Q&A: Managing Director at Large Global Asset Manager

As above, client empathy is big as you get more senior. In the institutional space you will have a lot of detailed interaction through a mandate life and - while you need to get paid profitably- you should never lose sight of the fact that the person in the other side of the table has a career too. They are placing a lot of trust in your hands. While I love reading books like Liar’s Poker, it’s deadly to approach clients in that way on the buy side.

Organisational and industry awareness is important in large firms especially. Many investors just don’t get that. Unfortunately, just producing “alpha” does not mean that your strategy will be perpetually relevant or top priority for distribution. As the top firms move towards a platform approach, bandwidth for individual products will get squeeze. You may have to fight your corner for inclusion but don’t be a dick about it. I’ve seen a lot of good investors get parked because they have an attitude problem or appear “myopic” versus the firm or the market’s needs. Understand your firm’s corporate strategy - if you can see how your portfolio fits, great. If you can’t, with good performance and reputation you can always find a seat somewhere else.

1. Enjoy what you do and get really good at it. Master it.
2. Learn to communicate to senior management in the right way. They want to know you are valuable and know your stuff. But you need to convey that succinctly in understandable language. Your depth of knowledge is exciting to you and maybe your line manager but very few others have the bandwidth. Most senior folks have an antennae for risk and complexity sets that off.
3. Treat people like you would wish to be treated yourself. Be on the level with back office and middle office folks, the awkward analyst on the Sales desk, the introverted risk guy. As you get more senior you appreciate that the money only onboards through team work. Take your Ops person out for a beer or a coffee and get to know them.

Sorry - I know this is all very motherhood and apple pie but these are the fundamentals of progressing out of the traps in my experience.

On cultural paradigms, I find this is one of the most interesting parts of the job and have been recognised for it by clients and colleagues.

I think the trick is to avoid imposing your own culture on the other side. In Europe and in Asia that will require a lot of biting one’s tongue as an Anglo-Saxon.

I have always read a lot of history and that has really helped me understand where other cultures might be coming from. Many Americans especially at big firms lack that basic knowledge and curiosity and it can trip them up or, more banal, it just makes for superficial interactions. So read up if you’re going abroad for a short term or long term assignment!

It would be essential for China facing roles, either in domestic asset classes or client facing roles.

My mode has been to leave China to the Chinese talent and make oneself available where needed.

You can certainly work in HK without Mandarin or Cantonese. While the city is becoming more Chinese in many aspects the finance industry is still very multinational.

As a self-identifying “Gweilo” it’s been possible to do a broader role encompassing the broad region. Again, read up on the history. North Asia is a place of intense national rivalry (understatement). In contrast “Expats” offend everyone equally.

The industry is being disrupted by a number of themes and rightly so: ETFs, ESG, private assets, FinTech. A good summary comes in Larry Fink’s commentary in the the BLK 2018 Annual Report. The whole business model for commercial asset managers is coming under question.

That’s the bad news.

The good news is that clients need help with their wealth and liabilities like never before given low yields and volatility. Despite the Covid crisis, I see that business is still getting done. But the themes I mention above are only accelerating as a result.

In big firms, young investors will usually be “given” small accounts from the team book as part of their development.

The next stage might be to sub in for a more experienced hand as part of a pitch team for a small or medium sized opportunity.

One’s own book might grow like this for a few years but under close supervision from the team head or CIO. It may take between 5-10 years to get fully “seasoned” where one has the opportunity to have a client base that would be potentially portable or enable one to move to a CIO status (the latter may be more like 15 years).

Again, as I write this, I am aware that I might be describing a model that is likely under disruption as the profession moves from the “artisanal” to the “industrial” in some ways. But the above describes the basic trajectory for active investors during my career to date.

Broadly, it becomes more individualised as you progress, in line with your commercial impact. In most big firms there's usually a split like you posit. This split can vary depending on the type of PM role one does (asset class, strategy, etc). I'm reluctant to give a ball park comp figure on this forum. It can vary widely, person to person and year on year. For most of us, if your performance is consistent, your comp will be too. As a senior PM, the sky can be the limit. Remember that the buy side is skewed towards a long game so LTIPs play a greater part in smoothing comp versus sell side.

Portfolio construction is really just the selection of the most appropriate and compelling research ideas for a given portfolio.

Constraints in my area are usually client or regulator mandated. Managing to those constraints is part of the fun, at least for large custom portfolios. Mutual funds are constrained by regulations.

If you're aware of the "Fundamental Law of Active Management" then you'll know that breadth of opportunity is a PM's friend for generating risk-adjusted returns. Multi-asset investors talk about breadth a lot.

It's a balance because a large AUM client may be too constrained to achieve the outcomes they believe they require. A bit of underwriting judgement is involved here - if a mandate is large AUM but overly constrained it is unlikely it will be successful. The win note might get your team's name in lights but you'll end up feeling the pain for a few years to come...

Depends on the level of hire. For juniors, I'd prioritise the coding skill as the investment part can be learned (it's why you're here). For more senior lateral hires, it's more about their subject matter expertise in an investment field. See other posts above as to the non-technical attributes I look for but I would re-emphasise by saying that technicals will only take you so far.

I work with a lot of STEM PhDs. Many of them will likely never make it to MD unless they can radically re-think their communication, project management, people leadership and execution abilities. Investment is a team game and it's about making decisions in an effective and timely manner. End of lesson...

Depends on the level of hire. For juniors, I'd prioritise the coding skill as the investment part can be learned (it's why you're here). For more senior lateral hires, it's more about their subject matter expertise in an investment field. See other posts above as to the non-technical attributes I look for but I would re-emphasise by saying that technicals will only take you so far.

I work with a lot of STEM PhDs. Many of them will likely never make it to MD unless they can radically re-think their communication, project management, people leadership and execution abilities. Investment is a team game and it's about making decisions in an effective and timely manner. End of lesson...

As an intern it does not really matter. You're there to get a feel for the business so just take the opportunity to soak it all up.

I started off in client facing roles myself. There is something of a bias against liberal arts majors in research which I personally feel is short-sighted. All degrees are analytical at heart. If you've spent a term studying Joyce's Ulysses and have mastered an aspect of its critical interpretation, you are displaying way more analytic chops than your peer doing the Basic Wall St Drone Business degree!

That said, for liberal arts majors, it's also worth demonstrating you have the ability to master the technicals. I learned Excel before moving into Finance which helped signal I could "do the math". These days you might want to do part of the CFA self-funded or demonstrate coding nous.

But it's almost certainly better to start your career as a researcher. Your work and interactions with PMs should be more meaningful. Client facing roles need a bit of experience and "grey hair". Many junior client folks spin their wheels on never-ending powerpoints and RFPs which their peers are pitching investment ideas to PMs.

The way I made the transition was to get to know the team I wanted to work for, be useful to them and really understand their business and the talent/resource gaps. I think it's also fair to tell your manager what your long term goals are. I was in a client role when I started my CFA and had a sympathetic boss who was an ex-PM. I had to make the business case for taking on the commitment of the CFA. That strategic approach will get respect. In a way, it shows you are already "thinking like an investor".

The corollary of that approach is to remember that you're not entitled to the role. Be humble - once you get it, you may have to take a step back to take two forward.

It changes over time. The current buzz is for Python and I suspect that is as much about ease of use as anything - its quite democratic in set-up and breadth of understanding. R has also been used in portfolio modelling for many years now. Those are the two I've been most exposed to and feel comfortable discussing.

On non-STEM adaption: there are plenty of online courses out there via both Udemy and similar as well as various business schools online courses, which may be tailored for more experienced executives. For non-STEMs it's probably worth learning the basics and being able to understand the common language (as well as the programming language) of coding. But it's equally good to remember why liberal arts graduates are useful in investment teams: we often ask better questions of data than STEM or business majors and are more skilled at lateral and creative thinking. There is often more power in asking the right (or new) questions than in coding the answers. Something to consider...

My favourite question so far! Bananas coming your way.

“Back in my day” there was a clear pecking order for success in AM. You either managed money or sold to clients. Everything else was risk or admin.

Then came 2008. As one of the chief monkeys in my firm called it, this was “the year of the plumber.” Suddenly, contracts and infrastructure mattered.

BlackRock understood this well and built a hugely impactful Financial Markets Advisory (FMA) business on the back of it. They also bought BGI around the same time - a great pre GFC franchise who had ignored the Ops side in their flagship HF until too late. The current CEO of GAM was an Ops guy seconded to FMA. It’s not far fetched to say that those that aspire to the C suite long term need to understand Ops (same with Dan Watkins at JPMAM APAC).

Same with Trading. Large AMs are moving to a scale model similar to tech (only 20 years after not understanding Amazon’s valuation...). Whether you are BLK, Vanguard, CPPIB or Millennium, implementation cost really matters. IB Sales & Trading is getting squeezed as big buy side shops take more in house and dicate flows and commission like never before. Buy side trading is big business and getting bigger thanks to the growth of index investment. New Zealand Superannuation have a new paper out on this topic.

20 years ago I would have advised you otherwise but these roles can have real impact at the right firms today.

It really depends on what you are interested in. If you are passionate about investments and investment strategies then research is your place. The skill you need is to be able to think, debate and communicate in an analytical fashion. If you are interested by systems, processes and market conditions, trading is a better place. I had someone on my team a few years ago who started in the investment strategy team but - despite the smarts - just turned out to be not that analytical. But he was disciplined and had great attention to detail. He's now thriving as an Implementation PM and his experience with investment strategy really helped that.

Per previous answers, there's no right way to get to the top. The majority of new entrants may start in research but many large firms will take on interns and graduates into their Trading functions. Both routes offer plenty of brainy, satisfying work.

All of the skills/attributes you mention are helpful but they won't make you stand out, except maybe for superior coding chops. The key thing is to be super effective in execution of any tasks or projects that come your way. Same as IB, AM interns are expected to be smart and add value quick off the mark. So becoming a Python master or Excel ninja will make you stand out and increase your demand factor on the team. For research, make sure you are organised and prepared to discuss and debate your conclusions on any research projects you are given.

1. I'm not going to comment on the political aspect of HK right now but I would observe that - as a nexus for capital and talent in the region - it's position as a financial centre is very hard to replace or replicate. SG certainly has its strengths, especially in Wealth Management and Private Banking, but it's a five hour flight from China. I've seen some press stories (e.g. FT) about HFs wanting to leave HK. That's weird because I know from my personal network that some big, successful shops are seeking more office space and are definitely hiring in HK.
2. I share your philosophy but I would temper it with the structural observation that the business model pursued by many traditional asset managers is in a challenging spot. I mentioned the themes above and I think that this confluence of trends will put pressure on the margins of traditional active managers who try to make a living out of performance that is just "good enough". Indexation and factor-based solutions offer systematic exposures at much lower prices; active managers need to demonstrate consistent genuine alpha and high active share through concentrated portfolios. That way they can continue to demand the fees. Everything in the middle will get squeezed. The industry has been talking about this "barbell" effect for 15 years. In the last 3-5 we've started to see it happen.
3. We want to see how potential recruits think. As above, being able to put through an intelligent investment case and hold a mature discussion is key. That's not necessarily a soft skill as such. Soft skills are more around team work, empathy and other aspects of interaction.

It's a pleasure! I'm having fun talking to you all! But one thing: this session is "Ask Me Anything" not "Ask Me EVERYthing". The pace of my answers will slow if I have to grapple with four questions per Monkey...

That said:

1. Virtual internships are new to all of us so the exceptional aspect is not a handicap. Many aspects of running a virtual internship will be unkown territory to your firm so I'd make sure I'm patient with them but at the same time proactive in terms of making sure you're being included in meetings, etc - it's easy to forget to include new people in the fog of war. It's okay to complain (politiely) if the tech is not working for you. Otherwise, I would advise the same as for office-based internships: be organised, deliver on time, practice asking intelligent questions, don't ask for help on the same thing twice, don't impose your personality or tactical needs on the dynamic of the team (unless invited to share...). We are really looking at two things: (i) are you smart? (ii) more importantly, are you making yourself useful?

2.I sort of mentioned some of them above. Here's some more specific DON'Ts: (i) Brag about your school/education (guess what? We've all done at least okay academically to get here) (ii) Tell egregious stories about any aspect of of your personal or family life (nobody cares, although they may pretend to if you are the offspring of a big client) (iii) Approach assigned research projects like they're college dissertations. It's more important to be on time in your delivery than worry about whether the footnotes are done in Harvard citation style (seriously...) (iv) Think about how you dress and come across (still true for virtual internships). There are plenty of advice blogs out there that can help here (for males, John LeFevre on Medium does a suprisingly good job for an American -;)). Appear professional but don't go over the top. (v) If a senior person asks for questions from your class, make sure you have one. But limit yourself to one... (Yes, I'm using humour but this is not a joke - I recall a new graduate from years ago who asked if he could ask two questions and the MD snapped back "No, you can have one." The graduate never quite recovered from the derision displayed by the rest of the class, although he did go on to be a very successful HF manager at another firm...)

3. Cultures. In AM, London is get in early and "try" to leave early. No real lunch break. Given the exhorbitant privilege of the GMT time zone, there is no quiet time - you come in with Asia and leave with the US. The great thing is - if you have a global mandate - you can talk to everyone around the globe (from Japan to West Coast, maybe not Australia) during your working day. I have not worked in London for a decade but I'm assured there is still something of an after work drinking culture but this is usually capped by the need to travel on public transport, which can be lengthy. The culture is mostly Anglo-Saxon - this means the environment is competitive yet mostly good humoured. Some Europeans and Americans get frustrated that the Brits "appear" to take nothing seriously. That's not quite the case but it can be an eye opener for foreign workers. Best to roll with it as long as the humour remains appropriate...

3. HK. Depends on the firm. Working hours tend to be very elongated. As a senior executive at a US firm you can easily work late on conference calls (regularly until midnight or after) and find yourself up again at 6am to follow up or debrief on the night before. There's also a lot of travel compared to London. As I loved pointing out to American colleagues, Asia is not Europe, it's a big region geographically - if you want to fly from Singapore to Japan or Seoul, that's a day on a plane. A client roadshow cannot be done in 3-4 days like it is in Europe. Office culture is different to London. People tend to come in later (9am for many) and eat their breakfast at their desk so work doesn't really start until 10am by which time the East Coast are in bed. Lunchtimes are deadly quiet - only Asia-Pacific is on line or trading. Locals will take regular 2 hour lunch breaks and expats may do similar or go to the gym. Things really start to ramp up after 2pm as London comes on stream and then... depends what's going on for you individually but afternoons turn to evening to late nights pretty quickly, particualrly for US HQ'd firms. I found HK much more cosmopolitan than London in terms of the office culture. Locals, Mainland Chinese, Brits, Aussies, Americans and French make up the largest constituents in my office. In some ways it's much more diverse and less ghettoised than I recall in London. People like to rub along and celebrate each other's holidays, etc. Perhaps being an ex-British colony, HK working culture is quite like London - Cantonese culture seems quite humourous, like the Brits, and there is an after hours drinking culture for those not jammed to their desk that evening.

4. My COVID experience has been likely similar to others' who have documented more widely:

Positive aspects: less travel, more family time, more exercise, greater productivity on important tasks, saved a TON of money (not good for the wider economy but an interesting lesson)

Less positive: "always on" (I'm used to it but others aren't), miss the camaraderie of the office, more worry about colleagues who are maybe not coping as well (this environment is not for everybody and I feel for young single folks starting out in small apartments in HK, etc)

You're lucky... my 10am just got cancelled...!

1. I made the move because I spotted a business opportunity and pitched it to my boss and the global head. Thankfully they liked the idea. I'd always been interested in working in Asia from early in my career (I started on the day the Thai Baht devalued, kicking off the Asian Crisis) but I didn't speak any Asian languages, etc. For me it was really just a case of taking a mature approach and tailoring my ambitions to the needs of the firm. If you are local to the region, speak languages, etc. it would make sense to go earlier in your career. CFA and CAIA had nothing to do with it - they help in other ways.
2. In AM, CFA (and CAIA to a lesser degree) are probably more important than an MBA, unless that MBA is from a very top tier institution. I agree that Asian business culture tends to place high value on graduate education but frankly I think the evaluation is superficial and mainly for reasons of "face". If you are transferring within a global firm, it will be more about the vocational and hard skills you are trading, rather than your MBA. My advice for internal transfer is have strong business reasons and be clear about why you want to go. Most global firms need more Asian talent in the region so you should be able to make an effective case. If you're not sure, speak to a mentor...
3. Thank you for sharing this fear, that in itself is not easy. I appreciate there may be both personal and cultural aspects at play in this fear. You have to recognise that there are plenty of introverted personalities in our industry and that's okay. The key thing to realise is that you will never get recognised unless you contribute to the discussion. If your seniors are critical of your views I would consider two things (i) how are you conveying those views - what's your choice of language and demenaour (these things can be trained with practice) or... (ii) change your seniors! This is difficult to solve on an AMA thread and worth a deeper conversation.

Thanks for doing this. Very interesting. Love that you have both client facing and technical experience. Do you feel a starting role (out of UG) on a sales desk at a large AM is a good launching pad? Where can one typically go from there? Is it common to move off the desk and into more technical roles like product strategy, institutional, etc? Is an MBA from a top school required to climb the ladder?

Thanks again!