It's more than just Milkshakes. Get the latest on Jobs-to-be-Done here.

Financial Services Through the Lens of Jobs-to-be-Done

Chris Spiek


This week’s show features guest Stephen Mohan, Managing Director of Operational Services of Cofunds.  Stephen joins us to talk about financial services through the lens of Jobs-to-be-Done.

We contrast how the financial planner’s view of the competitive set (retirement plans, mutual funds, stocks) differs from the competitive set that consumers construct (buy what I want now and go into debt, keep my money as cash to avoid risk, do nothing).  The discussion then moves into the solution space, and we talk about a few methods that financial planners could use to match their offering to what consumers are looking for in order to draw more people into the market.

Listen to the Show


Make sure you don’t miss upcoming episodes!  Subscribe to Jobs-To-Be-Done Radio using this feed.

iTunes/iPhone users can new subscribe to this Podcast in iTunes!

Coming Up Next Week

We’ll discuss Facebook’s new Facebook Camera offering and how they’ve leveraged the Instagram offering; Instagram for Video, and Social TV.

Click to view episode transcript.

Episode Transcript

Spiek: Welcome to this latest edition of Jobs-To-Be-Done radio. I’m
Chris Spiek with the Re-Wired Group, and I’m here today with my partner Bob
Moesta as well as Steven Mohan who is the Managing Director of Operational
Services at Cofunds. Steven is going to talk to us a little bit today about
how he views financial services through the lens of Jobs-To-Be-Done. I’m
going to let him do a little bit of intro here, and tell us about how he
became aware of the Jobs-To-Be-Done framework, how he met Bob Mesta and how
things have progressed from there. Welcome, Steven.

Mohan: Hi, Chris. Very nice to speak to you. And Bob, nice
to speak to you too.

Moesta: Good afternoon to you. We’re five hours apart.

Mohan: Good morning here, good afternoon here. I came
across Bob through the joys of podcast. Actually, I listened to him
talking on the Critical Path; to Horace Dediu . He did a great interview there, and really
fascinated me over the challenges of design. I’d worked in consultancy a
long time ago and we had a thing then called building market focused
organization, which we consulted on. This struck me as taking it to the
next level. We were building a conference for about 20 of the chief execs of our
key clients. They’re typically financial advisoes in the UK. Financial
advisors, wealth managers, stock brokers, those sorts of people. We had a
lot of people who were going to be just talking about the financial
services industry but nobody here was really going to give us an idea of
how to tackle the challenges, which we all accepted we have within financial
services; particularly in the UK, and could come to us with a new way of
looking at it rather than the normal “how do I get more money for my
clients, how do I gain greater trust and all those issues?” I should
probably say that what we do as a platform is we sit between financial
advisors and fund managers or pension providers and we allow them to
aggregate their information, their trade data and all the information for
their clients.

I think there is a challenge for financial services that Jobs shows very
well but there are some particular challenges that are making life worse in
the UK at the moment. I love the model that, when Bob came across to see
us he went through the influences you could have on
a person, how you could make them change and the drivers to make someone do something. I
thought it was interesting to see actually why people invest, which is
fundamentally what we as an industry are trying to get people to do. What
is the job of that investment and once you get to the job of the investment
it’s what is the job of the advisor, of the platform and of the fund
manager in there.

Moesta: I want to interrupt you for one second. What is interesting is,
it seemed that when we were there and talking in this big room of
people is you found that it’s all so rational. You have a room of very rational people who are talking
about ways in which to calculate risk and ways to calculate return and on
the other side of the table when you look at the person who’s investing the
money it’s a pure emotional buy. “I’m investing for the wedding. I’m
investing for the kids’ college fund. I’m investing for a house. I’m
investing for a car. I’m investing for retirement.” They’re not rational
thoughts. At some point you can try to make them rational but they’re very

Spiek: They’re real life events.

Moesta: When the conversation came up, Steven, about everybody moving
to cash and we started to put it through that lens of the forces of
progress and how people are moving one way or the other. From a rational
perspective cash makes no sense. I put it into cash, I have inflation, I’m
actually losing money every day that I keep something in cash. Yet people
are flooding into the cash side of the business. What are they looking for?
What job are they really trying to get done? Do you just not have an
investment that at least use their money and help them get the protection
they want?

Mohan: It is partly the problem. Cash does or money does
different jobs. If you thought of those three generic jobs you’d have cash
flow, the how-I-live-now stuff. I might go overdrawn and then go into
credit as I go through the month but generally it’s just a straight cash
flow thing. There’s a whole bunch of people who do the protection, the
insurance of wealth; the stuff that keeps me the way I live now. Some of
that you have to do like certainly in the UK, car insurance. But then
there’s house insurance and medical and life insurance. Then the third one
is the thing about investment, which is how I’m going to live in the
future. That’s the saving for that same housing, for the education, all those sorts
of things. It strikes me as an interesting anomaly, that when we as an
investment industry look we tend to be talking about how to help acquire
the funds, the money, and we ignore the fact that actually it always has a

Moetsa: There’s always a purpose.

Mohan: There is always a purpose. If we can get that job 10% of
our assets roll off our platform every year. Well, they go off because
people have saved up the amount of money they want and they’ve reached
their goal and they need to spend it or they’ve reached the time at which
they need to spend it because that wedding or something like this. The only
purpose of the money arriving is to depart. We very much tend to focus on
that; how to accumulate and not how to help people match their accumulations
to that process.

Moesta: I remember sitting next to one of the gentlemen who ran one of
the investment advisor groups. He likened to when he started off there were
three of them in the office and they’d sit down with people and they’d talk
about their dreams. Where did you want to go? What did you want to do? And
helping to make that dream more tangible. I want a cottage. I want a summer
home. I want my kids to go to college. Backing into that investment side.
He said, “Now that I’ve got hundreds of advisors and I’m up at the CEO
level of managing a very big advisory firm, we don’t talk anything about
that. We sit down with people who want to invest and we tell them
everything about the investment but we never help them figure out what
their dreams are.” That’s the thing that’s been lost: we’ve all been in
such a hurry to sell the investment that we forgot to take the time to
really listen to the investor and what they’re trying to do.

Mohan: The problem there is then the advisor doesn’t understand
what value the investor is genuinely [inaudible 08:33] advice. In his
example the
advisor gets paid a trail of commission by the fund manager which means
that the investor appears to get the advice for free. Then we actually
provide the advice for free provide then [??] for free to the advisor and
to the investment group itself. It’s very difficult to understand the value
add of something which people [feel is free].

Spiek: Steven, you’re a little bit muted there. I don’t know if
you’re far from your microphone. The one thing to me is I will say in the
short term I think there will be an adjustment but the reality is is that
people can’t do this alone and they’re going to move to the self-service
side of things for a period of time. Again, it’s free for me to do self-
service, I don’t really need the advisor, but the reality is when it comes
back to it the advisor is very, very important. They need to be reset. The
fact is that it is in the best interest of the investor, or the consumer in
this case, to pay for the value they believe in. Just showing up and
giving…again, I got the impression that the advisors were like, ‘Hey, I
have a stock tip today. That stock tip is very important and that’s where I
should make my money is on the stock tip.’ The reality is I think it’s more
the latter, ‘Help me figure out how to translate what I want to do into
what should my investment strategy to make sure I have the money to do what
I want to do.’

Mohan: I agree. A funny example for me is someone who I hired and
was speaking to recently; she’s very well respected in the tax community
and she said, “What happened was I got my qualifications, it went into the
press and an advisor phoned me up and said, you must be getting a pay rise
and therefore you need to start thinking about savings and pensions. And
every year or every six months they’d come in and say, “let’s make sure we
tuck the right amount of money away. It actually doesn’t matter whether
they gave me good advice or bad advice. I would have spent the money on
shoes or something. What they’ve helped me do is build up a lump sum of
money which I’ll be able to use for my retirement. A lot of the value was
to make me do something because typically we won’t do it.’ I try to do some
self invested stuff myself and it’s still sitting in the bank because I can
never get round to doing it and having an advisor really makes a difference

Moesta: We in the jobs world call that creating the light bulb.
It’s that ‘I want to
make progress.” You’re fundamentally not going to make someone do something
that goes against what they define as progress or what they want to do. But
to show them that something is actually possible and there is a way to
achieve it is lighting that light bulb. For her it was, “I could go blow
this on shoes. I might realize it’s not the right thing to do but until
somebody sits down with me and says, look, these are the steps you need to
take in order to ensure financial security for the future and it’s
something we can work on together and we can get done,” shoes are the much
easier option.

Mohan: In fact, there was a direct consumer platform in the UK
that was set up about ten years ago. They started off with savings accounts
and they…

Moesta: We’re losing you Steven. Can you repeat that? Started off with
savings accounts…

Mohan: This business set up lots of savings accounts, they had a
lot of clients there. Then they started doing two things. They set up deals
with local stores, that allowed you to buy online at discounts through
They also set up a fund platform, a fund supermarket where you could
invest through them. It was a very good deal on the investments, huge
choice, and hardly anybody used it. Lots of people used the online shopping
and nobody did the online investing. It was that problem that says you
understand the gratification of shopping. You never buy an investment for
the sake of buying an investment. It is a means of reaching that light
bulb. It’s another step in the process and for many people actually going
into debt is an easier way of reaching that light bulb because at least you
have the certainty that says, “I’ve got what I want and I know therefore I
will pay for it. If that means I’m paying for the next 5, 10, 20, 30
it’s still worth doing.”

Moesta: This is resonating with me along with a lot of the work that we
did in the home-building industry. I actually want to take this to another
place and talk about what’s in the consideration set when people think
about investing for their future and what are the alternatives? On the
other side how do you position yourself in a way that you can pull more
people into these investment products? I think what you said is extremely
true: investing for your future is really competing with going into debt
and getting what you want right now.

Moesta: As we talked about in France, one of the notions is you look at
the competitive set and talk about who’s emerging. I think the people to be
really worried about from a competitive perspective are those people who
are in debt and the banks are helping them get out of debt. There are these
new start ups local banks that help them get out of debt. “Pay $25 a month
to help get out of this debt.” But it’s helping them structure, giving them
the discipline but at some point the flip will be so easy: $Start giving
the $25 a month to start saving.’

Spiek: You create a momentum.

Moesta: It gets back to Clay’s point on disruption. The big guys are
only worried about the people who are worth $250,000 or more. The low end
the market they’re not interested in and the fact is the disruption is gong
to come when these banks can help these people get out of the debt, they
can help them save to get out of the debt. Once they build that
relationship…Again, what’s so interesting to me is that I actually think
the marketing of how people are differentiating themselves on the
investment advisor side is all on the wrong dimensions of value. They’re
talking about returns and a good balanced portfolio. The real good guys are
literally saying, “I can turn your dreams into reality.” The people who
are saying, ‘Here’s how many people I have and here’s how much I’ve helped
them get to where they want to go. It’s not about the return on
investment. The market is going to go up and down. It’s the people who say,
“My clients have been with me for 20 years because I can help them make the
progress they need to make.” The points of differentiation have to change
and will change because of how they get paid as well as what’s valuable to
the consumer.

Mohan: And to help them to understand what level of risks they
really want to take. The benefit of instant gratification debt is you have
certainty of outcome. You’re generally taking it on a fixed interest rate
and you know what you’ve got to pay. The real problem you have with
investments is if you want certainty of outcome you tend to get a very low
outcome and therefore it will be harder to achieve. Trying to help people
understand, when you’re looking at that schooling in 8 years time, 10 years
time, and therefore you can afford things to go up and down as long as
they’re going up and closer to that ten years time and we’ll make sure that
we are securing the position for you. It’s not turning them off from their
objective is I think a really hard challenge. Humans are very poor at
understanding risk, particularly risk over a period of time. Helping
them through that is a really hard challenge; and it’s not something we
really focus on.

Moesta: How does cash play into the mix as a competitor? As opposed to
investing I’m going to go a different route. I’m going to go into gold or
I’m just going to sit on cash because of the security aspect, the anxiety
side of the forces diagram.

Mohan: It does provide that absolute certainty and that is the
anxiety side that it plays to nicely. But clearly there are very few
counties I can think of where you can be investing in cash and be doing
better than inflation so you’re always losing money. Every day you’ve got
money in a bank account, the best deposit accounts are losing you money all
the time. The same is becoming the case with property; which is one of the
other sides; people are always trying to find physical means of savings
that they understand as a
different way of achieving the same job. You see people buying, as you say,
gold ingots, silver ingots. You see people buying properties. They’re not
buying them for anything except to do the same job as if they were to buy
investments. In almost all cases they are a less good way of achieving that
job but they’re real, physical assets and people like that physicality that
they understand.

Moesta: Who’s the gentleman we were listening to where he talks about
the cave man principle? It’s all about swe go virtual the fact is people
always default
back to the tangible. As much as you might have a technology where it’s
here’s the credit card and people will use it, the thing is there’s
something about having dollars or pounds or hard currency in your hand that
will always have…he calls it the cave man principle because people talk
about the animal they killed; but if they don’t bring it back nobody really
believes them. When you say, “I own that house or I own that piece of
property,” there’s this tangibility piece to it. Even though it’s cash they
can, at least, in their mind know what the cash means. They can go to the
bank and get this dollar amount bank. “I’ve got $50,000 in bonds.” What
does that mean? What do I have? They can’t manifest it into a concrete
thing. Part of it is to understand whether it’s about the concreteness and
I know what I’ve got and it’s not going anywhere, even though it might be
going down mathematically from an inflation perspective, the reality is
that pile of cash is not getting smaller. It’s staying the same. I might be
losing my buying power but the reality is if I stack all that cash on the
table it’s not leaving the table.

Spiek: The rational side, the finance and numbers side, would
say, ‘You’re not keeping up with inflation. The cash is actually losing
value every day,’ but that cave man principle will overpower that and say,
‘ Even if it’s technically worth less than it was yesterday I still have it
in my hand.’

Moesta: It’s still on the table and nobody’s peeling dollars off.

Spiek: It’s physically not getting smaller even though its worth
is probably getting smaller.

Moesta: There’s something to be said for that. I don’t know exactly
what it is. It would be interesting to do some interviews in that space. We
always talk about the switching moment; why would people switch from this
investment to cash? To understand those forces, it would be very
to talk to people about the last time they switched your investments to
cash or from cash to the investment? What are they expecting? One point I
want to jump back to is the fact that I think there’s a very large portion
of non-consumption here which is the point where people want to invest but
they don’t know what to do. They don’t have the time to figure out what to
do. The self service model has to be made to be simpler. The self service
model that’s been built is really to manage the transaction side of it; but
it hasn’t really improved the low end, to help people self service who
don’t have the knowledge or the know-how to know what to do with it. I
could say, “Fine, instead of putting this money in the bank I need to put
it into three things. What are the right three things just as a minimum, I
should put them in?’ People haven’t simplified; they’ve merely just
automated the transaction process. I think there’s another place where
there’s opportunity because I don’t think they’ve gone to the low end of
the market.

Mohan: That plays exactly to the story I told you about the
[inaudible00:? 23:22] who got funds and [23:25]. They had, I don’t know,
200 funds on
there. How do you choose? It wasn’t even as if they had one fund of each
particular type. If I looked on us we have probably about 4,000 instruments
that would be available. Now we’re doing it for financial advisors and we
hope therefore they know what they’re looking for. But if I opened up to an
end investor and said, ‘Help yourself,’ where would they start?

Moesta: There’s a paradox that people think more choice is good; but
fact is when you’re starting out more choice is bad because I don’t know
how to differentiate. If you could just give me five really different
things that I can pick that will at least help me understand where to go
with it I can pick from the five but I can’t pick from the 4,000.

Mohan: Exactly.

Spiek: We won’t get real deep into this but the other thing is
just the dimensions to wrestle with. I would say as a fairly naive investor
myself I don’t even know how to start to think about the decision. I can
balance short term return and high risk versus long term return and lower
risk. But beyond that just to start to look at that entire set and say,
do I weight these and rule things out?’ I would need guidance on what I’m
looking for and what tradeoffs I’m making. It’s impossible for me to even
start to dimensionalize the choice.

Moesta: It highlights the important aspect that the investment
and the opportunity investment advisors have for non consumption. They have
to get paid from the investor themselves now. The investor is going to have
to spend some time wrestling with, “What am I going to do?” They’re going
to realize they can’t do it. They’re going to need help. The whole aspect
of being able to figure out that transition…I believe they could make
money than what they’re being paid by the fund managers because the value
they’re adding is so much more from that perspective. It’s very

Mohan: I absolutely agree. Once the potential investor can
understand the real value that a good advisor can provide them; sharing the
benefits will not be the challenge. You will get rewarded, but it’s how to
understand that value. What is the job genuinely that that advisor is doing
and how does that work?

Moesta: It’s not about investment. I think it really gets back to how
do I want to live in the future and how will you help me make sure I’ve got
the money to do that? Or do I need to reshape my dreams, because I want to
own a house in the south of France. The reality is I don’t make enough
to do that. So either I have to reshape the thing or I’ve got to invest in
something that’s going to be fairly risky to get there. But you need to
help make it tangible for me. I have an emotional dream and the advisor has
to be able to help me make sure that it’s achievable. It’s more like a
coach than it is a retailer sitting there selling me, “Which product do you

Mohan: That coach analogy is excellent. You need somebody who
will act like a football person’s manager or their agent who helps you make
sure all the things you’re doing in your life are right. Makes sure you’re
not spending stupidly as well as saving wisely as well as thinking about
your career and thinking about the future and your retirement and really
where you want to go. Almost helping you understand, sort of the quoting
“How You Measure yYur life.” If somebody helps you do that on an ongoing
basis then investment is just part of the value of you understanding that
light bulb and understanding how you’re going to get there.

Spiek: Let’s talk about solutions for a couple minutes. This
still resonates with what we did in the homebuilding industry. One of the
solutions that we implemented was a model called ‘It is Possible.’ What we
were highlighting is, as much as I think people that have bought homes over
and over again take for granted the difficulties in the mortgage process
and the moving process, we were able to understand that for somebody buying
for the first time, or even repeat buyers, this created a ton of anxiety.
Applying for a mortgage, going through that entire process. How am I going
to sell my house? Just the anxiety of moving. I have the dream home of the
granite and the three car garage and all this stuff but there’s anxiety
around, “Do I have enough money to afford that? I don’t want to be told I
can’t afford it because it crushes the dream”. You’re going through this
entire process so we actually had a model where we would allow people to
interact with a website that let them lay their dream out or their
objectives out and lay out some information about their current situation
and would allow us to interact with them in a way that would say, ‘We will
help craft a solution to either get you to where we’re going or make some
adjustments on your path so you can get someplace similar.’ But it’s really
allowing them to paint a picture of their future. From a solution
perspective t allowed us to bring new people into the market that weren’t
in the market.

Moesta: How many people wanted to move but didn’t think they could. You
don’t think you can move? Come see us. The other thing that was important
was that people would come into the model homes and we would never actually
sit around the table with the mortgage guy, with the used home person, with
the client and the new home person all at the same table and say, ‘How do
we help you make this work?’ For us we pull in moving specialists, some
furniture people if we needed to but we’d literally sit down and ask, ‘How
do we shape the dream?’ Then we’d frame two or three alternatives they
could walk through or project their life into and from there they could
decide. The thing that was always most amazing to me is that before we did
that literally nobody sat around the table until the closing of the house.

Spiek: Is this a matter of having the realtor or some specialist
that knows homes in the south of France on the call saying, ‘This is what
you can expect. This is what this looks like. This is what you should have
in the bank and what you should expect to pay, this is the goal you’re
working towards,” to be able to craft the entire solution.

Moesta: I could see something where the investment advisor becomes a
goal advisor and pulls the right people in and says, “Let me do a little
research on homes and see where they’re going.” Or, “Education. Here’s
where it’s going. Here’s what’s going on” . It’s helping people manifest
those dreams and then basically saying here’s where things are going.

Spiek: And make it concrete, right? The last thing I want to do
is I’m investing and I’m putting off that…

Moesta: What did you say, Steven?

Mohan: This is exactly…the funny things is most financial
advisor have a tool which allows you to do thing that says, “Tell me how
many years away and tell me how much money and tell me how much risk you’re
willing to take and I will tell you the answer.” They do all of that non-
emotional of exactly that journey you’ve talked about. The financial bit of
that journey they do every time and they completely remove all of that
emotional part of it, all of the context.

Spiek: You put it into a spreadsheet for me but I still
can’t…there’s still some emotion around “did I get the number right?”
What if we estimated this wrong and I come up short and I can’t afford the
house or I can’t afford the education? Did we talk to the right people up
front to make sure we’re putting the right numbers into this calculation?”

Moesta: At the same time there are two types of risk; there’s economic
risk and then there’s the risk of did I miss it by 10% or 20% on the goal
end. Again, I think there’s a lot of opportunity for the investment
advisors because I just think that they’ve taken it to the other side of
the market. The commodity of the market is the rational side and the
premium of the market is the emotional side. An emotion isn’t, ‘Hey, I’ve
got a nice office and a comfortable place for you to come.’ It’s the
emotional wrestling that the investor has to do to answer, ‘What do I want?
Where do I want to be in my life? What do I want to do?’ Am I the agent
for the football player or am I merely just a salesman of many different

Spiek: But to be a coach you need to allow the consumer to
wrestle with that problem with you. If you’re putting forth a solution
where when you step into my office you need to know exactly what your dream
is, exactly how much it’s going to cost, and then I’ll tell you how to get
there, there’s too much anxiety. I need to shape up all of this stuff
before I even call you? I’ll never make the call.

Moesta: What happens in this meantime is you know you need to be saving
cash, you’re putting it on the side. You’re not really investing it because
you don’t know where to go with it so you’re holding cash and you’re
kicking it down the road or you’re just spending it. This gets back to
Whitney’s book. Whitney Johnson wrote a book called Dare, Dream, Do. It’s
literally the same scenario: people don’t dream enough and figure out how
they’re going to get there. The investment side has swung so far to the
rational side. Like you said, how do I actually figure out the kind of risk
I want to take? I have no concept to connect that back to my dream because
if it’s my dream I’ll do whatever I have to do to get to the dream. When
you talk about the risk is it the risk that I don’t get there or…that’s
where that notion of risk is not an easy concept in which to translate.

Spiek: Whitney’s approach could be very powerful in this realm as
well because she approaches it from the fact that even if you are dreaming
a lot of people don’t have the tools they need to make the tradeoffs. I
could set this lofty dream and the anxiety of the dream is so great that
I’m not sure I’ll ever get there, it becomes too far out. She approaches it
from how do you make the tradeoffs and how do you chunk it out into logical
steps where you can actually achieve these things and make them real.

Moesta: The goal is the trade offs. You might have to revise the dream.
You might have to revise the investment strategy. You might have to revise
what you spend. At some point, you can’t have it all. The investment
advisor’s job is to help you manage those tradeoffs, make them explicit and
help, not just on the investment side, because it’s not like you manage my
arms and someone else manage my legs. We’re all one body.

Mohan: That’s exactly it. And people do tend to buy the solution
rather than anything else. My argument with my wife is often we would love
to have a ski chalet in ten years time. She would prefer to buy a ski
chalet now and pay debt on it and be able to use it for two weeks a year
than to invest now to buy one in ten years time which we will then know
what size it needs to be, what shape it needs to be, where it needs to be.
It’s illogical but emotionally it is the way she would solve that problem.

Spiek: But it’s predictably irrational. At some point is
perception reality? As much as investments are I’ll say objective, or you
can compare [inaudible 00:37:22] most people have their own set of
realities. There’s
nothing irrational from her perspective about that view.

Mohan: If I went the other way round and said, “Let me take out a
mortgage so I can invest it in funds for the next ten years,” she’d think I
was crazy.

Spiek: Anything else? We’ve got a couple more minutes. Do you
have anything more to add, Steven? I think we’ve covered this pretty well.
We didn’t get to the wine side of things so there may be a repeat guest
appearance to get you back on to talk about that.

Moesta: I would like to do that because I want to get to the Morgan
story. Your whole notion of why you drive a Morgan back and forth to work
is a great conversation and I’d love to be able to pull that one out again.
I think that gives an example of…people buy cars for different reasons so
we’ll see if we can hit that one next time.

Spiek: Great conversation.

Moesta: Thank you very much for taking the time and in a couple months
we’ll have you back on.

Mohan: Fantastic. Thank you both.

Spiek: Thank you. This wraps up our episode. Join us next week.
We still need to talk about Apple TV and how TV is becoming social as well
as Instagram video and how they’re moving into different spaces. Thanks for
joining us.

Leave a Reply