Karen Watkin
Welcome to AB's Alpha Females, the Multi Asset Investment podcast from AllianceBernstein. I'm Karen Watkin and I'm a fund manager in the Multi Asset Solutions team Here at AB. The Alpha Females are those women who have developed unique areas of expertise and made their mark in the investment industry. For many clients, generating income from their investments is a priority. But market conditions are very different now from those that we've had over the past decade. So, taking a flexible approach to income and getting original and informed perspectives to investing is more important than ever. In this series, my guests, the Alpha Females share their expert insights on the key questions for investors on the hunt for income. They'll also be telling me about their career journeys, the challenges they've faced and the lessons they've learned along the way. We often hear that we exist in a world of man or woman versus machine, where we mere mortals risk becoming obsolete through the advances in data analysis, AI or some other technology. Yet Steve Jobs said technology is nothing. What's important is that you have faith in people, that they're basically good and smart and if you give them tools, they'll do wonderful things with them. As portfolio managers, we want to use technology to do wonderful things when investing for our clients. And we need talented individuals to help organise and understand the best ways of getting the technology to work for the greatest effect alongside our people. Portfolio managers need sophisticated tools to comprehend the masses of information at their fingertips. And technology needs to be built with their investment philosophy and process in mind so they can deliver on their objective of generating compelling returns. One of those people who works at the coalface, or more accurately, the interface of technology and what we do is Rosalie Candido Louw. She is co-head of AllianceBernstein's Portfolio Solutions. Rosalie works with investment technology and operations teams to ensure that together they can generate the best outcomes for our clients. She's been with AB for two decades and in that time, she's seen big advances in both technology and the way we work. She's also been recognised for her accomplishments last year, winning a major award in the US for excellence in asset management. Rosalie, welcome to the podcast.
Rosalie Candido Louw
Thank you. Great to be here.
Karen Watkin
So, I mentioned in the introduction that you've been in asset management for two decades now. How have you seen the industry evolve over the course of your career and what role has technology played in that?
Rosalie Candido Louw
Technology has always been a tool that we've had as we've managed portfolios, but over the past 20 years it has really become more core to our day-to-day. We're using Technology to access data, scrape data, analyse data, build portfolios, run optimizations, decide how we're going to trade, decide how we talk to clients. AI is becoming a bigger and more important part of, of everything we do, and it has for the past while been an integral part of our day-to-day. We can't escape it. Everything we do is using technology and understanding how we're going to shape decisions and help us make better decisions.
Karen Watkin
And what do you think those advancements have meant for ultimately what we can bring to clients in terms of the types of investment strategies that we can run for them?
Rosalie Candido Louw
We've gotten a lot faster. Technology has let us or enabled us to make decisions much more quickly using a much richer set of information. The growth of systematic strategies and really a democratization of things that used to be or investment strategies that used to only really be available to the most sophisticated investors who were coming into a hedge fund or a private vehicle or a bank doing proprietary trading. Now these things are things that anyone can go and buy in their personal E trade or Schwab or Rocket Money account.
Karen Watkin
And to that point, Rosalie, now there's the technology around how these strategies can get kind of traded on the exchange. But joining up that technology now means that, like you say, the person on the street can actually, with a tap on their phone, be investing into these super sophisticated complex investment strategies.
Rosalie Candido Louw
Right. And it's the whole chain. It starts with the availability of data. We're able to use AI or even just sophisticated programming languages to build strategies that are going to capture inefficiencies in the market. Things like when a dividend pays, a stock price will drop and there's an arbitrage there, or in a merger deal, the way that the, the target and the acquiring stock will move, we're able to very quickly capitalize and access those returns and put them in vehicles that, as you said, you can invest in with a tap on your phone. And that's something that I don't think would have been possible 20 years ago.
Karen Watkin
Like you say, it's really the end-to-end impacts of the technology that are so impactful. And so, when you think about how all of that has evolved, you know, over the last couple of decades, what have you observed in terms of, you know, what it ultimately means for investors and the way that they work? Have you seen changes in terms of what it means to be a portfolio manager and the type of skills and way that, you know, PMs need to work with this new technology?
Rosalie Candido Louw
Absolutely. It's becoming the case that because data is so available and there's so much data available that portfolio managers need to be able to parse through all of this data. They need to be able to find the needle in the haystack and try and find the thing that everyone else isn't seeing. A company will have their earnings call and everyone immediately knows what was said and the market starts moving immediately. Portfolio managers need to be able to find that extra insight and kind of get ahead of that. And I think that that's really where AI is starting to come into play, where we're able to use technology to build tools and try and find those insights that maybe we have the intuition, but the technology will help us access it and help us have more conviction in our views and just parse through the immense amounts of information.
Karen Watkin
So when you think about what that's meant for investment processes, how do you think that that's changed in terms of, like you say, probably historically, a large part of what it took to be working in investment management was that you just needed people to actually crunch through a lot of this data, to source the data, to analyse it. But now, if technology is able to do all of that for us, what's the role for the human beings?
Rosalie Candido Louw
The machines and the technology will help us understand the information, but it's up to us, and it's up to investors to really know what to look for and know this seems off and understand when the machines aren't right, everyone is going to see a stock moving. But it's up to the portfolio managers to really and the analysts to understand like, hey, well, this is important, and I think it's up to the people to understand, to really separate the information from the noise. And we have tools to do that. And that's really how the interconnectivity of all of the data and all of the tools that we work with has really been one of the biggest changes over the past 10, 20 years. Where it used to be, you had your risk system, you had your portfolio system, you had your trading system, everything was, we would connect, maybe there'd be an end of day batch cycle to share data amongst the different tools. And now it's really becoming. Everything is intertwined and everything is embedded in the same underlying data and we're all looking at the same data at different parts of the process so that we don't need to be doing the copying and we don't need to be spending time making sure that this data set matches this data set and we're talking about the same thing. It's really just. It's becoming all an integrated platform. And I think as we've been seeing the evolution of the systems that we use to manage our portfolios and really manage our process; the interconnectivity is really the place that there's been the most consolidation and continued consolidation. How can I see my factor exposure or my exposure to different components of the portfolio right alongside a trade I'm thinking to make? How can I, within a couple button clicks, think about, oh, well, if I do this, if I add this stock to the portfolio or if I do this hedging trade, how would that then impact my risk? How would that impact my expected return? And I can do that with just a couple clicks of a button and then make the trade.
Karen Watkin
So, when you're thinking about making our investment processes more effective and efficient, how do you think about what the right balance is between what technology can bring, what the people can bring, where we can, you know, where perhaps processes or procedures actually can improve things? How do you get that balance right?
Rosalie Candido Louw
We want to use technology to free up time. So, things that we're doing, repeatedly building a report, doing things like reconciling, ticking and tying, doing calculations, technology should do all that. We want technology to free up people's time so that we can actually have those debates and make those insights and make those decisions. And it's the people that are going to be the ones that are actually pulling the trigger and saying, yes, but the technology is an important tool to help us make better decisions. Whenever I'm talking to anyone junior or really coming up in their career, the first piece of advice I always give is that you need to always understand why you're doing something and how you. This little piece of code you're writing, or this report or this question that you're being asked, what is the end state? What is the big picture? Because understanding the whole process and really kind of getting back to the desired outcome is so key. And that's where the people come in and the process, right? It's the, what is the goal? And then how could technology help me get to the goal faster and more effectively or more efficiently?
Karen Watkin
And so where do you think we go from here? What do you think new technology will bring to us in asset management?
Rosalie Candido Louw
I mean, I think it's going to be. It's hard to have a conversation like this without talking about AI. If we think about big things that have happened over the past several years, it's blockchain, which has really kind of been technology that has allowed us to connect dots and have a single golden source of information. And cloud computing, which has allowed things to become much faster and more reliable. And we don't need to have data that's hosted here or hosted there. It can all be integrated and connected and then AI is helping us now analyse and make better decisions. And AI is evolving to start to do things. So, agency AI is something that will be helping us to automate tasks and actually see something and do it. And this could be in the trade settlement or reconciliation, anything that's a rule. We could have the machine follow the rules and do those things and then free up our time to really draw the insights and connect the dots.
Karen Watkin
Fantastic. And I mentioned in the introduction, Rosalie, that last year you got this award for excellence. So, I'm interested to hear what does excellence mean to you?
Rosalie Candido Louw
Excellence is to me, the bringing it all together, being well rounded and the horizontal kind of cross-sectional understanding of here's how this task or this process fits into the whole. Here's what the client is looking to achieve and so here's how we can all work together to achieve that and be it. Building a strong process and really having a connected, integrated, collaborative environment I think really helps us achieve that. And having strong teams and strong collaboration is so important in helping us really achieve what we're promising and hoping to deliver to our clients.
Karen Watkin
And in terms of that integration, you know, you've talked a lot about it in terms of integration from the technology perspective, but as you've just said, actually it's equally important in terms of being integrated from the people side of things and having teams that can collaborate closely together. So how do you think about building that type of integrated collaborative culture where actually the people can deliver the best outcomes for clients?
Rosalie Candido Louw
You know, I think it's so important to bring your true self and open up and kind of come to work and come to your team with an open mind and an open heart and like a feeling of here's who I am, and this is what's important to me. And you know, I'll come, and I'll talk to my team about here's what I did this weekend, or my kids were doing this and not just have the, oh, I'm in the office and I'm doing my work and I'm going to just have my separate life. I mean, there's that Apple TV show severance where the work life and the home life are completely separated and that to me is so backwards. And yes, there are boundaries, right. But really kind of opening up and sharing and liking the people that you work with and having that collaborative environment where you're comfortable going and asking someone, what are you doing? And why is this important and how does this connect? I think that's so important in building a strong team that is always working in the same direction and understanding that everyone obviously wants to deliver the best for their clients and themselves and succeed, but understanding that we succeed together, even just as we think about how we physically sit in the office. Right. And sitting all together. It used to be the case that everyone was in their offices, and you would come and you have to knock on the door, but now everyone is. This is just how the world is changing. Everyone is together and you overhear people's conversations, and you get so much insight from listening and learning and sharing. I always advise and mentor that you should be comfortable knocking on the most senior person's door and saying, do you have five minutes? Could you explain this to me? And having everyone that's working on something for a client understand why we are doing it makes the outcome so much richer and really like the team and the family environment is so important.
Karen Watkin
I totally agree. And I think, yeah, you and I have both absolutely seen that. You know, we've both been here for a couple of decades and I think, you know, a large part of, you know, our careers has been because of that culture where early on you could learn from everybody. And like you say, it was that kind of open-door culture where you could always ask questions. And I think what you said about bringing your whole self to work is so important because I think that's ultimately what builds the trust across a team. And otherwise, it can become a very kind of transactional kind of relationship. Right.
Rosalie Candido Louw
And I think during the pandemic when we were locked down and at home and people were joining and you'd only know someone via Slack chats or maybe a zoom, I think we saw it shift a little bit. It became a little bit more transactional, and we've made huge efforts to really reconnect. And now that we're all back together, I see it as really making such a difference.
Karen Watkin
Yeah, absolutely. And I also think while it is so important being together, like you say, for those interactions and building that collaboration, I also think it was really interesting actually in terms of how big a role technology played in connecting us through Covid. And actually, all of a sudden, we were all working from and zooming into each other's homes. Right. So, all of a sudden you had this window into everybody's lives. And I think it actually had a really positive effect in terms of some of those team dynamics. Right. Where it removed some potential barriers and gave you a very different insight into your colleagues.
Rosalie Candido Louw
That's true. I can think of someone's kid shows up on their zoom, or, you know, my kids run my zooms. And it was all good. Right? This is, you know, you're really learning about people's whole life. And, like, when you understand someone's true self and their real person, and maybe they're having an off day at the office, but it's because they had a toddler up all night, you have a lot more empathy. I think it just makes all of your interactions more collaborative and more productive.
Karen Watkin
And, Rosalie, I know, you know, through the course of your career, you've done lots of different things, but I would say one of the key things that I always think of with you is that you're kind of seen as this problem solver. Right. You can take difficult questions and challenges and figure out how to bring it all together.
Rosalie Candido Louw
Yeah.
Karen Watkin
What do you think makes a good problem solver?
Rosalie Candido Louw
You always need to start with, why am I doing this? What is the problem statement? Like, what are we trying to solve? What are the challenges? What's the history here? And approach the problem with the outcome in mind and then take another kind of pivot and say, okay, well, is this like something we've done before? You don't need to reinvent the wheel every time. Actually, we shouldn't reinvent the wheel every time. We need to have processes that are repeatable, that are standard, because this gives us scale. It lets us do more and do more better. And so, kind of with those two tenants first, like, the why and have we done this before? Then can we adapt what we already have? Maybe what we're already doing just needs to be challenged or changed a little bit and streamlined, and that'll help the existing processes. We need to make sure we're continuously evolving. And I think about it like your closet at home, right? Like, you go shopping, you add new things. You have to clean out the old things. Right. You don't need to keep around all of the history and the baggage. You want to make sure that everything you're doing, you're doing with the best process and the best technology and the best thinking, and it allows us to be leaner and allows us to keep innovating without baggage from the past. So, you know, just the constant innovation and constant reevaluation of what are our needs. Is this working? Is this not working? How can we continue to be streamlining our processes to make everything we do, everything we do best.
Karen Watkin
So, what would you say your three key insights have been? Or three kind of key lessons that you always try to keep in mind when you're looking to balance the technology with the people and the processes.
Rosalie Candido Louw
It's the why, right? Why am I doing this? What are we trying to solve? And have we done this before? Is this like this other thing? And maybe we just need to make a couple small tweaks and then the third one would be making sure we're continuously improving existing processes, never get stuck in the, oh, well, this is how it's always been. Well, that's probably the worst reason ever. And if someone, the moment that's said, it's like, okay, well, let's pause and take a step back, right? That is not a good reason. So, but really always coming back to that, like, what is the why? And then how can we be most effective and most efficient?
Karen Watkin
Fantastic. Rosalie, I could talk to you all afternoon but thank you so much for your time today.
Rosalie Candido Louw
Thank you, this has been great. Thank you so much for having me.
Karen Watkin
Hearing from Rosalie. I can clearly see the gains we've had from technology and investing are both the speed and quantity of data that we're able to access, manipulate, and analyse goes an extremely long way in terms of the amount of information that we can bring to our investment process. But what it means then is that you still need the people to be able to interpret and analyse that data and ultimately be able to join the dots, you know, in the most effective way to develop those investment insights that will ultimately generate value for our clients. I also thought it was really interesting, you know, what she mentioned at the beginning about the end-to-end connections of technology and what they've done from an investment perspective in terms of really democratising some of the investment strategies that are now available to, you know, to a wider audience. And so, I think the fact that it's made sophisticated investment strategies so much more widely accessible, you know, is a huge benefit to the rest of society. And in addition, one of the key things that Rosalie was able to highlight was this idea and the importance of integration. So not just integrating your technology end to end but really integrating your people. And having a collaborative culture where people are able to really work together in the most effective way is so important to deliver good outcomes. And culture plays a huge part in that. We talked about the importance of bringing your whole self to work and how valuable that is to really be able to develop those deep trusted connections with your colleagues, you can ultimately succeed together. And with that, I bring to a close this episode of AB Alpha Females, the Investment Podcast with me, Karen Watkin. It only remains for me to thank Rosalie. This series was produced by Richard Myron from Earshot Strategies.
