WILL HOBBS, CIO OF BARCLAYS WEALTH MANAGEMENT

Video Transcript:

For this week’s  Career Insight episode we interviewed Will Hobbs, who's the chief Investment Officer at Barclays Wealth Management. Over the course of the conversation, we had the opportunity to have an in-depth discussion about his professional career.

Will Hobbs: Career and Background 

Will Hobbs is the current chief Investment Officer at Barclays Wealth Management. Prior to getting into finance, Will spent the initial part of his youth travelling the world and pursuing his interest as a chef only after which he began his career in finance where he started out as an analyst. 

From all the way back from his school years to deconstructing his current role as the CIO at Barclays Wealth Management, here is what we discussed.

Can you tell us a little bit about your background? Were you always interested in a finance career?

Growing up, what I really wanted to be was a chef. I was always obsessed with food and I didn't really do any sort of GCSE or A levels that would tend me towards finance. I wasn't interested in stocks and shares as a youth at all. I was obsessed with cricket and cooking. 

My old man was in the army and my mother was a sort of garden designer. He's a garden designer and dragged me around kind of garden centres and stuff like that. Initially they wanted me to get into the army and learn some discipline but ruled it out in the end. 

In school, I studied English, History, Theology, Sculpture, and French literature but I didn't do very well since I didn’t work too hard on them. Eventually, I ended up going to Oxford Brooks quite briefly and then began to travel.

Can you tell us a bit about your experiences with your travels?

Yes, I lived in Turkey for a while with a Turkish family in Ankara and learned how to speak Turkish. When first arrived in the country there was a military coup going on. My night in Ankara, I saw these tanks rolling down the streets and I asked about it from the guy whom I lived with. He said “oh, it's just the army trying to persuade the government”.

So yeah I spent some time out there and I was lucky enough to travel around the Middle East and all that, while f trying to work out what I was going to do when I got back, and I ended up cramming into a French literature course at Oxford Brooks but didn’t really like the subject.

Eventually, I went out to Italy and did some cooking where I ended up as a commis chef in a very nice sort of hotel restaurant in a place called Umbria, right next to Tuscanya's. It was a beautiful beautiful and amazing place but ripping off tourists with a huge ruffle. Anyways, it was sort of during that time that I realised that I wasn't quite good enough to be a  professional chef. It's such a competitive industry and the work was unbelievable where you start work at seven in the morning and finish at three at night. Then you get a couple of hours of sleep and you get back afterwards. 

I worked in the industry for 3 months and I think I got 200 quid at the end of it and realised that's not going to pay the bills. That’s when I started writing letters to lots of chief executives in the financial services industry and one very nice chief executive called Steven Clark gave me an opportunity as a stock analyst role which I apprenticed for a while and that’s where it all started. 

Would you say that your unique travel experiences have helped to shape your career? Do you think you learnt attributes from different places and cultures that were then deployed later in your career?

It's a good question. The main thing I learnt in Turkey and speaking Turkish is that the way that people responded to you is entirely different. And also the understanding of cultural nuances that you've managed to get just because of the difference in the language and the way the language is constructed. Turkish in itself is a history lesson. Learning a language and travelling around the Middle East was it was an eye-opener. 

Apart from Turkey I also I spent some time in Jordan and also in Jerusalem during some troubling times there which has really broadened my horizons. It made me aware of the world outside and being aware of cultures. Once you come from a very comfortable life in this country and you start travelling abroad on your own without anyone to support you, you gain confidence which changes your view on what you can achieve. 

In the early part of your career, how much of it was technical know-how and accumulation of knowledge as opposed to your ability to just get on with other people and internal bureaucracy How do you balance it?

Well that’s a really good question. When started out, quite a lot of my first part of my career was really about survival. There was the blowback from 2000, then the blowback from the great financial crisis which really you just got to try and stay employed. During that time, I hadn't really discovered the passion for what I wanted to do. 

Work was just work to a certain extent.  I was doing equity analysis, so I was covering consumers, and consumer businesses around Europe.   It was interesting. I got to meet amazing chief executives. I didn't really quite appreciate it at the time, the people I was allowed into the room with. I was a little bit conceited about that kind of stuff and now I look back and cringe a little bit. 

At one stage during my quite far in, I met a guy or I was working for a guy who was the chief investment officer and he had said that rather than looking at the world bottom up, I should try and think about the world top down and start thinking about the macro sort of aspect He sent me to do a master's degree at Birthbeck doing development economics and it was at that point I really discovered my interest in economics which would have horrified my 18 year old self. For example development economics is kind of making poor countries rich or how to the framework by which you could think. Once you started thinking about it, it's almost impossible to stop thinking about it which is a weird thing to say but what really changed my career in a way; I had suddenly found that I was really interested and it made turning up to work totally a totally different experience.

The technical side came because I was enjoying it more and I wanted to do more so I sort of gathered gathered momentum from there. But I do think a lot of it is just being a good person as much as possible. What you need to do is build up networks with people whom you can trust. The bigger your network, the more your ability to get stuff done that you want to get done or that you collectively want to get done which makes you more effective, and therefore that makes you more effective as a leadership. 

Networking as you mentioned, is one of the things that we strongly encourage our students to do but for some, it can be intimidating. So what advice to you have for students on how to interact and communicate with senior figures such as yourself?

Well,  I'm always delighted to kind of meet people anyway, and so if I've ever got diary time, I'll always kind of make time. And I found the same was true of much more senior people than I am now when I was kind of starting that if you sort of reach out, you will get a positive response as long as it's not too onerous. I was always surprised by the degree to which people did say yes. So my advice to people on the court, is just give it a try. I mean, they can only say no, they won't be offended. They certainly won't be offended. They'll be flattered

One of the things I have learnt during this crisis is that actually you can do more meetings if you just do zooms. So there is a bit of a sort of a trade-off there, which is you can potentially mentor more people because it doesn't take much to do a ten-minute meeting with someone

Tell us a little about your role as a Chief Investment Officer. What does your typical day entail?

Well, it's different in different places. The easiest way to look at it is within Barclays, what we've done for the mass affluent and wealthy customers, so not the ultra network up there. We have organized the investment value chain into lots of distinct parts and what I mean by the investment value chain is what it takes, all the different activities and people it takes in order to deliver a multi-asset class, diversified portfolio fund that is the highest possible quality. And if you think about it along those lines, you've got to, first of all, you've got to profile the clients and to see what kind of what's their risk appetite, what's their appetite for losses and so on

 Then you've got to start building your asset allocation. So you've got your strategic, your long-term asset allocation, your tax class allocation, then you start going into the kind of colouring in aspects so things like manager selection, which funds to buy, how to blend them, that kind of thing. Apart from that, the profiling all the way up to the constructed fund, that's what I'm ultimately accountable for. Now, within that, there are some decisions that I'm on the hook for. So within the strategic and tactical asset allocation, in particular, those decisions come up to me for yes or no. 

But mostly what you want in that situation is nott key person risk; you don't want some kind of me turning up one day and feeling in a different mood tl the next and making a different decision with the same information. So what you have is a very organized research process, decision support tools, very strictly organized meetings which take into account all sorts of behavioural biases and so on that allow for a relatively consistent decision-making framework. 

Then there's all the sort of various governance and represent stuff that I do. So a lot of it is research, making sure that I'm on top of the world's economy and markets so that when decisions do come to me, I'm able to understand and assess and handicap the information correctly which takes a lot of time. As you know, understanding the world at the moment is obligated. 

There's also a lot of the kind of administrative stuff which is around how decisions are made, making sure that I'm on top of all of the various bits of the investment proposition, where we're taking bets, how we're taking bets, the framework by which those decisions are being made, the people that are making them.

And then there's a fun bit like doing media, that and sort of trying to represent the team as best as possible. So it's a great job. I love it. It's a great fun job. It's so different every day. There's times when there's huge, almost unbearable pressure and that's less fun. But most of the time it's great. And I've got great people around, so that makes it really fun. 

As you mentioned previously, on dealing with pressure, what advice do you have for our students for when they are on the hook for making significant decisions?

Yes this is a really interesting kind of behavioural problem that we face. For example, when we went back, we did a lot of risk profiling of our customers before 2007 and 2008 and we accepted huge losses which sounded right. But when it's happening, it is always mind-blowing; when you see the S and P like gap down or you see something crazy happen and you see scenes you haven't seen ever. And you realise that the media is telling you this is the end of the world this time around SO maintaining your cool is very important. 

That is why we try and keep the people who are making the tactical asset allocation decisions away from meeting clients in because you want them to be dispassionate. You need to continue to look at the facts as much as possible to whatever extent they can be mustered. 

Also if we look back to the most recent pandemic and what helped us a lot was that we'd spent quite a lot of time beforehand building decision support tools. And one of those was an investor sentiment indicator, which we backtested very thoroughly so that we understood what the thresholds were and what the hit rate was of going in the opposite direction. So when investors were extremely depressed, if we did the opposite and bought stocks at that point, what would be the chances that we were right over whatever time period. This gave us a very good idea of the shape of how those probabilities played out. So when it came to it, when the investor sentiment indicator went off the chart, that was one of the things that helped you say, right, okay, we need to do the opposite. We need to add to risk. We luckily had sufficient dry powder to be able to do so, which was luck, to be honest. A lot of people went in over risks and were unlucky. They had to de risk at the bottom just because of process, whereas we had actually derisked beforehand, not because we saw the pandemic coming, just because we didn't see much excess return in the major risky asset classes at that point in January. And that allowed us to put quite a lot of high yields stocks exposure right at the bottom. This was difficult because always at that moment, everyone was v struggling to keep cool. So your risk teams are questioning your decisions. At this point you need to stick to process and make sure that before you go into any crises stress tested and you're very aware of its parameters and its strengths. You've got to have good people around you as well where I was very lucky on both of those counts that enabled us to make the right decisions for clients. But, yeah, it's very difficult to replicate what it's like in a really messy market when you've got positions going the wrong way

Mental health is a very big thing at the moment for a lot of young people, particularly given the challenges of the pandemic. Do you have any advice on dealing with stress when ut starts to impede on your personal life?

One of the things that I learned about myself during this crisis is that I need to be around people to a certain extent. Working from home with just two small, quite aggressive dogs for company did not do my mental health any good at all. We've learned, all of us during this crisis, that, everyone has problems, don't they? Everyone has stuff to deal with. People can be much more open and honest about the stuff that they're suffering at home and the stuff that they're trying to endure.

What's your process now for interacting with more junior members of staff? Especially if they tend to be in the office a lot.

Barclays has been quite cautious about sort of getting people back to work. Some people are very nervous about coming back to work spaces more generally. Some people have gotten used to working from home and feel very comfortable. But I feel particularly the younger colleagues have suffered a good deal. But that part of the huge thing about offices and the reason why big companies, or one of the reasons why big companies still exist, in my opinion, is this idea of knowledge.  In economics, you talk about if you get lots of people in the same space, it's very difficult to kind of replicate digitally, but knowledge just spills over usefully. It is a very difficult process to replicate, and that's really important for young people. A huge amount of what I learned was just by being around senior economists who've done it all and having informal chats, which you can sort of set up an informal chat, really. It's not quite the same, is it? I don't think it doesn't have that sort of magic quantity. So we are trying to get people back into the office as much as possible. My team, we need to be back in the office two or three days a week, because knowledge spillover is really important in research, and you can have research meetings.

I've noticed getting back into the office, and particularly with the younger team members, they really kind of relish being able to sort of, say, share what they're reading at the moment and send it on to you. And I do too. I really like that kind of more informal process. And it's just nice to see people, isn't it, go out for some lunch or have a drink or whatever. I feel hybrid working is a very good way of doing things. But the more we can get back to two or three days a week versus one or two days a week, which we're at the moment, we'll all be very pleased

The current generation is obviously more comfortable with digital assets and things of that nature. Can you share some of your thoughts on role played by digital assets in the industry?

It's a fascinating question. I just don't know at the moment. So I can't quite work out. I'm really interested, for instance, in what blockchain technology could do to the existence of the company. Because if you think sort of sideways and go back to kind of old economic theory by Williamson, a Nobel Prize-winning economist who decided or argued that the existence of a company is in part down to transaction costs and sort of trust issues. So because I struggle to sort of say, get a stranger in the other side of the world and trust them, what I do is I bring them inside a company and therefore I can internalize the transaction and share tacit knowledge and that works that way. Now, if I could institutionalize or trust via blockchain, does that mean large companies are no longer as important and so on? I struggle a bit more with some of the currentpopular digital assets just because I'm not sure I agree with some of the use cases. So Bitcoin obviously is the one that everyone talks about. But there's the sort of the trade-off problem which is that if you're going to be a currency, you've got to be boring and you're going to be a speculative asset, you don't want to be boring at all. 

You can't have a currency that changes dramatically in value on your walk to the shops. For example suddenly I can't buy a bottle of milk to take home my children. That doesn't work. So I'm watching with great interest, but at the moment they may have some diversification benefits. That's something that we are looking at, but it's still too young a data set to really kind of work out. So it'll settle a bit and a lot of people are getting very interested in it. We will continue to watch at the moment. But yeah, it's interesting though what you're looking for when we build the asset class toolkit, what you're looking for is distinct exposures. So you can get equity duration, you can get credit, risk, commodities and offer something a bit different as well. We're trying for the mass market and for everyone possible is to offer this one-stop shop, multi-asset class global fund which is going to bring you the frontier in Institutional Asset Management returns. And you should just have it chugging away in the background. You can buy bitcoin, you can have all sorts of stuff, technology, fund but have this chugging away with your savings over the long term and you'll probably be better off and have more chance of hitting the cost of your savings. So the way we've organized our team is to make sure that we only pour kind of expertise into excess returns where we think there is evidence of excess return generation. So we don't do style bets, we do single stock bets, but through funds and we do TAA. But elsewhere we sort of try and get the market return quite carefully. So it's really just about making sure you've got all weather returns plus some alpha jugging away with your savings in the background and everyone else can have fun with the rest of it.

What advice do you have for a young person who is keen on learning more about the market? Where do you think they should start?

The problem I always find is where to start. And I do think for me, the first thing is to get an interest like, what are you actually interested in? That's where you start. I don't think Expected Returns is a very good place to start necessarily because it's big, imposing and it's got quite a lot of financial markets jargon.My old boss rent a book it's called Making Sense of Markets which is quite a good place to start because you've just got to try and amongst it all to I don't agree with everything he says in there, but it's a very good way of sort of just getting interest and starting to try to work out what you think.The most important thing is you've got to work out what you think and what your angle is and you bring your own.

It all of that pours into who you are and what you can bring to markets if you're going to be in markets. So if I look at who I try to hire for the Tactical Asset Research Team, I'm trying to hire different backgrounds who bring different perspectives, but at the same time, I would expect them all to have the same threshold of evidence. So they've all got to believe to a certain extent inefficient markets because I don't want to have that debate. But what I do want is different perspectives on the outlook for inflation, and how different parts of the capital markets complex are reacting to it. I want their different interpretations on that so that we've got a debate which omes from having different university degrees, different experiences, different specialisms. The way in for me was not to start kind of right at the top and sort of start reading the heavy stuff. It was really just to discover an interest and then the terminology becomes a bit easier to understand and also remember because what I found when I started is that I learned the terminology over and over again. I just kept on forgetting it. 

Most of us believe that the global market side has always been much more interesting than classic investment banking because of how dynamic it is. Are you of the same sentiment? What are you thoughts on this?

Yes, in this industry, one of the things that I've been blown away by is that during your life, working in a big bank you get access to amazing people and get access to genuine expertise and so on. It's an amazing industry to work in and to have the ability to look at markets, follow markets, and try and understand what's going on in the world. I find it a real privilege and really interesting and ever-challenging.