Reflections of Washington State CIO Gary Bruebaker, Retired

If there was a litmus tester for economies, a chief investment officer with Gary Bruebaker's experience would be sought after and hard to find. Over the forty two years of his investment experience in public service, he has seen investments evolve to include tangible assets, risk management and global equities and has been advisor to institutions from the US Treasury to hedge funds. In 2020, he retired from the chief investment officer seat at the $150 billion Washington State Investment Board where he was managing 35 separate funds, comprised of defined benefit and defined contribution retirement funds, deferred compensation funds, insurance funds, permanent, and other trust funds. He was selected by his CIO peers to receive a Lifetime Achievement Award through Markets Group in Seattle on May 7 at the 8th Annual Pacific Northwest Institutional Forum. 

Prior to joining the Washington State Investment Board, Bruebaker served as Deputy State Treasurer of Oregon, Director of the Oregon State Treasury, Controller of the Oregon Housing Agency, and Senior Auditor for the Oregon Secretary of State Division of Audits. He holds an MBA from University of Oregon and his Bachelor of Science Degree with Honors in Business Administration from Oregon State University.  

Bruebaker serves on the Board and the Audit Committee of the EisnerAmper Group; Chairs the Finance Committee of the Retired Public Employees Council; and was vice chair the Financial Accounting Foundation Board of Trustees; KKR Investors’ Advisory Committee; TPG Investors’ Advisory Committee; an independent director of the Capital International Emerging Markets Growth Fund; as the president and Executive Board Member of the Government Finance Officers Association of the United States and Canada; as the Chair of the U.S. Treasury Department’s Investors’ Practices Committee within the President’s Working Group on Financial Markets and various posts in Oregon. 

The following interview dives into his experiences and key take aways from his investing career. 

Let’s start at the beginning, where did you go to school and what was your career path.

I received a Bachelor of Science degree with honors in business administration from Oregon State University and a Master’s Degree in business administration from the University of Oregon. I hold the Chartered Financial Analyst designation and am both a Certified Cash Manager and a retired Certified Public Accountant. 

I started my career as a senior auditor for the Oregon Secretary of State Division of Audits, where my job was to serve as a check and balance on financial management and reporting, while offering improvement opportunities in financial management for state agencies. I then served as the controller of the Housing and Community Services Agency, where I had the opportunity to assist in providing affordable housing to the elderly, disabled and first-time home buyers, issuing tax-exempt debt, and investing reserve funds. Following this opportunity, I served as the controller, then director of finance, then deputy state treasurer for the Office of the State Treasurer in Oregon.

Next, in 2001, I had the opportunity to take on the job of chief investment officer for the Washington State Investment Board, which manages the retirement fund assets for more than 780,000 current and former public employees. 

What attracted you to pension investing?

When I went to work for the Housing and Community Services Agency, I got a little taste of investing.  I managed an investment portfolio which I thought at the time was a lot of money, half a billion dollars. Later of course we would have investment transactions larger than that.  I went to work for the Treasury as the deputy state treasurer, where the chief investment officer worked for me. I thought that Dan Smith, the Chief Investment Officer at the time, had the greatest job in the world and I wanted his job, but he wasn't going anywhere. That's why I left Oregon to came to work in Washington when they had an opportunity for the Chief Investment Officer, and loved every minute of it—well, maybe not every minute but most of the time!

The world that we operate in is constantly evolving while getting more complex. It's interesting work because you're not just redundantly doing the same thing over and over, and that’s really what drew me to it.

In what ways did your investment philosophy and approach to the markets evolve during your career?

I was in the business for just over 42 years. I've seen the whole marketplace evolve, and along with that, hopefully I've evolved as well. When I was with Oregon, we did limited formal planning every year, but for whatever reason it just didn't seem to jell, but when I got to Washington, it did. It was an evolutionary process which started out just conducting annual planning for private equity, and then we expanded it to include real estate. Eventually, we expanded it to include tangible assets, risk management and global equities as well. Annual planning became a core part of our investment management.

Every year, each of my asset classes does an in-depth plan which is a tactical plan for what we want to accomplish during the coming year and a strategic view of where we think we're going over the next five plus years. Those plans are presented directly by staff to the board, the Board formally approves them, then we use the plans as our map for implementing our program over the course of the next year.

What was your strategy in attracting and retaining investment talent in your investment office, especially considering the limitations associated with being a government entity?

We are truly blessed as an organization. We have a great team of more than 40 investment professionals. Our recruiting plans followed what we referred to as the three Gs. 


Green is the first of the Gs that we use.  We try to hire a certain number of people that we refer to as being green, as in right out of college or very early in their career. The attraction to candidates about working for the Washington State Investment Board is that they likely gain interesting and challenging opportunities in three to five years which would take 10 or more years to get in the corporate world, which is really attractive for new people early in their career.

We've been very good at attracting quality people, and lucky at the same time. We have a demonstrated successful track record of promoting from within. We also have people who switch from one asset class to another after they're here which has worked out well for us.


The second G is grounded. We have a number of people we've been able to hire who, for various reasons, have a connection to this area. Their family is either here or they're looking to raise a family in a place like Olympia. There's just something about the area that appeals and grounds them. For instance, Allyson Tucker, our CEO, came to Olympia from Seattle.  When starting a family she and her husband decided they wanted to raise their family in Olympia.  I’m not sure we could ever attract someone with her talent to Olympia if she didn’t have the connection to Olympia.  We try to get people who have some type of connection to this area, and that's why they stay.


The other end of the spectrum is gray. That refers to people who are towards the end of their career. They've already made money and built a skill set so now they want to contribute in a meaningful way and make a difference. One of the greatest things about this job is that every single day, we get to work on behalf of more than 780,000 public employees and our responsibility is to secure their financial future. For every extra dollar we earn in the portfolio, that's 50 cents that a firefighter, teacher or other public employee doesn't have to pay into their own retirement and 50 cents an employer and taxpayer doesn’t have to pay into the system. Those are the three G's that we use for recruiting.

Personally, I happen to love Olympia and you couldn't get me out of Olympia even in retirement. My family and I are very well grounded here.  The reality is the motivations of today’s younger workforce are different than those of my generation. Some don't want to live in Olympia, which is why we opened an office in Seattle. With our office in Seattle, we've been able to recruit people who we may not have been able to get with just an Olympia location. That's worked out exceedingly well for us.

We've also opened up our minds to other ways that we can employ people. For instance, we had an individual who worked from his home office in San Francisco, which worked out quite well for us. We're trying to find creative ways to work with a new generation, recognizing that people are attracted to different things today than in the past. We’re continually striving to get a better understanding of what motivates the younger generation, and then using that to make changes within this organization.

Another challenge for us on the recruiting side is that we work in a bonus-free environment. If it's all about the money, they're not going to come to work for us. Our experience is that once we find the right people, we’re able to retain them.

Washington State Investment Board has a long history of beating their investment return benchmarks. What has the Board done to accomplish this? 

I think it's really a combination of things, including great staff and long-term deep relationships with top-tier investment managers.  But the core of this accomplishment is our excellent Board. About three years after I got to Washington, I worked with the Board to develop and document a set of investment beliefs. These beliefs serve to help us have the discipline to do the right thing, and more importantly, to not do the wrong thing at the wrong time.  Our industry loves to respond to noise.  It takes a lot of discipline to not respond and trade against your comfort zone.

For example, during 2007 and 2008, in addition to the financial crisis, we experienced almost a 50 percent turnover of our voting Board members.  We weren’t sure if the new board was going to have the discipline to stick with investment strategies that were put in place by the previous Board.  We do an asset allocation study at least every four years, but we did one out of cycle then, right in the middle of the crisis. We did this because we wanted the Board to know that the staff did not want to make any changes and we wanted to be sure the Board would support us as the previous Board had. Thankfully they did support our direction as demonstrated by them not changing our risk/reward profile.  The Board’s discipline and focus, coupled with the fact that we're able to hire the kind of staff that we have today, has really benefited the fund.

What has been the Asset Allocation process at the Washington State Investment Board?

We allocate assets based on thorough and thoughtful deliberations with the Board based on the goals and risk tolerances of our stakeholders.  As part of a periodic asset allocation study, the Board and staff participate in a series of education sessions and discussions to determine the relevant asset allocation and risk considerations.  WSIB uses a modelling process that does not rely solely on one risk parameter such as standard deviation, but rather takes into account multiple risk factors.  (e.g., Market, liquidity, leverage, counterparty, currency, interest rates, sustainability, credit, macro-economic, geo political, concentration).  The Board has maintained a strong preference for private markets investments for years.  The commitment to private markets and the implementation of those strategies have been major return drivers over long-time periods.

The WSIB is a global investor responsible for more than $150 billion of assets, invested on six continents, in 84 countries, within 49 different currencies, with over 15,000 individual holdings. It ranks among the five best-funded public pension plans in the United States.  

What stands out as an important lesson learned throughout your institutional investment career?

You need to have the most conviction when the markets are going against you and people are publicly questioning whether what you've done is right. Clearly, you do need to test your own thinking to see whether you've got some things wrong, but for the most part, that's when you've got to really reinforce your conviction.

For instance, again referring back to the 2007-08 liquidity crisis, there were other large public funds that were publicly announcing to their general partners to stop calling capital.  We believe this is a relationship business so we took the opportunity to call each of our core general partners in private equity, and we told them "Look, we committed to you that we would be here when you needed to call capital, and we will be, so when you call capital, we will make good on that capital call.  We are asking you to voluntarily raise the bar, which we think you're probably already doing anyway. Also, make sure that any money you're investing and the return you are anticipating is better because the cost of capital and the cost of liquidity has gone up." We just wanted to deepen those relationships with them to let them know we would be here for them.

What was the best experience in your career? 

It comes down to making a difference in people’s lives! This is true for both our stakeholders, who trust us to manage their hard-earned money, and for our employees who work tirelessly to do so. We get to see the tangible results on a regular basis.  Our investment professionals as well as our investment partners understand the reason we are here is to secure the financial future of public employees and their families here in the state of Washington.

One of my favorite experiences is watching people grow.  Today, we have an Assistant Senior Investment Officer and a Senior Investment Officer, Kristi Bromley and Brian Shrader, respectively, both of whom were administrative support staff when I was hired in 2001.  We also have numerous other senior level investment staff who have earned promotions over the years. Honestly, we have the best employees I have ever had the good fortune to work with, and I am most proud of them and their achievements—all of which benefit our stakeholders.

What was the worst experience in your career? 

That would have to have been the Great Financial Crisis. Many investors lost 35-40 percent of their portfolio value in a few months. Global contagion was frightening, financial systems failed and nearly collapsed. Liquidity became something between expensive and non-existent. As previously mentioned, our Board did not de-risk during this time, but it was a painful experience which led to lots of concerns and discussions. 

Having said that, I have always believed that investors should never waste a good crisis. There are always opportunities, especially in a crisis. It’s important to have high conviction when the markets are going against you.  We remained committed to our long-term direction and remained a reliable investment partner which deepened our relationships. 

As Martin Luther King said, “the ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands in times of challenge and controversy.” 

In what part of the industry have you witnessed the most change? 

Private market investing, especially private equity has undergone immense change.  The numbers of both general partners and limited partners have grown tremendously.  General partners have gone public and significantly increased the number of their product offerings.  We have seen general partners change their investment strategy from financial engineering to value creation along with exponential development and institutionalism of the investment process in this market segment.  Advancement has included more formalization of the 100-day plans, improved investment advisory roles, and expanded proactive communication around the investment processes. 

What aspect or element of the industry would you most like to see changed and why? 

Personally, for me the answer is providing all people with access to reasonable and well-funded defined-benefit retirement plans.  Related to this, but not specific just to the investment industry, I would like to see less of a gap between those at the top and bottom of the income chart.  This is more of a policy question (and debate) than an investment question. Unfortunately, I have to admit that I am not a policy expert. However, while I don’t know the answer, it doesn’t change that I believe it needs to be accomplished.  While I believe everyone needs to earn what they get, I also believe everyone deserves a true opportunity in the marketplace to do just that.

Education and specialized training would be a great start. In the long run, a widening income gap hurts us all, not just those suffering from being at the bottom. The biggest issue is a values/morals based one. It is just wrong to have such large gaps.  Additionally, civil unrest is not good for anyone and such gaps tend to create such unrest.


What advice would you give LPs on private equity portfolio construction today?

It’s important to recognize that the private equity construction process is best done gradually and organically over time. It must come at the pace allowed by your governance structure, investment policies and your due diligence capabilities.

At the WSIB, our significant allocation is the result of decades of gradual construction.  This means: No overnight express efforts. No rushed decision-making.  No flip-flopping in or out of the asset classes due to changes in market environment or risk factors.  And even when we have increased our private equity allocation by a couple percentage points, it sometimes has taken us years to fulfill those fine-tuned target allocations.  During my time at the WSIB, Private Equity went from 15% to 23% of the AUM, but each time we managed the increases carefully.

What does it take to become a good CIO and how do you know you’ve done that?

Performance – after all, results ease the financial strain for beneficiaries, employers and taxpayers.  AND it is required for the pensions to be sustainable.

People – recruiting, developing and retaining talent is absolutely essential – because it’s the driver of performance.

Recognize risk as both opportunity and threat; and more importantly, know the difference.

You will know if you are successful.  You can’t hide from investment results (after all they are recorded every day), and when you manage other people’s money, there’s no shortage of people watching how you are doing, and they are more than happy to let you know if you are falling short. 

Also, in general, I always like to remember that:

-         This business of asset management is more about people than about money.

-         It’s about relationships more than transactions.

-         It’s about long-term outcomes more than incremental performance.

The Washington State Investment Board has a reputation for being highly collaborative.  What are some examples of the Board’s best collaborative efforts?

Collaboration is about attitude, as much as action.  You have listen with an intent to understand, rather than presume you know all that is necessary to know.

At the Washington State Investment Board, we are a large institutional investor with a strong reputation, but we recognize that our influence and place in the marketplace is stronger if we band together with like-minded organizations and industry groups.  This is especially true when it comes to regulatory or governance policy issues in our industry. We are big believers and active participants in the value of CII and ILPA, for instance.

We are very open with our fellow limited partners as well as our general partners about our willingness and desire to work together when possible, for the benefit of our organizations and related stakeholders.  Examples range from merely working together with other investors on sharing due diligence—to the partnership we did with the State of Oregon in creating a fund of 2 LPs to make co-investments in private equity on our behalf—to the many examples of Washington being the only or one a very few offered an investment opportunity in a private investment opportunity. 

Collaborative initiatives are always appealing—and always more difficult than they initially seem.  One example is a collaborative effort we attempted with a Canadian fund for infrastructure investments a few years ago.  We were speaking the same language and prospects were exciting until we began getting down to documenting definitions.  It became apparent very quickly that we didn’t have the agreement on the specific goals we initially thought we had—even on such easy things as what we mean my “long-term.”  Our definition was much longer than theirs.  Additionally, they have performance pay and as I mentioned, we live in a “bonus free environment” which also caused conflicts with the proposed structure. 

In your experience, what shared characteristics, if any, do the best fund managers possess when it comes to engaging with their limited partners?

It’s pretty simple, proactive honesty!  Bad things are going to happen, it is always best to learn about them as soon as possible and directly from the partner—no surprises.  A big part of due diligence is knowing how a partner will respond under stress.  Communication is a vital part of that assessment.

What do you hope will be the main legacy you left behind at the Washington State Investment Board?

That I made a difference! 

I was raised by a single mother who worked her way up in state government from an entry level administrative position to the head of Central Payroll for the State of Oregon while raising three kids.  She set an example for me that has always guided my aspirations.  I always tried to focus on securing the financial security of hard working public servants, like my mother, when I was managing their pensions.   


How and what are you doing in retirement?

I worried in the beginning I would not be able to ignore daily financial markets and that I would struggle with the desire to stay involved with, or at least informed about, investment partner activities—I had nothing to worry about!  My transition to retirement has been great! 

I have a wife, a daughter, two sons and seven grandkids.  I missed many of their activities while I traveled the globe on behalf of my career.  In retirement I have been to more sporting events for my grandkids than I did the previous 42 years, I have seen my oldest grandson catch a kickoff in the end zone and run more than 100 yards for a touchdown, I’ve seen my middle granddaughter held out of a game for missing one practice session by the coach and then go on to score more points the second half of the game than the entire team scored in the first half (the coach never kept her out of a game again) and she went on to earn MVP, and yes I have received more than 16 first place trophy’s in classic car shows including 7 Best of Show awards but my family is almost always there when I’m showing a car.  RETIREMENT IS GREAT!