Asset management talent: Higher returns from newbies, than poached rock stars – Hlelo Giyose

Some of the highest paid employees are to be found in South Africa's asset management companies. The most talented investment professionals are routinely poached by competitors in a dog-eat-dog industry that sells the skills of its rock star fund managers. For Hlelo Giyose, Chief Investment Officer and Principal at First Avenue Investment Management, the long-term benefits for an emerging asset manager come from individuals who are passionate about what they do and are prepared to work according to the requirements of the company. The established investment specialists who are headhunted tend to disappoint, he tells BizNews founder and editor-in-chief Alec Hogg in this podcast. – Jackie Cameron.Our long-suffering Hlelo Giyose who's been here quite some time. Hlelo take us through the decision you made in your quarterly report to talk about hiring staff..___STEADY_PAYWALL___.You know Alec, when you're an emerging asset manager – smallish to medium-size, clients expect you to hire people with commerciality – people that are shovel-ready, people with great experience. So, all asset managers; emerging ones, medium-sized ones: that's what they try to do. We all try to go out and get people with ten years' experience and it never works out. It's a conundrum. Clients think that's what will work, but it never works out..Do they leave or…?.Well, so this is the reason why we decided to do what we did. We decided we're not going to hire those people anymore. Now, if I could just step back for a little bit and say 'in life, there are games that you don't get to play unless you're all-in'. Think about the professional levels of athletics or sports. Think about disciplines such as accounting, the law, and medicine. Unless you're all-in, you don't get to triumph. As an example, think about marriage. If you think you can walk away, then you're not married. You have to be married because there are consequences, which stop you from walking away and at least, make you think twice about it. When we hire people as asset managers, we're looking for marriage but would you believe that some folks don't opt in completely? What's the reason for that? Why would an experienced person not be all-in? What we found is that there are various filters that inadvertently or involuntarily prevent an experienced person from being all-in. One of those is they lived experience from other companies that they've come from, so they come with software already pre-loaded, whether it's investment philosophy from where they're from, cultural biases, or value systems from different companies they've worked with. In South Africa, people tend to work for an average of two or three years in a company and if someone has ten years' experience, they come with three or four different softwares loaded in them and so, you have your own unique culture as First Avenue does, which really seeks you to be all-in/to opt in..Did you lose a lot of staff?.So, over the years, we realised that we'd get a guy who would come in two to three or four years, and then leave. Part of what it is, is that we say 'this is what we're doing. This is what we believe in. These are our organisational values and he/she would believe in those up to a point and then, they opt out as they would in a marriage, so we thought about it. What kind of recruitment strategy increases or maximises an opportunity for an investment professional to be all-in?.That's growing your own timber, effectively. How did you find Andrew Cuff to help you? Andrew is extremely well-known. He blew the whistle way back on Dave King in Specialised Outsourcing and he's done other very bold statements where he's been away from the crowd..Right..He sounds like an incredible catch to teach new people coming in..Well, first of all, I've known Andrew since his days at Investec Securities. I was in Investec Management, so that was from 2000 onwards and Andrew is always a guy who's all-in. He completely opts in and he's also spent a lot of time thinking about the numeric aspects from a valuation fundamental standpoint. We talked to him about a year ago, actually. We brought him in to come and lead our complete training program. We wanted to have someone who's dedicated to training so that the rest of the team stays focused on investments, so we really went back to the old days of having a head of DCF such as investment banks in the 90s, and a head of training, and we brought in a core of about five young ladies who came straight out of university. Now, what's fascinating about this is a lot of people say 'there isn't enough talent in the market'. Well, universities do a good job of getting people to pass exams but they don't do a great job of teaching people how to make connections and things. So, when we teach people, we have to teach them how to make connections and how to think laterally so you need a dedicated resource to be able to do that. Now sadly, by the way, Andrew has just stepped away from his role. We wish him great luck and great success.

Asset management talent: Higher returns from newbies, than poached rock stars – Hlelo Giyose

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