One of the most enduring lessons from our firm’s founders is the importance of stewardship — the idea that we should strive to leave our organization in a better place than when we joined it. Thoughtful, long-term succession planning is a key element of stewardship, and it was with that in mind that we recently announced the exciting news that Jean Hynes will become the firm’s next CEO in July 2021.
This will be my final annual client letter and next year Jean will write her first. I am now in my 29th year at Wellington, and I wanted to share a few perspectives, both reflecting back and looking forward. I hope you will forgive me that this letter is a bit longer than usual.
We are all just passing through, at each of our respective institutions, trying to do our part to position future generations for enduring success. We are, so to speak, trying to “leave the woodpile higher.” One way we do that is by deliberately developing those behind us, giving them space to lead, learning from their fresh perspectives, and stepping aside when it is time for them to take the baton. I can genuinely say with no false modesty that I am leaving the firm in better hands. Jean has led and she is ready. I’m also excited about Jean being in the CEO role and still being an active investor, running the Vanguard Health Care Fund. I like the idea of an investment-heavy, investment-focused CEO.
Some clients have asked me why now is a good time for this transition. Most importantly, as I noted, Jean is ready. She will have served as one of Wellington’s three Managing Partners for seven years when she takes the helm as the firm’s fifth CEO in the private partnership era. And at that point, I will be 60 years old. It’s time for fresh perspectives and new energy and leadership. I’m reminded of the quip by one of my mentors: “Better to leave five years too early than five minutes too late.”
On the mission
True north for Wellington remains investment excellence for our clients. If we can excel in our fiduciary role, we can literally help tens of millions of beneficiaries (real people with real hopes and dreams). We can help firefighters, police, and teachers working for a secure retirement. We can help students relying on university scholarships. We can help patients seeking care at hospitals. We can help families depending on social programs in countries around the world.
Never has that mission seemed more poignant than it does today, amid the global pandemic. Wellington has the privilege of being entrusted to manage the assets of more than 100 hospitals and health care institutions, and in some small way, we are seeking to support them in their lifesaving missions.
We exist for our clients. One of my predecessors coined a great mantra for Wellington decades ago: “Client, firm, self.” I heard him repeat it so many times that it’s emblazoned in my mind. I suppose it could come across as trite, but I think it carries deep wisdom. My predecessor would say: “If you are struggling with a dilemma, step back and first ask yourself: What’s in the long-term interests of all our clients? Second, what’s in the interest of the firm? And only last, what’s in your own self-interest? Things will very quickly be clarified for you.”
This “client, firm, self” mindset is ingrained in the fabric of our firm and guides the decisions we make today, whether it’s integrating sustainability authentically and deeply into our investment teams’ philosophies and processes; or making tangible progress at our firm on diversity, equity, and inclusion; or prudently seeking strong risk-adjusted returns for our clients amid high equity valuations and historically low bond yields. As another of my predecessors would often say to me: “We faced the challenges of our time. You will face the challenges of your time. They are not harder nor easier; they are just different.” And on we go.
My mentors have instilled in me a strong belief in “servant leadership” — the notion that a leader is there to help others succeed — and leading by personal example. I have come to understand that people can find themselves in very dark, fearful places, and that leaders can lend a hand, lift people up, absorb some of their stress, and guide them toward the light. Even in the darkest circumstances, there is always a path forward.
When I am choosing people for leadership roles, I try to identify those who are stress absorbers, not stress multipliers, and those who have a combination of low ego and big backbone (i.e., humility and courage). I try to find those who assume positive intent and meet the other person more than halfway. I try to find those who are fully committed to our clients and our collective success, and ready to put “two feet in.”
One of our long-standing traditions is for the Managing Partners to meet individually with hundreds of our leaders at year end, and we always have some “asks” of them. This year’s asks are: 1) stay very grounded in the mission; 2) embrace the growth mindset and challenge the status quo; and 3) role model constructive leadership (building bridges, taking responsibility, putting the best interpretation on a colleague’s words) because we observe the outsized positive impact of constructive leaders.
On learning from mistakes
We have a “learn from mistakes” culture, not a blame culture. One of our former Managing Partners was known for asking after every client meeting, “What could I have done better?” I’ve tried over the years to adopt a similar mindset and become more welcoming of feedback. There have been plenty of opportunities for improvement: I wish I had been more self-aware, more transparent in communication, more willing to acknowledge others’ valid but different perspectives, more forgiving, more willing to apologize, more cognizant of how I was contributing to the problem, and quicker to lend a helping hand.
Too many times, things went over my head and didn’t sink in as soon as they would have if I had been more open-minded and not quite so confident in my own opinions. It also took me too long to understand that it was not up to me to solve problems, but rather to put the right people in the right seats and empower them to solve the problems. I feel like I am learning more than ever at this stage in my life, especially about self-awareness and how the world works. I also remind myself, “When the student is ready, the teacher appears.” Truth be told, I have a lot of “dents in the fender,” but the car is still running!
On advice for my successor
I tell Jean that the most important thing is to be yourself. We all have different strengths and weaknesses. Don’t try to please people; rather, try to do the right thing to the best of your abilities and stay focused on the mission.
Find the truth-tellers who will debate you like a peer. Fight the nostalgia (don’t worry about past customs if they’re no longer right for our clients and our firm) and the deference (it’s remarkable how deferential people will be to senior leaders, even someone as warm, open, inclusive, and welcoming of feedback as Jean). Overcommunicate and lean into transparency, which builds trust (the magic word!). When people start mocking you for repeating yourself, you know your message is being heard.
We have exceptionally capable people, so continue to push out decision making to those closest to the issues. To quote one of my mentors: “Empower people and let them fly.” Treat people as adults — don’t manage to the least common denominator.
Wellington has to continue to “go our own way,” taking advantage of our differences and our distinctive strengths, while humbly working on our development areas. We can learn from our top competitors, but we shouldn’t try to be them. It’s analogous to what I tell early career investors, “Develop your own unique philosophy and process. You can learn from all of our seasoned investors, but don’t try to be them. Be yourself.”
Finally, stay grounded. The job is important, but it is not all-important. My three kids have a wonderful way of keeping me grounded. They could not care less that I am a CEO — which is great.
On culture and shared values
I have always believed that, in an intellectual capital business such as investment management, where our firm’s most valuable assets walk out the door every night, culture can truly be the sustainable competitive advantage. One of our industry’s great students of institutional culture, Roger Urwin, wrote that “culture has a tendency to regress to the mean without a lot of care and feeding.” I think there is profound wisdom in that observation and that it is particularly relevant in the virtual environment so many of us are in today. We can’t bump into the next generation in the hallways and have the informal mentoring conversations where the shared values are passed along. We have to redouble our efforts to not only perpetuate a strong culture, but also to evolve the culture to be more global, more diverse, more candid (without losing the kindness of the place), and more welcoming of challenge to the status quo. (As an aside, my favorite saying from the Wellington culture statement has always been: “Take your fiduciary duty seriously; don’t take yourself too seriously.”)
I was listening to a talk by Pulitzer Prize-winning historian Doris Kearns Goodwin the other day and she said, “Crises don’t so much form character; rather, they test and reveal character.” This past year brought a series of rolling crises (medical, economic, market, social, political), which were most certainly a test of character for us all. Through my lens, the true character of Wellington (a very special, albeit imperfect, place) came shining through. Among my 2,700 colleagues, I saw countless displays of resilience, compassion, teamwork, empathy, respect, courage, humility, inclusion, and an intense single-minded focus on the fiduciary mission. While I cherish the time spent with all of my colleagues in the office over many years, it has been inspiring and humbling to be let into each of their worlds over the past nine months — to see their individual challenges firsthand, to see their commitment to the cause, to see their kids pop onto the video screen, to hear the dog bark (often my own) at a tense moment, to deliver an inspiring two-minute speech while on mute, and to bring an authenticity and vulnerability to our work and our relationships with one another that we hopefully never lose. What struck me most of all was the humanity, the kindness, and the deep, genuine concern for one another.
On what’s next
A number of clients have asked what’s on my agenda for the next six months and then what’s next for me. Between now and my retirement at the end of June, I will focus on what I call the firm’s “three evergreen initiatives”: 1) long-term investment excellence for clients; 2) perpetuating and evolving a magnetic culture; and 3) stewardship — developing the next generation.
My short answer on what’s next for me after retirement is the four F’s: family, friends, faith, and fun. In terms of faith, mine teaches me to try to help the “least of my brothers and sisters.” On the charitable front, I have always been drawn to educational efforts for the underprivileged. I believe that education has the transformative power to change the trajectory of a child’s life. I’m reminded of the quote from the great Nelson Mandela: “Education is the most powerful weapon which you can use to change the world.” Coincidentally, the Wellington Management Foundation’s mission is focused on helping kids from disadvantaged backgrounds in our local communities around the globe.
So, I will end it there. Thank you to all the clients who have entrusted Wellington with their assets over the years. It is truly a privilege for all of us to be able to manage your assets and to play a small part in support of your respective missions, especially during these extraordinary times. I am grateful beyond words to have had the chance to engage with so many clients over the years and to develop so many lasting friendships.
I hope you and your loved ones have a blessed and peace-filled year ahead.
Don’t miss our recently released 2021 Investment Outlook, where specialists from across our investment platform share insights on the economic and market forces that we expect to influence portfolios in the year to come.