How Ari & James Met - Here's How Root Was Founded

That is not going to happen . I was very happy at my old firm prior to starting Root . Never saw myself going anywhere .

Yet here we are , and so , ari , what we're going to do today is we're going to tell the backstory of both how Root came into existence , how you and I met , how we've grown , what we've grown and what that ultimately means for the team here , for clients that we serve and , hopefully , for the industry at large .

I'm going to tell it to you guys all in one second , but I have to shout out some awesome names that came through that we heavily considered . We saw someone say you should just call it Retirement Made Easier . Discussion About Dollars . Curb your Volatility . A reference to Curb your Enthusiasm . The J&A Show , twin Minds . Lots of awesome comments .

So thank you guys for leaving those . We are going to call this Root Talks and it would not be right to start Root Talks without the story behind how Root got founded . So that comment was left by AlanYoung159 , who says you guys should do a video on how you guys met , how Root came about , the challenges of building up the business . I'd find that interesting .

I think you will , alan .

So , ari , you and I both have our individual YouTube pages where people follow us , and one of the reasons we started doing this podcast was so many people said wait , ari , you and James work together . I had no idea I followed you both independently , so really cool to see that you're both at Root and so this is going to be on the Root YouTube channel .

So make sure , wherever you're listening to this , go subscribe to the Root YouTube channel , the Root Financial YouTube channel . Let's tell the backstory and I'm trying to figure out we're trying to figure out how do we do this in 15 to 20 minutes , because the story is long and it's got this crazy plot twist and twist and turns .

But we're going to keep it high level and share how this came to be , because it has been quite the adventure and some cool things that we get to do . But seven plus years ago I was not at Root . You were not at Root . Root was not a thing . I was working as a financial advisor for another company and great company .

You learned a lot , enjoyed the work I got to do and didn't ever see myself doing anything other than continuing to be a financial advisor at that company . So thought honestly it was weird to say as a 28 year old at the time I'd not ever see myself working anywhere .

Other than that I saw myself as just wanting to be a great financial advisor for my clients and probably spending the rest of my career there . Then one day and this is a long story that at some point , if people are interested , we'll have to tell , but it's a fun , wild story but one day I was asked to resign out of seemingly nowhere .

I was asked to resign , which meant that my dream of working here forever was just a dream . It's not actually going to happen . And in retrospect , one of the greatest things that ever happened because as painful as that was what that prompted me to do what it forced me to do was say why am I actually doing this ?

You know , why am I actually in this industry ? I've been doing this my whole life . Post-college . I felt like I was pretty good at it and so I did start to think about that . I just a lot of introspection , a lot of time to think of . Am I actually doing this because it's what I love most and what I want to spend the rest of my working life doing ?

Or am I doing it because it's easy to be good at something and you get in a rut and it just seems scary to ever do anything other than that . So it was why am I doing this ? And I remember I just spent a whole day . I live in a city called Cardiff , california , cardiff by the sea , north County , san Diego area .

There's this awesome campground near us called Santa Lea Hill campgrounds , and I remember just taking a day and just journaling journaling about everything . Do I want to do this for the rest of my life ? If so , what do we want that to look like ? If so , how could we make root very different than what traditional financial services have looked like ?

What are the types of people that I would want to do this with ? Do I want to do this with other people or do I just want to do this by myself and serve a handful of clients and keep things really lean and efficient so I can live a great life with my family ?

So there was just a lot of introspection , a lot of reflection , and that , ultimately , is what gave birth to Root is three months after being asked to resign from my previous company .

I said this beyond a shadow of doubt is not just what I want to spend the rest of my career doing , but is the best career maybe in the entirety of the world in terms of how honestly fun it is , in terms of the impact you get to have , the transformation that you get to be part of when you're working with clients for long periods of time , the mix

between the critical thinking skills and the application of that to real life scenarios .

And so walked away from that saying , yes , I hope to do this forever , forever , but I want to surround myself with a great group of people that are highly ambitious , that do have the same values , that do have the same desires , both for themselves and for the impact that they want to see with their clients . And Root started three months later .

Here we are , seven years later from the start of Root , and right about that time , right about the time that Root was starting Ari , that's where our paths first crossed .

But that's actually not how our paths crossed . And when I was at a Starbucks in Santa Monica I was reaching for a charging little station and some guy helped me out and we had a little conversation and we had .

It was very loose , but I told him I was in finance , didn't know exactly what I wanted to do , I was in college , and he said there was this really impressive guy . I wasn't that close with them , but lots of people talked about him .

I was like sure there's like lots of impressive people out there and he's like no , really like it might be worth reaching out . So I knew nothing about James other than saying you know this guy randomly I just met in a Starbucks in Santa Monica says you're impressive . So I sent him an email saying look , I really don't know anything about you .

You look like you're a smart guy . You've got this certification at a young age , so is it worth the conversation . And at that point I knew nothing about what I wanted to do . And it's still the best email I've ever sent , because it's led me to where I am right now .

What I want to dive into in more detail , james , is how many people say I'm going to start something that's different and they say that and then it becomes just another financial company where it's just , yep , we're going to talk investing , but no purpose and no actual like okay , what else am I going to think about when it comes to retirement planning ?

So right now , we have a head of people and culture here at Root . Not everyone would think a financial company would have someone like that . So want to go deeper , certainly into the . Okay , what was the vision ? You were at the campground and you thought , yeah , I want to do this on a bigger scale than just me .

How did you think it was going to be different ? What was your plan ?

But I think that whenever you start anything this isn't just true for Root , this is true in general it's way easier to start something that's been done before because there's a playbook . Okay , I can just look at what those people did and just copy that . Or I can see what this consultant says to do and copy that , and you can do that .

But then you're just going to become like every other company , like every other firm . I didn't want to do that because this the industry I just told you . I think that this , the impact that you can have in this industry , is so incredible when you see real lives transformed in real ways there it's . It's incredible to see that .

But this industry isn't necessarily known for being super cutting edge in terms of the way it does things . A lot of this industry is still just people selling stuff . A lot of financial advice is .

I might call myself a financial advisor , but all I'm doing is selling you a product , I'm just selling you a mutual fund , I'm just selling you a life insurance product , and that's not what we wanted to do . That's not transformative , that's just transactional , no-transcript .

I think oftentimes we think of well , here's my life , over here , and then kind of like , the money is the things I do on the side , but it truly is fully integrated , fully holistic .

When you talk about overall wellness , you know people , you'll talk about physical wellness , you'll talk about mental wellness , spiritual wellness , whatever it is , and then we kind of think it's like money is something different , like it's in its box to the side , and money cannot be separated from anything in our life .

Not because our portfolio and our savings account needs to be , I don't know , prioritized to the same extent that our physical health or mental health or anything like that does , but that is what enables us to pursue everything else . And that's not just what enables us to pursue everything else .

If we don't have it , or if we manage it poorly , it's darn near impossible to focus on everything else . It's one of those things that you know like like air , you know you don't know how much you appreciate it until you don't have it well .

Finances you don't know how much it matters until it's managed incorrectly , until you make a major mistake , until something happens , and that's that's all you can think about . So it was this sense of how do we use money as a tool to help people live more purposeful , meaningful lives , how do we use money as a tool to help people get the most out of life .

So it doesn't matter to us how big our portfolio grows , how much money we save in taxes , how many cool estate planning things we do , if we never actually translate that into my life was now better because of these decisions that I made . Who cares at the end of the day ?

So how do we connect the two of starting with purpose , of starting with what does an ideal life look like ? And then let's be the best possible financial advisors , tactically speaking , to design the portfolios and tax strategies and everything else that goes along with that , but only in service to or in support of what actually matters .

And so that became the North Star , like I said , and as we've grown this that's changed in terms of how do we pursue that , but that's what we're always pursuing .

I don't know if that's exactly what you want to do the rest of your life , but it's a job and it's going to pay you something . And at that point I graduated school going , look , I want to have my own financial independence .

And you didn't say it was horrible , and I was looking up to even at that point , from someone who recently left a job , going , okay , well , he's got more experience . I'm going to listen to this guy . And so here I am , working a job . I didn't love it , and I would email you every three months , maybe every four months , going , hey , James , any update ?

Like , can you hire me yet ? Do you need any help ? What's the latest ? And you'd be like hey , man , like I don't know , I'm still trying to grow this thing and I'm thinking about I want to do it right , so I don't do it too quick .

And the last thing I want is to hire you and then have to fire you a month later and I'm like I'm even cool with that . No , I you are , but you never really questioned like , hey , Ari , why do you want to join this so badly ? And the truth is , here I am working at a company that I thought was okay .

But I thought , hey , I'm talking to advisors all day , every day , about mutual funds , about ETFs , about SMAs , about investment products , and all these advisors are asking me when I was at my role , going , hey , how much is this going to pay me ? And I say I don't understand the question .

They said , yeah , well , if I were to offer this potential product to my client , what's the commission ? And this ? I go hey , don't you want to know , like , how well we've done ? Or anything like that .

And I didn't feel a trust feeling with these advisors and I thought of my parents and I went maybe they have an advisor and maybe they're doing this and like , hey , what's ethical and what's not ?

And I got just a feeling of complete integrity beyond competence from you and went , look , this is a guy that maybe I could be wrong , but I think this guy is a good dude who knows what he's talking about . And I'm going to take a flyer . And at that point you eventually . What was that ?

Three years later , something like that you said hey , I think I'm ready to hire you . I don't know a hundred percent , but I think I'm ready and I drove down for a year from Malibu to San Diego and I love doing it .

I would listen to your podcast in the car on the way to sitting next to you every day for a year , and it was just epic , just here , but it wasn't what we have today . So maybe it would be cool to tell people a little bit about like hey , did you just start , and was it the YouTube channel and the podcast ? Or you know how do we even grow ?

The question here from Alan was what were the challenges of building up the business ? Any thoughts there ?

I was trying to say , okay , I gotta make this thing profitable , I've gotta make this thing something that could support me and my eventual family .

Um , and and I remember you impressed me a lot from day one I almost didn't respond to your email because you emailed me I don't know a few weeks into starting Root , when I had no money to bring on a team member .

I wasn't planning to start Root , so it wasn't like I was in this awesome position with tons of cash to just be like , yeah , I'll bring on whatever . I did respond and we had a conversation and I said , okay , this is someone that I'm going back to my experiences journaling all day .

It's like this is the type of person that fits what I would be looking for Someone that wants to build something , someone that's in this for you know , not just the paycheck , cause you can have made a lot of money . Where you were , you were doing really well , you had a path to do really well there .

You just your heart wasn't in it , you didn't love there . You just your heart wasn't in it , you didn't love it , you didn't think it was the right thing . So much so that you're like , hey , I'll come Like you were taking a pay cut to come and work and have no idea if this thing was going to work or not .

But what I do remember is , yeah , you , you would check in with me every few months . You would drive down just to shadow me all day and say , hey , what is it like to work ? Can I take you to lunch ?

And just like , when I say drive down , I don't mean drive down 15 minutes , I mean drive two and a half hours super early in the morning just to sit in a chair behind me , kind of seeing what does it look like to a day in the life . Take me to lunch , continue doing it after that and drive back another two and a half hours , probably more , in traffic .

So it was like this guy is committed . And I remember one day you're finally like , look , I'm going to make a change . I've talked to some other firms . They're all great , you know they've . I have offers , so I have like there's an intent that they will bring me on .

But I want to talk to you first , james , because if we could make something work like this is where I want to be . And so I remember thinking , okay , like I , I can't be dumb , like I cannot let this opportunity pass .

I still felt , like you know , anytime you hire your first team member , it's a little scary because it's like what if this doesn't work financially because of the relationship , whatever it is . But I said , okay , let's make it work . And obviously it was just awesome . But those early days it was I think the podcast had started .

So the first podcast I started was with another advisor . From the standpoint , we said let's just start something . How do we reach a lot of people ? How do we do something that adds a lot of value ? And I started another podcast back in 2019 with another advisor just talking about common questions we get from clients .

And then we just go back and forth , kind of like you and I are doing here , of perspective when do we see eye to eye , where would we see differently ? And we just we would release that .

And then that kind of evolved into the Ready for Retirement podcast , which evolved into the YouTube channel , which evolved into you doing a podcast , you doing a YouTube channel . But those early days I was in San Diego , you were up in Malibu .

We had a co-working space that we got and we were working out of a very I don't even know how big the room was maybe 120 square feet , maybe maybe less , I have no idea and it was just hey , come down and let's figure this thing out . Let's start to build a system and a structure that can grow with us as we continue to grow the team .

And now there's you know , four years later as of this recording 30 team members . There's hundreds of clients all over the country . There's a lot of assets entrusted to us by these clients who are attracted to that mission of not just building my portfolio forever , but how do I get the most out of life with my money ?

And it's a ton of fun doing it and lots of really cool things to come .

We did a master plan where we just put out exactly like hey , here's how many people are reaching out and here's like P&Ls and like us going into detail as to like why we have low overhead and how that actually impacts you as clients . But a lot of you listening right now want to work at Root and we've seen your names come through from applications .

Others of you are going well , I want to work either in some capacity with Root , but we don't really know how . But it just feels like you guys are different . This is something that I feel really is the difference , which is we like doing it .

If we were building this because it was our job , I think we'd still grow , I think it would still work , but it wouldn't be the same to the point where , when people reach out , part of the process here and I'm one of the people that takes the first call it's hey , what is the plan in terms of , like , what do you want to do in retirement and some people

are like I don't understand the question . I'm like , yeah , what are you going to do ? You probably haven't seen your wife in 30 years . You want to redate her . And they're like , oh , I thought you were going to tell me if I should buy Apple or Microsoft . It's like no , it's way deeper than that .

So when you were thinking about root and the vision and purpose and how this , what was the number one , like , oh , this is what I'm going to do so it doesn't become like a traditional financial company .

And it has nothing to do with financial planning . It has everything to do with how do you envision your future . I mean literally , it says , like imagine you're at your funeral , people that are meaningful to you there , like your wife's there , your kids are there , god's there , coworkers are there , neighbors are there .

Like what are people saying about you and the way you lived your life ? And then back into like what can you I mean , read the book . I won't try to summarize the whole thing here , but I think that that's always been a personal thing to me is like trying to live life by design , try to live life purposefully .

I'm not perfect by any means , but how can I be really intentional about the things that I'm doing so they align with the outcome that I'm looking for ?

And not outcome from like a Monte Carlo probability of success outcome , but like to have the relationship with my wife that I want to have to have a relationship with my kids and friends and community , like all these things , and it's okay . Well , how can we take that to clients as well now , obviously , like there's a depth to that .

That is very individual and it's very much a personal thing , but how can we be guides to help clients organize their thinking and think about the right things ? You know , every single advisor at Root is incredible at what they do . It's just world class when it comes to their ability to do the financial things right . That's not why people should come to Root .

People should come to Root when they want someone to help them prioritize and focus on the things that can't be quantified on a balance sheet , in a portfolio , in an asset allocation .

So we can say how can we transform the financial success that you've had and turn that into life success , turn that into the future that you want to live , and not just the future starting years from now , but the future starting today . How can we start doing that so that you can focus on the things that you want to do ?

Going back to what we said earlier using money as a tool as opposed to the money being the thing that we're all about . That justifies our existence . No , money's not the thing . Money is a tool . Money is the thing that supports the thing , which is the way that we want to live our lives .

So I think that was always embedded in the fabric of the way that we work , because it's always been a big part of who I am . I think it's a big part of how a lot of people here operate and that just is becoming more and more , I guess , systematized and structured as we grow . To say , how can we continue taking that to as many people as possible ?

I wanted a job so badly out of college because I wanted financial independence , because it felt like money only led to stress in my household . I feel like there was never enough . My parents made great money . They make movies , they were artists . There was absolutely no structure around money .

And so this concept that there'd be a financial plan I and I'll admit this and I do constantly in my videos I'll say look , I didn't have a Roth IRA working at a financial company . Because I felt like , if I asked that question , it was like , oh , how could you not know this already ?

So I wanted to go okay , where can I work where I can really make a difference and make people not feel the way I felt growing up . And I know you have a similar story , different , but you have a story where you were sharing hey , there wasn't financial literacy . Then all of a sudden there was and you became an advisor .

But it's not like you woke up or came out of the womb going . I'm going to be a business owner and I'm going to manage , you know , 30 people I love and I think this .

You know there's a lot of ways we could , of course , end this , but when you're , when people think about you right now , they think James , founder of Root , probably getting 10,000 emails a day , managing 30 people , what do you tell people when they're like , hey , how do you manage everything going on in the growth ?

And you guys are at a billion dollars in this ? Like , how do you do this as a business owner ?

I wanted people that were self-starters , people that had the same desire and passion for this , people that were incredible at what they did , so that , yes , the team there needs to be , this vision and this guidance of what we're pursuing .

But we have a team of self-starters who are incredibly good at what they do , and the system is what essentially , I guess , manages all of us in terms of like directing where our energy should go , how we should be working , what we should be doing .

So there's all kinds of things that we've done at root to do that , but no , I think that I don't feel like I manage anybody .

I feel like I get to work with 30 of the most brilliant people I know , all uniquely qualified in very different ways , to say , wow , we can take all these talents and skill sets and harness them to create something that's really special . We talk about this a lot in our master plan .

The goal here is not just to say we just want to grow a big firm and then sell it one day so we can retire and play golf . That sounds really boring to me . What sounds fun and exciting is building something that creates impact , and a big part of that is , yes , impact for clients , but it starts with impact for the team . And how do we create ?

The best thing that we can ultimately do for clients both current clients and future clients is build the best possible place for the smartest , most caring , most compassionate people in the world to come and say this is where I want to spend my career , because I'm going to be developed , I'm going to be taken care of , I'm going to be given a place where my

skillset and drive can be encouraged and supported and I want to stay there for the rest of my life .

Like that's the best thing we can do for clients is have a place that attracts the best people and is a place where the best people can call home for the rest of their lives , and so that's a big part of my focus now is how do we create that environment that brings in the best people , which then allows us to deliver the best possible advice for everyone ?

I imagine you've told yourself hey , I'm so glad I started Root and we had no idea it would become what it's become . And we say it because it's true . It's like , hey , we are just getting started and our goal is to help as many people as possible .

Whether you're working with Root , whether you're in our academies , whether you're just reading the newsletter , wherever you are in your stage of life , but anything else , james , you want to share with everyone about how you founded Root challenges anything else .

But it was like , unless you have that structure , unless you have that sense of how do we direct what we're doing , there's not going to be that sense of financial peace . You're not going to be able to use your finances as a means to support what matters most to you .

And so you know , going back to your story , maybe I'll tell more of the personal story at a later time , but it's like that's why we exist to help really great people who want to do great things , who love their families , who love their communities , who love the world around them and just want to be able to experience it and support it .

How can we help with that ? And you know , I don't know when people are gonna be listening to this . Obviously , this will be released at the end of 2024 . People might be listening right when it gets released . They might listen months from now , years from now .

But one of the things you and I just met recently to talk about how can we expand upon what we're doing going forward . We have the individual YouTube channels . We're now going to be doing . This is obviously Root folks' YouTube channels .

We have the goals like bring on other team members , let people see what's it like at Root , but we also have our personal social media pages that you've been doing a good job of being active on . I haven't been on Instagram in six plus years and you know we talked about , hey , let's get active there Again . I didn't even know how to use it .

I feel so I don't know , felt old trying to get back on there because , like I don't even know how to post anything anymore . Trying to get back on there Cause like I don't even know how to post anything anymore , but , ari , where can people find you ?

Cause I think that's a big part of what we want to do is is get connected to more people in more places .

I own a semi-professional soccer team . Should I do that ? Absolutely not , but I don't want to wait and purchase that when I'm 40 . And I could have more time with my brother and good luck quantifying to find that on a spreadsheet . I know , james , you have your Instagram where you'll be posting lots of different cool things family work , et cetera .

Is that just James Canole ? I believe .

We really prioritize a lot on YouTube and podcasts and it's how can we do more and more different places to stay connected . So follow us . Thank you for supporting everyone . I know there's a lot of just . It's fun to see comments . It's fun to see people that started commenting years ago and they're still tuning into the channel and listening in .

So thank you to all of you . All right , Anything else on your ?

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