Then imagine you walk in to your new office, ready to take on the challenge of that new role and you are told your star forward – who just keeps on delivering week after week – is leaving.
That analogy illustrates what happened to Peter Harrison when he took on the role of global head of equities at Schroder Investment Management earlier this year.
Excited about joining what he described as a company with “a really nice culture, really good people and one I have a huge amount of respect for”, his first day was mired by news that star UK equity manager Richard Buxton was leaving the firm after 11 years to join Old Mutual Global Investors.
“Richard is quite a distinctive manager and for me there wasn’t a right answer in how to deal with that from an industry point of view,” Mr Harrison explains. “It is hard to say, under those circumstances, if the manager should continue to run the money until he leaves, but in this case that was the right thing to do for the clients. Commercially it may not have been the right thing, but it was right to give the clients that breathing space.
“That was a baptism of fire,” he admits.
In some ways the pressure on Mr Harrison became more intense as news of Schroders’ deal to buy Cazenove came to light a week after Mr Buxton’s announcement. The acquisition would include the appointment of big-name managers such as Julie Dean and Paul Marriage.
“People automatically assumed Richard knew about everything,” Mr Harrison says. “Of course, he didn’t, but immediately people tried to connect those dots.”
In spite of many industry commentators viewing the departure of Mr Buxton as a negative event for Schroders, in reality what was left in the aftermath was a more evenly spread UK equity team. No longer was Mr Harrison faced with having just one key player; he now had a handful, each with differing styles and products to offer the market.
He adds: “The UK is our biggest market and it is the single most important thing we have to be good at. To put all of that on one manager doesn’t feel like the right way to organise the business.
“The changes we have made mean we now have a collection of managers that don’t run money in the same way – although you still get this ‘hot bed’ of ideas – and ultimately we have more to offer. For me that is the right way of organising that part of the business.”
Having previously held roles at JPMorgan and Deutsche Bank, Mr Harrison joined Schroders in March from RWC Partners, where he had held the chief executive role since 2006 and built the business from 20 people to 100.
He explains: “At JPMorgan I was on the equities team and I enjoyed seeing that business grow. The reason I stopped doing it was because I was spending too much time travelling and because my boss was a fantastic guy and I was never going to get promoted.
“I went to Deutsche as global chief investment officer with £500bn in assets. There is always something ready to go wrong there,” Mr Harrison jokes.
He admits that having done that, it was a nice change to join a smaller company.
“You know everything – the make of the coffee machine, how much the coffee cups cost. Every single person in that firm I had hired myself [and] I had chosen the coffee, the curtains, you name it – I had a hand in it.
“When I left Deutsche, I had given it all up, but after six months my wife told me she didn’t want me at home every day. That was when I went to RWC.”
However, after seven years in the hot seat at RWC and age 47, Mr Harrison found that he had little more to change or improve – he had hired 10 teams and the company was running smoothly.
“Once you have chosen the coffee maker, you’ve done it! I had got all the teams in – 10 teams, 100 people; it was all working and when you come to work and give everything a quick glance, that is all there is to do,” he says.
“I didn’t want to find myself at 48 doing less and less, getting more and more bored. [Schroders] was the perfect step; it was a job I knew I could do well.”
Once the dust had settled from Mr Buxton’s resignation and the acquisition of Cazenove, Mr Harrison got to work hiring key people, his latest being Mark Lacey, whom he admits had been on his radar for years.
“Mark is someone I had wanted to hire for so long that it is embarrassing,” he states. “I have wanted to hire [him] for about three years and when he left Investec, I had probably been speaking to him for a year before that; it was just an opportune moment to hire a great investor.
“When you see really good managers and get the opportunity to hire them, you just have to do it and figure out the rest later. You have got to keep the bench full of talent.”
With any range of funds, there is always going to be an underperformer. For Mr Harrison’s suite, this comes in the form of the Schroder Global Alpha Plus and ISF Global Equity Alpha funds managed by Virginie Maisonneuve. So what plans does he have to strengthen this weak link?
“I look for problems in top-performing funds as much as I do in bottom-performing funds,” Mr Harrison explains. “The global team is very well resourced and has a number of stock names where the analysis has simply been wrong. In the short term some of the top-down views are working so I don’t see any major process issues.”
He adds: “I think when you are looking at teams that start to underperform you have to ask, ‘Have they lost their mojo?’ ‘Have the people changed?’ ‘Has the philosophy started to creak?’ To me none of those are flashing red. You then look to see if maybe the style is out of fashion and you really have to challenge yourself. Any firm is always going to have something that is doing better than something else.”
At RWC, Mr Harrison was known for hiring teams, rather than sole managers, although he claims this wasn’t intentional and he was always on the look out for new talent.
“Would I be scared of bringing in a new team? Absolutely not,” he asserts. “But I am lucky here to have a lot of choice. I can sit back and think about what we have got.”
This way of thinking extends to the product range that, as global head of equities, he oversees. Mr Harrison says the structure behind the funds is how he wants it to be, but he does identify a number of areas that he envisages improving.
“We need to move to more higher alpha products. The Asian Total Return fund has been a huge success, but you can’t grow one fund forever. We need to have more of that; those types of products,” he states.
“We also need to work more on ‘solution’-type products. Our multi-asset business is great, but think what we did with Maximiser [fund] 6-8 years ago. What I want to do is find more things that we can do different; we have to find those areas that are the next Maximiser and that is an interesting challenge.”
He is quick to add, however, that these are merely ideas and nothing significant is in the pipeline.
“The key thing is to look at what capabilities you have got, really get inside the heads of the fund managers, and ask who is capable of going out and worrying about this. You don’t want to experiment with clients’ money and we are not quite there yet.”
CV
PETER HARRISON
March 2013 - present
Global head of equities, Schroder Investment Management
2006-13
Chief executive, RWC Partners
2004-06
Chief investment officer
for Europe and Asia Pacific,
Deutsche Asset Management
1996-2004
Head of UK specialist funds, managing director and head of
the global portfolios group, JP Morgan Asset Management
1991-96
Portfolio manager, Newton Investment Management
1988-91
Analyst, Schroder Investment Management
