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Silkarmour Boardroom In Conversation with Julie Schultz: Part II

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How a small town girl from Montana ended up managing a $100bn portfolio in New York

 

Lessons from the battlefront - An unfinished PhD, a front-row seat to the crisis of 2008 and rising from the ashes of Wall Street 

 

Last week we introduced our readers to Julie Schultz in the Silkarmour Boardroom series - click here to read Part I. This week we continue with the interview from where we left off last time: following a childhood spent in Montana, unexpectedly quitting a PhD program at Princeton University to pursue a career in Finance. This led Schultz, at the time a junior portfolio manager, to managing $50bn in assets in the middle of a crisis. Read on to find out her advice on career, take on the future of Artificial Intelligence, and list of Do's and Don'ts for fashion choices in the office.

 

Did you have a plan at that time?

I had done the investment banking rounds and interviews as an undergrad, just in case I didn’t get into grad-school. My college boyfriend was an engineering student but he had interned at Barclays on the IT side so I had the ‘in’ there a little bit. Part of me wonders sometimes had I not had that knowledge of investment banking, whether that career path would have ever even occurred to me. That’s one of the things that feels like an accident. There were no investment banks where I grew up, so it was never an occupation I considered. 

"The leadership went radio silence...When you aren’t being told anything, the speculation and the rumour mill goes into hyperdrive, you end up with a lot of question marks as to what is coming next and that morphs into stories and fear which isn't healthy for anyone."

So I quit my PhD and interviewed at a couple of banks and I just really liked the people I interviewed with at Barclays. It seemed like a group of people who were interested in the work life balance, maybe coming at the job with more intellectual curiosity and less of an ‘I have to make money at all costs’ attitude. It felt nicer – I don’t know if that’s necessarily the right word to be using but it felt like a good cultural fit for me. I got the job as a junior economics researcher but 6 months after I had interviewed and accepted the job, they called me and said ‘we’re re-doing some of the headcount in the bank between the rates group and the credit group. Would you at all be interested in company research instead of economic research?’  I had no idea really but I said ‘sure!’. That’s probably the happiest accident of my career: I ended up as a junior bank analyst, just a few years before the crisis. I got this really strong grounding in credit research and I already had the background in economics so I was able to meld both of them going into the financial crisis. I was a junior analyst for a couple of years, and then my boss’s boss who was head of the strategy group, asked if I was interested in moving over to that group.  I said yes and went to London for 6 months.

 

Life in Finance & The Crisis 

I had housing in Canary Wharf, and I’m one of the few people who likes it there. It’s effortless if you want to get away, with both Gatwick and City Airport easily accessible. Eventually the culture at Barclays started to shift as it hired entire groups from other banks, which is always dangerous as groups have a culture already formed and integration can be tricky. It stopped being a friendly environment. The unfortunate thing is the culture shift isn’t always avoidable, which is something that I am seeing where I am now. Leadership changes and active investors get involved and it’s a lot of pressure on the culture. 

"Having gone through the financial crisis really crystalized that the number of risks you have to contemplate is often greater than what your singular experience will bring you to realise."

In the end I decided to move to the buy-side of AIG in January 2008 so the timing was very interesting. I ended up managing synthetic CDOs and the product essentially died overnight - people started leaving. I was at the point in my career where I was junior enough not to have my wealth tied up in company stock, so it was less devastating for me and more of a ‘wow this is kind of neat to have a front row seat to what’s going on’, just to see how people were handling it.

How were people handling it?

The leadership in general, and this is across the whole street and not specific to my experience, botched communications left, right and center. This is one of those instances where letting your people know, keeping them informed every step of the way, even if you don’t have anything to tell them except that you don’t know anything and as soon as you know more, you’ll tell them. That is huge and that was completely absent, the leadership went radio silence. It didn’t feel nice. When you aren’t being told anything, the speculation and the rumour mill goes into hyperdrive, you end up with a lot of question marks as to what is coming next and that morphs into stories and fear which isn't healthy for anyone.

So what was your mind-set as you were going through it? 

I’m a fixed income specialist, so maybe I’m programmed to think about the downside more than the upside. But having gone through the financial crisis really crystalized that the number of risks you have to contemplate is often greater than what your singular experience will bring you to realize. The crisis was the perfect example of the importance of diversity of thought. Dick Fuld (last Chairman and CEO of Lehman Brothers) is someone who didn’t experience diversity of opinion for many years before the crisis, but certainly in 2008, when a diversity of voices could have told him that actually he could have sold to a Korean bank in June 2008 and gotten something for his shareholders. Instead, his shareholders where wiped out because no one was willing to serve as that voice. I always liken this to King Lear - there is the Earl of Kent who is incredibly loyal to Lear but he was telling Lear everything he doesn’t want to hear, so he gets banished. In the end, he was right - everyone needs an Earl of Kent, but this industry doesn’t lend itself to that. Nay-sayers get pushed to the sidelines or out the door. 

Did you yourself or anyone around you feel the tremors coming before the storm?

Within AIG, there were certainly people who knew that business was not as robust as it should be, but it still came as a surprise how much it tainted the rest of the firm. This one tiny piece of the business, even when the rest of the business was doing well, could bring down one of the largest financial firms in the world. That was not something anyone really expected to happen.

"Everyone needs an Earl of Kent, but this industry doesn’t lend itself to that. Nay-sayers get pushed to the sidelines or out the door." 

What happened next? 

I’d only been a portfolio manager for a year when the crisis hit. My product was dead, but when the people who managed the general account, which was about $50 billion at the time, decided to leave, I raised my hand and said ‘hey, there’s a spot managing the general account open, I would really like to move into that spot’. Things got shifted around and I got moved from managing a product that was dying to managing $50 billion dollars.

Sometime after I was contacted by a head-hunter. I’m still not entirely sure how the head-hunter got my name but I think it was from one of the traders I worked with at Barclays. That’s another important skill, to make sure you connect with not just the people you work with immediately but also broaden your touch points and connections. The people in your immediate group are unlikely to give your name to a head-hunter, so broadening your network is crucial. 

Any advice on jumping ship?

I didn’t answer the first time a head hunter called me. I wasn’t ready yet and at the time that was the right decision. You need to be ready. You don’t want to be calling a head-hunter back when you’re scared of change. You definitely want to meet with them in person as quickly as possible, so there’s no misinformation. Head-hunters are often hired for a reason, usually they have a good idea of what their clients are looking for and you don’t want to waste anyone’s time. 

The head-hunter said there was an interesting opportunity in Bermuda. I love New York so it was something I had to get my head around. I think specialisation is good but early on in your career, too much can be limiting. When I agreed to meet with the CIO of the company, we had this conversation for an hour that ranged over a whole bunch of topics and I thought ‘wow this guy would be really neat to work for’. The next step was to come down to Bermuda and meet the rest of the team. When I got off the plane, I immediately thought ‘there is no way this place will work for me – it’s too small and too hot’. My mind changed when I got to the interviews: the job opportunity just sounded fascinating so in the end, I moved. The people were awesome and I’m still in touch with a lot of them.

 

Advice to Women in the Workplace 

Why are so many women scared to have the conversations which are vital to make these career jumps?

 I was speaking to a young woman at work who was interested in being moved to portfolio management, and she asked me whether it was a good idea for her to go speak to the head of portfolio management. I said ‘absolutely you need to, even though I don’t think we have the head count right now, she needs to know you’re interested’. Having the conversation is vital. We may dislike rejection, but rejection really is the worst thing that can happen when you make your desires known, and the reality is it might have nothing to do with you or your skills or the other person’s view of you; it may just be situational. 

Why do women suffer from fear of rejection more than men? 

That’s an excellent question. Maybe guys are just used to being rejected. Maybe it is that we internalise things more, I do think that women are better synthesisers than men, we take many different inputs when we make a decision. When a man goes in and he is rejected, he probably thinks that it has to do with the other person, but we’re going to analyse it and say ‘well it’s probably this, and three weeks ago, there was this thing and that led to that other thing and maybe if I handled it better three weeks ago…’ Guys don’t even remember what happened three weeks ago as it is irrelevant, but we keep all this data in our heads. On the other hand, it is a huge advantage. Studies show that women make better portfolio managers when analysed over a long time horizon and its precisely because we take many more factors into consideration. 

"Rejection really is the worst thing that can happen when you make your desires known, and the reality is it might have nothing to do with you or your skills or the other person’s view of you; it may just be situational."  

Another example, one of the women I worked with was phenomenal with data manipulation and technical ideas. But she had no interest in being the face of an idea; she doesn’t want to be the one to stand up and take questions and face an antagonistic crowd. I think there’s a certain amount of truth to the ‘women taking things too personally’ idea and not wanting to take those hits on a daily basis, which you do have to get used to as a leader. To be a truly great leader means you have to do things that are unpopular and you’re going to have to fire people – I think women aren’t good at compartmentalising things. Men can separate their ‘golf buddy’ from ‘I have to fire him’ whilst women would take that to heart; the emotional toll is greater to women than it is to men in leadership roles. 

Do you think we strive for perfection too much? Men don’t seem to ask themselves ‘how can I be the perfect father and the perfect CEO at the same time?’ Why do we feel the need to? 

You might be on to something there. I was a perfectionist growing up. But in my freshmen year in high school, they would hand out the breakdown of your classes, homework assignments, attendance etc. I calculated that I could fail all of my first semester’s tests and still get an A in every class so I didn’t study and I got an A regardless. From that moment forward, I realised that I don’t need to know everything. Good enough is sometimes much better and with that extra time you can work on more important things – such as people skills. 

What do you think is the best way to empower women?

Airtime is really important. I’ve had managers who allow the juniors to speak where I was given a chance to speak fairly regularly so I could be viewed as knowledgeable across different topics. Especially in my current position, I try to get more junior people to speak – those at the back of the room, as opposed to those taking a seat at the table. 

What advice would you offer to women who are looking to enter your field?

Computer skills are great, and not just programming skills. You need to have the ability to work with excel and be comfortable with manipulating and understanding numbers. Being good at communicating technical things is one of those hybrid skills which requires both sides of the brain; that’s where women can have a real advantage over men. Whenever there is a chance to make a presentation at college which requires using technical terms, do that as much as possible.

Something else which is very important is to raise your hand when you’re interested in something and let people know what you want. Sometimes women don’t market themselves well. They expect people to know, ‘I’m doing a really good job, everyone else should just know’, when the reality is, in the modern workplace, people are focused on their own stuff. If you have something you’re particularly proud of, toot your horn. Send out an email to people who would be most impactful and cc’ your manager. I know women who have raised their hand for a promotion and their manager has been sort of surprised that they wanted to move at all. 

"Ironically, the communication piece is something that women are actually better at than men, but when it comes to presenting your knowledge and abilities it is the women who lack the confidence to do so." 

Getting to manage $100billion clearly does not happen just because you raised your hand. What makes you so good at your job?

Having the ability to think analytically, to pull information from many different sources and then presenting that as one picture that can be communicated to others is fundamental. 

Ironically, the communication piece is something that women are actually better at than men, but when it comes to presenting your knowledge and abilities it is the women who lack the confidence to do so. Men will stand up and talk very confidently about something they actually know nothing about, using the right buzz words, streaming them together in a way that actually makes no sense if you know what the topic is. But if you know just a little bit, then he sounds brilliant. 

Women have a way of answering questions without answering the question, but still without resorting to saying things which are simply untrue, like the men do. This is of course a broad generalisation, but typically women can talk around the question in circles, giving intelligent answers even when not knowing the answer to the exact question. The best thing of course is to say ‘I don’t know’ but people don’t do that, and I don’t think people on the other side of the table actually value it. When people are thinking about ‘Who should we promote?’, the ‘I don’t know’ person in the room is not on the list. That is something that we should change in our culture. 

Do you make an effort to say you don’t know?

I do it sometimes but there are also other ways. You could say ‘I don’t know the answer to your specific question but this is my reasoning’ and bring in something relevant, so the other person doesn’t leave the conversation thinking you don’t know anything - make them leave with an opinion about something related. 

"I would have liked my younger self to expect more from life."

You mentioned pulling from different resources; what’s the key activity or skill that allows you to have those sources to hand?

Reading broadly is crucial. Not just industry publications either. I think The Economist is the best thing anyone can read on the face of the planet, but there are other things you could use in a similar manner; anything that would give you touch points, not just across business and finance but across all kinds of subject matter. I think one of the things that will be hugely important for the future, is Artificial Intelligence.  If I just read business articles, I wouldn’t have seen it coming. But I’ve been thinking about this for years now, and it’s finally starting to get picked up by business journals. Just reading about science and what is happening there is important, even reading about what sorts of books are selling will give you insight into what people are interested in at the moment.

What would you advise to your younger self now? 

Salary negotiation. Coming from a place of not having very much of anything, to working with the sums of money I’m dealing with now, it felt like ‘this is a nice salary – this is my bonus? I was expecting half of that!’ But then you find out that it was half of what some other people got. I would have liked my younger self to expect more from life.

How do you approach this?

You need to mark yourself to market. We don’t need to get to a place where everyone is the same number of years out of college and making the same amount of money, but you need to have an idea of the range you can expect by comparing yourself to people with the same skill set, and then being comfortable with asking for the top of that range.  You may not get it but you should be asking for it. 

What habits are most helpful to keeping a work-life balance? 

I work out 6 days a week which I think is crucial to keeping mental clarity. It is a time for active meditation when I’m not thinking about anything else. Every Monday night a friend and I go rock climbing and it’s not only vertical problem solving, you also have to think a few steps ahead, so it’s having a physical comparison to my life. 

How do you assess your career moves?

I have a circle of friends who are my career counsellors and we’ve been each other’s career counsellors our entire lives so we can remind each other about certain things. We don’t always remember the bad parts but our friends do, so if I’m thinking about a big shift, I call these people and we go for a gab session to serve as each other’s mirror and conscience. They’ll say ‘here are the things you discussed with me last time so you need to fix this issue with the next job.’ 

 

The Future 

How do you see the future? 

Artificial Intelligence is something I’m fairly concerned about. I feel my comparative advantage is synthesizing different pieces of information, which is essentially pattern recognition. Whilst AI and computers were never that great at it, over the last four years, they’ve become fantastic at it. The technology has gotten its act together but it’s still primarily a people-relationship business. It will be a slow change rather than a big-bang shift to AI so I suspect I’ll still be able to get a full career doing this but I may be the last to have done this for my entire career. 

Do you think about that now?

I’ve been trying to think about an alternative route, for example is there a consultancy aspect that can come into this as the coders are going to need to know what to code. When computers can teach themselves what they need to be programmed to do, then no one will have jobs. 

Having grown up in Montana, I’m well-versed in all of the off-the-grid ‘flat earth society’, live-off-the land ideas, but that’s not something I’m interested in either. Right now, while ‘head-in-the-sand’ isn’t quite the right way to put it but I’m hoping the transition period will be quick and without too much violence. With AI, we have a real possibility of abundance with no human effort, which sounds amazing to me as I have a lot of other things I’d be interested in doing besides work.

Books you have recommended to people over the years?

Indonesia Etc.’ is one of the best books I’ve ever read. Recently I read ‘The Big Necessity’ by Rose George. It’s about human waste and how we deal with it across the globe. Another thing to consider as we think about a future with more people. 

Do’s and Don’ts in the office? 

I don’t want people to remember me for my clothes. I want them to fade into the background, so I use jewellery the way men use ties. That is the way you make yourself stand out. There’s a time and a place for colour but you should be careful. Tight is never appropriate and short is *never* appropriate, ever. I would also be careful with heels. I know the red soles are super trendy but they don’t work for the office. 

If you were Queen for a Day?

I’d give away a lot of money. To a variety of things, to research for multiple sclerosis and a charity called Daughters of Ayacucho and the Manhattan Theatre Club. I guess having money isn’t always bad.

 

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