An Interview with Bill Chinery
By Joseph De Dominicis, FSA, FCIA — SOA Canadian Staff fellow
“Fortune sides with him who dares” -Virgil
The trade-off implicit in the above quote is central to modern finance and investment. And, as one might guess, the idea of reward for risk has been an important theme in the career of BlackRock Canada CEO Bill Chinery, not only when it comes to investing but also, as I discovered, when making career decisions. I had the opportunity to speak with Mr. Chinery about his progression from consulting actuary to Canadian leader of the world’s largest investment management firm. Find out how some well calculated risks and non-traditional career choices contributed to a successful and rewarding career.
When did you first decide to pursue a career in the investment world?
It was the late 80’s. I had been working as a pension consultant for about 10 years when the regulators in Canada started to control defined benefit plans to the point where, as a consultant, I was no longer able to do anything really innovative. I had always been intrigued by the investment world, so I decided to build the investment consulting practice at Mercer. At the time, the only firm doing that type of consulting was Russell. It was a risk worth taking. If things didn’t work out I could always go back to pension consulting. However, I found the investment area much more interesting, and quickly realized that there would always be a future for me there—even if defined benefit plans ultimately met their demise.
How and why did you move from a career in investment consulting to investment management?
As an investment consultant I started to feel like I was coaching from behind the bench. I wanted to be a player on the ice. I decided to join a quantitative investment firm called YMG Capital Management. When I joined I had to take a cut in pay and I had to write a cheque to become a partner. My friends and former colleagues couldn’t understand why I would leave a very senior position and a bright future in consulting to join YMG. But I wanted a change. When I left, I joked that in consulting I was charging by the hour, but that in money management I was charging by basis points—so I effectively made money while I slept.
From YMG Mr. Chinery moved to Barclays Global Investors (BGI) which was acquired by BlackRock in December 2009.
When you moved into money management did you find that there were gaps in your investment knowledge?
Yes, definitely. The textbook investment knowledge you learn as an actuary works when you are consulting and giving advice, but when you actually start managing money a lot of practical issues come into play that you need to learn. There is a big difference between reading things in textbooks and actually executing on those things. I learned a lot of that practical knowledge by working with, and asking questions of, others in the business.
How much of the traditional market theory found in textbooks (i.e. efficient frontiers, CAPM , etc ) do you actually believe to be true in practice?
You quickly realize that the market theory you learned studying for actuarial exams or the CFA is not perfect in practice. I believe elements of it. In certain asset classes the efficient frontier is stronger than in others. I would argue that emerging markets, and even Canadian equities, are not completely efficient. On the other hand, US Large Cap is one of the most efficient markets in the world. To beat Large Cap US equity markets by any significant amount is very difficult; to beat emerging market benchmarks by a large amount is very possible. There is a spectrum. What I believe and have focused on throughout my career is the concept of return per unit of risk [relative to the benchmark].
It is clear that you enjoy your job. What aspect do you like best ?
When you are at the top, the best part is you get to do exactly what you like. You can take the company in whatever direction you want as long as you are delivering value to the shareholders. I enjoy surrounding myself with extremely intelligent people—that allows me to choose what I want to do and delegate the things I don’t want to do, or the things that are not well aligned with my skill set.
What are some of the things you don’t like, or that are not well aligned with your skill set?
This might sound strange coming from an actuary, but I am not very good when it comes to the details. I am good at appreciating the big picture, developing high-level strategy and managing people. When it comes down to actually executing on the minute detail, I’d rather leave it to other good people to make sure it happens. I am fortunate to have a team of smart people around me who are very good at that.
I imagine leading the Canadian office for the world’s largest money management firm comes with a fair bit of stress. How do you manage that?
Lots of people today get worked up over things they can’t control—that is what causes stress. I spend my time focused on what I can control—if you can’t control it, don’t worry about it.
In your role as CEO you have appeared as a guest expert on the Business News Network (BNN). You seem ready to respond to any issue that comes up. How do you prepare for that type of TV appearance?
To be honest, the first time I appeared on the show I was not comfortable. I am a capital “I” introvert—so I don’t like being the centre of attention, especially on TV. Our marketing people thought it would be good for the firm and good for me. I decided it was worth the risk and did it. My first appearance was to discuss the impact of the US Fed announcement in real time. It was a very specific topic that I could research and prepare for ahead of time. That made me feel more comfortable.
BNN liked my comments on the Fed Announcements, and wanted me to appear as a guest more frequently. They asked me to start providing commentary on whatever the issue of the day was. Those appearances were more difficult to prepare for because you had to be ready to discuss a range of possible topics.
How did you prepare for those appearances?
Even before appearing on BNN, my normal routine has always included reading the Globe & Mail, the Wall Street Journal, the National Post and the Financial Times every morning, and the Economist each week. In preparation for an appearance on BNN, I would read in more depth on key topics and would talk to my portfolio managers to get their opinions on what issues might come up. With that extra preparation I was able to discuss big picture implications of most of the issues that arose during the interview. And, let’s face it, a few days after the show no one is really going to remember exactly what you said as long as you weren’t too far off.
Click here to watch video of Mr. Chinery on BNN in June 2012
As an investor have you made any market calls that, in hindsight, you thought “I really nailed that one” or “I was way off on that”?
When I first joined BGI, I would use our ETFs—and, in hindsight, I made some good calls in emerging markets. Where I’ve sometimes struggled is individual stocks. A good example is RIM. When RIM fell from $50 to $25 I loaded up – now the stock price is well below that. When you lose your objectivity you shouldn’t invest. In the case of RIM I thought, “I’m a Canadian, I’m from Waterloo, I love the company, and I know it.” It seemed clear to me that the company was going to survive and do well. I didn’t anticipate how much market share they were going to lose as a result of product delays. RIM may have their renaissance again, but the point is, when you let emotion influence your investment decisions you can get into trouble.
When you look ahead over the next decade, what challenges and opportunities do you see facing the Canadian Economy?
Canada has a strong banking system and great resource and energy sectors. Those sectors make up 75% of the Canadian market and I see a bright future in all of those areas. We are in a better sovereign debt situation than most countries and, if we can stay the course—continue to control costs and debt—I think that the next decade will be great for Canada. I wouldn’t hedge our dollar against any other currency. I think we will continue to be one of the best performing economies in the world.
What challenges and opportunities do you see facing the Actuarial profession?
To survive and thrive the profession almost needs to “burn itself down” and return to risk as its main element. There are so many more “non-traditional” jobs in banking and finance that could be developed if we got away from simply licensing people to work in the various streams— and instead focused on the fundamentals of contingencies and risk in all dimensions. These days, financial institutions are crying for trained risk professionals. There is an opportunity for the profession if we focus on filling that need.
Bill Chinery retired in late 2012 from his position as Managing Director and CEO of BlackRock Canada. Mr. Chinery currently serves on the Canadian Institute of Actuaries Board of Directors.