Gabe Rissman: I've never made a friend at a virtual conference.
Iyassu Essayas: Yeah.
Gabe Rissman: That I think is the biggest difference is, you know, when the sessions are not happening, you go and step out and get to meet people. You know, there's a lot of stories of advisors that found their succession plan by being at the conference and sitting next to someone at lunch that you never otherwise talk to. It's not just about the learning, it's about the connections. cybersecurity, chemical weapons, they're making viruses now. Like every issue touches this and more and more people like all the time are trying to see their AI exposures in their portfolio. And in particular, partly because of the job loss part, the next generation is the most anti-AI because they see it, you know, they don't, they don't see the prospects of what their life is going to be.
Iyassu Essayas: Welcome everybody to inside the flows. I'm your host, Iyassu Essayas, and I have a very special guest with me today, Gabe Rizman. How you doing, Gabe?
Gabe Rissman: I'm great. Thanks so much for having me on, Asu.
Iyassu Essayas: It's an absolute pleasure to have you on. yeah, I I think for folks that that don't know, I I met Gabe years ago at a conference and you know, I was I just remember like the having this like lasting impression that you were like next gen, right? The next generation. And I was like, I gotta stay in touch with this guy, man. Like
Gabe Rissman: Haha.
Iyassu Essayas: this guy's gonna he's gonna do some things and I you know, I I don't think I was wrong on on any of my assumptions about you. So Really excited to have you on here, Gabe, and really, really excited to talk about what you're working on and and the conference that that's coming up that that you're you're hosting and you know to really shine some light on you for our audience members, because you you are one of the like the movers and shakers in our in our industry. So, you know, thanks for taking the time to to be on the show and and for speaking to our audience.
Gabe Rissman: Absolutely, and I've loved how we've stayed connected through our parallel journeys and seeing you with inflows and everything that's been going on. So, you know, very excited for what we're going to talk about today.
Iyassu Essayas: Yeah. So before we dive in, just a quick reminder to our audience that, you know, the discussions that we have here are purely for educational purposes. And, you know, do not take this as investment advice. Like if you need investment advice, just go hire a financial advisor. Like they're that's what they do. They're they're really good at it. so just putting that out there as as usual for our audience members. but getting into the show, you know, Gabe Can can you just like introduce yourself to the audience and let know who you are, you know, your s your your story, your journey, and then yeah, let's just shine some light on you.
Gabe Rissman: Cool. Yeah, so I'll start with what my mission and vision is right now, and then I'll backtrack to how I got there. So right now, my goal and what I'm trying to do with our team is build the modern home for values-based financial advisors. And the modern home is very key because I think as the world has evolved, as this industry has grown, as the field has... expanded the offerings of what it's doing. We are seeing financial advisors that are in the value space in particular, but really across the board, looking for more and more services as their clients are demanding more and more from them. And so, know, the age of the financial advisor is not just picking investments anymore. It's providing comprehensive service to your client. on the emotional level of really getting to understand them on the investment side, on the financial planning side, helping with taxes, helping with really every aspect of their financial life. And that requires a really integrated tech experience and that requires really great stories to tell and really personalized solutions across the board. And so what we are doing at your stake and informative is trying to provide that. meeting advisors where they're at and what they need and helping advisors that are really spending so much time with clunky technology and trying to figure out how to do everything for their clients and taking a lot of that off their plates so they can really focus on the relationship and providing the amazing service. And so how do we get here? My story kind of started in 2012. I went into college studying computational astrophysics and philosophy. And it was a really fun combination. But I got really into data. I love the data. But all of the work that I was doing outside of the classroom was completely unrelated to physics and maybe everything's related to philosophy. But I was so fascinated and so I was at Yale and At the time, there was a lot of pressure on university endowments, in particular Yale, to evaluate and reevaluate their responsible investing policies. There was a campaign to be able to have endowments divest from fossil fuel companies. That evolved into a really nuanced look into what's going on in responsible investing. We worked with the endowment to actually talk to their private equity managers about climate risk. We worked with the endowment to, you know, they had large public equity positions. How could they engage with the companies in their portfolio about climate change? And then are there certain companies that are, you know, really not able to make the leap into this next era post-energy transition that maybe would be candidates for divestment? And all of that work made me very curious about the impact that investing has generally. And so we started your stake to combine, this is where the computational astrophysics data background comes in. How do we provide the data that is decision useful for investors and their clients? And what I learned about decision useful is that helping financial advisors tell the story. to their clients about what's actually going on in their portfolio, what they can do about it, and what that means from a risk perspective, what that means from a values alignment perspective, what that means from an impact perspective. It's so hard, or it was, I would say, so hard to communicate that to clients. And that was how I went from this college activism into what we're doing now is how do we help advisors tell that story and that's evolved into how do we generally help values-based advisors accomplish all the things that they need to do for their clients.
Iyassu Essayas: That's awesome. I mean, you know, generally I I love the whole just the vibe of helping. Like that's totally my vibe. I I love helping people out and figure out ways to like, you know, get them to succeed. I find joy in that. And it sounds like it's a core tenet of of what you guys are doing over there at at Formative and even at your stake, you know, it's you guys are just helping the advisors out. It it's I think for audience members who are not like we have a mix of advisors and and just you know retail c folks because we we are on just you know YouTube and and Spotify
Gabe Rissman: Mm-hmm.
Iyassu Essayas: and and Apple. So like we have a lot of retail folks who have financial advisors that listen in. And I think like I think what's not really described in what what it takes to run a financial advisory shop. I think it's pretty fascinating. So like there's there's kind of like two examples I like to use. It's like it's like that duck floating on the river, right? Or floating in the in the pond. And like the duck is like smoothly rolling. But if you look just underneath the water, like the legs are flapping like crazy, right?
Gabe Rissman: You
Iyassu Essayas: That's that's
Gabe Rissman: Mm-hmm.
Iyassu Essayas: kind of like the financial advisor world and and yeah the other example I like to use is like if you ever go for like the younger audience members like if you ever go to a festival like the customer experience is amazing but if you were to go to the other side like to see how production is putting on the festival and like all the it's like crazy back there. Like nothing is working, everything's late. It's it's just it's amazing how they even get these festivals to to run as smoothly smoothly as they do. And that's kind of like the financial advisor world where you as a client you're getting this awesome experience right personalization, all these reports, customized funds planning that really ties into your your life. But in the background, like there's all this crazy plumbing stuff that needs to be done. There's all like there's a lot of good stuff that just has to be done that's kind of chaotic for the
Gabe Rissman: Okay.
Iyassu Essayas: financial advisor that you don't get to see. Right. And but you guys help, right? You you go in there and you make you make their lives just a little bit easier by figuring all that stuff out for the advisor on the back end. Is that is that a fair fair
Gabe Rissman: Exactly.
Iyassu Essayas: way of yeah.
Gabe Rissman: I would say that's true of any industry that I've ever seen or any field that I've ever seen. would say, mean, because I studied physics, the amount that we know about the world and the deep levels of physics versus the amount that it seems like we know about the world. Yeah, I think everything is the legs flapping underneath the water. When things look smooth, that's almost always a mirage.
Iyassu Essayas: remind me again. Did you do were you was it was it you and your partner working in in your apartment when you first started your stick? Like it's like two two two dudes with some computers in in like your New York apartment. Or it might have been like Bronx. there we go.
Gabe Rissman: Well, it started out in my grandma's apartment. Yeah, that was number one. But yeah, it evolved in many different ways. We actually got a grant to launch through the entrepreneurial Institute. And when that grant ran out, we were going to move to New York, but realized that Costa Rica was a third of the price. And so we initially
Iyassu Essayas: Ha ha.
Gabe Rissman: launched your steak from the roof of a hostel in Costa Rica. A lot of scratchiness. It still continues, I'm in a wee work now.
Iyassu Essayas: Nice, nice. And we're we're gonna we're gonna talk about the conference in in a little bit. but Gabe's also putting
Gabe Rissman: Mm-hmm.
Iyassu Essayas: on a conference with his formative financial team. And so it's it's just quite a journey to see Gabe go from you know college graduate to tech entrepreneur and then to an RIA formative financial. Like it it's it's quite the journey and you know I'm rooting for you, Gabe, and and the rest of the team. you know, Patrick and and George and and everyone. but I I love these journey stories where you start out little and you know, it's kinda like Google, right? They start in their garages and then all of a sudden they're like this mega tech company, right? Like, I mean, you start in your grandma's apartment and look at you grow now.
Gabe Rissman: Yeah.
Iyassu Essayas: You're you're like officially an RA. That's that's crazy.
Gabe Rissman: For sure. And maybe I'm realizing for the audience, it might be helpful to describe what is your stake, what is formative. And then we can go into some of really good questions you put together. So your stake was what we initially created. It was that software solution to be able to help financial advisors help their clients understand the impact of their portfolios according to their specific values. So we really pushed back against what was very common at the time, which were top-down scores. And those top-down scores were determined by an analyst and it was one size fits all. And we said, let's make this bottom up. Yasu, you've many overlapping values with me, but we don't have the exact same, you know, no one has the exact same values. How can we make it easy for individual people to express what they specifically care about and then just map that to what's going on in their portfolio? And so that was your the initial iteration of your stake and we're still doing that. We're serving about thousand advisors today with those tools. then Formative is the rebrand of First Affirmative, which was a pioneer in socially responsible investing on the RIA side, the financial advisor side since 1988. And we had partnered with them for the last few years to build a personalized portfolio construction engine called VADIS, the Values Aligned Direct Index Solution. And that partnership was going very well. And we realized that we could combine our technology expertise with their operational infrastructure and expertise and create a tech-powered organization that could really be the engine and solve a lot of problems on the service and technology side together. for advisors that have clients that are interested in values-based and impact investing. And so your stake is still providing that software. And then Formative is powered by that software, but provides the full service experience for financial advisors that are looking for more than just the software. So that could be asset management, or that could be actually being under the Formative umbrella.
Iyassu Essayas: yeah, that's that's a great description. I think, yeah, for audience members that are not familiar with direct indexing, direct direct indexing is a very useful tax strategy for let's say let's say you have an investment in like a mutual fund that's done really, really well over time. Well, you have all these like capital gains that that you need to pay taxes on. And what val direct indexing does is It allows you to kind of offset those capital gains with losses. And so that your you know, your investments can still grow in value, but they will also be like maximized for tax efficiency so that you don't at the end of the day, you don't get this like incredibly large like tax bill that you have to you know pay off. And so so these folks over there, you know, at your stake in first affirmative and the rebrand formative created a direct indexing strategy that also reflects your values and that's that's the the Betis one. so it's really it's a really important tool in the toolkit for financial advisors for folks who for their clients who have these like in like they've done they knocked it out the park when it comes to the investment. Now they're worried about taxes.
Gabe Rissman: Yeah, direct indexing is such a powerful but also counterintuitive strategy. And it relies on like, what seems like the opposite of all the great investment advice of buy low, sell high, right? Because what direct
Iyassu Essayas: Yeah, yeah.
Gabe Rissman: indexing says is, okay, well, first, let's start what is direct indexing. Most people, I'm guessing listening to your podcast know what an index fund is, you you invest in the broad market. But an index fund is You invest in one thing, that's the broad market, and you own everything in the broad market. Direct indexing says, okay, well, what if we just actually invest in all these companies directly and do it at the same weights of the broad market, and then we just own everything individually? Okay, cool. Why would you do that? And this is where the buy low, sell high counterintuitiveness comes in, is that if I own every stock within, let's say, the ACWI, the All Country World Index, just a global stock index, Some of those stocks go down and you sell those stocks. Why do you sell those stocks if they go down? If you sell the stocks that go down, can capture that as a loss. You can write that off on your taxes essentially. But then are you losing out on value? Well, the cool thing about direct indexing is when you sell the stocks at a loss, you can buy similar stocks that are correlated. if that stock goes up again, you're buying something else that's likely to go up with it because it's correlated. And so you're basically able to get similar financial pure returns performance to that broad index. But you also are able to capture these additional tax losses along with that. And so it's a really, really cool strategy. And then the other cool thing is on the value side, well, There are optimization technology tools that say, okay, let's not own every company in this index. Let's remove some of the companies that don't align with my values or invest more in companies that do align with my values that are leaders that I really want to be invested in. And so there are algorithms that can still ensure that when you remove or tilt on companies, you can still get performance that is in line with the broad market. And so you get the tax and the values personalization benefits. And there's a whole bunch of other things, that can be a whole episode in itself.
Iyassu Essayas: Yeah, it's a really cool tool for for clients and I'm glad you guys figured it out. All right, so that's that's Gabe, intro to Gabe and formative and your stake and and you know direct indexing. we're gonna we're gonna move
Gabe Rissman: Yeah
Iyassu Essayas: on to the weekly recap and before we do, just a word from our sponsor. so I'm pretty excited to say that we we have our first sponsor for the Inside the Flows show. And today's episode is brought to you by Simon Knight, financial advisor with Edward Jones in Alamo, California. And Simon runs a planning first practice serving clients in all 50 states. Thank you, Simon, for being our sponsor today. Now back to the show. All right, welcome back, everybody, to Inside the Flows. It's Iyassu your host, and I'm with Gabe, First Affirmative, as our special guest. So we're gonna do the weekly recap, and this will be a quick one. not too many interesting stories out there this week, but regardless, you know, if you were reading the Wall Street Journal on Monday, you saw that the NASDAQ was is hitting new record highs. At the same time, like 10-year treasury yields are touching 24-year highs. And so, you know, the the basically the market's like shrugging off borrowing costs, you know, in favor of the AI boom. That that's that's essentially what's what's going on. And, you know, how this directly impacts your allocation in your funds. I don't know, but you should probably want to talk to your advisor and see what's what's going on and and get more informed. I was actually looking at it, Gabe, and I I don't I don't know what to if there's like a comment that you can have, but like interest rates for 30 year mortgages are like pumping to like seven percent and up. And I just remember when I bought my first house out in Oakland, I think my 30-year rate was fixed, it was like 3.6%. And even then I was pissed off. I was like, man, my mom's refinanced before me, and hers is at like one point nine percent. You know, and I'm just like, man, when is this? It's just kind of crazy how these numbers can impact like the the greater economy and You know, we're seeing it with
Gabe Rissman: Yeah.
Iyassu Essayas: like oil prices, we're seeing it with like just grocery shopping. I mean, I remember Nicki Minaj, not Nicki Minaj, it was Cardi B. Cardi B was comp complaining about grocery prices. I was like, Well when when a multi millionaire like Cardi B is complaining about, you know, grocery prices, you know, things are just, you know, things are getting too hot, man. so
Gabe Rissman: she has a really good brand consultant to keep her not don't be out of touch this is exactly what you should do
Iyassu Essayas: Yeah. Yeah. I don't know, like any any thoughts on just life being expensive or how how are you feeling it? Are you are you seeing it at the pump yourself?
Gabe Rissman: Life is expensive. I'm seeing it everywhere but the pump because I live in New York City so I don't have a car. yeah, everywhere else for sure.
Iyassu Essayas: Yeah. I you know when I was in San Francisco, I basically didn't have a car. so I was just like, Yeah, what what's the problem, guys? You know, gas prices going up,
Gabe Rissman: You
Iyassu Essayas: not my problem. but yeah, so like moving on to the middle of the week, there was a Barons article that came out and this this directly impacts financial advisors. So if you if you're an advisor or an RAA on Fidelity, they just up their minimum. to a hundred million like minimum asset levels for the RAAs to use their trading and custody platform. So if you're like a growing RAA and you don't meet that minimum, it's kind of interesting. You have until like the end of 2028 to kind of figure out how to kit how to get to that minimum or else, you know, you're you gotta find some alternatives. And so what that's doing is it's creating opportunities for other platforms to you know basically acquire new clients, new new RAs, new new financial advisors. And I think I think Barons had Bettermint CEO like quoted on there and and Betterment's like a competitor to to Fidelity, at least for the c the the custody business. any any did you see that or any thoughts on on on the minimums being raised and driving advisors out of you know Fidelity's platform?
Gabe Rissman: Yeah, I did see that. I've seen a lot of really thoughtful discussions. Some people are really defending fidelity, saying the business model, they have to have a business model that works. This is what they got to do. And then other people are saying they're really going to regret it because they're making a mistake. And a lot of people are going to leave. We'll see how things shake out. We are working with some advisors that are trying to transition their clients and we can help them with that. But I think there's still so much that still needs to come out for it to be clear exactly what the impacts of this are going to be. But definitely people moving custodians, we're seeing already and helping with that.
Iyassu Essayas: Yeah, it's it's one of those things where if you're like an asset manager and you're not having a great year, and then you decide to kind of change the the portfolio manager within that fund, what it does is it tri immediately triggers a conversation with everybody that like invests in your fund. And it's like, do you really want to do that? Do you really want to change the PMs right now at the worst possible
Gabe Rissman: Mm-hmm.
Iyassu Essayas: time? Because how many people are now gonna realize, like, I need to get out of this fund? Or Morningstar is gonna write a report, you know, about how the managers are changing and the strategy. Yeah, you know, it's what I don't know. That's that's what it reminded me of. It's it's it's like Fidelity's giving an excuse for the advisors on their platform to rethink custody. And it's pretty risky. I I mean, I'm sure they had some really smart finance folks who figured out, kind of like at Netflix,
Gabe Rissman: Mm-hmm.
Iyassu Essayas: right? They're like, Yeah, we're gonna up our subscription and The increase in in the subscription is gonna counterbalance the loss in, you know, customers. Like I'm sure they did s the math behind it, but I don't know, man. It's pretty risky. All right. So moving on to the the towards the end of the week, climate change was in the Wall Street Journal. there's a a new like rebranded energy conference out in London that the journal was writing on and basically the conversation was Hey, it's so gl it's so nice to not have to deal with the pesky climate change folks and Now all
Gabe Rissman: Yeah.
Iyassu Essayas: these oil executives are talking about instead of sustainability or climate change, they're talking about energy security, right? Because of the the war new with Iran and just all the like the straight of Hormuz and and and whatnot. I don't know if you've seen it, Gabe, and I'll just add a description. I just like looked up Valero, like they're a refiner, right? And I looked at their stock chart using like the Apple stocks app and it's like Exponential. I mean, it's like literally hockey stick up, you know. I don't it's it's actually kind of stunning to me how we went from hey, we gotta figure out how to consume less you know, fossil fuels to like, fossil fuels is really is like the most important thing in the world right now. It's literally driving like everything that we're you know, buying, selling. know, transporting, making, like it it is like a driver. outside of like AI, it's like the dr a driver of the economy. So I don't know. Any
Gabe Rissman: Yeah.
Iyassu Essayas: thoughts on that?
Gabe Rissman: I think it's connected to be, well, maybe not so much oil that's a part of it, but energy, energy is an AI story in many ways. And so we, actually put together a research piece on data centers and environmental impact. And a lot of these companies made, you know, these companies, meaning Meta, Google, the hyperscalers made climate commitments. and they don't know if they'll be able to meet those climate commitments anymore just because of the enormous energy demands. It's interesting because they still expect their renewable energy mix to increase. The percentage of renewable energy being used across everything that they do and society as a whole is increasing, but the absolute amount of fossil fuels are also going up just because the absolute amount of energy use is going up so much. So one last thing maybe just to close out and tie it back to the first thing you brought up in terms of the day-to-day. One thing that is really interesting when you brought up yields going up and the stock market going up too, I think a lot of financial advisors try to not think that they are smarter than the market and not time the market. And they see their job is to help their clients stay in the market because There's just so many studies and so much research that there's always exceptions, but a lot of people behaviorally make mistakes where they pull out of the market in a bad time and that really costs their long-term portfolio growth. And so I was looking up updates. Values-based investors that align their investments with what they care about have way better behaviors, investing behaviors. than standard investors. They're much less volatile. They're much less likely to pull their money out when the market goes down. That really benefits them in the long run from a behavioral perspective because when they're connected to a story and a thesis and they know what their money is for they actually were intentional about what is going on in their portfolio, at least at, you know, better outcomes. And there are several studies that have been showing that over the last decade or so. That, I think, is my main takeaway from this week.
Iyassu Essayas: That's interesting. So you're saying that values based investors, you know, are stickier clients for financial advisors. That's I I haven't heard that one before. So that's that's really interesting.
Gabe Rissman: partly stick to your clients and also just less likely to call up their advisor and say, I want to get out of the market, know, sell everything because they believe in what you're doing.
Iyassu Essayas: Yeah, that's pretty cool. ready to move on to our special topic, Gabe? All
Gabe Rissman: Let's do it.
Iyassu Essayas: right. So let's so Gabe and the first first affirmative slash formative team are putting on a conference called Growth for Impact. do you want to just talk a little bit about it? Like what's what's it about? Just intro to the to the audience. I think it's a really cool conference and it has some like roots in the history of sustainable investing. So do you want to just intro the audience to what it is?
Gabe Rissman: Absolutely. So Growth for Impact is a conference for about 300 people, financial advisor focused. And it's going to be in Phoenix from November 8th through 11th. You can find out more. You can Google formative growth for impact. I'm sure we can do show notes or something like that. And this conference is the evolution of, there's been a few different rebrands, but started out as SRI in the Rockies, the SRI conference. several different names, but it's been going on for over 35 years. And it's the main conference where financial advisors that care about values-based investing have always come to learn best practices, learn what's going on in the world and issues that clients might care about and how that can be reflected in portfolios. And then also convene with each other and form community. The biggest difference that I've seen in this conference versus any other conference I've been to. is the amount of co-op in the co-opetition that's happening,
Iyassu Essayas: Yeah.
Gabe Rissman: right? At all these conferences, advisors sometimes share best practices about what they're doing, but the genuineness with which people in this audience and that come to this conference really want to help their peers succeed and help grow the community and help this general concept of values-based investing succeed overall blows my mind. There are so many examples of new advisors coming in and pioneers and leaders in the space, taking them under their wing and really introducing them to community and helping them from a very genuine perspective, not a self-interested motive, which is just quite different. And I think it's exemplified there. are two things that I love that always happen at this conference. One is at this conference, we've always brought out the hotel staff and giving them a round of applause and appreciation. You know, we, call them out and we really thank them. And, I just love, you know, I didn't come up with that idea, but I think it's amazing that that's something that's been a tradition. And the second is there's a fixture called why we do what we do. Where three people go up and kind of give their hero's journey, but it really gets vulnerable. It really gets into who are you? What's your mission? Like, what are you all about? And I think that's another thing that is really. really cool about this space is the level of community, the level of mentorship, the level of vulnerability and really deep connection between advisors and also advisors with their clients. When you're talking about values, it's yes, it's social and environmental issues going on in the world, but it's also who are you and what do you want? And it's really beautiful. Yasu, I mean, you've been a fixture of this community for a while. Do you want to share some of your favorite stories from or experiences or what you love about it.
Iyassu Essayas: Yeah, no, i I mean, everything that you just said, Gabe, is exactly you know how I feel about the conference. I I still go I'm old school, I'm a like really old, and I always think of it as the SRI
Gabe Rissman: Good one.
Iyassu Essayas: and the Rockies conference. But I I think I think the the key point to the conference is that if you want to understand like the cutting edge of sustainable investing, what new emerging solutions or tools or whatnot. you want to go to this conference because it's a it's a practitioner's first conference. It it's less than a like a there's a lot of other conferences that are like sponsor first or you know, there's some kind of agenda that that's going on with that with that conference. But this one is more practitioner first. So if you're a financial advisor and you really do want to learn, you know, this is N network, this is like the the kind of conference you want to go to to to stay ahead. because there's a lot of really innovative ways that folks are using finance that that stem from this conference. And there is like a help all vibe to the conference too. I I've said this to many financial advisors, bes especially on inflows. there's so much money to manage in the United States that these advisors are not really they're not competing with each other. they're really not. It's not like the asset management space where there, you know, there is a finite amount of dollars that you're competing competing for. So for the advisors, if you're not really competing with each other, then why not leverage each other? And this this conference is a really good example of of advisors, you know, building their books and building their practices and and bringing in tools to help grow their grow their business amongst each other. And so, you know, there's there's there's power in community and the the conference is a really good example of that.
Gabe Rissman: I love that you brought up the growth. That was one thing that I missed in what I was describing, but this year's title is growth for impact. And that will be the theme for quite a while because a lot of advisors, our whole thesis at your stake Formative is how do we make things more efficient and provide more services to help advisors grow? And that means grow the movement for values based on impact investing. And that means grow their practice and their revenue. And that means grow the amount of clients that they can surf and that means grow the amount of clients that have better financial outcomes and security and peace of mind because advisors in our community are able to work with more people. so a lot of our focus is going to be on what you can do to unlock that growth from marketing, from efficiencies, from different strategies, from best practices, from a whole bunch of different things. And so that will be a really important theme because You know, this is a movement. And as we grow that movement, the impact of everything that we're doing scales as well. And so that's a huge focus for us.
Iyassu Essayas: Yeah. And and Gabe, do you want to just talk a little bit about the importance of having like an in-person event versus like, you know, virtual webinar conferences that kind of took took over during COVID?
Gabe Rissman: Yeah, I've never made a friend at a virtual conference.
Iyassu Essayas: Yeah.
Gabe Rissman: That I think is the biggest difference is, you know, when the sessions are not happening, you go and step out and get to meet people. You know, there's a lot of stories of advisors that found their succession plan by being at the conference and sitting next to someone at lunch that you never otherwise talk to. It's not just about the learning, it's about the connections. And that's why the in-person I think is so critical.
Iyassu Essayas: Yeah, so if you're if you're a financial advisor and you are thinking about, hey, what does this next generation of clients look like? And how do I service them? I I do think this Growth for Impact conference is gonna be a really good educational course for you about what the next generation cares about. Cause This is like millennials and Gen Z and Gen Ys. Like, yeah, they haven't forgotten about the climate. Like they really haven't. And you need to be prepared because when they inherit their parents' you know wealth, you need to be able to have those conversations with them. And if you can't, like these these kids are really quick, man. They'll just go on TikTok, they'll go on Google and find a financial advisor that that does. So I don't know. It's almost like you want to kind of future-proof your your business by you know coming to this conference and learning as much as you can. Because that's that's where in my opinion, I think that's where the money is going. It's going to a new generation of really sustainably savvy, you know, kids. When when I grew up, like it was it burned in my head, you know, recycle, reduce, reuse, right? So like the the the hell and close the loop, right? So like, yeah, you're getting that, but you know, on more sophisticated sustainability issues that these kids are really smart on. So
Gabe Rissman: Yeah, I would love to add to that in terms of this generation. So, values-based, socially responsible investing, there's so many different terms. I prefer values-based because values-based really conveys bottom up, it's what you care about, what are your values, how do we align your portfolio with that. And then impact as well, there are shareholder engagement or private investing strategies that can really deliver impact. So I often say values-based or impact investing. That really was on a rocket ship. from about 2019 to early 2022. And then kind of fell off a cliff in many ways. A lot of people started to lose trust. There was a lot of political pushback. There was a lot of large institutions that went all in and then realized this really wasn't for them. And so there was a flat period for 2022 through I would say 2025. where there wasn't as much growth or engagement in values-based investing. But wow, 2026 has come back so strong and it's come back in, I think, a sustainable way, not even environmentally sustainable when I say it this way, but sustainable interest and sustainable demand and sustainable growth. And I think that is for a few reasons. the whole AI is becoming a theme that everyone is talking about all the time and it so heavily relates to people's portfolios. And this is now changing a little bit, but so much of it is not partisan. You know, I see Bernie Sanders working with Steve Bannon. right. There's, it is
Iyassu Essayas: That's wild.
Gabe Rissman: so interesting and people, people see AI all the time in their daily lives. There are so many different issues that impact it. There's the environmental concerns, there's weapons, there's surveillance, there's concentration of power, there's child safety, there's job loss, there's existential risk, there's, that's one quarter of it, right? There's algorithmic bias, there's discrimination, there's surveillance, maybe I already mentioned that one,
Iyassu Essayas: Yeah.
Gabe Rissman: cybersecurity, chemical weapons, they're making viruses now. Like every issue touches this and more and more people like all the time are trying to see their AI exposures in their portfolio. And in particular, partly because of the job loss part, the next generation is the most anti-AI because they see it, you know, they don't, they don't see the prospects of what their life is going to be. What's going to happen? you know, they were sold this story of become a coder, but now they, was thinking all the coding job anyway.
Iyassu Essayas: Yeah.
Gabe Rissman: yeah, the next generation, it feels very strongly against AI, those inheritors, but I think across the board, there's a lot of anti-AI sentiment. And so I think I'm answering what your last question was going to be in advance of, you know, one tidbit, but we are seeing so much interest in this and so much curiosity and so many advisors now trying to figure out how do I respond to all the different concerns people have about AI? How do I tell the stories about AI? How do I see what's going on within my portfolio? And there are people that also really like AI and believe in the boom and think it's going to cure a lot of diseases and there's a lot of validity to that. I think both sides are very valid and it's so important for advisors to be on top of that and more and more people all the time are trying to see what they specifically care about reflected in their portfolios. And so, yeah, from a growth perspective, from a next generation perspective, and from a current generation perspective, I think this issue is really something that people care about and will continue to care about and will be a lot less divisive than other issues that have been driving the value space investing movement in the past.
Iyassu Essayas: It's very well said, Gabe. as as we kind of wrap up the show, do you wanna I I like to this is my favorite question. Like what what are you looking forward to next week?
Gabe Rissman: I'm looking forward to getting the last registrations finalized at the conference.
Iyassu Essayas: Yeah.
Gabe Rissman: You know, we're in the final stretch and there's only a few spots left. And I'm looking forward to celebrating my younger brother's 30th birthday this weekend,
Iyassu Essayas: Nice.
Gabe Rissman: which will be really nice. And I'm just generally really excited. We're building a lot of a lot of very cool technology that we're going to unveil at the conference in a month. And so it's been super fun building a lot of things that will make a lot of advisors lives easier and their clients lives better as well. So just a love and life right now, Iyassu How about you?
Iyassu Essayas: Yeah, same, same. love and life. I'm all also building on on inflows and and I'm gonna include the the link to your conference inside the the description. So all the all that good stuff's gonna be in there. so I'm really excited. I'm also going to the conference too. So it's good, it's gonna feel good to be back. But I wanna you know let the audience members know if you wanna hear more about Gabe and his journey through Yale all the way to becoming a host and creator and originator for a really cool conference. You know, please join us on Inflows. I will post the show in there. If you're a financial advisor, asset manager, anyone who works for a registered investment and registered investment advisor firm, it's inflows is free to join, it's it's free to use. Come join the conversation, be part of the the community. And again, Gabe, thanks for being our special guest today.
Gabe Rissman: Thank so much for a great conversation.
Iyassu Essayas: Yeah.
Gabe Rissman: That I think is the biggest difference is, you know, when the sessions are not happening, you go and step out and get to meet people. You know, there's a lot of stories of advisors that found their succession plan by being at the conference and sitting next to someone at lunch that you never otherwise talk to. It's not just about the learning, it's about the connections. cybersecurity, chemical weapons, they're making viruses now. Like every issue touches this and more and more people like all the time are trying to see their AI exposures in their portfolio. And in particular, partly because of the job loss part, the next generation is the most anti-AI because they see it, you know, they don't, they don't see the prospects of what their life is going to be.
Iyassu Essayas: Welcome everybody to inside the flows. I'm your host, Iyassu Essayas, and I have a very special guest with me today, Gabe Rizman. How you doing, Gabe?
Gabe Rissman: I'm great. Thanks so much for having me on, Asu.
Iyassu Essayas: It's an absolute pleasure to have you on. yeah, I I think for folks that that don't know, I I met Gabe years ago at a conference and you know, I was I just remember like the having this like lasting impression that you were like next gen, right? The next generation. And I was like, I gotta stay in touch with this guy, man. Like
Gabe Rissman: Haha.
Iyassu Essayas: this guy's gonna he's gonna do some things and I you know, I I don't think I was wrong on on any of my assumptions about you. So Really excited to have you on here, Gabe, and really, really excited to talk about what you're working on and and the conference that that's coming up that that you're you're hosting and you know to really shine some light on you for our audience members, because you you are one of the like the movers and shakers in our in our industry. So, you know, thanks for taking the time to to be on the show and and for speaking to our audience.
Gabe Rissman: Absolutely, and I've loved how we've stayed connected through our parallel journeys and seeing you with inflows and everything that's been going on. So, you know, very excited for what we're going to talk about today.
Iyassu Essayas: Yeah. So before we dive in, just a quick reminder to our audience that, you know, the discussions that we have here are purely for educational purposes. And, you know, do not take this as investment advice. Like if you need investment advice, just go hire a financial advisor. Like they're that's what they do. They're they're really good at it. so just putting that out there as as usual for our audience members. but getting into the show, you know, Gabe Can can you just like introduce yourself to the audience and let know who you are, you know, your s your your story, your journey, and then yeah, let's just shine some light on you.
Gabe Rissman: Cool. Yeah, so I'll start with what my mission and vision is right now, and then I'll backtrack to how I got there. So right now, my goal and what I'm trying to do with our team is build the modern home for values-based financial advisors. And the modern home is very key because I think as the world has evolved, as this industry has grown, as the field has... expanded the offerings of what it's doing. We are seeing financial advisors that are in the value space in particular, but really across the board, looking for more and more services as their clients are demanding more and more from them. And so, know, the age of the financial advisor is not just picking investments anymore. It's providing comprehensive service to your client. on the emotional level of really getting to understand them on the investment side, on the financial planning side, helping with taxes, helping with really every aspect of their financial life. And that requires a really integrated tech experience and that requires really great stories to tell and really personalized solutions across the board. And so what we are doing at your stake and informative is trying to provide that. meeting advisors where they're at and what they need and helping advisors that are really spending so much time with clunky technology and trying to figure out how to do everything for their clients and taking a lot of that off their plates so they can really focus on the relationship and providing the amazing service. And so how do we get here? My story kind of started in 2012. I went into college studying computational astrophysics and philosophy. And it was a really fun combination. But I got really into data. I love the data. But all of the work that I was doing outside of the classroom was completely unrelated to physics and maybe everything's related to philosophy. But I was so fascinated and so I was at Yale and At the time, there was a lot of pressure on university endowments, in particular Yale, to evaluate and reevaluate their responsible investing policies. There was a campaign to be able to have endowments divest from fossil fuel companies. That evolved into a really nuanced look into what's going on in responsible investing. We worked with the endowment to actually talk to their private equity managers about climate risk. We worked with the endowment to, you know, they had large public equity positions. How could they engage with the companies in their portfolio about climate change? And then are there certain companies that are, you know, really not able to make the leap into this next era post-energy transition that maybe would be candidates for divestment? And all of that work made me very curious about the impact that investing has generally. And so we started your stake to combine, this is where the computational astrophysics data background comes in. How do we provide the data that is decision useful for investors and their clients? And what I learned about decision useful is that helping financial advisors tell the story. to their clients about what's actually going on in their portfolio, what they can do about it, and what that means from a risk perspective, what that means from a values alignment perspective, what that means from an impact perspective. It's so hard, or it was, I would say, so hard to communicate that to clients. And that was how I went from this college activism into what we're doing now is how do we help advisors tell that story and that's evolved into how do we generally help values-based advisors accomplish all the things that they need to do for their clients.
Iyassu Essayas: That's awesome. I mean, you know, generally I I love the whole just the vibe of helping. Like that's totally my vibe. I I love helping people out and figure out ways to like, you know, get them to succeed. I find joy in that. And it sounds like it's a core tenet of of what you guys are doing over there at at Formative and even at your stake, you know, it's you guys are just helping the advisors out. It it's I think for audience members who are not like we have a mix of advisors and and just you know retail c folks because we we are on just you know YouTube and and Spotify
Gabe Rissman: Mm-hmm.
Iyassu Essayas: and and Apple. So like we have a lot of retail folks who have financial advisors that listen in. And I think like I think what's not really described in what what it takes to run a financial advisory shop. I think it's pretty fascinating. So like there's there's kind of like two examples I like to use. It's like it's like that duck floating on the river, right? Or floating in the in the pond. And like the duck is like smoothly rolling. But if you look just underneath the water, like the legs are flapping like crazy, right?
Gabe Rissman: You
Iyassu Essayas: That's that's
Gabe Rissman: Mm-hmm.
Iyassu Essayas: kind of like the financial advisor world and and yeah the other example I like to use is like if you ever go for like the younger audience members like if you ever go to a festival like the customer experience is amazing but if you were to go to the other side like to see how production is putting on the festival and like all the it's like crazy back there. Like nothing is working, everything's late. It's it's just it's amazing how they even get these festivals to to run as smoothly smoothly as they do. And that's kind of like the financial advisor world where you as a client you're getting this awesome experience right personalization, all these reports, customized funds planning that really ties into your your life. But in the background, like there's all this crazy plumbing stuff that needs to be done. There's all like there's a lot of good stuff that just has to be done that's kind of chaotic for the
Gabe Rissman: Okay.
Iyassu Essayas: financial advisor that you don't get to see. Right. And but you guys help, right? You you go in there and you make you make their lives just a little bit easier by figuring all that stuff out for the advisor on the back end. Is that is that a fair fair
Gabe Rissman: Exactly.
Iyassu Essayas: way of yeah.
Gabe Rissman: I would say that's true of any industry that I've ever seen or any field that I've ever seen. would say, mean, because I studied physics, the amount that we know about the world and the deep levels of physics versus the amount that it seems like we know about the world. Yeah, I think everything is the legs flapping underneath the water. When things look smooth, that's almost always a mirage.
Iyassu Essayas: remind me again. Did you do were you was it was it you and your partner working in in your apartment when you first started your stick? Like it's like two two two dudes with some computers in in like your New York apartment. Or it might have been like Bronx. there we go.
Gabe Rissman: Well, it started out in my grandma's apartment. Yeah, that was number one. But yeah, it evolved in many different ways. We actually got a grant to launch through the entrepreneurial Institute. And when that grant ran out, we were going to move to New York, but realized that Costa Rica was a third of the price. And so we initially
Iyassu Essayas: Ha ha.
Gabe Rissman: launched your steak from the roof of a hostel in Costa Rica. A lot of scratchiness. It still continues, I'm in a wee work now.
Iyassu Essayas: Nice, nice. And we're we're gonna we're gonna talk about the conference in in a little bit. but Gabe's also putting
Gabe Rissman: Mm-hmm.
Iyassu Essayas: on a conference with his formative financial team. And so it's it's just quite a journey to see Gabe go from you know college graduate to tech entrepreneur and then to an RIA formative financial. Like it it's it's quite the journey and you know I'm rooting for you, Gabe, and and the rest of the team. you know, Patrick and and George and and everyone. but I I love these journey stories where you start out little and you know, it's kinda like Google, right? They start in their garages and then all of a sudden they're like this mega tech company, right? Like, I mean, you start in your grandma's apartment and look at you grow now.
Gabe Rissman: Yeah.
Iyassu Essayas: You're you're like officially an RA. That's that's crazy.
Gabe Rissman: For sure. And maybe I'm realizing for the audience, it might be helpful to describe what is your stake, what is formative. And then we can go into some of really good questions you put together. So your stake was what we initially created. It was that software solution to be able to help financial advisors help their clients understand the impact of their portfolios according to their specific values. So we really pushed back against what was very common at the time, which were top-down scores. And those top-down scores were determined by an analyst and it was one size fits all. And we said, let's make this bottom up. Yasu, you've many overlapping values with me, but we don't have the exact same, you know, no one has the exact same values. How can we make it easy for individual people to express what they specifically care about and then just map that to what's going on in their portfolio? And so that was your the initial iteration of your stake and we're still doing that. We're serving about thousand advisors today with those tools. then Formative is the rebrand of First Affirmative, which was a pioneer in socially responsible investing on the RIA side, the financial advisor side since 1988. And we had partnered with them for the last few years to build a personalized portfolio construction engine called VADIS, the Values Aligned Direct Index Solution. And that partnership was going very well. And we realized that we could combine our technology expertise with their operational infrastructure and expertise and create a tech-powered organization that could really be the engine and solve a lot of problems on the service and technology side together. for advisors that have clients that are interested in values-based and impact investing. And so your stake is still providing that software. And then Formative is powered by that software, but provides the full service experience for financial advisors that are looking for more than just the software. So that could be asset management, or that could be actually being under the Formative umbrella.
Iyassu Essayas: yeah, that's that's a great description. I think, yeah, for audience members that are not familiar with direct indexing, direct direct indexing is a very useful tax strategy for let's say let's say you have an investment in like a mutual fund that's done really, really well over time. Well, you have all these like capital gains that that you need to pay taxes on. And what val direct indexing does is It allows you to kind of offset those capital gains with losses. And so that your you know, your investments can still grow in value, but they will also be like maximized for tax efficiency so that you don't at the end of the day, you don't get this like incredibly large like tax bill that you have to you know pay off. And so so these folks over there, you know, at your stake in first affirmative and the rebrand formative created a direct indexing strategy that also reflects your values and that's that's the the Betis one. so it's really it's a really important tool in the toolkit for financial advisors for folks who for their clients who have these like in like they've done they knocked it out the park when it comes to the investment. Now they're worried about taxes.
Gabe Rissman: Yeah, direct indexing is such a powerful but also counterintuitive strategy. And it relies on like, what seems like the opposite of all the great investment advice of buy low, sell high, right? Because what direct
Iyassu Essayas: Yeah, yeah.
Gabe Rissman: indexing says is, okay, well, first, let's start what is direct indexing. Most people, I'm guessing listening to your podcast know what an index fund is, you you invest in the broad market. But an index fund is You invest in one thing, that's the broad market, and you own everything in the broad market. Direct indexing says, okay, well, what if we just actually invest in all these companies directly and do it at the same weights of the broad market, and then we just own everything individually? Okay, cool. Why would you do that? And this is where the buy low, sell high counterintuitiveness comes in, is that if I own every stock within, let's say, the ACWI, the All Country World Index, just a global stock index, Some of those stocks go down and you sell those stocks. Why do you sell those stocks if they go down? If you sell the stocks that go down, can capture that as a loss. You can write that off on your taxes essentially. But then are you losing out on value? Well, the cool thing about direct indexing is when you sell the stocks at a loss, you can buy similar stocks that are correlated. if that stock goes up again, you're buying something else that's likely to go up with it because it's correlated. And so you're basically able to get similar financial pure returns performance to that broad index. But you also are able to capture these additional tax losses along with that. And so it's a really, really cool strategy. And then the other cool thing is on the value side, well, There are optimization technology tools that say, okay, let's not own every company in this index. Let's remove some of the companies that don't align with my values or invest more in companies that do align with my values that are leaders that I really want to be invested in. And so there are algorithms that can still ensure that when you remove or tilt on companies, you can still get performance that is in line with the broad market. And so you get the tax and the values personalization benefits. And there's a whole bunch of other things, that can be a whole episode in itself.
Iyassu Essayas: Yeah, it's a really cool tool for for clients and I'm glad you guys figured it out. All right, so that's that's Gabe, intro to Gabe and formative and your stake and and you know direct indexing. we're gonna we're gonna move
Gabe Rissman: Yeah
Iyassu Essayas: on to the weekly recap and before we do, just a word from our sponsor. so I'm pretty excited to say that we we have our first sponsor for the Inside the Flows show. And today's episode is brought to you by Simon Knight, financial advisor with Edward Jones in Alamo, California. And Simon runs a planning first practice serving clients in all 50 states. Thank you, Simon, for being our sponsor today. Now back to the show. All right, welcome back, everybody, to Inside the Flows. It's Iyassu your host, and I'm with Gabe, First Affirmative, as our special guest. So we're gonna do the weekly recap, and this will be a quick one. not too many interesting stories out there this week, but regardless, you know, if you were reading the Wall Street Journal on Monday, you saw that the NASDAQ was is hitting new record highs. At the same time, like 10-year treasury yields are touching 24-year highs. And so, you know, the the basically the market's like shrugging off borrowing costs, you know, in favor of the AI boom. That that's that's essentially what's what's going on. And, you know, how this directly impacts your allocation in your funds. I don't know, but you should probably want to talk to your advisor and see what's what's going on and and get more informed. I was actually looking at it, Gabe, and I I don't I don't know what to if there's like a comment that you can have, but like interest rates for 30 year mortgages are like pumping to like seven percent and up. And I just remember when I bought my first house out in Oakland, I think my 30-year rate was fixed, it was like 3.6%. And even then I was pissed off. I was like, man, my mom's refinanced before me, and hers is at like one point nine percent. You know, and I'm just like, man, when is this? It's just kind of crazy how these numbers can impact like the the greater economy and You know, we're seeing it with
Gabe Rissman: Yeah.
Iyassu Essayas: like oil prices, we're seeing it with like just grocery shopping. I mean, I remember Nicki Minaj, not Nicki Minaj, it was Cardi B. Cardi B was comp complaining about grocery prices. I was like, Well when when a multi millionaire like Cardi B is complaining about, you know, grocery prices, you know, things are just, you know, things are getting too hot, man. so
Gabe Rissman: she has a really good brand consultant to keep her not don't be out of touch this is exactly what you should do
Iyassu Essayas: Yeah. Yeah. I don't know, like any any thoughts on just life being expensive or how how are you feeling it? Are you are you seeing it at the pump yourself?
Gabe Rissman: Life is expensive. I'm seeing it everywhere but the pump because I live in New York City so I don't have a car. yeah, everywhere else for sure.
Iyassu Essayas: Yeah. I you know when I was in San Francisco, I basically didn't have a car. so I was just like, Yeah, what what's the problem, guys? You know, gas prices going up,
Gabe Rissman: You
Iyassu Essayas: not my problem. but yeah, so like moving on to the middle of the week, there was a Barons article that came out and this this directly impacts financial advisors. So if you if you're an advisor or an RAA on Fidelity, they just up their minimum. to a hundred million like minimum asset levels for the RAAs to use their trading and custody platform. So if you're like a growing RAA and you don't meet that minimum, it's kind of interesting. You have until like the end of 2028 to kind of figure out how to kit how to get to that minimum or else, you know, you're you gotta find some alternatives. And so what that's doing is it's creating opportunities for other platforms to you know basically acquire new clients, new new RAs, new new financial advisors. And I think I think Barons had Bettermint CEO like quoted on there and and Betterment's like a competitor to to Fidelity, at least for the c the the custody business. any any did you see that or any thoughts on on on the minimums being raised and driving advisors out of you know Fidelity's platform?
Gabe Rissman: Yeah, I did see that. I've seen a lot of really thoughtful discussions. Some people are really defending fidelity, saying the business model, they have to have a business model that works. This is what they got to do. And then other people are saying they're really going to regret it because they're making a mistake. And a lot of people are going to leave. We'll see how things shake out. We are working with some advisors that are trying to transition their clients and we can help them with that. But I think there's still so much that still needs to come out for it to be clear exactly what the impacts of this are going to be. But definitely people moving custodians, we're seeing already and helping with that.
Iyassu Essayas: Yeah, it's it's one of those things where if you're like an asset manager and you're not having a great year, and then you decide to kind of change the the portfolio manager within that fund, what it does is it tri immediately triggers a conversation with everybody that like invests in your fund. And it's like, do you really want to do that? Do you really want to change the PMs right now at the worst possible
Gabe Rissman: Mm-hmm.
Iyassu Essayas: time? Because how many people are now gonna realize, like, I need to get out of this fund? Or Morningstar is gonna write a report, you know, about how the managers are changing and the strategy. Yeah, you know, it's what I don't know. That's that's what it reminded me of. It's it's it's like Fidelity's giving an excuse for the advisors on their platform to rethink custody. And it's pretty risky. I I mean, I'm sure they had some really smart finance folks who figured out, kind of like at Netflix,
Gabe Rissman: Mm-hmm.
Iyassu Essayas: right? They're like, Yeah, we're gonna up our subscription and The increase in in the subscription is gonna counterbalance the loss in, you know, customers. Like I'm sure they did s the math behind it, but I don't know, man. It's pretty risky. All right. So moving on to the the towards the end of the week, climate change was in the Wall Street Journal. there's a a new like rebranded energy conference out in London that the journal was writing on and basically the conversation was Hey, it's so gl it's so nice to not have to deal with the pesky climate change folks and Now all
Gabe Rissman: Yeah.
Iyassu Essayas: these oil executives are talking about instead of sustainability or climate change, they're talking about energy security, right? Because of the the war new with Iran and just all the like the straight of Hormuz and and and whatnot. I don't know if you've seen it, Gabe, and I'll just add a description. I just like looked up Valero, like they're a refiner, right? And I looked at their stock chart using like the Apple stocks app and it's like Exponential. I mean, it's like literally hockey stick up, you know. I don't it's it's actually kind of stunning to me how we went from hey, we gotta figure out how to consume less you know, fossil fuels to like, fossil fuels is really is like the most important thing in the world right now. It's literally driving like everything that we're you know, buying, selling. know, transporting, making, like it it is like a driver. outside of like AI, it's like the dr a driver of the economy. So I don't know. Any
Gabe Rissman: Yeah.
Iyassu Essayas: thoughts on that?
Gabe Rissman: I think it's connected to be, well, maybe not so much oil that's a part of it, but energy, energy is an AI story in many ways. And so we, actually put together a research piece on data centers and environmental impact. And a lot of these companies made, you know, these companies, meaning Meta, Google, the hyperscalers made climate commitments. and they don't know if they'll be able to meet those climate commitments anymore just because of the enormous energy demands. It's interesting because they still expect their renewable energy mix to increase. The percentage of renewable energy being used across everything that they do and society as a whole is increasing, but the absolute amount of fossil fuels are also going up just because the absolute amount of energy use is going up so much. So one last thing maybe just to close out and tie it back to the first thing you brought up in terms of the day-to-day. One thing that is really interesting when you brought up yields going up and the stock market going up too, I think a lot of financial advisors try to not think that they are smarter than the market and not time the market. And they see their job is to help their clients stay in the market because There's just so many studies and so much research that there's always exceptions, but a lot of people behaviorally make mistakes where they pull out of the market in a bad time and that really costs their long-term portfolio growth. And so I was looking up updates. Values-based investors that align their investments with what they care about have way better behaviors, investing behaviors. than standard investors. They're much less volatile. They're much less likely to pull their money out when the market goes down. That really benefits them in the long run from a behavioral perspective because when they're connected to a story and a thesis and they know what their money is for they actually were intentional about what is going on in their portfolio, at least at, you know, better outcomes. And there are several studies that have been showing that over the last decade or so. That, I think, is my main takeaway from this week.
Iyassu Essayas: That's interesting. So you're saying that values based investors, you know, are stickier clients for financial advisors. That's I I haven't heard that one before. So that's that's really interesting.
Gabe Rissman: partly stick to your clients and also just less likely to call up their advisor and say, I want to get out of the market, know, sell everything because they believe in what you're doing.
Iyassu Essayas: Yeah, that's pretty cool. ready to move on to our special topic, Gabe? All
Gabe Rissman: Let's do it.
Iyassu Essayas: right. So let's so Gabe and the first first affirmative slash formative team are putting on a conference called Growth for Impact. do you want to just talk a little bit about it? Like what's what's it about? Just intro to the to the audience. I think it's a really cool conference and it has some like roots in the history of sustainable investing. So do you want to just intro the audience to what it is?
Gabe Rissman: Absolutely. So Growth for Impact is a conference for about 300 people, financial advisor focused. And it's going to be in Phoenix from November 8th through 11th. You can find out more. You can Google formative growth for impact. I'm sure we can do show notes or something like that. And this conference is the evolution of, there's been a few different rebrands, but started out as SRI in the Rockies, the SRI conference. several different names, but it's been going on for over 35 years. And it's the main conference where financial advisors that care about values-based investing have always come to learn best practices, learn what's going on in the world and issues that clients might care about and how that can be reflected in portfolios. And then also convene with each other and form community. The biggest difference that I've seen in this conference versus any other conference I've been to. is the amount of co-op in the co-opetition that's happening,
Iyassu Essayas: Yeah.
Gabe Rissman: right? At all these conferences, advisors sometimes share best practices about what they're doing, but the genuineness with which people in this audience and that come to this conference really want to help their peers succeed and help grow the community and help this general concept of values-based investing succeed overall blows my mind. There are so many examples of new advisors coming in and pioneers and leaders in the space, taking them under their wing and really introducing them to community and helping them from a very genuine perspective, not a self-interested motive, which is just quite different. And I think it's exemplified there. are two things that I love that always happen at this conference. One is at this conference, we've always brought out the hotel staff and giving them a round of applause and appreciation. You know, we, call them out and we really thank them. And, I just love, you know, I didn't come up with that idea, but I think it's amazing that that's something that's been a tradition. And the second is there's a fixture called why we do what we do. Where three people go up and kind of give their hero's journey, but it really gets vulnerable. It really gets into who are you? What's your mission? Like, what are you all about? And I think that's another thing that is really. really cool about this space is the level of community, the level of mentorship, the level of vulnerability and really deep connection between advisors and also advisors with their clients. When you're talking about values, it's yes, it's social and environmental issues going on in the world, but it's also who are you and what do you want? And it's really beautiful. Yasu, I mean, you've been a fixture of this community for a while. Do you want to share some of your favorite stories from or experiences or what you love about it.
Iyassu Essayas: Yeah, no, i I mean, everything that you just said, Gabe, is exactly you know how I feel about the conference. I I still go I'm old school, I'm a like really old, and I always think of it as the SRI
Gabe Rissman: Good one.
Iyassu Essayas: and the Rockies conference. But I I think I think the the key point to the conference is that if you want to understand like the cutting edge of sustainable investing, what new emerging solutions or tools or whatnot. you want to go to this conference because it's a it's a practitioner's first conference. It it's less than a like a there's a lot of other conferences that are like sponsor first or you know, there's some kind of agenda that that's going on with that with that conference. But this one is more practitioner first. So if you're a financial advisor and you really do want to learn, you know, this is N network, this is like the the kind of conference you want to go to to to stay ahead. because there's a lot of really innovative ways that folks are using finance that that stem from this conference. And there is like a help all vibe to the conference too. I I've said this to many financial advisors, bes especially on inflows. there's so much money to manage in the United States that these advisors are not really they're not competing with each other. they're really not. It's not like the asset management space where there, you know, there is a finite amount of dollars that you're competing competing for. So for the advisors, if you're not really competing with each other, then why not leverage each other? And this this conference is a really good example of of advisors, you know, building their books and building their practices and and bringing in tools to help grow their grow their business amongst each other. And so, you know, there's there's there's power in community and the the conference is a really good example of that.
Gabe Rissman: I love that you brought up the growth. That was one thing that I missed in what I was describing, but this year's title is growth for impact. And that will be the theme for quite a while because a lot of advisors, our whole thesis at your stake Formative is how do we make things more efficient and provide more services to help advisors grow? And that means grow the movement for values based on impact investing. And that means grow their practice and their revenue. And that means grow the amount of clients that they can surf and that means grow the amount of clients that have better financial outcomes and security and peace of mind because advisors in our community are able to work with more people. so a lot of our focus is going to be on what you can do to unlock that growth from marketing, from efficiencies, from different strategies, from best practices, from a whole bunch of different things. And so that will be a really important theme because You know, this is a movement. And as we grow that movement, the impact of everything that we're doing scales as well. And so that's a huge focus for us.
Iyassu Essayas: Yeah. And and Gabe, do you want to just talk a little bit about the importance of having like an in-person event versus like, you know, virtual webinar conferences that kind of took took over during COVID?
Gabe Rissman: Yeah, I've never made a friend at a virtual conference.
Iyassu Essayas: Yeah.
Gabe Rissman: That I think is the biggest difference is, you know, when the sessions are not happening, you go and step out and get to meet people. You know, there's a lot of stories of advisors that found their succession plan by being at the conference and sitting next to someone at lunch that you never otherwise talk to. It's not just about the learning, it's about the connections. And that's why the in-person I think is so critical.
Iyassu Essayas: Yeah, so if you're if you're a financial advisor and you are thinking about, hey, what does this next generation of clients look like? And how do I service them? I I do think this Growth for Impact conference is gonna be a really good educational course for you about what the next generation cares about. Cause This is like millennials and Gen Z and Gen Ys. Like, yeah, they haven't forgotten about the climate. Like they really haven't. And you need to be prepared because when they inherit their parents' you know wealth, you need to be able to have those conversations with them. And if you can't, like these these kids are really quick, man. They'll just go on TikTok, they'll go on Google and find a financial advisor that that does. So I don't know. It's almost like you want to kind of future-proof your your business by you know coming to this conference and learning as much as you can. Because that's that's where in my opinion, I think that's where the money is going. It's going to a new generation of really sustainably savvy, you know, kids. When when I grew up, like it was it burned in my head, you know, recycle, reduce, reuse, right? So like the the the hell and close the loop, right? So like, yeah, you're getting that, but you know, on more sophisticated sustainability issues that these kids are really smart on. So
Gabe Rissman: Yeah, I would love to add to that in terms of this generation. So, values-based, socially responsible investing, there's so many different terms. I prefer values-based because values-based really conveys bottom up, it's what you care about, what are your values, how do we align your portfolio with that. And then impact as well, there are shareholder engagement or private investing strategies that can really deliver impact. So I often say values-based or impact investing. That really was on a rocket ship. from about 2019 to early 2022. And then kind of fell off a cliff in many ways. A lot of people started to lose trust. There was a lot of political pushback. There was a lot of large institutions that went all in and then realized this really wasn't for them. And so there was a flat period for 2022 through I would say 2025. where there wasn't as much growth or engagement in values-based investing. But wow, 2026 has come back so strong and it's come back in, I think, a sustainable way, not even environmentally sustainable when I say it this way, but sustainable interest and sustainable demand and sustainable growth. And I think that is for a few reasons. the whole AI is becoming a theme that everyone is talking about all the time and it so heavily relates to people's portfolios. And this is now changing a little bit, but so much of it is not partisan. You know, I see Bernie Sanders working with Steve Bannon. right. There's, it is
Iyassu Essayas: That's wild.
Gabe Rissman: so interesting and people, people see AI all the time in their daily lives. There are so many different issues that impact it. There's the environmental concerns, there's weapons, there's surveillance, there's concentration of power, there's child safety, there's job loss, there's existential risk, there's, that's one quarter of it, right? There's algorithmic bias, there's discrimination, there's surveillance, maybe I already mentioned that one,
Iyassu Essayas: Yeah.
Gabe Rissman: cybersecurity, chemical weapons, they're making viruses now. Like every issue touches this and more and more people like all the time are trying to see their AI exposures in their portfolio. And in particular, partly because of the job loss part, the next generation is the most anti-AI because they see it, you know, they don't, they don't see the prospects of what their life is going to be. What's going to happen? you know, they were sold this story of become a coder, but now they, was thinking all the coding job anyway.
Iyassu Essayas: Yeah.
Gabe Rissman: yeah, the next generation, it feels very strongly against AI, those inheritors, but I think across the board, there's a lot of anti-AI sentiment. And so I think I'm answering what your last question was going to be in advance of, you know, one tidbit, but we are seeing so much interest in this and so much curiosity and so many advisors now trying to figure out how do I respond to all the different concerns people have about AI? How do I tell the stories about AI? How do I see what's going on within my portfolio? And there are people that also really like AI and believe in the boom and think it's going to cure a lot of diseases and there's a lot of validity to that. I think both sides are very valid and it's so important for advisors to be on top of that and more and more people all the time are trying to see what they specifically care about reflected in their portfolios. And so, yeah, from a growth perspective, from a next generation perspective, and from a current generation perspective, I think this issue is really something that people care about and will continue to care about and will be a lot less divisive than other issues that have been driving the value space investing movement in the past.
Iyassu Essayas: It's very well said, Gabe. as as we kind of wrap up the show, do you wanna I I like to this is my favorite question. Like what what are you looking forward to next week?
Gabe Rissman: I'm looking forward to getting the last registrations finalized at the conference.
Iyassu Essayas: Yeah.
Gabe Rissman: You know, we're in the final stretch and there's only a few spots left. And I'm looking forward to celebrating my younger brother's 30th birthday this weekend,
Iyassu Essayas: Nice.
Gabe Rissman: which will be really nice. And I'm just generally really excited. We're building a lot of a lot of very cool technology that we're going to unveil at the conference in a month. And so it's been super fun building a lot of things that will make a lot of advisors lives easier and their clients lives better as well. So just a love and life right now, Iyassu How about you?
Iyassu Essayas: Yeah, same, same. love and life. I'm all also building on on inflows and and I'm gonna include the the link to your conference inside the the description. So all the all that good stuff's gonna be in there. so I'm really excited. I'm also going to the conference too. So it's good, it's gonna feel good to be back. But I wanna you know let the audience members know if you wanna hear more about Gabe and his journey through Yale all the way to becoming a host and creator and originator for a really cool conference. You know, please join us on Inflows. I will post the show in there. If you're a financial advisor, asset manager, anyone who works for a registered investment and registered investment advisor firm, it's inflows is free to join, it's it's free to use. Come join the conversation, be part of the the community. And again, Gabe, thanks for being our special guest today.
Gabe Rissman: Thank so much for a great conversation.
