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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  October 1, 2017 10:00am-10:30am EDT

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david: did you always know you wanted to run fidelity? >> i never felt any pressure to. david: did your father say if would be the ceo? >> he was not the guy -- david: did your father say if you worked hard, you would be ceo? >> he was not the guy to make promises. david: was accompanied into growing up with your father and family being famous? >> we were not famous at all. i think this is the moment that i have been waiting for. >> would you fix your tie, please. david: people would not recognize me if my tie was fixed. i will leave it this way. all right. ♪
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david: i don't consider myself a journalist, nevertheless i -- nobody else would consider myself a journalist. i began to take on the life of being in interviewer, even though i have a day job. how do you define leadership? what is it that makes somebody tick? did you always know that you wanted to run fidelity, and did you feel pressure to run it when you were younger? abigail: i never felt any pressure to and i certainly never knew that i would actually get to the position that i have gotten to now. i was always interested in the business, it was impossible not to learn about it. between my grandfather and my father, they were both passionate. and they both loved the idea of building a business that focused on taking care of its customers and i always wanted to be involved with it.
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but of course, when you are young, you do not know where life is going to take you. david: your grandfather started the company in 1946. abigail: he began life as a lawyer. the family word is he was frustrated and bored being a lawyer. he gradually drifted away from his practice of law. he loved stock market. this would have been in the 1940's, shortly after the securities act of 1940, which was the foundation that enabled mutual funds to come into existence. he purchased a small legal entity called "the fidelity fund," that had one employee, and began using that legal entity to run money for friends, extended family, networks of people and that was how the business began. david: your father, most of his
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career was at fidelity? abigail: the organization was small when he joined. it was basically an investment boutique. his father, yes, was president ceo. there were probably several hundred employees at the time and he was one of them. david: what did fidelity do or your father do to make it become so large and successful? abigail: the key ingredient was, he had that passion that my grandfather had for investing. he also had a passion for building a business. that was something i think that my grandfather probably did not have because he was completely focused on being a great investor. my father had a vision to do more than just have a great investment capability. he wanted to build a business that would extend and expand, and be sustainable beyond any market cycle. david: so you are growing up in boston, your father is building
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a company that is becoming one of the biggest mutual complexes in the world, was a complicated growing up with your father and family being famous, or were you relatively anonymous as a child? abigail: we were not famous at all. david: you aren't? abigail: this was the equity market in the 1970's, david. nobody in the equity market was famous. people thought the equity markets were dying back then. people were asking my father, why are you still doing this? david: you grew up relatively modestly? abigail: we were comfortable, but not any lifestyle that anybody would be wanting to show on t.v., or be particularly impressed by. david: you knew you wanted to go to harvard business school, or not? abigail: i was definitely thinking about business school, but i would not say i have the confidence to be sure that i could actually make it there and be successful.
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after i finished in college, i wanted to go into business and get a good is this experience. i had worked at fidelity during the summer, so i came here to new york and i worked in the strategy practice for management consulting firm. that was a great experience. i had been a liberal arts undergrad, so being immersed in business analytic challenges was a terrific experience. david: did your father say, ok, now you have an obligation to come to the family business? abigail: he never said i had an obligation to come into the family business. it is interesting because both of my parents always encouraged me and my siblings to do what we wanted to do. do the things that we were most passionate about with our lives. my father in particular, his family, his father's family,
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before his father had become a lawyer, they had a dry goods store. they had run it in their family for a couple of generations. his uncle had been pressured by his family to go work in the dry goods store. he hated it. he did not enjoy the work. he did it because they did it to follow the tradition and going into the family business. it made a really impression on my father. he said i never want to pressure my kids because i would not ever want my kids to have this life that his uncle had. david: on your own you chose to go to the business. did your father say that if you work hard in 20 years or 30 years, you will be the ceo? or did he never promised that? abigail: he was not a guy who made promises to anybody. david: so when you are working in a family business, and your father is the ceo, is it awkward
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at times because people presume you will rise up? abigail: it can be awkward, particularly when people don't know you. if they do not know you, they tend to presume something about you and it tends to be one extreme or the other. as with any work environment, everybody has to show up for work and do their best job that that they can to produce the best work product that they can and make their contribution to the business. over time, people get to know you. they appreciate you for what you do. don't forget, after my -- part of the business i went into the equity management part. as an equity analyst, you are given responsibility for a group of stocks and you have to make recommendations as to whether the fund manager should buy, sell or hold the stocks. you are judged by how well you
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do on your recommendations. if you tell all the fund managers to buy stocks up and down, then you do not do so well. knowing can really excuse that. david: what do you think investors want, low fees, good service or high returns? abigail: everything, they want all three of those. you better be doing more of every single one of those every year or you will find yourself behind. ♪ david: let's talk about
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fidelity. how much money do you manage?
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abigail: we have almost $6 trillion under administration. that includes money that we manage and money that we record keep that other people manage. we manage over $2 trillion, about $2.5 trillion and inequities, fixed income, money market and other assets. david: your company is privately owned, but it is owned by the people that work there and your family. any investment bankers, along and say you should take this public? abigail: it has happened. [laughter] david: the chance of that is zero i assume? abigail: by the time i came along, the investment bankers gave up on making that pitch because they made it to my father and it never went anywhere. david: what is the reason you don't want to take the company public? abigail: as with a lot of things, there are trade-offs. the first thing that my father always said is, we do not need the capital that going public would bring us.
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if we don't need the money, why would we ask for it? beyond that, it is nice to have the flexibility of having the financial accountability being a little tighter. for example, we do not have to go through the practice of reporting publicly for quarterly earnings. that is explaining the earnings to a broad audience. we do watch our earnings very carefully. because it is all of our money that is the capital base of the company. do not be confused. returns matter, they matter a lot. the consistency of the returns probably matters less because everybody is in for the long-term. people are not trading in and out. we do not have the benefit of having public currency to be acquisitive, which is one reason why we generally have not done acquisitions of other companies.
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most companies that are acquisitive do it using their publicly traded securities. david: the company is privately owned, but it is not owned only by your family. half is owned by the people that work there? abigail: yes. david: your father decided to do that for some reason because he owned 100%, so why did the family decide to let employees own, roughly half the company? abigail: he always thought it was important to have partners. this is a pair a competitive business, where we are trying to attract and retain the best talent. the decisions that you have to grapple with are often complicated decisions. it is important to have partners. that is how you have partners, is make them shareholders with you. david: fidelity is famous for actively managed funds, meaning you have people picking stocks,
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so forth, in recent years, index funds have come a long. etf's and so forth, do you provide those, and are they competitive with you, or you don't care whether somebody wants to go etf fund or actively managed fund? abigail: we want to bring products and services to people that help them meet their investment objectives. any reasonable product is something we are interested in. we have a very robust line of index funds right now. we are doing great in that business. we have the lowest fees, we have great service. we also have a partnership to
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have a full range of etf's, some of them are proprietary etf's, some are not. our goal is to have everything that someone could reasonably want on our platform, and make it available to them in a way that is most value added. david: you mentioned low fees, good service, but what do think investors mostly want? low fees, good service or high returns? abigail: everything. [laughter] they want all three and you better be doing more of every single one of those every year or you will find yourself behind. because every year, i tell everybody because it is what i hear from our customers -- give me more, and give it to me for less money. david: who manages your money? does fidelity manager money? -- manage your money? does that person get nervous because you are the ceo? [laughter] abigail: i think part of my role as the ceo is to also experience the company has a customer. i do have a couple of representatives who work as a team, who call me several times a year and take me through the portfolio.
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we talk about what is going on with the different funds that i am invested in. of course i go through other avenues, but i want to hear from them, how they explain it. it also gives me a chance to ask them questions. david: you are on many lists as being one of the wealthiest people in the united states. does that upset you when you see those forbes lists or bloomberg lists that say you are one of the wealthiest people and how do you feel and how does that affect your life when you see numbers attached to your name? abigail: i just assumed not to see a lot of numbers attached to my name, but that is probably inevitable of what happens in the world today. people want to speculate about putting numbers next to people's names. i do not think that reflects anything about what you are and how you live your life, and what you do. i certainly lead a comfortable life, but i was raised by parents who -- a father who was
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an equity manager in the 1970's, my mother is a real new englander who likes to live frugally and does not like a lot of excess. david: talk about the difference between building a company and going into one where someone else has built? abigail: with a big company you have that big thing up and going. you have that machine in motion. sometimes it is hard to get people to think about what is the next new thing. i talked to people often about looking out at the horizon. what is on the horizon? what is beyond the horizon? ♪ david: let's talk about your
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role as ceo. 45,000 employees, do you have to travel the world to see them? abigail: i spend a lot of time traveling because we have major campuses all around the country. we also have our international company with different locations all around the world. i try to make sure that i get a balance between being in front of employees, being in front of customers, almost every time i visit a major location around the u.s., i do a town hall meeting. i hate as many of our client
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events as i can because that is a great opportunity to go and see a group of clients in a very efficient way. david: you have a preference for flying commercial, you have told me. abigail: i am traipsing through airports and getting on planes all the time. david: do people recognize you and come up and say gimme some money advice? abigail: [laughter] david: or not that much? abigail: usually the people that recognized your employees. if we are in a city with a big base of employees, i am recognized. occasionally, clients, but not generally. david: after the show, they certainly will recognize you. abigail: [laughter] absolutely. david: do you feel pressure to be a role model for women, recruit other women? abigail: asset management in particular i think is a great career for women. the idea that you come in and you are responsible for covering a bunch of securities and making recommendations.
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it is your responsibility to do that work. you get to structure your time, and ultimately, built your own personal franchise and being good at that. that is a great opportunity for women, i believe. in our organization, we have some very senior women, in addition to myself. and we have a real need in our business right now to recruit more women because when women, customers, into our branches, very often, the first thing they say when we are trying to get them paired up with a representative is, i would like to work with a woman. we do not have enough women who our customer facing reps to serve all the women customers to come in. david: do they say that because they presume women are better money managers? you would agree with that? abigail: they might be thinking that, but they might be
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thinking, i am just more comfortable talking to a woman. we have studied women as customers compared to men as customers and they are really quite different. women tend to underrate their abilities as investors and be financial stewards of their own financial situation. they tend to describe themselves as beginners, even though they actually really know more than they give themselves credit for. they tend to be more methodical studiers and learners of of financial information. very often they believe that a woman would be easier to talk to about something that is as personal, and potentially complicated as their financial situation. david: talk about the difference between building a company and
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going into one where somebody else has built. what is the different type of pressure? if you build a company, you can say i did this on my own. on the other hand, you can flop and say you have nothing. you have a good company and you can make it better. but if you flop, people will say you were not qualified. how do you measure the differences? abigail: those are two really different things. certainly, i watched my father taking fidelity from a boutique to a broad financial company. my husband has been through three startups now, so i certainly experienced vicariously the startup world through him. them versus my own experience, which was, by the time i started at fidelity full-time when i got out of business school in 1988, we were probably up to at least 20,000 employees, something like that.
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with a big company it is a machine in motion, but there is a different kind of need to make sure that you appropriately find and manage small problems so that they do not become big problems that could potentially mess things up for you. also, without perpetual motion of a legacy business, sometimes it is hard to get people to think about what is the next new thing. i talked to people often about looking out at the horizon. what is on the horizon, what is beyond the horizon? when everybody is running the machine because it is all in place and working, there is a tendency to look at the short-term and focus on incremental opportunities and not look ahead to the really big opportunities. david: as you look at what your future will be, how many years would you like to consider doing this?
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abigail: i am really excited about what i have the opportunity to be doing right now. it has taken me a lot of years to get here. i have had a lot of different jobs around the organization. i have been with the company almost 30 years now. i think this is the moment that i have been waiting for for. it is an opportunity to really run hard and run fast for, i think as long as i can. i have a lot of energy right now and my goal is to bring my full energy to what i am doing. i do not have an endpoint. i really want to build a business that can grow and sustain itself beyond me. i think that is really something i got from my father because that is what he always wanted to do. he wanted to build a business that would grow and thrive beyond his time. he focused on planting the seeds
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to make that happen. david: your two daughters, would they ever like to go into your business or you have no ambitions in that direction for them? abigail: i would like to see them be successful, passionate adults that make a difference in the world. whether it is in the world of fidelity, or the world of something else, it is up to them. david: you have talked about some of the pleasures of the jobs you have, but what are some things you do not like? other than an interview like this, perhaps, but what do you not like? abigail: [laughter] there is certainly frustration. i like to think of frustration as a motivating source. often, with a big company, the most frustrating thing is trying to get things to move quickly enough. particularly in financial services where a lot of your operations are geared around safety and security that builds
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in a natural resistance to change. david: how do you deal with philanthropy and the expectation that you will give away a fair amount of money? abigail: yeah, so, we have a family foundation and we have a terrific staff at that foundation. i work informally with them. other members of my family, my mother, my siblings, and of course my father, who is the main driver of it for so many years, our all engaged and working with a confident staff to make sure we're giving lots of money. david: when you go out to dinner in boston, do people come up to you and say, how about this philanthropic thing? or they do not recognize you or they do? abigail: they mostly don't recognize me. sometimes i cannot get a table. i often cannot get a table so i don't eat out that much. [laughter] david: you ever tell them who you are? maybe get a table? you don't like to do that, not your style? abigail: it does not happen. ♪
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