Alex: Hi there, and welcome to another episode of Curiosity Code, the podcast where we dive into the world on fintech. And today my guest is Jennifer Shell, and we'll be talking about investments, investment strategies, and education in that domain. Welcome, Jennifer.

Guest: Hi, Alex. Hi, everyone. Really happy to be here. This is exciting.

Alex: Yes, it is. Thank you for coming. Let's start with just a bit of your background. If you can start with telling about your professional journey, how you end up being at your current position. I see that you are a partner and associate portfolio manager at Freegrove Investment Management, and you're also CEO and founder of Finlity.

Guest: That's right. Yeah. I'm obsessed with finances and the stock market and businesses and all of that jazz. So it's just my lifelong passion and really enjoy my work. It's like when you're telling you if you enjoy everything, it doesn't feel like work. And that's kind of like how my situation goes, except that there's a lot of highs and lows with doing all of these different things. So, yeah, my journey. I grew up in Sudbury, Ontario, which is northern Ontario. It's about 4 hours north of Toronto, by driving by car. And if you're into rocks or minerals or geology or mining, that town's for you. If you like nature, it's also for you. If you want a simple life, it's great. We have a big nickel, and it's the biggest tourist destination over there, but there are also beautiful lakes. So I went to the city to pursue my dream of financial management and trading, and I worked at all the big banks in Canada, except for one. And I got into investments, really enjoyed it. Worked on Bay street as an investment advisor for BMO and then got recruited over to CIBC Wood Gundy. And from there, I saw the digital writing on the wall and I saw that, hey, we need to have a hybrid experience. And right now it's just not cutting it. And this is pre pandemic. So it was like, really silent. There is stillness in the air. I was on a beach in Croatia, and I decided to make a power move in the summer of 2019. I had a feeling that something weird was going to happen in 2020, and I wasn't sure what it was, but I could feel the stillness and the calm before the storm, before it actually happened. So I ventured out on my own with a couple of partners, previous colleagues that I'd worked with in the past. We started our own boutique investment management firm, and I decided to build a fintech because if I didn't build it, the way I wanted to, in an ethical way. I figured somebody else might and it might not be as I had envisioned. And we all know what happens when tech giants get giant. They kind of take over the world. So I wanted to build this new culture in finance and to really let people see what I was seeing. The one thing I noticed in my career is that people often gave in to their behavioral biases. And they said some really funny things to me, like, oh, I checked my horoscope before getting into a trade, or this is dirty money, and it came from a client I don't really like. So it's not really that important to me, just some strange things happening that couldn't be explained with a typical risk tolerance questionnaire. So I explored that and worked with a behavioral scientist, Dr. Stefano di Domenico, and they came up with a tool that actually identifies these personality traits that were unexplainable before. And that's the whole basis of the Finlitty fintech platform. It's based on behavioral science, it's accurate, and it gives you a way more accurate reading on your individual personality than anything that exists right now. And so knowing this, we're able to actually use AI and algorithms and make a really seamless journey that's really customized to the individual investor. And this is really helpful for both wealth managers and makes my job a heck of a lot easier because there are expectations that we have to essentially be personality psychologists for our clients. And it also helps the retail investor make better decisions and stay more committed to their goals. And it helps the discount brokerages retain their clients and have increased engagement and gets the capital going and flowing into the hands of the people who need it and allows for new businesses to grow.

Alex: That's really impressive. I played myself with finlity, and I encourage all listeners and whoever is watching us to do the same. What amazed me is how you implemented those personas, and it's sort of like gamification going on. How did you come up with that? Where are the ideas coming from? Because it's quite, I would call it unstandard way to approach such conventional thing as financial education.

Guest: Yeah, and that's a good point. A lot of people want to feel safe when they do their investments. And so it actually came about because I was really intimidated when I got into Bay street and I was working with all these big personalities in one of the biggest head offices in Canada at a brokerage. And so I invented these characters in my head to deal with some of the stressful situations and personalities. And I made it almost my hero journey to combat some of them and to build the confidence in my abilities, in my knowledge about investing, to be able to defeat these preconceived notions that I had and the fear that I had around some of these, either the people, my coworkers, or the invisible forces in the economy that were unpredictable, like the market. So I noticed a trend where there are different types of financial foes, as I like to call them. They were the villains that were preventing me from getting to where I wanted to be. So they'd be intimidation factors or people who would try to make you spend a lot more than you could afford, get first class tickets, buy designer shoes, buy ten handbags. I call him Mr. Jones. So I noticed there were those different personas that I was working with. Another financial foe is like Slick Nick, like somebody who's always trying to sell you on something, even though there is no value there. So there are these different financial foes, and that's where they came from. There are also a lot of really great mentors. I got a great boss at one of my organizations, and he was like, you need to build your confidence. How do you build your confidence? This is what you need to do. You have to get familiar with an investment strategy that appeals to you and really own it, and you have a lot of value to provide. And who do you get along with? And it turned out I got along with business owners. So there are different financial friends and coaches, or mentors, if you will, who can really help you along the way. And so I decided to personify them and to make them into tangible beings, because the stock market and investing is very intangible in nature. So having something that you could see and relate to is very helpful and can help you see where you're going to be, either facing obstacles or where you need some help. And everybody needs a little help here and there. So that's where they came from. Yes, they're unconventional, but they've gone over really well with both men and women and people in general, and they just seem to really relate to them. And a lot of people feel like having an avatar takes them away from their situation and allows them to experience that bird's eye view where you can kind of see outside of the box of what's defeating you and allow you to explore those forces and to really grow as an individual and as an investor.

Alex: I saw that you're referring to finlity as finlity framework, and you're applying framework and different solutions. Can you tell me more about the framework? What's the difference between finlity as a product and finlity product, or it's the same thing. That's interesting. And what part AI does play in this? How does it contribute to the user experience when your client is actually interacting with Finlety?

Guest: Yeah, we've built a whole platform. So the framework, it's not just a personality test. So yes, you can go onto our website and actually get a sample of what your personality test would be. You could take the investor questionnaire and find out about your own individual strengths and weaknesses, but it doesn't stop there. So we use that as a training model for our AI and for machine learning to get you on the right track with your investment approach. So aligning your goals with your personality type and also with an investment strategy that you'll stick to. For example, some people don't like to have a lot of investments in their portfolio. It's overwhelming, it's too much. They'll give up. It's like, I can't track all this, I'm busy, I have other priorities in life. And so that's where the framework comes in. We know if you get overwhelmed by too much choice, and so we narrow it down and give you some simple strategies that you can work with. But the opposite is also true for some people. They like to build their own strategy and they like some complexity to it. It keeps them challenged and engaged. And so we know that too. And then we can offer a solution that gets you to where you want to go, or maybe you want to explore a higher rate of return or engage with the risk and understand risk. That's our motto. Understand risk, reap the rewards. And you can build a strategy that aligns with your personal views and helps you be in charge. And some people really like that as well. Yeah, so that's what we're still building on, that with AI right now. There's a lot of bias in the system, so you can scrape data that exists already on different websites, but a lot of that's very biased data or it's predatory data. So they'll give you nudges to make more trades, which is not really to your best benefit and in your best interest as an investor. It's more so making money for the sake of making money. And that's a short term strategy that makes people money in the short term and companies money in the short term. But it won't add that stickiness and trust that the financial institutions need to uphold to get their customers to stay there and to increase the long lifetime value of their customers. So that's why we have to get clean data with the finlitty system, with the tools to be able to collect that data and to be able to optimize it for our users so that we can train our AI models to give better recommendations in terms of the strategies that are there. So we always give you the choice. It's an active management solution, it's not passive. You want to stick a few etfs in there, then Bob's your uncle, whoever Bob is. Yeah. It's really to give you an active approach and to really give you the control that you want and the motivation to stay with what you want to do and to get you to your goals faster than you would otherwise.

Alex: And it's mainly about institutional investments. Right. Like, you don't work with crypto or real estate or anything like that. So it's mainly like fundamental investment strategies for average person.

Guest: Well, we have things in development. The whole finlitty framework is a SaaS based model, which means there's a framework to fit on top of the existing brokerage infrastructure. So essentially we are asset agnostic. I have experience in real estate. There are things you can do with real estate as well. But for now, we are working on the financial markets and dealing with the regular securities stocks that are on the stock exchanges in North America.

Alex: All right. Yeah. So no crypto for now.

Guest: We could create strategies for crypto. Yes, and we do have some strategies relating to crypto, but in fintech, it's a very highly regulated environment. So when we're working with things, we are cautiously working with the regulators to be able to make sure that we have a solution that's in the best interest of the integrity of the capital markets and everybody involved and the investors.

Alex: Especially in the northern american market. Yeah, it's highly regulated and you need to be careful with everything related to crypto.

Guest: Yeah. The issue there is that it's just volatile, and so it may not be appropriate for everybody, but there are the new adopters who are getting into it and who really take an interest in it. And it has some interesting hybrid of a security and a tech product. So there's a lot to discover there, a lot of interesting opportunities, but also a lot of dangers if you're coming up with a long term strategy.

Alex: So let's step back a bit from the core of affinity and explore a bit your journey as a founder and as entrepreneur, because it's quite an interesting transition. Been an employee of all major canadian banks and then stepping aside and founding your own company, your own business. Did you do it all alone or you have co founders. Tell us a bit about that journey at the early days of affinity.

Guest: Yeah, so I have co founders in a sense, where they're definitely supportive of the work and collaborating it, but I'm definitely driving the vision. So I had a very distinct vision that I was comfortable with running with because I had experience in the financial institutions and saw what they were doing and knew what type of product had to be a high enough caliber and quality to be able to compete in a very competitive environment with very high barriers to entry and where a lot of capital was required. Essentially building a unicorn on a shoestring budget is what I like to call it. I did go out on my own, but I've always had the entrepreneurial drive. I held multiple garage sales when I was a kid. I sold things, whatever I could and actually made money at it. I always knew that I wanted to do a business. I wasn't exactly sure what, but then I got really interested in financial services and working with the entrepreneurs and the business owners. And so at one point I had a job working as a commercial banking analyst and I was giving loans to the entrepreneurs in northern Ontario. And I enjoyed the work, but mostly I enjoyed learning from the entrepreneurs, the business owners who built up their businesses. And I'm like, this is what I want to do, and I want to get back into the investments. So I wanted to get up my knowledge and get up to speed. And it was just about building the confidence to be able to do that and to really feeling confident in my abilities to build a company and to make sure that it succeeded without too much room for failure. And so getting around that room for failure and realizing you don't have to have everything perfect was definitely something that added a little bit more time to my journey than it otherwise would have been.

Alex: Right, and were you part of any incubators in early days? Yes.

Guest: Yeah. I wasn't sure what to do. I was comfortable with the capital markets, but I didn't know how to start a fintech or a technology company at all. And I know it was very different. And I was unfamiliar with the venture capital landscape and how that all worked. And I also just like Bay street and the investment advisors and the brokers, I thought that Silicon Valley people were very intimidating and very loud and outgoing and really smart and were geniuses in some type of way. So I had to break that down. And then I realized that people use their egos as a defense mechanism. And then I was able to understand how to get around it and realized was able to rely on a lot of my own abilities. So I started with founder Institute and went through their funding lab, which was really helpful in raising capital and I still work with them today and have a great network. Love that program and met a lot of my current colleagues there who are with Finlitti and so I'm grateful for that program. Went through the fintech cadence Ascension program out of Montreal and that was very helpful in establishing a network and providing me with people high up who were able to tell me, yeah, this is something that could be implemented, or no, you need to work on this. Here's some feedback. Here are the people you need to talk to. This is what you have to consider, personal information, all that jazz. And then I went through recently another next AI program in Toronto last year. Wow, I can't believe I'm saying last year. That was really helpful too, because Chat GPT had just come out and I was experimenting with it, so this was perfect. And then now that we have AI and Chat GPT and all these programs that you can actually work with, it's not just like a pipe dream or a theory or an academic application. There's actually things that you can do with it and interact. It's just really been helpful and it was what we needed to really bring us along. So I'm grateful for all those programs. They were all useful and I feel like we've got all of the help in terms of mentorship or where we need to go and where to look for it.

Alex: How long did it take you to build the first version of the product?

Guest: It took a year and a half to get the full, to get the tool up and running, to get the research personality tool, to do what we wanted to. There were a lot of iterations. We worked really fast because we weren't sure how long it would take to get things running and we felt the competition. But then it's like a whole other thing when you're bringing something new to the market, then you have to convince people that there is an alternative way, and this is what it is, and you have to make it tangible so they could actually see it, because seeing it is believing it. And so we did raise money on the dream of it, and now we have it and we can show people and it works and can do everything. Everything works. It's just a beautiful thing, but it's still new. And so getting people's heads around that is challenging. So you have to look for those early adopters.

Alex: How did you acquire your first users early adopters?

Guest: Well, first we were a b to C model, so we had a lot of interested retail investors because the whole meme stock, Sega happened on Reddit and they were all interested in investing. So we had a really interested pool of investors who wanted to do it themselves. Then we shifted to b to b. I have a lot of relationships in the financial space, so that just made sense. And it could get us to market sooner. Maybe not sooner, because the sales cycles are long, but at least once we're in, then it would be really good to blossom from there and to really take off once we have the proof of concepts done. So does that answer your question?

Alex: Being an entrepreneur myself, and I launched products myself before, I know that you struggle the most with first users and it's like when you see first dollars lending on your business account after a year of hustling, bustling, building the product. That's most amazing feeling probably for entrepreneur. Yeah. What are the, what are the plans? Whatever you can share. I know that it's maybe all covered by competitive advantage, but whatever you can share, it will be interesting to know where you moving towards with fidelity.

Guest: Well, after a lot of feedback and iterations and finding the right svps to make decisions, we're proudly negotiating. We have five interested proof of concepts and we're going to roll it out to a selection of beta users. And hopefully it'll be out on a platform within the next six months or later, part of 2024. So that's when we anticipate we're talking to parties now. There's a lot of enthusiasm. We're moving forward. 2024 is going to be a big year for finlity.

Alex: How complex it would be for you to expand to different markets, like to the US, for example, or to european markets, or the legislation. Difference is a real blocker for the expansion in that sense.

Guest: Well, we constructed the tool from the north american market.

Alex: Okay, so it's already designed for the US as well.

Guest: Yeah, that's right. So the US, Canada. Other markets that are similar would be the UK. We could roll it out to other markets. It would just be a matter of tailoring it to those markets. The Finlity investor profile indicator. And we know how to do that. We just have to do some work on the ground. And there are little cultural nuances and different financial systems, although there are similarities too. So that's what we're doing. And once the resources get up to speed and we've got a good handle of where things are there, then we could expand to other markets quite easily.

Alex: Nice. Well, congratulations on a great project. I wish you all the success. I hope to see affinity in rope one day as well. And thank you for joining. And it's been nice having you as a guest.

Guest: Well, thank you. It's been great being your guest. Thanks.

Alex: The episode of Curiosity Code and thank you for listening. We'll see you next time. Bye.