From his show business background (Elizabeth Taylor was his baby sitter) to his relationship with predecessor Nick Lopardo, State Street Global Advisor's new Chief Executive Officer Timothy Harbert talks about his rise to the top of one of the world's largest money management firms. In an interview with Boston reporter Dave Kovaleski, Mr. Harbert also shares his vision for the future.
How did you get into money management?
A I was on the train one day (in early 1973) reading an article in the New York Times about the best-paying jobs. One ... was accountant. I was always good in math, so I said, `I'll be an accountant.' I went to Bentley College, got my degree in accounting in October 1976, and started working at a CPA firm called MD Oppenheim in Brookline, Mass.
(A few years later he joined Price Waterhouse). I spent six months with Depository Trust Co. in New York City devising a cost allocation program. That was my first taste of the financial services world, and I fell in love with Wall Street and the whole idea. The excitement of every single day (is that) the decisions you make have an impact on the financial performance of portfolios.
I then entered into this specialized practice unit within Price Waterhouse that focused on investment managers, broker-dealers and custodial banks.
When did you move to State Street?
A State Street was one of my largest clients. I was asked to do a comprehensive - where are our strengths, where are our weaknesses - sort of review for the asset management division. The former leaders of the asset management division left to start their own firm, so it was in a bit of disarray.
We prepared a blueprint on how the asset management division should be structured. Nick Lopardo had just been hired in January (1987), so the report was given to him. In the report it was suggested that fund accounting go back to the custody division of State Street. What was needed within the asset management division was what we called the systems and investment operations unit, or the back office of an investment manager.
So I got a call in early April from Nick Lopardo. Mr. Lopardo said, `Well, I think I found the person that should run this new unit.' So I said, `Would you like me to interview him or her?' He said, `Sure, why don't you come on in.' So I met with Nick Lopardo. I'm sitting in his office, waiting for the candidate to show up, and I said, `Where is he?' He goes, `I'm looking at him.' He was looking at me.
At that point I knew everything about State Street. I knew State Street better than Mr. Lopardo did at that time, simply because of the amount of effort we expended on the report.
How did you go about building SSgA?
AI set about creating the infrastructure, working with Nick, preparing the platform so that we can expand our service delivery capability and our investment options.
We felt that with our investment capability, which at that time was primarily quantitative, it was easier to transport quantitative strategies than traditional fundamental management.
So one morning, 6 a.m., I'm sitting with Mr. Lopardo, having a cup of coffee, and he said, `Okay, I need a leader to oversee all that ... and you're it.' So that's what I did.
QDo you foresee any fallout from Nick
AI can assure you that there won't be much fallout. I don't want to quibble, but it's not really a transition. It's a continuation. For the last five years I've signed every single investment management agreement for our clients. I have been running operations for the past two years, and before that I was in the No. 2 role.
Where do you go from here?
AWe want to increase our focus on active investment management. We're going to develop more mutual funds and more ETFs, which we will develop in-house. We will continue to focus on the defined benefit and defined contribution markets. We will continue to expand our (high-net-worth) initiative. We also will focus on distribution. We're never going to go direct to retail. I can't spend as much money as Fidelity or Vanguard, and quite frankly, I don't want to. I'd rather go through them and distribute that way.
What challenges do you face?
AAttracting and retaining talent is always a priority. Another challenge is communicating our capability to the marketplace, fighting for shelf space. ... We met with consultants recently who said, `No wonder we don't really understand you, you have so much product.' Another challenge is to maintain our discipline. Sometimes you can fall into the trap that you can be all things to all people.
Any new initiatives planned?
AWhere SSgA is in a unique position is in what I call global equities, (where we will) create our own proprietary database for stock selection, which is going to be unique and very powerful going forward.
Q Will this be a different organization under Tim Harbert?
ANot too much different. What you will see is more individuals from SSgA as spokesmen ... In order for the true capabilities of SSgA to be known, I'd have to be on the nightly news every night for 365 days a year, which maybe I could do, since my brother Ted is the president of NBC Studios.
Do you have other Hollywood connections?
AMy father was one of the founding producers of the "Tonight Show," along with Steve Allen. My youngest brother is an agent with United Talents, where he represents directors, writers and actors. My older brother writes for movies and television.