Bridge over ocean
19 September 2017 Multimedia

CEO Panel: Positioning Investment Firms for Success

  1. Dana M. Emery, CFA
  2. Barry S. McInerney, CFA
  3. Michael S. Falk, CFA
  4. Margaret Franklin, CFA

Join this CEO panel of experts as they discuss the disruptions and shifts affecting the practice of investment management; how to create and maintain a culture leading to innovation, agility, and ethical decision making; and how to manage the “investment firm of the future” by adapting to redefined client preferences, incorporating technological advances, recruiting talent, and using diverse teams to create a competitive edge.

CEO Panel: Positioning Investment Firms for Success

[THEME MUSIC] MICHAEL FALK: Well, hello again, everyone. I hope you didn't get too tired of me from a couple of sessions ago, because I'm back. Michael Falk again. And with me, Mark Franklin, Barry McInerney, and Dana Emery. I'm not going to take the time to read through their bios. Instead, I'm going to try and hold them to a minute or two each to just tell us a little bit about themselves. And then we'll jump right into the questions.

MARGARET FRANKLIN: I'm the President of BNY Mellon Wealth Management. I have about 12 years of institutional experience. I worked for Barry at a point in time at Mercer. And so we're happy to be sharing the stage together.


MARGARET FRANKLIN: I know. And for the last 15 or so years, I've been in the private wealth business. And as you probably gather, I have been a devotee of the CFA Institute and sort of what they try to achieve.

BARRY MCINERNEY: Barry McInerney, I'm the CEO, McKenzie Investments here in Toronto. And I've been at the helm for about a year and a half. Prior to that, I was actually in the United States for 15 years, half the time in New York and half in Chicago, running a variety of investment businesses in the US and internationally. Nice to be back in Canada.

And I guess I have the unique position of being an American and Canadian, if that means anything. And I have perspectives on US business and Canadian business, and happy to be here. Proud father of three children and-- three daughters, rather-- and a new granddaughter. So I'm surrounded by women in the household. So I'm very compliant. So--


DANA EMERY: My name is Dana Emory, and I'm the CEO, President, and I'm Director of Fixed Income at Dodge and Cox. We're an asset manager based in San Francisco. I've been in the business for 35 years, all at Dodge and Cox, which makes it very boring when I go back to reunions at school. But I've really grown up through the business, almost a classic apprenticeship. And I still am involved in asset management. I sit on our fixed income and global fixed income policy committees.

MICHAEL FALK: All right. Thank you all. So as you all know, obviously, this is our CEO panel, and talking about positioning investment firms for success. So we've had a chance to talk and communicate amongst ourselves. And just want to start off with a discussion about creating a culture that leads to innovation, agility, and ethical decision-making.

Those are a lot of topics that have been thrown around here. So a question for each of you to respond to-- how do you describe your firm's culture, and how have you used your culture as a competitive edge? Dana, since you finished up last time, we'll allow you to jump right in first.

DANA EMERY: You know, I think culture is an interesting-- you know, trying to come up with a definition of even what that means. But I think about it as a shared set of beliefs, and a set of ways of behavior to achieve a specific goal. I think at our firm, I would say one of the biggest things that comes out of that definition would really be an alignment with clients. We've tried to make all of our decisions about how we manage money and how we run our firm to ensure that they are aligned with clients.

It really goes back to the very founding of our firm, which is in 1930, right out of the conflicts that existed in the 1920s. And having a fee-for-service model that's very aligned with your clients really grew out of that experience. We're many times entrusted with the entire financial net worth of families at the very beginning. Now, of course, it's a much more segmented world. But we're trying to keep that alignment. We are independent.

We think that allows us to stay making decisions in the best long-term interest of our clients. We try to stay very focused in our strategies. We only have six strategies, one of the few mutual fund firms with only six mutual funds at our asset size. And then trying to keep our fees reasonable. So it's all in the interest of trying to create long-term value for our clients.

And I think it's a competitive advantage because of the way we run our firm, the high ethical standards allows us to attract and retain people. Many people-- I'm not unusual at 35 years at our firm. The prior generations of our firm were there for 40, 45 years. So consistency of investment philosophy, building up of intellectual capital, and having a consistent approach throughout market cycles we think is a key to successful act of management.

MICHAEL FALK: Thank you. Barry?

BARRY MCINERNEY: I would say-- so Mackenzie in Canada is a large, independent asset management firm. And we define that in Canada-- independent means that we're not owned by a bank. So different independent, probably, Dodge and Cox, in terms of being employee-owned. Because of that, the banks are very formidable in Canada, and good for them. And so we respect them.

But we need to be quicker and smarter and faster to market. And so we try to develop a culture within Mackenzie that-- decision making is very focused and very collaborative. And I think we do attract very, very smart individuals, as well, to be able to affect the strategy. And we actually measure culture, if you can actually-- it's tough to measure culture, whatever culture is. But the main focus for us is ensuring we have the most engaged employee force on the street.

And engagement we measure via Gallup. And many of you probably know Gallup. But we partner with them to measure our level of engagement on a variety measures within Mackenzie every year. And that's actually embedded in all the senior executives' objectives, as well. So they're highly attuned to doing better, not for the sake of just getting a higher score every year on the Gallup survey, but more importantly, measuring engagement. And obviously Gallup has shown a high correlation between engagement and success of a firm.

But looking at the areas that we can improve upon, and when we identify them, we communicate to the employees, say, OK, here's three things you told us we're going to work on this year. And you better get them done, because if we don't get them done, then they're going to lose faith and trust that you're going to be able to-- next time they give you their honest and candid opinions, that they're going to hold back a bit. So culture is important, like every firm, just a little bit of an angle which others may do that we do-- try to measure every year. And we act on that culture to ensure that level of engagement is as high as it can be.

MARGARET FRANKLIN: I actually-- I think you and I started the same day in July at our new jobs. I think we emailed each other.

MICHAEL FALK: Congratulations.

MARGARET FRANKLIN: You said-- I think you came with a bigger force. I actually came into a position where I needed to reset and retool the culture. We had massive change. And so as unnerving as that was, it actually did give me the opportunity to really reset it. And so when you do that, you really have to think hard about what the culture is that you want to create, because every piece you put in place, every person that you bring in, every policy that you put in place, has really quite significant implications. And we had people who had been long-time employees there.

I would say the culture is very different than-- has been very different over the last number of years than it is now. So those principles were-- you won't be surprised, not dissimilar-- centered on clients. When we set that, that also means it's not centered on an individual person or even key individuals. So that was a collective-- well, I put it out there. And then we agreed on it. So that may not have been quite so collective. But it was, if we're going to be centered on clients--

MICHAEL FALK: That's leadership, it's called leadership.

MARGARET FRANKLIN: Exactly. If it's going to be centered on client outcomes, then it can't necessarily be centered on certain individuals. The second was that it was going to be collaborative. I am the oldest of six kids. And I have learned much of my leadership style from that environment that I grew up in. And it was collaborative. And at various points in time, somebody had something different to offer that at that moment in time was necessary.

So part of it was to hire people that demonstrated collaboration, could use language that was evidence that they understood what it meant. And then the final thing was, right from the get-go, was to create a culture of critiquing. I'm always amazed in our business that I think we're always navigating uncertainty. And yet, most things are delivered with great certainty, generally, to two decimal places.

And I think that sort of belies a confidence that isn't really appropriate for a business. I think our business is one where we're trying to manage a number of outcomes or possible scenarios. And I really actually-- I think Mercer was the only place where that peer review process was codified, was really institutionalized. And I took a lot from that.

I worked at Barclays Global Investors for a number of years, and they, too, had a culture of critiquing, that you would take your work to somebody else and you would solicit feedback. And that necessarily gets a diverse opinion. I think it gets better outcomes. That being said, it's not easy. It's a little bit slower. And you have to bring in the right people who can do that, or can be trained to accept that kind of culture.

MICHAEL FALK: Yeah, both the giving and the receiving of the feedback, really important. Pivot a little bit, along these same lines, you know, SSGA did some research-- the Center for Applied Research in combination with CFA Institute, which they came out with their paper called Phi, which was their Greek assignment for purpose, habits, and incentives. And it's been said that our industry, and some of my own firm's research, as well, confirms this very well-- is that we're very high in passion and low in purpose.

And when you think about culture being values, beliefs, and behaviors as a definition for what kind of warranties, how we go about doing our work-- Barry, talk to us about, in terms of, can we shift our industry from passion-driven to purpose-driven? What do you think?

BARRY MCINERNEY: Well, I think we can. I hope to think that we're not that bad. But you know, I liken it to-- this is probably in reference to the portfolio managers, because they have to really spend all day, and sometimes all night, focused on the capital markets, and do what they do best to put together portfolios, and not worry as much around the environment around them, particularly clients.

The best way to make the connectivity is you have to remind everybody that we're actually managing people's money. We're managing family money, and retiree money, and young millennials, and single parents. And that connection is absolutely essential. And I was, again, Margaret reminded me of our Mercer days. I am an actuary, which I disclose very infrequently in a social setting. But I remember I was--

MARGARET FRANKLIN: So much than an actuary.

BARRY MCINERNEY: Well, thank you. But I was an analyst. And early in your career, I'm just working all day on programming. And then I got to go to a client meeting. And you kind of have a light bulb said, oh, actually, all the work I do, clients are actually making decisions on what I'm doing? And very important decisions, in terms of their employees' retirement plans? Or then you're asked to go talk to a group of lay people on rolling out a defined contribution plan, and looking at you.

And you have to explain to them how to invest. It really allows you to bring it to life. So what we do at Mackenzie-- and I don't know if we do a great job at it. And I've always been a big advocate of reminding everybody what we're here for. I think there is a higher purpose of the asset management industry. We are providing retirement security for Canadians and Americans, and other citizens around the world. That is a noble cause, If you want to take that cause and redefine it as such.

So when we're out, for instance, in the retail sector and working with advisors, we're not pushing product. And I say, we're not pushing product. We're going out there and saying, how can we help you? How can we help you with your business? Obviously, we want them to use our strategies. But that's how you start that. And I always ask the advisors across the country, when I've had a good fortune to meet them, I ask them, what are your clients thinking? What are they dealing with? What's on their mind?

And I can try to bring that back, and other leaders can bring that back to the portfolio managers. Because again, you've got to watch their time, because their time is limited and precious. But I actually think they appreciate that what they are doing is of a higher purpose, even though they might be staring at a screen all day. This is something that's meaningful.

So that connection is important. Those are just a few ideas to throw out there. But I think the connection between the investor and the manufacturer, you have to make a stronger connection to do that. I think millennials are going to probably naturally do that for us. I think their DNA is wired as such. And if we don't have a purpose as an industry, we're going to fail miserably of attracting smart millennials.

MICHAEL FALK: It's so interesting that you brought millennials up, because when we start talking about culture, we have three different generations in the workforce now. And if you go out, 2020, 2025, we know millennials are going to be the lion's share of the workforce. So Dana and Marg, how do you integrate, or think about integrating, welcoming millennials into your firm, into the culture that you have built?

MARGARET FRANKLIN: Well, first of all, I think millennials get a really bad rap. And I have millennials, so they have actually educated me. But actually I do think they get a bad rap. And perhaps I'm biased because I think my children are collaborative. I think they care about their footprint. So when you get back to purpose, they understand the butterfly effect, that what they do has a ripple effect.

And I got to say, for 50-something males, if you've worked your whole life, you've slaved away, you've got all the goodies, you get turfed out of a business at 52, 53, 54, your family life is a mess. And that's 50% of households. So if it's not your kid, it's your kid's friend, or their cousin. I would look at that trade and say, that's a pretty crappy trade. And so doing the same thing and expecting a different outcome, of course, is the definition of stupid.

So I think with the millennials, and women, actually have a very common challenge that is going to stress the structure of our business. And that is they are simply not going to do 7:00 AM till 7:00 PM seven days a week for 25 years. They are going to be maybe not more transactional, but the intent will be, while I'm here, I will give it my all. And I may leave. I may on-ramp. I may off-ramp. And that, I think, is going to challenge our structures.

We actually have a lot of millennials working for us. And so I've been very clear. I've worked for a couple of organizations where we created alumni, essentially. We were just talking earlier about people we keep in touch with over 25 years. And I think that sense that you're here for a period of time, give it your best, we have something to offer you in terms of learning, mentorship, that culture, that ethical orientation, those things around purpose that are going to motivate you.

But we don't necessarily demand some kind of loyalty that's unreasonable. So the trade can be pretty fair. And it's good for us. And we've structured those jobs to be that way. So I think we talked earlier about transparency. I think you have to be very clear in your thinking about what it is you're offering, and what you expect. So I think with millennials, we have the same sort of dialogue with women who sometimes want to maybe go off-ramp and come back on.

And I think we have a number of women in our office who have kids at the teenage years, which are often the more difficult years. And we've just said, like, do your job. It doesn't mean because you're not signing up, putting your hand up for everything on the go right now, that those opportunities aren't available for you three, four years down the road, when you have a different context. In fact, let us know what you want to sign up for. You will not be penalized. And I think that's true for millennials, as well.

MICHAEL FALK: And context is so important. And so Dana, when I think about this topic for your firm, based in San Francisco, right in Silicon Valley, what are your experiences about bringing millennials in and kind of inculcating them into your culture? Because you've got such a strong culture.

DANA EMERY: I mean, we have a mixture of two to four-year jobs, research associates. So there's not an expectation that they're going to spend their entire career with us. And then we have other young people that come into the firm that we're hoping will decide to spend their career with us, but may or may not. And so we have really two different groups of millennials in our firm. I would say that first and foremost, I think, as Marg was talking about, is really-- they want to have purpose.

And they want to have impact on the firm very early in their careers. And so one of the things that we've done is have rotational programs. We find that first giving them a really strong base in what is an asset management firm and all the different jobs that exist within an asset management firm has been tremendously helpful. And actually, that group-- we started that program about eight years ago. We have a 100% retention.

So people, they've enjoyed that rotation. They get to look at the different parts of the firm. And then we try to come to a mutual agreement of where their ultimate placement is going to be. So it's usually a two-year rotation, and then a placement within a group. And we get an ancillary benefit in that we have people-- like, when I grew up at the firm, there were 35 people there. So I had to wear every hat. And you know how everything works. But as you grow, you become more specialized.

And that opportunity to really rotate and understand the A to Z of a business is harder to effect. So having these rotational programs has been a tremendous addition to the firm. The research associates, we know that they're going to be sort of ambassadors for Dodge and Cox. Many of them go off to the top business schools. Some of them do come back as full time analysts with us. Many go off to do other great things in the industry, or other industries. And so we want them to have a great experience.

We want them to be challenged. We want them to be value add for our analysts. And we also want to help them have placements at top business schools if that's their goal. So we put a lot of effort into that. We've also found that millennials do like, overall, like a purpose. So we do talk a lot about who we serve. You know, people just are in awe when they don't understand we work for millions and millions of shareholders and beneficiaries that benefit from our asset management.

I think that kind of puts it into light for them, the importance of what we're doing. The other thing that we've implemented a lot more is a lot more of overall philanthropic efforts. I think that a lot of millennials grew up with some type of service experience, and really want to see the firm be good corporate citizens.

And so we do a lot of backpack drives and clothing drives, and done-in-a-day kind of things-- working at food banks. And it's really a benefit, because it's, like, an informal way to have a lot of cross-pollination across departments and across generations. And we've seen a lot of just a real positive response to that type of thing.

It doesn't take that much to do those kinds of things. And we've seen a lot of benefits, a lot of really positive feedback.

MICHAEL FALK: Wonderful. And if I could piggyback, Marg, on a couple of the comments you made-- millennials, we lump them in, its a giant, homogeneous group. And the stories, while quite entertaining, are not always very positive. First of all, they're not one homogeneous group. We have to recognize that. We have to recognize that maybe they have a little different sense of values than we have as X'ers or boomers.

And if we're going to make it work, we've got to come together with them. Interesting little factoid about millennials is the level of their desire to volunteer and to give back is greater than the boomers and the X'ers all put together. So tied to purpose, it's a big thing for them. It really is. Any additional comments, Barry, that you have thoughts on millennials that you're experiencing within your work force?

BARRY MCINERNEY: Well, it's interesting how it creeped up, because you look at your firm, and this year or a third of our employee force are millennials. Say, wow, how did that happen? And by the way, the number's going to get higher, so--

MICHAEL FALK: Because we're getting older.

BARRY MCINERNEY: Oh, yes, aren't we? One year at a time. But I concur with Marg and Dana's comments. You know, we, in addition to all the great programs that your firms are doing, same thing. We have a charitable foundation that's run by the employees, has been up for about 10 years or so. And so that seems to be another level of engagement. The employees run it. Everyone contributes to it.

And we probably support a couple dozen charities across the country. I think, also, if we could flip it a little bit, in terms of trying to be as successful as you can in terms of meeting the needs of investors, we're trying to be more sensitive, I'm sure, like others, to the particular investment needs of a variety of demographic cohorts. Because the baby boomers have just obviously built this industry on their backs for the last 30, 40 years. And they still have the majority of the wealth.

But they're starting to decumulate, although still a majority are still accumulating. But millennials are-- there's more millennials, as we know, than baby boomers in North America. And so they have a different way of investing. And so we're trying to be sensitive to launching products using technology to engage them-- obviously, sustainable, responsible, and impact investing.

Which, I apologize. I wasn't here for the earlier parts of the day. So I don't want to be repetitive. But that's just something that we're all trying to tackle to get that out there for millennials to engage them. And so it's really flipping around to see how we can attract millennial investors, same time engage the millennial employees within the workforce.

MICHAEL FALK: So millennials are a form of diversity. Not what we're here to talk about, per specifically in the workforce. But coming back to the purpose of the conference, about gender diversity-- what best practices can you share about building smarter teams, or better decision making groups within your organization?

What are challenges are you experiencing? Dana, Marg, what are thoughts that you have around some of the issues about making this work, making it happen in a productive fashion?


MICHAEL FALK: Because we know the data. It's there.

MARGARET FRANKLIN: Yeah. I think, I'll tell you I personally-- and I know [? Leah ?] and I have been talking about this. Because when we started this whole thing, it was really about, we didn't see women like us in the C-suite. There were so few, and sort of a certain age and stage. I think we've actually become much more concerned that the pipe at the early stage is really dry.

And I know Rebecca is starting to undertake some-- CFA Institute will be doing research on that. But anecdotally, I have to say, you have the great financial crisis. And then you have Wolves of Wall Street come out. And those are things that women are going to say, I-- like, a 25-year-old coming out of an MBA school, guy is going to go, yes. Sign me up. And we see those coming.

And saying, I don't really know what it is, but I kind of like that vibe. And part of that's just genetic, right? Part of that is that whole testosterone thing. Boys are charged more on auto insurance at 25 for a really good reason. I have one of them. And I have nephews like that. And I think, oh my God, like this is-- there's a reason for that.

Women look and say-- and we do this when we speak at universities. Like, they don't get it. And they just look and say, it's an awful industry. It's a terrible industry. We saw that in the accounting profession, when the accounting scandals came. So that's the first thing.

MICHAEL FALK: Doesn't fit with purpose.

MARGARET FRANKLIN: Doesn't fit with purpose. And it's because they don't know. So the second thing that's concerning is the part of our business that we believe is really attractive for women and structurally suitable, which is the buy side of the business, where there are not that many women. It's a opaque part of the business. You have to spend a lot of time educating people, and I think actually pulling them in.

The other thing is that we just went through an exercise of hiring an investment analyst. We called it an investment analyst. These are people that support investment counselors. There's a high degree of analytical skill required, or to be developed. But it's actually in a private wealth context. And we had 500 applicants for three positions. So we were very happy about that. We had about 10% women.

And we really scratched our heads. And we went back and retitled the position to associate wealth manager. And we've had a significant uptake. We've had more women applicants. And we're actually having to go dig down into our networks. And everybody's digging down into their networks to find these women. Because I do believe that there are all kinds of diversity issues. And we're very clear that age diversity is a very important one.

But the universal diversity issue is women. It doesn't matter which jurisdiction you go to, whether you're in London, or Toronto, or the US, or Dubai, or Hong Kong. That is the universal diversity issue. And so if you can crack that code, I think you can crack a whole bunch of other ones.

MICHAEL FALK: And something you said about recruiter, you've got to dig deeper for recruiter-- at Focus, we have a perspective we share with our clients. You and your colleagues, the other employees of your organization, are the single best recruiters you could ever have. If they're all keeping their networks alive and well, think about that versus how you may go to market to find somebody-- leveraging your network, because they know the business, they know the people better. Dana, same question to you about how are you finding the practice of doing this and the execution, making it happen?

DANA EMERY: I think it's interesting, because our firm actually gets touted as having very good diversity, relatively. So you know, I was looking at a Morningstar study. And they said that Dodge and Cox had the highest percentage of women in investment decision making roles. Everything's done on a team basis, so that matters as part of those statistics. But we're about 30% of our investment portfolio managers on investment policy committees are women.

And we have a little over 35% in our analyst ranks. So we do have a pretty high percentage of women, relatively. But it was something that really struck me more recently. And I think this is really an outcome of the financial crisis. But I was looking at our interns. We end up hiring a lot of people out of a summer internship.

And we have a research associate summer internship, so their junior year in-- between junior and senior year of college. And this year I took them to lunch, and there were eight men. So I was like, OK, what happened here? How did this happen? And we had started instituting--

MICHAEL FALK: Oh, men need to eat, too.


MICHAEL FALK: Men eat, too. Lunch is OK every now and then.

DANA EMERY: Yeah, I know. Yeah. But we had started instituting case studies as a way of testing the interest in investing and how they approach analyzing a company. And we were doing it at Wharton and a lot of the top undergrad business schools. And what it turned out is that even at the schools, a lot of the investment clubs are predominantly men.

And then they, when they're creating their team to enter the case study, they do it with their friends. So they gather all men. And so the winners of these case studies were pretty much all men. And they are the ones that got offered the internship. So anyway, it ended up becoming self-fulfilling. And it was interesting, I asked some of them, where are the women?

And they said a lot of their female classmates really aren't interested. They don't understand this business. They think of it as Wolf of Wall Street. They think of it as being greedy, being money-oriented versus being purpose-oriented. And so we've been talking a lot about that at our firm, getting more involved, going directly to schools, having women presenting to the undergrads and to the MBA programs.

We have a lot of senior women that can go and do this, so we just need to be more purposeful about this, having them be aware of trying to recruit women to the investment clubs. I gave that as like a goal for these young men that were working with us, to try to recruit women to their investment club, and talked about all the understanding that we have about diversity of teams, and how you make better decisions with a diverse team. So it's something that-- what I'm worried about at our firm, even though we've created a culture that where women can thrive--

We have a lot of senior women who spend their entire careers, whereas when they started, they would admit that they thought that when they had children, they would probably leave or really scale back. And many have persisted. And many, in some cases, are the biggest breadwinners in their family.

The husbands have actually the ones that have made adjustments, or their partners have made adjustments to their job responsibilities. So it's really fascinating to see. If you create the right culture, you can create a place where women can thrive.

I think the biggest thing that-- what I worry about, though, is, will this be sustained? Because as I look at succession, one of my big jobs at COO is overall talent and succession management. And when I look at this, I could see it gradually fading, actually making less progress if we're not more deliberate about the early entry pipeline that we're creating.

MARGARET FRANKLIN: Can I just add, this thing about this investment clubs, we see this here in Canada at the top business schools. And one which is here in this province but which will remain unnamed, the comment was, they have an investment club. Those are the kids that go to Goldman Sachs. They're the kids get down into New York, and then ultimately end up in those jobs.

And they had no women. They had one secretary and one marketing person. And the commerce board actually had women on it. Said, like, this is unacceptable. And they said, well, we just screen for the best. Like, that's it. And the CEO of Walmart here in Canada took them to task, absolutely took them to task, and said, no, no, no. You, as the employer, have to think about this.

You have to proactively change this. And yet, you know what? Two years later, it's right back to the same thing. And we were helping a group of women actually prepare for the screening. It's a lot like the CFA Global Research Challenge. The process is a lot like that. So we've been familiar with it. And this is discouraging about the schools, that even exists in this day and age.

BARRY MCINERNEY: But if I could add, this is of highest priority for my firm. And again, like Marg and Dana, we're tackling-- we're behind you, too, by the way, in terms of where Mackenzie is. But we decide to focus on gender diversity, because it starts and ends there. And it's the most visible. And it's the way that we can become the best we can be, because obviously diverse groups make better decisions. It's scientifically proven.

And I became aware of this probably about 10 years ago, working in the US. And I think Dana, you and I attended a couple of conferences. I think Prudential did some really nice research on the fact that-- it just occurred-- it was an epiphany to me to see the statistics of the male domination of CFAs and the portfolio managers. I don't know why. I didn't see it. And then I first started to see it about 10 years ago.

And it's very, very unique to our industry. And that study indicated that if it-- maybe it was a US study-- was that women that get into the industry stay. But it was getting them into the industry. It was the traction into our industry. I think that's the point you're making.

So what I did when I came to Mackenzie back in Canada, I had a meeting with the 50 most senior women leaders at Mackenzie. I got them all in a room. And we had three, four hours. And I said, I need your help. And I told them I wanted to do this for commercial reasons, because I think we could be a better firm if we had more women in the firm, particularly in portfolio management positions.

Because our returns will improve. And I better returns means more assets, OK. So if you don't mind me saying, I had my commercial hat on, because we have to appease shareholders. And second of all, we're-- I can't disclose this, I guess, formally. But thinking about, like other firms, of launching some global women leadership impact funds. I firmly believe in the investment thesis.

And it's been proven, obviously, to be successful. So I didn't want us to be disingenuous as a firm. If we were going to do that at some point in time, well, I'd better talk to the senior women within Mackenzie. Said, if we do this, how do you feel about that? Because that would not look good if they don't feel good about how we're doing in terms of gender diversity at Mackenzie.

And lo and behold, we're out there launching women leadership funds. So we had a great discussion. And we had breakout groups. And they came up with ideas of how we can do better. We're starting to enact them. It's early days. But it starts from the top. And obviously, it starts with my two panelists at the top and being women. And me not being a women, as far as I know. But I said, this is important to me. And I'm watching it. And I'm watching you.

And I'll give you an example. So lo and behold, they had a list-- we have co-op programs, and summer students come in for the summer. And so they gave me a list of getting close to the ones they want, about 25 they wanted to hire. And it was 21 males, four women. I said, no. How could that be?

And they said, well, the feedback we're getting is that the women didn't shine as much during the interviews. Oh, what do you mean by shine? Like, have you ever thought that maybe there's some gender differences in how interviews are conducted? I mean, again, women tend to be more honest, OK?

And the fact that they ask you questions about the job, and what does the job entail, and I think I can do that. Whereas the men, especially young men, you have a son, tends to be a little bit more confident. Oh, I could do that. And be very careful of that. So we're a little behind. I'm going to be honest with you. And we're catching up quickly.

But I know that firms have done a great job in terms of weeding out HR policies and practices to ensure that these are blind interviews and blind resumes. And so we're actually just taking all the great work that probably you two have done, and others, and we're implementing it right now, and trying to catch up. And that's the best we can do. And I think we're committed to doing it. And I think we're doing a good job in next couple of years.


MICHAEL FALK: Great. You know, we got a couple of questions from the audience. This has a couple of parts to it. And this is for each of you. Can women have it all? What are you doing in your organizations to help women, especially younger and new moms? And then if you have any specific thoughts on maternity leave.

MARGARET FRANKLIN: So, can women have it all? No. I just think that's a complete fallacy. But I think you can have a really robust family life and a really robust career. And I think that's-- for me, and when I look at my cohort and my colleagues, that's really about all they could manage. So I wasn't as social as I might have been. It tended to be socializing with people that I worked with.

I'm not as well-read. I wasn't in great shape. I wasn't, like-- so many things that I wasn't. But I could be very present with my children. And I think you can structurally organize yourself. So I will tell you that my kids and I all did homework together. You know, we cooked together. I would race home from-- actually, when my kids were little, I was at Mercers.

And I would get up very early in the morning, my husband would stay late. I would get home. We would cook dinner together. We would, half the time, grocery shop together. And then we would do our homework together. And ironically, that set up my kids for real success in terms of their life skills right now. So I was always-- I'm raising adults, not children.

So that makes me, I think, very aware of the needs, in particular of women. I have a very, sadly, traditional marriage. I ended up taking a lot of the responsibility for the kids, as well as having-- we both had very vibrant careers. So I'm acutely aware of that. I think as I said, I'm pretty honest with people around, you might not be able to do it right now. You can make that call.

Do you have the infrastructure to take on stuff? If not, let's talk about what you can do that you're progressing, but there may be another time. So that gives somebody some optionality. I think there needs to be optionality. With regards to maternity leave, I think if your firm is large or large enough, you should be able to withstand it.

I think it is incumbent upon employers, leadership, peer level, and otherwise, to keep people connected socially with your firm. It's a big deal to have a baby. It's a big deal to go home and cut off all your networks. And so I think there are many small, human ways that we can look at that. I think it's very difficult if it's a critical person out for a year and you're a small firm.

MICHAEL FALK: And you're a smaller firm.

MARGARET FRANKLIN: So I'm talking about sort of the average firm.

MICHAEL FALK: Each of you, as well. The request was for each member of the panel.

BARRY MCINERNEY: Oh, a couple of anecdotes, if I may-- well, first of all, I hope any women at my firm that wants to have it all, at least career-wise, which I can only control, that there will be no barriers for them to achieve the goals that they want to achieve. So that's my commitment to each and every female employee at Mackenzie.

Two quick anecdotes, one is-- this brings it to life for me, in terms of, we made good progress but we have a long ways to go. Because my eldest daughter just gave birth to a girl two months ago. And about eight or nine months ago-- she's a recent-- obviously, I think she's exceptional. Like, we're all biased with our kids. She's very smart. Three degrees, NYU Law School.

So she starts working on a law firm on Wall Street. And just new, just started in the fall, after Labor Day last year. And there's a couple of weeks where she was fussing. And her husband noticed it. And my wife and I noticed it. And finally I said, what's bothering you? And we already knew she was pregnant and expecting, we were ecstatic.

But she said, well, I haven't told my employer yet that I'm pregnant. And so I said, so why are you concerned about that? Well, I just started my job. And now I'm going to take time off. And I said, this is absolutely preposterous. I mean, for goodness sakes, I mean, you're worried about telling your employer that you're pregnant and having a baby? That's one of the most wonderful life experiences you can have.

So she did tell them. And they were fine. And by the way, this law firm-- I won't name them-- is starting to change very quickly, because they've lost a lot of female partners because long hours, and they're doing a lot of great work. So that went very well.

So just to have-- men never have to go through that anxiety. Why would she ever go through that anxiety? Now, of course, we know in the US, the maternity practice and leaves aren't as progressive. I think US and Papua New Guinea are tied for last globally, in terms of maternity leave. But my eldest daughter now is on disability, which is great, because that's what they call maternity leave in the US.

And my middle daughter is now pregnant. She's going on disability in November. So I will have two disabled children for a period of time. But I just think we've got a long ways to go. And I'm very attuned to it. And by the way, I have to-- I don't want to be glib here, because this is something that, with three very strong daughters, and a granddaughter now, and my wife is a writer on women issues-- so I am--

DANA EMERY: You get it.

BARRY MCINERNEY: I'm all over this issue. Which I need to be, because I think it's a competitive advantage. So--

MICHAEL FALK: You can have a panel unto yourself, I'm thinking.

BARRY MCINERNEY: Oh, listen. I tell you. Pour the wine, let's get going. But really, I'll just stick with the one anecdote. Because I just thought that it just show that you just have to be attuned to it. And we've come a long ways. But we've got a long ways to go. And we've got to keep supporting this.


DANA EMERY: Yeah, I mean, I think it's, like, a fallacy to say you can have it all. And I think it's true for men and women. You always have a set of choices that you're dealing with, in terms of trying to be present in whatever you're trying to achieve. And that could be anywhere from your work-related, your family, or anything else you're trying to achieve in life.

So I think there's always trade-offs. And I think that that's something that we all have to acknowledge and try to facilitate. We've always had paid maternity leaves. And that was even when I first started, it even though I was one of the first women to take a maternity leave and actually come back to Dodge and Cox. So I took three maternity leaves. I have three boys. And I do think that there is a real benefit.

And I think people saw that. And it actually caused a little agitation to actually start a sabbatical program, which I think is actually really wonderful. That's for all employees. And I think there's such a benefit for the rest of the team, to have to step up and fill different roles, and rotate a bit, and take on responsibilities. And I think that there's a real benefit to the firm, as well, to have some of those absences cause, actually, the strength of the overall team to increase.

We've also recently instituted paternity leaves. And we always had it where it was informal. Now it's formalized. And men can take up to 12 weeks, as well. And that, I think, was something that culturally, like-- just as I probably had to be a pioneer back in the early '90s when I took my maternity leaves. I think the men that are actually taking those, I think are setting a really good role model for other men to say, hey, you can have an active engagement in raising your children and being present in your family.

BARRY MCINERNEY: That's perfect.

DANA EMERY: So I think we've just tried to have policies that are supportive to overall families, not just women, but families in general. I think that's created a great deal of loyalty.

MICHAEL FALK: That's wonderful.

BARRY MCINERNEY: Just one more blind spot-- again, Dana, Marg may be aware of. It's the sandwich generation of those men and women dealing with elderly parents. So that's just something that's coming to the forefront. May already happen--

DANA EMERY: Yes, it's already happening.

BARRY MCINERNEY: [INAUDIBLE] --that we're trying to be very sensitive to, because that's going to become very real going forward.

MICHAEL FALK: Time away for the parents, not time away for the children. Yes.


DANA EMERY: Yeah, we have different leave policies for that, as well.

MICHAEL FALK: Very good. Yeah, and for those of you who haven't reached this stage yet--


MICHAEL FALK: Don't rush to it. For some of us, I've been dealing with it. I can't speak for other panelists. But it's a different type of time away. With the time we've got left, I want to try and address the audience's questions.

Two questions left, but they're not small. So it seems that women are trying to forge a career in a world that is structurally designed for men. Do societal changes need to be made? Small question. Just a little question.

MARGARET FRANKLIN: I actually think that there's a lot of commonality between what millennials are demanding and what women are demanding. So I actually think that structural changes are coming otherwise, for any number of reasons. But I don't think it's exclusive to women. I think there's just a commonality. I like the concept of universal design.

So if you think about curb cuts in a sidewalk, they were originally for disabled people. And you see kids skateboarding, you see mothers pushing strollers along, you see old people with not so much good footing. It becomes a universally good thing. And I think the demands from millennials and from women will create this context that will force companies to think differently about the labor structure. And of course, technology enables that.

MICHAEL FALK: I like that. That's optimistic. And--

MARGARET FRANKLIN: I am an optimist.

MICHAEL FALK: I like the way that's going. Barry, Dana?

DANA EMERY: I guess-- Yeah, I don't really completely agree with the premise. So I do think that this is an amazing industry for women. I think it's intellectually challenging. It's--

MICHAEL FALK: And we finally got to a debate. It only took us 50 minutes.

DANA EMERY: No, I think it's an amazing business. And I think we need to do a better job of explaining this to the pipeline, that this is a business where you can thrive, where you can use your intellectual capabilities, where you can work in teams. And you can serve a very high purpose, in terms of working for clients and helping them achieve their outcomes.

So I do think it's a great business. And I do think that we need to do a better job educating. And I think there's gradual changes happening. I think these type of conference and all the work that Marg and [? Theo ?] have done is really, really valuable to putting a spotlight on the fact that we do need to make a change. And I agree with you that the millennials are probably going to demand it.

MICHAEL FALK: They're going to push it.

DANA EMERY: It's going to push.

MICHAEL FALK: Barry, I guess you have to be the tiebreaker now.

BARRY MCINERNEY: Well, I agree with both my fellow panelists. But I--


MICHAEL FALK: Well, well.


BARRY MCINERNEY: I'm trying. No, but I will add, Dana, actually, I'm very positive, like Marg and Dana. I've been at this for-- the industry-- for 25-plus years. It's a great industry. And it will evolve with time, and needs to evolve with time. I would add that one of the other dynamics of it being attractive is the fact that it's one of the few industries where experience and wisdom is appreciated.

You can work in this industry well into your 60s and 70s if you so choose, particularly on the portfolio management side, because nothing replaces that knowledge. I was at Bank of Montreal, running their asset management businesses outside of Canada, out of Chicago, for many years. And I had a gentleman-- you may have heard of Don Cox, who's just a wonderful gentleman, and one of the intellectual giants in the area of commodities.

Don is 84, and he's still a portfolio manager, doing just fine. And so I think that it's a very attractive industry. But I do believe, I support Marg's point that it's a push and a pull. I mean, you'll get push from the hugely prominent influence of women investors and wealth going forward now, and growing, and from millennials. So that's the push. But the pull us that if you don't relate to those enormous trends coming at you as an asset management firm, then--

MICHAEL FALK: You're done.

BARRY MCINERNEY: You're done. So you're going to have to change. I think the system-- if there's any structural, you know-- it's not perfect. But I think those natural forces will take hold.

MICHAEL FALK: So to play off of the structural topic before we get to the last question, just imagine-- a real simple phrase that my organization uses a lot, "Work is a thing you do, not a place you go." Just kind of let that kind of marinate for a little while. Because there's a concept out there. I don't know how many people have heard of it. ROWE?

Show of hands, how many people are familiar with ROWE? I see, like, one hand. Results Only Work Environment. And you want to talk about something that resonates with millennials, or women who are maybe around those years where they're thinking about having children-- the ability to still work at home and contribute without having to leave the workforce. Because it's about the delivery of results.

And it can be quite positive. So just a thought to play with before we get to the last question. This is a big question. So whoever wrote it, I like the question. But I saved it to the end for a reason. What words of wisdom-- it's great. You get to impart wisdom to all these people now.

What words of wisdom do you have for small, independent firms who are pressured by fees, compliance, and data costs exploding with the small-- it goes onto the back. Exploding with the small firms rapidly going under and disappearing. So the challenge to small firms, right? So that's really-- if you could share your words of wisdom to smaller firms that are facing a heavier burden. What would you say to them?

DANA EMERY: I guess I'm the smallest. I don't know. I think that we've been able to succeed even though we were-- networks are medium-sized-- but we're a small firm for a long time-- is to stay very focused. You don't have to be all things to all people. But you have to have a distinctive strategy and approach. So I think staying very focused and not letting-- trying to have a ton of different investment strategies.

And then just being really, really good at those few strategies allows you to contain your cost structure, and allows you to have a really clearly aligned messaging to your clients, and allows you to kind of overall keep your expenses reasonable so that you can pass through that saving to your clients. I think there needs to always be a push.

And you can benefit off of millennials. I'm always telling millennials this is, help us find the solutions. They're the best with computers and figuring out efficiencies. And being able to do more with less people, I think, is a big goal when you're a small firm. You just have to be incredibly efficient.

MICHAEL FALK: And Dana, if I'm clear-- so you mentioned you have six funds or strategies that you offer. But it was quite a long time before number four or number five or number six ever saw the light of day.

DANA EMERY: Yeah, we tried to be-- one, we have broad-based strategies that are flexible that we think can be core to our clients' asset allocation. And we started very much as a domestic US manager. And then really through an investment need, really feeling like obviously companies were multinationals. And we needed to be better at understanding the global dynamics.

We started doing in-house research on international companies. And that gradually became a strategy. But it wasn't like we started out saying, we want an international strategy. It was really that it was synergistic and beneficial to our underlying strategies. And that was the mindset. How do we get better at what we do to be great investors?

And the strategy sums come out of that, rather than driving the process. And so I think that that has been-- really being gradual and methodical, focusing on your existing client first, rather than growth. We don't have anybody paid for marketing, no advertising. So by doing a great job with the assets you're entrusted, you will attract assets.

Because people will find you. They want great performance. And so by staying focused, by being clear and definable, and then also trying to make decisions in the best interest of your existing clients first and foremost, that has really led to success for our firm.

MARGARET FRANKLIN: I've actually worked at small firms, two small firms. Both were start-ups. And I would make a couple of observations. I think you actually have to be much more strategic and focused on what you do, because I think-- and that necessarily says what you're going to say yes to and what you're going to say no to. So there's the opportunity now to, with an increased regulatory environment and increased complexity, there's a lot that you can actually outsource to specialists.

But it necessitates that you're actually going to do one thing and one thing only. And I would say the challenge for small firms, and particularly if they start out as one thing and then sort of drift, lose a bit of focus or say, we'll just take on this one more thing-- my observation is a lot of these firms are started by portfolio managers or an individual who has a particular capability, but is not necessarily a good business person.

And so that's the one thing I think that the changing dynamic requires that either you think very strategically about how you're going to run your business, and who is going to do that, or-- that focus is way more important in a small firm.


BARRY MCINERNEY: I think we need small firms. We need competition. We need the boutiques. You know, as an ex-consultant, my advice is probably Dana's. You've been through this. Do a few things really well. And this huge trend toward solutions providers and multi-asset class funds and-- that's to your benefit. Because all the aggregators and asset allocators, they need you. And they'll find you.

So my one advice is to do a few things really well. And make sure you are in every database. Just hire the resource and make sure you're in all the databases accessible, because that's how you'll be found. You don't need to have a sales force. You just need to put your returns in every database. And hopefully they're good returns. And they'll come and find you.

MICHAEL FALK: And my bias is, I'm a big fan of the boutiques that do one thing really, really well. And think of them as artisans, or they're exercising their craft on whatever the strategy is. And just doing that really, really well. I don't deny the costs to play have gone up. And I don't expect them to turn about and do an about-face. But can you all please join me in thanking Dana, and Barry and Marg.


DANA EMERY: Thank you.

SPEAKER: Copyright 2017, CFA Institute, all rights reserved. This program is designed to give accurate and authoritative information in regards to the subject matter covered. It is distributed with the understanding that CFA Institute is not engaged in rendering legal, accounting, tax, investment, or other expert advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. 

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