SmartBe Wealth Aspirations Issue 01. - Rod Heard


SmartBe Wealth Aspirations

We are introducing a new publication that will be comprised of interviews of an inspiring group of people who share a common interest – a curiosity about investing and an aspiration for wealth. We hope you will be equally inspired by these special individuals, and hope they can feed your ambitions and interest.

My name is Rod Heard, co-founder and CEO of SmartBe Wealth Inc. When I reflect back on what brought me to SmartBe and what inspired Art Johnson (my co-founder) and I to launch a new ETF with our good friends at  Alpha Architect a common theme emerges – an incessant interest in investing and a desire to put our family’s assets to productive use.  In every conversation we have at SmartBe Wealth we discover the same underlying principles; a desire to expand their financing knowledge and to discover new applications for wealth. Those are the conversations that we want to share with you.  The SmartBe team will be criss-crossing the country, speaking to people at various points of intersection on their personal knowledge and wealth journey, from those who are far along the curve to those just beginning their journey, and we are confident that this collective experience – and knowledge set – will enrich the experience of all of us, and in the process establish our own unique community. 

So the team decided to kick off the program by interviewing me that will serve as a starting point for this new series we call “SmartBe Wealth Aspirations”.  I hope you will accompany us on this journey, and as always we have immense gratitude to the people like you who have contributed to our success at SmartBe Wealth.

You told us you began isolation March 13 Rod, – you've been at home for a long time . How are you? Your family?

Well, March 13 seems like a life ago, and we are still keeping a very small bubble. Truthfully things have been a bit up-and-down but in general I think we’re coping quite well. We added some stress to our lives by moving from our house of 20 years to a downtown condo in April but that too is becoming routine. In addition our youngest daughter Phoebe recently moved into her own apartment so we are adjusting as empty nesters. Toughest for me is my mom and step-dad. Being at high risk in their eighties we didn't see them for months during lock down and now any in-person time is pretty stressful. We still have not had a full multi-generational gathering. Thank goodness for FaceTime.

How are you coping with this new normal – post COVID-19 reality – that we are all living in? What is your routine?

Yeah there have been a lot of adjustments, but I feel very fortunate to have my health, lots of support from family and friends and a job where I can keep things moving with technology. I haven't stopped working from home and my routine is pretty simple. My wife Nicole and I usually squeeze in a run or workout that fits with our schedules. We pretty much work through till 5 or 6 then begin the nightly meal ritual. If there is nothing pressing in the evening we usually enjoy some downtime watching a show, reading or visiting with our kids as we have kept them in our bubble.

You’ve now been in the wealth management business for 3 years – what are your high-level observations about the industry.

These are interesting times. The last time I remember such concentration of wealth in a few companies was in the dot com era. I think people in general are worried, Albertan’s are more than worried and the world has never experienced such a systematic injection of capital into the market.

As far as the industry is concerned my initial observations, in particular in the subset of the community that believes in quantitative investing, is how collaborative and collegial this community is. I was expecting the financial services industry to be more cutthroat. I have been pleasantly surprised.

The other area that was surprising was how few Canadian financial professionals know about or use strategies based on scientific method as it relates to quantitative finance, especially when I compare us to the other major markets around the world. For me this represents our biggest opportunity and challenge at SmartBe.

Tell us about the journey to launch SmartBe, what were the major challenges. And what were some highlights?

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The journey began mid-year 2017, when Art Johnson hired me to do some consulting work on his sales practice and a new idea he had been incubating in the software space. After 3-4 months working together we decided to chase after the opportunity that we saw emerging in Asset Management. Critical to our success was my first phone call to Brian Craig and then Mike Broadfoot, who were the people closest in my network with experience in Financial Services. The four of us spent a month or so developing the business case and securing our exclusive agreement with Alpha Architect. Once that was in place we launched the company at the end of the year 2017.

It took us all of 2018 to navigate the regulatory environment and launch our first fund. The next major task was to block and tackle the operations infrastructure to be compliant and scalable. For the past 6 months or so we have been 100% focused on generating awareness and building sales capacity.

As for highlights – hosting three conferences that featured some of the top North American quantitative specialists, including our own Dr. Wes Gray, Corey Hoffstein and Meb Faber. Meeting amazing people in this industry including the Canadian quant ecosystem, professors at the U of C and our friends the NEO Exchange – they too are pushing boundaries in the market exchange space. Beyond business, for sure the highlights centre around our our crazy journey with our partners at Alpha Architect. Team building and social time has taken us on 2 polar bear swims, 2 x 46k military marches to remember fallen soldiers – March for the Fallen, as well as crewing for the AA team in the Leadville 100 mile ultra run.



Why do you feel this business is now more important than ever?

When I look at people who aspire to wealth, it is now harder than ever to save, grow, protect and pass on your wealth. The combination of advancements in behavioural science, quantitative finance and  computer technology for the first time has made best in class investment knowledge affordable and available to the public at large. We founded SmartBe to fill a gap in the Canadian investment landscape. We think, and the history of market data shows, that Canadian’s can get superior investment results by choosing strategies that have been vetted through academic peer review and by sticking with them through the ups and downs of market turbulence. Except for the most sophisticated institutions, for the most part the Canadian investment community is well behind the rest of the world who are future-fitting their portfolio’s with quant. SmartBe is focused on closing the knowledge gap and providing products and services that help shape investment journeys.

What are you going to invest in post COVID?

From a macro perspective, we will continue to invest the same way pre and post COVID. Our first fund SBEA has 3 main investment components in Canada, the USA and in Developed markets. First is that half of the companies in the fund are inexpensive compared to their peers. Post COVID SBEA will continue to screen for undervalued companies who have strong financial fundamentals. The second component is we search for companies whose stock price has increased the most in the past year. Post COVID the computers will continue to screen for high quality companies with strong price momentum. The third component of SBEA is the fund switches from equities to bonds (cash). When the underlying markets are moving up, our risk signals are on and we invest 100% in equities. When market conditions are uncertain, we take caution and we move half to bonds. And when the markets are bearish, risk is off and are invested 100% in bonds. Post COVID the sectors might change as industries go in and out of favour, the companies with strong price momentum might change but the computers will  continue to scour the globe for value & momentum as well as to continue to pay attention to the risk signals from Canada, the US and Developed markets.

We love to ask this question or a variance on it – if you were running the country or province – what would you do? The pressure is on.

Beyond the tactics to get through covid and re-ignite the economy, the first major initiative would be to mandate Canadian energy self sufficiency and build export capacity. This would bridge us to the eventuality of a non-carbon economy as well as improve the short-term worldwide ESG per barrel.

Who are your role models right now? Who are you looking up to?

I have to give a big shout out to our independent board members Brian Craig, Mike Broadfoot and Peter Virvilis. Their values, judgment and focus on doing the right things have been a terrific role model for me.

Tell us about your family. Under normal circumstances what would you be getting up to now? 

We cancelled a family trip to Vegas and Arizona. The other big event is that my eldest daughter Khloe was planning a wedding for September. She and her fiancé Torrie have postponed to August 2021 and have a backup in the event large gatherings are not permitted.

Who has been most influential in your life?

Without a doubt I would have to say my mother, Lois Haskayne. I am very fortunate to have had a terrific and supportive family but her super-power really became evident to me when I was 12 and my parents divorced. My mom was forced to reinvent her life as a single parent with 5 kids from 12 to 22. Not only did she become successful in business but she always found the time to nurture our spirits and enable us to flourish. Lolo has been an ever loving cheerleader throughout my life.

So what book are you reading, what show are you watching, what podcast or music are you listening to?

Red Notice was fun, especially since I have spent some business time in Russia with Gazprom. It really is that crazy. I really enjoyed Narrative is Everything –it appealed to both my logical and creative brains in how to construct messages that connect. Unfortunately, as with most craft, putting the lessons into practice is harder than it seems. I've been listening to a podcast – Dolly Parton's America. It was a good surprise even for the uninitiated Dolly fans. Getting sports back satisfied my Flames (boo hoo) and Raptors urge. We the North!

What is your superpower? What were you put on this earth to do?

I'm skilled at corporate strategic planning, but I think my real strengths are in being genuine, nice, steady and optimistic. My ability to sleep well is definitely a super power.

Are you tapping into any practice right now? Yoga, energy healing? Self-care?

I continue to run and keep my fitness regime – I've been working out on zoom with my trainer Pete Estabrooks. Getting out for a hikes and mountain runs is always grounding and invigorating. Life feels a little more normal breathing in nature.

Okay, in a post virus community, city, province, country, planet – what do you want to see most?

Live sports & international travel come to mind, but in reality I would like to fly east and meet SmartBe's new national sales team face to face. I am also hopeful the world will make real and enduring changes to solve so many of our issues of social injustice. As a board member for the Calgary YMCA I am continually impressed with the amazing charitable work they do – the Y is particularly well positioned to serve new Canadians and our indigenous population.

What do you think our world needs the most right now? What’s your version of a big hug?

Raise the standard of living of the bottom 10% of the world by 100%. I believe in the saying that a rising tide floats all boats, and if we were able to accomplish this the world would be a far better place.

One thing that has brought me joy is the Beltline Urban Mural Project (BUMP). We've had the pleasure to watch Nathan Meguinis create a spectacular Dene themed mural across the street from our condo. We've been making a point to visit all the murals. It's been really inspiring during a challenging time.

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When you emerge from your COVID cave, what will be the new normal for you? Lessons, insights, what did you not know about yourself before that will now be put in practice. Do you have a goal in mind for yourself?

Being in my mid fifties, with an inner voice in my late 20’s, OK those of you who know me might think this is a stretch, I think I’m reconciling with my fragility. I don’t handle stress as well as I used to, I’m having times where concentration is harder and I’m feeling more melancholy than usual. Lesson is to make sure to stop and smell the roses, live every day to it’s fullest.

What aspect of SBEA is particularly attractive to you – at this particular uncertain point of time - that you want to share with our Community ?

Since Art Johnson introduced me to quantitative investing over 15 years ago, the concept of stacking the odds in my favour has always resonated. So for me, what is best about SBEA in these times of uncertainty is that I do not have to pay attention. The noise in the media, the roller coaster of major markets, the uncertainty around the trillions of dollars flowing into the economy, these are all interesting and important, but my belief is that over the long term will not be important to the performance of SBEA. It’s like playing poker, if I have a 3 ace hand I will bet that hand almost every time and it is the right bet. But the reality is that sometimes an opponent flops a full house or flush.

Who is your stand-out Covid star or spokesperson; who do you turn to for reliable content and and sagely advice right now?

I can’t really think of a single star as all of the front-line workers are the real heroes. My niece Meagan is on the front lines as an ICU nurse in Calgary. All day every day she is putting herself at risk for society. My other niece Alex is an infectious disease specialist in Edmonton and on the front lines of treatment and policy. My heart goes out to her for her hard work and dedication, especially considering she is pregnant, her husband, Jan is an emergency doc and they have a toddler at home. And my brother-in-law Geoff is a nurse practitioner in Hamilton with two young kids. I can only imagine the stress and fatigue they and their colleagues are facing on a moment by moment day after day basis.

I’ve been impressed by Jacinda Ardern, Prime Minister of New Zealand, who did not wait for the WHO to take action. She continues to impress me with her leadership on many fronts. I wish the world had more leaders like her.

I don’t really have a reliable content go-to. In general though, I believe Canadian and British credible news agencies are taking a more balanced approach than our US neighbours. My DNA is more socially biased so I look to my mentors, friends and family to identify good content and shared perspectives.

What are your Wealth Aspirations?

I have always had financial freedom as a goal. As with many things the definition of freedom changes over time. As a young man freedom meant travelling the world with a backpack for a couple of years. Having our first kids it meant being able to afford having one of us stay home. At 54 I am now beginning to think more seriously about retirement. I feel very fortunate that I love my work and want to continue to participate in the economy for years to come. I am also blessed with kids that have established their own financial freedom so retirement for me is shaping up to be one of privilege. My dream is to have sufficiently good health, to keep fit, travel, spend time with my family and friends, stay centred in my spirituality and contribute to society in whatever meaningful way emerges as time goes by.

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