Rosemont Roundtable: Exploring the Business of Investment Management

In this episode of the Global Investment Leaders podcast, Rosemont CEO Chas Burkhart is joined by Kristen Bauer, CEO of Laird Norton Wealth Management, an independent Seattle-based wealth management firm. Founded in 1967 as a single-family office, Laird Norton now manages approximately $15 billion in assets* for nearly 1,500 prominent families, individuals, foundations and endowments.

A CPA with more than 20 years of experience in holistic wealth management, Kristen originally started her career as a trusted advisor and CFO for George Russell and his family. Prior to joining Laird Norton, she went on to become president at Threshold Group, helping transition that single-family office into a multi-client office, developing and leading the national family office practice and ultimately merging the company into Tiedemann Advisors.

During their conversation, Bauer and Burkhart discuss:

• Bauer’s tenure as CEO of Laird Norton, which started just weeks before the Covid-19 pandemic began making headlines, and the workplace changes she has navigated in the years since
• Laird Norton’s unique position as a registered investment advisor and a trust company and how that structure better enables the firm to partner with clients for multiple generations
• How the client experience is the first consideration when it comes to inorganic growth, with employees, clients and the community as key stakeholders in M&A decision making
• Laird Norton’s approach to ESG and impact – both on behalf of the clients they serve and within the four walls of their company 
• The ownership of Laird Norton and the recent introduction of employee equity to ensure the sustainability of the firm for years to come 

Regarding the future of Laird Norton, Bauer tells Burkhart that she is focused on the long-term. “We’re feeling like we are in the J-curve of an investment and we are really thinking about what the next 10 years look like – not what the next year looks like,” Bauer says “When you look at it from that approach, decisions become a little bit easier in the organization.”

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* Approximate AUM for Laird Norton Wealth Management at time of recording

In this episode of the Global Investment Leaders podcast, Rosemont CEO Chas Burkhart is joined by Warren Stoddart, the President and Chief Executive Officer of Connor, Clark & Lunn Financial Group – one of the largest employee-owned firms in Canada. Warren has held this position for over 20 years, until 2021 as Co-Chief Executive Officer with Michael Freund, with whom he shared overall responsibility for the growth and development of the firm and its ongoing management.

Throughout their conversation, Stoddart and Burkhart discuss:

• How Connor, Clark & Lunn evolved to a $100 billion* global firm with multiple affiliates and a worldwide client base
• The affiliates that comprise Connor, Clark & Lunn, with revenue streams coming from public markets investment products, private markets, high net worth clients and returns on investments the firm makes as principal on its own balance sheet
• How Stoddart views the M&A environment and the firm’s criteria by which they judge potential acquisitions, starting with partnership potential and alignment first, before evaluating product and geography considerations
• The investment strategies Stoddart is closely watching, specifically including active specialty strategies such as international small cap and frontier markets, as investors become disenchanted with large-cap developed market public equities and fixed income
• Connor, Clark & Lunn’s ownership structure and succession planning approach that is built to ensure the success of future firm leadership as the business becomes more complex

According to Stoddart, as the firm grows, its people remain his primary focus – a key concept that has shaped the firm from the beginning. “The decision was made to organize the business around the idea that we would be successful if we got as good as we could at attracting and retaining talented individuals. Since that time, the mission of the business has been to provide for the self-actualization of the people who work within it. And we’re confident that if we do that, we’ll have a successful enterprise.”

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* Approximate AUM for Connor, Clark & Lunn Financial Group at time of recording 

In this episode of the Global Investment Leaders podcast, Rosemont CEO Chas Burkhart is joined by Wendell Mackey, CFA, who is a founder, co-CEO and CIO at Channing Capital Management, a $4B* institutional asset management firm founded in 2003 and known for its flagship small-cap strategy.

Having long been a capacity-constrained U.S. equities manager, Channing Capital launched Channing Global in 2017 to advance its focus on discovering attractively valued, high-quality companies on a worldwide basis. With over 24 years of investment experience, Mackey attributes Channing’s success in part to “being who we say we are and having the proof to back it up – proof in the numbers, proof in the patterns and characteristics, proof in the messaging – and running the business right.” 

Throughout their conversation, Burkhart and Mackey discuss:

·      Mackey’s background and how he came to found Channing

·      Channing’s unique perspective as a long-tenured and successful minority-owned and led asset management firm

·      The importance of building strong relationships, particularly for the next generation of up-and-coming investment managers

·      The challenges and considerations for emerging investment managers and where to turn for advice on starting, growing and operating a sustainable investment firm 

Thinking about Channing’s future, there are three key components Mackey keeps top of mind: Serving clients well and delivering long-term performance, continually investing in technology and creating a dynamic and successful team. “You don’t ever want to get too comfortable that your strategy is bulletproof,” Mackey cautions. “You want to take an honest look to make sure you are who you say you are or uncover where you need to make some modifications to stay competitive.”

All episodes of the Global Investment Leaders podcast are available on Apple Podcasts, Spotify, Google Podcasts and more. Receive the episodes as soon as they premiere by subscribing today.

In this episode of the Global Investment Leaders podcast, Rosemont CEO Chas Burkhart is joined by Larry Kochard, Chief Investment Officer at Makena Capital Management, a $20 billion* OCIO serving endowments, foundations, family offices and institutions. During their conversation, Kochard discusses his professional background, including roles as CEO and CIO of University of Virginia Investment Management Company, CIO at Georgetown University, and Managing Director of Equity and Hedge Fund Investments for the Virginia Retirement System.  With a PhD in economics, Kochard also taught at the University of Virginia after spending the early part of his career in capital markets at Goldman Sachs and corporate finance at Fannie Mae and DuPont.

Throughout their conversation, Kochard and Burkhart discuss:

• What differentiates Makena from other OCIO firms
• The differences and similarities between leading endowments vs. leading an OCIO
• Kochard’s six core investing principles, from being a true long-term investor, to finding your edge, to knowing “when to get off the bus” and walk away from an investment
• The importance of balanced diversification, the risk of over-diversifying the source of alpha and how Kochard views the role of public and private assets in a portfolio
• The competitive landscape of the OCIO industry and Kochard’s insights on the up-and-coming generation of investment leaders

All episodes of the Global Investment Leaders podcast are available on Apple Podcasts, Spotify, Google Podcasts and more. Receive the episodes as soon as they premiere by subscribing today.

*AUM at time of recording 

Ally McDonald, CEO of Boston Common Asset Management, joined Rosemont CEO Chas Burkhart on the latest edition of the Global Investment Leaders podcast. From her perspective leading the $5 billion* employee-owned, ESG-focused, active global equities manager, McDonald discusses how a commitment to people, purpose and the planet can benefit society and shareholders alike.

With extensive experience in traditional investment settings, McDonald has become an accomplished leader in the ESG investing space. Starting her career in financial services in marketing and sales, McDonald moved into leadership roles, which led to an opportunity to focus on philanthropy and investing. Proving to be a pivotal experience, it was through her leadership role at Fidelity Charitable that McDonald fully embraced her passion for “doing well by doing good” and honed her skills for creating efficiencies and growing businesses with impact.

“I decided that the intersection of investing and social good is where I was going to spend the rest of my career,” McDonald tells Burkhart. “I made a personal commitment to use my skills, experiences and anything I can bring to the table to help deploy more capital toward social good.”

Throughout the conversation, McDonald shares her insights on:

• The growth Boston Common has experienced as interest in ESG has grown, demand for authentic ESG managers has risen, and endowments and foundations have placed increased emphasis on aligning their work with their investments
• How Boston Common weaves ESG factors into its investment process and its company DNA
• Leading the firm as a woman and how having a truly diverse workforce creates a competitive advantage
• How everyone can contribute to increasing female presence in the leadership pipeline in the male-dominated investment industry
• The importance of being authentic in the ESG and impact world as interest increases and green-washing is becoming ever-more prevalent 
• The ownership decision that allowed Boston Common to remain both a majority employee-owned and female-owned firm

All episodes of the Global Investment Leaders podcast are available on Apple Podcasts, Spotify, Google Podcasts and more. Receive the episodes as soon as they premiere by subscribing today.

*AUA at time of episode release

This episode of the Global Investment Leaders podcast features Mike Manning, CFA, CAIA, the managing partner at NEPC, a full-service global investment consulting firm. Manning shares his insights with Rosemont CEO Chas Burkhart on the firm’s evolution since its founding in 1986 and its positioning for the future.

“You do right by the clients, you set up the company in a way that you can be as independent as you can from conflicts of interests, and you think broadly about clients’ investment portfolios. If you do that right, your business will grow,” Manning shares. Manning also discusses the firm’s focus on its people, from attracting and retaining talent to preserving the culture of employee ownership through the sustainable and fluid transfer of equity to the next generation of leaders.

Throughout the conversation, Burkhart and Manning discuss how NEPC runs its business in the same way it advises its clients to operate. This includes being:

• Disciplined about how much the firm will extend itself 
• Diversified across all segments
• Dynamic, being nimble and opportunistic whether it’s adding new talent, services or client segments

One such example of being dynamic was NEPC’s decision to build a team to serve the private wealth market, which was historically underserved by independent, institutionally minded consulting firms. Manning credits NEPC’s ownership structure, without quarterly earnings or outside owners to consider, with the ability to make that investment over many years.

Finally, Manning and Burkhart discuss the current investment landscape and the themes that Manning and his firm are following for their clients. These include:

• The forward-looking returns in the public markets, which are unlikely to be sufficient to help clients meet their objectives
• Opportunities in private markets and illiquid investments, particularly in private debt, due to its attractive risk profile and cash flow
• Investing to compensate for rising inflation

All episodes of the Global Investment Leaders podcast are available on Apple Podcasts, Spotify, Google Podcasts and more. Receive the episodes as soon as they premiere by subscribing today.

In this special edition episode of the Global Investment Leaders podcast, Gávea Investimentos Founder Arminio Fraga brings his unique background in academia, public policy and investment management for a discussion about the global economy and the opportunities and challenges that exist for investors. During the episode, Fraga shares insights from his extensive background before founding Gávea, which includes roles as President of the Central Bank of Brazil, Managing Director of Soros Fund Management and positions with Salomon Brothers and Garantia Investment Bank. Fraga has also taught as an adjunct professor at the School of International Affairs at Columbia University and the Wharton School, among others.

From the perspective of Gávea, a leading independent alternative asset management firm focused on emerging markets, Fraga shares his thoughts on the geopolitical environment challenging investors across the globe. While Fraga jokes that economists are paid to worry, the concerns topping his list include 40 years of low declining interest rates that have risen materially, very high inflation in the US and Europe and massive supply-side problems in Russia, Ukraine and China. Further, Fraga notes that the increasing rise in authoritarian leadership globally underscores the importance of understanding that when investing in emerging markets, the norms and regulations under which we operate in the western world only apply to approximately one-third of the globe.

However, Fraga finds that many reasons remain to be optimistic. For example, in emerging markets like Brazil, in which Gávea specializes, people every day are taking the opportunity to learn, improve and build companies that serve a need, which in turn creates investment opportunities. For Gávea, this means identifying businesses led by outstanding leaders who are looking for support in the areas of strategy, finance, risk, people and value creation. One example is ReGreen, a company that aims to restore 1 million hectares of Atlantic Forest and Amazon rainforest in Brazil, in which Gávea invested. “Our goals are substantial, but I don’t think I’ve ever been as excited about an investment,” Fraga shares, noting the tailwinds of regulation and a world increasingly focused on ESG.

All episodes of the Global Investment Leaders podcast are available on Apple Podcasts, Spotify, Google Podcasts and more. Receive the episodes as soon as they premiere by subscribing today.

Merger and acquisition activity in the investment management industry has sustained a torrid pace over the last few years. Buyers and sellers are ubiquitous, but rationale and “fit” are diverse and far ranging. Bruce Cameron, co-founder of Berkshire Global Advisors – the first independent investment bank specializing in the investment management and securities industries – joined Rosemont CEO Chas Burkhart on the Global Investment Leaders podcast. During this episode, Cameron shares his insights on a wide range of topics on the M&A environment and Berkshire’s evolution and brand.  

During their conversation, Cameron and Burkhart discuss:

· The driving forces behind the M&A euphoria that accelerated during the pandemic and has resulted in a record number of deals, including the inflow of capital, soaring valuations and buyer and seller perspectives

· The particular terms, criteria or structures used by firms that are winning certain transactions and considerations beyond price

· How investing through downturns has curbed the appetite for too much leverage and too robust projections among more experienced investors

· Investment banking compensation and transaction outcomes: a view on what constitutes “success” and how bankers are paid

· The importance of building and maintaining long-term relationships with clients and how Berkshire seeks to evaluate its clients’ needs and advise them long before a transaction is likely to be consummated  

Toward the end of their conversation, which was recorded in December 2021 before geopolitical conflict and record-breaking inflation dominated our headlines, Cameron and Burkhart discuss the precarious environment of the marketplace and how a correction may impact the M&A environment in the months and years ahead.

 
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For some publicly traded investment firms, tension can exist among stakeholders given the potentially competing interests of shareholders, employees and clients. In the latest episode of the Global Investment Leaders podcast, Diamond Hill CEO Heather Brilliant, CFA, joins Rosemont CEO Chas Burkhart to discuss how her firm seeks to align these interests. According to Brilliant, putting clients’ interests first is the key to Diamond Hill’s long-term success for its shareholders, with its employees investing right alongside clients.

“We do think of ourselves as an aligned boutique, aligned with our clients but also through a set of principles about investing that we believe to be true,” says Brilliant. These principles include actively managed, concentrated portfolios, a long-term perspective, a capacity mindset, and valuation discipline. According to Brilliant, these fundamental principles carry through to everything they do at Diamond Hill, and the firm seeks to ensure every investment team is committed to upholding those principles.

During their conversation, Brilliant and Burkhart also explore how differing perspectives can enhance a team’s effectiveness and culture. Specifically, they discuss:

• Brilliant’s background and her insights on the global investment community following her leadership roles at Australia’s First State Investments and her role as CEO at Morningstar Australasia
• The differences between the investment industry culture in Australia and the U.S., particularly around collaboration and sharing of best practices
• The opportunities and challenges that come with being a female CEO in a traditionally male-dominated industry
• How she believes cognitively diverse teams are better equipped to solve problems and how the industry would benefit from attracting more women and people of color
• How the next generation will continue to define the industry through a lens of purpose

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Among the large philosophical questions facing our industry, the view of investment management as a business versus the view of investment management as a profession, much like law or medicine, is paramount. This viewpoint determines how strategic decisions are made, from growth and M&A to allocation of capital. And at the core, it determines how firms act as stewards of the capital they manage. 

John Taft, Vice Chairman of Baird, joined Rosemont CEO Chas Burkhart on the newest episode of the Global Investment Leaders podcast to discuss how he views stewardship of capital and some industry trends that have the potential to serve as headwinds or tailwinds to society’s greater good and clients’ benefit.

Chief among these trends is the flurry of M&A activity over the last several years. On one hand, thoughtful acquisitions and inorganic growth have the potential to benefit clients, as is often the case when a team joins a larger organization that has broader access to investments, better systems, or a superior service model. On the other hand, a returns-driven approach to M&A is often the objective, which can result in short-term profitability taking precedence over long-term benefits for clients.

“The primary focus needs to be on what’s best for the client. Every time we’ve gotten away from that and focused on what’s good for management or shareholders, we have strayed from the core principle of stewardship and have gotten ourselves and society in trouble,” says Taft.

Another emerging trend that Taft believes is here to stay is the alignment of values with investment strategies. While Taft cites the lack of standardized measurement as a hurdle, he believes the increasing interest in impact and ESG factors will lead to greater good for both investors and society in general.