The reality is, is that if you're out there thinking you're going to read your analyst research report and make a bunch of stock picks on the top 30 things and do YOLO on NVIDIA, or whatever else you're doing, if you had just done the empirically valid thing that is supported by evidence, you wouldn't have that risk exposure.
Ben Felix: We agree on most things, but we often disagree on the extent to which we should engage online with trolls, basically, or with people that we don't agree with. We've talked about this. We actually do appreciate your logic on it, even though I don't agree with it. Can you explain why you fight trolls on the Internet who are spreading financial BS?
Jason Pereira: If this was at a conference and when these people want to argue with me, I’d probably just walk away, a lot of cases. Sometimes I don't. It also depends on their footprint. This is a dividend blogger who thinks that – Here's the reality. I'll go back to Edmund Burke, who said something to the effect of the only thing necessary for evil to triumph is for good men to do nothing. I'm not going to assume that it's evil. I'll assume Hanlon's razor, which says that yeah, assume ignorance over malice. They're committed to their ignorance. That's fine.
Here's the reality. These people may have an audience. These people may be getting an audience. There's people who are watching. One thing I learned about social media a long time ago was, when I found out how many of my friends were following me would comment to me, “Oh, yeah. That was a really good conversation.” Dude, you never comment. I don't even know you're on Twitter. What's going on? There's far more lurkers, people watching than there are people talking. These people are taking things in. If we're not out there calling BS, if we're not out there fighting the good fight, I mean, there's a certain point you walk away and say, enough is enough. If we're not basically throwing up evidence against unaccountable nonsense, who's going to do it? People are going to start. More people will fall into the trap of thinking this is the case.
There was a case about two years ago with an insurance guy at the US where all of Fintuit united against them, because he was so crazy. He's like, “Oh, this is great. It's feeding me more business.” I'm like, “You don't understand. You don't understand all the people who aren't coming your way now, because of all of us doing this. You think you're winning. You're only seeing this. Your selection bias is tiny.” The point is, is that it's simple. You can beat this baseless stuff with logic math, and academic papers, because most of it's completely baseless. It's based on total misconceptions of the universe.
You give people enough for up to show exactly who they are. Once they finally give up, they start attacking you and they start name calling and they start doing whatever. Great. Do you think you just won anybody over by name-calling me? You're so right about your argument. You've won with a denigration. Yeah, maybe you're in a non, whatever, which means you have no courage in your convictions. Nevertheless, look, I've joked it's a public service. There's times where I'm not going to involve myself. Ben's got this, or I usually walk away. You're like, someone else walk away.
Yeah, there'll be times where Ben, you got it. I mean, you're going to go only so far, or someone else will go, and McGrath was pretty good at that for a while. Or some other friends we have online will go, or Clif Asness will just really blow someone up, and I'll just watch and eat popcorn along the way. Look, the reality is, is that on some level, it is a public service. We are basically educating. Now, it's not the funnest form of education, I'll say that. My wife will often give me grief for it. At the end of the day, other people are watching and other people are learning.
Cameron Passmore: Why was it important for you to start the Financial Planning Association of Canada?
Jason Pereira: The origin story is interesting. I was down at the FPA conference in the US several years ago, and I made a friend, and I wandered into the next gen group, which is their young advisors group. This new president was taking over, and he was talking with such passion about the opportunity they had to transform the industry and create something so beneficial to humanity that I was almost in tears. I was just like, this place is incredible. Then people started challenging stuff. I stand up. I'm like, “Guys, really, respectfully, I'm from Canada. We got none of your stuff up north. I wish I could take you all with me, because we got none of this. Frankly, please do everything you're talking about, because you're going to shame the rest of the world into doing the right thing. Just do it.” You know what he says to me? He goes, “Why can't you fix it?” Look, it's complicated banks, blah, blah, blah. He’s like, “No, but seriously. Why can't you fix it?” I sit down like, “Jerk.” All right, he threw a gauntlet.
I go up and talk to him afterwards and he's like, “You listened to me for two minutes.” He’s like, “So, you're not the guy?” I'm like, “Oh, man. Come on.” I came home and this just started to happen several times, where I come home from American conferences, a little bit depressed about what I was coming back to in terms of the industry. I was having these engaging conversations about fiduciary responsibility and elevating the industry and all this other stuff. I couldn't find, with hundreds of people, I couldn't find a dozen people to have that conversation within Canada. It drove me insane.
I started talking to friends and colleagues about what the heck we're going to do. I can't do nothing anymore. I don't think we could do anything. This was when title protection was starting to come about in Ontario, and we were worried that it was going to go the wrong direction. It did, but trying to fix it. None of us wanted to start an association, but we felt that there was going to be no other way to move the needle, because we weren't happy with the representation planners had in this country. We said, okay, great. Let's build an association. How are we going to make sure it's different, and how are we going to prevent it from being co-opted by those who don't have the same belief structure?
We came up with an end state. We created a chart and said, this is the world we are trying to create fiduciary responsibility, evidence-based, basically best interests of the clients with pure transparency, all of it. We basically said like, look, there's no other way. There's no other way. We need to create an association, and the charter will serve as a filtering mechanism. I'll tell you, man, that I get a bunch of hate mail about that charter. I basically said, look, man, respectfully, as far as I'm concerned, fiduciary responsibility, transparency, all this stuff, that's me saying, I stand for unicorns, puppies, and rainbows, man. If you don't believe in what we're talking about, congratulations, you don't have to join. You don't have to join. But the rest of us are going to.
A bunch of people, early on, before we even launched, there have been over 100 advisors, or planners took the leap of faith and let a bunch of us put this together. Now, we stand over 300 members strong. We have an incredible community, an incredibly engaged community that I'm touched by it all the time. I was meeting with a young guy today, who basically is leaving his career because he wants to be a planner. He thinks it's only possible because he managed to get involved in that pack and basically, learn from our forums and get exposed to our education.
They're going like, this is someone who basically, legitimately wants to build a better industry and do good for people, and he wouldn't have made a career change if we hadn't enabled and empowered. We've had president's list winners for the CFPs top three placements in the CFP exam, who credit the forums and the education to get with us to this. More importantly, it's created community. It's created a community of people who basically were no longer at an island. That's something I've found with a lot of the right intention to planners that have been around for a long time. The older ones was that they were on an island for so long. They didn't have a tribe, and we created that tribe. That's why it was so important.
This is the only way we're going to win this is a ground game over time, which is why reaching out to the students and younger planners and right-minded people. That's what's going to win in the long run.
Ben Felix: It is a great community, and it's a great association. I'm a member. Mark McGrath’s a member. Dan Bortolotti is also a member. He's got a great forum. Cameron. I think Cameron's a member. It is a great group, and it's a great resource for people, like you said, Jason, that are coming into the industry, where there's a group of people with broadly shared beliefs about what the industry should look like. It's a great thing to have. All right. Second to last question. Did Mark McGrath's soul actually leave his body in a hot sauce eating contest?
Jason Pereira: We have photographic evidence and video that it did, legitimately. At one point for the record, he was looking down at his hands, hyperventilating, afraid he wasn't going to go on. Despite the fact that he had been trash-talking, and even when we sent them a cameo from Alton Brown telling him he was wrong, he would not digress. He would not digress. His hubris got the best of them, and to his own admission, he was glad that there was a hospital not far from the hotel. Luckily, he didn't eat it. But if he had tried to go any further, he might have.
Ben Felix: Yeah, I was there. That was actually scary.
Jason Pereira: Well, scary for him.
Ben Felix: He was cooking. He was cooking.
Jason Pereira: Irvin and I were perfectly fine.
Cameron Passmore: Yeah, I heard Irvin was a machine with it.
Ben Felix: Irvin was beyond fine. Irvin was enjoying himself.
Jason Pereira: I was sweaty, and I was like, okay, man, I'm feeling it. I'm going to lie down after this, but I feel it, but I'm not hyperventilating and worried about that. That's all to see that much.
Cameron Passmore: All right, Jason. You know the final question?
Jason Pereira: Oh, boy.
Cameron Passmore: How do you define success in your life?
Jason Pereira: Let me give you the – it depends answer. It depends on what we're talking about. I thought about this in three levels. First, personally, nothing matters more to me than my children growing up and living a happy life, and my wife being happy with our family. That's it. That’s the most important thing in my life. It's my cornerstone. In terms of my business, I am living the most important thing, which is, I get to sit across from people and help them succeed in life. What I discovered years ago about myself was that I take immense pleasure in aiding everybody else's success, and I get to do that on a daily basis. Unfortunately, life will throw curveballs and negative things, and you will have some of the most horrific things happen to clients and people in your life you care about, and you'll be there to – This is the test. You'll be there to support them. This is a truly profound and transformational industry that can do so incredible, if we just do it right.
The last piece is the industry. I just want it to be better than when I left, when I leave them when I found it. Everything we wrote in that charter was written out of pure love for what is possible and helping humanity. Frankly, if we can actually be a real profession by the time I finally say I'm out, nothing will make me happier.
Cameron Passmore: Great answer. Great to see you, Jason.
Ben Felix: Always a pleasure.
Cameron Passmore: So great to have you on, finally.
Jason Pereira: Some people denied my existence. I don't know.
Ben Felix: Yeah. All right, Jason. That was great. Thanks for coming on.
Jason Pereira: My pleasure.
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https://community.rationalreminder.ca/t/episode-354-jason-pereira-expert-financial-planning/36663
Papers From Today’s Episode:
‘Current Practices for Risk Profiling in Canada and Review of Global Best Practices’ — https://osc.ca/sites/default/files/2021-02/iap_20151112_risk-profiling-report.pdf
‘Financial Risk Tolerance: A Psychometric Review’ — https://dx.doi.org/10.2139/ssrn.3088292
Links From Today’s Episode:
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminder
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Jason Pereira — https://jasonpereira.ca/
Jason Pereira on Facebook — https://facebook.com/jasonpereirafinancialplanner/
Jason Pereira on X — https://x.com/jasonpereira
Jason Pereira on LinkedIn — https://linkedin.com/in/pereirajm
Jason Pereira on YouTube — https://youtube.com/@jasonperieraFP
The Fintech Impact Podcast — https://jasonpereira.ca/the-fintech-impact-podcast-jason-pereira
Conquest Planning — https://conquestplanning.com/en-ca/home
Replit — https://replit.com/
FP Canada — https://fpcanada.ca/
Financial Planning Association of Canada (FPAC) — https://fpassociation.ca/
Episode 188: Prof. Ayelet Fishbach — https://rationalreminder.ca/podcast/188
Episode 236: Harold Geller — https://rationalreminder.ca/podcast/236