The world is full of must-reads and self-help books. Some take common sense and position it as divine wisdom, while others aim to help readers formulate concrete thoughts and consolidate ideas. Asked about her approach to taking on a new role, Honor Solomon points to a guide she believes sits squarely in the latter category.
Legal & General Investment Management’s (LGIM) head of retail distribution for Emea was hired from rival BlackRock in 2014 with a simple task: to take the firm’s dominant position in the institutional market and repeat it in the retail space.
Before Ms Solomon’s arrival, the insurer-owned asset manager was the kingpin of the pension fund investment world, but had limited success with financial advisers and could have been accused of neglecting the discretionary space.
She says her task, as set by LGIM chief executive Mark Zinkula, was simple. “Mark said, ‘you build it. Look at the markets, look at what we have in place and look to see how to get us to number one’.”
The development of her turnaround plan was inspired by The First 90 Days by Michael Watkins, published the year before her arrival at LGIM, which claims to provide “success strategies for new leaders”.
Ms Solomon says: “I’m a big believer in the book. I spent the first 30 days really getting a sense of the team and the market that I had become head of. The next 30 days was forming a plan as to how we were going to structure the team, and what our strategy would be for the next five years. And then I spent the subsequent 30 days implementing it.
“[At the end] I had a new team and new strategy in place and a way forward. It was fast moving, but an interesting thing to do.”
LGIM may not have reached the number one spot, but the tactics adopted by Ms Solomon have certainly had a positive effect. The firm topped the Pridham Report’s net retail sales chart in the second quarter of this year, largely driven by the popularity of its passive products.
The asset manager brought in more than £1bn in the three-month period, pipping BlackRock to the top spot. The firm was praised by the report author, Helen Pridham, for its improved distribution strategy. Net new business more than doubled from the first quarter to a record level, with index funds and property in high demand.
It has proved a relatively quick ascent for Ms Solomon. Having studied in Paris, she stepped into the financial world as an intern in 2000 in a bid to improve her French. A year later she was entering Merrill Lynch’s London office in the firm’s investment banking arm, working in global relationship management.
Work with equity and fixed income trading clients quickly led a role focusing on Merrill Lynch Investment Management’s institutional investors. A year later that business became part of BlackRock.
“I went over to BlackRock and no one had heard of us, so we were going up and down the country talking BlackRock. It was completely unknown, and so it was a good way to start spreading the name. BlackRock then bought Barclays Global Investors and suddenly I was working for the biggest asset manager in the world,” she says.
Having spent her final three years at BlackRock working with retail clients, LGIM came knocking. Ms Solomon explains: “I wasn’t looking, but I had a very persistent headhunter and I thought, ‘what have I got to lose?’. Fifteen interviews later I knew I had uncovered a really good opportunity at LGIM to shape a business.”
She jokes about friends in the industry mocking her for leaving BlackRock to sell index funds at LGIM. Three years later, in light of passives’ rapid elevation in the minds of many retail investors, the decision looks a sensible one.
But Ms Solomon has not given up on active. She stresses that there is still a place for the firm’s fixed income and active equity products, particularly within the discretionary space.
Her desire to shift the retail business away from simply selling passive funds to financial advisers was underlined in 2015-16 by the hiring of industry veterans Simon Hynes and Stephen Gray – the latter joining from Axa Investment Managers to lead sales to the wealth market.
“The intermediary business is pretty much the DNA of our [retail] business. But we weren’t tapping into the wealth market in the same way,” Ms Solomon says.
“Our active fixed income capability is very strong, and on our active equity side it’s about concentrating on those high-conviction concentrated portfolios and talking to clients about the strategies we’ve got.”
The firm’s bricks-and-mortar property fund is another focus. Though LGIM did lower the value of the strategy by 15 per cent during the sector’s slump last summer, unlike its peers it refrained from gating investors – a decision Ms Solomon says has stood it in good stead.
“We have had a lot of momentum in the discretionary and the financial adviser market,” she explains. “The point I get from clients is not just that we remained open, but also that when the going got tough, we remained in touch. That was appreciated and we’re reaping the rewards of that now.”
But lower-cost offerings are taking a growing share of business. LGIM is looking to replicate institutional success with its smart beta franchise in the wholesale space. It is considering bringing across a multifactor fund – Future World – as well as launching single-factor smart beta products.
The company is also hoping to tackle both Vanguard’s growing dominance in the passive multi-asset space, and the popularity of multi-asset absolute return strategies, such as those run by Aviva Investors, Aberdeen Standard Investments and Invesco Perpetual.
Ms Solomon says: “We have a multi-asset target return fund. It’s a team approach and a cost-aware solution with active asset allocation. We are engaged in that for the future, but I see that as more for the discretionary audience.
“Where we have had a lot of success with financial advisers is our multi-index funds. That was one of the key attractions: the range of risk-targeted strategies is ideal for growth and income needs.”
In the more immediate future, Ms Solomon has bigger issues to contend with. Most asset managers have spent the final weeks of the summer deciding whether they will shoulder the cost of external investment research once Mifid II unbundles this from trading costs next January. The vast majority have now decided to take those costs on to balance sheets.
LGIM has yet to confirm its post-Mifid position. Meanwhile, its January 2016 decision to unbundle costs ahead of time – and pass on these charges to clients via higher fund fees – has left it isolated.
Ms Solomon describes LGIM’s position as flexible and opens the door to a change of heart.
“What we were pushing for is transparency of cost and to make sure we were a first mover. But it is something we are looking more and more into as things evolve. We are continually looking,” she adds.
Aside from this issue, she says the company’s focus over the next 12 months will be a variation on a familiar theme: “More of the same; diversify by client, and diversify by product”.
CV
Honor Solomon
2014 – present
Head of retail distribution Emea, Legal and General Investment Management
2009 – 2014
Managing director, London discretionary team, BlackRock
2006 – 2009
Director, institutional sales, BlackRock
2001 – 2006
Global relationship management, global markets and investment banking, Merrill Lynch
