How did you begin your career working in the financial sector?
I feel very fortunate in that I’ve had a number of different careers within finance and my experience in this area is quite diverse.
I started out on a capital markets trading floor, working for a couple of large American banks, where I initially traded ERM currency options. I then migrated into a sales role running fixed income and currency derivatives sales teams. I did that for Bankers Trust, which was bought by Deutsche Bank.
The pace was fast and furious. I ended up running a sales team that built balance sheet hedging solutions for corporate treasuries across Europe, and subsequently I moved on to do that at Morgan Stanley.
After that, I got married and took some time out. I had three kids but got a bit bored dealing with bottles and nappies, and thought it might be nice to be working again.
How did the job with Hermes come about?
I was living in Monaco at this time, because my husband was working in private equity.
From 2002 to 2008, I was raising assets for ex-banking contacts as a third-party solution. It was hard after 2008 to raise new assets for small independent investment managers, as all the moneywas gravitating towards the much larger companies.
I got a call about the role at Hermes from a headhunter who knows me quite well. Hermes was a name I knew but I didn’t know what it was. I thought it was just a pension fund. Hermes Investment Management is owned by the BT pension scheme.
I decided to go in and have a look. One of the main reasons I joined was that, post-financial crash, the idea of being owned by a pension fund and being able to create a story around that was very attractive.
What struck me was that, on the surface, this looked like a giant asset management firm with £26bn under management, but when you looked under the bonnet it was tiny. It looked like a start-up because there was less than £2bn ($2.8bn, €2.5bn) of third-party assets under management.
There were some great performance track records, including a real-estate business that formed the bulk of the third-party assets. This offered a lot of scope to create business development opportunities.
There seemed to be plenty of quickly monetisable stuff, with great longer-term performance track records on the liquid side, and some interesting private-market capability with all the right client alignment. But that needed a clever product strategy to create access to these hard-to-reach asset classes, in the right format and at the right price.
The financials of the business were not great. With £26bn under management, you’d expect it would be quite hard to lose money. In 2006, when it was easier to raise assets, the firm went on a bit of a buying spree, but it wasn’t terribly focused.
After the financial crash there was a lot happening and you had to be much more focused around corporate strategy.
We knew we had to take some costs out of the business, streamline the strategy and grow sales quickly. We had work to do in terms of tidying up the fund range, mostly in specialist regional equity but without the distribution capability.
We had a business development function that had been built very much with an institutional DNA in mind. It was clear there was a whole market out there, which bought this amazing stuff we did, but that we just weren’t talking to.
The first imperative was to bridge that gap and build a UK and European wholesale business, because we could convert that most quickly.
To me this seemed like kid-in-the-candy-store territory, and a great opportunity. I knew I just had to find the right team and we went about that quite aggressively. I was probably interviewing 30 people a week at the beginning.
I had to get the right story together for the vision of what Hermes could be. The perception was that it was a pension fund/spun-out asset manager that had been trying for a while to reinvent itself as a third-party manager, and hadn’t been terribly successful at getting that right.
We created a new institutional story to take to the wholesale market, and we quickly raised assets in the UK wholesale market and Europe.
We had to top-slice the market. It was all about the largest multi-manager allocators, the bank distribution platforms and some of the other platforms. We kept on hiring, and the board began to have confidence that we were going to be able to make this work.
We were also cutting costs. During 2014, we took the best part £30m of costs out of the business and streamlined corporate strategy on the other side.
As part of our strategy to sort out the legacy business, we closed the global equities team in Boston and the commodities business – due to a shift in investor attitudes – and exited inflation-linked bonds.
Third-party revenues have since risen from 18% of the Hermes’ total, to 55%, with 45% in the BT Pension Scheme (BTPS). In terms of the company’s £23bn in total assets under management it is 40% third party and 60% BTPS.
