Free Money S02E11 Transcript

Featuring Charles Skorina

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.

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And now, a transcript of this episode. Just a quick reminder first: none of this is investment advice. Also, this transcript has been edited for clarity and may differ somewhat from the recording. Enjoy!

Sloane Ortel (00:00:10):

Welcome to the free money podcast. It's where we give you the Brooklyn-Bay Area consensus about institutional investing that you desperate, desperately crave.

Ashby Monk (00:00:19):

We call it the free money munchies,

Sloane Ortel (00:00:21):

The free money munchies. Yeah, exactly.

Ashby Monk (00:00:25):

You're craving a little free money insight. Nom nom nom nom. Sorry. It's Friday.

Sloane Ortel (00:00:34):

I mean, yeah, exactly. Like that must be just like a classic mood shift. Like people are encountering Friday us on a Tuesday when this is eventually released.

Ashby Monk (00:00:42):

What a trip for these people, people that are just so ready to be done with everything, but their week just started yeah.

Sloane Ortel (00:00:56):

But yeah, like, I mean, this is kind of a crazy episode. I mean, this is the job's episode. Right. And I think what's interesting about that. Like, you know, right now we just got some new jobs numbers. Right. and the unemployment rate, like the headline unemployment rate is down to 8.4%, which is not good. It was like 3% before the global pandemic.

Ashby Monk (00:01:18):

It's not a strong number. Yeah. Yeah.

Sloane Ortel (00:01:20):

There are definitely better numbers out there. And like, what's funny about that number is like, it doesn't, it's not the whole story, right?

Ashby Monk (00:01:34):

Oh, definitely. I mean, the funny thing in this process, you know, we've had this mirage that I feel like has been built with the stock market, you know, and this notion that like tech companies are killing it, it's a frickin' and Mirage. And this week, some of that mirage seems to be you know, being revealed as such, we've seen the market's kind of coming off, but for the most part, like you would never know in like reading the press about tech companies or, you know, like people are suffering. Yeah. We are. And we were talking about this before the show, like we're suffering.

Sloane Ortel (00:02:16):

I mean like, yeah. My consulting business is down substantially. I mean, like I've got really interesting stuff going on on a couple of projects, but I'm at like 25% of my capacity. You know, and that freaking sucks.

Ashby Monk (00:02:29):

And by the way, that means you're not part of the data. Yeah, exactly. You're not one of the stats, even though you're massively underemployed.

Sloane Ortel (00:02:37):

Exactly. Exactly. And that's like, you know, and that's like frustrating in a number of ways. Right. Because it's like, you know, it makes it, you know, you have to pursue both consulting assignments and like full time work simultaneously, you know, it kinda makes you feel like the, you know, businesses get built jobs get gotten in this process that like, you know, basically it's, you know, everyone has their advice and then eventually you get lucky and the process ends.

Ashby Monk (00:03:03):

Yeah. Yeah. It's fascinating. I feel like I always tell people that if they want a job, they need to like keep being their job, you know? Cause it's being on the job train, like you're just moving from cars. But once you get off the job train, it's pretty hard. Yeah. And I raise this like as, as my family, not my wife will be like, what the hell are you doing? Talking about our shit. But she just, she just quit her job this week.

Sloane Ortel (00:03:29):


Ashby Monk (00:03:29):

Yeah. It's a big life change for my entire professional and adult life. Like my wife and I have been two working parents, but she's been like at the same place for five years. And she was always thinking about a break, but I have to tell you like the insanity of running the zoom schools and the like nonstop attention that our children need not fricking easy convinced her to bite the bullet and, and like quit her job early so that like she could help the kids. And like, I have to tell you, like, as a family, that's kind of devastating because we've always been like, we're not a patriarchal family. Like, you know, like we want to be this like modern family. That's awesome. And like, you know, everybody's working and here we are, you know, Courtney's at home taking care of the kids. It's weird. It's like, we're not in the data either. But like, yeah.

Sloane Ortel (00:04:29):

I mean, unemployment famously, like, I mean basically the way that, that, that works is there's an estimation of what constitutes the labor force. Right? And like the, you know, there's basically the BLS kind of looks at it as this binary where you either are in or not in the labor force. And if you sort of have, you know, quit your job to provide childcare, that's not counted in the statistics. If you've kind of like, if you're underemployed, that's not counted in the statistics.

Sloane Ortel (00:04:55):

And so there's this illusion of widespread prosperity, which in a way creates this fundamentally American situation. Like I think John Steinbeck had this great quote that all Americans are temporarily embarrassed millionaires. Right? Where at some point our ships are all gonna come in, you know, and everything is going to be fine, but there's this illusion of prosperity. That's, that's so prevalent in our society.

Ashby Monk (00:05:19):

I mean, isn't that the American dream that like, we all have a shot at being millionaires. It just so happens. It's the only shot most of us have is a lotto ticket at the liquor store.

Sloane Ortel (00:05:30):

Hey, options have value Ashby.

Ashby Monk (00:05:34):

The other Mirage though, I have to say is like, everybody's like, Oh, tech companies are just killing it right now. And like, as somebody who has like been building tech companies and working with tech companies, like in no shape way, shape or form, would I say that like the companies that I've been building or working with are like way better off because of covid. Some have pivoted to like handle COVID, but like, I don't buy this this like widespread belief that like tech companies have just are going to just kill it because everything has been made virtual. I think we're all kind of hanging on to this, this moment where like, yeah, like maybe they are well positioned, but like how this plays out over the next two, three, four years. I still think we have a lot of pain that's coming. And I say that from the experience of having to like pivot these companies out of industries and the inability to get on airplanes, to sell SAAS consulting deals or the budgets drying up to buy data, or, you know, it's like really? It's just hard for me to believe that tech is, has this amazing moment happening with what I'm seeing on the ground.

Sloane Ortel (00:06:51):

Yeah. I think that there's like a tendency to be like, Oh, that's bad news, but actually paradoxically it's good news. Like I saw a tweet the other day that said "Freakonomics is singlehandedly responsible for like every like 40 to 55 year old person being like, ah, I see this data, but actually it's wrong.

Ashby Monk (00:07:09):

You're going to make me laugh so hard. I know exactly what you mean. "Oh, you're not interpreting it correctly." This interpretation. It's like Jesus Christ. I do like freakonomics though, just to be clear, but it is funny how everybody is a data analyst.

Sloane Ortel (00:07:30):

Yeah, exactly. It's like, ah, you'd think that, but you would be wrong, but like, you know, I think like this, we can make this like complicated at a high level, but you know, we've had listeners write in, you know, and obviously there's some open questions about like, how do you actually get a job at a pension fund? Let's get some answers for that? Right. Yeah.

Ashby Monk (00:07:50):

First off. I mean, I did a whole paper, academic paper I think the name of the paper was called attracting talent to the frontiers of finance. And originally I wrote the papers written with Jagdeep Bashir. Who's the chief investment officer at UC. And you might say to yourself, why the hell is it hard to recruit talent to Oakland, California? And it's not his last job was in Edmonton, Alberta.

Sloane Ortel (00:08:19):

The noted financial powerhouse. Yeah.

Ashby Monk (00:08:22):

And we were like, how the hell do we get people to come to Edmonton, Alberta? Which by the way, for those of you out there don't know I was born there so I can talk shit about it. It is minus 50 in the winter. So it it's a tough place to recruit for. It's not close enough to Calgary to kind of benefit from like the Rockies and all that stuff. And so we built this whole framework for thinking about how pension funds can attract the right talent. Now I know our question here is like, you know, how do we, as, as people navigate the process to get jobs to pension funds, but it's useful to think about how pension funds are also looking at, at, at talent because ultimately they build their strategies around, you know, human resources on these kind of key things.

Sloane Ortel (00:09:11):

I think it's a market with two sides, right?

Ashby Monk (00:09:15):

Yeah, exactly. Absolutely. And I think before I jumped into our little framework the key kind of things that we noted in our paper was that like these are often public agencies, so there's tons of constraints and challenges. Many of the big pension plans are located in cities. You've only read about like, you know, Juneau, Alaska is the home of the permanent fund or, you know, Everett, Washington, not Seattle is where Washington state investment board is. You know, it's Sacramento where CalPERS, it's not San Francisco Sacramento, doesn't quite have the same vibe, you know? And so a lot of these places are in these kind of frontier cities, which makes them a little bit more difficult to recruit for. And then the types of talent that these organizations are hiring for are changing. They need more investment capability instead of asset allocation, allocation capability.

Ashby Monk (00:10:09):

They're moving much more into alternative assets. So they're looking for people with private equity and hedge fund and venture capital and real estate. So it's a whole shifting paradigm of talent needs in places that you have never probably thought of going to work. And so we built this framework of how we design recruitment and that we called it the green, the gray and the grounded and the notion was: pension funds are incredibly good at hiring people that are zero to five years out of college. It's at that point that they are green and the salaries that you would earn at a public pension fund really aren't different, not multiples different from what you would get it, you know, McKinsey or as an investment banker. The gray or those people that have made all of their wealth and want to come back and kind of give back to their community. And so the salary doesn't matter as much. And then the grounded or those people that have some connection to the sponsor. You know, if you're from California, maybe you want to go work for CalPERS to save your state. If you are an alum of Stanford. Maybe you want to go work for Stanford management corporation. So we called it the green, the gray and the grounded. And then I had somebody this year, tell me, you forgot one of the G'S: gullible. And I was like, Oh, come on.

Ashby Monk (00:11:34):

This person was like, I love the gray, the green, and the grounded, but you also need to include gullible in your recruitment strategy. So the reason is you're starting to get it is the compensation is, is usually not sufficient to pull people out at mid career. And so they need some other reason to get involved. Like they want to get experience or they want to give back, or they want to live in a certain place where they can fly fish or, or they're gullible.

Sloane Ortel (00:12:06):

I mean, you know, like those are all valid reasons.

Ashby Monk (00:12:09):

Those are all valid. And we've, you know, that's been used by a few plans that I've worked with, but I'm curious, you know, we wrote that paper in 2013, it would be awesome to like, get an update and hear how pension funds are recruiting talent today. And the very least, you know, this is the job episode. Maybe we'll help somebody get a job.

Sloane Ortel (00:12:31):

I think that would be a lovely thing.

Ashby Monk (00:12:31):

We're calling somebody, we're calling Charles Skorina.

Sloane Ortel (00:12:36):

Of Charles Skorina and company, Yes?

Ashby Monk (00:12:38):


Charles Skorina (00:12:38):

This is Charles Skorina

Ashby Monk (00:12:38):

Charles! You're on with Ashby Monk, Sloane Ortel. We don't have free money for you, but we're hoping you have free advice.

Charles Skorina (00:12:53):

Oh, always free advice. Well, it costs 2 cents. You know,

Ashby Monk (00:12:58):

It's in the mail,

Charles Skorina (00:13:05):

Your topic is timely by the way, because I am writing a news piece as we speak about Kim Lou, who was just promoted to CIO at Columbia. I've done interviews with her in the past. She's terrific. And then in fact, I think I got the other magazines to take notice of her.

Ashby Monk (00:13:29):

She's incredible. I think she's CEO of Columbia management corporation now.

Sloane Ortel (00:13:34):

Formerly at Carnegie, right?

Ashby Monk (00:13:36):

That's right.

Charles Skorina (00:13:37):

Yeah. So she's stepped up about three times in assets. I estimate two to three times in comp and she deserves it. However, it is tough to, to the topic of your of our discussion today. If you're not in an endowment or foundation or possibly a nonprofit hospital system, your chances are roughly one third of moving into a mid or high level position. I, to prep for this topic, I went back and looked at a lot of the CIOs backgrounds. You know, the resumes I have now, most of them started in mutual funds or on wall street or in banks as analysts, and then transferred in to a, usually an analyst position at an endowment or foundation or, or a public pension.

Charles Skorina (00:14:54):

If you look at the progression, once you get about to manager level, really about, I don't think quite two thirds. I broke it down, we broke it down a couple of years ago, about 65% of the the hires at a manager level or above in an endowment or foundation came from other endowments and foundations. They didn't come from hospital systems or charities. They came from other endowments and foundations. Like Kim. And by the way, I'm joking in my piece, her office was 13 blocks away. Tell me New York isn't a small town.

Ashby Monk (00:15:44):

She's moving 13 blocks.

Charles Skorina (00:15:47):

Actually less. Eight down, three, over five more billion.

Ashby Monk (00:15:56):

So Charles, let me jump in and remind people that are listening. You're kind of a legend in this space because you write these awesome newsletters, which everybody should go to Charles Skorina and kind of log in to get these newsletters, because I'd say it's probably once a month you kind of update the world recruitment and endowment space in particular, you seem very well situated, but your world kind of goes beyond that into pension funds and all the asset owners.

Ashby Monk (00:16:29):

And we've just been talking a little bit about like often how the pension funds think about recruiting talent. We want to switch it to you now. And ask how do these organizations actually go about sourcing candidates? And what are the, like, what are the different sources they actually turn to when they're trying to get candidates in the door?

Charles Skorina (00:16:51):

Well, almost everyone now is bureaucratic enough so that they first post the job on their internal website. And then for example, what I was doing some work for Michigan state, my old undergraduate school, a couple of years ago, they have a procedure they must follow. You must post it internally. And then there's a, a list of like, indeed, LinkedIn, I forget there's a half a dozen sort of job sites that are really generational, whereas I didn't pay much attention to it. The 30 and 40 year olds go to these sites first. So at the low to mid levels, all the jobs are, are, are posted and then picked up by these career online and etc. Once you get to director level though, they tend to want to be a little quieter about the hiring. And fortunately that's why folks like me still have a job.

Ashby Monk (00:18:14):

Okay. So then, so, so it's really just the kind of lower and mid level careers that you would kind of expect to see job postings on LinkedIn. Once you get to the higher stuff, you really gotta just know the right people is what I hear you saying, because your job, I guess you're turning around and going out into the industry, looking for the hidden Jewel people that you know, the asset owners didn't know about.

Charles Skorina (00:18:40):

Well, I have an advantage in that I've been doing the newsletter and before that articles on venture capital for the San Jose Merc for a long time. So I have a kind of a readership and the bounce that comes along with it. So when I actually write about something I'm working on, I'll get inquiries from folks I didn't know, existed in many times. And not only that, when I send out my newsletter again, if there's a job, they get picked up by the sites. So

Sloane Ortel (00:19:23):

That's a great competitive advantage. I'm curious though, like, you know, so we've got the seniority kind of spectrum that we've talked about, right. Where, you know, at the lower level indeed, and the job sites, and then, you know, you better subscribe to the Skorina Letter. If you want to hear about the, you know, the more senior ones or the more nuanced ones, but I'm curious about that

Charles Skorina (00:19:44):

Actually the Skorina letter for what Skorina is working on, we don't talk about what Russel Reynolds or some of the others, however, to your point, for instance, did you know, I mean, we knew that there was a vacancy at the Columbia investment management company, but the only reason I know I knew who was doing it and, and kind of the progression, cause it wasn't posted and they really kept it quiet, but I knew a few folks were who were involved. And even though I wasn't directly involved, which broke my heart. Oh, it's a cold cruel world in general. You know, nobody knew I had a lot of folks calling, sending me an email, say, Hey, what's going on with this Columbia search? You know, again, I happen to know who was doing it. So, you know, I told a few of 'em, but, but it was very, very quiet.

Sloane Ortel (00:21:02):

I wonder, like, you know, so there's, there's sort of two questions here, right? Like there's, there's the you know, there's a question about the natural hiring appetite of these, of these organizations, right? Where, you know, if you're, I mean, you know, famously investment banks sort of, you know, pick up young talent, put them through two year programs, burn them out. And then it's sort of an up or out thing. You know, but I hope hopefully, and probably that's not happening at most of the pensions foundations and endowments. But I'm curious if you could go into each of these different organizations and talk a bit about the way that their natural appetites for talent might differ.

Charles Skorina (00:21:41):

Well, when I started my career on wall street, I started at chemical bank, which is now which ate about 10 other banks. And now they call themselves JP Morgan, but it was chemical bank and the chemical bank, they had a year long training program that we went through. It was really, really good. Most of those training programs at the banks are gone. They're too expensive. They don't do them anymore at endowments and foundations and pension funds. If you look at the size of a staff compared to Silicon Valley startups, they're tiny, you know, the biggest endowment in employment still, I think is Harvard with about 220. Now they've got quite a big back office staff, which Narv is trying to cut, but, and then you, UTIMCO, I think is, and then the biggest biggest public pension plans, CalPERS, what does CalPERS have? 60 people? I mean, they're,

Ashby Monk (00:23:00):

I think it's ramped. I think it's ramped over the last few years.

Charles Skorina (00:23:04):

I totally lost track, but compared to the dynamics of bureaucracies, they are really small and their training programs are nonexistent basically, which is why, again, I have a job because I, every now and then I write, why didn't you prepare a number two? They don't. I don't know it, you know, you could argue that maybe bringing in fresh talent is a, is a good thing. I would certainly argue that that's the case in Silicon Valley. You know, we're, we're, we have done a lot of work over the years and lived, but these staffs are tiny. So they, when they need to fill a hole, they almost always have to go outside.

Sloane Ortel (00:24:08):

This is a great point to talk about this concept of pedigree, which I sort of ripped on in the last episode a little bit, because there is a degree to which the concept, the word, the framing came about around the same time as the historical concept of eugenics. Right? The idea one's breeding would lead to an understanding of one's behavior. I wonder if you could talk a little bit about that and how it sort of plays into drives to boost diversity and kind of bring in talent from the outside.

Charles Skorina (00:24:41):

Well, I look at schools. So when we talk about pedigree as a, a search guy, I first think of what's your educational background because that does make a difference. If you not so much in, in the institutional investment world, although you do see a Chicago MBAs where I went, you know, will be recruited into some of the hedge funds, but for instance, Harvard, which has a terrific old boys network, nevertheless, in the investment world, I don't think it's a big draw. And I see again, as I looked at some of the resumes, the diversity of schools is terrific. Now, when it comes to race, that's a different deal. And that's what I've been writing about really when I took the call today with you.

Charles Skorina (00:25:52):

It's, if you're Caucasian, Asian, but mainly Caucasian here, you've got a far better chance of making CIO at an endowment or foundation period. If you're Asian, maybe, you've got a decent chance. Now I'm not talking about Wall Street right now. I'm not talking about the the I-banks and the hedge funds. I'm really talking now about the non profit side down with endowments, foundations, pension funds, it's still a pretty white world. And as you move up that ladder, it gets very white with I'd say Chinese as second. And what I'm mentioning in my news, if you are black, you have, I have at the moment 10 black CIO's that I've that I have from my database that I'm using for my article. That's going to come out on Tuesday 10. I have in my database of nonprofits, about 550. So that's less, that's less than 2% of all the nonprofits CIOs are African American. Men or women.

Charles Skorina (00:27:22):

Yeah. So from a pedigree standpoint, well, it depends on, you know, what, what classifications we, we are using. Women in general for the CIO position about a third of the CIO positions are women it's getting better than it was 20 years ago. When I counted like 17% or something about every five, five years, we do our own little census of chief investment officers and we kind of break it down by again by school, race, and that stuff. It's interesting.

Ashby Monk (00:28:10):

It's fascinating. I think you're touching on something that we've really focused on in this podcast, which is like, how, how do we kind of break this institutional capital from these these biases, you know, and obviously there are other biases, like we need hedge funds to meet our expected returns. You know, that's a bias. But then there's also like literal bias around race and gender. And it's one of the things that me as an academic at Stanford I've worked on. And, and I really kind of reconnected around a project, which she was referenced in the paper that was published in the proceedings of the National Academy of Sciences around where we identified racial bias in capital allocation. And one of the things we really want to do is to help candidates for, you know, fund RFPs, but also jobs candidates to know like, what are the things they should do to make sure that in this context where, like you say, there are networks and implicit biases, they're not overtly stated, but in your experience, what are the things people should be doing to put their best foot forward? Not just from the bias perspective, but in general, what are the, what are the traits of successful candidates and getting hired into these funds?

Charles Skorina (00:29:36):

Well, if we're talking about the, the various racial biases, it's a vicious circle because it comes back to education. For example, a friend of mine was the star, everything through high school, this kid is smart. He blew through Caltech half asleep, and he's now running a robotics company. And I talked to him and I asked him about who are the guys at Caltech? How did it break out in terms of race? Well, we got, we got a lot of Indians and we got a lot of Chinese. Well, what'd you think of them? He said, you know, they were good, but they weren't great. They were good because they studied the twice. As long as the rest of us, he said, I still eat them for lunch. I mean, this guy's brilliant, you know, one of those 1 million, but he said, I was paying attention to it as for women. And Afro-Americans zilch. Why? Well, the system is stacked against them, you know, how did the Indians and Chinese get into Caltech? They study day and night. It's like the kids that do the spelling bees, all they do to get into the 200 slots each year at Caltech. So that's just not set up for minority neighborhoods. They don't have the parents that are willing to spend the three hours at night. So I think it starts there. There's a whole bunch of things that we don't have control over.

Sloane Ortel (00:31:35):

Yeah. I mean, like, this is, you hear people talk about like systemic racism, right? Where these, like, you know, interlocking systems that are effectively oppressive kind of conspire against people from certain neighborhoods or of certain backgrounds, right? Like you know, if you have a situation where, you know, you're a single family home and the parent is working two jobs and then thus unable to invest in the, in the child's care or whatever, it's not exclusively a racialized dynamic, but it can be. And then you, on top of that have all these frictions in the way that people are assessed and related to inside of educational institutions. I'm curious, it sounds like what you're saying is that the, the, the pipeline of candidates is just, you know, that, that have the pedigree dynamics that these, that these foundations endowments, pensions look for in the form of like good education and the relevant experience is just very small, is that the right interpretation?

Charles Skorina (00:32:35):

I would say that's the right interpretation. And I have talked to Kim Lew about this, for example, when Lyndon Johnson's great society built up steam, you either the hard way to do it was to give kids the resources and if necessary the free education to get them into the best school, the easy way to do it. And the way they chose was to dumb down the requirements. For example, New York city had those you know, the Tech high schools, there's about, you know, the Bronx tech or Bronx sigh or whatever. There was about five or six of those schools. And Kim went to I think the Bronx, they were tough. You got into that, to that school. You were drilled for college. She said, so she got into college because Bronx now, now she came from a poor background and she had no favors done on the way up the ladder, but she got into that tough school and the teachers gave her a great high school start, but those schools are, you know, I mean, we could spend hours on what's happening in just the New York city school system, but they aren't what they were. So now you come out of those schools and are you prepared to get into college? And then when I interview and I said, well, how did you get into finance? Most of the women who are chief investment officers got in because they had a role model who was already working in finance.

Charles Skorina (00:34:31):

I mean, you'll see it with with my interview with Kim, you saw it with all of the lady who was at Emory. Mary Kay Hill. I mean, all the interviews, how did you get into this? Well, my mother's best friend was in finance and I thought it was so cool. Amy Fall at Rockefeller, the same thing. She, she had a mother's friend who, you know, was on wall street and she thought that was the coolest thing ever, but how many role models? So, you know, I'm talking about women right now because I'm doing the article, but I mean, we break it down. How many Afro American role models are there on wall street?

Sloane Ortel (00:35:15):


Charles Skorina (00:35:16):

How are you going to get a taste if you're a kid that has the potential, you still don't have a role model.

Sloane Ortel (00:35:26):

Yeah. Yeah. It's, it's really amazing. You know, it's funny you use the example of those schools. My mom was a bond trader at Solomon and at Lehman Brothers. And then she left that job and went to go teach AP Economics at Stuyvesant High School in New York city, which is one of those five magnet schools. And like, you know, it's, I mean, she's since passed away, but when she did so many of her former students now on wall street came to the funeral and talked like crazy about what it meant for them to see somebody, you know, who, you know, who, you know, was a little bit unconventional who had done these things who had put them on a path. So definitely that's a super powerful thing. I wonder about a structural force though. Like the there's a, this, you know, a listener wrote in about this really kind of insane situation where you know, out in Nebraska, they were doing a CIO search and it wound up actually leading to the names of all the finalists for the job being put in the public domain.

Charles Skorina (00:36:38):

Do you know who that was, because I did the university of Nebraska CIO search, but I don't know seriously. Was it the public pension or was it the university of Nebraska? Do you remember?

Sloane Ortel (00:36:55):

I have the PDF. I'll email it to you after this,

Charles Skorina (00:36:59):

Because I have found sometimes when we're writing about the outsource chief investment officer, how, how was the selection process? We will discover online notes, but it's almost always an accident. You know, they'll just post it online so that some of the other board members can pick it up and then forget to take it off or forget that Google just scooped it up. But when I saw that, I thought, Oh, well, the CIO is still there. So whatever happened, I guess I didn't hear about it. Which, which is good. Isn't that awful when you wrote that? I thought that's terrible.

Sloane Ortel (00:37:56):

That's the Nebraska investment council.

Charles Skorina (00:37:59):

That's the public pension fund,

Sloane Ortel (00:38:08):

So that wasn't you.

Charles Skorina (00:38:08):

But it does show you why that is. Why one of the reasons why I do not do searches for public pension systems, period, I will not. I get calls and I, well, I don't get calls saying, Charles, we want you to do the search. Please send us your invoice. No, it usually says, we'd you in our database. Now, what that really means is that we've already picked who we're going to use, but in order for me to justify picking this person, I have to have nine others that I can say I religiously went through and they just didn't meet our requirements. Well, I'm not going to feed into that. So then on top of that, I, once when one of the CIO's was at CalPERS that I knew, well, he said, look, get into the database. I spent hours online putting every last detail of my life. I can't imagine that a CIA or FBI job application would be any more detailed. And I thought after listening to security experts at city Corp or JP Morgan, you should never listen to those guys talk because we're, we're screwed. I mean, the Chinese and Russians are ripping us off, but I thought after that, I thought, Oh, and then CalPERS of course said, well, thank you. You know, you're one of 50 and we'll get around to you. But I thought in the meantime, in the meantime, I put everything on a public database. And as you see from your example, there's always somebody who leaves the back door, or even the front door.

Sloane Ortel (00:40:13):

Have you heard about this happening with other positions or something similar to this?

Charles Skorina (00:40:16):

Not, not with candidates for a senior position, I've, I've gotten notes after the fact about discussions about candidates, but they've been, the names have been crossed out. So I actually think fortunately that that was a most likely a mistake.

Ashby Monk (00:40:49):

Those candidates would have had jobs elsewhere. It would be pretty non-standard to put names out there for people who actually have current jobs.

Charles Skorina (00:41:03):

It would have been terrible! And by the way, It could easily lead to a lawsuit to.

Ashby Monk (00:41:10):

Well charles, we brought you on to help us understand how to navigate CalPERS' job market.

Sloane Ortel (00:41:23):

I mean, it's good to know that this is just complicated, right? At some level.

Charles Skorina (00:41:28):

For lower level positions, CalPERS puts out the know they'll post the ads for instance. And then they go through this elaborate process. And at the lower levels, they'll call some people in, I mean, it's pure state government bureaucracy at the higher level. Now yet again, they're going to do another search. And yet again, it will, although they've got 50 recruiters in the database, they already know who they're going to use. I mean, they may actually, it may be two or three firms. And they're now arguing at the board level whose firm gets to do the next search, but that's, that's, that's at CalPERS. More realistically the endowments. I mean, you get back to the core question in this podcast. Silos tend to hire from the same silos in institutional investing. So you, I will see somebody come in and they'll start their career up the nonprofit ladder after spending some time at Franklin Templeton or one of the wall street banks, they were just an analyst. And then they, it was almost random when I asked them, how'd you how'd, you get into University of Pennsylvania's investment office. They'll say "The job came up. I applied for it. And that was 15 years ago." But once you're in it, you tend to stay in. I'm not to segue too much, but there's investors wall street investors. They pick things: they pick equities. They pick stocks, they pick private equity, but Chief Investment of Nonprofits don't do direct investments. Most of them don't, they pick people and that's a very different they're listening to managers and those managers pick the equities. So as you move up the ladder, the skillsets diverge more and more wall street versus nonprofit CIO. And, and that's why you don't see that many CIO is jumping into wall street. Now the last CalPERS, I never can pronounce his name. The lawyer that left before Ming.

Sloane Ortel (00:44:17):

Ted Eliopolis?

Charles Skorina (00:44:17):

He was a little different, you know, he had a law background, he had a lot of wall street connections he has, but basically he was still brought in because of his Rolodex, his access. But in terms of actually selecting, you know, should I, should I buy Apple or should I buy a cold storage facility in Nebraska? I mean, that's not what he's doing. And I think that tends to be why as you move up the ladder, you see fewer and fewer candidates come from outside the silos.

Ashby Monk (00:45:02):

Right? Right. Well, Charles, look, I think we've taken more of your time than we said, we would.

Charles Skorina (00:45:10):

I'm here for you!

Sloane Ortel (00:45:14):

It's been so great.

Ashby Monk (00:45:16):

What we learned is when you need to go to a great school, get an entry level job, and then never leave. And then one day, you can be CIO of an endowment.

Charles Skorina (00:45:26):

One of my CIO recruits who is still on the job, he kids me. He said, how did you close the deal? Charles, you looked me in the eye and said, I can't tell you who it is. This is the best job you're ever going to have. And he said, you know, I thought about it. You laid it out for me. And I thought you're right. And he's making really good money. Great weekend. Bye bye.

Sloane Ortel (00:46:04):

So I guess my randomness construct from earlier holds up pretty well.

Ashby Monk (00:46:10):

Look, I mean, the sad thing is I thought he was going to like, talk about like exactly how you get in there. And he was a, he himself is as frustrated with the process at CalPERS and other public pensions, but I think what resonated for me and what he said, which I've found true and I'm sure you have too Sloane, is that it's a privleged network. And the network starts: you go to the right high school and you go to the right college and then you get the right finance job and that finance job gets you the entry level job. It's all baked very early in your life. It's really hard to break in your forties or your late thirties. It's all done. Exactly. Yeah.

Sloane Ortel (00:46:52):

It's funny, like, you know, and it's not just the endowments foundations, the pensions, like I, you know, I write this column for city wire about diversity and like the registered investment advisor space, which should be a lot more democratic. I mean, like, you know, it's a lot easier to start a registered investment advisor than it is to, you know, get a job at the Columbia university pension. Right. You just have to fill out the filing, but it's the diversity numbers are exactly the same. Like I quoted this person, Keith Beverly, who's one of the few CFA, CFPs on earth. Who's black in a column a couple of months ago. And he's like literally 99% of people are black. And then he sent me an academic paper.

Sloane Ortel (00:47:34):

You know, basically, sorry, 98% are white. Unlike, unlike in institutional investing a hundred percent of registered investment advisors are black. No, not now. Not true.

Ashby Monk (00:47:51):

I did like his comment about how we need more role models. A lot of the work I do with pension funds where I go in and I like help them design some new thing. I do it because I'm like, look, you could be a role model for others because that's actually how you drive change in this industry. They'll follow the leader, but somewhere you need somebody to lead and pensions struggle with leading. We've beaten this topic to death on this podcast in terms of innovation, but we need people to lead by like changing their hiring policies and really making a pledge towards a more diverse workforce because you know, the right proportion of black men and women in financial services should be 15%. Right. Yeah. Something like that.

Sloane Ortel (00:48:40):

If not higher. Yeah. And you know, I've seen firsthand the power of role models like which is, this is like, I can't believe I'm about to say this, but like, you know what, so when I came out as trans, like I knew of two other people who are trans on wall street. Right. and there were both like 55 year old folks who had run their own asset management firm and were like decamillionaires. You know, so like not the same degree of career risk. Right. and like, you know, I just didn't, I didn't know anyone in my same age or whatever. And now like three or four years later, I have this DM group on Twitter of like 10 other trans girls. You know, and like, I, you know, I've heard from folks at my old employer, like somebody wrote me, and was like, Sloane and you're my role model. And I'm like, Jesus Christ get a better role model. That's explicitly terrifying.

Ashby Monk (00:49:33):

You are though.

Sloane Ortel (00:49:33):

But that's freaking terrifying. Like the, you know, I mean, like, I don't know anything and like the, I think it speaks to just the paucity of of models for folks who fall a little bit outside of kind of the normal way of, of being and, and performing professionalism.

Ashby Monk (00:49:53):

Yeah. I mean, I, I, I wish there were more people like use long. I think you're, you know, you're an incredible role model. I mean, here we are, we're putting ourselves out there, you know, we're putting ourselves out there and talking about all these things on a weekly basis. And, you know, I, I've learned a ton from you. And so I think we, this is, I'm not surprised.

Ashby Monk (00:50:17):

I know you don't like the compliments.

Sloane Ortel (00:50:20):

Thank you, that's very nice. I learned a lot from you too, but with that said, it's time to change the subject or wait, it's time. It's time for Dear Ashby. This is the segment of the show where we take listener questions and an opportune time to mention that a listener question sparked the idea for this episode So if you are sitting there and you're wondering about something related to the world of pensions, sovereign funds, endowments and so forth or even queer stuff, whatever really write us at and while you're at it, maybe leave a review in the iTunes store or your podcast or of choice. That's a nice thing to do.

Ashby Monk (00:51:01):

Whoever leaves a review that says free money munchies, you'll get a free item from the Free Money Atelier. That's so true. Yeah. Yeah. Actually if you, if you leave a review that mentions F Anon also then I will literally buy something from the free money atelier and mail it to you.

Sloane Ortel (00:51:23):

You'll get a free pair of free money underwear.

Ashby Monk (00:51:27):

It's up to me to choose what you get, right? Yeah, exactly. Yeah. The, I mean, the underwear are shockingly unpopular. It's, I think we're in the triple digits in terms of the people who've bought on the, in terms of the, the revenue numbers or the number of people, the number of people really.

Sloane Ortel (00:51:45):

like three, 3.00.

Ashby Monk (00:51:49):

That's my favorite flight of the Conchords where he's like, talking about his number of dates he's had, he's like triple digits. Brett is like three isn't triple digits anyway, free buddy tip: watch flight of the conchords.

Sloane Ortel (00:52:10):

Yep, yep, yep. Yeah. It starts with F very aligned with F Anon.

Sloane Ortel (00:52:17):

So here's the first question. First question. You to talk about the rise of ESG investing, like it's a good thing. And I'm sure that's overwhelmingly true, but are there any dystopian consequences of ESG's growing popularity? This is, after all, 2020.

Ashby Monk (00:52:36):

For sure. I love this question. ESG has the potential to become a world of bullshit and disinformation if we don't do it right. And so like in the core, like I'd love to think that ESG leads to like deeper understanding, but information overload means information has no value. We have less knowledge, less understanding companies that are good, get lost companies that are bad bullshit their way to looking good. And so, yeah, like we need, we need ESG to come with more standards. That's what the sustainability accounting standards board has started to do with this notion of materiality, but there's a long ways to go. You know, somebody told me there's something like trillion dollars. It Jean Rogers on our show, $70 trillion of sustainable capital up there. Like, why aren't are all my problems solved? Why? Because it's baloney. And so that's the dystopian future we need to avoid where like, all information becomes meaningless because ESG becomes like Facebook.

Sloane Ortel (00:53:48):

Oh man. That's so that's so like Huxley. And, you know, I mean, like, in dystopia there's like the Orwell versus Huxley, you know, kind of, kind of continuum where like, on the one hand you have like the, you know, the apparatchiks controlling society explicitly subject to their whims. On the other hand, in the Huxley zone, you just are so inundated with information that you can't actually make sense of anything. I mean, it sounds like we're, we're very much in the latter zone.

Ashby Monk (00:54:17):

We could be. We could be, if we don't start to bring rules into this space, now the definition of alternative data for which ESG fits is data, not conventionally used in decision making. So it's hard to bring conventions around the unconventional, but we need to, we need some way of vetting, you know, and understanding the value of this data, where we can use it. And so that is the fear that, and I appreciate all your literary references that I don't quite understand, but.

Sloane Ortel (00:54:51):

It's really important if you're gonna, if you're gonna think about finance, it's really important to major in English Literature.

Ashby Monk (00:54:58):

That's important.

Sloane Ortel (00:55:00):

I mean, come on the world needs people who can re read medieval English. The all right. So next question is the the active ownership theme is really interesting. How long has it been going on? What is the first action by a longterm investor you're aware of that you would classify as active ownership?

Ashby Monk (00:55:22):

So funny, I don't think I would call active ownership interesting. It's like: How do you vote? How did you vote your proxy this quarter? Active ownership is important and it has the potential to be really interesting. I think for too long, it's been kind of like the less focused upon component of what all of these big pension funds and sovereign funds have as part of their job. You know, we think of investing as like picking things to buy, but investing is also managing the asset, which is about looking in and actively engaging with the ownership of the companies to change the governance. That's what active ownership refers to like an investor engaging and trying to influence the governance of companies, projects, et cetera, in order to add value. And for a long time, people thought that pension funds should just stay out of it, you know, like their government entities and what are they going to do to add value.

Ashby Monk (00:56:32):

And so all of these proxy voting industries emerged, and I have to say it was like, you know, we added more layers of intermediaries and frankly, the rise of passive funds and you know, zero fee products has led a lot of funds to generate revenue through securities lending. And when you lend your securities, you don't get the vote, the proxies, these are all the things that are.

Sloane Ortel (00:57:00):

Just as a 101 thing for folks. Large companies exist in this form of shareholder democracy, right? Where a lot of the time, you know, like every year you'll get a, what's called a proxy statement where they, you know, usually they'll have the most important thing that always gets written about in the news is something about manager pay approve the CEO pay package and stuff like that. But they'll also sometimes have proxies in relation to mergers, acquisitions, changes of strategies, spinoffs and interesting stuff like that.

Ashby Monk (00:57:34):

So that's shareholder democracy in which the tourists have the same vote as the citizens.

Sloane Ortel (00:57:41):

Indeedo. Yes, indeedo.

Ashby Monk (00:57:43):

That's the problem with our model of capitalism, the way that we've designed this with our public markets, as you can own this stock for one minute and have the same voice as somebody who's owned the stock for one decade and active ownership, the movement is about trying to empower those long holders of assets, the asset owners, to actually voice, you know, their desires in this process. And the first step, which I think was part of the user question is generally to participate in, you know, the annual meeting and vote your proxy on the various proxy resolutions that a company puts forward, which often includes composition of the board. Sometimes it includes like C suite pay, paying compensation packages and things like that. But it also is like really into climate change and things that I remember, like, I think Exxon was told to do, I forget what it was like they were there.

Sloane Ortel (00:58:47):

The shareholders wanted to... This is a Hiro thing. The shareholders large group led by the Japanese large Japanese tension took exxon aside and were like, Hey, we want better disclosure around climate risk and applied for an sec safe Harbor protection to keep them from making that disclosure, which is still like the most punk thing ever. What a bunch of wimps. It's amazing.

Ashby Monk (00:59:18):

All right. Last one.

Sloane Ortel (00:59:19):

Last question. You know, following on the dystopia theme, the giant NASDAQ whale quote unquote, that has been hoovering up equity options with a highly unusual appetite was revealed to be drum roll, please, SoftBank of all things. Doesn't this prove that asset managers should be more closely regulated.

Ashby Monk (00:59:44):

Of course the entity blamed for all of the insane valuations in Silicon Valley is now at fault for the ridiculous run up in tech equities over the last three months, the complete disconnect between the real economy and the financial economy. Of course it's softbank, not the fed. I don't have like a great answer for this one other than yet, like it's revealed, they, I think there was 50 billion in options.

Sloane Ortel (01:00:18):

Yeah, 50 billion In notional value of options.

Ashby Monk (01:00:19):

Yeah. I mean, is that, do you know, was it calls or puts?

Sloane Ortel (01:00:25):

it was calls, out of the money calls. And like the notional value is the, you know, the strike, you know, kind of it's not the market value, so it's not like as long as you're buying $50 billion worth of it, might've been like two, two or 3 billion, some, some relatively large number.

Ashby Monk (01:00:41):

It's a big bet though.

Sloane Ortel (01:00:42):

It's a big bet and it moves the market, right? Like, because options, markets are pretty thin, especially when they're out of the money. You know, so like, yeah, it was, I guess the recommendation though has to be: if anyone hasn't read SoftBank's earnings presentations and the PowerPoints that go alongside it you're missing.

Ashby Monk (01:01:05):

You'll see the level of detailed analysis that goes into these bets includes such things as drawings of the unicorns.

Sloane Ortel (01:01:16):

And like: Our strategy is be number one at everything.

Ashby Monk (01:01:21):

Well, guess what, you're the number one buyer of out of the money calls.

Sloane Ortel (01:01:27):

Like if, you know, maybe we'll roll out the free money vision fund.

Sloane Ortel (01:01:30):

After we do our SPAC,

Sloane Ortel (01:01:34):

After we do the SPAC, you know, we'll be like, alright, so, you know, sure. We raised, you know, a $500 million back, but what we really want to do is raise a $500 billion free money vision fund, where we will be the best at everything.

Ashby Monk (01:01:47):

Yeah. That's our number one goal. That's the, how we're raising the money. Number one is to be best. We're going to be number one. Thank you all so much for listening that about does it for this week, but we love you. Bye!