Full Transcript for The Calculated Jump — From Corporate Security to Entrepreneurship with Herman Chan

didn't jump in. head first without thinking it through without making the prep work, but it's, it is, of big changes that, I think many people, and I'm sure, many, ⁓ I know many that in our previous corporate lives would have thought I like to do this. but few make that leap. If you will, you managed to do it. Herman Chan: Yeah, no, mean, no stranger to change. mean, they would, say that change is the only constant in our lives. Right. So, and I've been very fortunate to have been a manager and a leader at a number of organizations. It started off in my late early twenties ⁓ with feature shop, became Best Buy, had a stint at HSBC as well. So played a tiny little part in the global financial crisis with my subprime lending. Sam Sivarajan: You Herman Chan: which I may not have shared with you before. ⁓ Then I got an opportunity with RBC, really learned the insurance side for a couple of years, and then an opportunity came up with Can Life, ⁓ that's where I really learned integrated financial planning, as well as how independent advisors operated. And then about seven, eight years ago, I ended up getting my certified financial planner designation, which has been absolutely amazing for me in my career. Sam Sivarajan: . Herman Chan: And I got a really amazing the scenes look at many different firms and practices. And I realized that some of the very best ⁓ and well run had areas of opportunity. And I also know that most consumers don't get the planning they need and don't even know what it looks like. More often than not, people it's an investment process of some sort or simply retirement projections. And I know this may sound crazy, Sam, but risk management in its truest sense, and this is my definition of it, really against, ⁓ sorry, it's really insuring against ⁓ getting out of nowhere, getting really understanding the benefits critical illness insurance, and then life insurance well, protecting against that, especially if somebody has ⁓ loved ones that they care about. And in the last year and a half, I would say, being able to convert insurance only and investment only introductions into full planning engagements was the proof I needed to Sam Sivarajan: No, I think that's, that's bang on. think that, ⁓ the, the, the financial services world, evolving. And I think we're all moving more towards that financial planning element. It is to my mind, one of the key things that I think most Canadians, most people need is that element of a plan. There's that old saying, failing to plan is planning to fail and whole theme of this podcast is about uncertainty and how you deal with uncertainty. And I think whether it's on ⁓ for your loved ones, or for business continuity or business decisions that you're making to grow your venture, and we'll come on to that in a minute. There we're always dealing with uncertainty, we're always dealing with change. And it's not that you're going to have a crystal ball on how to deal with it. But how are you planning or preparing yourself to deal with these things? And I think, as you said, part of the financial planning process that you go through with your clients is not just projections, it's not just numbers, It's actually ⁓ asking tough questions about did you think about this, did you think about this? Did you think about this? If this happens, how do you think you might want to deal with it? And for the most part, in at least in my experience, I found that many people haven't thought along those lines, just because it's ⁓ something that they come across on a day to day. Herman Chan: No, absolutely, Sam. yeah, a lot of my discussions revolve around questions and scenarios that they never think of rarely think of. ⁓ like you said, definitely don't want to think of. ⁓ I've this happen quite a few times where I would have a couple look at each other and then turn to me and say, we've never, ever talked about this. And we've been ⁓ together Sam Sivarajan: Yeah. Herman Chan: five years, 10 years, 15, 20, right? you're on the right track when you have that sort of level of engagement ⁓ and ⁓ they understand that is vulnerable situation discussion, but it's gonna lead ⁓ better outcomes, right? Because I want make sure that ⁓ they're ready for anything and especially case scenarios. Sam Sivarajan: Let's talk about metrics, Herman. In the early stages of building Crimson Financial, what are the key performance indicators you're tracking to measure whether this is working? Your business is growing the way that you wanted to. How are you defining progress in the first six to 12 months of your business? And what milestones will tell you whether you're actually on the right track? or whether you're going to need to pivot somewhat. Herman Chan: Yeah, excellent question. mean, there's a few for sure. I would say the different type of meetings that I'm I promote my free hour long consultation a lot. I said to myself, if I can get people to meet with me to better understand their situation at the time and allow me the opportunity to explain some, how I operate and how I operate differently with them in ⁓ That should really help things forward. I also track discovery meetings, which are extremely important. that's when they get really vulnerable, like I mentioned before, share what's them at night, short-term, medium, long-term goals themselves or something or another, what they see themselves doing in transition in that transitional period. We used to use the word retirement. People don't like that word. transition and transitional period is probably a better one. So tracking that, tracking ⁓ recommendation so having enough information, ideally having full plan and sharing with them they should do next and in what order, and then ultimately transitioning those type of meetings into an application meeting of sort, whether it's for insurance or for assets. Sam Sivarajan: Mm-hmm. Mm-hmm. Herman Chan: right? And then there's, revenue from planning engagements as well. So in

terms of like results, I want to track that. I also want to track, you new money coming in from other institutions, as well as first year commissions on the insurance side. Sam Sivarajan: Yeah, I think that makes total sense, Herman. think from if I were to synthesize what you just said, you're tracking very much process or activity which is in your control. So how many meetings are you having? How many discovery meetings are you having? What you're less focused on is the results of that. Like how quickly is that discovery meeting converting into a client, etc. I mean, obviously, eventually, that is an important important metric, but it is not something that is directly in your control and shouldn't directly be in your focus. So you're ⁓ upfront and I think that least in my experience and I suspect in your your from the corporate side of things when you work with advisors, that is a better leading indicator of success of what you're doing and how that is going to translate into the key metrics that matter. how many clients do you have? how much assets are you managing? All of that, which ⁓ nobody deny is important. But they become secondary to at least at the outset to some of other ⁓ activity measures you you've rightly said that you're focusing Herman Chan: you're definitely right. The activity is something I learned a very long time ago and focusing on that should lead to the results that not only that I want ⁓ as a new entrepreneur and as a financial advisor, financial planner, but also really helping ⁓ clients achieve goals that they want to achieve. And there's different stages to that. There's a different process for different needs. But ⁓ it's definitely a mutually beneficial situation. Sam Sivarajan: I think what you've talked about this discovery, this deep discovery, get into that in a bit. But ⁓ is something that ⁓ totally resonates with me. think it's one of those things that is a key differentiator ⁓ in building a ⁓ financial advisory practice that lasts. is, it's part science, part art, but it's what I think that clients get enough of in the industry, I would say. think that there is this, they're not sure where these questions are coming from. They're so used to having, it be about products and not about the problem that is being solved. I think there is call it a blue ocean strategy to kind of differentiate yourself in this, in this regard. ⁓ seems to be that's the way that you're positioning your practice. Herman Chan: Yeah, know. Absolutely. mean, are so many advisors in this country and many financial planners as well. And, I've that, is, I feel a better way of doing this. And I think leading with that planning approach sets myself apart, but also gives a different experience for the, the clients as well. I've realized that by them paying a fee upfront. And I basically collect, after they signed the engagement letter, they gave me the fee upfront. And I find that's enough skin in the for them to be really involved and engaged

for the rest of process. Sam Sivarajan: Now, model requires more upfront work ⁓ probably longer sales cycles than just selling products. How are you thinking about that in terms of rolling out your business? Herman Chan: Yeah, I was actually explaining this to another advisor the other day. the beauty of ⁓ this process that I ⁓ collect those fees upfront, which helps pay the bills. While I write insurance and transfer investments from the engagements before. some people take longer than others to provide all the information and documents that I need. So the next couple may not be the I deliver next because of that. also shared my approach and processes to other professionals like ⁓ wealth-focused or wealth-only advisors, ⁓ CPAs, accountants, ⁓ other advice-only planners as So I'm also helping them execute on their goal of providing holistic advice. I've also shared my approach and processes to other professionals like ⁓ wealth-focused or wealth-only advisors, CPAs, accountants, and advice-only planners as well. So I'm also helping them execute on their goal of providing holistic advice. Sam Sivarajan: So this is more of a collaborative effort with other adjacent type of professionals that you could perhaps ⁓ cross referrals and ⁓ joint kind of submissions to. Herman Chan: Absolutely, Sam. The advisory business itself can be quite lonely. I'm sure you've heard of that. I've heard that over the years. It is true. We both have talked to many advisors they've all said the same. I've uncovered that other professionals are in the same boat. And I believe that if there's more collaboration... we can definitely create a better result and better outcomes for everybody that's involved. Sam Sivarajan: Look, I think you and I've seen very successful advisors that I would say always significant amount of their success to the fact that they're ⁓ experts in their field, but they work very collaboratively with other advisors. The primary is how do we solve ⁓ the client's particular problems? I bring that expertise, ⁓ that's great. not, I have to find who else can bring it. The analogy I'm sure you've heard it, analogy I've always heard used is that a good advisor is like that general practitioner for that client on the financial health side. That their ⁓ is to be able to look overall the financial health of the client, ⁓ what is wrong, ⁓ recommendations and to the extent that they need to bring a specialist in. like a medical doctor would, they bring in that specialist and that specialist will focus on that their niche, their area of expertise. And it's the financial advisor's job, like a general practitioner, ⁓ to bring all that information together and ⁓ continue to be that patient or in your case, that client's coach and a main advisor to make sure that the different pieces of advice are working together properly. Herman Chan: Yeah, so that's exactly it. Your analogy with the general practitioner, the GP is the same as what I share with my potential clients and my existing clients that, I'm applying be their financial family doctor that wants to be that close ⁓ and most trusted within their COVID bubble. When I say that, people laugh because they understand that reference from a couple of years ago and how great... Sam Sivarajan: Right. Herman Chan: How crazy that time was, right? When you're only allowed to have like your closest, closest people within your household and you weren't able to go to even your best friend's house. So when I explained that ⁓ some visuals, people understand that and they realize that, wow, I've only been dealing with financial pharmacists over these years. And then I explained to them like that would include your, know, broker or your or even your ⁓ business lawyer. Sam Sivarajan: Mm-hmm. I can't. Herman Chan: or even including your accountant. ⁓ I explain that ⁓ in such way, people understand that reference. ⁓ And my mission is to help guide them so that, they have a better shot making those right decisions and achieving what they want, as opposed to potentially making some mistakes down the road and then coming to see me afterwards. Sam Sivarajan: Now let's walk through a pre-mortem, Herman, and I'm sure you went through this type of exercise either implicitly or explicitly. So it's one year from now and Crimson Financial hasn't taken off in the way that you expected. So for instance, client acquisition is slower than it's projected, revenue isn't covering costs, and you're questioning whether the model is viable. Let me preface this for the audience to say that this isn't projecting failure, but it's a very useful business planning exercise when facing uncertainty to kind of think through these kind of scenarios before you get into those kinds of obstacles, because it often allows you to identify potential obstacles and plan around it, then having to deal with it after the fact. So with that kind of caveat aside that I'm not saying that Herman is not prepared. But Herman, when you imagine this scenario, what do you think are the most likely causes? What could have gone wrong operationally, strategically, or in terms of market response? And how have you prepared in advance for those kind of scenarios? Herman Chan: Well, that's an excellent question. I've always been big ⁓ on visualizing you want. And I think learned that from my basketball coach ⁓ in high school, that you're going make ⁓ that free throw or that three pointer. Yeah, no, great, great question. unlike, those other business owners that decide to operate in the hospitality industry, like opening up a restaurant. or some other business, I don't have any physical inventory. someone has 4,000 to allocate towards their ⁓ freedom or plus, ⁓ I solutions for you. And if acquisition was slower than expected, they wouldn't have to review my activity, which we talked about already. The good news though is that I do have a co-founder who's ready to help me pay the bills while we build in the next coming And I'll

continue to find to my processes before buying out a selling advisor. So for any advisors that are listening to this, having a tough time trying to find the right successor or somebody that will help them take care of their clients like they have done for the last 20, 30 plus years, definitely open to a conversation. Sam Sivarajan: No, I think that's great. I think you're being a bit modest in our conversations before. know that you've done a lot of legwork beforehand to anticipate and preempt any of these types of obstacles. So from thinking about the niche that you're trying to serve, to think about the business model that you're going to put, to think about how your clients are going to find you. I think you've done a lot of the call it the legwork to kind of say, okay, how do you stand out in a crowded market? So maybe you can talk a little bit about that, like including some of the the work that you've done in the industry that built some networks and partnerships. And, of the technical skills that you bring from call it the, the IT side and planning software side, you've done a lot of that work, I think that is prepared you ⁓ implicitly in many cases to kind of sit there and, head off at the pass, any kind of potential obstacles that you might come across. Herman Chan: Yeah, I've mentioned FutureShop earlier. I've always been interested in technology and playing around with computers and software and things like that. There's a bit of a joke between me and two of my close friends. We talk about stocks in the markets every day. We've been doing that for quite a while. And I said to him that when my dad asked me to build a computer in 1996, I told my dad, we need to use this in video card. That's back in 96. Everybody, know, Nvidia is obviously a household name over the last couple years, but I knew about their technology back then. Now, of course, of course, nobody knew that, 35 plus years later, it'd be one of the hottest stocks in the world and one of the most valuable companies, And that's another example of not an overnight success in regards to, know, Jensen Wong, the CEO there. Right? Been around for 30 something years. Sam Sivarajan: Well. That's a great example, yeah. Herman Chan: Yeah, no, my interest in technology has helped me a lot in this financial advisory space. I remember, looking back when I first joined Canada Life in 2011, not having that wealth background, not having that planning background. I did have a couple of years of insurance under my belt. I thought to myself, what was the quickest way to, gain the favor of some of these veteran advisors that I need to support and help drive and making more of their clients are protected and making sure that, ⁓ their investment are, set up properly and to help them reach their, their goals when they want to reach them. So I learned, I learned a planning software and spent a lot time using it. ⁓ And I helped a number of advisors and that really me well for years. ⁓ It was called NaviPlan. Still around actually, but. ⁓ Sam Sivarajan: Mm-hmm. Herman Chan: Yeah, no, it helped me a lot. And it actually was able to use that software to lead to advisors ⁓ their clients take action immediately. And that really set the stage. just the ⁓ interest in financial planning So I studied for the ⁓ Certified Financial Planner designation, I eventually got, you know, try to motivate a bunch of other advisors to do the same and peers to do the same. which I've also done. And most recently, I just joined the Financial Planning Association of Canada, FPAC, that is filled with veteran planners and aspiring planners. And just the other day, I spoke to a group of 12, 13 junior advisors and planners about how I leverage technology to better serve my clients. Sam Sivarajan: Hmm. So you've done a lot of prep work, even though that you've only hung up your shingle very recently, you've done a lot of the prep work and the building the foundations that you needed to do this business. the I would use it's like a ⁓ water boiling, right? You think that water boiled when you see the bubbles on the surface, but, ⁓ there's a lot of work going on before that bubbles come. And that's Sort of the analogy I would use for you and your going ⁓ I think that there was a lot of work that was done beforehand in getting the skillset, the networks and everything else in place before you flipped us on switch, if you will. Herman Chan: Yeah, for sure, sure, Sam. And just to further that point and answer your question. Yeah, I've spent a lot of time leading up the big decision on building as many mutually beneficial partnerships as I could. And it's been well received so far. think the key is just ⁓ leading with what are your pain points a fellow professional? What are your pain points? If you had a magic wand and you could... ⁓ wave it and get what you want. Like, what would that look like? And, you been, it's been a lot of fun, interacting ⁓ and, partnering with other are truly client and ⁓ they really like the idea of providing value via their trusted partners so they can help clients save time. And all wish we could have more of Sam Sivarajan: Look, I think there's an important point that you're making here. I think many people will think that this is a very cutthroat and competitive industry. And I can see why people would think that, but in my experience, I've also found it to be a very collaborative and, you know, friendly environment. think that it isn't a zero sum game. think there is enough. biggest challenge I think in the Canadian marketplace is there are far more that need good advice and good financial ⁓ than are getting it right now. So the issue isn't about we're competing with other advisors for a very small market. I think it's a collective effort ⁓ all advisors to ⁓ Canadians that the ⁓ biggest obstacle them achieving their financial goals. is really having proper advice, proper plans and proper approach to how are they going to build wealth? How are

they going to protect their loved ones? ⁓ are they going to prepare for the uncertainty over the next 10, 20, 30 years ahead? Right. And I think that to some extent is a collective effort among all people in the industry. And I think the kind of networks and the collaborations that you have built and that you're continuing to build, I think will go a long way towards that. Herman Chan: Yeah, I totally agree. And it's just very exciting when you're able to meet other professionals that have the same vision and same desire to truly people. I mean, that's what it's all about. know, financial success and business success is a byproduct of that, but that's not the main thing. Sam Sivarajan: So in my mind, Herman, having known you for many years now, one of the key differentiators in your approach is the blend of the technical skills and the human slash behavioral side of financial advisory, the science and the art, if you will. I've always felt that it's not enough to know what to do. The key isn't actually doing it. Sort of like being fit. It's not enough to know that eating right and working out is actually important. Most people know that. You actually have to do it in the moment. Like when that plate of cookies are staring at you or you don't want to get out of your warm bed to go to the gym. Walk us through how you're implementing that approach into your practice. Herman Chan: Yeah, great question, Sam. I try to teach this in my previous roles, but sometimes you just can't. Yeah, you either care about people, are curious about people, and want to truly solve their problems, or you don't. believe that you need to be a lifelong daily learner as well. I've learned firstly from many of your guests that you've had ⁓ on previous episodes. I've learned a lot of other industry friends. I've read a lot of books, spent a lot of time reading a lot of blogs and listening to many, many podcasts. And in the past year and a half, I've been leveraging AI a lot more too. I've also been big on process, just like a Michelin star chef ⁓ or a family like I mentioned before. I believe that, having strong, clear processes demonstrate professionalism. it will also allow me to take on more clients, eventually add staff and scale the practice. Sam Sivarajan: 100%. I think processes are important ⁓ for everything that you've mentioned, I think to give clients confidence ⁓ to effectively be able to scale to build a business, right? In my experience, probably yours, I think I've seen a lot of great advisors who I think had a great practice, but not a business. And the business requires processes that are repeatable, etc. And, to me, it brings to mind there's a surgeon, Atul Gawande that wrote this book called The Checklist Manifesto. he says that he best surgeons ⁓ who performing brain surgery or heart surgery, etc. They have a checklist that they go through. And ⁓ whole is to make sure that they're not forgetting anything. Pilots, before they take off in a plane, they have

checklists and Atul Gawande's whole point is that this kind of having this process or these checklists take away from the intellectual power, the creativity that you have to have in ⁓ business or in your profession. But it makes sure that you're in the heat of the moment, you're not forgetting something. So, if you have an onboarding checklist of the things that you have to go through with your client, the questions that you have to ask them, the forms that they need to fill. ⁓ This isn't making something administrative. It is making sure that every, that your first client and your thousandth client all have the same experience that they go through that in the process that you're delivering the best possible service that you can provide them. So I totally agree about the need for a good process. Herman Chan: Yeah, for sure, Sam. I it's important that I gather as much information and definitely more than most advisors or planners. Like I gather a ⁓ ton of information because there's really important data and insights ⁓ from data and information that I collect to provide a better plan ⁓ provide ideally better for them. So yeah, I didn't know about those two examples. So thank you for sharing that too. Sam Sivarajan: So Herman, looking ahead, you're betting that your niche focus, the integrated planning model and your independent structure will be a competitive advantage. But that also means you're competing against firms with more capital, more brand recognition and more resources. So what's your long-term strategy for not just surviving, but winning in that competitive landscape? How do you think about scaling Crimson Financial over the next three to five years? Herman Chan: Well, yeah, I've been studying others in the industry for many years. When I say others, mean, fellow advisors, computing firms, the big five banks. I've got friends in contacts at all these different institutions. And also studying who's leading in those places and innovating in those places. So that's really helped. Sam Sivarajan: Mm-hmm. Herman Chan: terms of ⁓ that ⁓ in my ⁓ and my day to day, ⁓ actually bringing up an interesting example in the entertainment industry. There's lady by name of Kim Kardashian, I think some of your listeners will know who that is. She used family's TV show. She leveraged that. leveraged Instagram over last five, 10 years and recognizing and partnering what's popular at the time. So couple years ago, she ended up partnering with the NBA as well as Team USA and a big star at the time, but now he's an absolute basketball superstar now and style icon. And that's Shade Gildes Alexander from Hamilton, Ontario, and before an NBA champion last year. So she had partnered with these massive institutions and, star athletes. Sam Sivarajan: Mm-hmm. Herman Chan: Then you look at to, then you, then, ⁓ you're looking into fashion. I, I saw a couple of years ago that Adidas launched sneakers or Prada. so these are the, ⁓ this is what seen in the marketplace.

right before launch, I was able to partner with a local private healthcare company called MedCan. ⁓ I also stumbled onto a 24-7 virtual healthcare service for under 17 called Kickscare. I've also known the co-founder of an online estate planning company called Epilogue Wills. And I even with ⁓ a ⁓ local Spa She's got a ⁓ clinic up in Woodbridge La Deas. I understand that. ⁓ high net worth clients, especially the ⁓ spouses, ⁓ the ⁓ of some, busy, successful they want to look good too. ⁓ I feel like I've got, a bunch of bases covered at launch and will continue to partner with like-minded ⁓ entrepreneurs to better my clients. Sam Sivarajan: I think that's a great example. Herman I hadn't known about Kim Kardashian's partnership with the NBA, etc. But I think you're right. think that this is you have to go ahead another one of my guests the podcast that talked about showing up where your clients are. So it's not enough to kind of be ⁓ in the wealth magazines, etc. Because if your clients aren't reading it, it's really relevant, you're not going to be top of mind to them. that's ⁓ very interesting approach. Herman Chan: Yeah, for sure, Sam. I just also want to mention that everybody that I've partnered with and connected with, they're all dedicated in providing a best-in-class client experience. That's first and foremost. And my clients existing and future will benefit from some of the perks. They won't get elsewhere. And I also want to mention that I'll continue to use the best fintech. I really hope that they all connect with each other a year from now. really pushing for that in the last five years or so that I've been interacting with different fintechs across the country. I know it's very tough here in Canada. A lot of them, know, they've got a great idea, like to go, head down south, there's such a bigger market. But no, I've definitely been a champion for Canadian fintech and I'll continue to play that unofficial role. So, to all the fintech founders out there, don't give up. You know, the independent space is growing up here in Canada. Sam Sivarajan: Right. Herman Chan: And I'll also use AI more to create efficiencies for myself and my firm so I can help more people reach their financial goals. Yeah, just ⁓ like you mentioned earlier, that blue ocean. ⁓ a big blue ocean. And I'm just getting started. Sam Sivarajan: Awesome. Well, Herman, we're coming to the end of our episode. So I have a few final rapid fire questions for you that I ask all my guests. So number one, professionally, what is the most important lesson you've learned over the years? Herman Chan: Most important lesson, there's a number of them, but up top my head, would say controlling the controllables. I think you touched on that earlier in our conversation. In other words, focusing on activity and moving opportunities ahead. I really can't control how much inference people need or the size of their account transfers. ⁓ What can control is being enough quality prospects on a weekly and regular basis. Sam Sivarajan: Right. Beautiful, I love it, I totally agree. Number two, what is one practical tip you would offer listeners keen on applying your insights? Herman Chan: practical tip. advising is a team sport. I'm leveraging AI, I'm leveraging other professionals to give clients the answers quickly. So I give a shout out to F-PAC again, and connecting with the peer to get a different perspective. Sam Sivarajan: I love that. think the team sport, I've not heard it in so many words, but I like that. think you're 100 % right. It is a team sport. And you have to have people on your on your corner on your bench, etc, that are going to help you when when you need it. So Herman, fascinating discussion. If listeners want to learn more about you or Crimson Financial, where should they go? Herman Chan: they could find me at my website, www.crimsonfi.com or my email address at hermandodgfan at crimsonfi.com or via Facebook, Instagram, LinkedIn. And I I'm going to start tweeting or texting a little bit more on X. Sam Sivarajan: Awesome. Herman, thank you for joining us today on the uncertainty edge. Herman Chan: It was an absolute pleasure. Thank you so much. Appreciate it. Really enjoy your podcast. I encourage everybody else to listen to previous episodes and look forward to chatting again, maybe in a year's time. Sam Sivarajan: Absolutely. Want to see how you're doing. Thanks again, Herman. Herman Chan: Thanks,