It’s a busy Friday soon after midday, and Robert ‘Rob’ Gardner pops up on screen. It doesn’t take long to establish that this is going to be a high energy discussion. Entrepreneur, financial activist, children’s book author, and investment industry maven – the discussion could have gone in any number of directions, as it did, but it started off with his role as a senior officer at St. James’s Place Wealth Management, and the CEO of its unit trust fund board.
Here are some excerpts:
On Assessment of Value (AoV), two years in:
“I welcome the AoV process in the same way I welcome the SMCR (Senior Manager & Certification) regime. Yes, it is an obligation, but take a step back, and it is sensible, forcing us to document and evidence, for instance, our purpose. You’ll notice (on LinkedIn) I talk about helping clients ‘achieve financial well-being in a world worth living in’; it is a cultural thing, a behavioral thing that we’re trying to embed in our team so that everything that we’re doing is driving at that.”
On the asset management industry moving from just being ‘regulatory compliant’, to focusing on achieving higher standards of investment governance:
“Being compliant and meeting the regulations is filling out a report. Governance, at SJP, for me is: What are we doing? Are we doing the right thing? And then how do we make sure that we play that back (to our clients)?
Take the example of going into a theme park with young kids, and you’ve got a sign saying, ‘Are you tall enough to go on this ride?’ There’s a very clear, ‘for this ride you have to be 90 centimeters tall, a meter tall, one meter 10’. If you can’t, you’re not getting on, and that’s meeting the rules and being compliant. After that, everything above is about judgement, about governance.
For us, at SJP, governance is, first and foremost about challenging ourselves to deliver value, today and into the future, and ask: What are the risks coming down the pipeline? Not just in one year, three or five years, if I’m investing your money for a 100-year life. How are we thinking about those issues? And here I am specifically talking about ESG issues. How do we implement ESG? How do we evidence that we’re doing it well, and that we’re not greenwashing? And then how do we continue to improve on that?”
On the primacy of the ACD/unit trust fund board, the role of the directors, and the quantum of work involved around AoV, and especially since the implementation of the Asset Management Market Study in 2019:
“Yes, it is true that about three years ago, the functioning of the unit trust board at SJP, probably like many others, was very much bottom-up, regulatory and compliance driven.
“But the KPIs (key performance indicators) have improved significantly over the last three years: the composition of the board (with the inclusion of independent directors, led by an iNED chair), the number of board meetings (as well as engagement outside of board meetings), and the quality of discussion.
“We now have a dedicated team (for AoV), and work has already started on next year, and beyond that already.”
On money as a ‘force for good’:
“Financial well-being is helping clients plan grow and protect their wealth. Getting them to invest, getting them to take risk, understanding that the biggest risk is not taking risk, otherwise their money gets inflated away.
“Money can be a force for good, especially the way we think about it at the engagement end of the spectrum of ESG (Environmental, Social & Governance) factors, and that one can use money to influence the behaviors of companies to be better. And crucially, we need to demonstrate (to our clients) that we’re having that additional impact, and not just moving capital from A to B.”
On positive outcomes for end-investors, and asset management in the UK serving a greater good:
“For those who have read Simon Sinek’s ‘The Infinite Game’ will know the asset management industry is not playing the infinite game. Take for instance, the levels of indebtedness – they’ve never been higher in the UK. Also, 50% of all mental health issues in the UK are to do with like some kind of financial indebtedness.
“I like to separate what I call financial resilience from financial well-being. So for me, financial resilience, and it something actually has just happened to me: I got a puncture in my car tyre. I was ticked off, but I could easily afford to get it fixed. But for many people, they don’t have that much money left in their monthly budget for unexpected things. So financial resilience is you are putting yourself in a position where you can take what I call ‘bumps in the road’.
“The flip side is financial well-being, and we know that people are so far off track on having enough pensions, savings for retirement, where the average man in the UK will run out of money 10 years before they die, and twelve-and-a-half years for the average woman. I don’t think the investment industry has figured out what its role is in society. It knows what it does at the macro level and a micro level, but at a meta level?
“Of course, there are a handful really good firms who are moving in in the right direction. But until we get everyone moving in that right direction, we’re not going to change it. How is that 21 years on, the number of black men and women who work in the industry is basically not moved? Not moved, until the establishment of 10,000 Black Interns. Why does the investment industry have to worry about this? Why is it responsible for savings? That’s the bank’s job? Why is it responsible for financial education?
“I think we all have a responsibility, and it is within all of our collective interest. That’s the point here, it’s a win-win, to have an entire nation of well-informed people who are confident and making decisions about money: Whether they should buy something or not; whether they should use a credit card or not; is this a fraud or not? By the way, having too much money in your bank accounts is also a poor decision.
“So, as you can see, I have a lot to say about this!”
Resources and links:
The SJP AoV Report
1000 Black Interns
Director of Investments at St James’s Place Wealth Management
School: QEH, Bristol
Your first board role (exec or non-exec): Redington
Number of current board roles (if appropriate): 4
Current car: Tesla
Favourite book: How will I measure my life?
Favourite film: Inception
Music choice: Kygo
Top gadget: iPod
Your preferred charity, or equivalent: RedSTART
Your next holiday: Skiing