As Threadneedle forges links with Cass, Stefan Stern interviews Crispin
Henderson, its Chief Executive and finds out what it takes to manage £64.8
billion of investors' funds.
Considering the sums of money that are involved, the atmosphere at Threadneedle
in the City of London is remarkably calm. The fund management group has about
£64.8 billion under investment on behalf of highly demanding clients -
individuals, pension funds and other institutional investors. Given the
turbulence in financial markets over the past three years, you might expect a
sense of shock or fatigue in the air.
But no. On a sharp winter's morning I am shown in to meet Crispin Henderson,
Threadneedle's Chief Executive and all seems pretty tranquil. This stability
stems from two main factors: experience and results. Threadneedle's record is
impressive. As many as 86 per cent of its funds have outperformed their peers
over the past three years. The company - created in 1994 by combining the
investment operations of Allied Dunbar and Eagle Star - continues to attract
top talent. Yet you won't see Threadneedle people building personality cults
around themselves. "We do have 'stars', but we don't have a star culture," says
Henderson. "We are very much a collegiate organisation. Teamwork is extremely
important to us. Principle triumphs over personality." He can speak with some
authority on this point, as he is a relative newcomer to the business, someone
who chose to join Threadneedle after carving out a successful career
Henderson joined the accountancy firm Deloitte, Plender and Griffiths straight
from school. He spent the next 35 years there, the last 25 as a partner. Over
that time what were the big eight accountancy firms merged (or, in the case of
Arthur Andersen, crumbled) to become the big four. Henderson thus found himself
working for Coopers & Lybrand and, finally, PricewaterhouseCoopers (PwC),
where he helped to establish (then lead) the investment management special
advisory services group. He got to know Threadneedle as an adviser but then, a
little like Victor Kiam and his Remington shaver, liked the business so much he
joined it, as chief operating officer, in 2002. He later became chief financial
officer. When the former chief executive, Simon Davies, became chairman in the
summer of 2007, Henderson stepped up to replace him. This was around the time
that the credit crunch first began to hit and customers were queuing up outside
branches of Northern Rock to get their money out. What is the difference
between life as an adviser and as the boss? "I had built a business at PwC,"
Henderson says, "so I did come armed with some of those skills." But while an
adviser can only advise, he adds, the manager actually puts things into action.
So having spent the past eight years on the inside of a successful investment
firm, perhaps he can reveal some of the secrets of the trade? What makes a
really good investor? "It does help to have maths," he says. But it is analysis
and decision-making that count. "Those are the innate skills of a great
Know when to sell
One subtle point is perhaps less well understood, he suggests. "The skills of
buying are extremely well developed," he says. "But knowing when to sell - that
combination of instinct and grasping market reality - is where the difference
is." And he offers this (free!) piece of investment advice: the first loss is
often the cheapest. In other words, "if a trade is going wrong, sell it
quickly". Threadneedle has recently formed a corporate partnership with Cass,
bringing together two organisations that are leaders in investment thinking.
Threadneedle's culture is summed up by its catchphrase "out-think,
out-perform", reflecting its commitment to rigorous research, debate and idea
sharing. While the investment firm may not want to hire egotists or rampant
individualists, it certainly is on the lookout for business people of
sophistication and insight.
£30,000 essay competition
As a mark of its commitment, Threadneedle is sponsoring a new essay prize for
students undertaking an MSc in Investment Management. The best three will make
it to a shortlist, and the winner will receive a £20,000 prize as a
contribution to course fees, with the two runners-up collecting £5,000 each.
The winner will also be able to spend an internship at Threadneedle as part of
the MSc course. As an experienced observer of the financial scene, Crispin
Henderson is optimistic that Cass will continue to produce graduates who can
play their part in the better running and performing of the financial services
industries. The recent global crisis reminds him of the secondary banking
crisis of 1973-75. "Too much easy credit," he says. "The same problem today as
then. Admittedly the magnifier effects of new technology, globalisation and
interdependence have made the current problems more severe. But I expect it is
on page one of the Cass course on banking: do not lend long and borrow short.
It is an old principle but the old principles tend to be good principles." It
is that sort of seasoned sobriety that stands Threadneedle in good stead and
which may one day do the same for Cass alumni.
Stefan Stern was appointed Visiting Professor at Cass Business School last