فصل 6 بخش 7

CHAPTER 6.7

MARY CALLAHAN ERDOES: THE TRILLION-DOLLAR WOMAN

CEO, J.P. Morgan Asset Management Division

Mary Callahan Erdoes may only be five foot two, but she casts a long shadow as CEO of one of the largest asset management groups in the world, at the biggest bank in the United States. Forbes magazine has called her “the rare female comet in the male-dominated firmament of Wall Street” and listed her among the 100 Most Powerful Women in the World. Since 2009, when she took over J.P. Morgan’s Asset Management Division, it’s grown by more than half-a-trillion-with-a-T dollars—more than a 30% increase! Today Erdoes oversees the management of $2.5 trillion invested by foundations, central banks, pension funds, and some of the world’s wealthiest individuals. She’s often mentioned in the media as being on the short list to succeed JPMorgan Chase CEO Jamie Dimon.

While most of the voices in this book advocate that passive, low-fee money management brings the best results for individual investors over time, Erdoes makes a case that funds that are actively managed by the best minds in the business are worth the fees they charge. She says the proof is in the loyalty of their satisfied clients, as well as the new business they continue to attract.

Money management is in Erdoes’s blood. She was the firstborn child and only girl in a large Irish Catholic family in Winnetka, Illinois. Her father, Patrick Callahan, was an investment banker with Lazard Freres in Chicago. Mary excelled at math in high school—while also winning equestrian medals—and went on to become the only female math major in her class at Georgetown University. She met her husband, Philip Erdoes, while they were both earning MBAs at Harvard Business School.

As a financial services executive, Erdoes has broken the mold in more ways than one: in a business famous for aggressive management, her colleagues describe her style with words such as “loyal,” “team-oriented,” and “caring.” When she was coming up at J.P. Morgan, she was known for flying across the country to meet with clients who needed extra help in managing their assets. Now 47 years old and part of the highest level of management in a firm with 260,000 employees, she is honored as much for her extraordinary leadership as for her financial brilliance.

Our meeting took place at J.P. Morgan’s world headquarters in the classic Union Carbide Building, overlooking Park Avenue and the skyscrapers of Manhattan. As I rode the elevator to the conference room, J.P. Morgan Asset Management’s communications director, Darin Oduyoye, told me a story that touched me deeply, and illustrated the kind of person I was about to meet. Oduyoye had always wanted to be a broadcaster but took a job in J.P. Morgan’s mutual fund division before transferring to public relations. When Erdoes asked him to be a producer of a daily morning meeting broadcast for wealth management employees all over the world, he was shocked.

“I don’t know enough about investing!” he objected.

“Well, you told me you always wanted to be in broadcasting,” she said. “Now you get to be a talk-show producer!” “She saw more in me than I saw in myself,” Darin told me.

It doesn’t matter what they do for the company, Erdoes goes out of her way to know each of her employees. But she still carves out the time periodically to have lunch with her three young daughters and pick them up from school most days. That’s the way she rolls, and it makes her the extraordinary leader—and human being—that she is.

TR:

You lead one of the largest management groups in the world. Tell me a little about your journey, the challenges you faced, and the principles that guide you.

ME:

I don’t think you can lay out a path in life to get exactly where you want to go. A lot of it happens by accident or circumstance.

I remember when I was given my first stock: Union Carbide. It was a birthday gift from my grandmother. I think I was seven or eight—old enough to remember and young enough not to know what to do with it.

The first thing she told me was, “You don’t sell this.” I’m not sure if I agree with that now! But she said, “This is the value of compounding. If you keep this, it will hopefully grow over time, and you will have something much larger.” That also ingrained in me at an early age the importance of saving and started me thinking about money management. I already knew I had a knack for numbers, so the concept of saving versus spending was a powerful one for me.

It helped that my father worked in the industry, and I spent a lot of weekends with him at work playing “office.” I sat at his desk, and I had my brothers at his assistant’s desk! We had good fun growing up, and I think that showed me how interesting and exciting financial services could be, and that it wasn’t something to be fearful of. That was very helpful early in life.

TR:

You work in a business that has been dominated by men. What were some of the biggest challenges that you’ve faced along the way?

ME:

Money management is an industry where results speak for themselves. It’s a virtuous cycle: if you perform for your clients, they’ll invest more money with you, and their money will make money—again, the idea of compounding that I learned from my grandmother. So because of the focus on performance, money management is a business that fosters equality. If you perform, you will succeed.

TR:

What’s leadership? How do you define it?

ME:

It’s important not to confuse management with leadership. For me, leadership means not asking anyone to do anything I wouldn’t do myself. It’s waking up every morning trying to make your organization a better place. I truly believe that I work for the people of J.P. Morgan Asset Management, not the other way around, and because of that, I try to see beyond what people even see themselves.

Having been a portfolio manager, client advisor, and business leader, I know what we’re capable of achieving for clients. So I consider it my job not just to lead our teams but to get in the trenches alongside them and join them on the journey.

I think in many ways you’re either born with leadership or not, but that doesn’t mean you’re not constantly working at it, honing it, and figuring out what works and what doesn’t. The style of leadership will change with different people or different situations, but the basic tenets of leadership are consistent.

TR:

I recently interviewed Dr. Robert Shiller, who just won the Nobel Prize in economics, and he was talking about all the good that financial institutions do in the world that people take for granted. Why do you think their reputations have shifted, and what can be done to turn it around?

ME:

Following the financial crisis, it’s easy to understand why some people lost trust in the industry. In hindsight, there were some things that needed to change—products that were too complex or confusing. But overall, the financial services industry contributes a lot to the world. We provide companies with capital to grow, which ultimately fuels employment. We help individuals save and invest their hard-earned money so they can do things like buy a house, pay for college, or retire more comfortably. We support local communities both financially and through the intellectual and physical capital of our people.

I’m incredibly proud to be part of the industry and even prouder to be part of J.P. Morgan. We have 260,000 people who work hard for clients every day and always strive to do the right thing. We have a saying that if you wouldn’t let your grandmother buy a product, then it’s probably not a business we should be in. It’s a simplistic yet important way to look at things.

TR:

It’s a sensitive issue, I’m sure, but if you listen to Ray Dalio, you listen to Jack Bogle, David Swensen, Warren Buffett—they all say active management doesn’t work over the long term. That 96% of active managers don’t beat the index. I wanted to get your view on it because your performance has been extraordinary.

ME:

One of the biggest challenges about successful investing is there’s no such thing as a one-size-fits-all approach. But if you look at the world’s most successful portfolio managers, you’ll find that many of them manage money actively, buying and selling companies in which they think that they have added insight. Their track records have proven that active management, compounded over long periods of time, makes a very large difference in your portfolio. What an active manager can do is look at two seemingly similar companies and make a judgment, based on extensive research, about which is the better long-term investment. We’ve surrounded ourselves at J.P. Morgan Asset Management with managers who have done that successfully for a sustained period of time, and that’s why we have $2.5 trillion in assets that people ask us to help them manage.

TR:

Great investors are invariably looking for asymmetric risk/reward, right? And the ultrawealthy have always done this. But tell me, how does the average investor today get wealth without risk, or at least wealth with little risk, if they’re not already ultrawealthy?

ME:

It is not about a wealth level, it’s about being well rounded, well advised, and sticking to a plan. What happens too often is people start with a diversified plan, but as market conditions change, they try to time the markets so they are getting either more upside opportunities or better protection in unfavorable conditions. But that’s a very dangerous thing to do because it’s impossible to predict every scenario.

What a well-diversified portfolio does is help you capture those tail risks [risks that can bring great rewards], and if you stick to that plan, you can create a tremendous amount of wealth over the long term.

TR:

What are some of the biggest opportunities for investors today and the largest challenges that they need to prepare for?

ME:

I think that we will look back at the time that we’re living in right now and say, “That was a great time to have invested.” We have so much liquidity in the system to take care of a lot of the things that went wrong. But investing over the next five years—particularly those with long-term growth prospects—are opportunities to consider right now. Most investors today want income, tempered volatility, and liquidity. There’s still the hangover effects of 2008, where many are concerned about, “If I need my money right away, can I get it?” If you don’t need it right away, get it invested. It will serve you very well over the coming years, and you will look back and be incredibly thankful that you did it.

In addition, the industry has made a lot of changes in rules and regulations to attempt to insure better conditions for the future. That’s not to say there won’t be market anomalies, but the system is better, and so it should be safer.

TR:

I’ve asked this of every multibillionaire that I’ve spoken with who started with nothing: Does financial stress ever go away for you?

ME:

Financial stress never goes away for people regardless of the level of their wealth or success.

TR:

Why is that?

ME:

Because no matter what stage you’re in, you want to make sure you are using your money most effectively, whether that’s paying for health care and your family’s well-being, or insuring you are investing your money properly for future generations or to fulfill philanthropic goals.

TR:

Is there an antidote to that stress? What is it for you?

ME:

For me, it’s all about keeping things in perspective and focusing on the things you can control, like insuring that you’re doing as much as you can every day and giving it your all. You can never be out of balance in taking care of yourself as a person, taking care of your work as a professional, taking care of your family, taking care of your friends, your mind, your body. It’s okay for things to get out of whack every once in a while, but they can’t stay out of whack.

TR:

If all you could pass on to your children was a set of rules and/or a portfolio strategy or an asset allocation strategy, what would it be?

ME:

Invest for the long term and only take money out when you truly need it. Specific portfolio construction will be different for different people. For example, I have three daughters. They’re three different ages. They have three different skill sets that will change over time. One might spend more money than another. One might be more frugal. One may want to work in an environment where she can earn a lot of money. Another may be more philanthropic in nature. One may get married, one may not; one may have children, one may not—so they’ll have different dependents. Every single permutation will vary over time, which is why even if I started all of them the first day they were born and set out an asset allocation, it would have to change.

TR:

How old are your girls?

ME:

Eleven, ten, and seven. They’re lots of fun.

TR:

From my understanding of what I’ve read, you believe in “work-life integration.” Tell me a little bit about that.

ME:

I have the great fortune of working at a company that is very supportive of families and gives people a lot of flexibility to do what works best for them. So whether that means logging off a little early to catch your child’s soccer game but then reconnecting later in the evening to finish a project, or bringing the kids to the office on the weekends like my dad used to with me, you have the option to do what’s best for you and your family.

TR:

Like you did at your father’s office! And they’re sitting behind your desk, preparing for the future.

ME:

Exactly. My work life and family life are all one thing, and I’m always determined to get the most out of both of them.