In today’s episode, host John Laurito is joined by someone he’s known for 20 years and the Chief Investment Officer of BASH Capital, Scott Shaw CFP, CFA. They talk about how Scott’s life was before reaching a fork in the road and deciding to transition from being on the passenger seat to taking the wheel and get that CFA designation for himself. He also shares what it’s like as a CFA, what he does, and how he can better help his clients than he ever could.
Scott Shaw is dedicated to implementing BASH Capital’s Investment philosophy using an effective and purposeful approach. He is focused on delivering portfolio advice that provides clients with the expertise they deserve and an added layer of due diligence.
Prior to starting BASH Capital with Matthew Bagell, Scott was the Managing Director of his own financial firm Mainline Wealth Management and owner of his franchise at Ameriprise Financial. Over the past 19 years, he developed a wealth management practice composed of investors and financial planning clients from a variety of backgrounds. Scott has focused his career on providing the most comprehensive and efficient approach to portfolio construction, and asset management. His dedication to implementing CFA Charter best practices is what sets his advice apart from others.
Find Scott on: LinkedIn
[2:26] What Scott’s path looked like and how he figured out the right step
[4:53] His fork in the road
[7:16] On wanting to be in the driver’s seat for his clients
[8:45] What is a CFA designation?
[14:19] His transition to being a thought leader as a CFA
[17:46] Working and dealing with clients
[22:01] How he helps people become more self-aware
[25:41] His “Daily 7” habits
[30:40] Scott’s parting words of wisdom
John Over the last two decades, I’ve been on a quest to learn everything I can about leadership obsessed with what makes the best leaders so good after running companies small and large for the last 20 years. Today, I speak on stages all across the world to audiences who are interested in that same question. My name is John Laurito and I’m your host. I invite you to join me on this journey as we explore this topic. What makes the best leaders so good? Welcome to tomorrow’s leader. All right, tomorrow’s leaders.
John So this is a great interview, this is a guy reconnected with I’ve known for about 20 years, Scott Shaw. I had the privilege of working with him and he just came into the business. And this guy has just navigated his career extremely well and really, most importantly, found what his kind of unique spot is and his unique abilities and has just done tremendously well. He’s chief investment officer of Bass Capital, has a CFA designation. Which, wow, like talk about hard, unbelievably difficult. I have all the respect in the world for any CFA out there. And we talked about all kinds of stuff, managing the forks in the road of life and stepping outside your comfort zone. Really, really cool guy. Great conversation. So here you go. Enjoy it, Scott Shaw.
John All right. Welcome to today’s episode of Tomorrow’s Leader, where we dove deep on all things leader related related to leaving yourself and leading others. I’m John Laurito, your host today with a great guest, a longtime friend of mine, Scott Shaw, who he and I got the opportunity to work together years ago. Scott, what has it been now? 20,.
Scott 20 years.
John 20 years? Wow. Well, welcome to the show, man. Thanks for joining me.
Scott John, it’s a pleasure to be here today. Thanks for having me.
John Yeah. You know, I know you and I caught up recently and reconnected and talked about a whole lot of stuff. And I’m really happy to have you on as a guest because I know there’s a lot that you can share with the audience. So we got people in all different walks of life to listen to this podcast from new leaders to leaders of organizations and CEOs to people that just want to leave their lead, their life better. And one of the things you and I were talking about, you’ve really navigated your career path very well. And a big part of that was really figuring out what path made the most sense for you. I know when we started working together back in 2000 or whatever that was, you were you came in as an advisor, a financial advisor. And then I know I remember quickly saying, wow, this guy’s got a lot of leadership potential and started you on a path on that direction. But why don’t you just share a little bit about kind of what the path looked like and how you figured out what the right step for you was? I think that’d be great for the audience to hear.
Scott Yeah. Thanks, John. Yeah, it’s been about 20 years back in 2001, really launched my career under your guidance as not only my first manager, but probably my most impactful one on my career as I look back, which I’m sure we’ll get into so many things today. But really what launched me into management was yourself and seeing your styles and how you worked with advisors. And I went down that path and became a coach, began working with advisors and sitting in meetings and guiding them and trying to help lead and I guess mold their future careers. And even as a young adult myself, I still needed so much mentorship from you. But, yeah, being able to dove into that type of of a practice where I was working with my clients but also working with advisors, it taught me a lot about myself.
Scott It taught me a lot about the type of leader that I would become and that I am today. Somebody that likes to lead by example. I do like to get my hands dirty and I like to work and I like to get into a case analysis and work with advisors. But I am much more of that doer. And I, I, I really discovered early on in coaching that sitting there with advisors next to me while being fun and being a teacher was not going to be my and my own platform, which was really to be working with advisors. And I decided quickly to focus on my practice, focus on developing a client service model that clients would look at and enjoy their experience. And they would see value in my practice. And then really, as we spoke earlier about my fork in the road, came like many advisors in the Great Recession of 2008. But, yeah, I mean, talk about a time period that squashed many of my peers. I mean, it took a lot of people of the industry. So for me, that was the fork in the road. I told you briefly about a story if you want me to go into it.
John Yeah. Let me ask you a question, though. When you know and I’m I’m a big believer that there are sometimes things that happen in life that are out of your control. 2008 certainly was bigger than all of us and out of our control and influence with the markets and the economy. But there sometimes. Weird things happen that put a fork in the road for you that actually make you really think about, OK, am I on the right path or do I need to change paths or do something different? Is that what you felt like 2008, 2007, 2008 was for you?
Scott Yeah, that’s exactly right. That was my fork in the road of figuring out long-term, what am I doing? What’s my strengths, what’s my weaknesses and where am I going to thrive in financial services? The irony is I was sitting in a synagogue in high holiday services, and it was Rosh Hashanah of 2008. And I took my phone out of my pocket and checked what the Dow Jones was doing and saw it closing down 700 points. And at the time, that was a large drop. Clearly, my mother did not like me doing that in synagogue. And I got the wrath. But at the same time, I recognized the feeling that I have is a lack of control. The feeling that I have is not what I perceived my clients to want me to have at that time. And I didn’t feel like a money manager. I felt like I manage relationships and I do financial planning. And that is a large part of the game. But it wasn’t what really got me motivated to get out of bed every day and go to work. And I decided at that moment to go down a different path in financial services and to become a CFA charter holder to begin that curriculum with something that took a lot of discussions back and forth with family, knowing that it would be a path that would not be easy and not be short. It would take years and a strong commitment I would have to sign.
John I want to talk about that because I have immense respect for you and anybody as a CFA designation because it is, I think, one of, if not the hardest situations to get. So I want to talk about that with you. But it sounds like what I hear you saying is your it was almost like this light bulb of anxiety over the fact that you didn’t have control or you didn’t necessarily have the clarity on why things were happening and almost felt like you were in the past. And I don’t wanna put words in your mouth. Did you feel like you’re almost in the passenger seat of the car with managing money versus wanting to be more in the driver’s seat of being able to make decisions based on knowledge that you gained yourself? Am I summarizing that right?
Scott Right. I think you’re summarizing it accurately. And I think I’ll always feel like I’m scratching the surface of the markets and really an equity analysis of what I do. But, yeah, you’re right that that feeling was there of sitting in the passenger seat along with my clients, a lot less in control, a lot less navigating the ship. And that had changed, especially if I wanted to bring my practice to levels that I felt it should get to.
John So you began the journey to get the CFA designation so tell, share with everybody what that is and what is the process? Because I know it’s an unbelievably rigorous test and process of many years. Tell the audience what that’s all about.
Scott Yeah, well, it certainly makes a root canal enjoyable. I can tell you that there’s no doubt that when you embark upon the CFA curriculum, you are really setting yourself up for what is the most challenging curriculum in finance that will take your education to a level that you didn’t think that you can get to many times along the way. I had strong doubts as to whether or not I would complete it. I guess each level I had backed out from level one, two, and three as to whether or not this was going to happen. But yeah, after spending close to six to nine months every single year, committed to studying every day in twenty fifteen, I was able to finish it. But this was one that would to me every level gained more and more confidence in what I do. And I often got the question of why are you doing this? I got that from peers, from leaders, from family, and from friends of why are you doing this? Why are you putting yourself through this seven days a week? You’re up in the middle of the night studying your work and then study, and that’s it. And I want it was something that I wanted in my life that was a huge goal for me of being able to attain that designation, knowing that that was the pinnacle of what I perceive to be in asset management. And it was my personal goal. And I simply had the attitude of I want to finish this.
John So and they give the exam once a year. And if you fail it or miss it for some reason, you literally have to wait another year.
Scott Yeah, I think now it’s a look with covid. They changed a couple of things. And now the computer-based system, I think that level one and maybe one of the other two levels are also on the computer. But yes, sitting in Philadelphia Convention Center with in level one, a few hundred students level to a table, level three had like five people. It was it was it was. It’s very interesting. And I’m exaggerating the point, of course, because that that anxiety when you sit there, that gets a lot of people you have to have a very strong mental game and you have to be very prepared. It’s certainly not a curriculum to go unprepared and to.
John Do you know what percentage of people actually complete the program?
Scott So this time around, I believe. Well, let’s see, maybe in the low teens’ complete all three. Certainly first-time test takers for level one, I believe it’s close to a 40 percent pass rate, maybe a thirty-five percent pass rating for level two. And then I believe it was in the 20s for level three. So the cumulative math would mean that, yeah, it’s probably in the low teens of people or the high single digits of people that make it all the way through.
John So how did that feel? And do you find out right away that you passed or do you get a letter afterward, or?
Scott No, they make you walk home crying, thinking you felt that that feeling for me every time walking home from the convention center. And by the way, that was like a ten-minute walk home, it would take me like three hours to get home. Like, I would walk throughout the entire city going through every single question in my head and trying to think of what what went well, what didn’t go well. And I just came to the same conclusion of: time to go back to work, go service your clients. And in a month and a half, you’re going to find out if you’re studying for another nine months.
John What do you get a letter or do you get an email or?
Scott Yeah, you got an email. And the second that email hit your inbox, like, wow, sorry, that was that. That’s stressful.
John And so what did it feel like when you found out you passed the final level and you now had completed it? What what did that do you remember that moment pretty vividly?
Scott I remember it like the back of my hand. I for the first time for any of the exams. I went home. I couldn’t tolerate the anxiety. I went home and waited and was like literally like right outside my house and got the email and went inside him and was with my wife and my daughter, who had she had been born. She was almost two years old at the time. So it was a very, very, very rewarding moment to share with my family how they went through it equally with me.
John Wow. That’s got to be emotional. I mean, wow, if they’re all that hard work and. Well, I mean, congratulations. And that’s a perfect way to find out with your family because they’re obviously it takes a lot of support from them to make it through that. I’m sure it’s kind of like the Navy SEALs of the financial industry designations.
Scott Except for the fact that they could do a lot of damage to my body with just their pinkie. So other than that, sure.
John Well, I wouldn’t want to mess with a Navy SEAL. I wouldn’t want to mess with the CFA, maybe a Navy SEAL who is a CFA. That would be a dangerous combo.
Scott Yeah, with our calculators out.
John But I will say so the interesting thing with you is you it sounds like you came to this conclusion and I see this in all different industries, there’s a difference between sharing information that you obtained from outside other sources and a whole different level or a difference of being a thought leader where you’re truly the one that’s studying things and digging in and coming up with your own conclusions and sharing those. And that’s what I thought, Leader, is it doesn’t matter what industry is, my industry, your industry, any industry. And it’s not you know, you made that transition, which most people don’t. It’s interesting because it’s very hard. It’s not like, OK, I’m going to be a thought leader. And let me just now embark on the thought leader one on one program. It doesn’t work that way. What what is? That done, when you win, you now you have that designation, what was involved in. Tell us about that whole transition of now being equipped to be able to come to your own conclusions about stuff and how that’s changed your business and how you’ve impacted other people.
Scott That’s so important and very specific. The investment policy statement as a thought leader and going through the CFA curriculum, I really believed that adopting the investment policy statement of working with clients was important in our world where so many of my clients for at the time of over 15 years, had never even heard of what an investment policy statement or an IPS is or how useful it is or the tool itself. And the reality behind it is now when at Basche Capital, what we do is bring the analyst myself and the financial planner to the table. So when we’re working on an investment policy statement and we’re talking about risk, we’re talking about it from different perspectives, emotions, and behaviors, where we certainly ask the common questions of how would you feel, but also the quantitative aspect of a client’s ability to take on risk. Well, and a client’s ability. That’s a quantitative answer that’s based on an analysis having nothing to do with behaviors, emotions, or cognitive biases. And that’s where I’ll bring to the table an analysis for the client that is based on their ability as well as willingness. Now, what we try and do is educate. We like to jump up to the whiteboard and with our clients educate so that there is a clean correlation between a client’s ability and willingness. You can imagine the difficulty of working with the client if they have an extremely high ability to take risks from a client perspective. But are the willingness to buy anything riskier than a CD, isn’t there? That’s difficult. We want to really help educate and vice versa as well.
John Mm-hmm. It’s interesting because people, you know, they get they get they get influenced by the potential for rewards and gain, but don’t necessarily understand risks that are involved in getting that or potentially getting that. That’s interesting. So a lot of what you do is dealing and helping people understand emotions and as well of not just the financial or data related info that’s backing up a decision, but emotions are a major part of every decision as well as financial decisions to your emotions.
Scott I find clients make more emotional and behavioral decisions less so than the financial ones, the ones that make economic sense. And we like to bring that out and put it on the table. And everyone says to us how their house is worth more than their neighbors. It’s the exact same home and their house is worth more because they did X, Y, Z, or I bought a stock, I bought alphabet at X, Y, Z. So I want to sell it at that price. So we anchor to that these we want to call clients out for it in a very common way and friendly way so that we can understand and learn from it.
John Yeah, it’s interesting. There’s been a lot of studies about that. People feel that if there’s a natural bias if they own something and it’s theirs, it’s worth more. It doesn’t matter if it’s an idea, if it’s a stock, if it’s a house, it doesn’t matter what it is. If it’s theirs, there’s a natural tendency for us to value it as being higher versus if we were going to buy it from somebody else. We naturally, same item, but we’d naturally value it less.
Scott And you know, what’s so funny about that is it’s similar to now in this market today. We’re sitting here on August twenty-fourth and markets have been a little bit more volatile over the last couple of weeks here as seasonality has picked up. I get recency bias of clients. The feelings come right back of, oh my God, is the market going to drop again, or are we going to have another falloff? Because very recently it did. Yeah, a year and a half ago. So that I tend to look at those sensitive feelings and I remind clients that you don’t get a bull market that pops when all the investors are skeptical or pessimistic. You usually see those bull markets die on euphoria, as John Templeton said, best and worst. Certainly not at that point now. But I see that recency bias coming into today’s markets.
John It’s like somebody going to a casino and playing roulette and they’re betting on red or black and they see that the last nine spins of the wheel have been black. So there are some people that think, OK, well, the. The next one’s going to be black. It’s on some kind of run or they might think the other way, well, because of those nine, then it’s going to be red. In reality, it has no impact whatsoever. The statistical odds are still the same. Exactly. You know, but it is interesting, you know, understanding people’s biases and how it influences decisions. And those are great ones. So there are other biases that you see that you are working to help clients understand.
Scott Yeah, I mean, we go through and clients represent things that are really not there. Representativeness bias. We also see a home bias of clients that have a fear of investing overseas in the international markets. So they stay domestic right now, which is certainly protected them. But when we look longer term, diversification within asset allocation will help clients in terms of reducing their risk. So we do try and identify. But to me, the biggest ones I see are recency, the anchoring bias, and endowment bias, where people do believe, as you said, the assets that they own are worth more than the assets that they don’t own, and that that I do see every single day. So we try and remind clients of that. I’m very agnostic to short-term market moves as clients know. And each month they hear from me in terms of what I believe is occurring in the markets as well as the economy. Give them a quick update and more or less try and let them know, hey, here’s what you’re going to probably see happen. As seasonality ticks up in August and September, that volatility occurs. It kind of gives them that recency of, hey, I just read that they’re aware of it. They’re on top of it. And I could call them any time if I have another question.
John So how do you deal with people that may not know? Because I think and not just with financial decisions, but with all decisions that do have biases, which most, if not all of us have to some degree, but may not realize that. How do you make how do you help somebody become more self-aware? And you’re speaking to a wide audience here of people from all different walks of life. How can they be more self-aware and maybe pick up on the fact that, hey, you know what, this makes sense? I do have a bias and maybe I need to be more cautious.
Scott You start right with the heuristics of what you’ve done in history. Go right to the statements for me in my world. I look at what clients have owned in the past and usually, there’s a story behind it. Oftentimes it’s not because the investment was trading at an attractive valuation. It’s because of a reason. So for years, I saw shares of Cisco in clients portfolios or stocks that some of us would remember from the dotcom crisis that was held because clients were anchoring to where they purchased it at and had they just sold off investments that were no longer working and reallocated, they probably would have recovered. I witnessed that very often early in my career of holdings that were constantly in every portfolio. And frankly, I guess we can all say that we saw that in the real estate market, too, because, yeah, the first eight years of my career, every real estate investor would often say to me, Scott, why would I ever invest with you on the equity markets? You can never lose money in real estate. So why would I ever do that?
John Yeah, and it’s so funny to bring back memories. I remember I started my career in ninety-five, ninety-four, and the market’s ninety-five, six, seven, eight, nine, literally shot straight up and it was twenty, twenty-five, thirty percent returns at some points. And I remember expectations being so off where people would come in and say, listen, unless you can guarantee me forty percent I’m not going to work, why would I work with you. I mean it was almost absurd and it was built by the recency bias of what had happened. It’s OK. Well, of course, it’s going to continue to happen. It’s happened. It’s been happening.
Scott But it is a euphoric belief that you could probably point to other points in your career, also with real estate of how people may have had a single parent with one income, two children able to get a mortgage, and then two investment properties. Yeah, without putting documentation down. Right. Like, there’s just I mean, there’s anecdotal evidence of irrational behavior that in hindsight if you look back, you would say, oh, I would have done things a little bit different.
John Well, what I hear you saying, which is great, is I mean, bottom line is there are patterns in people’s behaviors. And if you look back for that person who might be saying, well, how do I make better decisions, whether it’s financial or life or relationship or job or whatever, looking back at the decisions you’ve made. And how you’ve made them, you know, we used to ask that question, what was your best investment? How did you make the decision or your worst investment? How did you make what factors did you look at? And you’d see that most people stick to the same kind of premise of how they make decisions financially is how they make decisions in relationships and everything. It’s not that dissimilar in terms of the biases that they may have.
Scott Very true. Very true.
John That’s excellent. Well, I know you mentioned and I thought that was really interesting that you’ve got a and I think you called it your daily seven or your seven habits. And I love that in terms of how you kind of run your day. Can you share a little bit about that?
Scott Well, of course, you love it because, in 2001, you were the one that would make sure that that was ingrained in my every day so that I became a systems-based person. And I am a systems-based person and I execute that way. So everything in my day today is developed where there is a system, there is an operating procedure for doing it. And if I don’t have one, I will get very anxious and stressed over that. But I generate leads every single day. When I was starting my career, I knew that that was my core number one activity that had to be done to generate leads. I had to schedule initial appointments, scheduling an initial appointment and 2001 and 2002 is a lot different than it is today, especially when you are nice enough to give me a lot of big leads that may or may not have been called dozens and dozens and dozens of times.
Scott So scheduling initial appointments was very important. Holding appointments was critical, meaning the people that you’re scheduling appointments with were actually showing up. That was a pretty big conversion ratio that we looked at servicing my clients. I didn’t have many clients in the beginning to service. So every client I got, I made sure that this was top-notch. Everything was done right away on time. You literally couldn’t mess up if you only had three clients. So that was critical for me. I also believed in following up with contacts. And you had a specific terminology for what is a contact because that’s very general and broad. It was somebody that I was able to keep on the phone for two minutes and have a conversation with me. I was then expected to set an appointment with that person that was setting the right expectation for myself. As maybe unrealistic as it may have been, following up with contacts was critical.
Scott One of my biggest ones was self-development goals. Every single day I set aside time to do self-development and I began right away with the CFP. I understood that if you’re going to provide advice, strategic advice, and planning the CFP curriculum, that being a fiduciary, providing advice along with those guidelines and with the standards of practice that the CFP promotes, to me that is where every client should begin and that’s where every advisor should strive to be at. That was important in self-development, along with really wanting to teach, wanting to be a Chalk Talk teacher, and get really good at that because I learned from the best. So I wanted to make sure to also become the best at teaching the different strategies that we were implementing day to day with clients. Those seven habits, to me that were ingrained. That was every day. If I did those seven key activities, I knew I was going to bring on one client every single week. I knew that right away. I knew if I did fourteen hundred dollars I was going to get forty contacts. I was going to set twelve, four were going to show, one was going to become a client. That was my number and I would memorize it like my birthday.
John Well the great thing about that is and I obviously you know me well enough to know that that’s how I operate my life that same way. And the good thing is most people don’t realize the power of being able to focus on what you can control, which is the activity most people get so bogged down with the results of their life or their business or finances or whatever. And in reality, the result is a function of what you’re doing and your actions and your habits and your patterns. And when you break it down and say, hey, let me just focus on those actions and behaviors and patterns and and and define what a successful day is, that’s the other thing. Too many people don’t know. How do they win the day? And coming up with the concept of, OK, here’s what I want to achieve every day, it doesn’t matter if it’s one thing, two things or seven things.
John These are the must-dos that no matter what, I will make sure that I do and accomplish. And it’s such a confidence builder, because when you do that and you get in the habit of doing that and maybe it’s starting with one and then moving to. Two, and then moving to three, but when you get in the habit of that, it just builds this feeling that you can if you do one, you can do two and you can do to the could do three, this feeling like of growth and accomplishment that feeds that confidence that you have. So it’s a great way to live life. And obviously, you’ve had tremendous success, not just yourself with your company and also with your clients too. So it shows it works now.
John Well, this has been fantastic, my friend. I know we’re at the end of our time here. As far as people a couple of questions I’m going to ask you in a minute, because people that want to get in touch with you how to do that. But in terms of maybe parting words of wisdom, you’ve got a lot of leaders, a lot of people that are kind of maybe in that point where they’re in a fork in the road and they’re trying to figure out what’s the right path or what do I need to do to make sure that I’m reaching my potential and happy and fulfilled. What parting words of wisdom might you give to them that can help them kind of take a step in the right direction?
Scott That’s great. Well, I would say that one of my mentors and one of the smartest people I know who helped raise me said, you need to love what you do when you show up to work every day, you should be happy. You should love what you do. And that will really help in terms of your striving for the highest level within your career if it’s financial services or something else. But if you’re not happy with what you’re doing and you’re looking elsewhere, and that to me that that takes a lot of guts. That’s something that I deeply admire. People that recognize, you know, I’m just not happy here. And I’m going to get up and I’m going to probably do something else, and I respect that a lot.
Scott So for me, my advice to people is to really love what you do. And I love coming to work every day. I love managing money market expectations and really providing advice around the markets and the economy. It’s what I’d love to do. I’m centered around some great financial advisers. I have a phenomenal partner who’s amazing at what he does in terms of financial planning and relationships. And as good as he is, that allows me to be happy. That allows me to do what I love to do is having a good partner. I waited a long time to have a good partner in financial services because that’s not easy. That’s a very difficult partnership to embark on in finances is joint practices. Luckily for me, I found somebody that we had synergies because as an analyst, he saw what I would bring to the table and from a marketing perspective, from financial planning, from the attention to details, the ability to manage a business. I saw that in my partner. It allowed me to stay in my avenue of money management. If I have to go out of that. That’s where those discomfort that that’s not what makes me happy. So that allows, so that to me was extremely important John is having a great partner to support me.
John I love it. Got to have the right people around it for sure. A great parting words of wisdom. We’ve been here with Scott Shaw, CFA, CFP. He is a chief investment officer, Bash Capital, and a great friend of mine. Scott, great to have you on the show. I really appreciate it.
Scott Thanks a lot, John.
John You got it. And thank you all for tuning in today on today’s episode of Tomorrow’s Leader. As always, appreciate you sharing, subscribing, like, go down below, give five-star reviews, and always appreciate your ideas for future content and future guests. For now, thank you for joining us again, Scott. Thank you. And we look forward to seeing you next time. Take care.
John Thanks for joining us on today’s episode of Tomorrow’s Leader for suggestions or inquiries about having me at your next event or personal coaching, reach me at John@johnlaurito.com. Once again, that’s John@johnlaurito.com Thanks, lead on!