Hello and welcome to Personally Invested. I’m your host, Dave Richardson. Today I sit down with Damon Williams, the Chief Executive Officer of RBC Global Asset Management. Today’s discussion is going to be a little bit of a change of pace from previous episodes of the podcast, where we focused on investment managers and how these individual investment managers manage their individual portfolios.
Today we are going to focus more on leadership and focus on how to build a world-class investment manager. Damon has a really interesting background, and he brings both a different style of leadership and, I think, a really interesting style of leadership – particularly an incredible passion for building a strong organization, a diverse organization, and an organization that brings value to investment clients. I think you’re really going to enjoy the conversation.
So, Damon, welcome to Personally Invested.
Thanks a lot, Dave.
Great to finally have you on.
It’s great to be here.
One thing that we always like to do when we start with a new guest is to find out how they got to where they are. I understand that you’ve had a fairly interesting career path. How did you get interested? When did you know that you wanted to be the head of a global asset management firm?
Gosh, that’s an interesting question. I didn’t even know that asset management existed as an industry until I was about halfway through university. It certainly wasn’t something I aspired to as a child. My father was an engineer and my mother was a chemistry teacher, so I was headed hard down the science path.
When it came time to actually select a university program, I had become disenchanted with the idea of engineering. A friend of mine – who spent a lot of time in the guidance office in high school – said, “You should do this: an actuary. It involves math and they make lots of money.” That’s about all I knew, and so I went down that path.
As it turns out, I enjoyed math and I was good at it. The actuarial science background, which is mostly finance and statistics, was pretty good training for an eventual transition into the asset management business. For me, the shift to asset management happened when I finished my actuarial degree. While working in the pension field, it quickly became obvious to me that I was much more interested in the asset side of pensions than the liabilities.
Getting into that, I wrote my CFA and started doing investment consulting. I then went from investment consulting to actual practitioning in asset management on the institutional side. Eventually, I had the opportunity to take over institutional business for GAM in Canada, first with PH&N. When PH&N became a part of GAM, I also took over U.S. and international. When John Montalbano retired, I took over first as co-CEO, and then as CEO for GAM.
My whole career path has been really driven by a single principle: keeping my eyes on what I really like to do. What are the things that drive me? What gets me excited about getting out of bed every morning? And then I just try to lean more in that direction.
For example, I knew I was interested in investments, so I leaned in that direction. Then I learned I was quite interested in business strategy, as well as working with investments. So, when I had opportunities to get involved in business strategy, both in consulting and asset management, I leaned more in that direction. I also found people management endlessly fascinating. When you get it right, it’s tremendously rewarding. And so, again, I looked for opportunities to do more of that.
I continue to look for more ways to challenge myself. I have always found that when the learning curve is steep, and I feel like I’m being challenged, that’s when I’ve been the most excited about the role. There’s been no shortage on this path of opportunities to be challenged, learn, grow, and keep on going.
Were you always good at math?
I don’t know if it’s genetic or if it’s learned, but math and analytical thinking were a big part of our household growing up. So, I may have had some nurture advantages and I may have had some nature advantages too. But it’s always been something that has come fairly naturally to me.
I’ve got a daughter who, for whatever reason, is just naturally exceptional at math. You see how it drives the decision-making. It comes into your career; you love that core component, and it opens up so many interesting doors for you. And then you were able to make the right choices – or rather, I’m assuming you feel you made the right choices along the way?
I feel tremendously fortunate to have had the career opportunities that I’ve had. I think about where I am now and about having the opportunity to lead a team of people who are running one of the foremost asset management firms in the world, let alone in Canada. The skill, talent and engagement of the staff around the organization are incredible to see. The opportunity to be part of that and to lead that overall business has been… I kick myself every day as far as how fortunate I feel to be in this role.
So, what was your first role when you joined Philips, Hager & North? What did you learn from your first experience in the investment management business?
I joined Philips, Hager & North as an institutional fixed income portfolio manager. Prior to that, I was running Aon’s investment consulting business, which was practising globally. So, I was consulting to a number of institutional clients on how they should invest their money. When I moved to PH&N as an institutional fixed income portfolio manager, rather than consulting with a client on what they should do with their money, we were actually implementing for that client. So, I was dealing with the same clients – but now we were actually representing the asset manager manufacturing the portfolios.
Anyone who’s gone from consulting to execution knows there are a few things you realize after you’ve been doing the execution of portfolio construction for a while. You think, “Wow, I used to advise clients to do that?” If I was able to do that again, I would go back and give them different advice.
But it wasn’t too bad for the most part. So I was working with institutional clients, specializing in fixed income portfolios and then from there, I went on to lead the institutional client business for PH&N. That was just prior to the acquisition of PH&N.
For anyone who has worked in the Canadian investment space, Philips, Hager & North is an iconic name. What do you think made Philips, Hager & North such a special place from your perspective?
I think Philips, Hager & North has a lot of elements that made it special, but I think all of the organizations that have created what RBC GAM is today have elements of that. Every location across GAM’s offices have slightly different flavours to them, but they are all a blend of the successful parts of the legacy organizations that led to what we are today.
You know, I think about this. There is a huge amount of commonality. It is sort of highly collegial internally, but competitive externally. Curious, bright people who are engaged, and are seeking to find new ways to do things better for our clients. There’s this obsessive drive to do more for our clients that I think pervades the entire organization. Those commonalities are really why GAM has succeeded the way it has. Those pieces that originally started GAM fit so well together because there were so many similarities. Looking at PH&N, someone who didn’t come up through that organization might think, “Wow, that’s really special!” But I can assure you, a lot of people who came up through PH&N look at RBC Asset Management and BlueBay and think, “Wow, there’s something special in those organizations too!” And it’s the complementary aspects of those special characteristics that led to a stronger firm all over.
So at Philips, Hager & North, you’re in the institutional business. What’s the next role?
From there I went from institutional, client facing, to having the privilege to lead the institutional team. I’d say that happened shortly before the acquisition of Philips, Hager & North in 2008. When PH&N was acquired by RBC , John Montalbano became the CEO of that combined asset company. I succeeded him as president of PH&N, but was also a part of the executive committee that we had put together to represent the newly-formed GAM at that time. So, my role went from being predominantly working with a book of clients, to one that was about 50% client work and 50% management business strategy. And then from there, over the next few years, I took over responsibility for the U.S. business and then the international business. My penultimate seat prior to taking on the co-CEO role was head of global institutional for GAM.
So, that’s your first experience leading people, and you’ve talked about how you loved mathematics and the learning. We’ll dig a little deeper on that in a second, but you also said you really enjoyed leadership, once you got a taste of it, and working with teams of people… What do you recall about your first experience leading a group of people?
Well, maybe I’ll preface it by saying that everything I learned about leading people I learned by screwing up the first time. People, I find, are endlessly complex. And trying to invest time and understanding their perspectives, their views, I find, is very time-consuming, but it’s immensely rewarding. Because if you can really understand what drives your team, what motivates them, then you can help them. You can create an environment that helps get the most out of the talent you’ve got. That’s the most fascinating part.
Now, I had had some experience doing that at my prior role at Aon because I had a business leadership responsibility there. So, you know, I learned some of my lessons there, although certainly not all of them. And I continue to learn lessons about this every day. But I find that’s the really interesting part. The part that I find the most motivating, is when you start to feel like you are understanding how your team is working. You’re listening to them. They are listening to you. You are helping them. You are helping create an environment that enables them to be as productive as possible. That’s the trick – along with making sure that they feel like they are getting the support they need, the direction they need from you...
A friend of mine, who is the CEO of an engineering firm, once said that the CEO’s job is to get everyone to swim in the same direction. You don’t need to teach them how to swim. They already know how to swim. You don’t need to teach them how to swim around the small obstacles that they encounter. They can do that themselves.
What you need to do though is to help coordinate. So we are all trying to head in the same direction. And once they understand that clarity of direction, where we as an organization are trying to go —they’re smart, they’re engaged, so everyone will make their own decisions on how best to help us get there. And occasionally they’ll request guidance if they are not sure. But that’s the job, it’s to say, “Here’s where we’re trying to head.” And then, what can I do as a leader of the business to help remove any barriers that are difficult for individuals or our teams to get over?
And so, the direction you’re trying to get everyone to go in right now, in your current role, is you’re building a world-class asset management shop. And I think most people would agree that RBC Global Asset Management is a world-class asset management shop. So, is the key to that the math? Or the people and culture?
It’s definitely the people and culture. That’s the more important part. The math, actual mathematics, is not really a big part of what I do anymore. But the logical and analytical thinking is, I think, helpful training for it. But it’s a mixture of logical thinking and empathetic thinking and understanding. So, it’s a mixture of all these different things that help contribute to the skills that I find helpful to me as far as trying to succeed in this role now.
It’s interesting, I think every leader is like this. You have to find your own personal style of leadership that works for you. I know that I am probably more analytical than some—probably because of my background—but hopefully not to a fault. I often get it pointed out where I perhaps was leaning too much one way. And I know other leaders who are very, very effective who aren’t nearly as analytical, but they use their own strengths.
Again, I’ve been really privileged in terms of the people around me. And I know the GAM Executive Committee is filled with people who are bright, and motivated, but they have different complementary strengths. What I find works really well is that where I might miss something, it’s unlikely that all of the Executive Committee will miss it as well. Usually, when we have these discussions, there is almost always somebody who comes up with the perspective where you think, “That’s great.” So, again, it’s trying to create this environment where these smart, motivated people can contribute and help us make better decisions. So, that’s what it comes down to. Certainly, I have lots of faults, but I think the team around me helps make sure that we as an organization don’t suffer from those faults excessively and that we can complement one another.
You touched on a point that we’ve covered on several different episodes in this podcast speaking to different investment managers. And that is this idea of diversity and the power of diversity. You mentioned it around your Executive Committee table—there’s a diversity in people where they come from, their backgrounds, and a diversity of thought. How important do you think diversity is to what you’re trying to accomplish? Again, you’re running a global asset manager, not just an asset manager that’s viable in Canada.
It’s hugely important. It’s incredible. There are no complex problems that get solved in a sustainable way without groups of people working on them. The idea that you have a person sitting in a room who’s all-knowing and sort of sits down and thinks, “Ah, this is the solution” and gets it right – that almost never happens. There’s almost always an idea that crops up, that gets batted around with a group of people that have diverse perspectives. That’s how you find these lasting problems. That’s how you ensure that you don’t have a hole in the solution that you think is ideal, while someone from a very different perspective points out, “Have you thought about this?” So, I think diversity is important.
The most important aspect of diversity is cognitive diversity: having people who think about things differently. But you don’t get cognitive diversity without having differences—diversity in terms of experience, diversity in terms of backgrounds.
So, to me, the most important aspect of diversity is ensuring that we have an environment in which people who have different experiences, different perspectives, can contribute. They feel like their voices not only can be heard but should be heard and that they can succeed here. And that is the recipe for us navigating not just the problems we’re looking at today, but the problems we’re inevitably going to face in the future -- both the problems and opportunities. But without those diverse perspectives, and without an environment that embraces those diverse perspectives, I think the odds of us being successful are much, much lower than they would be with it.
So, RBC Global Asset Management has had such an incredible run over the last 20 years. If you look at it from a Canadian perspective, we’ve had incredible rates of growth. If you look at it on a global perspective, some of the different pieces that have been put together to form what is the current global asset management have been incredibly successful. We’re taping this just a couple of weeks after the most recent Lipper awards in Canada. Phillips, Hager & North—an arm of RBC Global Asset Management— was, for 10 out of the last 13 years, the top overall fund manager, and for 11 out of the last 13 years, top overall bond manager. So, it’s an incredibly successful organization in terms of delivering results and outcomes for investors.
What do you think when you look at the different pieces you’ve put together and how they function and deliver for clients…? Maybe talk about the story of how those pieces were built and what was the thinking behind each piece that was added and how has it added value for investors – particularly in Canada but also around the world?
Well, I think it’s been almost nine years since we made our last major acquisition, which was BlueBay. But if you think about the stars, RBC Global Asset Management was Canadian, predominantly Canadian, predominantly retail focused. Philip, Hager & North was predominantly institutionally focused, mostly fixed income. RBC Asset Management had a lot of equity strength. Both the client sets and capability sets were quite complementary.
Voyager Asset Management was focused on the U.S. with, again, some different and complementary capabilities, which we folded in. But even that made it still mostly North American. And then came BlueBay, predominantly European with a little distribution in North America and global fixed income focus, whereas most of GAM’s fixed income to that point had been primarily North American focused. Again, highly complementary. So, that is what we have really looked for—complementary manufacturing, complementary distribution, the pieces that you put together where the whole is worth more than the sum of the parts. Right? That’s the idea.
I think that we have successfully done that. But there’s more to go in terms of making sure that the pieces continue to work well together. And that’s not saying that there’s not good work done, but I just think that there’s more that we can get out of the business we’ve got. There’s lots of opportunity for us to continue to grow and to continue to make more of the ideas and the teams that we’ve got to do more for clients.
So, what do you think are the biggest challenges you’re going to face over the next five years in this business – specific to RBC Global Asset Management and to the industry overall, the investment management industry around the world?
Well, when I look at the industry overall, I think that there are some massive changes that we’re in the midst of. I won’t say they’re coming at the industry.
They’re here, and we’re in the middle of them. They are around new technology. They are around regulation changing quickly around the world as far as expectations on asset managers, fee transparency, those sorts of things. They are around new competitors that are emerging. They are around client expectations. The way in which clients expect to be dealt with by a service provider -- not just as an asset manager but many service providers -- is very different today than it used to be. What is acceptable service? Today, it’s a much higher bar than it was a few years ago.
So, those are all things are happening. Again, not coming at us. We’re in the midst of them. They are continuing very quickly. But I think we’re adapting quickly. If you think about the new RBC iShares alliance that we launched . . . if you think about some of the work we’ve been doing in real estate with BC Investment Management Corporation . . . if you think about some of the new capabilities we’ve been launching out of BlueBay with the CLO capabilities . . . there is a constant array of new thoughts and how do we take advantage of the opportunities that are in the market for our clients.
We’re continuing to work on new tools that we’ve been launching to make life easier for advisors and help them do more for their clients, which is what we’ve continued to do. I see all this stuff as rapid change creates disruption, but it also creates opportunity. And one of the things that I find most exciting about the industry is what are we going to be able to do for our clients with all these new tools? It’s amazing. What we can deliver for our clients is exciting. And there are so many ideas in the pipeline.
When you look at what we’re working on developing for this coming year, it’s awesome. I look at this stuff and think, “This is great!” But there is always risk that you don’t get it quite right, and you miss some things. But when I look at the team we’ve got, we’ve got so many people who are bright, they are engaged. The recent Innovation Challenge we held was fantastic. We’ve got ideas. And the engagement that came out of this, you know, the teams...
So, tell me about the Innovation Challenge, just some background on what that is.
We did the Innovation Challenge 2.0 this year. A couple of years ago, we did the first version of it. We invited teams to form and to help us solve a problem. And the first time, it was how can we make GAM better through these data? This time it was basically better, faster, cheaper. And so, what are your ideas to make us a better, faster, cheaper organization?
This time we did it over 48 hours. Each team had to put together an idea and a presentation. But the ideas that came out… We had 22 teams, I think, participating. So, well over 100 people who were spending their evenings and nights working on these problems.
And the variety of ideas and things that came out were fantastic. Just the enthusiasm and thoughtfulness that went into this were tremendous. And I think that was just an example of the type of thoughtfulness and engagement that goes on across our firm.
So, I look at that and I look at our staff and how thoughtful they are and what they’re thinking about and how they are constantly thinking long term about “What can we do better for our clients?” That’s why I find that, all these changes in our industry, they are exciting. They are not scary. We have an opportunity to do so much more with the people we’ve got and the technology that’s coming our way. I think that the growth opportunity is tremendous.
And if we keep the business focused on creating long-term value for our clients, and that’s our goal, then the business will be successful. If we focus on our clients and what helps them the most, I think we’ll continue to have a highly motivated staff and continue to have a very successful business. I think we’ll all be able to look at each other and walk out of here at the end of the day, thinking, “We’ve done some really good things.”
It’s so interesting. I talk to so many business leaders – and people in business in all fields, not just investment management – who are fearful about the future and how rapid change is, and how change is dictating to business – whereas in the past they could often dictate the changes that were coming in their particular business or industry. And it just doesn’t seem like that’s the attitude you have towards this at all.
Is it easy to get everyone to buy in? Because they are reading the headlines. They see where the challenges are coming for the industry. How do you make sure that everyone is viewing it the same way that you do? That this is exciting. It’s not something that’s scary.
Well, it can be a bit scary sometimes because you see these things happening and you think, “This is change.” But we all have to remind ourselves of the calibre of people we’ve got. We are able to recruit from some of the strongest organizations, from the strongest academic institutions anywhere. We have an enviable list of people who want to work here. We have tremendous retention amongst our existing staff. We continue to train and develop. Our people are our strength. And we happen to be part of an organization, a parent organization, that’s got tremendous capital and is willing to invest in the business where we’ve got good ideas on how to grow it.
While those things don’t guarantee success, I think it gives a lot of advantages. And so that’s part of why I get excited about it.
The other thing, as you know I am a keen cyclist. There is a saying in cycling: if you are racing up a hill, and you’re looking around at the people beside you, and you’re suffering, that’s the best time to attack because you know they’re suffering, too. And I kind of think about it that way.
When I look at our business, there are always things that are disrupting us and there are lots of things to point out and say, “Well, what about this and what about that?” But then we take a step back and think about our competitors and how worried they must be. We have so many strengths behind us. When we attack and when we go hard, more often than not we will come out of this successfully. Not every time, but more often than not. And that’s why I’m excited about it.
Wow! So, I want to finish with one more topic, fitness, because I have to validate some of the things I have heard about you. You mentioned you are a cyclist, and we are doing this as an audio broadcast for a reason: I don’t want to stand side-by-side with Damon because he is a physical specimen. I am a little chubby and cherubic in appearance. So tell me about your fitness regimen over a week? For example, what are you doing … well, let’s say when there’s good weather in the Canadian landscape . . .
Well, I did go for a snowy 90-kilometre bike ride on Sunday, which was amusing but... So, my typical day, I’ll get up early. This morning, for example, I ran in to work. Then, I’ll go to the gym and do weights or boxing at lunch, and then run home in the evening. And so that would be a pretty typical day. You know, run or ride in the morning, do some strength training in the middle of the day, and then usually something at the end of the day on the way home. And then on the weekends, when I have the opportunity, I’ll go for longer bike rides or runs or what have you.
So, the stories of you doing a 250-kilometre bike ride and then looking for 100 more kilometres more to just tack on, because it was too easy. That’s an exaggeration or…?
That has happened on occasion, but it’s not something I look for every day. Plus, you know I’m getting older, so I’m starting to slow down, Dave. Someone said to me—actually, I think it was John Montalbano who gave me this advice: “Your career is a marathon, not a sprint, so pick the balance that works for you.”
For me, I have always found physical exercise is something that helps me. I do a lot of thinking while I’m exercising. It helps take some of the stresses off. Sometimes when I’m tackling a tough problem you can go and work out, and sometimes I come back to work and I’m like, “Okay, I’m more settled, I can tackle the problem better.”
So, for me, it’s part of the balance. It’s always been part of the balance. But that’s a personal thing. And certainly, everyone’s got to find their own balance and what works for them in terms of balancing their work, their pleasure—whatever that is—their physical activity, their family time, all of those things.
I haven’t done 250 K on my bike, but there is nobody quicker from the economy section of a flight to the luggage rack carousel than me. I’m super speedy. I think I could challenge you there.
That’s a skill in itself.
Anyways, thank you very much, Damon. I have really enjoyed this.
Thanks a lot, Dave. This has been great. Thanks for doing these sessions.