Dr. Indre Viskontas:
Hello, and welcome to Inside the Mind of a Trader, the show where we explore how brilliant traders are wired for success. I'm Dr. Indre Viskontas, neuroscientist and professor of psychology at the University of San Francisco, and my next guest is Chesley Spencer. Hi, Chesley.
Chesley Spencer:
Hi.
Dr. Indre Viskontas:
So you started out not on a trading floor, but in phone support.
Chesley Spencer:
Indeed, at the very ground floor of the brokerage industry, taking phone calls, reset passwords, reading out quotes. Yeah, very much a phone-based client service sort of experience.
Dr. Indre Viskontas:
So this is like the start of a movie. We see you on the trading floor, you're resetting passwords. What then gets you interested in trading itself?
Chesley Spencer:
I was actually, prior to that first job, not connected to the finance world or the corporate world really at all. But from there, through various twisting and turnings of life, I got involved in the actual portion of the software and the platforms involved in doing it. And that really spoke to my inner computer geek and the whole mind-machine interface of how people react with data coming through a screen, and being able to play with that to an audience that loves and is passionately engaged with this stuff. It's a treat. It's a joy. It's fun.
Dr. Indre Viskontas:
And you talk about how you've collected brokerage licenses to fill a bingo card.
Chesley Spencer:
Yes.
Dr. Indre Viskontas:
Tell me about that.
Chesley Spencer:
Sometimes you have a slow summer and you want something to do and the beach doesn't look appealing, so you just go collect another license or two. But no, part of our brokerage offering is to really offer a wide array of different kinds of products to people. And although I don't work in a service or broker type of role and haven't for a while, knowing how those products work and knowing how the regulations around them must work and the mechanics of them is pretty important in order to build a product that walks that line between giving folks the right ideas and opportunities, but not acting in a recommendation type of basis. Help people understand what they can do without telling them what they should do.
Dr. Indre Viskontas:
And is that what's different about this platform than, say, other opportunities?
Chesley Spencer:
In my opinion, everything, because I'm making it, but we have a lot of different capabilities that try and make people into not just traders in the sense of executing trades. That's like trying to make somebody a baseball player by teaching them to swing a stick at a ball. Technically, yeah, that's a big part of it. But you need to know things and be engaged with things around understanding how the markets move on large levels. You need to be able to understand or be able to find opportunities in the marketplace and sift through enormous, staggering amounts of data. The market is a multi-trillion dollar beast. So giving people technology tools that can take those mountains of data, distill it down to what the essence of things are, is something that I think we've done a really, really good job at and certainly seems to be working in terms of the amount of engagement and passion that we see from our users.
Dr. Indre Viskontas:
And what you're describing reminds me of this tech startup culture where there's a lot of humor, there's fun in it, and in fact, I guess there are some Easter eggs and some release notes that people might want to know about. What's that?
Chesley Spencer:
We do get a little sneaky sometimes. I'm a pretty big science fiction geek. I like to read a lot. So whenever I have the opportunity to take a hand, which is not too often because obviously our first passion is on making stuff that works and is useful, but if I can sneak in a little reference to a flux capacitor, I can use some release notes to write a clever pun or a limerick maybe, yeah, that's the icing on top. That's the giggle at the end.
Dr. Indre Viskontas:
Yeah, I think that's probably unexpected from a large financial institution that has a long history.
Chesley Spencer:
Yeah. Yeah. The Charles Schwab name in particular is built on very classic values of mindfulness, respect, a deep appreciation for users, and definitely I have those in spades and in my heart. But at the same time, if I can't do it with a chuckle, I can't do it. And it's appreciated. It's a little different maybe than some of the pattern, but I love it.
Dr. Indre Viskontas:
One of the pieces of advice that CEOs often give to newly minted CEOs is that they need to know every aspect of the business. And it sounds like by your starting already in phone support and going all the way through, what are some of the things that you've learned along the way that help you do your job?
Chesley Spencer:
The first is definitely you've got to listen more than you talk. That's a big one, and probably one that took me a little while to learn. I like being right. I like being in the middle of the room, which is not an entirely bad thing, but it must be balanced. But listening to people and spending those years just on the phones hearing when clients are coming to us with a problem, it paints a pretty clear picture of how one might solve the problems, but keeps one humble in the sense that you don't necessarily know how to do that in every case. So yeah, it's my personal opinions. If you're going to ever own a restaurant, you had better have worked in a kitchen, you have better have been a waiter. It keeps you humble and teaches you what really matters and what doesn't about the business. So yeah, that'd be my advice to somebody that was looking at this industry or probably really any industry. Figure out what the nuts and bolts are and try and do it through your own personal experience and it'll serve you well. It served me well.
Dr. Indre Viskontas:
With the digital revolution, trading, like so many industries, has changed a lot in the last 10 years. What are some of the trends that you're seeing now in terms of how users are engaging with the platform? Where do you see the future going?
Chesley Spencer:
I'm going to try and steer away from the words generative AI, because that gets abused a little bit. But one thing that is really, really interesting about some of the space around machine learning or natural language processing, some of those types of things is it does speak really well to our core mission, which I mentioned a minute ago, of taking mountains of data and trying to get that down to its essence. What is useful about that to you as a person? How do I get it to you without having to read pages upon pages upon pages of news articles or scraping through time and sales records, things like that? Some machines are good at taking large bodies of semi-associated data and finding the patterns, find the clusters and expose them.
And there's a million and one different ways you can do that. Some of the newer technologies are doing that in really cool ways, in that the data can be less structured and it can be more human language-oriented, so I think there's a lot of opportunities in those kinds of spaces. But fundamentally, it doesn't really change the underpinnings of the business. You have to have technology that is bulletproof and robust. You have to be able to execute and provide the data fundamentally, or the cool stuff on top just falls down. So yes, it is always interesting to explore the cool and the new, and certainly we spend time and energy doing so, but if we don't spend as much or more time making your foundation strong, you get a lot of flash and not a lot of substance in my opinion.
Dr. Indre Viskontas:
And have you seen a change in terms of the kinds of people that are using the platform, whether it's their personalities or what it is that they're interested in gaining from the platform, their experience?
Chesley Spencer:
Things always change. Things always stay the same too. Definitely the ways in which some younger parts of the audience, or maybe more tech-savvy parts of the audience, engage with the markets or with technology in general shift. They like things in a little more bite-sized form, but get lots of them very quickly, to generalize. But at the same time, I think what I would say traders as technology users and just as people in general all really have in common more than anything is a passion or an enthusiasm for it. They like to geek out on it, for lack of a better word, so building a place where they can really be richly enveloped in that. And that really holds common, whether you're talking about our 80 something retiree that's doing it as a passion still, or your 20 or 30 something guy that's looking to gain a little more edge in his nascent 401k. It's the tools by which they prefer to do it differs, but I find it's a little more about personality and maybe learning style than it is about purely age.
Dr. Indre Viskontas:
Yeah. I wonder how much of it has to do with experience as well. We're living through this time where at least neuroscientists are finding that people's attention spans are shifting a lot and how the brains are being wired by their experiences is shifting a lot, so there's probably a pretty big disconnect between the thinking patterns of your older users and your younger users, but there's a lot of wisdom to be gained from waiting.
Chesley Spencer:
Sure. And you're the neurologist, so I won't speak to your expertise. But at the same time, people learn how to interact with the world, but they're also taught how to interact with the world. So as they see these experiences and we find ways to start to connect with them, we can help build patterns of behavior. And the patterns of behavior that we were hoping to build is to think about all elements of a portfolio, not just how do we get them to think to make a trade? How do we get them to think of managing their risk? How do we get them to think about their position and their account relative to the overall movements of the market?
So there's a lot of things we can help people learn, even if it's not learning in the sense of a how to video or an FAQ. Lorraine, who I think you are going to talk to as well, is very much in the education world and thinking about that from a very content-driven perspective. But it certainly permeates how we think about design and the user experience, because you're taught every time you open your eyes.
Dr. Indre Viskontas:
Absolutely. And that makes me think about this difference between giving somebody advice, that maybe you can do that in one video, versus teaching them something, which requires multiple repetitions. It also requires a different strategy. Yeah, so how do you balance that aspect of it? Instead of giving advice, actually giving people the skills that they need in order to be better at it?
Chesley Spencer:
Well, yeah. Advice is very much a part of the overall Schwab business, but in the trading space, it's much more about empowerment, and telling people what they should be doing is verboten for a variety of reasons. But enabling them to see what they are able to do, particularly with things like derivatives or options where it's not nearly so much a binary of, "Hey, you think this is good? Buy it and it'll go up. You think this is bad? Sell it and go down." There's an infinite variety of levels that you can get into or nuance in those situations of, oh, I think it's going to channel for a while, or maybe it'll go up for a bit and peak or down a bit and bounce back. All of those have very particular actions one can take based on them that's a lot more nuanced than just a simple buy or a simple sale.
Dr. Indre Viskontas:
Yeah. What you're talking about reminds me a lot of the fact that 90% of what our brains do is not available to us consciously, but it is still built on our experiences, and a lot of it is this implicit learning, so non-conscious learning, habits that you form over time. And it sounds like within the platform, there is some embedding of the development of this implicit learning.
Chesley Spencer:
We certainly try to. Actually, it reminds me of a conversation I was just having yesterday with a couple of my coworkers, and we were talking about this experience one of our trade desk reps had talking to a client who had a very complex options position that he needed to wind down or to make smaller. And it was a long process that he walked this client through very well. It was very successful, but it's also the kind of thing that's incredibly hard and frankly expensive to train somebody how to do. So we started thinking about how could technology help that process?
And the first thing we really had to wrap our heads around were what are all of the little things that associate's doing in his head that doesn't necessarily make it out to the clients, where if maybe we can expose some of those things that maybe he, as he's speaking, isn't even really aware of. If you can make some of those more cut and dry, more exposed, not only does it make his job easier, but it also enables the client to be able to be more engaged in a more informed way.
Dr. Indre Viskontas:
Excellent. Now I think I'm going to have to read your release notes to find all those hidden references. Chesley Spencer, thanks for coming on the show.
Chesley Spencer:
Thank you very much.
Dr. Indre Viskontas:
Join us next time as we look inside the minds of brilliant traders.
