Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York City, you're inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for 225 years. Each week we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Sometimes we all need to ask for advice. For example, I'm constantly texting my home theater guru, [Nathan Ladato 00:00:53] about whether it's finally time to upgrade to the new Bravia XR Z9J 8K HDR television from Sony and that's NYSE ticker symbol S-O-N-Y. Having a trusted expert on retainer, or at least on speed dial puts you at ease and reinforces that you're making the right choice. And from time to time, businesses need advice too. They turn to consultants firms like Bain, Boston Consulting Group, who provide an external voice to understand the problem you're facing and help improve organizational effectiveness. Reliance on external analysis and advice has always played a critical role in helping even the biggest organizations retool and reimagine their product set. BCGs website, for example, has this great case study of how Bed Bath & Beyond's new CEO, Mark Tritton, pivoted amid the pandemic to preserve liquidity and reduce debt shrinking his physical footprint by permanently closing 200 stores and accelerating the company's move from multi-channel to omni-channel distribution.
Josh King:
But beyond the big players in the consulting world, there's this wide range of smaller consultants who focus on specialized aspects of the management challenge. And here's where it really gets interesting. One such firm ReD Associates, a boutique shop with offices in New York and Denmark argues that the traditional strategy tools really need to be amped up with other skills, combining anthropological, sociological, and ethnic graphic research to help its clients develop a new perspective and strategy for their businesses. The managing partner in charge of ReD and the woman who oversees its fast growing financial services, insurance and healthcare practices is Millie Arora. She runs the firm's day to day operations as the group has expanded and helped clients achieve organizational effectiveness. Over the nearly 300 episodes of this show. We've talked to founders, CEOs, CFOs, regulators, investors, attorneys, board members, marketers, advertisers, and just about every other expert in the industrial ecosystem. But for our first foray into the world of management consulting, our conversation with Milli Aurora is coming up right after this.
Speaker 3:
The transition to electronic trading is gaining support in fixed income markets, presenting opportunity and driving demand for data. At ICE, we're a leading provider for fixed income data and analytics. We offer a comprehensive fixed income execution solution via ICE bonds, committed to execution quality, transparency, and information. We provide a wide range of platforms with deep liquidity pools that support multiple trading protocols. Our fixed income indices can be tailored to your investment strategy, powered by our data. Our ESG data offers increased transparency into fixed income markets. Access the ICE fixed income ecosystem, including the ICE bonds execution platforms, evaluated pricing and analytics via ICE fixed income select. By creating a single point of access for our execution platforms, customers can utilize a variety of trading protocols and manage risk. ICE supports your end to end fixed income workflow, increasing transparency, execution efficiency, and data access across the fixed income marketplace.
Josh King:
Our guest today, Millie Arora, is managing partner of ReD Associates in oversees the strategic direction of the firm globally. She also drives ReD's practice in financial services, insurance and healthcare in the US. And prior to her nine years at ReD, Millie served as assistant vice president of strategic planning for New York City's Economic Development corporation, the KIPP Foundation and the consulting firm, L-E-C-G after getting her degrees from Cal Berkeley and her masters in economics and public policy from Princeton. Welcome, Millie, inside the ICE House.
Millie Arora:
Thank you for having me. Pleasure to be here.
Josh King:
So, Princeton has long been seen as an assembly line for management consultants. And in fact, you were co-chair of its graduate consulting group. Did you always see that as your career path?
Millie Arora:
Funny enough, I didn't. I started my career in consulting, as you rightfully stated at an Economics Consulting Group where I spent long days trying to measure the consumer harm and or benefits of major mergers and acquisitions happening at the time, PeopleSoft, Oracle, you might imagine cases against Apple, iTunes and Napster at the time. And it felt too abstract for me being in the world of consulting, to be honest. And that's where I pivoted. And I went into the world of education and research because I really wanted to have an impact with people on the ground. I went into policy school and Princeton, as you mentioned at the Woodrow Wilson school there. Trying to really understand what are the underlying drivers of the economic system, of different networks that interact with that system, nonprofits, government, local institutions. To figure out how we could come together to effectuate change in the world.
Millie Arora:
As part of my time with the graduate consulting group, I did a really fun project with the city of Newark, trying to think about their sustainability efforts at the time. They've got a massive port, has a lot of sustainability issues with that port not only in terms of air quality and so on. And what I really enjoyed in the world of consulting is thinking at a systems level about how to effectuate change. But I always thought I'd take that back to sort of the grassroots local level. So, it's funny that you ask that question now almost 15 years later, after my graduate degree that I'm back in the world of consulting. And I think it's because, the world of consulting allows you to step back and reflect of all the different pieces that need to come together to solve really complex and critical issues.
Josh King:
How did you find your way to Berkeley in the first place in the beginning of that trajectory that ultimately led to this career you got?
Millie Arora:
So, when I got to Berkeley, my eyes were opened and I was a drawn to the field of economics and in particularly development economics. Because it was a field in which yes, there were theories and ways in which you could explain how growth was experienced in countries and particularly development countries. Yet at the same time, there was a burgeoning field of trying to understand root causes in root drivers that could be explained by economic models. So, I had an amazing mentor, thesis advisor, Ted Miguel, who's gone on to write numerous books in the field of development and economics. That tried to understand those root causes of why kids don't show up to school. And how can we start spending time with people in the field and bringing that data into economic models to help drive policy change. And that really was the catalyst for me and the work I do even now at ReD.
Josh King:
We touched briefly on it during the introduction, but I think it would be helpful to hear directly from you who, what exactly is ReD Associates and what's the story behind this Danish New York based consulting practice?
Millie Arora:
Yes. So, ReD is a social science strategy consulting firm. And a lot of people confuse that with social sciences. It's just about understanding people or organizational change, but really we are a boutique firm that is all about understanding the social and cultural forces that shape human behavior, that shape why we all do the things that we do. And bring that understanding into the heart of business decision making. So, whether it's advising our clients like Samsung on its future product roadmap or service definition. Or thinking about large firms, trying to think about the intersection of social and moral issues, such as sustainability and business. A lot of our clients turn to us for some of these big existential fundamental issues, facing future strategy, future product definition. How they should engage with the customers. How they can rebuild that trust with customers.
Millie Arora:
And we use the tools of the social sciences, now I have an economics background, but many people here at ReD have an anthropology background. Our history, philosophy, sociology really it's a myriad of different types of people that share a common interest in understanding people and culture and using that to advise CEOs and CMOs and major strategists in a lot of our firms.
Josh King:
What's the Copenhagen angle?
Millie Arora:
The Copenhagen angle are founders are from Copenhagen. So, we got our footing 15, 16 years ago by a philosopher economist sociologist who back then it wasn't popular to really do this. Human centricity, customer centricity, understanding people really wasn't lexicon that was inside the world of business. Traditional management science reign the day. Everything had to be measured, put it into a spreadsheet. The way of reasoning inside of companies was objectively.? So, you have a set of hypotheses, you test those, you figure out what's the way to grow your greatest market share.
Millie Arora:
And that's how you big business bets. People in some ways were taught to forget, even if you came from a social science background. Forget all of that stuff. Really here, it was about the hard sciences. And really the philosophy was is that really true? Aren't companies really at the service of customers ultimately, and shouldn't there be a space for the humanities in big business decisions. So, that was premises. And a lot of our early clients were Danish clients and continue to be. So, Lego is one of the flagship cases that many people who've heard of ReD have heard about our work with Lego over the years. We started working with them early days back in the 2000 when the company was at the brink of bankruptcy because they were running the company based on this management science logic, chasing trends, the trends of digitization of games. Nintendo was introducing danger into all sorts of play.
Millie Arora:
And the electronification of gaming basically. And Lego was trying to chase those from a design standpoint, launching new products monthly, burning cash. And really not having a north star about what play was really about. And we've been working with them ever since. Back then we helped them rethink what play is all about and bringing in the ideas of play is really about hierarchy and mastering. One of the classic examples we always talk about is a young boy named Luca, we met in Los Angeles and we were meeting with him, his parents, and out on the playground on the skate park. And when we asked him what his greatest most prized possession was, he pulled out and rummaged through his closet, an old worn out shoe. And when we asked him why it was because the particular skid marks and I wish I had the picture to show your listeners were a sign for him and his friends that he had perfected the perfect way to do a certain back flip, kick flip on a skateboard.
Millie Arora:
And to him, that was his most prized possession. That is sort of why he loved skateboarding. And that to us signaled that what kids want is not all this sort of danger and so on. Some of that can lure kids in, but really mastery, a sense of hierarchy, a sense of skill building as you play is what kids are really looking for in play at that time. And that really reoriented Lego to sort of refocus back on the brick, which is, if you think about it such a core tenant of how you can build world and bit stories and build hierarchy in play experiences. So, that's the story of Denmark. It continues to be a major hub for us. We have an office in Denmark, an office in New York and continue to sort of do great work cross Atlantic.
Josh King:
I mentioned, the Bain and Boston Consulting Group in the intro. And you can imagine what all the deep papers and thought leadership that you can find on those websites. You spend any time on the ReD Associate's website, you're greeted by some lovely black and white photography of hands molding a chunk of clay on a potter's wheel. And it says, "It's important that we keep the technology in the background to ensure our hands and humans can learn, collaborate and shine on their own." Why, Millie are hands so important?
Millie Arora:
Because hands are people too. I mean, I think when you think about technology as fundamentally changing how we as human beings operate with each other, the social structures around us. And if you're a major technology company, that's thinking about the future of AR and VR and thinking about devices. Whether that's smart devices in the home or devices for your hands, or gloves, or the future of displays in the home, home in the workplaces, if you're thinking about workplace, or the future of work. You need to understand the way in which our bodies are a part of us. When we cook, for example, there are things that we are doing with our hands that we aren't even aware of that have just become habitus for us.
Millie Arora:
And any technologist needs to recognize that those are intuitive behaviors that are part of what put us into flow movements. And we think it's important that when we think about designing new products, designing new services, designing new technology that you take into account us as human beings in totality, and that includes our hands. It includes about how we use those hands as a movement of expression. And I think if you are designed technology without understanding the role of the body, the role of the body in communication to others, I think you're doomed to fail.
Josh King:
ReD relies on this differentiated set of expertise when you work with your clients like them. Millie you hire PhD students in anthropology, history, journalism, political science, and tend to steer away from your typical MBA candidate in maybe finance or accounting or economics, where are you finding the best talent? And what's their background when they come in your door?
Millie Arora:
The common thread in people who we hire are people who are able to listen well, who have a deep empathy and curiosity in people and who are really detail oriented in particular in sort of the skills of observation. Being able to just sit back, observe, listen, without rushing to judgment. And now that tends to, those are the kinds of skills that you are trained or theories you are trained in if you studied anthropology or philosophy and so on. Those are the kinds of questions you grapple with often. But I would say there's not a particular school or set of schools that we look to. It's really those that have showcased that curiosity in their life experience.
Millie Arora:
People who have gone off to do a research project for a year, because it was a passion of theirs. People who've taken a risk to really dive deep into the world of shoemaking, because that is just something that they were really fascinated with and wanted to learn and understand everything there was about that. Those are the kinds of people that we are interested in hiring. And the reason why we don't tend to hire from business schools is because we find that typically business school tends to reinforce a hypothesis driven problem solving approach. Where let's think about three potential solutions to a problem and let's go test that. As opposed to having a beginner's mind, being able to look at the world and absorb data that's coming at you to create new solutions.
Josh King:
So, let's set the scene, you're meeting with that client for the first time and they've asked for some help from ReD to build a product roadmap. What does the process typically look like and what questions are then you and your colleagues asking when you're starting to assess whether you're going to take on a project and begin the work?
Millie Arora:
So, typically our clients come to us with a traditional business problem. You take the class, I'll talk about Samsung, who for many years has come to us thinking about, we want to design or think about the next wave of TVs in the home, for example. An interesting question, there's a lot of innovation that's happening and it's a very competitive space. And we'll say, well, what are the fundamental underlying human questions that will shape where the home electronic market is going to go for the next decade? And there's a lot of things that are changing today. If someone were to come ask me that question today amidst the pandemic, you have many people thinking about where they want to live. What does a home mean to you today? The mass exodus from major cities like New York City, which we're both in, to suburbia, to more time being spent at home and people reconfiguring, where do families hang out?
Millie Arora:
What's the role of the office? How do we make more space? What we'll do with a client is think about what are those human questions? And that gives us a question to study, a human question to study. We want to understand changing home dynamics. We want to understand the impact of how people are thinking about their life careers and how they're thinking about where they want to be and what is ultimately the impact of home entertainment. We want to think about how people are thinking about migration, perhaps, and communication with family members across, because we know that TVs no longer just entertainment devices, but they compete for attention in terms of communication and devices and so on.
Millie Arora:
So, we go in and frame those human questions, and then we do some tactical stuff about, well, we want to understand this in next markets because that's where the biggest market potential is. So, we'll go out and study people in their homes, understand their communication practices, understand their work practices, understand family dynamics in the home and who actually drives decision making about how a home is laid out. What's the role between a mother and a father and their children? Who's negotiating the rules about what gets used and what gets placed where? And we'll go out and study. Our team of who we've hired will go out and spend time with people in their homes for days, if not weeks, to really observe again.
Josh King:
I mean, you certainly have in your own life, interesting range of worlds and homes and communities that you've seen this kid who grew up in Fullerton, California. You had joined ReD in 2013 as its COO after three years of service in the New York City economic development corporation, height of the Mike Bloomberg years in New York. What did you take away from that New York City experience? And why did you decide that that was the time to move into ReD in this idea of consulting versus the one earlier in your career?
Millie Arora:
To take the first part of that question. What did I learn from my time with under the Bloomberg Administration? What I took away from that experience is the power of local government and the power of local communities to effectuate change. I joined the Bloomberg Administration post the 2008 financial crisis, right here where we're sitting and it was a tough time. There was a lot of talent that was leaving the city. A lot of tax dollars was leaving the city, a lot of empty real estate. There was a question about what does the longevity of did of New York City economy look like? How can we retain talent? How can we diversify the New York City tax base away just from financial services? How can we keep talent here and retrain them to the world of tech? And we got to do a lot of amazing, amazing initiatives that I think have long-term impact. ReD's offices is now in the same building where the Cornell Teknion campus has its offices.
Millie Arora:
And that was one of the major initiatives we got off the ground in terms of soliciting a competition between universities to really think about how to make New York City, a hub for tech talent to compete against Silicon Valley. And I think that experience, again, for me personally, talked to the power of local communities and the importance of communities engaging in driving change whether that's school boards or so on. And that's something I carry with me constantly. I'll say when I came to ReD and when I first heard about ReD, my spark plugs went off that this approach, and we're starting to do a bit more of it now. I felt is deeply needed in the world of policy making. Oftentimes when policy gets made, it's a lot of smart politicians, smart economists, and so on, that have amazingly great ideas. We brought together VCs to conceptualize big ideas.
Millie Arora:
When we were thinking about some of the things we did post-crisis. But at the same time, the concepts of participatory budgeting, really understanding all stakeholders from the grassroots level up, wasn't really being heard in policy making. And ReD to me signaled an approach that yes, of course is deeply valued in corporations today, but is also deeply needed in the world of policy making, in the world of social impact. And it's been fun to see that over the last couple years, these worlds have really started to merge. And even at ReD, we've been trying to do, and we have been doing a lot more work with companies to think about what are ways you can bring the social impact and marry that with a commercial impact and doing that in an authentic way.
Josh King:
I know you've written a lot about financial literacy and I'm curious how you define that and how that fits into some of the other aspects of ReD that we've been talking about. I'm struggling a little bit to see how they go hand in hand.
Millie Arora:
I think one of the core are issues that come across all of our studies in the world of financial services is people's relationship to money is broken. Mellody Hobson whose board of Starbucks wrote an amazing op-ed for anyone who hasn't read it over the weekend in the Financial Times. And she highlighted this at the heart of the crisis. Money isn't something we talk about. And that issue of people's relationship, that the fears that are ingrained in people's relationship to money create all sorts of challenges. And literacy is one of them. I think talk about, we've done a lot of studies with average, everyday Americans around that broken relationship to money. We've done studies with immigrant populations in the US and in Europe. And many, many people have this fear of messing up.
Millie Arora:
If you're an immigrant in this country and you've ... a young woman that we met in Texas, her father had lost his job twice and instilled in her I do not want you to go into credit card debt. I had to do it because I lost my job. I just want stability, safety and security for you. The consequences of that is she is deeply averse to credit card debt. She will put every ounce of earning she makes into a savings account. But is afraid to take out credit and is also deeply afraid of investing in the stock market or investing her money whatsoever because the rules of the system are opaque to her. She doesn't under stand them. They don't make sense. No one has really broken down for her investing 101, nor has she grown up in an environment that gave her that intuitive sense of knowledge for how to invest and how to make your money work for you.
Millie Arora:
And so when I say literacy, I don't necessarily mean teaching of financial concepts. It's how can we better train and build the intuition in people so that they get comfortable investing. They get comfortable prioritizing long term savings over short term savings when it makes sense. And that's really at the core of a lot of our work at ReD, whether we study the issue of people's relationship to money with kids or teachers or average everyday folks, there's this lack of financial intuition and therefore a fear that people will just get it wrong.
Josh King:
You've written about the difference, I think, between what you call fast money and slow money. Can you explain what you mean by those concepts?
Millie Arora:
Yeah, absolutely. I think this stems from a lot of our work with a lot of banks who for many years been focusing on how can we digitize money? How can we make things more seamless, more convenient, ready at hand, make payments faster and all of those sorts of things. And what we found is those kinds of things are really important for fast money, things that are here and now. Again, things like your checking account, billing account, the pandemic clearly showcase that people are comfortable with not visiting a bank branch and doing a lot of day to day financial matters digitally. But when it comes to slow money, in our view, that's money oriented to the future. Things like investing, things like your pension, your retirement savings, life insurance, all of those things that are oriented to the future, people are a little bit lost.
Millie Arora:
They seek safety. They seek stability. They seek peace of mind. But they really struggle with how to connect decisions I'm making now with my fast money, with how that's going to impact and connect to my slow money decisions. And why that's important is because we think when you design financial products or ways to provide financial advice, really sort of the design principles around that are quite different. With fast money, yes, those need to be digital. They need to be safe. They need to be secure. They need to be ready at hand and fast. All of those things really matter. But when it comes to slow money, that's actually where people going back to this financial literacy point and intuition, it's where you able need to slow down a bit. They need to understand the steps piece by piece. If you think back to the mortgage crisis and the housing crisis, a lot of people signed up for a mortgage.
Millie Arora:
It was easy. It was fast. They were able to get fast money. It wasn't until things fell apart that they understood the consequences of what they had done. Yet felt embodied that experience of what it means to really sign up for something. And so we often argue that for slow money, you need to, again, introduce friction. And we saw a lot of people doing this, having their own hacks, putting a credit card up on the top shelf so they wouldn't want to spend money. Or actually being happy that they forgot their password to the account that has their rainy day fund because they wouldn't tap into it. Or sending their mother their emergency funds so that they couldn't access it. Even for frivolous purpose purchases. We saw a lot of people intentionally introducing friction when it comes to slow money, which sort of goes counter to what a lot of banks and financial services companies are doing.
Josh King:
You and another colleague wrote in an American banker article that advised companies to steer away from investing their resources in one all in one super app that would allow users to access their finances in one place. Why might it be a good moment to reevaluate that super app goal?
Millie Arora:
The ambition of a super app as a standalone thing isn't necessarily flawed. I think the way in which people are designing for a super app is. The underlying issue to solve, if a super app is to be successful is to tap into what's the ultimate core social purpose these apps are providing. And I think the issue that we've seen with super apps is assuming that a single design ethos and or principle can be placed on something like payments with something like investing with something like teaching your kids financial literacy. And we would argue that, that's not true. You have to create spaces that allow people to interact with those different kinds of money differently. Because you may not want to check your Robin Hood app every single day, but you might be tapping into that Venmo and wanting the confirmation that your money was sent seamlessly with ease to your babysitter on a daily basis.
Millie Arora:
And so our argument is you're going to design the super app, think about all the ways in which those connection points between fast and slow money are useful and design for that. Because that's, what's going to be differentiated. I think in our research, the people that have done this best is people who tap into a group of people who have a set shared common needs. Walmart is building, is going deep into the world of financial services as they are in terms of health benefits and other things. So, they're creating a world where understand the Walmart employee, their customers, and what are the ways in which we need to help better prepare them for financial insecurity moments, perhaps benefits, programs, helping them save more and be smart with their paycheck. And they're being smart about what is the underlying thing we're trying to solve for as opposed to just having more features for the sake of having more features and driving engagement.
Josh King:
Thinking about the idea of the super app and all these apps that are on my phone. And phoning in a little bit on Robin Hood, because it's been such a big part of the 2021 story that we're about to leave in the rear view mirror. We saw its IPO. We've seen some of the issues that it's raised. But that paper that you and your colleague did in American Banker talked a lot about this increase in gamification. The design trend that turns these digital products, financial products into something that you might describe as fun. And it's been used commonly in these fast money applications. And sometimes to the detriment of the user, we saw scene with some of those Robin Hood examples. But is there a value in the gamification of slow money? And is that possible?
Millie Arora:
Absolutely. I think there's tremendous value in the gamification of slow money, if done right. So, for example, I think when you think about the retirement and savings crisis we're in, half of this country doesn't have enough retirement savings. There's many young people today who don't really understand the steps for savings. And a lot of our research has shown it's because we're all human. We prioritize short term benefit over long term gain. How can we gamify? How can we make it fun and give people the tangible rewards for medium to long term savings? Whether that's through visual features that give them points or rewards or affirmation with their friends or their community that says, okay, I set these goals and I'm going to have an accountability partner that keeps me on track with these goals. Those are the kinds of gamification features for good, that we think can be useful with slow money products. In the world of investing as well.
Millie Arora:
I think you can create sandbox environments that get people comfortable with safe investing, scenario planning about what it could have looked like. And I know that this is something that you all with EverFi have been involved with how can we do that with kids and create those sandbox environments? I think there's absolutely a world for doing that, to make slow money decisions less opaque also. I think it requires sort of a little bit more transparency, less opaqueness, breaking down the steps of how you save, when you save, what are the right moments to engage in different kinds of financial products when it comes to your slow money so that people can engage with that now, when it matters and take advantage of the powers of compound interest.
Josh King:
As we head into the break, you've mentioned, half of Americans don't have enough saved for retirement, or haven't begun to save for retirement. As people are sort of pondering this and thinking about it as a study companion for the rest of our conversation, where do you recommend they turn to improve their own financial literacy?
Millie Arora:
I'll tell you where people that we've met with are turning to. A lot of people have yet to find a home in digital advice. When we've done studies, it is finding a right financial advisor who understands me and my experience. And that is critically important, understands my career, my career directory, how, what matters to me personally, and my values in terms of I am someone I'm going to take care of my parents in old age. I need to keep that in mind. So, someone who really taps into your values and whether people are finding that in a person or for some of the young people we've met are finding that on TikTok. Now this is not a recommendation to go on TikTok. But it's that feeling of being seen and meeting someone who understands my values. And then who's able to give me the tips and tricks and break it down in terms of the rules of thumb is what we're seeing a lot of people, seeing resonate with a lot of people when it comes to financial advice.
Josh King:
After the break Millie Arora managing partner of ReD Associates are going to dive a little deeper into how different generations approach finance, the value of trust and the future. And that's all coming up right after this.
Speaker 5:
India is one of the strongest and fastest growing economies in the world with a population of 1.4 billion. Making energy secure, affordable, and sustainable is essential in supporting its growth. In response, the Indian government aims to diversify its energy mix, increasing its natural gas consumption to 15% by 2030. Efficient to transport, liquified natural gas is critical in supporting countries with developing infrastructure. ICE's West India Marketer LNG Futures contract compliments our global natural gas complex. Providing essential risk management as demand for liquified natural gas in India and the Middle East grows.
Josh King:
Welcome back. Before the break Millie Arora, the managing partner of ReD Associates, and I were discussing her career, her team at ReD Associates and the value of the social sciences and understanding and describing the world. Millie on a recent [Sheddar 00:36:05] appearance you spoke about how different generations interact with money differently based on a study completed by ReD. Can you walk us through some of the findings behind that research and does it mean that financial services need to change their approach to all these apps that I have and how they market to a 27 year old or a 21 year old?
Millie Arora:
I would argue that the work that we did on that foundational study with Gen Z, that you're referring to, now a couple years ago, we're seeing a lot of those findings play across the general population. And I would say young people are very pragmatic when it comes to their money and very deliberate when it comes to making decisions about their money. They are growing up the oldest side of Gen Z, still scared from the financial crisis or many people today have seen parents go through hardship. And they don't want fall into the same trap. And so they're starting to think long term, but they don't know how. I will say that the other thing that is affecting how young people are thinking about their money is the changing nature of work. People are, this trend was happening pre COVID.
Millie Arora:
It is only accelerated because of COVID thinking about what will my career look like? Is there such thing as a traditional career anymore? And I don't think there's a one size fits all answer. You're going to see some people who, because of all of the economic uncertainty on the world, want to go back to the big corporation that can provide for me and my family and give me a stable career. And you're absolutely seeing many employers, PayPal, Chobani and others lining up to really ramp up their ways in which they support their employees around financial wellness, which I think is fantastic. And young people are looking for that. At the same time you have another generation, another segment of young people that are really interested in making it on their own. But not really sure just yet how they're going to make it work for the long term.
Millie Arora:
And so whether that's the rise of the gig economy, freelancer economy, people trying to start up their own businesses. A lot of people have the ambition to do that because it's very practical. You can see the easy returns coming to you, it's so I can make money for myself and only myself logic. At the same time there's this underlying fear and anxiety of will I ever have enough for what I need in the long term. And I think when it comes to how banks and other financial services providers need to think about young people today and how to best support them, it is over helping them with this big question around financial security and stability. That is the biggest unmet need challenge, question that young people, and I would say the vast majority of Americans are grappling with. What is enough? How will I deal with future economic challenges, whether it's inflation or another pandemic, job security, piecing together a career?
Millie Arora:
And they're not sure who to turn to our advice. So, I think there is a big opportunity because the other side of this equation is a trust in institutions is at an all time low. Trust in governments, trust in healthcare institutions, trust in traditional markers of institution. But at the same time, people are leaning in a little bit more to businesses as a valid source of information. And so I do think that there's an opportunity to build that trust if you can lean into helping consumers think about what are the concrete action scenarios and pathways for me to understand what lies ahead and how I can build up my financial security. If you can speak to those realities and values, really understand people for who they are and those emotional fears they have, whether it's an adverse fear to debt or a need to, yes, I want to build financial independence and autonomy for me, and I want to take care of my parents. But I need to create some boundaries.
Millie Arora:
How can you help me do that? So, personalized advice that overcomes a lot of the obligations and fears that people have. And last thing I'll say is, it's part and parcel with stability, but also providing financial security. And this is where a lot of banks and folks that traditionally provide financial advice do so reactively. But how can you be one step ahead? Checking in on financial health, giving people a sense of, am I on track? Sadly, it's not something people think about until they're in trouble. And it's not something people proactively want to talk about because again, most people have an irrational fear of money and don't want to talk about it. So, how can you create lightweight ways of giving people a signal on if they're on track or not, or what are the next steps to help them get on track?
Josh King:
Millie, my kids would generally fall into the category of Gen Z as do the kids of my friends. And my kids have not grown up as gamers, but others have become really avid gamers in this Gen Z cohort among my friend group in New York City. And we've seen that go from original gaming to increased participation in financial markets. And in January we saw market participants, eagerly pile into specific names. And ReD was doing some work with Jigsaw, an alphabet company, on what tendies are and what makes trolls tick. And I certainly learned what tendies are this summer. Can you share what you learned through the process?
Millie Arora:
We have a long starting partnership with Jigsaw, as you mentioned an alphabet company, to help them think about ways to mitigate harms on the internet. And one of the things that we looked into is sort of trolling communities and what drives that kind of behavior. And one of the things that we found, which we think has implications for the world of investing as we saw with GameStop and the rise of meme stocks is that there is a culture of how kids today communicate online, how they trade jokes online that we called it, it's all about the LOLs, right? That people are cracking jokes, making fun of each other. Really to poke and stoke a reaction from people. And we saw a lot of that behavior happening with GameStop.
Millie Arora:
And whether it's sort of, if you looked at the Reddit forums and so on, it was really people who had grown up on these gaming forums, translating that to the world of investing. And so for us, it's this call to not just the tech forums that need to be thinking about this, but how are the modes and norms of interactions in online games, even if it's sort of in a fringe group, how is that going to go mainstream? And what does that mean for financial services companies or other brands around, how do you mitigate for that? How do you make sure real world harm doesn't happen? Because the group dynamics or the way that, that's how momentum is built.
Josh King:
We've seen public trust Millie in institutions come to an all time low in recent years, even before the pandemic. The Pew Research Center reported earlier that there was really little change in public trust in government. But that people still believe that government has responsibility to provide support and services for all Americans. How does this impact how people engage with money, financial institutions, do you think?
Millie Arora:
I think that the stark reality that we're seeing is people aren't looking to traditional sources for advice any longer. They're trying to piece it together themselves. I mentioned the rise of TikTok in financial influencers. In many of our studies, we see people turning, young people in digitally savvy, young people, turning to fin influencers who look like them, who can speak to their life story because it's easy, it's accessible, it's engaging. They're clear next steps for what I need to do when it comes to savings. It makes the opaque rules of the financial industry clearer to them. And I think what this means for the financial services' industry is we need to lean into language, to discourse about how can we make it less opaque. Jillian tied to someone else you had on your show-
Josh King:
Yep.
Millie Arora:
A little while ago. And she talks about the tribe of investment bankers, where if you go into a room and you spend time with investment bankers, there is a language to how people communicate there. That is a language that is not accessible to the average everyday person in our studies with teachers and middle America. There are people who like to follow the rules, who like to follow the rules of the games. And they're afraid they're going to get it wrong. So, how can we as financial services companies that are still trusted, I think, in the realm of financial advice break down specifically what are the tactical actions people need to do? What are those rules of thumb? And I think it's building trust in that way.
Millie Arora:
Building trust in showcasing how you understand them. I can't tell you in how many of our studies we'll meet someone who's been a longstanding customer of you name it, bank. Take your pick. And they walk into a bank branch or pick up the phone to try to ask a simple question about what kind of size loan might they qualify for? Because they're thinking about buying a home in the next two years. And they have to start from ground zero. They have to share their whole life history. It feels very depersonal. It feels like I've been a loyal customer for many, many years, and you still don't understand who I am. So, how can we change that equation? How can we as banks show up in a more personal way? How can we again give them those concrete actions? And how can we more proactively check in to show that we're on their side? Not only when it's too late.
Josh King:
We've also seen in recent years in light of Black Lives Matter and other social movements that companies really are figuring out whether or not they can still afford to be neutral on social issues, Millie. What does your research suggest CEOs and other businesses really need to do, especially since so often they seem to be in this difficult bind when it comes to balancing the wishes of shareholders versus stakeholders. What advice do you have for these leaders when you're in the boardroom with them?
Millie Arora:
I would say that making a positive impact on society and that desire to make a positive impact on society isn't something that's not necessarily new. But for the most part, these activities have lived out of the core business. They've either lived in CSR groups and so on. And I think what's new is that their CEOs are asking the really difficult questions about, how can we be a force for good and leverage that force for good as a competitive advantage. Vis-a-vis our peers. And I think our response to a lot of the CEOs that we work with is you need to do it with a thought through, sincere, authentic intent and a serious look at what are the key pillars underneath the movements that your customers care about and respond to that. So, it's not enough to do some philanthropic initiatives on the side.
Millie Arora:
If you don't look about, look at if core sustainability is what you're after, how do you do that in the heart of the business? So, I think we really think there's an opportunity to understand it holistically in terms of let's look at your customer, what do they care about? Why are certain causes important for the groups of customers you serve versus others? Let's look at your employer base, which is another important stakeholder in terms of thinking about the purpose that motivates your employees. And so our advice to CEOs is to not rush into any one thing, just to say you're doing one thing. Too many companies have been attacked for greenwashing for all sorts of things that it's just, we want to do invest in ESG and sustainability, but really it's not fundamental how we can think about the core business.
Millie Arora:
If you are going to make a massive bet, think about it holistically. Think about what you as a leadership believes in. Think about how it impacts your employees, and also think about what are the commercial underlying drivers around your core customers and how they engage with you and how fundamentally making this bet around social impact, sustainability, whatever cause you choose will make it a differentiator for you as a brand.
Josh King:
Reflecting on where we are right now in terms of the holidays and looking forward to the next year. You and several colleagues partnered and wrote an article for Slate about how to talk to QAnon loved ones during Thanksgiving. And while this episode is going to be released in early 2022. There's a lot of advice in that article that's timeless. How does so social scientists approach engaging with people who hold different ideas like this and what led you to write the piece?
Millie Arora:
I think there's a lot of just general life lessons for how in today's society with increased polarization, people with different views, how we can engage with people who disagree with us. And I'll just say some of those are what we live day to day, I hope. When ReD is at its best of being empathetic, not leading with an opinion, but understanding how and why someone might think what they do. And coming at that opinion, and coming to that discussion with empathy. All too often, what we found with that QAnon work or people who disagree is there's a lot of othering going on. Trying to say well, that's just wrong. That has to be false. Downplaying people own perspective for how and why they might have gotten to a certain opinion.
Millie Arora:
And that article points to tactics to how to engage in a real discussion. Let's think about, well, how did you first hear about something like that? Let's have a real discussion because too often we're getting parked into our silos further, further away from each other. And if we continue down that track, I don't know where we're going to be on the other side of the holidays. So, I think approaching conversations with empathy, curiosity as we would any family member, I think is an important life lesson I hope everyone brings not just into the holidays, but on a day to day basis.
Josh King:
Millie Arora, we've covered a lot of ground here. Talked about the consulting model, the types of people that you are bringing to the firm, your own history. As we get ready to finish up this, let's put back on the hat of the consultant and see how it affects your everyday life. The Wall Street Journal published an article about how many consultants are spending so much more time at home than they had for the majority of their careers. The old Monday through Thursday on the road and Friday to do paperwork. And took to, instead with all this extra time, they're not traveling optimizing their times at home. They'd spend time rearranging furniture, finding more efficient ways to do the dishes, organizing weddings or photo albums. Do you relate to these stories? And as many of us hunker down for another variant, are there any projects that you're now looking to tackle?
Millie Arora:
I find it interesting that amidst all this I can relate a little bit, but not so much because at ReD we have a different model. We've always had, I'd say the luxury of time to go deep into clients and projects. It's a gift. And it's a gift that we try to bring our clients that let's slow down for a little bit before we speed up the process around product innovation. Let's think deeply for a little while. And what I think is interesting as we sort of hunker down in the time that we're in is we are facing a crisis of loneliness.
Millie Arora:
Yes, people are hunkering down and finding new home projects and so on, people are doing that alone, even as digital communication and find there's more ways to come together online. And I would just urge people to find a way to meaningfully connect. Whether that's through I have a love of books. I plan to hunker down and dive deep into some books-
Josh King:
What's on the reading list?
Millie Arora:
... that have been on my reading list for quite some time. I'm reading a book on the loneliness generation topic as we speak that's on my docket, Balloon Shot is on my docket. It's been on my docket for quite some time. So, I have a few that have been piling up and then also some good fiction books.
Josh King:
Well, excellent. I'll let you get back to the books sitting on the reading table and thanks very much for joining us inside the ICE House.
Millie Arora:
Thank you so much.
Josh King:
That's our conversation for this week? Our guest was Millie Arora, managing partner of ReD Associates. If you liked what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Stephan Capriles with Production Assistance from Pete Asch, Ken Abel and Ian Wolf. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
The information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor is affiliates make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to any security or a recommendation of any security or trading practices. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.