June 29, 2023 • 26 mins
Sandro Pierri had no clue what mutual funds were when he first ventured into the world of finance. Today, the boy who grew up in a small Italian village sits at the helm of BNP Paribas Asset Management, overseeing half a trillion euros. He credits people always taking a bet on him early on in his career, and he wants to pay it forward. In this episode, Pierri reflects on his career, lessons from his mistakes, and what he really thinks of the ESG “gold rush.”
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Speaker 1 (00:04):
Hello, and welcome to Out of Office. I'm your host
Malika Kapoor. Our guest today is candid. He confesses that
when he first stepped into the world of finance, he
had no idea what mutual funds were. He also recognizes
that his pattern of mistakes can be boiled down to
one word, indecisiveness. He's Sandra Pieri, the CEO of BNP
(00:26):
Pariba asset Management, which oversees over half a trillion euros.
Pierre grew up in a small Italian village. He says
his childhood was pretty ordinary. He played sports, studies, was
surrounded by family and friends, and he had absolutely no
interest in finance. After studying economics at the University of Turino,
(00:49):
he got a job as an equity analyst and the
rest is well history. Pierre says he's been fortunate enough
to have people taking bets on him early on in
his career, and now he wants to do the same
for the younger generation rising up. In this episode of
Out of Office, Pierre talks to my colleague Ya Josan
about his career trajectory, what he's learned from his share
(01:12):
of mistakes, how generative AI will disrupt the asset management business,
and the four factors causing a paradigm shift in the
world we live in. Here's their conversation.
Speaker 2 (01:30):
Sandra, Welcome to Out of Office. We're so excited to
have you here. We are living in very turbulent times.
The war in Ukraine is still going on. Central bankers
around the world are battling inflation while trying to limit
the credit crunch. We're having unprecedented banking turmoil in a
(01:51):
US and also in Europe. And now there's a wave
of ESG backlash in the US and maybe it was
spread to Europe. Posse. I'm very excited to dive into
all of that with you. But first I am hoping
that you can share with our listeners a little bit
about your childhood. Where'd you grow up and how would
you describe your upbringing?
Speaker 3 (02:14):
Okay, so first, thanks a lot for having me in
this podcast, and it's a pleasure to be with you
and all the listeners. I actually grew up in a
little village in the north of Italy, CU somewhat closer
to the French border, so in the Piedmont region, so
close to Torino. That's actually where I grew up and
studied and I had a very normal childhood, I mean,
(02:38):
like everyone sports, studying family in France and nothing special.
And at that time I had no idea what finance was.
So I graduated in economics at the University of Torino,
but actually I didn't have really a particular interest in finance,
and just to be completely transparent, I also didn't know
(02:59):
what mutual fund were at that time. So it was
by a series of coincidence that when I graduated, actually
after a few months, at the time it was called
Price water House, Coopers and Ibrands, so that the way
the accounting consulting firms. I got a call to from
(03:22):
one of the new emerging asset management company in the
Italian In the Italian industry itally has been somewhat lagging
in terms of mutual fund development some of the Anglo
Saxon countries, and I got a call to basically become
a become an equity analyst, and I hardly knew what
was what that was at that time. I took it
(03:45):
from there and I really enjoyed from the very beginning,
and that's where the whole story started. So I started
as an equity analyst and then I moved into managing
portfolios actually been managing. You predominantly use equitis and I
had a couple of years running European equities, and what
I liked about asset management at that time was that
(04:06):
it was really bringing together some of the interests that I,
in a way i've always cultivated because early days I
had an interest in policy making and philosophy, which is
something I keep having as a passion. I like maths
and statistics, and I think asset management and especially portfolio
(04:30):
management helped me to basically put all this stuff at work.
And that's, you know, in a way, how I started.
So that's as much for the beginning. And then you know,
it's been a bit of a long story. And I
turned fifty nine, so it's been quite some time that
I passed by.
Speaker 2 (04:50):
I want to ask, you know, I actually study economics
in college as well, and I looking back, I can
help a feeling that economics is really a social science
kind of masquerading as a heart science. Would you agree
with that?
Speaker 3 (05:07):
How do you think? Yeah? Absolutely totally. I think that
in my view, there's a misconception about economic being an
art science. I mean there's and I think with the
recent development that we have seen in economics, you know,
with the rise of behavioral economics, I think what you
just said, I think has been proven to be even
(05:28):
more real. So I think it's really in a way
which also applies to market is not only modeling stuff,
but understanding animal spirits which makes a difference. And I
think that applies to economics and finance as well. So
completely agree with you.
Speaker 2 (05:45):
Yes, people are not always rational. We need to remember
that exactly. So you said you landed your first job
as a US equity manager, that was for San Paolo Funds.
How did you How did you do that?
Speaker 1 (05:58):
Was it?
Speaker 2 (05:58):
Was it like a really easy boss point? After college?
Speaker 3 (06:02):
Well, look, I started as a as an equity analyst
for a while, and then a position opened up and
I started as a junior portfolio manager and I just
enjoyed and and I think in a way again, as
I said, what I liked was the multidisciplinary element of
being a portfolio manager. I realized that again you need
(06:22):
to understand accounting, you need to understand strategy. But I
think one of the things that they started to be
to to resonate with me as I started to meet
a number of companies and management of the different companies
that we were investing on, was that the leadership element
was a key element in you know, translating good ideas
(06:44):
into something concrete and and with value. So I started
to develop a bit of an interest at that time
also on all the leadership element, which actually at that
time I didn't realize they would be They would have
been very valuable in the future. But I think it's
I can now give a bit of sense of what
(07:04):
I've done why I focus on the leadership side even
when I was a portfolio management because I think that
has helped me quite a bit during my career development.
Speaker 2 (07:12):
If someone were to describe your leadership style, what do
you think they would say?
Speaker 3 (07:18):
Look, I think there's a couple of elements which are
I believe important and probably most of the people that
worked with me or for me would probably recognize. The
first is that trust is important to me, so in
any organization, but I would say in any even you know,
(07:41):
even within family, trust based relationship is key. I've always
built my career trying to be a trustable person for
my bosses at the time, and this is exactly what
I'm looking when we're building teams. Trust is crucial because
when you're running a larger going tozation, you need to
put processes and control in place, but there's nothing that
(08:04):
replace a trust based culture because at the end of
the day, you have teams operating like ten thousand miles away,
and with all the processes that you can put in place,
you need to trust them that they will be aligning
in terms of value, which implies that they would always
try to do or I think doesn't mean that they
will always be right, but they will. You need to
(08:26):
get that level of conform So trust, I would say,
it's it's an important element. The second element is I,
you know, I give disproportionate attention to people. And of
course everyone knows that asset management is a people based
business and there's no there's no make no mistake, this
(08:48):
is absolutely the case. But for me, this is this
is also it is not only to do with the
nature of the business, but it's also to do with
with my own nature in a way, and I reflected
upon it, and I've been lucky enough in my career
to always find people that took an early bet on me,
(09:11):
so they gave me trust and they actually offered me
chances to progress in my career. Even when I was
when I was very young and maybe unexperienced, people took
a bet on me. And this element of trust people
development is probably a constant throughout my career, which I
think is inspiring me in my day to day leadership job.
Speaker 2 (09:34):
So you you know, because there are certainly people who
subscribe to the philosophy of not backing a lame dug,
but you believe it's important to give people opportunities for
them to flourish.
Speaker 3 (09:50):
Yeah, if you don't take risks on people, you'll never
know whether the potential is real. So we all need
to take more risk with people when we see potential.
And of course you need to be ready to live
with mistakes. You made me say that's normal, there's nothing
wrong with it.
Speaker 2 (10:09):
Well, speaking of mistakes, I was wondering if you made,
are there any career blunders perhaps that that you can
share with us.
Speaker 3 (10:18):
Look, I've made tons of mistakes and I keep doing mistakes.
So that's that's that's a constant in life. And by
the way, I think it's important that everyone not only
in our businesses, in our business, but I would say
overall in economic activity, needs to be to learn to
(10:38):
to live with mistakes. There's nothing wrong. I mean, it's
it's it's a law of nature, and that's also how
we learn now mistakes, I would say, look, I don't
have anything specific in mind, but I can definitely see
a pattern in a number of mistakes that I made.
And one of the patterns is that when I waited
too much to make a decision, which goes back again
(11:01):
to the point and making that at the end of
the day, we also need to take risk and making decisions.
So one of the patterns that in a number of cases,
a number of mistakes I've made, you know, we're behind
that we're probably a level of indecisiveness on my end
of or not having enough conviction and then waited too
(11:24):
long and then when you make that decision, then it
turns out to be a mistake. So timing is an
important element in the decision making because something that might
be right today, if you wait too long, it might
become wrong. And this element of timing, you know, is
something that I've learned in my portfolio management career. I mean,
if you like a company and you're just waiting for
(11:46):
the long term, but you're just waiting for something to happen,
that might not happen, and then it's you might miss
an opportunity or when you jump on the bandwagon, it
might be played. So I think this is probably one
of the patterns where I made many mistakes. I've tried,
I'm now trying to I've tried to correct that, and
I think I'm now at the point in which a
(12:06):
bit based on experience, based on the trust that I
have on the team around me, I tend to be
quite decisive when you know, without over being over analytical
in making decisions.
Speaker 2 (12:19):
So now you know you go with your intuition.
Speaker 3 (12:23):
Well, okay, again, don't take me wrong. Intuition is an
element is a bit of experience, but there's a good
preparation to that. The point is that, as everyone would
probably agree, the marginal utility of doing the twenty to
thirty percent extra analytical work doesn't bring a lot of
value in decision making. So if you stop at seventy
(12:44):
percent and you need to do a proper work for
the seventy or eighty percent, then you're in a good
position to take decision.
Speaker 2 (12:50):
You know, we'll have to bring up on what happened
with Credit Servis and UBS. I'm just you know, very curious.
How do you think that would fact the competitive landscape
of asset management and wealth management in Europe.
Speaker 3 (13:09):
Look, our industry is an industry which is still quite
fragmented in not only in Europe, I would say globally.
I think if you take the top three firms, they
probably represent twenty five percent of the overall let's say,
(13:30):
market share of the overall industry. And if you compare
it to again, the first industry that comes to my
mind is probably auto manufacturing. I guess that the top
three of four would probably control eighty or ninety percent
of the market. So that gives you a sense of
the level of fragmentation that is still exists in our industry. Now,
having said that, there's a to me, there's there's a
(13:53):
couple of reasons why this is not progressing. One is that, frankly,
our industry has been enjoying a very nice ride over
the last twenty years. Asset growth fueled by you know,
acid gathering, but also by market appreciation, reasonably stable margin
(14:16):
and you know, with the cost base which is predominantly fixed.
That has resulted in significant improvement on profit growth. And
in a way I think we have enjoyed very nice marging,
so the pressures to scale has been somewhat less pronounced
(14:38):
than in many other industries. The second element is that
this is the nature of our industry, and we have
touched upon just before. It's a people based industry. And
at the end of the day, you can put together
two companies, but people need to make sure that there's
a full cultural alignment and value alignment because otherwise people
would walk away. So the the fact that is a
(15:01):
people based business, I think is also in my view,
a bit of a structural reason why consolidation doesn't happen
at the same pace they were seeing in our industry
as well. We took i would say, a deliberate and
conscious decision to put sustainability at the core of what
we do. So for us, this is I would say,
(15:24):
part of our DNA. So being what we call the
sustainable investor for a changing world, recognize that our role
is a role where we help clients and investors to
achieve their goal by using the impact that sustainability will
(15:47):
have on asset prices going forward. I would even I
would even go one step farther and saying that, look,
the reality is that I think we're living at a
moment of which is quite unprecedented. In my view, there
are four major disruptions happening at the same time, one
being sustainability, the technology, the third being demographics, and the
(16:11):
four being geopolitics. And I'm happy to expand it needed,
But the point is that this element of changing world
is around sustainability, but is the fact that we're probably
going to see a number of paradigm shift and that's
I think our DNA. I think for us, this is
not about a product, but it's really about who we
want to be.
Speaker 2 (16:30):
I have to say, though critics have said that ESG
has become a box taking exercise, and I think you
have to agree, you know, especially with the news vera,
you know, the largest carbon offset market you know not
now proven to be you know, mostly fake and actually
bad for the environment. Would you would you say that
(16:53):
perhaps the market has seen too many products ESG products
in the last five years or so, and how do
you how do you see this going forward?
Speaker 3 (17:06):
Look, my view is that there's some truth to what
you said, and I think to meet us to do
with the fact that when a number of terms realize
that actually that was the new hot trend in the market.
They just jumped themselves. They just put themselves a lot
(17:27):
of money to basically be positioned in the sustainability field.
From our angle, we started earlier and we haven't changed
our course over the last year, and now we're you know,
probably sustainability as being somewhat challenged. The real line of
divide is those were really, you know, putting sustainability as
(17:48):
a cultural element and with a strong belief that actually,
given the disruption that we're observing, this will have a
meaningful impact on asset price surprises. And those were doing
it just because they need to ride the last wave
of product. And the jury is going to be out
(18:09):
on those work between those were doing it seriously and
those were doing it maybe just more sickly in a
in a more cyclical way, if you if you see.
Speaker 2 (18:17):
What I'm saying, Yes, speaking of hot trends, I think
you have to agree that generative AI is really wowing
consumers and investors alike. Have you given this technology a
thought about, you know, how maybe it will impact your industry,
you know, with this ultimately lead to a slimmer and
(18:41):
sharper workforce perhaps, and how does that impact the kind
of talent that you look for.
Speaker 3 (18:49):
So maybe I'll start from the talent. So it's very
clear that you know, any asset manager, but I would
say any company, almost any sector, they seriously need to
look at the impact that technology will have on their
business model, operating, bottle cost structure, and so on and
(19:11):
so forth. So that applies to us as well. And
one of the problems that I think as an industry
you have is that we are not necessarily the natural
employers for the young tech people coming out of some
of the leading university. They would typically go work for
(19:31):
some of the unicorn or some of the large tech
companies or some of the startups, but not necessarily for
someone in finance. So the first challenge that we have
is attract people in the tech space because we need
to build a way more skill set than we have
(19:52):
right now as an industry. At the same time, and
to be honest, I mean that's the challenge I think
on our side, what we're trying to do is only
keep hiring that kind of profile, but also trying to
build a bit of an ecosystem whereby we have exposure
to young fintech, either commercially or through equity stakes because
(20:12):
we are you know, at least from my side, I'm
taking a view that is going to be very difficult
to develop everything internally. We're never going to be able
to keep all the competency. So this dual model of
having young talent and creating an ecosystem where we're exposed
to what happens, I think is the way forward on
tech in general. Now on how this is going to
(20:34):
transform the business. Look, there's three dimension to it in
my view. The first one is operational efficiency and this
is probably where we are a bit more advanced on
leveraging everything that we've seen over the last three five
years as an industry. I think we're there's a number
(20:57):
of areas where automation will play a role, were use
of AI and machine learning techniques will play a role.
For example, on our side, we're using NPM and machine
learnings to do portfolio performance commentaries. So it's it's it's real,
(21:17):
it's life and it's and it's very efficient. There's a
second element, which is our technology will transform and change
customer journey, which has to do with you know, not
only digital interaction and this is happening, but what this
would have an impact on the distribution pattern. So today
(21:38):
is mostly physical and intermediated by the traditional by the
traditional channel. My view is that this is not going
to change for quite some time, but the digital customer
experience will be will go through significant changes that will
affect both asset and well management. And the third dimension
(21:59):
is of technology is going to be whether we can
use intelligently all sets of data to help us generate
alpha in our core business, so how we can make
better use of all the informations available. This is probably
relatively new. We're experimenting, so we're working on it, but
(22:23):
it's a bit early days. And to me, these are
the three eras in which we're looking at technology from
our side.
Speaker 2 (22:29):
What keeps you up and night? What keeps you worried?
Speaker 3 (22:33):
Normally I sleep quite all, but look joking aside, look
as I told you, I wouldn't say a concern. But
one of the things, one of the topics I'm spending
(22:54):
quite a bit of time thinking about it is what
would be the implication of these four majors disruptions happening
at the same time, Because I frankly don't remember in
my career life such a period where there's a there's
a real paradigm shift. I mean We've lived in an
(23:17):
era of globalization, and now I think in with the
geopolitics geopolitical development, we're not going to see globalization the
way we have experienced so far. Technology we have discussed.
Sustainability is probably the biggest shift in capital location that
our uh, you know, our generation will observe, and I
(23:38):
would say probably in the whole history of economy, and
then demographics I think will probably generate significant impact in
terms of stock of stock and flows of assets, expected
return from the different asset class So how this will
all come together, and the impact on our industries, it's
it's it's what I would call charted territories. And I'm
(24:02):
trying to force myself not to use the same toolkit
that has served us so well over the last twenty
years to assess the future, because typically in a moment
of paradigm shift, you tend to use the toolkit that
you're using the different paradigms and that are not probably
that outful. So again, it doesn't keep me awake at night,
(24:23):
but it's probably one of the most constant thinking I
have in terms of defining the positioning and the strategy
of the firm for the next five to ten years.
Speaker 2 (24:31):
Which city do you think is going to be Europe's
financial center?
Speaker 3 (24:34):
In of course, of course, parents you seem very long Paris.
Speaker 2 (24:39):
I look forward to checking in with you on that
last question. At the stage of your career, what drives you?
Speaker 3 (24:47):
Well, that's what I kind of keep asking myself almost
every day. Look to me, there's few things. The first
one is that I I like to have an impact
on people's life. This has been a bit of the
(25:07):
constant in my career. So I really enjoying shaping the
firm for the future, finding talents, bringing talents to the
next level, and you know, get the most out of
the human capital that we have in the firm. That
I would say is probably my biggest drive and my
(25:28):
biggest motivation at the stage. At the stage and if
I have to think, like you know, one day I
will leave retire, and if I would have to think
back of you know what I would be proud of.
I think if at the end of the day, the
(25:48):
company I've been leading would be one of the employer
of choice and would be top of mind for the clients,
that is what I would consider a success. And to
be personally, the fact that you know, I'm still in
you know, I still have a strong relationship with a
number of people that I work with and I work
(26:10):
for or that work for me of the PASTI twenty
five years. That's rewarding. So it's really again the human side,
which I think is my driving force at this stage.
Speaker 2 (26:24):
Making positive impacts on people's lives. It's a very noble
cause for everyone. Thank you so much. This is a
really in lightening conversation. I appreciate it.
Speaker 3 (26:34):
Thank you, Thank you very much.
Speaker 1 (26:39):
That was my colleague Ya Joe Son in conversation with
B and B partapus Sandra Pierri. I hope you enjoyed
that chat. I know that I did. This episode was
produced by Young Young I'm Aleika Kapoor. Thank you for
listening to Out of Office.
Hello, and welcome to Out of Office. I'm your host
Malika Kapoor. Our guest today is candid. He confesses that
when he first stepped into the world of finance, he
had no idea what mutual funds were. He also recognizes
that his pattern of mistakes can be boiled down to
one word, indecisiveness. He's Sandra Pieri, the CEO of BNP
(00:26):
Pariba asset Management, which oversees over half a trillion euros.
Pierre grew up in a small Italian village. He says
his childhood was pretty ordinary. He played sports, studies, was
surrounded by family and friends, and he had absolutely no
interest in finance. After studying economics at the University of Turino,
(00:49):
he got a job as an equity analyst and the
rest is well history. Pierre says he's been fortunate enough
to have people taking bets on him early on in
his career, and now he wants to do the same
for the younger generation rising up. In this episode of
Out of Office, Pierre talks to my colleague Ya Josan
about his career trajectory, what he's learned from his share
(01:12):
of mistakes, how generative AI will disrupt the asset management business,
and the four factors causing a paradigm shift in the
world we live in. Here's their conversation.
Speaker 2 (01:30):
Sandra, Welcome to Out of Office. We're so excited to
have you here. We are living in very turbulent times.
The war in Ukraine is still going on. Central bankers
around the world are battling inflation while trying to limit
the credit crunch. We're having unprecedented banking turmoil in a
(01:51):
US and also in Europe. And now there's a wave
of ESG backlash in the US and maybe it was
spread to Europe. Posse. I'm very excited to dive into
all of that with you. But first I am hoping
that you can share with our listeners a little bit
about your childhood. Where'd you grow up and how would
you describe your upbringing?
Speaker 3 (02:14):
Okay, so first, thanks a lot for having me in
this podcast, and it's a pleasure to be with you
and all the listeners. I actually grew up in a
little village in the north of Italy, CU somewhat closer
to the French border, so in the Piedmont region, so
close to Torino. That's actually where I grew up and
studied and I had a very normal childhood, I mean,
(02:38):
like everyone sports, studying family in France and nothing special.
And at that time I had no idea what finance was.
So I graduated in economics at the University of Torino,
but actually I didn't have really a particular interest in finance,
and just to be completely transparent, I also didn't know
(02:59):
what mutual fund were at that time. So it was
by a series of coincidence that when I graduated, actually
after a few months, at the time it was called
Price water House, Coopers and Ibrands, so that the way
the accounting consulting firms. I got a call to from
(03:22):
one of the new emerging asset management company in the
Italian In the Italian industry itally has been somewhat lagging
in terms of mutual fund development some of the Anglo
Saxon countries, and I got a call to basically become
a become an equity analyst, and I hardly knew what
was what that was at that time. I took it
(03:45):
from there and I really enjoyed from the very beginning,
and that's where the whole story started. So I started
as an equity analyst and then I moved into managing
portfolios actually been managing. You predominantly use equitis and I
had a couple of years running European equities, and what
I liked about asset management at that time was that
(04:06):
it was really bringing together some of the interests that I,
in a way i've always cultivated because early days I
had an interest in policy making and philosophy, which is
something I keep having as a passion. I like maths
and statistics, and I think asset management and especially portfolio
(04:30):
management helped me to basically put all this stuff at work.
And that's, you know, in a way, how I started.
So that's as much for the beginning. And then you know,
it's been a bit of a long story. And I
turned fifty nine, so it's been quite some time that
I passed by.
Speaker 2 (04:50):
I want to ask, you know, I actually study economics
in college as well, and I looking back, I can
help a feeling that economics is really a social science
kind of masquerading as a heart science. Would you agree
with that?
Speaker 3 (05:07):
How do you think? Yeah? Absolutely totally. I think that
in my view, there's a misconception about economic being an
art science. I mean there's and I think with the
recent development that we have seen in economics, you know,
with the rise of behavioral economics, I think what you
just said, I think has been proven to be even
(05:28):
more real. So I think it's really in a way
which also applies to market is not only modeling stuff,
but understanding animal spirits which makes a difference. And I
think that applies to economics and finance as well. So
completely agree with you.
Speaker 2 (05:45):
Yes, people are not always rational. We need to remember
that exactly. So you said you landed your first job
as a US equity manager, that was for San Paolo Funds.
How did you How did you do that?
Speaker 1 (05:58):
Was it?
Speaker 2 (05:58):
Was it like a really easy boss point? After college?
Speaker 3 (06:02):
Well, look, I started as a as an equity analyst
for a while, and then a position opened up and
I started as a junior portfolio manager and I just
enjoyed and and I think in a way again, as
I said, what I liked was the multidisciplinary element of
being a portfolio manager. I realized that again you need
(06:22):
to understand accounting, you need to understand strategy. But I
think one of the things that they started to be
to to resonate with me as I started to meet
a number of companies and management of the different companies
that we were investing on, was that the leadership element
was a key element in you know, translating good ideas
(06:44):
into something concrete and and with value. So I started
to develop a bit of an interest at that time
also on all the leadership element, which actually at that
time I didn't realize they would be They would have
been very valuable in the future. But I think it's
I can now give a bit of sense of what
(07:04):
I've done why I focus on the leadership side even
when I was a portfolio management because I think that
has helped me quite a bit during my career development.
Speaker 2 (07:12):
If someone were to describe your leadership style, what do
you think they would say?
Speaker 3 (07:18):
Look, I think there's a couple of elements which are
I believe important and probably most of the people that
worked with me or for me would probably recognize. The
first is that trust is important to me, so in
any organization, but I would say in any even you know,
(07:41):
even within family, trust based relationship is key. I've always
built my career trying to be a trustable person for
my bosses at the time, and this is exactly what
I'm looking when we're building teams. Trust is crucial because
when you're running a larger going tozation, you need to
put processes and control in place, but there's nothing that
(08:04):
replace a trust based culture because at the end of
the day, you have teams operating like ten thousand miles away,
and with all the processes that you can put in place,
you need to trust them that they will be aligning
in terms of value, which implies that they would always
try to do or I think doesn't mean that they
will always be right, but they will. You need to
(08:26):
get that level of conform So trust, I would say,
it's it's an important element. The second element is I,
you know, I give disproportionate attention to people. And of
course everyone knows that asset management is a people based
business and there's no there's no make no mistake, this
(08:48):
is absolutely the case. But for me, this is this
is also it is not only to do with the
nature of the business, but it's also to do with
with my own nature in a way, and I reflected
upon it, and I've been lucky enough in my career
to always find people that took an early bet on me,
(09:11):
so they gave me trust and they actually offered me
chances to progress in my career. Even when I was
when I was very young and maybe unexperienced, people took
a bet on me. And this element of trust people
development is probably a constant throughout my career, which I
think is inspiring me in my day to day leadership job.
Speaker 2 (09:34):
So you you know, because there are certainly people who
subscribe to the philosophy of not backing a lame dug,
but you believe it's important to give people opportunities for
them to flourish.
Speaker 3 (09:50):
Yeah, if you don't take risks on people, you'll never
know whether the potential is real. So we all need
to take more risk with people when we see potential.
And of course you need to be ready to live
with mistakes. You made me say that's normal, there's nothing
wrong with it.
Speaker 2 (10:09):
Well, speaking of mistakes, I was wondering if you made,
are there any career blunders perhaps that that you can
share with us.
Speaker 3 (10:18):
Look, I've made tons of mistakes and I keep doing mistakes.
So that's that's that's a constant in life. And by
the way, I think it's important that everyone not only
in our businesses, in our business, but I would say
overall in economic activity, needs to be to learn to
(10:38):
to live with mistakes. There's nothing wrong. I mean, it's
it's it's a law of nature, and that's also how
we learn now mistakes, I would say, look, I don't
have anything specific in mind, but I can definitely see
a pattern in a number of mistakes that I made.
And one of the patterns is that when I waited
too much to make a decision, which goes back again
(11:01):
to the point and making that at the end of
the day, we also need to take risk and making decisions.
So one of the patterns that in a number of cases,
a number of mistakes I've made, you know, we're behind
that we're probably a level of indecisiveness on my end
of or not having enough conviction and then waited too
(11:24):
long and then when you make that decision, then it
turns out to be a mistake. So timing is an
important element in the decision making because something that might
be right today, if you wait too long, it might
become wrong. And this element of timing, you know, is
something that I've learned in my portfolio management career. I mean,
if you like a company and you're just waiting for
(11:46):
the long term, but you're just waiting for something to happen,
that might not happen, and then it's you might miss
an opportunity or when you jump on the bandwagon, it
might be played. So I think this is probably one
of the patterns where I made many mistakes. I've tried,
I'm now trying to I've tried to correct that, and
I think I'm now at the point in which a
(12:06):
bit based on experience, based on the trust that I
have on the team around me, I tend to be
quite decisive when you know, without over being over analytical
in making decisions.
Speaker 2 (12:19):
So now you know you go with your intuition.
Speaker 3 (12:23):
Well, okay, again, don't take me wrong. Intuition is an
element is a bit of experience, but there's a good
preparation to that. The point is that, as everyone would
probably agree, the marginal utility of doing the twenty to
thirty percent extra analytical work doesn't bring a lot of
value in decision making. So if you stop at seventy
(12:44):
percent and you need to do a proper work for
the seventy or eighty percent, then you're in a good
position to take decision.
Speaker 2 (12:50):
You know, we'll have to bring up on what happened
with Credit Servis and UBS. I'm just you know, very curious.
How do you think that would fact the competitive landscape
of asset management and wealth management in Europe.
Speaker 3 (13:09):
Look, our industry is an industry which is still quite
fragmented in not only in Europe, I would say globally.
I think if you take the top three firms, they
probably represent twenty five percent of the overall let's say,
(13:30):
market share of the overall industry. And if you compare
it to again, the first industry that comes to my
mind is probably auto manufacturing. I guess that the top
three of four would probably control eighty or ninety percent
of the market. So that gives you a sense of
the level of fragmentation that is still exists in our industry. Now,
having said that, there's a to me, there's there's a
(13:53):
couple of reasons why this is not progressing. One is that, frankly,
our industry has been enjoying a very nice ride over
the last twenty years. Asset growth fueled by you know,
acid gathering, but also by market appreciation, reasonably stable margin
(14:16):
and you know, with the cost base which is predominantly fixed.
That has resulted in significant improvement on profit growth. And
in a way I think we have enjoyed very nice marging,
so the pressures to scale has been somewhat less pronounced
(14:38):
than in many other industries. The second element is that
this is the nature of our industry, and we have
touched upon just before. It's a people based industry. And
at the end of the day, you can put together
two companies, but people need to make sure that there's
a full cultural alignment and value alignment because otherwise people
would walk away. So the the fact that is a
(15:01):
people based business, I think is also in my view,
a bit of a structural reason why consolidation doesn't happen
at the same pace they were seeing in our industry
as well. We took i would say, a deliberate and
conscious decision to put sustainability at the core of what
we do. So for us, this is I would say,
(15:24):
part of our DNA. So being what we call the
sustainable investor for a changing world, recognize that our role
is a role where we help clients and investors to
achieve their goal by using the impact that sustainability will
(15:47):
have on asset prices going forward. I would even I
would even go one step farther and saying that, look,
the reality is that I think we're living at a
moment of which is quite unprecedented. In my view, there
are four major disruptions happening at the same time, one
being sustainability, the technology, the third being demographics, and the
(16:11):
four being geopolitics. And I'm happy to expand it needed,
But the point is that this element of changing world
is around sustainability, but is the fact that we're probably
going to see a number of paradigm shift and that's
I think our DNA. I think for us, this is
not about a product, but it's really about who we
want to be.
Speaker 2 (16:30):
I have to say, though critics have said that ESG
has become a box taking exercise, and I think you
have to agree, you know, especially with the news vera,
you know, the largest carbon offset market you know not
now proven to be you know, mostly fake and actually
bad for the environment. Would you would you say that
(16:53):
perhaps the market has seen too many products ESG products
in the last five years or so, and how do
you how do you see this going forward?
Speaker 3 (17:06):
Look, my view is that there's some truth to what
you said, and I think to meet us to do
with the fact that when a number of terms realize
that actually that was the new hot trend in the market.
They just jumped themselves. They just put themselves a lot
(17:27):
of money to basically be positioned in the sustainability field.
From our angle, we started earlier and we haven't changed
our course over the last year, and now we're you know,
probably sustainability as being somewhat challenged. The real line of
divide is those were really, you know, putting sustainability as
(17:48):
a cultural element and with a strong belief that actually,
given the disruption that we're observing, this will have a
meaningful impact on asset price surprises. And those were doing
it just because they need to ride the last wave
of product. And the jury is going to be out
(18:09):
on those work between those were doing it seriously and
those were doing it maybe just more sickly in a
in a more cyclical way, if you if you see.
Speaker 2 (18:17):
What I'm saying, Yes, speaking of hot trends, I think
you have to agree that generative AI is really wowing
consumers and investors alike. Have you given this technology a
thought about, you know, how maybe it will impact your industry,
you know, with this ultimately lead to a slimmer and
(18:41):
sharper workforce perhaps, and how does that impact the kind
of talent that you look for.
Speaker 3 (18:49):
So maybe I'll start from the talent. So it's very
clear that you know, any asset manager, but I would
say any company, almost any sector, they seriously need to
look at the impact that technology will have on their
business model, operating, bottle cost structure, and so on and
(19:11):
so forth. So that applies to us as well. And
one of the problems that I think as an industry
you have is that we are not necessarily the natural
employers for the young tech people coming out of some
of the leading university. They would typically go work for
(19:31):
some of the unicorn or some of the large tech
companies or some of the startups, but not necessarily for
someone in finance. So the first challenge that we have
is attract people in the tech space because we need
to build a way more skill set than we have
(19:52):
right now as an industry. At the same time, and
to be honest, I mean that's the challenge I think
on our side, what we're trying to do is only
keep hiring that kind of profile, but also trying to
build a bit of an ecosystem whereby we have exposure
to young fintech, either commercially or through equity stakes because
(20:12):
we are you know, at least from my side, I'm
taking a view that is going to be very difficult
to develop everything internally. We're never going to be able
to keep all the competency. So this dual model of
having young talent and creating an ecosystem where we're exposed
to what happens, I think is the way forward on
tech in general. Now on how this is going to
(20:34):
transform the business. Look, there's three dimension to it in
my view. The first one is operational efficiency and this
is probably where we are a bit more advanced on
leveraging everything that we've seen over the last three five
years as an industry. I think we're there's a number
(20:57):
of areas where automation will play a role, were use
of AI and machine learning techniques will play a role.
For example, on our side, we're using NPM and machine
learnings to do portfolio performance commentaries. So it's it's it's real,
(21:17):
it's life and it's and it's very efficient. There's a
second element, which is our technology will transform and change
customer journey, which has to do with you know, not
only digital interaction and this is happening, but what this
would have an impact on the distribution pattern. So today
(21:38):
is mostly physical and intermediated by the traditional by the
traditional channel. My view is that this is not going
to change for quite some time, but the digital customer
experience will be will go through significant changes that will
affect both asset and well management. And the third dimension
(21:59):
is of technology is going to be whether we can
use intelligently all sets of data to help us generate
alpha in our core business, so how we can make
better use of all the informations available. This is probably
relatively new. We're experimenting, so we're working on it, but
(22:23):
it's a bit early days. And to me, these are
the three eras in which we're looking at technology from
our side.
Speaker 2 (22:29):
What keeps you up and night? What keeps you worried?
Speaker 3 (22:33):
Normally I sleep quite all, but look joking aside, look
as I told you, I wouldn't say a concern. But
one of the things, one of the topics I'm spending
(22:54):
quite a bit of time thinking about it is what
would be the implication of these four majors disruptions happening
at the same time, Because I frankly don't remember in
my career life such a period where there's a there's
a real paradigm shift. I mean We've lived in an
(23:17):
era of globalization, and now I think in with the
geopolitics geopolitical development, we're not going to see globalization the
way we have experienced so far. Technology we have discussed.
Sustainability is probably the biggest shift in capital location that
our uh, you know, our generation will observe, and I
(23:38):
would say probably in the whole history of economy, and
then demographics I think will probably generate significant impact in
terms of stock of stock and flows of assets, expected
return from the different asset class So how this will
all come together, and the impact on our industries, it's
it's it's what I would call charted territories. And I'm
(24:02):
trying to force myself not to use the same toolkit
that has served us so well over the last twenty
years to assess the future, because typically in a moment
of paradigm shift, you tend to use the toolkit that
you're using the different paradigms and that are not probably
that outful. So again, it doesn't keep me awake at night,
(24:23):
but it's probably one of the most constant thinking I
have in terms of defining the positioning and the strategy
of the firm for the next five to ten years.
Speaker 2 (24:31):
Which city do you think is going to be Europe's
financial center?
Speaker 3 (24:34):
In of course, of course, parents you seem very long Paris.
Speaker 2 (24:39):
I look forward to checking in with you on that
last question. At the stage of your career, what drives you?
Speaker 3 (24:47):
Well, that's what I kind of keep asking myself almost
every day. Look to me, there's few things. The first
one is that I I like to have an impact
on people's life. This has been a bit of the
(25:07):
constant in my career. So I really enjoying shaping the
firm for the future, finding talents, bringing talents to the
next level, and you know, get the most out of
the human capital that we have in the firm. That
I would say is probably my biggest drive and my
(25:28):
biggest motivation at the stage. At the stage and if
I have to think, like you know, one day I
will leave retire, and if I would have to think
back of you know what I would be proud of.
I think if at the end of the day, the
(25:48):
company I've been leading would be one of the employer
of choice and would be top of mind for the clients,
that is what I would consider a success. And to
be personally, the fact that you know, I'm still in
you know, I still have a strong relationship with a
number of people that I work with and I work
(26:10):
for or that work for me of the PASTI twenty
five years. That's rewarding. So it's really again the human side,
which I think is my driving force at this stage.
Speaker 2 (26:24):
Making positive impacts on people's lives. It's a very noble
cause for everyone. Thank you so much. This is a
really in lightening conversation. I appreciate it.
Speaker 3 (26:34):
Thank you, Thank you very much.
Speaker 1 (26:39):
That was my colleague Ya Joe Son in conversation with
B and B partapus Sandra Pierri. I hope you enjoyed
that chat. I know that I did. This episode was
produced by Young Young I'm Aleika Kapoor. Thank you for
listening to Out of Office.
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