Interview With Jeff Maggioncalda: Masters in Business (Audio)

Calda of Financial Engines. Are you familiar with them? And I said yes, I actually am very familiar with them. Their public company, uh, they run a hundred plus billion dollars in assets, and Bill Sharp, the Nobel Laureate economist, is essentially uh, the founder and the guy who put the original idea together. And I said, I would love to interview Jeff. I don't know him. I don't know how to reach him. I don't know his his information is in public. How do I how do I find

this guy? And the reader said, well, I know them. Let me make an introduction. And that was about six months ago. He Jeff lives in Palo Alto. He's on the West Coast. He's not in New York all that often. And when I pinned him in made the offer of Hey, you should come on the show. Here's who we've had on, here's what it's about. He said, Um, that would be interesting, but I'm I'm rarely in New York. Two weeks ago, I said, Hey, any chance you're in New York anytime soon.

He's like, yeah, I'm in New York on on the week of the of the first of the month. Let's let's see what we can schedule. So here we are. It was really a fascinating conversation and I think you'll really enjoy it. So, with no further ado, here is my conversation with Jeff Magian Calda, co founder and former CEO of Financial Engines. This is Masters in Business with Barry Ridholts on Bloomberg Radio. This week on Masters in Business on Bloomberg Radio, I have Jeff maggian Calda. He

is the founding CEO of Financial Engines. Now, you, as a lay person, may not have heard of Financial Engines, but it's really an interesting company with a fascinating history. Uh. They are currently the largest r I A in the country, managing over a hundred billion dollars in assets. They were founded by Nobel Laureate Bill Sharp. Uh, we'll talk a

little bit about Bill later. And Jeff was tapped by the three leading investors of the firm, literally right out of his Stanford NBA program to take what was then a free website offering suggestions for asset allocation models and turn it into the powerhouse that it's become today. Jeff, welcome to Bloomberg. Thank you glad to be here. So let's let's talk a little bit about that history, because it's so it's so amazing. Bill Sharp essentially created a

free website. Hey, I developed the capital asset pricing model, eventually winning the Nobel Price for that. And here's the output of that work. You could play with this for your retirement accounts. It's free on the site. How did that morph into what's now with publicly traded company? Well so, so Bill, he's he's a genius and he is very well meaning. He's always wanted to use the work he's done to help people. Um. He has also been a total gear head and sort of hacker since the early days.

He wrote one of the first compilers for the Basic programming language back in the day, and so he had his own son's sparkstation as which is his own web server. At the time, this is the beginning of the internet.

No one, no one had personal computers in right, and he has like a note on the darknet or something and uh, and so he thought, you know what, I can write some simulation software and some some optimizers and I can make this available because I mean he saw early on that the demographics of the baby boomers, uh, and the shift away from defined benefit plans towards four O one case was going to mean a lot of people had a new responsibility to invest, but but really

didn't get access to very good advice, so didn't have the skills, didn't have access to people who can help them in so many for one case, are under a hundred thousand dollars. Nobody is really going to take that as a as a client. That just doesn't work. So so what did he do with that? So he started a website and back in the days where they used to index popularity, it was actually a pretty popular site.

But you know, among the people using the internet the time, which were kind of the more actively technically, it was much more of a crowd. It was very much else. So his buddy Joe grin Fest, lawyer at the law school, former SEC commissioner. Um. He said, Bill, if you really want to make a difference, you gotta start a company. Bill was not really interested in starting a company. He's like, look, I want to do something good for the world. I

don't really want to charge money for it. And Joe said, if you want people to really promote the idea and create a good product that people can really use, you got to start a company. So so you're saying Bill Sharp, noble laureate, kind of a wonky academic. Is that the description? Why does that not surprise? Yeah? Yeah he he uh his his his his pursuit of sort of the intellectual breakthroughs, and this pursuit of doing good in the world definitely

trumps his pursuit for financial gain. Not not uncommon. You look at people like Bob Schiller or Jeremy Siegel, or when when I spoke with Siegel, it was he was amazed that he made any money because that wasn't what he ever expected. He expected to just toil away and academic obscurity and have a satisfying life. It sounds like Bill is Sharp is similar very much so. So so you're tapped. You're literally twenty seven years old, just graduating, Uh,

Stanford NBA program. What's it like when a couple of heavy hitters like Sharp and Grunfest and who's the third Craig Johnson. Craig Johnson also not no lightweight. Um says, hey, kid, come, we got an idea for you. How do you how do you respond to that? Well? So, so I was at the time, I had I had worked for McKinsey over the summer. I had taken a full time job. So I my wife had spent the signing bonus on

new furniture, and we had two kids. We were weigh in debt and the big sum of money comes and what did the economists say when you get a windfall, the propensity to spend is like one you like, just spend it? And uh. So she did and um and the account and uh And I had been approached by our professor at the business school, h. Robert Bergelman. He at the time, I think he still teaches, And he taught a class with Andy Grove, who was at the time the CEO of Intel on kind of strategy and

information technology. And they had no cases on the internet. And so as an undergrad. I was an English and economics major, so I knew about statistics and quant stuff. I knew how to write, and they said, would you be a case writer and write a bunch of cases on the internet. So I said that would be fun to do. I called McKensy. I said, well, you know, I'll becoming in January. And then it was during the time that I was writing cases that I got this call from Joe grin Fast, who I had worked with

previously at at a litigation consulting firm. And I was like, Bill Sharp was my hero. It was amazing because when I graduated in he had received the Nobel Prize the year before, and he was my graduation speaker. And I just thought this guy was the most amazing guy in the world. And I love the elegance of his model. I thought his overall philosophies. I totally bought into it. You know, generally speaking, he can't beat the market, so go for a low costs. I thought that was great.

I think by the way, that's managed to catch on quite a bit. It seems to have pretty well among the the investing public. So so so I was really kind of stuck, and I was like, well, I'm kind of tied up right now. And and I talked to my wife, who's you know, PhD and evolutionary biology. She's like, Jeff, you have to do this. This is a once in a lifetime thing. You have to do this. We'll figure out the the money and I we'll figure that stuff out later. And uh and so I'll like, you're totally right.

I mean, how often do you get to work not only with the Nobel prisminer, but with like a hero of yours? Uh And and so I sort of took the plunge, not having any idea what I was gonna do. I'm Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio. My guest this week Jeff Magian Calda. He is the co founder and former CEO of Financial Engines, the country's largest r I A, which manages over a

hundred billion dollars in four one K money. And I want to talk about how you guys moved into that space. But first, there's this great little story about you playing Monopoly with your wife and you decided to let's run a million simulations of Monopoly to figure out what the ideal move is for each property and what have you. Essentially high frequency trading the monopoly board, a little bit of cheating, and your wife, instead of being angry, was actually, oh,

you should do something. Yeah, how did that about? So? So so Monopoly is a is a really fun game. It's mostly about trading, but but a lot of it has to do with the probability is landing on certain spaces, and so you know, it's it's a game with pretty simple rules, right, you roll the dice, you roll doubles, you go again. But if you do it three times and you go to jail and then you pull certain

cards advanced to St Charles, blah blah blah blah. They're very simple rules, but it's really hard to get a distribution of the likelihood that you land on any property. And so I was like, well, look, the value of a property is going to be based on the probability that you land on it, plus the rents that you get of something if you have a house or whatever, and then you have to look at the cost of

building those houses. But I just want to know what's the probability of landing on every space on on the on the on the board and turns out what computers is pretty if you have a game with simple rules, even if it's a very complex set of distributions. At the end, you just play the game millions of times and you just see like how often did you land there? So my wife didn't know I was doing in this.

I had actually create a little cheat sheet and uh, I was using it to kind of assess the odds that I buy a proper trade of proper collections of properties. And it was basically just a sheet that showed the probably beloy of landing on any space. And it turns out certain spaces are way more likely to be landed on than other space. So what are the greens the oranges? What are the greens? Are bad? Greens are bad and

the oranges best the best. Yeah, because people go to jail all the time, and if you play they come around. That's right, you end up in jail. You've got ten spots free parking if you play crafts what number comes up the most? Seven? Seven? Right, Well, the other two are going to be six and eight, and those are the oranges. So and that basically gets there. Going to jail a lot and rolling anything six to nine is

pretty good for the oranges. So so how did that then lead to the idea of, hey, we could run analyzes and come up with the best probability for people's retirement portfolios as opposed to letting them just randomly pick whatever fun manager is hot that much. Well, so it only helped me get the job by convincing Bill Sharp

I knew something about money Carlo simulation. He had been doing this for the defined benefit pension managers for a long time because they're trying to figure out on the pension side, how much do we have to fund these pensions and how should we invest to have you know, certain probability of being able to pay these pensions? When are our people all looking for the greatest return with the least amount of risk and just end up in the fat part of that car Well, so so that's

kind of how you set your portfolio. But then you even have to say how much money are we likely to have thirty years from now if we invested a certain way, And that's really about simulating, well, what if the markets do well, what if they too poorly? What if interest rates are high or lower? Inflation does this or that, or you know the spread between you know, a small cap and and MidCap stocks varies. Sharp described it as a thirty variable dimensional analysis. Yeah, and so

we would. So so he was already doing this for pension funds to kind of get a sense for like how much is this pension gonna be worth twenty years from now, and he wanted to do the same things for individual to answer the bay is a question like are you going to have enough money? Well, it's an easy question. It's a pretty hard answer because you don't know what the future holds. It doesn't mean you throw up your hands you say I have I have absolutely

no idea. It's a little bit like predicting other things that are stochastic or uncertain, where you say, we don't have a perfect idea, but we could put a range around it. You know, if you're all in in very very vaulatile stocks, a couple of stocks, it's gonna be a very wide range that probably goes down to almost zero in a bankruptcy situation. If you're in money market funds of treasuries, it's gonna be a very tight range.

And anywhere in between you're gonna have a higher sort of expected outcome, but a bigger range depending on how much risk you having that porfile. So the monopoly thing was was was useful because when Bill Sharp said, hey, you know, we're gonna be doing a lot of simulation and a lot of optimization. What do you know about that? I said, well, you have already kind of used it to my game previously in life. Although you know, my my wife didn't didn't take kindly when she found out

that cheat sheet. That's that's great. So so now I'm trying to follow the path of this. So this is a free website. And then of eventually Grundfest and Johnson say, Bill, what are you doing? This is a there's a business here. You don't have to do the unpleasant. You don't have to do the firing and hiring. Let's get a guy who's never done that to do right. But here your your chairman emeritus. You're the nobel laureate. You're gonna be.

We'll trot you out when we have big clients that we want to razzle dazzle, and I'm based on your client list, so you don't. Essentially, it's not like individuals come to financial engines and say take my four oh one K. It's companies like Ford and other giant employers who say, we're not gonna play this crazy game. We're just gonna do this simply and and crank uh crank out one of Bill's simulations, and we'll use that for or a couple of options for our clients. So so,

but how do you get from A to B? How do you get from a free website run by a quirky Nobel laureate to all right, this is a real business with a hundred billion in assets, a public company and generating drives and millions of dollars on revenue. If I had boiled down to kind of one thing, I would say hardcore learning and iteration, which which sounds a lot like failure. And you know, if we had given up, it would have been failure. But it was kind of

close to failure a lot of times. So what were the first few What what what are the first few versions of this look like? So the first thing we tried to do is and I thought it was a pretty decent idea. The Department of labor At just issues from regulations saying that if an employer hired someone who did not give specific recommendations, just asset allocation advice, it wouldn't be advice. It would stay on this fiduciary safe harbor and they could do without worried being worried that would

be constituting advice. And and our original thought was, let's be an education company. Let's actually just just give education. Let's not be an advisor, let's not give advice. And what kind of sell as an employee benefit? Kind of financial literacy? And so I read up a big business plan. This is my big document. I'm excited to go raise money. I go out to walk to uh To to sand Hill Road and all the vcs and they're like, this is a stupid idea, and we're not going to fund

an education company. Uh. They didn't really say what do They're just like, you know, tell me when you get a better idea. And a couple of guys at work, and there are only five of us, but two of the guys are like, yeah, this is so stupid. We shouldn't be just doing education. We should become an investment visor, because that's how you can charge of some percentage and get paid on the assets under management and surreptitiously work

the education. Yes, and and and what we what we really did have a sense for And so I agree with them. I didn't want to kind of take on that headache of becoming an advisor, but the fact that the matters most people want to know what to do and kind of hey, you're getting warmer, you're getting colder. Study a little bit of this now, they're like, just tell me what I should do, what fund should I buy?

What find should I sell? In order to really do a good job with that, you gotta be an investment visor. I'm Barry Rihults. You're listening to Masters in Business on Bloomberg Radio. My guest this week is co founder and former CEO Jeff Agian, called of Financial Engines. They are the largest r i A in the United States, managing over a hundred billion dollars in four oh one k money.

And I've described, by the way, whenever I described financial engines to people, because so many people have never heard of you. You're not selling into the retail market. You sell essentially into corporate and institutional markets. Financial Engines, I've I've never heard of them. Well, really, they were the

original robo advisor. They started doing this before one case we started, so it's almost twenty years twenty years old, and essentially you were using software and algorithms to drive investing decisions, long before all the cool kids started doing Oh yeah, I mean there was no JavaScript. I mean web servers were brand new job and didn't even exist yet, and so there was a whole different world out there. And when we first did this, you it took about

fifteen minutes to download our software. Uh when Java finally came out and and people were using dial up modems. So it's kind of a problem that the technology really wasn't there yet when we were starting, not not a whole lot of graphic interface and a lot of interesting web flash before Java, before Flash before all the things we take for granted on the internet. Yeah. Yeah, So let's talk about I don't even know if I could call them your competitors, although they have talked about moving

into the four O one case based. There are a dozen or so companies, the probably the two best known or wealth Fronts and Betterment. What are these other robo advisors doing right? What are they getting wrong? It's hard to say for sure. I mean, I clearly have a lot of biases because I've been in the industry for a long time, and obviously we we compete, um, but you know what, I what I think they're doing right is that they recognized a really big need, which is

that more and more Americans do need help. And there's a lot of inefficiency ease, and a lot of conflicts and a lot of poor quality when it comes to individual Americans getting advice, and so I think there is a big need. I think that they are also kind of carving up different sorts of spaces. Well Front is going after kind of the the younger millennial, generally tech

person who made a lot of money. They're focused a lot on tax loss harvesting, betterment, has a few different distribution channels, including going through r A s not through corporate are big thing. You know has been going through our A. So we last time and I'm not the company anymore, so I just kind of read the press

releases and the earnings reports when they come out. But company now has more than a trillion dollars in four win K plans that have hired them and managing over a hundred and fifteen billion in a u M, so that that's a pretty big company. It's the largest independent area in the country and a big part of the success has been making it really easy and safe for an individual to say, yeah, I want you to be

my advisor. And by going through the workplace, we get the trusted introduction from the from the company, keeps acquisition costs low and because we manage your four O OK, you don't need to sign any paperwork, you don't need to move any money, you don't need to figure any it's just like, yeah, please do this. I think without that trust to introduction and not having to move money, it gets very difficult. So I know our unit economics quite well, and they were very they were very compelling.

It's a very profitable company. I think it would be really really difficult to do this without a some sort of secret sauce on the acquisition side, because acquisition costs are huge to say the least. So let's ask the flip side of of the question. So, what's the role of a live human in providing financial advice or financial planning either as an adjunct to or above and beyond the al GOO driven allocation strategy? And so so this is something that took us a long time to figure out.

We started as an education software company that didn't work at all. Then we went to advice, but we the tagline was your personal online advice. But this was your personal online advisor. Our whole thing was we didn't want to have our own advisors. They cost too much. You know. We talked to customers and they said, it's great thing you're giving me a tool. I don't know how to use the tool. I think I'm gonna misuse the tool.

So he said, well, what if there was an advisor you could talk to anytime you want who could actually manage your portfolio for you. Now, actually, what we weren't saying is it's all the same technology. It's a it's an advisor center with Series sixty five license advisors out in Phoenix. Their their financial enges employees. But they're just basically using our software in a call center, but talking to people and making sure that those people feel comfortable

about the decisions that they're making. It's the behavioral side, not the investing, absolutely is. So what we found is that at least for baby boomers, where there's a lot of the five trillions and four oh win K accounts are with people who are older than fifty. I think last time I checked it was sixty seven percent of the four K asks are held by people fifty and older. Give me that number again, sixty seven of four oh one k assets. Sure, that would make sense. You warned more.

As you get older, you can contribute more, absolutely, and you start thinking about it more because you're getting close to retirement. So when you've saved all your life and now the question is how you gonna invest that money, you really want to make sure that you're not screwing something up, and at least for that age, cohort talking to someone to make sure, like, you know what I'm saying right, you know what you got the data right? I want to make sure I understand what you're doing.

There's just an interest in knowing, alright, someone is accountable and they know how to use these these tools in this technology. So I'm not going to get it wrong. You're listening to Masters and Business on Bloomberg Radio. My special guest this week is former CEO and co founder of Financial Engines Jeff Nagian Calda. And you got to

work with a hero of yours. You graduate Stanford, the NBA program, what you was at undergrad was alright, so your Stanford undergrad and then you stay so you really like that party. I like and I have two of my three daughters go there. Uh and my wife got a couple of degrees and that's where we met. So so Stanford has been uh home away from home for you basically, so you should talk to them about their

in down terrible and could use your your assistance. Um. But you go to your graduation for your m b A. And the commencement speaker is Bill Sharp, Nobel Laureate, and you're entranced. What was it like after that experience to get a phone call essentially from Bill Sharp? Hey, kid, I got ah, I have an idea. I'd like to have you helped me build this into a business. Yeah. Well, so he spoke at my undergrad graduation. I was an econ major, but I always thought that he was just

a magnificent mind. I was like, this guy is super smart, and I happened to think he could that he was saying a lot of things that could help people. I didn't ever meet him until he interviewed me, and I was shaking up my boots. I mean, I'm like, I'm not worthy, but he was really down to earth. It was interesting. He wanted to make sure that this is that says a lot about Bill Sharp. He quickly said, you know, are you smart enough in terms of the economic stuff, But he really wanted to do you know

how to program? I'm like yeah, and and when real programming scripts like you could really you could like like like real programming now literally he wrote in C plus plus and he wrote an assembly, so he this guy is like a really serious old school so I couldn't do that. But I was mostly I was mostly programming sort of Pascal and kind of lightweight stuff. I mean, I'm not really a hacker, but I programmed enough stuff to kind of know the basics. And then he said,

what do you know about graphic arts? And I go, uh, well, I used to have a graphic arts business. Because I used to I learned how to use it Adobe Illustrator back in the back. Still it's still around. And he said, you know, one of the most important things about this business is going to be figuring out how to communicate these principles to people so they can understand it. And if you if you're not able to communicate, you know

we're gonna have it. It's gonna be tough. So for him, it was kind of checked the box on the on the math and economics, but really Let's make sure we get someone who can solve the hard problem, which is helping people understand it, making it simple, easy to understand visual graphics. Are you know a picture does health is worth a thousand words? And if you can communicate this dry, complicated stuff in a way that makes sense to people,

you're two thirds of the way that. He was also really clear that Jeff, I don't want to run this business. You're going to run it, which means you're gonna deal with the headaches. He didn't say, I want to spend all the time doing the research, and he was involved every day in actually writing the early code, helping us with the algorithms. It was amazing, It was amazing, he was. Was it a little surreal working with that close with

someone like him? Tell you what's awesome? Because you're trying to recruit a team of finance people and you're like, how'd you like to sit next to Bill Sharp working on something that we think is gonna change the world. I mean, it wasn't hard to hire talent when you've got Bill Sharp there. So let me jump ahead to a question, because there was a quote of yours that

I really liked, and I'm gonna paraphrase it. You mentioned, you know, when you're building a company, there are three key elements that a CEO has to focus on, strategy, culture, and hires, and you just basically, uh, touched on on the higher side. So before we get the strategy and culture. So you're you're recruiting from a pool of Stanford and other top schools. You're right there in Silicon Valley. How difficult was it finding the right people and then convincing

them to come sit with you and Bill? I mean, honestly, it wasn't that hard. I didn't think it was. I mean, I'd like to say it was really hard. Nowadays it's much harder. There's there's so much money and people. I think we're realizing the value of talent, so much competition, and there's a huge competitionists. But the kinds of Bill here we're sitting in Bloomberg, this is testament to how

you have to compete for talent. I mean, you have to have really compelling reasons for people to join your company. You asked me about the food segment. When you walked in this food space on the sixth floor, you want to hire somebody, they walk by, they're like, Wow, this place is for real. It's just one of those parks that people see and say, oh, I think I could play with you guys exactly back in the day though, right, So I had raised a lot of money. That was good.

The Internet was really just ramping up. I think Netscape went public, it was right at the beginning, and so people were hungry for this, and we had the VC money, we had a big idea, we had a Nobel Prize winner. We were in Palo Alto, and you wouldn't have been that difficult to do it was. It wasn't hard to get the early team on board. And so now let's talk about the other two elements you mentioned, strategy and culture. Yeah. Culture is the one that I find fascinating because it's

very easy to have a culture go astray. It's very easy to lose sight on those core values. How do you focus on building a culture at a company? Yeah, well, i'd say I'd say that it starts with the leadership team.

I mean, it's easier if you're just like, well, what's the personality of the leaders because it's if there's a big mismatch between what you want the culture to be in the in the way they actually act and the leadership team acts, then it's gonna ben it's not authentic that people will be like, yeah, that's really that's our culture. Uh huh um. So a lot of it really comes

the culture. So the way I usually think about it is, you know, first of all, get the strategy right and and the strategy is really about where do you choose to focus your energy in a way that you can win a big opportunity. And if you win, you can keep winning because you have some advantage that that other people can't compete away. And I think if you don't, if you don't pick your battles properly, you can execut

incredibly well. You have a great team, but you just want to have a valuable business, and it's winning the business that doesn't matter isn't as important as winning the business that does matter, right, And I hear a lot of people say, oh, you know, execution beat strategy every day. Well, I would say, well, it kind of depends. If you have a good strategy, then you're totally right. But if you're really executing well on a poor strategy, it doesn't

really make much difference. In my view. Is no, you got to get the strategy right, and yes, that's definitely not all you got to execute. And how do you execute well? First you get the leadership team in place, because if if you're as a CEO of your people aren't good, you can't go and hire everybody else. I mean, you've got to really get the talent and the tone from the top, starting with that core group is really important. And then that just reflects across them. That's where the

culture come exactly. And then what you do is you kind of say, and of course you want to be explicit about the types of people you're bringing into that you can reinforce a certain kind of culture. There's certain people who might have the talent, but they just don't have the personality or sort of the the way you want it to feel working with them and say you say,

you know, you're not really consistent with our culture. You don't say it out loud, but you started your screening people as you interview and you're like, this is this is not gonna be uh, this is not having you as an exact might not set the kind of tone that we want to um. And culture is really tricky, largely because it is such an outgrowth of the earlier people, and and and the senior people and and so um.

You know, I never I did not get it perfect, for sure, and with something I was always trying to learn more about, but at least intentionally being aware of what your culture is and your what your culture is is what your people basically say that it is you. You can't say, as a CEO, this is my culture. You ask your people what's it like to work here? They'll tell you what the culture is. And then if you want it to be different, you guys say, well, how do we have to change as leaders to create

a different environment for the for the company. So you said you made a lot of mistakes you learned on the job, but when you look at this company, you were there for a CEO or co founder or I don't know if you actually had any of the titles other than I. Well, when you're the first employee, you can call yourself what I said, I'll be the president CEO.

But basically, the three co founders or co investors said, you get a business model together, you get vcs to invest, you can become CEO and let's see where it goes. At what point did you realize, hey, this is working this this business model. We're attracting assets, we're winning business, We're heading in the right direction. When did you first

get that glimmer? Well, the glimmer kind of came and went and came and went and came and went a lot of times before I really knew, knew and well, in the beginning, you have to be saying, well, I'm working with Bill Sharp, this is an amazing idea. I love the concept. Let's see what happens. But at what point did you say, Hey, we have a billion dollars, we have ten billion, Hey we have like where did?

How long did it take from start? I'm asking this for my own personal selfish questions because I'm fascinated by this. It's a startup, it's got no real assets other than the people in the until actual capital and then at some point down the road it's a multibillion dollar asset manager.

How long did it take from it was from A to B. We started in nineties six, and I would say that I had a very very strong conviction that we were going to be very successful in December of two thousand four, So eight years that's that's a long time. So by two thousand you managing assets at that point, so you still know we're offering the online tool. In two thousand and two, two thousand three, we had like a thirty million dollar business. We were cash flow break

even by many accounts. You'd say, this company is doing pretty well. But you know, I was like, we're not growing fast enough and it's just too hard. So Jeff, if people want to find you or your writings, how do they track you down? I would just say, don't worry about my writing, go to Financial Engines, all right, I'm not the CEO. I I stepped down in January of this year of this year, after grooming a successor

over the course of two years. Yeah. Well, I and I had hired Larry from Fidelity is one of the top guys on the r I A space, and I has been that. He had been there for thirteen years, so he knows financial Engines inside and out. Um, but I would say, you know, and by the way, with the robo advisors, there's so much advice that is so much better and so much less expensive than what's been out there. I mean, consumers have a huge number of choices.

You know. I love financial Engines partly because I know how it's built, and you know that's that's what's managing my money right now personally. UM, but a lot of a lot of integrity into that. I think there are a lot of other firms. Vanguard's doing something great. Schwab's got some good portfolios that are being managed at low cost. I think the newer advisors are good. There's just a lot of good advice out there. We've been speaking with Jeff Nanjian Kalda, the co founder and former CEO of

Financial Engines. If you enjoy this conversation, be sure check out our podcast extras, where we keep the tape rolling and continue chatting about also of fascinating stuff. Be sure and check out my daily column on Bloomberg View dot com. Follow me on Twitter at rid Halts. I'm Barry rid Halts. You've been listening to Masters in Business on Bloomberg Radio.

All right, this is the podcast portion and and that's the part of the show where I throw my arms out and say let's uh, let's let's roll up with sleeves and go over the questions we missed and talk about, um, some other interesting stuff. By the way, Jeff, I've been really looking forward to having this conversation because I followed

financial engines at least for the past five years or so. UM, we never got to talk about when taking them public with that experience was like and we never There's a whole run of stuff we haven't gotten to. So so let's jump right into that. UM first, let's see what questions I missed. We know about that. UM So, the pivot to four on one case, the to running the assets, it was two thousand walk that was two thousand four.

Now it took us. We were working on it a year before we launched it, and we had done it was that before or after the customer surveys when they said you guys do it? It was after, so it was like, Wow, there might be a totally new type of business opportunity. And and then we created a little prototype and we did a fake survey. One of our cust o our corporate customers was really great because we needed to figure out what people really sign up for this, but we didn't want to build it until we knew.

And they let us do a survey where basically said do you want to sign up for this? And little tiny print on the back of it said, by the way, you know it's not yet available. Then they signed up, and then we called them and big numbers, and then and then we called them back, and we literally called each one and said, thank you very much for your interest, and we're working on it and we'll let you know when it's ready. But we already kind of knew from

a pretty big test that people wanted this. And I went to the board. We had about fifteen million dollars left. Have that hundred million I talked about. I said, guys, we let's go all in here. This is it. We've got enough evidence that we've shown a prototype. People seem to want it. They're responding to sort of direct mail enrollment. Our our our corporate distribution partners want their employees to have this. This is it, Let's go. It was It was sort of it was about the company and a

freaking work. Sometimes you have to bet the company. Sometimes you have to say, hey, what we've been doing isn't generating the revenue, or it's not the business model that we think the idea is worthy of. Here's something that we can actually monetize in a way that's that's both true to the underlying philosophy and productive as a company. Yeah, and and and a big part of it too, is we we felt that we've done enough tests to make

it a smart bet. It wasn't a sure bet, but it was a smart bet because we we've shown the prototype, we talked to customers, We've done this or enrollment test to fairit with the acquisition costs would be. So we kind of had a lot of indications that this was gonna work. What was your degree of confidence in that? I mean, honestly, it was okay. So this wasn't like, hey, we're rolling the dice. Let's let's hope that snake eyes

doesn't coming up. It's like, hey, this is really based on all the evidence in front of us, based on the success of the prior business model, which was so so, based on what our clients are telling us, both the corporate clients and their employees, this looks like really the way to go when nobody else is really yeah. And now what was tough is I had I had a

company where we had very low turnover. So the employees had been with me and the other senior management team for the journey, and after your fourth or fifth pivot, they're like yeah, right, yeah, here we go again. And so it was a little bit tough, and I had we had an all hands meeting where I said, look, yeah, this is what we're doing. A lot of people are very enthusiastic. I showed the data. We kind of we went, we talked to our customers, etcetera. Listen, if you could

sell your employees, you can sell anybody. There were a lot of people with their arms crossed, basically saying I'll believe it when I see it. And I said, I said, guys, if you're on the sideline, I'll give you like a week and and no, no fault. I mean, if you decide you don't believe, then you should find something else, because this is what we're doing. And I totally get why you wouldn't believe because we tried so many. Things that happened were the really five previous significant pivots, the

different business there there was. There was There was the education at first, the quick pivot to become an online advisor within the workplace. I raised all that money. We had a big deal with A O. L to go B two C. There was this. We were one of the first freemium models. You could get your forecast for free, but then pay for advice that didn't work. Uh, then we did this uh, this business, which was we called the enterprise business, was trying to create a workstation for

our as to use. Then we had something we call the Advice Server where we were going to sell it to the big wirehouses and say, look, here's a servert that's gonna give automated advice within your firm. And then finally we did manage accounts, and manage accounts was the one was the magic button. That's that's amazing. UM. I'm gonna save the conversation about target date funds and fiduciaries later, but I definitely, uh, I definitely want to come back

to that. We're done with this question. UM. We briefly touched upon Vanguard before. So there are the non Silicon Valley startups like Schwab and Vanguard who are rolling out their own UM robo advisor. Schwab Vanguard is really fascinating because they launched it with essentially no fanfare and they took a bunch of older UM advisory accounts and basically said, okay, you guys are now I'll go automatic driven. And it was five billion, and then it was fifteen billion, and

now it's like thirty billion plus. UM. I've spoken with them, UM, including Bill McNab was on the show. But that's gonna be a hundred billion dollars and in no time at all, no doubt about it. What what are your thoughts so within financial engines, UM, portfolios, what asset classes, what sort of UM is it? Vanguard d f A, like, who are you? Who you holding in those accounts? Yeah, well, so we're managing the last quarter I think it was

like a hundred fifteen billion. We only use the investments that are available in four O wind K plans, so it tends to be mutual funds and a handful of ets. Well, what's interesting is that the large part of the market, it's it's not many mutual funds and and no E t f s. They're almost all separately managed accounts. And when you start working with ibm s and forwards, UH and hallmarks, you're talking single digit basis points in many cases.

So here's what's kind of amazing. The meaning you're charging us less than a fifth of a percent, less than So if you look at the economics of that hundred fifteen billion that we're managing, what you find is that the underlying fund fee. So that kind of the expense ratio of those funds that we're managing, it's about fifteen basis points considered fairly low, considered low. That's Vanguard territory.

And if you look at the cost of our services, after all the A discounts and everything, this is this is not the cost of financial engines. Is what the employee actually ends up paying. It's about thirty seven basis points. So seven plus fifteen is for the for the whole innch a lot of talk to an advisor retirement planning. Not a terrible price at all, and that's actually much cheaper than what we see from a lot of places

we see. So whenever we we run an st management firm, whenever we look at a four oh one K comes in and I'm talking about some pretty big entities that are fairly famous that you would think would have access to whoever they want. We look at these portfolios just festooned with active, high fee funds that have all underperformed their benchmark. And then there's the Custonian fee and the reporting fee and the advisor fee and all in it's

three d basis points. It's astonishingly ridiculous and it's a terrible drag on long term returns totally. The good news is is if you look at the kind of weighted average expense ratio of four O n K assets, given that over six of the assets are held in the top point four percent of companies, so the found Fortune one thousand, that's where almost over half the assets are.

Those guys do a really good job of getting nice, well managed, low cost funds um so, so at least on average dollar weighted, most of the four on K money is is sort of is sort of good investment options. And what you find is the d O L and the regulators are really pushing that down market. So it's it's gonna be a while till you get to the smaller plans, but there's definitely gonna be a trickled down.

And I think Americans need to know if you work for a Fortune one thou company, your four o wn K options are probably your four o w K plans like the best investment. You're getting a match, you're getting all kinds of advice for very low costs, and your funds are probably the cheapest you're going to see anywhere. Plus, so for you guys, what does that mean? You're filled

with guard or dimensional or fidelity? Like who's in your I know it varies from company to company does, but I'm gonna bet there's a bias towards a handful of it's about half actively managed, half indexed. And if you look at the actively managed guys, they're not very expensive. They're they're they're really good lower cost actively managed funds. But what happens is if you have a fund, uh, in a lineup of funds that maybe cost fifteen basis points, if one cost sev in the scheme of things, it's

not it's not going to make the cut. Uh, you guys carve that out. Well, they're still is in the plan, but we just don't put in any of our portfolios. Got it? The differential price is cost too much? Thumb. Also, you know, there was a great morning Star research note which I'm sure they rude the day they put this out, which is so morning Star came to fame for by the way, their second behind you in terms of managing

four oh one k properties. Because everyone thinks they're the mutual fund expert, but their claim to fame is their five star fund rating system and then one of the researchers put out a piece that said, if you don't know anything about a company of fund, or a mutual fund, or even whatever type of fund it is, if you did nothing else but pick the cheapest funds over the long haul, that's gonna outperform everything else, which sort of was a problem because they're selling, hey, our five star

rating system is great, and their own research is essentially saying, yeah, yeah, the rating system is great, just by the cheapest fund. So I I don't blame you guys for saying, hey, we're not gonna put one of these expensive now every now and then. There's an asset class, the actively managed mortgage back um fixed income funds. There are no inexpensive versions of those, and you can't do it passively. You have to have some degree of active due to quality

concerns and how that turns over. But for just about everything else, cheapest is invariably the best, which is really a difficult message for people to wrap their heads around. You would think that would be really easy to grasp, but people use price as a as a quality signal when it isn't always a quality signal. I totally agree with you, all right, so that's the end of my diatribe. Let's um, let's talk a little bit about your gap year.

This is your gap year. So you you stepped down officially in January after grooming a success sor um and that successor is now running the shop. And you said you're gonna do nothing for a year, because you were there for what eighteen years? So you said You're just gonna kick back for a year. And I stayed on as an an advisor to the company for six months, so that officially finished on June. But you're right. I said, I'm going to take a year and just pull pull,

pull back. And you know, a lot of what I was interested in doing was a combination of learning and having fun, and so I thought one of the things I'd like to learn that I just haven't had time to learn. I always wanted to sail in the ocean. I sailed on lakes as a kid. I wanted to sail on the ocean, so I didn't I've been doing a lot of sailing and getting certified as as a sailor. I want to always want to learn, not just how

to play the piano. I wanted to learn music. I want to say, I learned music like I believed, and I'm just super excited into it. I mean, here I am at forty six like learning about the basic patterns and structures that underlying music. This is pitch and harmonics and residents and rhythmic patterns and things, and so music

theory is really interesting. And and now when I listen to songs, it's like, oh, you know, there there are some deep patterns that once you kind of understand how these things are built, it's almost like a puzzle that you can unlock to say, what's that corporate? What key is it? And what's the core progression? What are some of the surprises the way there, the way they're breaking the rules are are refraining a chorus? And so it's like a way, a new way for me at least

to understand music, which has been really fun. I have a book for you. I'm sure you've either read it or heard of it, and if you haven't, I'm gonna rock your world. Good godal escher bach Um. Essentially, it's about the concept of repeating patterns showing up in mathematics, art and music. And it's not just fractals. It's just

when you look at a box um piano concerto. It's a series of and if you've ever heard like kat tun still do something with the you know, the the recording box whereh will play and loop it over and over again. It's the same basic concept in a symphony. It's just explosive. I recall reading that in college and just pulling my hair on my head, going, it can't be just that everything is a pattern? Is that? Is that true? Everything is just repeating fractal forever And it

turns out some things are some things aren't. But if you like that idea of of the concept Um Douglas Hofstatter, I think is the is the I'm pulling these names out is a hard years ago. He wrote one other book that I think UM did really well, and I um that I can't access, but this if you like that sort of thing. I just remember saying, wow, this book is amazing. Oh yeah. I mean I like to understand how things work, and music is such a part

of culture. I just I love music too, but I never really understand, like, how does this stuff really work? And now I'm starting, I'm starting to discover it, and I have ideas about how it changes your brain and and and how even when you have these patterns, you know, a lot of what it is I think is is the song and also the antecedents of the song, songs that sound like that song, the genre that came from it primes your brain to expect patterns, and the early

part of a song that sets up patterns. And then there's this dance between rewarding you with the familiar, recurring pattern but then surprising you by breaking the pattern a little bit. And there's this there's this dance of like giving you the pattern and then not giving you the pattern that I think sucks you winto the music. That's that's fascinating. There was the other book if you like music.

David Byrne, former frontman of The Talking has a new book on I think it's called How Music Works or something like that, and it's he you're these are both right in exactly what you're talking about. So so other things that My my wife, you know, when she knew that I was going to be stepping down, she said, I gotta get you to a Buddhist retreat. Okay, I said, okay, she excuse she's done. These are these silent retreats that that one goes on and how long are you silent?

I was silent for three days and it was you know, it was it was, it was definitely. You know. My view of it is sort of a form of brain management. It's like, can you get your brain in a certain mode where it's it's not worrying about the past, and it's not worrying about the future. It's just kind of tuned in. And it's not like metaphysical or anything. It's actually quite basic. It's like, can you just be noticing the things that are happening here, now here and now?

And what's kind of amazing about it? With some pretty simple little practices, your brain gets into a different state and you do you kind of feel this sense sense of freedom and and it creates it sort of creates a lightness that that is sometimes hard to find in

a busy life. You know, there's a tendency, especially in today's between Twitter and email and everything else, that people are just playing tennis and hitting the ball back constantly, and sometimes you have to step back and say, I just want to exist and and be a little I hate to turn mindful or mindfulness, but sometimes you can't just be. Stimulus response stimulus response. Sometimes you have to let me think about stuff for a minute and not

be wrapped up in that world. That sounds like that was a fun experience, And that's kind of what I'm trying to do with this whole gap year. It's just is have a year filled with experiences that can that can kind of break my brain, like I haven't seen this before. This is a new way to think about the world. This is a new way to think about myself. This is a new way to think about my marriage, This is a new way to think about you know,

team depression. We're having a lot of problems out in Palo Alto with with kids under a lot of pressure, getting depressed and committing suicide. There was just a big article in any of the Times, the Worlster Regeneral about it's not the big urban areas, it's small town suburbia

and rural areas that have seen suicide rate spike. So so you know, this has been happening close to our community, and and I wanted to understand because you know, when this happens, clearly the community reacts and there are a lot of people who say, uh, it's it's this thing, It's this one thing that's doing it, and it's never just one thing. There's never one thing. But then there are people say it's kind of everything, which means it's almost kind of nothing, because like, what are you gonna

do about everything? I'm like, no, no, it's not one thing and it's not everything. There's there's got to be some system of effects that are causing this to happen at an unusual rate here in this community. And I don't know if I have the answer, but I kind of developed a model for how to think about it. Right, Well, if you want to be rational, you have no future in politics, So forget about that. Um so let's talk a little bit about going public. Yes, alright, that was

on my list. We didn't get to so oh four or five oh six. You're ramping up a Um what point does someone say, hey, we could use some more uh use some more capital. I know, let's let's make our vcs happy and take the company uh to Wall Street. Well, at first, the first time people said that was in when we had five thousand dollars of revenue. Uh so you would have been worth nine or ten billion dollars exactly.

That's it's all about eyeballs. I raised around. It wasn't we didn't go public, but it was gonna get the idea was. We raised around in Novembers. Our series is eighty five million. We had five hundred thousand dollars of revenue. We were valued at three five million, which at the time was a massive valuation. Right now nowadays it's kind of like, well that's that's a And we were planning on going public within six months, and we didn't. We didn't have a good revenue, we didn't have a good

business moment. You were lucky that the dot com crash happened. You. We drafted the S one and just never filed it. Really we had we had a draft that would have been a disaster. It would it would have been we we had a draft written in We created another draft in November two thousand seven into two thousand eight. So your timing is phenomenally freaking precipitate market crash. I was gonna say, every S one, let me know, let me know the next S one you're doing, so I could

get Then the third time was okay. We had managed accounts, we had weather two thousand and eight. Really well, we kind of grew right through it, and we were like, now now we really this is good. You won public. So what was the valuation when you went public? You know, we were valued at seven are millions something like. Okay, so fairly modest. What was the process like going public? Who were the underwrite the underwrise Goldman Sachs and then

a handful of others, but Goldman kind of lad the deal. Um. I frankly loved it really well. You had a good experience across the board in the bell with the New York I did all that stuff, and you know, we had been working on this model with enough pivots that my board was always saying and I didn't really heat heat them well enough. Luckily I was prevented from doing it. But they're like, you gotta have a predictable business model before you go public. Gotta I'm like, yeah, yeah, yeah,

thats okay. Whatever makes sense. Well, predictable, predictable revenue streaming totally, because when we finally went out, we had an incredibly stable, predictable business model. And so I wrote our first kind of earnings announcement, kind of the quarterly call, in kind of almost mad libs format. I wrote the story with a bunch of blanks, and I said, we're just gonna fill in the blank every quarter. And because this is a long term demographic bet this is not zig zags.

We're done with our ziggig and zag. And we think we found something that should last for quite should create

growth and profitability for many, many years. And so every quarter we pop in the new numbers, we tell the same story with a little bit of nuance, but not a lot and and and I think that's what a great business can do, is is have periods of sustained, predictable, scalable revenue growth and profitability punctuated by whoop's got a zig zagagan because the world changes, right, I've meant to ask you before I forgot. I love the name financial engines. Who came up with that? I think it was either

Joe or Bill? It was named before I got there. It's it's a terrific name. And if if you if you hear it, you kind of scratch your head and then as you look under the hood, no pun intended you. Oh, of course, this makes perfect sense. This is the engine that drives the allocation. And yeah, that makes that makes perfect sense. Um, I only have you for another ten or fifteen minutes. So let me get to some of my favorite questions that I asked all of my guests. Um,

and this is right here. I did the gap question, so we'll get rid of that. Oh, before we do that, I have to just ask your opinion on on my So you've experienced vcs, you know it's like to raise money.

I have a pet theory that the current group of robo advisers have pulled off one of the greatest scams on vcs ever, because essentially they created this business that has there's nothing proprietary, there's nothing unique, there's no barriers to entry, and existing players can basically say, yeah, we'll

do the exact same thing. But they've raised a couple of hundred million dollars in VC cash in order to generate three or four million dollars a year in revenue, and essentially said, all I need is ninety million dollars to fund on our I A and I'll charge twenty five bases points and if we never go public or we never get brought out, that's the VC's headache. How wildly wrong is that statement? How cynical and incorrect is that? Well?

So um uh so My view is we raised a hundred and fifty million, and you know, every time I did, I really believed that even though the last zigg and zag didn't quite work, we were going to get the one and you eventually did and we eventually did, and so so it's it's really hard to say and this is what they was. It's easy to say, oh, yeah, it's all about the two. There's zigs and zags coming with these guys and to justify it or not or not.

And so I wouldn't totally rule it out. But but you but you have to ask yourself a question, which is how well are you on track to discovering how to see the big opportunity? And is the big opportunity getting bigger or is it receiving or getting more crowded. That's fascinating And when we were there, there just weren't many players in the space known was in the four oh one k. We believe there was a way to reach a lot of people in assets. We believe that

we could get very long. We had a lot of a lot of Uh, you had it easier than the current crop. It's much harder for them. It's it's more competitive, much more difficult, So I wouldn't I wouldn't rule it out, but it's it is not. This business is not easy, and I think it's only gotten far more difficult with the new competition and some of them, what is a personal capital was just bought by somebody I think black Future Advisor, Future Advisor, Black one and and for a number.

I'm like, gee, I would have thought black Rock could have built their own for that, But obviously they saw something that that no one else did. And we talked earlier about the talent right there. There are a lot of companies with with so so or non existent business malls, but with talented people, we've got some pretty good technology where you know, it might be worth it for a year head start to market with the talented team, that might be able to move faster than you could higher

is that phrase? Alright? Let me get to before they kick us out of the studios. Let me get to some of my favorite questions that we ask everybody. Um, So, your early mentors, aside from Nobel laureate Bill Black, Bill uh Sharp, who was your early mentors? You know? Uh? Before I started financial engines, I did consulting and I was a student and so it's all kind of you know, do it yourself, be a smart person and try to

get the right answer. And that was that. What really became hard is managing people and figure out how do you build and work with a team of people. And I had some I had a lot of learning to do. I really think my biggest mentor in terms of like who gave me the most advice, it was actually my team telling me what I was doing wrong. They're like, look, I'm not sure exactly how to do it the right way,

but I don't like what you're doing. This isn't really working for the company for me, And and a lot of it for me was like and I started this, I was like, look, I have so much to learn. I'm going to take feedback from anywhere I can get it. And my team was really candid with me about what we need to change in the business, what what I needed to change in my management style, you know, what we need to change in the product. That's got to

be a challenging um way to to start out a company. Yeah, if if, I would say if if, if you're an entrepreneur and you don't like feedback, then you're in the wrong job. That's that's a that's a fair statement. Let I mentioned a couple of books earlier. What are are some of your favorite nonfiction books? Nonfiction books? You know. I'll just when I recently read is called Sapiens, which is sort of a history of Homo sapiens. I just

got that as exult from somebody. It's so funny, it is worth reading, and it is it is an epic kind of view of literally, how do we compete against Homo or gaster and Homo fororensis? I mean, when there were multiple Homo species out there, you know, Holmo sapiens was only one of a few species nine or seven. So the book I just finished was called Last ape Standing, and it's the same. Hey, these are the twenty seven or twenty nine species that were contemporaries and competitors to

Homo sapiens. And then and it goes and it goes through sort of cultivation of fire and technology. It goes through the spread of religion, the worle that religious place, wonderful treatment of polytheistic religions, monotheistic religions, naturalist religions, and then it moves forward to talk a bit about happiness, which is like was surprising to me, But I think it really goes like, why are what are we even

trying to achieve here? And then it kind of goes through what's the future of the of the of the species Homo sapiens, and it talks about cyborgs and are jacking into people's brains and and there's gonna be some crazy stuff coming. It's is gonna be absolutely wild, so not quite dystopian, not quite the negative things we've see in some sci fi films, or does it do we have the potential for that if we're not, you know, I mean what I talked about, what's happening in Palo Alto.

When you get kids, you're a teenagers jumping in front of trains, there's definitely something dystopian going on. And I think the technology. I I predict that in five or ten years, we're going to look back on our kids and their use of seven screens and social media as one of the most foolish, um hazardous thing that young people could be spending that much time doing, just like eating fast food every day or so we'll say, look,

it's it's gonna be part of our culture. But but but it could be harmful if use the wrong way or too much, and so there's got to be more guidelines on what's healthy and what's not with the consumption. My wife's a teacher, and she he says, even about the kids who are she goes, they're not cooked yet. There's still still a work in progress, and you can't expect them to make the best decisions with all these terrible influences in there, not having the tools to know

how to deal with that totally. So, so you're on the same same So we so we we shut down our WiFi every night from eleven to seven because I don't know how else to make sure that that my daughter gets at least has a chance to get eight hours of sleep. That that that's pretty interesting. Um, so what advice? Speaking of young people? So, what advice would you give to a millennial or a recent college graduate who was interested in finance, someone just coming out of school? Now,

what what would you say to them? I would say, I'd say a couple of things. The more generic thing I'd say is, um, the world is changing at a faster and faster rate, and watch out because technology and kind of machine learning, artificial intelligence is going to totally change the landscape. So the best shot you have if you want to become become you know, financially independent, which just means like be able to put food on the table and have a house. I'm not talking about being

like rich. You're gonna have to have some skills. They're gonna be able to survive lots of twists and turns in terms of how technology changes the way we create an ad value in society. So your ability to learn and keep learning, I say that's the number one thing. Stay agile, stay curious, and make sure that you're always investing in learning the next thing, because if you stay on one thing, the rug's gonna get pulled out from

money world will pass you by. With respect to finance, I'd say be very wary before going into asset management, at least in terms of kind of large cap equities. It's the game is not the same as it used to be and the economics are fundamentally I think the change forever. We we had Mario ga Belly last week, he essentially said the same thing. Would not recommend kids jump into that unless they really felt they had no choice. Last question, So you've been an entrepreneur, You've been in

the world to finance. You've been doing this for twenty years. What do you know today that you wish you knew when you began twenty years ago? Uh? You know, I guess partly because I expected to have no idea what I was doing. Uh, and I had to learn a lot. I was I was kind of a blank sheet. I didn't have a lot of preconceptions. Um. And I think, and I also think to myself, like, what would I

do differently if I could do it again? You know, I'm glad I had kids when I was twenty two because one of the things you said, I think is really important. If you really want to solve a problem, I think that the best way to do it is to go deep, deep, deep, like really focus on it and bring as much talent to bearn as possible. But sometimes you don't solve it right away, and you need to pull back and let your mind work on the

problem when you're not specifically thinking about the problem. But I think optimal problem solving is the ability to stay focused on a problem and recruit other people to work on the problem for a period of intense focus, then back off of it, then come back to it, then back off it. And sort of put the pieces together kind of don't always right. There's another book by the way, we're just thinking fast and slow, which which which I love.

And it's not the blink your guts right, it's like no, in some things usually where there's an instinct to mate or survive, your instincts are quite good, right that they've done a good job keeping you alive on the savannah. But we're using them for to to borrow the pharmaceutical phrase, it's off label. It's what we're using our brains for is not what they would design for. And so trying to intentionally structure the way you think, I think it's valuable.

So so I think I might have gone fast. I'm happy I had kids because they pulled me back away from the problem. Honestly, I kind of wish that I could have not been so worried about failing all the time. Maybe I would have failed if I weren't so worried about it. But it took it took a lot of the joy out of it, right. That's fascinating. Jeff, thank you so much for spending so much time with us.

I think this was really fascinating, and it's an aspect of of investing in finance that I think most people are not familiar with. UM. For those of you who want more information, you could go to Financial Engines dot com. UM. You mentioned social you on Twitter at all? I'm actually I am not on Twitter, not on Twitter, and so this is a whole year of note Twitter. This is a whole decade of not Twitter good. I don't know how long this is gonna last, so we'll see what

happens again. If you enjoy this conversations, be sure and look up an Inch or down an Inch on iTunes and you could see the rest of our interviews. Check out my daily blog at Dholtz dot com and on Bloomberg View dot com. I want to thank my head research Michael bat Nick and my engineer and producer Charlie Volmer. You've been listening to Masters in Business on Bloomberg Radio.