Renee Neri is a partner in the
Heidrick & Struggles office in New York as well as the head of its asset
management practice in North America. A two-decade-long executive search
veteran, she is focused on the changing leadership in finance, as well as the
industry-specific challenge for each career position. Prior to joining Heidrick
& Struggles in 2004, she was a senior asset management recruiter for Bank
of America Corporation. She began her career with another executive search firm
after graduating from Fordham University. Neri sat down recently with Markets
Group’s Editor in Chief Christine Giordano and Content Writer Chris Glynn to
discuss how the market changes post-COVID have impacted the skill sets executives
need to overcome challenges and find success.
Chris Glynn: Looking at finance post-COVID-19 pandemic, would you say there is anything that has been the top trend seen for asset management? How would you sum that up?
Renee Neri: If we think about post-pandemic, into and through the pandemic, finance has shifted and evolved. Asset management is thinking about how they approach the marketplace, how they are positioned for the future, or whether their products, services and solutions are appropriately positioned to meet client needs on a going-forward basis. This takes several different vantage points. The No. 1
thing is thinking about, from a commercial standpoint, that they have the right product set and solutions – are they matched against the marketplace in the way that they should be? Is there enough alignment to what institutions are looking for? Are the capabilities that they are offering from a product set from the way that they're structured – is that aligned appropriately?
So, what we've seen is a rise in analytics and data. Products are being measured from an ESG or sustainability perspective the way that performance is being reviewed and reported against. Also, the way that products are being marketed, are all of those considerations being factored in as we look at opportunities going forward. Also, as I think about opportunities that we've seen, there has also been a significant rise in go-to market strategy, so marketing product as well as distribution capabilities.
Chris Glynn: What has been seen as far as the pension fund level? Is there a difference between what has happened on the public pension fund level for a plan sponsor in a certain state, or between a private corporation pension fund as far as looking for a CIO?
Renee Neri: There is a significant amount of opportunity and succession in the public pension domain. There has been a lot of turnover; there’s aging and change up from the CEO-level in public pensions through to the CIO domain. We’ve seen several transitions occur in that space. That has a trickledown effect into the staffing levels at the managing director level.
If you were comparing or contrasting private with public plans, obviously, they're a very heavy component of the marketplace in terms of assets under management, representation versus some of the corporate plans. In the corporate domain, there's been a bit of turnover or some opportunity in that space. Where we see more of that activity is in pension risk transfer liability-driven investment (LDI) opportunities on the asset management side – more asset managers investing in some of those solutions and bolstering most capabilities.
Chris Glynn: You have seen a lot of that? Or was it prior to the pandemic?
Renee Neri: The LDI pension risk transfer was going on before the pandemic, but I think it has been accelerating probably since the pandemic.
Chris Glynn: Have institutional investors made post-pandemic alterations?
Renee Neri: If you think about the marketplace, the macroeconomic market, we have all experienced significant volatility. What we're hearing and what we're seeing is that teams are trying to figure out how do you contend with that type of volatility, how do you come up with a new paradigm?
Collectively, we are all looking at the next 10 to 15 years and thinking all right, there's going to have to be a new methodology. What’s served us for the past decade is probably not going to be the approach that serves us going forward. That embeds some degree of uncertainty. You're thinking about macro views or about portfolio positioning from a strategic asset allocation perspective. You're thinking about risk management. You are thinking about how do you position that portfolio? How do you then think about implementation manager sourcing, due diligence, and then incorporating in—as I said earlier—analytics? How do you gain conviction in some of the decisions that you're making? How do you use as much data as you can possibly get your hands on, to get to that level of conviction in volatile or uncertain times?
Chris Glynn: As far as the family office space now, how would you describe it? What has changed?
Renee Neri: Family offices have been an area of increased focus in the form of probably three main avenues. One is intergenerational, perhaps transitions and retirements of existing staff members. There was an aging of staff that may be an existing family, maybe even an intergenerational transmission amongst the family members that are converting those offices. That usually is a catalytic moment when some transition or change may occur.
There are new family offices that are being established. There's a lot of wealth that's being generated in the marketplace. We’ve had a number of offices and conversations with advisors to families in the early stages about what it really means to start a family office. How do you think about this? Do I hire an investment person? Do I hire a CEO? How do we think about structuring? We have looked at successful operating businesses and helped them bring in a leader to establish that family office that might have a more multifaceted background and can work alongside the family and the operating business.
Lastly, I would also say there has been a very heavy push of individuals that are investment entrepreneurs that are aging private equity founders, hedge fund founders that are looking at their own age and stage and saying, “OK, I've thrown my all into the formulation of my own fund and I haven't looked at my own personal affairs in that same measure. I really ought to pay more attention to that and we should think about bringing someone in to focus on diversification.” Oftentimes that tends to be a bit more of an investment professional that can think about deal sourcing or investment opportunities that could be adjacent to what they've done in their operating business.
Christine Giordano: You mentioned that a lot of family offices are being created: is there a certain area or industry that you're seeing a lot of activity?
Renee Neri: There have been more than a handful in the tech space for sure, Silicon Valley types, that have been established – four or five of those that have crossed our radar; real estate as well. Oftentimes, individuals that have very sizable real estate holdings tend to cover their family offices side-by-side with their real estate offerings. Eventually, they may get to this stage where they think about establishing a structure that's perhaps more formalized.
Chris Glynn: What should a person who would like to become a CIO be looking to build their career to eventually become a CIO, or one day be considered for a CIO role?
Renee Neri: I feel like I said this in the past but it's a truism. A lot of times, individuals think of the CIO as the top investment role. Really it is, but truly, it is the top communication, advocacy, collaboration type of role.
What I often say for someone to move from that No. 2 role into the No. 1 seat is they really need to be able to evidence that ability to bring others over to their side, bring an investment committee along to their viewpoint, and to be able to instill trust and confidence in their committee. In their suggestion, it is about making the step up to thinking about the total portfolio and to having that ownership and stewardship mindset. For the total fund, rather than thinking solely about the day-to-day operation of one aspect of the portfolio or making recommendations to a CIO, it's about making sure that they think of it as their ownership ethos.
It makes me think of a client contact who was the CEO of a Canadian pension fund who asked me after I had made a recommendation and this person said, “Renee, would you stake your reputation on that?” This was a defining moment personally for me.
That is the question that you should be asking when you make that move to the CIO, you are staking your reputation on any recommendation you're making. That is the level of readiness that you need to have, the level of stewardship that you need to be embodying.
Chris Glynn: I wanted to follow up: have you had to work with people who talk to investment officers who work harder with investment committees?
Renee Neri: I had someone say to me very recently, there's no artificial simulator for you to go through without experiencing it yourself or stubbing your toe and just living through it. You can have proxies if you have the right relationship with your CIO. Where they give you that airtime in front of the investment committee, where you get to make those recommendations or have that role and responsibility in the meetings. You must prepare. You must answer. It can be a dynamic exchange, but ultimately it still is the CIO’s accountability that you must bear, the fiduciary responsibility. But that is what you should be working toward – that ethos of are you willing to and are you ready to stake your reputation on this?
Christine Giordano: Can someone from a public plan easily dive into an endowment?
Renee Neri: Where there are points of adjacency, a natural connection to the institution that can be a little easier. It may be an alma mater and a more natural connection into the local area. I think that builds a more natural bridge into the endowment or foundation space if it's a mission that really matters to you in a genuine way. Authenticity really matters.
There is a difference in the distinction between operating in a pension environment and in an endowment and foundation environment. The differences in taxation and nonprofit environments versus the liability-oriented environment is distinctive. ERISA standards are quite different than the long-term nature of an endowment or foundation. The more you can show your awareness or your thoughtfulness to how you would mitigate that learning gap, if you will, and then show that level of the mission that you would be stepping into, that's usually a solid indicator of desire to take on that kind of lift.
Christine Giordano: I would like to talk skills from corporate clients from pension plans to endowments, foundations and family offices. What are the top two skills in each category that are being sought now, private equity experience or LDI experience? That has changed with the markets, right? So, does that change the skills?
Renee Neri: In a corporate environment, that type of experience depends on the funded status. You need to know from a funded status what your goals and ambitions are if you are getting too overfunded, then those organizations are thinking about what the future of that plan is.
In a family office, they’re as nuanced as any family is, and they certainly show up as reflective of what that family hopes and seeks out of that office existence. Generally, what I say about a family office is that you almost invariably must have an equal measure of IQ and EQ (emotional intelligence) to be successful in that domain. Regardless of what your investment strategy is, you need to be aware that it's not your capital you're deploying.
I would make a distinction between endowments and foundations – oftentimes, they are combined. There's a lot of interest right now in private markets – the driver of very significant returns going forward. We’re going into potentially a new workplace. I think being able to advise, engage and get the most out of a very sophisticated investment committee is the key strength in that domain.
Then for a foundation, it's understanding your role and the exchange are an interplay with the mission of the foundation, how that connects, and what that offers in terms of a benefit and the differentiation, as a partner to the marketplace. Of managers, what that does from a differentiation perspective – your mission? In a foundation environment, the differentiation is the mission that, if you illustrate it appropriately, can set you apart as a partner to the top managers in the marketplace, particularly regarding ESG and impact considerations or position you differently from a talent perspective, as well as from a partnership perspective with top managers.
Christine Giordano: Are there any big sharp trends that you're starting to see in insurance?
Renee Neri: I would say it's multifaceted. There's been a significant amount of succession, similar to what I described at the public pension level with an aging and retirement of CIOs that trickles into the positioning of investment staff from inside an insurance company; we've participated in many CIO successions.
Then there's also a significant amount of activity, engagement and investments being made from a private equity perspective in insurance. Most of the private markets and private capital firms are putting significant assets behind the investment and insurance companies building up products, building solutions, and building investment and distribution teams focused on the insurance channel.
Christine Giordano: Is there a certain asset class for that insurance channel?
Renee Neri: Private equity and private debt; most of the private equity firms are investing in insurance. The broader asset managers are also expanding their third-party insurance platforms, insurance portfolio management teams, relationship management teams, and sales team.
Christine Giordano: Do you have to have insurance experience or are they looking for crossover as well?
Renee Neri: An individual that has a level of depth in insurance investment management, can bring communications capabilities, and has an ability to develop leadership experience, could have significant opportunity ahead.
Christine Giordano: Thanks again for your time today, Renee.