Joyful Friday! We’re going to attempt to shift this Q&A function a bit earlier within the week sooner or later, however right here’s an interview with Rob Gardner, a veteran of the UK funding business with a number of fascinating jobs underneath his belt.
Gardner co-founded the funding consultancy Redington in 2006, earlier than he left to change into funding director of St James’s Place in 2019, and chair of the funding supervisor Rowan Dartington in 2021. Gardner then left these roles to discovered Rebalance Earth — a pure capital agency — the place he’s at the moment CEO. He additionally co-founded RedSTART, a monetary schooling charity specializing in primary-school kids, and has written books for each kids and younger adults.
The transcript has been edited for size and readability.
FTAV: How did you find yourself in finance?
It goes again to Argentina. My mother and father moved there in 1985 — they had been academics. Inflation was working at about 30 per cent a month. And each month, my mother and father would receives a commission, and we’d actually buy groceries — like supermarkets sweep — and purchase all the pieces. Then at night time, we’d drive to this home that seemed like one thing out of Narcos to illegally change their australs or pesos into US {dollars}. We’d go dwelling, roll them up as a household across the kitchen desk, put them in 35-millimetre movie circumstances, after which conceal them round the home. As a result of it was safer to cover your cash in {dollars} in your own home than financial institution it. Once we went travelling throughout — Bolivia, Peru — I used to be the cash mule. I’d carry all of the {dollars}. I used to be seven years previous.
After I moved again to the UK, I assumed everybody understood inflation, and everybody understood FX charges.
After I was doing my A-levels I labored at bureau de change [in France]. Individuals would are available, enormous bid gives, and I’d take the cash. I’d lookup charges on the Minitel, get on a moped with all these pesetas, Deutschmarks, change all of it to French francs, carry it again. And due to that I used to be capable of get my first job working at Deutsche Financial institution on the grad programme — I began out on overseas change.
You’re most likely greatest recognized for having co-founded Redington with Dawid [Konotey-Ahulu]. You had been comparatively younger on the time. I imply, what on earth had been you pondering?
I used to be like 27 years previous after I stop. My mum and pop thought I used to be nuts. I’d gone from Deutsche to Merrill Lynch — which is the place I met Dawid. And we thought, “why don’t we begin up our personal consulting enterprise to assist pension funds perceive their belongings and liabilities — easy methods to handle them each, and management the dangers?”
The shopper downside was actually clear to us. And so at 27 I retired from Merril Lynch — as a result of it let me maintain my inventory. And in Could 2006, Dawid and I co-founded Redington.
How did you win your first shoppers?
Luck. We’d executed our 10,000 hours at Merrill Lynch. Dawid and I had spoken to lots of of CFOs, group treasurers, trustees, IC, all of the funding consultants. We’d been presenting the issues and options as Merrill Lynch. Individuals knew who we had been.
However I bear in mind somebody sat me down, pulled out his enterprise card, and stated, “Rob take a look at this. It’s the bull of Merrill Lynch.” And offers this speech to attempt to maintain me, saying, “Nobody is gonna converse to you. The one purpose individuals converse to you is due to that. Are you positive you need to throw that every one away?”
I suppose we had confidence in our social capital, in our skill to grasp the issue, and our skill to give you an answer. However then that is the place luck is available in.
It was 2006. I can’t bear in mind what the deficit of Royal Mail [pension scheme] was. I believe it had simply give you a 13 yr restoration plan, which was — at the moment — tremendous lengthy. And Frank Schinella, the finance director for Royal Mail, was in search of advisers. That they had Rothchilds, that they had Barclays. The trustees had Willis Towers Watson, and he needed somebody to be on his aspect and not using a conflicted enterprise mannequin. We purchased all of the experience and credibility of Merrill Lynch bankers, however we had a enterprise mannequin that wasn’t pushed round making an attempt to do transactions. So a fantastic instance of proper place, proper time.
Even now I’ve a stamp made up with Frank Schinella’s head on it, as a result of I believe getting your first consumer is at all times the toughest factor in enterprise.
What made you permit the agency that you simply’d began?
Two issues actually. Again in 2017, we tried to boost cash to develop to the following stage. We’d had some PE corporations are available and scrutinise the enterprise. They liked the enterprise, they liked that we had all these long-dated relationships with superb blue-chip shoppers. The most important dangers they noticed within the enterprise was key-man danger in me and Dawid. The query was, “might Redington win shoppers — might it develop with out you in it?”
And as an entrepreneur, that was the purpose the place it’s a must to assume — I’m the proprietor, I’m the co-founder, I’m an fairness holder — all these roles begin to separate out. And I realised that Redington can be extra invaluable with out me in it.
On the identical time, I had a little bit of a craving to be nearer to be making the selections slightly than advising on choices. And it was simply serendipity that David Lamb, who was the Director of Investments at St. James’s Place, was retiring.
On the time they had been about £100bn [in assets under management], and so they had been in search of somebody to affix the manager board. Which additionally was nice for my ego, proper? I believe after I joined, I used to be the youngest particular person on a FTSE 100 government board — I used to be 39. And so to be chargeable for — on the time — 750,000 shoppers’ monetary outcomes, and £100bn, was enticing and thrilling. And being candid, I additionally needed to place myself able that — if there was a CEO succession — I’d be near that chance.
Very shortly after I joined SJP, Redington received two approaches from personal fairness corporations. And on the finish of 2019, Phoenix Fairness Companions invested in Redington. So my thesis was appropriate.
How did you discover the shift from being an founder to being a FTSE 100 firm government committee member?
That was another excuse for doing it — might I scale tradition, might I create transformation? It’s very completely different — they had been an nearly 30 yr previous firm. May I carry my strategy?
I used to be described as Che Guevara in disguise. One among my colleagues stated, “you managed to get extra change within the 4 years you had been there, than in a decade.” So, it was difficult, for positive, very completely different.
Clearly, you’re not the boss, you’re a listed firm. I believe SJP will get lots of scrutiny — I believe considerably unfairly typically. However it’s the most important and most profitable wealth supervisor, and so extremely demanding. It was me who needed to make the decision on Woodford. I needed to make the decision on Magellan.
We went from being a single fund supervisor, bottom-up supervisor choice agency, to a high down strategic asset allocation, portfolio building one, launching the world’s largest low carbon fairness fund at COP 26 — the primary wealth supervisor globally to enroll to GFANZ [the Glasgow Financial Alliance for Net Zero]. We did an entire load of cool stuff that we by no means received to inform the world about.
It’s fairly thrilling whenever you begin pondering in items of billions. I constructed a capability mannequin out to a trillion. As a result of SJP will develop.
Once we terminated Magellan the week earlier than Christmas, we needed to transfer £10bn. And these had been mental challenges I actually loved.
How can we design our fund vary to satisfy the calls for of one million completely different shoppers? We had shoppers who had been infants and we had shoppers that had been 100 years previous — shoppers in each nook of the UK.
And the factor individuals don’t realise is that SJP is the biggest payer of individuals in pensions, of any supplier within the UK. We had been paying out over a billion a month of pensions in cost, which is why we needed to begin fascinated with decumulation and drawdown funds and why we launched our in-retirement fund manner forward of anybody else.
You’ve now arrange a pure capital agency — Rebalance Earth. What’s ‘pure capital’?
Pure capital is investing in nature to derive a monetary return. We attempt to place nature as resilience via a local weather and nature downside that I believe is just not absolutely understood by monetary markets.
Nature has all of those ecosystem providers — it cleans water, it shops water, it offers biodiversity that underpins all the pieces that we do. And so you can begin to consider it as infrastructure in the identical manner that constructing a port is infrastructure. If you will get paid for these ecosystem providers, that makes it an investable asset class.
So, our job is to spend money on nature as infrastructure. It delivers monetary returns, it delivers environmental returns, and it additionally delivers social returns, as a result of it improves peoples’ well being and wellbeing and it creates jobs.
Are you able to unpack {that a} bit extra?
Most cost for nature exists in a compliance market — both carbon credit from internet zero or biodiversity internet acquire, which is one thing that it’s a must to fund if you wish to do property growth. And over a 15 yr time period — which would be the size of our first fund — there’s a danger that there’s a change in political regime and [the rules] get ripped up. So we’re at all times looking for individuals who can pay for nature as a result of they need to and must, and never as a result of they’re pressured to.
A water utility can pay to deal with the water. The query is, do they construct one thing out of concrete and metal and chemical compounds and power to scrub the water? The choice is that we might restore an entire load of peatland and use an entire load of Sphagnum moss and it might clear the water for them. It does a greater job than the incumbent manufactured concrete and metal answer.
I believe what we’re making an attempt to do is get firms to recognise their local weather and nature-related dangers and dependencies, after which perceive that nature is a extremely good offset or hedge to that, after which join the 2 and get them to pay for that — and ensure we contract that every one correctly.
You’ve authored a kids’s ebook about saving and likewise co-founded RedSTART — a monetary schooling charity. Was that born out of your childhood experiences with inflation in Argentina?
Yeah, precisely that. I bear in mind beginning at uni and being stunned that folks didn’t know easy methods to price range, didn’t know easy methods to save. My theme is all about earn it, maintain it, develop it. And so my mother and father confirmed me the facility of incomes cash and retaining it, however they didn’t perceive the facility of rising it. They simply used to place it within the financial institution. After I went to work in funding banking, immediately there was this concept that you may spend money on equities and in bonds and that you may develop your cash.
And I suppose what I realised early on in my profession is that there was this form of secret playbook that confirmed you easy methods to earn a living, however, ordinarily, individuals didn’t know easy methods to do it. And I felt very strongly that wouldn’t it’s cool in the event you might train those who?
So in 2012 when auto-enrolment kicked in, we at Redington needed to offer again. We knew that individuals who had a DC pension had been in a really completely different place to these on a last wage pension — at a time when individuals had no concept the distinction between the 2. What if we might train the following technology how cash works?
These children that [RedSTART — the financial education charity] first taught at the moment are 24, 25 years previous. In order that’s our idea of change. It’s like, “what if individuals could possibly be confidently in command of their monetary future?”
After which after I turned a dad and my first daughter was born, that impressed me to write down “Save Our Acorns”, after which throughout Covid, while everybody was making banana bread and studying to play the guitar, I wrote “Freedom” [a book for young adults].
Final query — in the event you had been going to do one thing utterly completely different exterior of finance, what wouldn’t it be?
An writer writing extra books — I’d like to write down a Implausible Mr. Fox equal, however about beavers saving a city. Or a geography instructor.
