Andrew Auerbach (00:01) Well, hello everybody. Welcome to another edition of Beyond the Bank. My name is Andrew Warbeck. I'm the co-founder of Delisle Advisory Group and really delighted to welcome Ruben Miller to the podcast. Ruben will describe his very interesting background. I had a chance to actually listen to a few of his podcasts that he was a guest on and immediately sent an invitation because I just found

Rubin Miller (00:20) Thank you.

Andrew Auerbach (00:28) Ruben's perspectives on the US wealth management landscape are, I think, very poignant and kind of is living it in terms of his decision to create an independent firm. So Ruben, welcome and thank you for joining us.

Rubin Miller (00:43) Thanks, Andrew. I'm glad to be here. Yeah.

Andrew Auerbach (00:46) Well, let's dive right in. I would love for you to take us through a little bit of your career journey. You've done a lot of interesting things, both in the institutional side of things before branching into private client. And I think the listeners would enjoy just hearing you kind of walk through your travels to date. So start there.

Rubin Miller (01:06) Yeah, sure. Thanks. Man, so I'm not someone that grew up sort of with my grandpa reading the Wall Street Journal to me. This was a foreign world to me all the way through college. I never took an economics class or finance class in college. I happened to, as a young sort of teenager, be a highly competitive chess player and

When I was graduating college and I didn't know I was going do with my life, I was catching up with an old mentor from the chess world who said, you know, you should maybe try your hand at trading. And I'm 22 years old. Some guy says this to me, says, you know, actually even I'll take you under my wing. I used to be a trader, just moved to Chicago and I'll take care of it. So I had nothing else going on. I thought maybe I'd go to law school. This sounded very enticing to me as a 22 year old.

didn't grow up in a big city. So I moved to Chicago after college to be a trader knowing nothing about what trading was. some books that summer or whatever. I started, obviously Chicago has this ecosystem around futures and options trading at the Chicago Board of Trade, Chicago Mercantile Exchange. It looked a little bit different back in 2006. Things were just migrating onto, from the sort of pits in the floors that you see in the movie with all the hand signals and screaming.

onto screens, which are a little more efficient. But at that time, it was a little bit of a hybrid. I was mostly on the screens. And so I tried basically in my early 20s to learn how markets work working for this guy. And it didn't initially work out too well. I was trading oil in summer of 2006. There was a war in the Middle East. I didn't know what volatility was, but I was experiencing it. And it seems crazy that someone would let some kid with such little experience do that.

The model of a lot of proprietary firms back then really was that trading was a skill that could be learned or taught. And if you bring enough of these young people in, give them a chance, some of them will float to the top. You can get rid of the other people that didn't work out and make a lot of money and the traders can make a lot of money for those that were successful. So that's sort of like a guinea pig program I was in. again, it didn't work out very well in beginning, got a little bit better after a few years. I ended up doing it for seven years. So most of my time trading,

futures and cash bonds, which is basically like everyday bonds. You go buy a bank. Those also trade on exchanges. And there's also futures contracts, which are a derivative contract, which we're happy to chat about a little bit. I say that just because our firm does sort of stand apart a little bit in the U S wealth management world, because we actually, even though we're an evidence-based firm, we don't use expensive active products. We do use options trading for clients. And so we could talk about that maybe at some point. So

Anyway, fast forward, did that for ended up being seven years. I went back to business school. I knew I wanted to stay in finance and markets, but I wasn't sure I wanted to stare at screens all day. I found it sort of a unnourishing experience as a career and I wanted to work with people. got a great internship at American funds for a summer. I really wanted to work there. I didn't get a job there. Came back to business school, was back in all my investment classes. One day something clicked to me that, you know, maybe studying all this valuation work and

Then trying to go pick stocks isn't really the way it has to be done. Asked my professor what she thought about my sort of line of reasoning. And she said, don't you remember back in one-on-one last year, we learned about Fama and French and how markets might be efficient. And that is a hypothesis. And she said, you should go get a job at Dimensional. And I have a crazy story about how I got a job at Dimensional. I was living in Los Angeles for business school and I was very unlike me, but I happened to get an invite to the Elton John Grammy party.

Andrew Auerbach (04:43) Ha ha ha ha.

Rubin Miller (05:02) one year and I met someone there a few weeks before graduation and they said, what are you going to do with your life? And I said, I have no idea. I just took on all this debt to go to business school and I haven't got a job yet. And they said, have you ever heard of Dimensional? And I ended up, I was speaking to basically the friend of someone whose friend worked there and lo and behold, a few weeks later I was interviewing and got an offer. So I worked at Dimensional, which for those that don't know is sort of a pioneer.

in low cost market based style investing much like Vanguard or iShares or BlackRock index style investing. I was there for a little over seven years I believe and then for the last three years I've been an advisor and for the last year and a half I've owned my own firm as an

Andrew Auerbach (05:47) Wow. So what a great journey, you if you threw me for a little bit of a loop around the Elton John Grammy. And so that's a story that sounds interesting in and of itself.

Rubin Miller (05:58) Yeah

Sometimes I forget that that's even my story and I'm like, people must think that is stinking crazy and I don't tell that story enough. You know, I'm from Ohio. not, happen to go to grad school in Los Angeles, but I felt a little bit like a fish out of water out there, but I happen to be dating a girl whose grandfather was sort of famous in the music industry and he had a table every year at the Elton John Grand Party. And so I got an invite and I happened to sit next to this woman who...

Andrew Auerbach (06:07) Okay.

You

Rubin Miller (06:30) Her first question when I said I'm in business school, I don't know what when I do. said, have you ever heard of Dimensional? And it was literally probably a week or two after my professor had sort of said, you got to start trying to find a way to get a job there. So, you know, when they say that sort of success is where luck meets preparation or something like that, I'm not sure how prepared I was, but certainly I was lucky. I had a tremendous career at Dimensional and all the respect in the world for that firm. And now I'm an advisor on the independent side. So my firm, we have to choose investments for clients and Dimensional is firm we think very highly of.

Andrew Auerbach (07:00) That's terrific. Just a question for you around your background, starting with chess. I could see very intuitively how being a good trader, that actually, I never really thought of it before I heard your first podcast, but there are a lot of parallels, aren't there, in terms of how you think about strategy and chess relative to how you trade?

Rubin Miller (07:26) There is, this is a great thread for people that enjoy game theory and things like this, but there was the inclination of my mentor, his name was Zach, was that because I was a good chess player, you know, there's a higher probability I'd be a good trader compared to someone that maybe wasn't a good chess player. Sure, with chess players, there's typically, I mean, I'm a master, there's a, I don't want say I'm like world elite or anything like that, but I'm at a level above where you would go to a party and want to play with me.

Andrew Auerbach (07:52) yes.

Yeah, virtually. Just to clarify for those who don't know chess, 98 % of us will have no interest in playing you. That's the level you're at. That's pretty impressive.

Rubin Miller (08:05) I'm very bad at a lot of things in life that haven't been one thing that I got. So anyway, I'm not, I tend to push back on people a little bit, mostly because I experienced it myself. Like I wasn't immediately a good trader. I'm not sure I ever was a great trader anyway. I had a seven year career, which is honestly quite good. Typically people burn out pretty quickly or blow out. But I had a very hard time managing risk, which I think is...

common quality that all investors have. And many of us don't even know really what risk is when we begin our investment journey or how it's likely to manifest. think that's probably my value proposition now as an advisor, but it's something I was in everyone else's shoes when I was 22 and I started my first day on the trading desk. But what I would say that's helpful about being a good chess player to being a good investor or maybe trader would be pattern recognition.

If there are patterns that exist in markets, chess players are some of the best at recognizing patterns. If you showed a grandmaster or even just a regular master a board that was a common position, they could look at it for a quarter of a second and they would understand everything that's going on. They could look away and tell you everything that's going on. If you showed them a position that didn't make sense, like

the night was on a square that it couldn't legally be on or something like that, our brain would go haywire. We would not be able to remember anything. It wouldn't make any sense. And so we wouldn't be able to use what has been wired in us for so many years of playing and the pattern recognition that comes from that to understand what's going on in the board. And so that's always a great example to understand like what we might be good at, which is seeing those patterns. However, there are two types of investors. There's investors who believe that you can look at the market.

and see patterns and go act on them and make more money than if you went to the market, didn't see patterns, and didn't try to act on them so that there's value in finding these patterns. I would actually argue that that's not a very useful exercise for investors. Research has shown time and time again how challenging it is to think you know something that's going on in the market or something that you think will go on in the market sometime in the future. I believe it's a sort of...

foundational philosophy of my firm and my approach as chief investment officer that prices in the market contain a lot of information for investors. The markets, whether it's me as a 22 year old trading oil futures and bond futures, or someone else going to logging on to Schwab or Fidelity today and buying Apple stock or Netflix stock. The price that you see is this equilibrium between all these buyers and all these sellers. And where they meet in the middle is the price.

think it's a really beautiful concept that doesn't get enough understanding or concern from everyday people who just kind of get caught up in the frenetic buying and selling of the market and seeing that you can make or lose a bunch of money every day. There's a lot of information in a price because the world's full of really smart people who are investing every day. So while I wish I could tell people, know, hire really good chess players as your advisor because they can understand all the patterns in the market.

The truth is I don't really believe that trying to find patterns in the market is that useful as an exercise. I would argue people are better off not concerning themselves with neon lines on a Bloomberg terminal or screen and drawing columns or bands and thinking if this happens and this happens, it just doesn't really work that way. mean, stock prices are driven by people's expectations for corporate profits. When you buy stock, own ownership in a company, there's information about that company that comes out through time. There's information about the economy that comes out through time.

There's many factors that go into what should drive a stock price. I don't really believe that random patterns we might find are ones that people should get too much concern to. So I do think, let me say something aside, it's not like hiring a good chess player is a bad idea to be your financial advisor either. I would say if you have find anyone who understands patterns, there's a lot of utility in that because we're not just in today's version of investing in wealth management.

we're not just picking stocks or trying to find patterns in the market. That's not the value proposition. I would say most of my value proposition is taking this background I have in investing and saying, I came to the conclusion in the middle of my career that it's better if people focus on what is the life you want to live? What is your perfect day? What is your ideal existence for you and your family? And your portfolio can be informed by that.

Once I outlay a financial plan for someone, have a lot more information about how I want to invest for them. That is pattern recognition. That is someone saying, I want to pay for my daughter's wedding in three years and I want to buy a second home in seven years and managing the risks so that people can go and accomplish those dreams that they have. That is not easy, right? That is not just buying an index fund and moving on with your life. So that is understanding.

patterns and market movements, expectations for volatility, how risky certain assets are. So I always delineate between like, I wish I could tell you to hire a good chess player because they're really good at investing. I don't really believe in that. What I do believe in is that if you find someone that understands how to connect patterns and things they've seen before in other clients to what you might be trying to accomplish as a person, that's certainly related to what a good chess player might be able to do. That's financial planning, not investing, but I would also argue that's probably more important.

Andrew Auerbach (13:46) Wow. And I think what you've done so nicely there is tied in the human dimension, which is at the end of the day, our behaviors as investors is ultimately what matters. And, you know, when you described, really resonated with me, you know, what you pay in the price kind of matters at the end of the day over time, because that is going to be the bearing of what your return is going to be over time. And I think in shorter bursts,

when people become very momentum driven, I think they lose their bearings a little bit. And I think that they get caught up in the excitement, know, and Nvidia is a great example, or just the concentration in the US market right now in terms of, you know, so few companies driving basically all of the return in the market. And because of the craze of indexing, continuing to accelerate that, you know, we just keep on building on.

on that notion. And what you framed so nicely, Ruben, which I really like, is the real barometer is the plan, which is what the family is trying to accomplish over a longer period of time and how to achieve that in the most efficient way, minimizing volatility, structuring a portfolio where perhaps you don't need to take excessive risks because they're unnecessary based on what you've indicated as what you're trying to achieve.

That pattern recognition ultimately is what matters as opposed to, you know, even a chess master saying, it's not about a secret sauce. It's not about some kind of a proprietary trading strategy that that is why they should hire you.

Rubin Miller (15:22) I was on my friend Peter Lazarow's podcast about two years ago with my buddy Phil Huber. And I said something to the tune of, my job is to make sure you don't run out of money for retirement planning. And Phil challenged me, rightfully so. And he said, that's not quite right. It's actually our job, one, to ensure you don't run out of money. But B, make sure you don't leave this earth with too much of it.

based on what you're trying to accomplish, right? So it's also what I love about what he did was sort of say there is this fine line between being too conservative for someone, but also helping people live bigger lives, which is a phrase that my partner at Pelton or Rachel Levine uses a lot with our clients, which is like, yes, our job is to make sure you're going around on money. But after doing that, our job is to allow you to live a bigger life. And it's not up to us to define what that means for you.

And so I think a great advisory relationship really belies on this idea of us unpacking, as I said earlier, what that perfect day looks like to your family, however you want to describe it, but everything should start there and it should go from there. And if we can allow people to live those bigger lives, I think that's what a successful, you know, that's, that's what I consider a successful career for any of us, Andrew, you or me, or people that do what we do. And that's the ticket, you know, and how cool that is, how far we've come from 34 years ago.

when, and maybe it's different in Canada, but where we are in the US right now, 30, 40 years ago, an advisor relationship, people would inherit a hundred thousand bucks, a hundred thousand bucks, and they thought the right thing to do was go down to the corner store that said investments on it. You get the person your money and you say, go turn this money into more money. And that was it. And it's such an incredible evolution we've had now to see finance as a service and an all encompassing one so that we can help people live bigger lives. I'll say, Andrew, I launched my firm,

about a year and a half ago, and I named it, it's called Peltoma. Peltoma is actually a lake and region in Eastern Canada. I was reading this book called The Dawn of Everything, and there was two pages on this quick little story about how in the 1600s, these sort of French proselytizers arrived on the Eastern shore of Canada in this region right around Peltoma, and there was this native tribe called the Micamac that lived there.

Andrew Auerbach (17:30) Huh.

Rubin Miller (17:51) And this guy Pierre Biard, who was sort of the leader of the French, sort of, A, trying to convert these Micomac to their way of life, the Frenchman way of life, which dealt with the pursuit of treasures, being away from their families for

nothing that this tribe was interested in. This tribe was very...

happy with their lifestyle and modesty, being around their family, cooking with their family. And it really perturbed the Frenchman. And he said, why don't you want these treasures and jewels and this life that we're doing and this religion that we have, all these things? And they were just like, you know, the reason why the story was in the book was because there was this conversation between the leader of the Meek Mac and the leader of the French. And the leader of the Meek Mac says to Pierre Biard, you're not rich. And it really frustrated Pierre Biard. And he said,

You're not rich. Like you think you're rich. You think treasures are rich. You think being away from your family to go pursue all these pursuits of gold and silver and blah, blah, blah is rich, but like that's not rich. And the last line is that he says, we are rich because we have ease, comfort and time. And none of those things have a dollar value attached to them. And when I was reading this book and I happened upon again, just serendipity reading those couple of pages at the same time I was launching the firm, I wasn't going to name the firm Meekamack.

But I did want to name the firm after the story because that is how I really feel this evolution toward where the wealth management industry should be right now, which is that it's my job to deliver ease, comfort and time to people broadly defined. I don't know what that means to someone. And a good relationship is where I unpack that early on and their portfolio is a tool to help endow that life.

Andrew Auerbach (19:35) That's really cool. And what a great analogy. You know, one of the things that we're often commenting on is when you talk to an advisor about their, let's say their 20 largest clients and you start talking about who they are and who those families are. The one thing I've learned over many, many years is there is zero correlation to now put that aside and tell me who are the happiest families that you deal with. It's not in the same sequence as the wealth level or financial assets or revenue contribution.

for precisely what you're describing this intersection of really understanding purpose. know, everybody has families, everybody has things that are great and things that are not. Everybody is worried about stuff. Oftentimes it's will I run out of money? Oftentimes it's things that have nothing to do with money, but are still wearing on the overall family. So I think that's a really, a really cool insight to think on those terms. We actually don't know when we start with a relationship with a family.

until we understand a little better, a lot better.

Rubin Miller (20:37) Yeah, we, it's funny, we launched a second offering for our firm of just investment management. So we launched a sort of financial planning folks firm. That's our value proposition. We would say we're really good at investing, but this is where we think the focus should be for most people. And then people said, Hey, I don't really want to engage on the soft stuff. The perfect day stuff isn't ticking for me. And Rachel and I decided, well, you're not really our, that's not who we really want to work

At the same time, were several, plenty of people that really wanted this from us. So we launched a second offering that's just investment management. We don't do those conversations. We just manage your money. It's at a, it's basically half the price, but we said we can do that. That's actually not that hard for us. So we didn't, we can't charge full rate on it. That's not the sort of the experience we're trying to create as our firm, but that can be a very good service to people too. Like as we, as we discussed that, like there's so much to learn from a family about what they want to accomplish.

Andrew Auerbach (21:19) Interesting.

Rubin Miller (21:37) There are plenty of people out there who just want to sleep better at night, knowing that their money is being professionally managed. That was a cool insight for me because I literally, that was a pendulum swinging the full other way for me after I launched the firm. I really never thought about that. I was trying to move away from that. People just wanting investment management. What I learned was that that's not my job to tell people what they need. And if someone doesn't want to engage in everything that our firm offers and want a more a la carte offering,

One of the cool things about being a sort of nimble, more flexible boutique firm is we can do that. We don't have like, I'm not a Morgan Stanley or Mayor Lynch where it's sort of like, can go on their website and see how they serve every client. not saying that's bad or good. It's just that we have a lot more flexibility to do what we want. We've built a firm that way. And so we decided to sort of have this sort of more distilled offering as well. And who knows, maybe in the future we'll have more of those based on what we hear.

Andrew Auerbach (22:30) Okay, so I've got to build on this one. How do you think about the disaggregation of what we get paid for? You've just given me a perfect vertical. You've created a category of investment management only we're an industry where our fee revenue dominantly is coming from managing money. And yet we're saying the value is in a whole bunch of ancillary services that are now more dominant, financial planning, estate planning, tax, philanthropy, succession, whatever these other important services might be.

Maybe you could give me your perspectives Ruben on today, how you think about that disaggregation of what clients are paying for and then overlay that with your view of AI and what this looks like in the future in terms of the call it commoditization of the investment management standalone.

Rubin Miller (23:22) Yeah, I this is a very, you know, this debate occurs all the time in our industry. It's one of those debates. I mean, I live here in the U S so I'm very familiar with heated debates politically. And, it's one of these debates where people who do it one way have their heels dug in. People that do it the other way have their heels dug in. They love battle like this, but there's really not that many people in the middle.

I would say Rachel and I at Peltomar, we're sort of in the middle. I see both sides of it. The traditional AUM percent model where someone gives you, know, $5 million to manage and you charge a percentage of that every year, let's call it 1%, is that right? I don't know. I don't know what this $5 million client, what we do for them or whatever it be.

And speaking of hypothetical, our firm's fee structure is not like that. the other question is like, well, what should we do then? If that's wrong, you say, well, we should charge them a flat fee. You should just charge them $40,000 flat with inflation riders every year, something like that. Well, how did you get to that number? Did you lay out everything you thought you'd do for them that year, put a dollar amount to your hourly rate? Are you like a repairman, carpenter where...

People aren't just paying for the hourly rate, but they're also paying for the expertise, right? If I own a home and my disposal and my kitchen breaks and it cost me $500, but some guy comes over and it takes him two and a half minutes to fix it, I still owe him $500, even though it only took him two and a half minutes, because I owe him for the expertise that took him decades potentially to learn how to fix a disposal in two and a half minutes, right? He's not going to be happy with an hourly rate if it's a quick fix.

So I think that the same world exists for us advisors. Like, it's not clear what the best way to charge people. There's no perfect advisory fee. You might have a flat fee for someone and hardly do anything for them or do way more for them and have to adjust it all the time because you've decided to incorporate this sort of like expertise plus hourly proxy for what you're going to charge them every year. The AUM model, it should just be described as a proxy.

for the complexity and time and expertise required to serve a client. And I have no problem with someone doing it that way. The same thing on flat fee. I have no problem doing a flat fee. We listen to what a client has and we have clients on both types of fee schedules. Again, we have flexibility to do whatever. I will say on the flat fee side, people have gone way too far, at least in the US, I'm not familiar with the market, of underplaying investment excellence.

Andrew Auerbach (26:12) Mm-hmm.

Rubin Miller (26:12) Like my firm is really, really good at investing and I expect to be paid on that. It's not a commodity the way that we design and implement portfolios. We're spanking good at that. I see how other people do it. I'm really proud of way we do it. If someone that I love wants to hire an advisor, I would tell them to look at our firm first. So I don't want someone to think that that is commoditized. And I saw it a lot, by the way, mostly in...

This is a little bit longer thread, but you when you invest in an evidence-based way, you should mostly hold a low cost, globally diversified portfolio of stocks. There's not much tinkering you want to do in your equities. But on fixed income, as rates change and the shape of yield curve changes, there's a lot of activity to do that adds value to a client portfolio that I see a lot of sort of flat fee financial planners that will tell you investing is commoditized, just stick it in here for long run.

That's not true at all. Like none of the research says that you should just sit on your bond portfolio when short-term yields go from basically 0 % to 5.5 % and now back down to 4.75%. You mean there was 5.5 % there for the taking and we did nothing about it? So designing and playing portfolios is complex and advisors should be compensated for how they do that, whether they do it by higher flat fees or percentage AUM, whatever it might be, commoditizing a

an advisor's ability to design and implement portfolios, I believe is wrong. The other thing is that it is true that there's risk in managing portfolios. So a lot of times people will say, you know, what's the difference between a $6 million portfolio and a $9 million portfolio in the way that an advisor manages it every year? And I would tell you not that much, but it's not zero either. There are some, there's additional complexities. There's bigger numbers. If I make an error,

and I have to go pay the client for that error, clients don't have to pay for errors. I have to pay for errors. That's an additional risk I take. So is it worth 1 % on every million? No. Is it worth 0.5 % on every million? I would say no, less than that. But it's worth something. Whether you get there through a flat fee or a small percentage additional each time, this idea that it's always going to be the same as portfolios get bigger is not true. Also, people with more money tend to enter different tax brackets. So there's additional complexity.

So I go back to our firm is somewhere in the middle. I see arguments on both sides. I don't think either one is perfect. When clients talk to our firm, we talk about sort of both approaches, typically because we work with younger high performing people in their sort of 30s, 40s and 50s, sometimes in their 60s, sort of facing retirement. But we would say sort of in those golden years of working age, it's cheaper for them to work with our firm on an AUM schedule anyway.

And so that tends to be where most clients lie, but we do have a flat fee that we talk about and where and when it's appropriate. So we're open. I think you'll see most firms that launch these days in the U.S. are open to being flexible. I don't think the percentage AUM is evil or wrong. I don't think flat fees are evil or wrong. Both have their trade-offs.

Andrew Auerbach (29:30) Yeah, what a great articulation. And it takes me to the independent channel in the US and you having a vision for Peltoma, creating a firm. This is a new trend in Canada. So in the US, let's use a number that says, Ruben, let's say there's 19,000 RIA firms right now and growing, there would be 350 investment counseling firms in Canada today.

And so even with a 10 X difference, gives you a sense of where we are. We're in a very, very different place where overwhelmingly the, the clients and assets are resident with the, brokers, in bank owned wire houses. And so it's basically for us, that's where virtually all the clients are domiciled. And we're starting to see firms like Delial. I spent a lot of time in the U S and I saw what I love Rubin about speaking to you and others.

in this space is you're not trying to say I am perfect for every single client. What you're doing is carving a value proposition that is exceptional for the right type of client. And then you and your partners go about it and you say, look, I don't need to become the next wirehouse size firm. I can really do well for my clients with this value proposition. And that's what I do. And away you go. Maybe you could talk to us a little bit, given your work at Dimensional and now your work.

Rubin Miller (30:49) Hmm.

Andrew Auerbach (30:57) creating your own firm on what that means to the marketplace. What does it mean to have whatever number of RIA firms under 20,000, but certainly about a third of the market and growing for choice, for the value proposition, for firms like yours getting set up. And you you mentioned to me, takes, you know, not a lot of time to set up a firm in Canada. I mentioned it takes about a year. So there's some big, big differences. So

Rubin Miller (31:20) Yeah.

Andrew Auerbach (31:24) That's a big opening, I'd love just to get your walkthrough of that.

Rubin Miller (31:26) Yeah, sure. So I guess maybe a good place to start is this idea of a value proposition, is we are in a, you know, 2024 is a very different year than 1990 and 2000, even 2010 as far as how can you run a business? Like my business has to be successful and profitable. Otherwise I can't bring on talented people's employees and partners. I can't serve clients the way they deserve to be served. So I have to have a robust business model. What I think is different compared to the traditional wirehouse model.

is that a client walks in and tells me what they need. They're in control of this conversation and I will tell them, I'm not a good fit for you if I'm not a good fit for them. Thankfully I have an incredible Rolodex of friends I trust dearly in the industry who might be a great advisor for this person. But there's various reasons why people aren't great fits for us and we might not be a great fit for them. So as you described, a well articulated value proposition.

Then there is, if you go to a wire house broker style thing, you are fitting into their mold. They have fact sheets about how they work with people instead of you sort of telling them how you want to work with somebody. The trade off is I run a two person firm. We're small and nimble and boutique and I love that. I don't really want to work with that many more people. Like we're having a blast. We're serving people well. Clients are happy, but

If you call me and said, Hey, Ruben, I love the way you manage money. want to pull some money out to go buy a home. Can you help me get a mortgage? No, I can't help you get a mortgage. I'm not a bank. Right. So I know people, I know the realtor I like in Austin, Texas, where I live, that if you live here, that I want you to use. I know the mortgage places that I trust and I have no clients I've used before that have done well, I thought by them, but I don't have any products to cross sell you on. That can be good and bad.

I run a business, I'm gonna market myself. I'm gonna tell you, hey, you don't want me involved in the mortgage world. I'm just gonna cross sell you with all these different products. I'll be selling you investment products, life insurance products, mortgages, banks, loans, whatever it might be. If the one person that is controlling your financial life also has products behind them, somehow they're gonna find a way that all those products should be owned by you, right? So as an independent firm, I would say it's a lovely ecosystem to find yourself in. I always say that there's,

Andrew Auerbach (33:39) You

Rubin Miller (33:48) Good people and good intentions everywhere. It's not like people that work in wirehouses and brokerage firms, which sounds like it's the vast majority of advisors in Canada. They're not bad people per se. I would just say all else equal, what ecosystem do you want to find yourself in? And any chance to hire someone who's an independent thinker, who's not incentivized to put anything in front of you and get a kickback or commission, that's a really nice ecosystem to be in. Doesn't mean there's not shitty independent advisors and fantastic brokerage advisors. That is also true.

but it's an all else equal statement. And so I just sort of hope that people, the person that they gravitate toward happens to be in the independent space because it's a lovely place to be. There's a reason why that these, you know, these 19,000 RAs are talking about in the U S that the vast majority of firms that are launching right now, they frankly happen to be a lot of people like me. We didn't like the, today's world, we went through COVID. We reassessed what we wanted our own life to look.

I worked at a big fancy corporate job and I wore a tie every day. I now don't have to do that stuff. And that's really nice for me. I love my old job. A lot more people should be interested in my old job. It was sweet, but it wasn't for me anymore. I reassessed what I wanted to do and I said, I have this expertise where I could go serve people intimately and grow this boutique firm. I happened to be able to bring on an incredible partner and now we're doing it together. A lot of people see that and say, wow, that's a cool life that can exist as a small firm owner in today's world.

you know, digital technology, being able to communicate with people like this. We don't have to be the corner store with the investment sign on it. We can be creative and flexible in the way we run robust businesses. And so you see a lot of people launching firms like mine. I want to get to your question about AI, but I'll pause. Anything else I should double click on there?

Andrew Auerbach (35:33) No, I mean, I think that is a terrific kind of flyover. Maybe just your aspiration, you talk about the importance. I have no doubt you are very clear on the value you can bring to clients. What about personally, as you did that reflection and decide to set up Peltoma, what does Peltoma look like in five and 10 years?

Rubin Miller (35:55) Great question. We look very weird right now. So we are two senior people. We are both sort of senior people at Dimensional itself, corporate job, and we started a small boutique. So we don't even have any support right now. We just posted for our third hire. So we are growing, I would say quickly, but both rather intentional about growing the right way. And we've sort of put our finger on, we don't ever want to be more than a five or six person firm. A five or six person firm in the way that we serve people,

That's probably three senior advisors, two support advisors, and then maybe some administrative staff. And right now we work for just over 40 families and two institutions. And I would say we could probably get up to maybe between 100 and 150 total clients in the way that we serve families as we get our processes better and scale and whatnot. that's what I imagine. Now, of course, it's easy to move those goalposts.

I'm less concerned about the five to six people. I don't know where technology is gonna go. My partner Rachel is incredible with sort of our technology stack and building efficiencies in our processes. So we're able to have two senior people with no administrative staff because we use technology really well. And it's very possible that what I do care about, which is my lifestyle and being able to spend my time the way that I wanna spend it outside of work and not be run down by.

feeling like I have a corporate job, even though I have a small boutique. That's very important to me. I think that's a five to six person firm, but that ends up being a 10 person firm or 15 person firm, but I can still have the lifestyle I want. That's what I hope for my clients too, right? Like that is the goal is to spend our time and money in the ways that we want to spend it. And I don't just like in investing, I have no idea what the future is going to bring, but in my vision, the way I see it is we are a great firm for

sort of a work-life balance and integration and I don't have aspirations of being Peter Maluk or having you know 300 billion dollars under management or anything like that like I want to enjoy my life too. Just like I want clients to enjoy their life I'm sure he enjoys his life, but I don't want to be that stressed out by becoming a corporation. I want to be a boutique

Andrew Auerbach (38:14) Fantastic. What about AI, Ruben? Why don't you take us there with your perspective, given, I imagine it's an area of real interest to you, just given your background and your sort of analytical minds, what is your perspective of AI in our industry?

Rubin Miller (38:18) Yeah

Sometimes I'll tell you, I gotta be the dumbest chess master out there. I'm not as analytical or smart as lot of my peers were growing up that were sort of at that elite level of glass and chess. I don't know that much about AI relative to other people. I've tried to learn a lot. I went to South by Southwest for two years in a row. I dove into as much sort of technology as I could.

Andrew Auerbach (38:39) Hahaha

Rubin Miller (39:01) as I could, I went to a really great AQR annual conference that they host that had some incredible AI experts. So I've tried to learn and now it's just taken over. I'm very friendly with one of my closest friends is Dan Solan, who I know has a little bit of a presence in Canada as sort of an advisor, as a thought leader in the advisor space, a big one in the US New York Times bestseller. He is, I would say, at the very cutting edge.

What advisors should be thinking about as relates to AI. He runs a marketing business called Evidence-Based Advisor Marketing. I'm thankful that he's just one of my best friends. So I get to talk to him offline a lot and hear what's going on in his business. And actually, Andrew, can send you a link. He took one of my blog posts, threw it in this AI machine, and a few weeks ago an out popped a podcast of two people talking about my blog post and the people aren't real. They're just robots.

Andrew Auerbach (39:57) Yeah, I think this is Google's new tool. It's unbelievable. I've tried it as well.

Rubin Miller (40:02) believe so. It was wild to me. And so that stuff to me still wows me, which will tell you like, I don't know that much about AI. What I, but thankfully I'm smart enough to know that. Like there are, let Dan tell me where I need to be going and directing my focus. What I will tell you is people who believe that AI can help them be better investors. I would tell you to think again, where we started, prices already contain a lot of information. If AI can help you be a better investor and identify which stocks to buy.

people are already doing that on both sides of the trade. You can't get rid of the equilibrium. So people are already doing it. They're doing it on the buyers, they're doing it as a sellers, and they're getting back to the same thing, which is a thing we call price. So get it out of your head that AI will help you be a better investor. What AI will do is it will make a lot of jobs commoditized and not needed very much. I think what you're going to see, and we're seeing it a lot now even before AI, is this move of firms like mine,

and yours maybe, we become sort of experts who then have to focus on content and marketing to bring out our authentic selves. If you are going to hire an advisor, you do not want to hire a robot. You want to hire someone that you resonate with. And so no matter where AI takes us, I'm not doubting even that AI at some point might be able to have empathy for people and feelings like we can't imagine. It could be completely remarkable. But do I want to grab a beer with you?

Do I want to chat with you about my kids and show you pictures? All these things that like, that's not gonna happen. And one thing that Rachel and I have focused so much on is just this radical authenticity in everything we do. And how we do something is how we do everything at our firm. And so there is no hiding. It forces us to have hard conversations with clients about politics or religion or things that we think about and do like, we don't hide away from who we are as people.

And I would say that as firms begin to niche down a bit, this is almost a necessary second coming of a second on effect of that, which is that people want to be around people. And if you are still hiding behind the mask of a corporation, people come in, you have the product for them, not asking them what, you know, what they need, not telling you what they need from you. And then also you're sort of a

pushing a product and process on them as opposed to just having a conversation, being yourself, getting to know each other. I think you're really missing the boat on why people would hire an advisor these days. So AI, it's changing the world. You talked about Nvidia's price earlier in this conversation. Like it is gonna change the world even more I think than we can imagine. I don't doubt it. But it doesn't take away

I would say what that means to me is that being radically authentic as an advisor is more important than ever because otherwise you are going to feel commoditized. Somebody just did a podcast about my blog. I don't even have a podcast. Somebody else has a podcast on my blog. Right. So it's unbelievable to me. But I do know that if you can get in a conversation with somebody and be yourself and if yourself resonates with them you're much more attractive to them than hiring a robot.

Andrew Auerbach (43:07) Yeah, there is. Yeah.

Yeah.

Yeah.

Radical authenticity. love that. That is awesome. Yeah, that's good.

Rubin Miller (43:31) yeah. It's, the way, I would say that that's really only possible in this ecosystem we're describing of these boutique independent firms. You can't be radically authentic at a warehouse. There are regulations and bosses and things like that that won't allow that. If you work, when I worked at Dimensional at a fund company, I can't go post whatever I want on LinkedIn because they have their own regulations as a fund company. That's not Dimensional's fault. They got to abide by their rules.

Andrew Auerbach (43:39) Exactly. Exactly.

Rubin Miller (44:02) For our small firm, as long as we are compliant, I can say whatever the hell I want. And I really like that. That's really important to me because I think that's what resonates with people that might hire us.

Andrew Auerbach (44:13) So this has been such a great conversation. thank you, Ruben. I've really, really enjoyed it. As we think about the advisors that are starting to contemplate a move to an independent firm in Canada, as I mentioned to you, if you're in the fifth inning, we haven't actually started the game yet. It's just beginning now in terms of the awareness of the benefits. What would you say to an advisor that has a mature business at a wirehouse or a bank?

Rubin Miller (44:17) Yeah.

Andrew Auerbach (44:42) and this road is unexplored in Canada. What kind of advice would you give them? You've given us, I think, a real world living testimony as to where this fits, but what do you say to a person like that?

Rubin Miller (44:56) it's, I get this question all the time.

We have a public presence. People see that Rachel and I are having a blast. People ask us all the time, like, how do I do that? But of course, like things aren't perfect at Peltoma, but we're having a blast. I don't know why anyone would want to work at a big wire house and brokerage firm anymore. It doesn't really make sense to me. This idea that the trade-offs I described about, well, you can get a mortgage or cross-summit products. Like that's not that interesting to me. I just kind of use it as example of why, what's different. I don't know why anyone would want to do it.

But the problem is big corporations pay you nice salaries. They have spent decades building up client bases and you as an employee become their leverage to grow. They pay you 150 grand a year, whatever the heck it is, and you build their business for them and you get a salary. The idea that you're gonna quit that, quit that salary, start at zero, build a book of business, you have a family to look at.

You have a mortgage or rent, you have expenses. So I think that as much as we might want to glorify it, it takes a lot of thought. So if you're married, you got to talk to your spouse about what it might look like and the financial tradeoffs of potentially starting at zero. I believe that it's very helpful to talk to people like me who have been through it. Like what does it look like financially if I go and do something like this? In the long run, if it works,

on expectation, you're way better off. You're growing an asset, right? Rachel and I own this business now. It's fantastic. You own your business, Andrew. Like, it's great, but it might not work. I know plenty of people who have small boutiques right now and they're struggling to grow up. So I think that, especially if you're sharing a life with someone, you really have to have that conversation with them about what the emotional and financial trade-offs will be if you go and do this. But all else equal, it's worth it. So...

find some thought partners and work through what it might hopefully will look like, build your cushion and your buffer as far as the liquidity your family might need. It's a fantastic time to run a business where you get to buy your time back on this short time we all get on this earth, right? And I look back on potentially having worn a suit and tie for the next 20, 30 years of my career and working for someone else. And I'm really glad I didn't do it. However,

There are a lot of people who would rather punch in nine to five because they've done the math and like the thought process I was describing and saying, you know, I make a nice salary. I clock out. don't have think about it. I don't mind being leveraged for the person that owns the company. I don't mind them telling me when I have to work. There's benefits to that too. And that might fit your lifestyle. But for me, once I identified what I wanted my life to look like, and again, COVID I think was a big inflection point for both Rachel and me, it was no longer sort of

working for other people in that capacity. So I think that a lot of people, again, probably align with that, but don't, don't fool yourself. If you make a nice salary at a big wire house or brokerage, it's really hard to turn away and start at zero. And I think it takes a lot of planning, you know, even if you want to do it, it might be several years down the road. I will say it's very easy, at least in the U S right now to launch a firm. Sounds like Andrew, you were saying a little harder in Canada, maybe takes a year anyway.

That might be a good thing because it gives people, they have to think about it a little bit and prepare. Here, think I joked that maybe it took me four days, maybe it was a little bit longer than that, but it's not so hard and there are companies, I used XYPN to launch my firm. They did everything for me. So at very reasonable cost, they built our tech stack, the initial tech stack we had. So there are companies like XYPN or RIA in a box is another one who...

Andrew Auerbach (48:31) Yes. Yeah.

Rubin Miller (48:57) already know there's a lot of people like Ruben and Rachel that want to go do this. So they built out an offering for us as advisors to tap into their program and scale our time as we launch our firm. So it's very, very quick and easy in the U S I'm sure if it's not so much a candidate, eventually it will get there. Again, I think my biggest comment would be the liquidity thing, which is even if you want to do it, doesn't mean you should yet. And if you share life with someone, make sure they're in on this, but you got to assume the first few years are going to be kind of hard.

and eventually it'll be worth it. And that's a J curve that we're all familiar with in finance, but it's real. And it's harder and harder the longer you stay at a wire house or brokerage when they bunk your salary five, 10 % every year, right? So you got to really want it. But my experience having done it now for a year and a half, I wouldn't change it for the world. And it's incredible to be running a service and being in service to others.

in a way that I'm not sure I felt as intimate with the client as I did when I worked at a larger corporation.

Andrew Auerbach (49:59) Yeah, that's amazing. And it may not be for everyone, but everyone should be educated and informed. You should at least understand the option and then make the decisions that are right for you. And it sounds very clearly like Peltoma. Yeah, exactly.

Rubin Miller (50:11) Yeah, and it will evolve. It will, right? It's not like it's just RIA and big wire house. Life evolves through time. You don't know what it's like gonna look like in the future. Yeah.

Andrew Auerbach (50:18) Exactly. Exactly. So Ruben, if anyone wants more information on Paltoma, where do we go to learn more about you and Paltoma?

Rubin Miller (50:28) Sure, yeah. My firm is just PeltomaCapital.com. I'm fairly active on LinkedIn as well and Twitter. And then most people follow me and I would say our firm and more me on my blog, which is Fortunes and Frictions, fortunetoffrictions.com. so that's where I write. I tend to write about conversations like this, sort of where the spreadsheets of finance meet the heartbeat of our lives and where people should really be spending their focus.

Andrew Auerbach (50:56) Well, you are a multi-talented guy. I've been watching your blog as well. You're a great writer as well. So you've got a lot in that toolkit, Thank you for your time. This was really good fun. I know that the listeners in Canada will benefit immensely. And I really enjoyed the discussion as well. So thanks again for joining us.

Rubin Miller (51:05) Thanks, Andrew.

Me as well. It's a great service. podcast you have for the advisors up in Canada. So thanks for doing that. Yeah.

Andrew Auerbach (51:21) Well, thank you. Talk soon.