Where are they now? Ron Liling on how not to invest

Ron Liling

In 2006 Old Mutual bought Intech, the asset consultancy co-founded by Ron Liling. Liling was a major Intech shareholder but he and Old Mutual parted ways. He tells us what he's doing now and how not being "answerable to anything and everything" yields far better results.

Why did you leave financial services?

I left the industry in 2008 following the sale of Intech in late 2006 to Old Mutual. I was the largest Intech shareholder, and was very keen to explore a brighter future for Intech under the ownership and resources of Old Mutual. However, we never really saw eye to eye, and we parted ways by mutual agreement in 2008.

Where are you now?

I am currently actively managing my own investment portfolio including my own super fund, as as well as investment portfolios of a small number of family members. I also keep an involvement in the financial services industry through investment advisory board positions with a couple of specialist investment managers.

In what way is your new role different to your previous role at Intech?

The main difference is that I manage my own assets and don't have to be answerable to anything and everything that others are or are not doing. All my decisions are 100% in the best interest of the various portfolios, something that was not and is not possible in the financial services industry (institutional or retail).

What do you like about it?

As I mentioned in my response to the previous question, I like the fact that in managing my portfolios I am not answerable to others to the same degree that we were during my time at Intech. For example, I only do the research I feel is necessary to support my investment decisions. When I was in the industry, I would waste a significant amount of time on researching topics/ideas that our clients would want us to research, rather than us concentrating on where we thought our resources were best employed. I feel that I am significantly more efficient now and, not surprisingly, the investment performance of my portfolios is significantly better.

I also like the fact that I get to spend a lot more time with my family as well as explore other interests in my life. I travel a lot these days, and I am also involved again in football (soccer) coaching, which has always been a great passion of mine.

What don't you like about it?

I pretty much like everything I do these days.

What did you learn at Intech, that has helped you in your new role?

The main lesson I learnt is what not to do. These days, I focus solely on the "prize", ie. on the investment outcome. In hindsight, I wish we were more forceful at Intech in pursuing what we believed was right, rather than succumbing to the dreaded peer group pressure that all funds in the industry are under. My most interesting finding came when I first sat down and drafted an investment policy statement for my super fund. It was quite a lengthy document which covered every aspect of how the portfolio was to be invested. Interestingly, not once did the words "benchmark" or "peer group" appear in the document. The removal of these (benchmark and peer group) shackles led me to focus my efforts predominantly on two things, namely (i) preservation of capital, and (ii) searching for assets with sustainable and growing cash flows.

What do you miss about your role at Intech?

I miss the day-to-day contact with staff, clients, service providers, media, etc.

Would you go back to an executive role in financial services?

My first reaction is to say no. However, I would love to be involved in operating a "better Intech" business. What I mean by this is operating a business where the interests of all stakeholders (shareholders, clients, staff, investment managers, etc) are perfectly aligned - ie. where all benefit when things go well but, equally, all suffer when things don't go well. I feel that this alignment of interests is crucial if one wants to generate the best possible investment performance. If all the stakeholders share a common goal, the potential for conflicts of interest reduces significantly.

When AWM put up the Intech business for sale following its purchase of the combined Skandia/Intech business from Old Mutual, I decided to buy the business back and operate it under the above approach. However, when I approached AWM for permission to talk to Intech's major clients and its key staff prior to putting in a bid for the business, AWM declined.

For more, Ron Liling and Damian Moloney spoke with Penny Pryor on The brave new world of asset consulting.