My chat with Sue Brake, Senior Investment Consultant for Willis Towers Watson, about the importance of governance in asset management and the real cost associated with bad governance.
Sue talks about her transformation from a high-achieving maths wiz investment banker to a thoughtful long-term asset allocator and good governance champion.
Regular Marketfox readers know that I’m not a fan investment consultants. But I’m happy to make an exception in Sue’s case. She’s the real deal. There’s a lot that investors can learn from her.
She’s also a good sport. I managed to get her to play a game in which she responds to quotes by David Swensen, CIO of Yale, in his book Pioneering Portfolio Management bagging investment consultants. I’ll leave it to listeners to draw their own conclusions.
2:00 Changing careers, from banking to investing
3:30 Banking is about implementing smart mathematical solutions, while investing is about effective decision making
5:00 Executive retreat told me that there is no winning
8:00 Embrace the mess; there is no straight line to becoming a president or CEO
9:30 The longer you are in the market, the more you realise that humility is good.
10:10 Failure is result of process not people
11:30 Being smart doesn’t get you the whole way, you have to be curious and humble
12:00 Founding my own gourmet food company
14:00 Fortuitously I sold the company in 2007
16:00 Working at New Zealand Super
22:00 The reference portfolio is a governance tool
25:00 Simple reference portfolio beats most Australian pension funds
26:00 The reference portfolio can show you the difference between good governance and poor governance
27:30 Why does currency matters?
29:00 You have periods where currency fluctuations really can make or break you.
31:00 Is being far away from financial centres a positive or a negative?
34:30 Working at the IMF
38:00 What aspect of investing are universal?
39:00 Boards are like the Little River Band: there are no original members
40:00 Organisational efficiency
42:00 Investment cultures that have a competitive edge
44:00 Putting a price on governance
45:30 Less than 2 per cent of pension funds get the AAA rating for governance
46:00 The 12 factors of good governance
47:00 ADD LINK OF CLARK AND URWIN PAPER ON 12 FACTORS
50:00 Changing nature of asset consultancy
53:00 Are asset consultants gatekeeper?
54:00 Does the ownership of a consultant matter?
56:00 Do consultants need more skin in the game?
58:00 David Swensen says, Sue Brake answers