CIO: After retiring from your role as
CIO managing nearly $500 billion
at TIAA-CREF, you took one of the
hardest CIO jobs in public pensions,
managing five New York City plans.
What made you decide to do it?
Evans: I actually thought I’d just be in
here with my feet up on my desk, you
know? (Laughs) Joking aside, I knew
what I was getting myself into. I’d
known Larry Schloss, who I thought
had the toughest job in the investment
management business. Really, it was
meeting [New York City Comptroller]
Scott Stringer that changed my mind.
He is absolutely determined to make
good government work, and if reform
of the pension system is what’s needed,
Scott was up for it.
One example—Scott was able to
work with us and the elected officials
and union representatives to create six
common investment meetings, which
is a lot better than the 54 that we used
to have. And this freed up the team to go out and visit our
managers, and have time to create some disciplined routines.
CIO: How else have you changed procedures?
Evans: All of our teams follow the same disciplined, due diligence process. We have an internal investment committee
that hears all manager recommendations to add or subtract
managers from the portfolio. And we have broad participation in the investment committee amongst the entire investment staff. The asset class heads rotate, and myself, the CIO,
and my two deputies are the permanent members of the
CIO: You’re in one of the world’s financial capitals where
people have many employment options. How do you attract
your best talent?
Evans: Ashby Monk at Stanford said that if you’re running a
CIO: As a former executive and
public pension fund, you have to find ‘the green, the grey, and
the grounded.’ The green are young people who want to get a
start in the business. Working for a large public pension fund
is a terrific first job, because you’re able to dig right in, get
directly involved in managing a very
large pool of capital, and work directly
with some of the best investors in the
country. If you’re grey, like me—and
Mike Haddad and Alex Doñé, my
deputy CIOs—we’re grizzled veterans
of the industry. We’ve been on the
private side for most of our careers,
been able to be successful in the busi-
ness, and this is our opportunity to
give back and to mentor young people.
Attracting the grounded, or those
mid-career, is tougher.
external advisor to ABP, what’s your
advice to others on “kicking the tires”
when selecting managers?
Evans: It’s similar to analyzing companies: You want to understand the
firm’s philosophy, watch their practice
over time, watch them react to unanticipated events, and then to be able to
understand—not only at the top level
of the organization, but down through the organization—how
decisions get made, and how the core objectives and the core
strategy of the fund are replicated over time.
Frequently, when a manger runs into a difficult performance patch, we get on a plane to go visit them. And it’s
frequently when we give them more money, because we
become convinced that the reasons for them falling out of
phase are transitory and not inherent to the portfolio. But
when you look at managers that we have to part company
with, they tend to get overwhelmed by the markets they are
in and begin to become very unpredictable to themselves and
to their clients. It’s very, very easy for this to happen. Money
management is tough, and you go through long periods of
time where you might be out of sync with the markets.
Right now, there are a number of active managers that
have really suffered in the Central Bank-led quantitative
easing market that we’ve had over the past number of years,
which has led to a massive movement towards indexing, and
it’s tough out there. — CIO
Read the extended interview online: www. ai-cio.com
#80 Scott Evans, CIO, New York City Retirement
System (page 32)
Scott Evans, CIO, NYC Retirement System
Exec takes on ‘toughest’ CIO job, successfully revamps procedures and attracts staff