The Rational Reminder Podcast

In this episode, we are joined by Dr. Paul Kaplan, economist, CFA charterholder, former Director of Research at Morningstar Canada, and co-author of Lifetime Financial Advice, for a fascinating exploration of life cycle finance. Drawing on decades of research in economics, portfolio construction, and asset allocation, Paul explains how financial planning should be grounded in optimizing lifetime consumption rather than relying on disconnected rules of thumb.
 
We explore how life cycle finance integrates consumption, saving, investing, and retirement spending into a single framework, why risk tolerance and risk capacity are fundamentally different concepts, and how human capital should be treated as part of an investor's balance sheet. Paul also walks through the life cycle model he and Tom Idzorek developed, explains why traditional retirement rules like the 4% rule lack theoretical foundations, and demonstrates an open-source spreadsheet that allows anyone to experiment with the model for themselves. This conversation brings together economics, portfolio theory, and financial planning into a practical framework for making better lifetime financial decisions.
 
Key Points From This Episode:
(0:04) Introduction to Dr. Paul Kaplan and the topic of life cycle finance.
(4:38) What life cycle finance is and why consumption smoothing is its central objective.
(5:20) How life cycle models optimize saving, investing, retirement spending, insurance, and annuities.
(6:36) Linking life cycle finance with Harry Markowitz's mean-variance optimization.
(8:38) Why consumption—not wealth accumulation—is the true focus of financial planning.
(9:56) The concept of an economic balance sheet: financial assets, human capital, liabilities, and net worth.
(10:59) Holistic investor profiling beyond traditional risk tolerance questionnaires.
(13:23) Why risk tolerance and risk capacity should never be combined into a single score.
(16:48) Assessing the risk characteristics of human capital.
(17:36) Applying utility theory behind the scenes in financial planning software.
(19:15) Sample profiling questions that measure lifetime consumption preferences.
(20:54) Why maximizing lifetime utility ultimately means optimizing consumption.
(22:55) How preferences, needs, and circumstances shape lifetime financial plans.
(24:13) The primary outputs of a life cycle model: consumption and asset allocation.
(25:01) The roles of life insurance and annuities in lifetime financial planning.
(27:44) How uncertain investment returns influence both spending and asset allocation.
(28:19) Why longevity assumptions are critical in retirement planning.
(29:37) Simplifying complex life cycle optimization into practical formulas.
(30:27) Why life cycle finance challenges rules of thumb like the 4% withdrawal rule.
(31:12) Flexible retirement spending versus fixed withdrawal strategies.
(34:01) Why consumption should be treated as an output rather than an input.
(36:05) The importance of asset location and after-tax portfolio construction.
(37:04) Why asset allocation and asset location should be solved simultaneously.
(38:19) Harry Markowitz on why asset allocation became the foundation of modern investing.
(40:06) The need for financial planning software built on life cycle theory.
(41:55) A walkthrough of Paul's open-source life cycle finance spreadsheet.
(46:58) Understanding economic balance sheets and asset mix visualizations.
(49:17) Which investor characteristics have the greatest influence on optimal asset allocation.
(50:52) Why Nobel Prize-winning life cycle finance research has yet to become mainstream practice.
(51:37) The evolving role of financial advisors in helping clients make rational financial decisions.
(52:50) How Paul's own investment philosophy emphasizes indexing and asset allocation.
(54:13) Factor investing, popularity theory, and connecting behavioral finance with asset pricing.
(56:42) Paul's definition of success: applying first principles with rigor and integrity throughout his career.
Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dr. Paul Kaplan: https://www.paulkaplan.com/ 
Lifetime Financial Advice (CFA Institute Research Foundation): https://rpc.cfainstitute.org/research/foundation/2025/lifetime-financial-advice 
Life Cycle Finance Spreadsheet (Paul Kaplan's website): https://www.paulkaplan.com/lifetime-financial-advice 

*Disclosure: Links to third-party materials are provided for your convenience and do not constitute an endorsement or recommendation of the products or services offered therein.
Frontiers of Modern Asset Allocation (Wiley): https://www.wiley.com/en-us/Frontiers+of+Modern+Asset+Allocation-p-9781118029689 
Popularity: A Bridge Between Classical and Behavioral Finance (CFA Institute Research Foundation): https://rpc.cfainstitute.org/research/foundation/2021/popularity-a-bridge-between-classical-and-behavioral-finance
 
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this AMA episode, Benjamin Felix, Dan Bortolotti, and Ben Wilson tackle a wide range of listener questions covering portfolio construction, diversification, active management, pensions, fiduciary duty, and short-term investing decisions. They examine whether breaking apart all-in-one ETFs is worth the complexity, why global diversification remains the default despite long stretches of underperformance, and how investors should think about risk when they have defined benefit pensions or short-term financial goals. Along the way, they discuss the limits of active management, why simplicity often beats optimization, and even reveal their favorite board games.
Key Points From This Episode:
(0:01:12) Whether investors should replace asset allocation ETFs with individual component ETFs to save on management fees. 
(0:01:40) Why simplicity has real economic value—and how small fee savings compare to behavioral costs. 
(0:05:38) Portfolio drift, rebalancing discipline, and the hidden costs of managing multiple ETFs. 
(0:06:08) How recent fee reductions narrowed the cost gap between VEQT and its component funds. 
(0:06:51) When using individual ETF components may make sense for larger portfolios or asset location strategies. 
(0:11:16) The hosts share their favorite board games—and why poker has surprising parallels to investing. 
(0:15:01) What true diversification actually means beyond simply owning the S&P 500. 
(0:16:07) Why the global market portfolio remains the logical starting point for most investors. 
(0:19:46) Addressing claims that modern index funds have become "too concentrated." 
(0:21:52) Why active managers tend to lose their edge as assets under management grow. 
(0:22:15) Diminishing returns to scale and the efficient market for manager skill. 
(0:27:03) How defined benefit pensions should factor into portfolio construction and risk capacity. 
(0:33:53) Understanding fiduciary duty for Canadian portfolio managers and financial advisors. 
(0:37:17) Why publicly holding yourself out as a fiduciary carries legal and ethical implications. 
(0:39:22) Can individual investors outperform active funds by picking stocks themselves? 
(0:42:32) Why time, effort, and research alone rarely translate into market-beating performance. 
(0:45:04) Why international stocks have lagged U.S. equities—and why diversification still matters. 
(0:47:10) The role of valuation expansion in explaining decades of U.S. outperformance. 
(0:50:05) How to invest money earmarked for a home down payment over a three-to-five-year horizon. 
(0:53:31) Applying the same time-horizon framework to RESP investing and education savings.
Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, we are joined by Shannon Lee Simmons—Certified Financial Planner, Chartered Investment Manager, bestselling author, and founder of the New School of Finance—for a wide-ranging conversation about the emotional side of money. Drawing on more than two decades of working directly with Canadians, Shannon explains why financial stress has become so pervasive, how social comparison shapes spending habits, and why a well-built financial plan can be one of the most powerful antidotes to money anxiety.
We also explore decision-making during financial crises, the psychology of regret, why traditional budgeting often fails, and how couples navigate money differently—particularly in retirement. Shannon shares practical frameworks for aligning spending with personal values, avoiding emotional financial mistakes, and helping households make confident decisions through life's biggest transitions.
Key Points From This Episode:
(0:03:56) Why people worry about money—and why financial uncertainty often feels like uncertainty about life itself.

(0:04:24) Why so many middle- and upper-income Canadians still feel broke despite earning good incomes.

(0:05:18) The importance of having a financial plan and reducing harmful social comparison.

(0:06:55) How social media fuels overspending, comparison, and "financial dysmorphia."

(0:08:35) Why cashless spending has fundamentally changed our relationship with money.

(0:11:52) How perceived life milestones—especially home ownership—shape financial decisions and expectations.

(0:13:36) Practical ways to manage financial stress, restore confidence, and build resilience.

(0:15:55) The growing "spending arms race" and how rising expectations have redefined what's considered normal.

(0:18:09) Why Shannon dislikes traditional budgeting—and what to do instead.

(0:20:32) Her four-bucket framework for worry-free spending and maintaining financial flexibility.

(0:22:35) A practical test for deciding whether a large purchase is truly affordable.

(0:25:01) Aligning spending decisions with personal values using an "emotional return on investment."

(0:28:12) Helping couples navigate different financial priorities without turning disagreements into conflict.

(0:30:28) Separating good decisions from bad outcomes to overcome financial regret.

(0:33:48) The major financial decision crises people commonly face—from divorce to illness to retirement.

(0:35:16) Using "micro financial plans," guardrails, and scenario planning during periods of uncertainty.

(0:37:45) The three phases of a financial decision crisis and how planners can help through each stage.

(0:41:41) Why retirement often reveals differences in couples' relationships with money that never surfaced while saving.

(0:45:19) The psychological challenge of withdrawing from investment portfolios after decades of accumulation.

(0:46:41) Using cash wedges and realistic retirement projections to reduce anxiety around spending in retirement.

(0:49:42) How saver-versus-spender dynamics can evolve into power struggles during retirement.

(0:53:12) The question almost every client is really asking: "Am I going to be okay?"

(0:54:41) Why planners should ask about clients' hidden DIY investment accounts.

(0:56:21) The risks of becoming emotionally attached to concentrated investment gains.

(0:57:16) The most impactful parts of a financial plan: realistic spending projections and actionable next steps.

(0:58:25) How often financial plans should be updated—and when life events require immediate revisions.

(1:01:08) Who benefits most from fee-only planning and who may be better served with ongoing advice.

(1:07:00) Why implementation—not recommendations—is often the hardest part of financial planning.

(1:10:00) The strengths and trade-offs of fee-only planning versus assets-under-management advice models.

(1:15:05) Shannon's advice for improving financial well-being: build a plan, focus on your own values, and stop comparing yourself to everyone else.

 
Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Shannon Lee Simmons – https://shannonleesimmons.com/ 
New School of Finance – https://www.newschooloffinance.com/ 
Worry-Free Money – https://www.amazon.ca/Worry-Free-Money-guilt-free-approach-managing/dp/1443454451 
Making Bank: Money Skills for Real Life – https://www.amazon.ca/Making-Bank-Money-Skills-Real/dp/1443469815 
 
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, Ben Felix and Ben Wilson tackle a wide range of listener questions covering portfolio construction, home-country bias, currency exposure, ETF selection, retirement decumulation, leasing versus buying a car, discounted cash flow valuations, and the real work of portfolio management. Along the way, they revisit the Rational Reminder model portfolios, discuss how new products like CAGE have changed the DIY investing landscape, and explore whether Warren Buffett's long-term record still provides evidence that active management can outperform.
The conversation also offers a behind-the-scenes look at PWL Capital's planning-centric approach to wealth management and why helping clients make better financial decisions often matters more than portfolio construction itself.
Key Points From This Episode:
(0:28) Why AMA episodes have become less frequent despite hundreds of listener questions waiting to be answered. 
(2:07) Ben shares observations from PWL's growing institutional investment business and why low-cost, planning-focused institutional advice remains surprisingly rare. 
(6:37) Revisiting the original Rational Reminder model portfolios and how newer products have simplified implementation. 
(10:09) Should U.S. investors underweight the U.S. market relative to global market-cap weights? 
(11:07) Research, home-country bias, and Ken French's arguments for overweighting domestic stocks. 
(18:11) Asset-allocation ETFs in retirement: Is there any benefit to separating stocks and bonds during withdrawals? 
(21:03) Leasing versus buying a vehicle, opportunity costs, depreciation, and convenience. 
(26:13) Currency exposure, RRSPs, withholding taxes, and common misconceptions about USD-denominated ETFs. 
(30:30) If Dimensional funds were unavailable, what would Ben choose instead? 
(31:26) Are there any popular ETFs investors should avoid? A look at Canada's largest ETF holdings. 
(38:28) Why discounted cash flow models often produce wildly different valuation estimates. 
(41:47) What portfolio managers at PWL actually do when they are not trying to beat the market. 
(45:57) Concentrated stock positions, client coaching, and helping investors make better long-term decisions. 
(50:02) Why financial planning questions are often portfolio management questions—and vice versa. 
(52:53) Helping clients navigate the transition from wealth accumulation to wealth preservation and spending. 
(58:06) Revisiting Berkshire Hathaway's long-term performance versus broad-market index funds. 
(1:02:35) The challenges of active management as assets under management grow larger. 
(1:04:22) Aftershow: Ben reflects on his experience appearing on Diary of a CEO with Steven Bartlett.
Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, we are joined by Morley Conn, Director of Sales and Strategy, ETF Services at Scotia Global Banking and Markets, for a deep dive into the mechanics of the ETF ecosystem. With more than 30 years of experience across equities, foreign exchange, and money markets, Morley pulls back the curtain on the creation and redemption process, ETF liquidity, block trading, market making, and the often-overlooked infrastructure that allows ETFs to trade efficiently every day.
We explore how authorized participants and market makers facilitate liquidity, why ETF liquidity is driven by the underlying holdings rather than trading volume, and how large institutional ETF trades are executed. Morley also explains the differences between Canadian and U.S. ETF markets, discusses common misconceptions investors have about ETF trading, and shares practical advice for retail investors seeking better execution. This conversation offers a rare look at the operational machinery behind one of the most important innovations in modern investing.



Key Points From This Episode:
 
(0:04) Introduction to Morley Conn and his role in ETF market making.
(4:29) The key participants in the ETF ecosystem: issuers, custodians, market makers, advisors, and dealers.
(5:53) What market makers and authorized participants actually do.
(7:03) How ETF creation and redemption works and why it matters for liquidity.
(10:58) How ETF portfolio management differs from traditional mutual fund management.
(12:44) Why ETF trading volume often greatly exceeds primary-market creations and redemptions.
(13:35) The capital gains refund mechanism and its relationship to ETF trading activity.
(16:04) What happens when ETF market prices diverge from net asset value (NAV).
(18:24) Lessons from the March 2020 bond ETF dislocations and what they revealed about market pricing.
(19:16) How market makers price ETFs when underlying securities are illiquid or difficult to value.
(20:38) Managing ETF market-making risk when underlying markets are closed.
(21:35) The major factors that influence ETF bid-ask spreads.
(23:26) Why market makers prioritize trading volume and investor experience over wide spreads.
(26:45) How large ETF block trades are executed and hedged behind the scenes.
(29:26) Why ETF liquidity is determined by the underlying holdings rather than visible trading volume.
(30:43) The difference between NAV trades and at-risk trades.
(32:46) How market makers contribute to the development of new ETF products.
(34:20) Best practices for retail investors when trading ETFs.
(37:34) Factors that determine when block trades make sense.
(38:46) Why pricing ETF blocks is both an art and a science.
(43:14) What happens when an ETF is shut down and how investors are affected.
(46:22) The balance between retail and institutional participation in the Canadian ETF market.
(48:27) How institutions and retail investors use ETFs differently.
(51:23) Key differences between Canadian and U.S. ETF markets.
(54:56) ETF tax efficiency in Canada versus the United States.
(56:23) Common misconceptions investors have about ETF liquidity and assets under management.
(1:00:13) How CRM3 total cost reporting could influence ETF adoption in Canada.





Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)