Lori Heinel: What It’s Really Like to Manage $4 Trillion

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
When you're in a large organization and your team
needs you to be there, you haveto really show up as a leader.

Speaker 2 (00:07):
Welcome everyone to a new episode of the Blunt Dollar
.
Today, we're joined by LoriHeinel, the Global Chief
Investment Officer of StateStreet Global Advisors, one of
the world's largest assetmanagers, overseeing more than
$4 trillion in assets.
Laurie has built an impressivecareer over 41 years in finance,
leading investment teams acrossmulti-asset strategies.

Speaker 1 (00:30):
The most important thing that we do is we deliver
investment outcomes for ourclients.
Finance isn't just one thing.
It's not just portfoliomanagement, right, it's
marketing, it's sales, it'scompliance, it's operations,
it's portfolio management.
Of course, almost no matterwhat your skills interests are,
you can find some way to be inthis industry.

(00:50):
I spend a lot of time with myteam on is how are we thinking
about the skills that will berequired for us to be successful
in the future and how do wemake sure that we're readying
our workforce today?

Speaker 2 (01:06):
for that future.
This is the Blonde Dollar withIgnacio Ramirez.
Quick disclaimer the views andopinions expressed in this
podcast are those of thespeakers and do not constitute
financial investment or legaladvice.
This content is forinformational and educational

(01:26):
purposes only and should not berelied upon as a substitute for
professional advice.
Always do your own research andconsult a qualified advisor
before making any financialdecisions.
All investments involve risk,including the potential loss of
capital.
And now let's get started withthe episode.
Welcome everyone to a newepisode of the Blunt Dollar.
Today we're joined by LoriHeinel, the Global Chief

(01:49):
Investment Officer of StateStreet Global Advisors.
One of the world's largestasset managers, overseeing more
than $4 trillion in assets.
Lori has built an impressivecareer over 41 years in finance,
leading investment teams acrossmulti-asset strategies, factory
investing, eng andmacroeconomic research.
She's been at the forefront ofhow institutional investors

(02:12):
shape markets, navigate risk andadapt to change, and today
we'll tap into her insights onleadership, investing and the
future of asset management.
We'll talk about what it takesto lead in finance, how
institutional investorsinfluence the investment
landscape, and the progress andchallenges of diversity in asset
management.
We'll also explore how AI andtechnology are reshaping

(02:33):
investing and what that meansfor the future of portfolio
construction.
So, whether you're a financeprofessional, an institutional
investor or just someone curiousabout how the biggest players
in the industry are makingdecisions, this episode is
packed with insights you don'twant to miss.
Lori, welcome to the BlondeDollar.
It's fantastic to have you onthe show.

Speaker 1 (02:56):
Thanks for having me, really glad to be here.

Speaker 2 (02:59):
So maybe, before we dig into all those topics, can
you tell us in a couple of wordswhat is it that you're doing
exactly at State Street as theGlobal Chief Investment Officer?

Speaker 1 (03:10):
Well as the Global Chief Investment Officer.
Here at State Street GlobalAdvisors, I'm responsible for a
team of over 600 people who doeverything from portfolio
management, research and tradingto engaging with our clients
and making sure that we candeliver exceptional outcomes to
them in their portfolios.

Speaker 2 (03:28):
So 41 years in the industry, I mean they make me
sound old.
No, not at all.
I guess I'm incrediblyadmirative.
I very rarely talk to peoplewith so many years of experience
, and maybe I'd like to hear abit about your path.
And how did you go from yeah,just, I guess an intern in the

(03:49):
finance industry to being theCIO of one of the most important
finance institutions in theworld?

Speaker 1 (03:55):
Well, I would like to say that it was all planned but
, as you can appreciate, acareer that spans multiple
decades always has a few twistsand turns along the way.
But I would say I fell intofinance really by accident.
I was a liberal arts major atundergraduate university, but
when the time came that I wasgraduating, I really needed to

(04:16):
find a job, and at the timefinance careers were very
lucrative and very attractive,and so I was fortunate enough to
secure an analyst position atone of the premier investment
banks at the time, and then thatreally led me to catch the bug.
I got really interested inmarkets, in finance, in solving

(04:37):
client problems, and thenthroughout my career I took a
variety of roles that werealways in the finance space.
I've run product, I've beeninvolved in research processes,
I've been involved in, you know,all kinds of development
efforts, and I think that thatsort of journey positioned me
quite well when the opportunityhere at State Street arose.

Speaker 2 (05:00):
So for our listeners, maybe could you describe in a
couple of words what does a dayin the life of a CIO like you
look like.

Speaker 1 (05:10):
Well, one of the things I love about my job is
that every day is different, soobviously there are threads.
As I mentioned at the outset,the most important thing that we
do is we deliver investmentoutcomes for our clients, and so
job number one is to make surethat we're actually delivering
that, and, as you probably canappreciate, we run a variety of

(05:32):
strategies.
We have a very large index book, and so making sure we deliver
the exposure that that clienthas hired us to manage is
critically important, but wealso have a number of active
capabilities where, you know,looking at how we're doing from
a risk return standpoint isreally really valuable, and so I
spend a lot of time just sortof looking at where we are, what
we're doing to make sure thatwe can deliver upon those

(05:54):
outcomes and, where there arechallenges, understanding what
might be driving those.
I think the other thing, though, is that it's a very eclectic
day, because I might be visitingwith clients and talking to
them about what we're doing.
I might be dealing with talentissues and, as you can
appreciate, this is a talentbusiness so everything from
hiring to developing to makingsure our employees are motivated

(06:15):
a lot of projects, I mean.
Your audience has probably seenthat we've been doing a lot of
innovation here at GlobalAdvisors, and so the role that
investments has to play incollaborating with our chief
product officer, our chiefbusiness officer and our
client-facing teams to do thatinnovation.
So lots of things are on myplate in a given day.
And then, oh, by the way, allthe extracurriculars what's

(06:37):
going on with the Fed?
What's going on with, you know,world geopolitical issues all
of those are things that I haveto stay on top of as well, and
on top of that podcast like thisone.

Speaker 2 (06:51):
I mean, it looks like your day has like 48 hours
instead of 24.
So how would you define yourleadership style, Because I mean
you clearly manage hundreds ofpeople, not an easy task.
What is your leadershipphilosophy, and has it evolved
over the years?

Speaker 1 (07:09):
Well, first of all, it's evolved a lot over the
years.
As you can appreciate likeprobably so many listening to
this podcast, I'm a veryhands-on person.
So in my early career, the ideaof delegating was really
challenging for me because Ialways thought if I needed to
have it done right, it had to bedone by me, because I was going
to do it the best right.

(07:29):
But, as you can appreciate, asyou grow in your career and take
on more and more leadershipresponsibility, you really do
have to adapt and make sure thatyou have the right team in
place, that you trust thoseindividuals, that you have their
backs, that you give them theempowerment.
So I would describe my styletoday as trust but verify, and

(07:51):
by that what I mean is I'veobviously got a fantastic team
and I work very hard to makesure that they have what they
need.
But there are times when I needto get in there and just
regurgitate what's going on andmake sure I have a deep
understanding, because ifproblems arise, I want to be
able to understand what thoseroot issues are and help them
problem solve.

(08:11):
So I'm pretty hands off, but Ican also go deep when the
moments necessitate that.

Speaker 2 (08:18):
And something I wanted to ask you about is how
you deal with pressure, Becauseinvestment management is
obviously inherently highpressure, especially at the
institutional level.
Right and leaders often dealwith market shifts, with client
expectations and internalstrategy decisions that impact
not millions but billions ofdollars, and even trillions in

(08:39):
your case.
So how do you manage pressureand maintain clarity in high
stakes decision making?

Speaker 1 (08:46):
Yeah, well, look, that's where I've been on a long
journey as well.
My natural temperament is to,you know, be a bit reactive,
right?
Oh geez, what just happened?
But when you're in a largeorganization and your team needs
you to be there, you have toreally show up as a leader, and

(09:07):
so I guess the first thing I tryto do is take a breath.
We just heard something badhappen.
Okay, take a breath.
Second thing is put intoperspective.
Right, are we talking aboutsomething that's really damaging
?
Are we talking about somethingthat's a little bit of a setback
?
Are we talking about somethingwhere we can solve the problem

(09:27):
with a few people gettingtogether, or is this something
that's much more pervasive?
So, try to move into thatproblem-solving kind of modality
.
The other thing is likecommunicate, like make sure that
your key stakeholders knowwhat's going on, make sure that
they know that you've either gotthe ball or that you need their
help to get something addressed, and that everybody appreciates
what their rules andresponsibilities are, and then,

(09:50):
once you're out of that crisismode, take that step back and
digest what happened so that youcan make sure that that thing
doesn't happen again, that youput in place the right kind of
mechanisms.
And then the last thing I wouldsay is just personally, like
I'm a big exercise fanatic, Ilike to get to the gym, I like
to do outdoorsy things.
So I think the other importantthing here is you've got to give

(10:13):
yourself space to recover.
Right, you're going to be inthose moments where you're all
in everybody's, very stressedout, you're trying to manage how
you're showing up as a leader,but you're also trying to make
urgency and get things addressed, and then you need a little
space for yourself because youhave to recover from that
situation.

Speaker 2 (10:33):
Yeah, a lot of times people ask me, like what's the
number one productivity hack?
And I always tend to say whatyou just said, like do sports,
go back to the basics, sport,and then eat well and sleep.
And if you do these things, Ican guarantee you know you're
going to be 100 times moreproductive at work and in life
in general.
Definitely so.

(11:02):
I'd like to now talk a littlebit.
Guess, but how do institutionalinvestors like State Street
differ from retail investors inthe way they approach investment
decisions?
What is different?

Speaker 1 (11:13):
Well, as a global asset manager, we deal with
clients across all of thosedifferent channels.
So we have everything from very, very large sovereign wealth
funds and defined benefit plansand other institutional asset
pools, but we also serve asadvisors, consultants,
ultimately end clients, 401kplans that have end participants

(11:34):
, et cetera.
So we kind of see it all, ifyou will, and I would say
there's some things that arequite common.
I think, for the most part, allclients are trying to put
together a portfolio that'sgoing to give them the best
opportunity to achieve theirlong-term goals.
But I think there are alsosensitivities that are different
in different client types and Iwould say to think about it as

(11:56):
institutional versus retail isnot necessarily a helpful
construct, although I wouldagree that there may be some
differences.
A helpful construct, although Iwould agree that there may be
some differences, but I thinkit's more on.
You know what the sort ofpsychographics of those clients
are.
So some clients are just morerisk sensitive, right, and that
could be large institutionalclients where there are real

(12:19):
issues that they havesignificant drawdowns in their
portfolios.
Or could be retail investorswho are late in their 401k you
know cycle where they're goingto go into retirement they're
going to have to draw down andat that point in time, you know,
have a market corrections very,very damaging.
I think there are also someclients who are just more
willing to focus onopportunistic and growth
oriented kinds of capabilities,and then I guess you know.

(12:42):
The other thing that I wouldsay is that sometimes there are
just other frictions, like someclients don't have the right
kind of governance structurearound their decision making.
Some clients are constrained bywhat they're allowed to do.
Some clients have, you know,regulatory limitations.
So the good and the bad thingabout being an organization like
State Street Global Advisors isthat we see clients who have

(13:04):
all kinds of ambitions but alsoall kinds of constraints, and
being able to work with them tocustomize what's right for them
is the common thread.

Speaker 2 (13:14):
And talking about the good and the bad thing, I mean
you're managing $4 trillion inState Street, so what are the
biggest advantages and what arethe challenges of managing
assets at such an enormous scale?
I mean it's just huge.

Speaker 1 (13:33):
Yeah, well, look, I think the first thing is, as you
noted, we are a scale provider,so that gives us incredible
efficiency opportunities, and wereally have seen if we haven't
seen it all, we've seen a lotright, and so it puts us in a
really good position to adviseour clients and deliver them to
them on a daily basis.
The other side, though, is it'squite complex.

(13:55):
So, across that $4 trillion, asI noted earlier, we have a
large book of indexing business,but that spans all kinds of
exposures equity, fixed income,large cap, emerging markets you
know very niche fixed incomeasset categories, etc.
But then we also have a largebook of asset capability, or,
excuse me, a large book ofactive capabilities, multi asset

(14:16):
class solutions, and, as youprobably also know, we partner
with a lot of third partyadvisors to bring products to
market where we may not have ourown expertise, but we think
clients would benefit fromhaving those kinds of exposures.
So part of the challenge isjust being able to make sure
that you know our clients have afull awareness of all the

(14:37):
different ways we can help themand that we are managing that
entire ecosystem in a way thatis really valuable to those
clients and, as CIO.
As you can appreciate, I've gotto make sure that all those
capabilities are fit for purposefor our clients.

Speaker 2 (14:53):
Absolutely, and you were just talking about one of
the parts of your business whichis passive investing, which
obviously has taken over a largeportion of the market over the
last years and decades.
I would argue how has the riseof passive investing impacted
the way you manage portfoliosinternally, but also like

(15:16):
institutional investors ingeneral?

Speaker 1 (15:18):
Yeah, so I think there are a couple of trends in
index investing, and wepurposefully don't call it
passive, because there's nothingpassive about index investing,
and we purposefully don't callit passive because there's
nothing passive about indexinvesting.
It's actually quite technicaland difficult to do, but the
first thing I would say is that,for a lot of clients, it is the
best, most cost-effective wayto access a market, and so we've

(15:38):
seen the rise of equityindexing, in particular, over
many decades now, and then, inmore recent years, we've seen
more and more clients looking atfixed income indexing, in
particular, over many decadesnow, and then, in more recent
years, we've seen more and moreclients looking at fixed income
indexing rather than hiringactive managers, so that's a
trend that we see persisting,because it's efficient and it
gives investors kind of whatthey're looking for.
The other thing that we've seen, though, is that indexes are

(15:59):
becoming even more precise, so,once upon a time, you just the
S&P 500 or the MSCI world, andyou called it a day.
Well, increasingly, investorsare fine-tuning that, so they
might want to look at regionalallocations or sector
allocations, and so they mightget an index exposure that's
very stylized, and then we'lloften see investors doing a

(16:20):
little bit more asset allocationacross the top and even adding
some tactical plays on top ofthat index set of capabilities.
And then I think the thirdthing that we're seeing, which I
think is really interesting, isthe evolution of indexing into
spaces where maybe you wouldn'thave expected to see indexing.
So, whether that be in moreexotic fixed income exposures or

(16:43):
alternative asset classes,that's also becoming a trend
that we think is very, verydurable.
So we try to talk about notindexing or active, but really
having a full toolkit and takingadvantage of what the index
exposures can give you, coupledwith other things that you might
be doing, like tactical orincluding other active exposures

(17:04):
.

Speaker 2 (17:05):
Yeah, by hearing you, I have the feeling that, the
same way that the days of a CIOare never the same, the days of,
you know, passive and indexingare also constantly evolving and
, with the arrival of newtechnologies and regulatory
changes and investment themes,like it's constantly moving and
I guess that's what makes itreally, really exciting.

Speaker 1 (17:28):
Yeah, and, if I could just jump in, it sort of
provoked another thought in mymind, which is this idea that
clients want increasinglycustomized kinds of things as
well.
Right, and so what we've seenon our institutional client base
, which I think is starting tocome into more of the wealth
channels as well, is this ideaof, you know, customizing by

(17:50):
either, instead of acap-weighted index, do more of
an equal-weighted index, or tryto create something that's a
little bit morevolatility-controlled, or maybe
remove certain exposures fromthe portfolio or add more
exposures to the portfolio.
So I think this idea of gettingthings that are more customized
to clients is a trend that'salso supported by indexing.

Speaker 2 (18:12):
actually, I was planning to talk about that a
bit later in the conversation,but since you brought it up, I
think we're going to jump rightinto it, which is a bit like the
future of asset management andparticularly now with the
arrival of AI, what do you seeas the biggest forces reshaping
asset management today?
Do you think it's this trendtowards personalization that

(18:34):
we're going to be seeing mostabout, or do you think there's
other bigger things happening atthe moment?

Speaker 1 (18:40):
I think there are a lot of things.
I mean, certainly the trendtowards personalization is
intact and it will continue togrow.
We have seen, you know, thingslike model portfolios, but model
portfolios that are sort ofallow for certain amounts of
customization is very, verycommon.
Trends around direct indexing,for example, again allow clients

(19:02):
to access markets but do so inrelatively stylized ways.
Here in the US, obviously,tax-aware investing is something
that's been in vogue for a very, very long time.
We also have certain clientsthat want to integrate things
like sustainability into theirportfolio.
So that idea of customizationis, I think, something that's

(19:22):
with us, probably for the restof my career, for sure.
I think the other thing and itsounds a little trite, but we
talk about this idea of thedemocratization of investing.
So, you know, you started with aquestion earlier about the
differences betweeninstitutional and retail or
wealth investors, and I wouldsay one of the differences is
oftentimes institutionalinvestors have options available

(19:45):
to them that may not beavailable to the average
investor, and you think aboutthings like alternatives.
You know private equity, privatereal estate, infrastructure,
direct distressed debt, thingsof that nature, and increasingly
those exposures are, you know,able to be captured by broader
audiences through vehicles thathave really democratized the

(20:06):
investment landscape.
So I think that's a trend thatyou'll see going further, and
things like blockchain and someof these other technologies
digitized finance enable that tohappen in a much more sort of
widespread way.
So I think that's another bigtrend.
And then the last one I wouldcite is one I was talking a
little bit about earlier thisidea of solutions, and really

(20:29):
not just customizing theportfolio, but customizing the
solution right.
Your career, your portfolioadjusts based on your then
current tolerance for risk andreward.
But you can apply that to lotsof other scenarios, too, where
there might be very stylizedthings you're trying to do in

(20:52):
the moment, whether it'scontrolling the volatility of
the overall portfolio or tryingto eke out incremental return.

Speaker 2 (20:59):
And since we're talking about the future,
obviously we cannot talk aboutthis without using the big
buzzword at the moment, which isAI.
A couple of years ago, everyonewas talking about ESG.
In every single earnings callyou dialed in, you know it was
the big word.
Now it's all about AI.
I'm curious to hear how is AIcurrently being used in

(21:21):
institutional asset managementand where do you see its biggest
impact in the coming years?
Hey there, quick favor to askIf you enjoy the blunt dollar,
the unfiltered takes, thestories and the laughs.
The easiest way to support theshow is by tapping that
subscribe button right now.
While you're listening, andhere's my promise If you do,

(21:42):
I'll keep bringing you honestconversations, fresh
perspectives and the kind offinance talk that's engaging,
insightful and worth your time.
Thanks so much for being hereand let's keep these great
finance conversations going.

Speaker 1 (21:56):
Yeah.
So the first thing I would sayis we are big believers that AI
is a technology whose time hasarrived in a lot of ways and it
will significantly impact reallyeverything that we all do over
the coming decades.
There are a couple of differentways that we think about this.
First of all, it is technologythat we deploy within our own

(22:19):
business for a variety of things.
So we've been using naturallanguage processing and machine
learning toolkits for years andwe've continued to evolve that
to create signals within ourportfolios, to be able to
pressure test ideas.
We're increasingly looking atways to leverage these tools to

(22:39):
do other kinds of efficiency,almost like the research
co-pilot, to be able to digestinformation out of research
papers, you know, translate thatinto some form of code.
You know, test hypotheses.
All those things can be very,very efficient when you leverage
AI tools.
The other side of it is lookingat it from a how's this going

(23:02):
to change other companies, right?
So we're an active manager.
We're curious about how AI isbeing deployed in our portfolio
companies to say, okay, you knowif you're in pharmaceuticals or
you're in the, you know energycompany or you're a consumer
goods company, how are youdeploying AI tools?
People are starting to wake upto the idea that this is not

(23:25):
just AI for AI's sake, but itactually is game-changing for
companies that deploy AI in asmart way.

Speaker 2 (23:33):
Yeah, I like to think about it as not a winner takes
all kind of scenario, but arising tide type of scenario
where everyone benefits.

Speaker 1 (23:41):
I think that's fair.
Yeah, I think that's fair.

Speaker 2 (23:44):
So I'm a fixed income advisor and I am a little bit
worried about my job in five, 10years down the road because of
AI.
I'll be honest, I'm an optimistby nature, but I think that for
sure, the skill set requiredfrom finance professionals in
the future, with the rise of AI,is going to change.
So how do you think the role ofportfolio managers, investment

(24:07):
analysts and so on is going toevolve as AI becomes more
integrated into asset managementand the finance industry in
general?

Speaker 1 (24:15):
Yeah.
So, first of all, I don't thinkyour job's at risk at all, and
I will go back to my beginning.
I was a liberal arts major,right.
So I came into a very highlytechnical business with a
background that was notnecessarily highly technical.
I mean, I had some math skills,it wasn't like I had nothing.
But I say that because I thinkit's a marriage of man and

(24:39):
machine, or person and machine,not that suddenly the machines
are going to do all the work andwe're going to have nothing to
do.
I think there's still a lot ofspace, for you know what's the
idea generation in the firstplace?
Like what do you want toactually test?
Like we go through these?
You know research, idea seasons, where anybody can throw an
idea out there, and oftentimesthe best ideas come from people

(25:02):
who are the non-technicians.
So I think it is this you know,changing the nature of what we
need in our workforce.
For sure, we may not needpeople who are deep in the
writing of the code, but what wedo need is people who can think
, who can interpret the resultsthat can come out of that, who
can translate that into realworld.

(25:23):
You know, outcomes forinvestors.
So I'm not, as you know,nervous about the future, but I
think, like every industry, ifyou're standing still, you're
going backwards, and so one ofthe things I spend a lot of time
with my team on is how are wethinking about the skills that
will be required for us to besuccessful in the future and how
do we make sure that we'rereadying our workforce today for

(25:45):
that future?

Speaker 2 (25:46):
There's an analogy I love from the world of chess,
which is so the best chessplayer in the world, apparently,
is not a human, it's not amachine.
It's a group of humans thatwork with a group of machines,
and that player is known as acenter.
And I think we are at the cuspin the finance industry of a new
era where we're going to becomefinance centers and I could

(26:09):
totally imagine myself in five,10 years down the road doing a
lot more with the help of themachine.
So maybe I'll be covering moremarkets, more asset classes,
more clients.
I'll personalize more, and Ithink the important thing is to
have, like, an open mindset,keep learning and become part of
the change rather than juststaying oblivious to it.

Speaker 1 (26:32):
I agree, and you said something else.
I think there that's fairlyimportant, this idea of how do
you collaborate effectively withothers.
I mean, one of the things youasked me earlier in this
conversation was you know myleadership style and how I've
grown, and I commented that youknow, in the early days it was
like I want to do it right, Ican do it, and as you get more

(26:52):
experience and have moreresponsibilities, it's more the
we can do it right.
And what you just described isthis is the ultimate.
We right that now you have allthis great AI technology that
can support your journey, but itultimately is bringing that
with the people and valuing allthe different perspectives that
those people bring to the tableas you're sort of navigating

(27:14):
that new ecosystem.

Speaker 2 (27:16):
So if you had to give one tip for the finance
professionals that want tosurvive in the age of AI in a
one liner, what would it be?

Speaker 1 (27:24):
Intellectual curiosity I don't think AI, in
the short term at least.
Maybe someday when we have, youknow, general AI, generative AI
, maybe it will.
But I think the people that Isee thrive throughout my career
and I believe will continue tothrive into the future, are

(27:44):
those people who are alwaysasking the what and the how and
the why questions, right,intellectual curiosity, noodling
on that, being able to thinkabout how that changes what
you're doing today but also whatyou might do tomorrow, and
being very expansive.
You know, the other people thatI really admire in this
industry are those who kind ofare the connectors, who see

(28:08):
something, think in a sort ofbigger enterprise way and
connect the dots in ways thatultimately drive better outcomes
.

Speaker 2 (28:17):
I fully agree with you.
I mean, I think connectors andsoft skills in general are like
completely underrated skills.
One of my personal objectivesfor 2025 is to get better at
storytelling.
Can you maybe tell me a bitabout that?
How do you think, as a CIO,about storytelling, because
that's like a huge part of yourjob.

Speaker 1 (28:35):
It's so important and this is another area that I
feel like I've grown but I cancontinue to grow right.
Earlier in my career it was allabout the facts, right, I would
go in front of my team and Iwould tell them the facts and
then I started to get feedbackthat you know that was
interesting but it wasn't reallykeeping people's attention or

(28:56):
it wasn't really compelling orit wasn't really compelling.
And then I would find situationslike maybe like this, where I
would do an impromptu session ona panel or I'd be doing an
interview or I'd be doing anearly version of a podcast or
something, and I would be alittle bit more loose, like I'd
be a little bit more not soworried about being perfectly

(29:19):
prepared and sharing thoseexperiences that I had in an
authentic way and sharing youknow, some of the reasons why I
do what I do.
And suddenly people are likewow, you know, you have
something really interesting tosay.
I was like, well, I'm sayingthe same stuff.
So I think, just as humans, werespond to not just the facts

(29:39):
but kind of what went into that,how did you feel about that?
How did you react to that?
What would you have donedifferently?
Like.
Those are all really importantthings and they help us grow and
learn and work better and trusteach other.

Speaker 2 (29:51):
So, talking about feelings and empathy, I think
that's an excellent transitionto another part of the
conversation I wanted to havewith you, which is women in
finance.
So women are notoriously knownfor being a lot better than we
when it comes to beingempathetic, and I think there's
many studies that show that theaverage emotional intelligence

(30:14):
of women is way above ours.
And, yeah, the finance industryhas traditionally been male
dominated, but we've certainlyseen some progress in bringing
more women into leadership roles, and I think you're obviously
an excellent example of that.
But my question is from yourperspective, how far has the

(30:35):
finance industry really come interms of gender diversity and
what progress still needs to bemade?

Speaker 1 (30:42):
Yeah, so I think we're on a journey, like so many
things, but what I would sayfirst of all is the most
important thing is thatdiversity does matter, right?
Diversity in many, many forms,and it can be things like you
know gender or other identitycharacteristics, but it's also
just ways of thinking and youknow ways of operating and

(31:05):
behaviors and emotions and allthose things.
So so we really do take toheart that we want to create an
engaged environment where wehave a diverse set of people who
are working on problems and whocan feel as though they can
bring their whole selves to thatproblem.
Right?
So you want to create anenvironment that's safe and that
enables people to express allof who they are, because all of

(31:27):
that together is what ultimatelywill make us better.
What I would also say is thatpart of the thing that we've
tried to navigate is it's alwaysgot to be meritocracy, right,
like?
We're in a very competitivebusiness, and so we need the
best talent, and we need thebest talent operating at the
highest level.
So this idea of you know justthinking through the lens of

(31:52):
diversity, it always has to begrounded in.
We want the best talent, butwhat you also see in academic
studies, which I'm sure you'refamiliar with as well, is that
sometimes diverse teams actuallydon't feel as comfortable for
people, because folks tend togravitate towards people that
are more like themselves, butthe outcome they deliver is

(32:16):
better because you have thatdiversity of thought.
So there's this kind of tensionthat you sometimes see in the
academic literature, where morehomogeneous teams like their
environment better or they feel,like you know, more comfortable
, but they actually don't do aswell as heterogeneous teams, and

(32:37):
we've seen this in a couple ofdifferent varieties.
There's, you know, studies thatshow that more experienced
people coupled with lessexperienced do better than all
experts.
We've seen, you know, the teamsthat have diversity.
So I think diversity is a topicthat we just need to keep
leaning into because it deliversbetter business outcomes.
And then the last thing I wouldsay is part of what I try to do

(32:58):
is kind of look beyondsomebody's experiences when I do
hiring.
Obviously, experiences areimportant, but if you only look
for people who have a certainkind of experience profile,
you're pulling from the samecandidate pool that everybody
else is pulling from, and ifit's really a war on talent,
part of my job is to find othercandidates that might be able to

(33:19):
do the job as well or better,but broaden my candidate pool.
So we focus more oncompetencies, potential, you
know, some other elements inaddition to experience and we
found that that helps us widenthe candidate pool.

Speaker 2 (33:34):
Yeah, that's a very smart approach, finding also
diamonds in the rough andlooking in places, maybe, where
others are not looking.
And what you said before abouthomogeneous themes also made me
think about confirmation bias,which we see a lot of in markets
.
Right, but you want to beexposed to people with different

(34:00):
ideas and to think about thingsfrom a different angle if you
really want to progress and moveforward.
So you've clearly navigated avery competitive industry and
you made it arguably to one ofthe most senior positions out
there.
But I'm sure, like many of ourlisteners, particularly women in
finance will be looking forpractical insights on how to
advance in their careers.
So I wanted to ask you what aresome of the biggest challenges

(34:21):
you faced as you moved up inyour career as a woman, and how
did you overcome thosechallenges?

Speaker 1 (34:29):
Right.
So sometimes the challenge thatwomen in particular deal with
the most is like know thyselfand don't limit thyself right.
So again, there's a lot ofacademic literature that
suggests that women are lesslikely to raise their hand for

(34:50):
opportunities unless they feelthat they have all of the
capabilities required by the job, whereas men are more likely to
raise their hand even if theyfeel like they have, you know,
half the qualities required forthe job.
So I think women have to besort of self-advocates and be a
little bit more willing to raisetheir hand, and I would say

(35:11):
that's true for men too.
So this is not just a—becausethere are lots of men that I've
worked with throughout my careerwho were also maybe a little
bit less willing to putthemselves out there.
So number one is you know,advocate for yourself, have
confidence in yourself andrecognize that you know part of
the benefit of a stretchassignment is it's a stretch
assignment.
It's going to let you learnsome new skills that you don't

(35:31):
already have or that you haven'talready mastered.
I think the other thing to bejust really blunt is sometimes
you have to recognize you can'thave it all.
It doesn't matter.
You know whether you're a maleor a female, when you want a
senior position.
It's going to requirecommitment, it's going to
require that sacrifices, it'sgoing to require that maybe you

(35:52):
won't be able to go to all thesoccer games or the school plays
or whatever it is.
And I have two children who aregrown now and I'm sure at the
time they would have said youknow at times that I was a
terrible mother because I didn'tshow up for whatever event it
was.
But that's part of the.
You know the contract.
If you will, now you can havegood work-life balance, and I

(36:13):
think you know.
Certainly I would argue thatyou know I have that balance and
that my employees can takeadvantage of that balance.
But it is a consideration andsometimes it's not the right
thing at that time.
And how do you make sure thatyou can stay on the track so
when the time is right, you canreaccelerate?
And then the last thing that Iwould say is that try new things

(36:36):
, don't be afraid to take risks,because, as I mentioned earlier
, my career was a bit morejagged.
It was always in finance, but Idid a variety of different
kinds of things and it took alittle bit of risk taking to say
, yeah, I think I can move frombeing in investment banking to
being in trading, or, geez,maybe I can move from trading

(36:57):
into product or I can move intoyou know, specialized sales or
whatever.
So I think, there again, you'vegot to have that mindset, that
you're willing to experiment andbe intellectually curious and
try new things.

Speaker 2 (37:11):
I love that.
That's a great philosophy, sothat would be tips for maybe the
people that are already in theindustry.
But what can we do to encouragemore women to pursue careers in
asset management, actually tojoin the finance sector?

Speaker 1 (37:28):
I think there are a couple things.
There was a study done this ismany years ago now, so I hope
it's changed a bit but it was astudy where individuals were
asked, like, what careers theyadmired the most.
And finance was very, very low.
And it always surprised mebecause I think about what we do

(37:50):
in finance right, like weempower people to fulfill their
financial ambitions, right, we,you know, really do focus on
investors and the clients.
It's a very client-centricbusiness.
It's a very people-centricbusiness.
So when I think about the womenthat I know they, if you ask
them, you know what kinds ofthings would be attractive to

(38:12):
you they'd say I want to solveproblems for the world, I want
to solve problems for people.
I want to, you know, helppeople be secure and safe and,
you know, have financial successand like that's what we do.
So I think part of it is maybemarketing, like maybe we just
need to do a better job to saythat there are lots of different
kinds of careers you can havein finance and in the wealth

(38:36):
management and asset managementspace in particular.
I feel it's very aligned withwhat a lot of people want to do,
kind of personally as well asprofessionally, and I think the
other thing that sort of Ialways remind people of is that
finance isn't just one thing,like it's not just portfolio
management, right, it'smarketing, it's sales, it's
compliance, it's operations,it's portfolio management, of

(38:58):
course, it's operations, it'sportfolio management, of course.

Speaker 2 (39:12):
So almost no matter what your kind of skills
interests are, you can find someway to be in this industry.
For this episode, I did readthat women leaders bring
different strengths to finance,such as more risk awareness,
more collaboration and morelong-term thinking.
Do you think women bring adifferent leadership approach to
finance and if so, how has thatplayed a role in your career

(39:35):
specifically?

Speaker 1 (39:37):
Yeah, yeah.

(40:03):
So I guess the first thing Iwould say is, while it's
convenient to say that certainkinds of attributes are more in
the masculine style at the timeversus in the feminine style but
I think this idea of empathy isanother one that I want to talk
about here, because that'sanother one that I've worked on
throughout my career is likereally taking a genuine interest
in people and understandingwhere they're coming from and
taking the time to listen andtaking the time to get to know

(40:25):
people as people, and oftentimes, when we're in the heat of the
moment or we're doing the job,it's all about the job, but if
you don't have thoserelationships and people don't
trust you, they might do the job, but they're going to just do
the job right.
And what we really need in thisenvironment is we need people to

(40:46):
be taking care of their ownpart of the situation, but also
thinking more broadly and beingwilling to jump and you know we
use that sort of term like runtowards the fire, run towards
the crisis of term like runtowards the fire, run towards
the crisis, and so I think,leadership that engenders that
trust, because there is a sensethat, like you, really do care

(41:06):
about me and what I'm feelingand how I want to be successful.
That goes a long way in havingpeople show up and do their best
work when those moments requireit.
So, yes, those attributes oftenare associated with more
feminine characteristics, but Ithink all leaders and I've
worked for men and womenthroughout my career and the

(41:29):
best ones of them, the ones thatI responded to the most, were
those that I felt genuinely hadmy interests at heart.

Speaker 2 (41:37):
Yeah, it's true that we have this tendency to
generalize.
Sometimes it's a little bit toosimplistic.
It's true that we have thistendency to generalize.
Sometimes it's a little bit toosimplistic, but I love that
color that you provided.
Thanks for that and for thehonest answers.
So, leaving this topic aside andmaybe now talking about your
job as a CIO in terms of assetallocation, particularly now in

(41:58):
an era of uncertainty, I'd liketo ask you a few questions and
before that, something that Ishould have mentioned maybe
earlier in this conversation isthat one of the reasons why
we're talking today is becausethe CFA Institute kindly made an
introduction, because you and Iare both going to be at the CFA
Life Summit that is going totake place between the 4th till

(42:19):
the 7th of May in Chicago.
It's going to be absolutelyamazing.
There's going to be over 1,200finance professionals talking
about some of the biggest topicsthat shape the industry at the
moment.
Lori, specifically, has a veryinteresting panel discussion
coming up, called NavigatingInvestments amid Market

(42:40):
Meltdowns.
You're going to be talkingabout volatility and how to deal
with current market dynamics.
I will be there, for sure.
I wouldn't miss that foranything in the world, and so,
basically, if you're working inthe industry, if you're a
finance professional and youwant to meet some incredibly
interesting people, make sureyou come to Chicago.
Lori is going to be there, I amgoing to be there and there's

(43:06):
going to be many other people,so check the event online and
make sure to get some tickets.
And, jumping into that assetallocation topic, there's
something that I wanted to askyou about, which is this
equation of managing risk versuschasing returns.
How do you think investorsshould think about balancing
risk management with the needfor returns?
Because I have the feeling thatmore and more, particularly

(43:28):
smaller, investors think justabout quick wins and they don't
think enough about riskmanagement.
Hey there, quick ad break.
Do you work in the financeindustry and have a genuinely
interesting story to share?
I'm always on the hunt forgreat guests who bring raw,
unfiltered insights to the table, or maybe you know someone with
a story worth telling.

(43:49):
Please put us in touch.
You can reach out to medirectly via LinkedIn.
I'd love to hear from you.
And now back to the show.

Speaker 1 (44:02):
Yeah, no.
So I think that this is acritical topic and, from where I
sit, you should always bethinking about the risk that
you're taking on to achievethose returns.
So that doesn't mean youshouldn't chase returns, but do
it eyes wide open.
And we've seen, you know, orI've seen lots of examples
throughout my career of thingsthat sounded too good to be true

(44:23):
and were so putting that risklens on.
And I guess when we work withour clients, there are kind of
three levels at which that riskawareness operates.
So the first is at themulti-asset class level, the
total portfolio level, right?
What's your total risktolerance, or what do you think
that risk tolerance is, and howdo you put all the pieces

(44:43):
together so that you getsomething that approximates that
total risk tolerance and youcan't just look at risk through
the lens of volatility?
That's certainly an importantmeasure and one that we use all
the time, but also draw downrisk, right.
So lots of people forget thatthree and four and five standard
deviation events happen, and sothey focus just on kind of the

(45:05):
you know, the sort of standarddeviation, but they don't
necessarily think about whatthat might mean in a protracted
bear market scenario where youcould literally lose 50% of your
assets or something of thatnature.
So that's the first thing thatwe often do and there are lots
of ways you can manage thatright.
You can certainly manage it bythe proportion of risky assets

(45:25):
you put in the portfolio.
You can add diversifiers, youcan use sometimes tail risk
hedging strategies.
There's lots of things you cando at that level.
Increasingly, I think, peopleare waking up to the idea that
even within the asset classesthere are lots of things you can
do to manage volatility.
So over the last couple ofyears, if you look at the S&P
500, for example, it got highlyconcentrated and so no surprise,

(45:47):
you know, if those high flyingstocks take a bit of a tumble,
it's going to bring the indexdown disproportionately.
So you know we've been talkingto clients about do you look at
things like equal weighted?
Do you look at things that aremaybe not quite so concentrated,
so custom indexes that maybeare a little bit less
concentrated.
Do you look at things thatmight be a little bit out of

(46:08):
favor, where the valuation ismore attractive, so value stocks
, quality stocks, things of thatnature.
So within the asset class beinga little bit more attuned.
But then the third one.
It's a lot more nuanced.
But what sometimes clientsdon't realize is that their
particular situation carriesoutsized risk factors, and the

(46:32):
really obvious example of thisis a defined benefit plan, where
it's the assets and theliabilities, and the liabilities
change based on interest rates,change based on interest rates,
and so if the interest ratesfall, the liabilities go up
because the price relationshipis inverse to the yield right.

(46:53):
So you could have a very strongmarket if you're a defined
benefit plan manager andinterest rates fall and this was
an issue we ran into a fewyears ago when rates were at
zero and suddenly yourliabilities have ballooned and
so your funded ratio is terrible.
So this idea of asset liabilitymatching, which is different

(47:14):
from risk in terms of volatilityor drawdown, that's the most
important risk to them.
And there are lots of otherexamples that I could give you
where the specific circumstancesof the client need to be
factored in, because they willcapture other kinds of risks
that need to be managed thataren't obvious through the

(47:35):
traditional metrics.

Speaker 2 (47:37):
Another question that I wanted to pick up your brains
, given that we only have a fewmore minutes left, is the topic
of liquidity.
I'm a fixed income person, andwe tend to say that liquidity is
one of those things no onetalks about, until it becomes
literally the only thing thateveryone talks about.
How should investors thinkabout liquidity when designing a

(47:59):
portfolio?

Speaker 1 (48:01):
Yeah, no, that's actually a great segue because,
if I just pick up on the themethat I was just talking about,
liquidity is one of those risksthat oftentimes people give
short shrift to, right.
So we've seen market meltdownswhere suddenly investors sold
what they could.
So it was sort ofcounterintuitive that you'd say,
well geez, the crisis washappening in emerging markets,

(48:24):
but all the outflows are comingfrom large cap US equity,
because, guess what?
That's what people could sellat a price they wanted to sell
it at, right.
So I think this vector of,especially as I add more exotic,
stylized, illiquid alternativesyou know, pick your favorite
name as I add those things tothe portfolio you have to always

(48:45):
be focused on, okay.
So what does that do to myliquidity profile?
Oh, by the way, if you've got along time horizon, if you're a
perpetual investor, fantastic,like you might not even care
about that, but the other sideof it is, maybe you're a
perpetual investor, but youstill could have capital calls
for some reason, right?
You're a pension plan, you'vegot to make distributions,
you're an institutionalendowment and guess what?

(49:09):
You just got called for morecapital into another private
equity commitment that you madetwo years ago, right?
So, understanding what yourliquidity buffers might be is
another critically importantpart of investing.

Speaker 2 (49:21):
That's a great answer .
Thanks for that.
And to wrap up this part of theconversation, maybe looking at
the future.
I mean there's many structuralshifts happening at the moment
in the asset management industry.
You have demographics, monetarypolicy the next big shift in
asset allocation and the financeindustry really in general over

(49:51):
the next few years.

Speaker 1 (49:53):
Yeah, look, I think it's going to be a really let's
call it exciting I'll use theword exciting time.
I mean, there are some of thethemes we've already talked
about, right, which is thiscustomization, increased
customization at scale,democratization of investing,
enabled by, you know, blockchainand or other technologies that

(50:13):
will bring more and more exoticparts of the market to the hands
of investors.
You know, rise of ETFs as adelivery vehicle.
I mean, that day has arrivedand I think that will continue
to be a big theme.
But I guess the other thingthat you know we sort of play
around with and I'll come backto the blockchain there's an

(50:34):
opportunity there for that to bereally game changing, and I'll
sort of backtrack a bit when Iwas early in my career was sort
of the dawn of the asset-backedsecurities market, right?
So before that, you didn'treally have securitization of,
you know, auto receivables orother kinds of instruments, and

(50:55):
suddenly a whole asset class wasborn, right?
Blockchain, in theory, givesyou the ability to securitize
anything.
Anything that has a value or acash flow can be securitized,
and we've seen some of this interms of, like you know, labels
selling off their record assetsor artists selling off their

(51:15):
assets.
So it's a kind of intellectualproperty.
But take that to an extremeright, anything that you could
kind of value in theory couldbecome an asset class.
So I think over the next decadeor so it'll be interesting to
see if some new things spawnthat didn't even exist, you know
, a decade ago, that nowsuddenly are investable and play
a role in a portfolio.
And then the last thing that Iwould say, from a kind of what's

(51:37):
on the horizon sort of you knowkind of vantage point, is that
I do think that this marriage oftechnology and person right so
that, whether it's through AI orother things, it will empower
investors in ways that perhapsthey've not been empowered
before.
And so the role of people likemyself and asset managers is

(52:00):
going to change a lot, like it'sgoing to have to be a lot more
engaged, understanding whatyou're trying to do, being
advisory and the how we do it.
Not that it won't be important,it'll still be important but
it'll be that sort of cold faceof let's talk about what you're
really trying to accomplish andhow you're going to go about
that.

(52:20):
That will be critical and thatwill change the nature of our
business.

Speaker 2 (52:24):
And I think that's an excellent way of wrapping the
conversation.
Use technology to empoweryourself, your organization and
everyone around you to makebetter decisions overall and
become better professionals.
Laurie, it's been absolutelyamazing to have you on the show.
Thank you so much for sharingall those insights my pleasure.

(52:46):
I'm really looking forward tomeet you on the show.
Thank you so much for sharingall those insights.
I'm really looking forward tomeet you in Chicago and I hope
the next 41 years in the financeindustry are as successful as
the previous 41 that you hadVery well done.
Thank you, the Blonde Dollar iswritten, produced, hosted and
edited by me, ignacio Ramirez.
Everything you hear concept,script, sound, design and

(53:08):
production comes straight frommy desk and, occasionally, my
kitchen table.
Thank you so much for listeningand join me in the next episode
of the Blunt Dollar for moreraw, honest finance
conversations.

All Episodes

Episode Transcript

Popular Podcasts

Are You A Charlotte?

Dateline NBC

Stuff You Should Know

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Lori Heinel: What It’s Really Like to Manage $4 Trillion

Episode Transcript

Popular Podcasts

.css-r6mb8g{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:1;overflow:hidden;}Are You A Charlotte?

Dateline NBC

Stuff You Should Know

All Episodes

Lori Heinel: What It’s Really Like to Manage $4 Trillion

Are You A Charlotte?