Leading the way in the competitive world of high finance, showing an active concern for the well-being of others –colleagues, family, friends and society’s most anonymous souls alike– are two aims that are by no means impossible to reconcile. This is plain to see in the professional and personal history of Stanley Fink, who, apart from steering one of the world’s most successful hedge funds, gives up time, efforts and money from his own pockets to improve the lot of some of life’s less privileged individuals.
From Crumpsall (Manchester) to La Zagaleta, one of several places that you call home [Mr. Fink also has homes in London and France]… From an upbringing in an modest household to a place among the UK financial élite… What have been the most important lessons that you have learnt along the way?
The most important lesson is to try to treat people kindly on your way up – as one day you might meet them on your way down. This was a quote often used by my First Chairman at Man Group, Michael Stone.
He was invariably kind and charming to staff, particularly newcomers (like me) and junior staff. It left a lasting impression on me and I have tried to follow the principle.
Drawing upon your own professional experience and your outstanding career in the world of finance and investment, what three golden rules would you give to investors?
First is you are invariably investing in people as well as a business or product, make sure you can trust the people bringing you the product and running the business. If the people are untrustworthy, there will rarely be a happy outcome. Second decide in advance, what is your real pain threshold, can you afford to risk or lose 10,000, 100,000 or 1 Million Euros? Do not place a single investment or a group of highly correlated investments where the potential worst-case outcome exceeds your financial pain barrier.
Thirdly, wherever possible diversify. Diversification is the closest thing to a free lunch offered in the financial world.
You are often described as a no-nonsense, down-to-earth person who dislikes ostentatious displays of wealth. How does the concept of luxury fit into your life and lifestyle?
This description of me is fairly accurate, however as the years have passed by I will not willingly cramp my family’s enjoyment of our good fortune. So when we do treat ourselves to an unusual luxury, we always check to ensure that a similar or greater sum has been invested in improving the lives of others.
Where does La Zagaleta in particular fit into this vision?
When I first visited La Zagaleta I found it a place as close to paradise as I have witnessed, certainly in Europe. Indeed my screensaver on my office computer in London is a picture of the view over La Zagaleta Golf Course from my home. When I first found the location and plot, I was planning quite a modest home. I did allow my excellent architect Juan Salvador Shvartzberg to encourage me to build a little bigger, to have more room to entertain family and friends.
Under your stewardship, Man Group became the world’s largest listed hedge fund manager. Not bad for someone who by his own admission “got into hedge funds by accident” and who “didn’t even know what a hedge fund was, or what the business involved”.
Over the last 15 years the hedge fund industry has recorded very sustainable growth of more than 20% per annum becoming a $2,000 Billion industry. Having joined Man when it was a diversified conglomerate, it became fairly clear over the years that we should de-merge our other slower growing businesses and focus on this shooting star. We made several good business decisions including strategic acquisitions before others realised the sustainability of this industry and we had a lot of luck.
Does this strengthen your alleged belief in the forces of fate?
I do believe that fate plays a large random factor in life, but individuals are free to position themselves to be ready when fate offers an opportunity. So in my case, with a desire to go into business from a relatively humble background, I ensured my academic early business career covered mathematics, law, finance and accounting. I also tried to learn the good habits of the most able business people I saw, so when fate brought some business opportunities to me, I was reasonably prepared to take advantage of it.
Hedge funds have been described as “unashamed money-making machines”, “enormous reservoirs of cash that take bets on any market, anywhere”, “debt- financed betting machines” and even as "financial weapons of mass destruction, lined up like dominoes, ready to collapse in spectacular fashion causing terrible collateral damage along the way”. Not a very flattering vision...
The truth is that many hedge funds have the flexibility in their prospectuses to trade a wide variety of markets and derivative instruments to take advantage of differing market opportunities, unlike many traditional portfolio mandates which allow shares and cash or bonds and cash.
But if one tackles a difficult golf course like Zagaleta, is it better to have a whole set of golf clubs in your bag – like wedges and seven irons; or is it best to have only the 2 clubs you use the most, i.e. the driver and putter? - so I suggest that for most investors investing with talented and experienced managers, it is better to have more tools at their disposal.
Man Group was famed for its corporate openness, an exponent of something that was once described as “corporate glasnost”. Was that a reflection of one of your own personal traits?
When Man became public in order to raise long term capital, the rules of the game clearly changed in terms of requiring more disclosure than private companies or hedge fund managers typically did. This change increased further when Man joined the FTSE-100 about 5 years ago.
In life, I try to always make virtues out of necessities – so we tried to embrace rather than fight the trend and use it as a differentiating factor that our business partners and investors appreciate.
Last year you stepped down as CEO of Man and announced that you wished to spend more time carrying out philanthropic work. How did you arrive at this decision?
I had always wanted to live a balanced life between making money, spending time with my wife and children and helping others through philanthropy. In the early stages of one’s career, building a career and making money can become too dominant, so I had always thought that a “semi-retirement” to rebalance my life as I hit fifty was a good thing. Given that business was going well and I was enjoying it, I suspect I might have changed my mind – however I had a real reminder of my own mortality about 3 years ago, when a brain tumour made me realise that no-one is immortal and one’s friends and particularly family are much more important than work.
Do you subscribe to the writer Henry Fielding’s view that “a rich man without charity is a rogue”?
Yes totally. I have never met anyone who does not possess some time or some money to help charity. As a student I spent time in a youth voluntary service and Round Table helping the poor by volunteering time. As my career took off I started to have more money than time and I refocused my philanthropy. Recently, I have tried to rebalance my life to have time as well as money and as a result believe it is beholden to spend some of both on charity.
When you stepped down as Man Chief Executive, some observers claimed that it was amid declining returns in the industry and that your departure signalled hedge funds had reached a peak of performance. What is your own view?
This is not the case. AHL, Man’s flagship fund has returned nearly 20% for the recent calendar year and the hedge fund industry over 10%. We also see large opportunities in the environment space or carbon finance. My philosophy is always to leave something on the table for the next generation.
These are troubled times in the world of finance. How do you see the current turmoil on the world markets and what are the prospects for hedge funds in particular.
We do indeed live in turbulent times, and there is no doubt that the banking world became very highly leveraged, particularly in sub-prime and secondary real estate after an unprecedented boom. I believe like all markets, conditions will normalise, which will give opportunities to many styles of hedge funds. In the last year hedge funds focusing on commodities or ones who took a contradictory view on credit or some emerging markets did very well.
There are experts who claim that “philanthropy in the UK is a booming business”. Some banks (e.g. Coutts, among others) have special departments that advise the wealthy on the best way, financially speaking, to make donations. What do you say to those who see donation and philanthropy as primarily a business interest?
I believe that the purest philanthropy is totally altruistic, ideally with anonymity between donor and recipient. However for philanthropists to change the world, they need to be evangelistic to encourage other rich businessmen to multiply the effects. In this regard, if people promote it and build businesses around it – so much the better – provided that it leads to more philanthropy.
You claim that you give away approximately one third of your total income, and have said in the past that you were “brought up in a modest home but my parents would give if there was a good cause.” Have you inherited your charitable streak from your parents?
Yes, they and indeed my late grandparents were a shining example to me.
Have there been any other important figures that have served as role models for you over the years?
Dozens of people – indeed my whole business and personal life is based on role models, usually positive but occasionally negative. When I see someone who behaves in a certain nice decent way, that causes people around them (including me) to react positively – I always aspire to emulate that type of behavior, usually successfully. On the other hand when I see the opposite of people behaving in a petty or vindictive way that demoralises people around them (including me), I try to avoid that type of behavior (sadly not always as successfully).
In 2004 you suffered a serious personal setback when you were diagnosed and treated for a benign brain tumour. Surgery, three months recovering…. How did this affect your outlook on life and your view of the world, and to what extent did it influence in your decision to dedicate greater personal efforts to philanthropy?
As I said earlier in Q9, it made me resolve to bite the bullet and balance my life. Other than that, it probably made me less quick to get cross or angry as I realised how tiring these emotions can be.
You have joined a select worldwide club of fellow philanthropists such as Bill Gates, Warren Buffet, Sir Tom Hunter, Chris Hohn (TCI), George Robinson, Peter Crudas (CMC Markets), John Duffield (New Star), John Caudwell, John Studfzinski (HSBC), Harvey McGrath (Man Group) and Arpad Busson (EIM). Mr Busson describes this phenomenon of as “venture philanthropy”. Do you think that’s a good way of describing your activity?
Yes it is. It is a phenomenon that businessmen want to put really quite large amounts of time and money back into society, but they want it to have the maximum impact. So ideally it is deployed in a very focused way to achieve measurable transformational results.
Hedge funds appear to be among those organizations that most put back into society. Funds such as TCI and Ark contribute regularly and generously to charitable organizations/ good cause. Increasingly, donation is being seen as a form of investment. How does it benefit companies economically as well as from the point of view of CSR (Corporate Social Responsibility)?
The work and positive activity is worthwhile for its own sake. However I believe it does have a positive business impact economically for a variety of reasons. One of which is the market for high grade human talent. When bright young people want to start off their careers, as well as wanting to join companies who will pay them and train them well, they also look to work for companies with a good reputation - developing the size and scale of CSR helps build that reputation.
How are you applying your management expertise and leadership skills to your new philanthropic activities?
In a wide variety of ways – I am a governor of two secondary schools that I sponsor. I am a trustee of ARK and help with its educational task force. I am a trustee of the Guys & St Thomas’s Charity and chair its Investment Committee which invests about $1 Billion for charitable purposes. I am also a trustee of several other health and educational charities. I was also a joint founder of HRH Prince Charles Rainforest Foundation.
What are your own views on CSR as a corporate phenomenon?
I think it is here to stay. It has a powerful motivational effect on existing and potential employees.
At ARK's annual fund-raising gala this year, donors gave nearly $50 Million in one night. How will this money and other sums raised in the future be used to help others in need or to improve society?
In the case of ARK, there are 3 main themes: a) Education, the building and running of schools for the most disadvantaged kids in our community. b) Treatment of HIV, to stop children becoming orphans and keeping them healthy. c) Deinstitutionalisation – to close down some of the biggest worst run large scale orphanages in Eastern Europe and place the kids with their birth parents, foster parents or more human small scale housing units.
You once said that you would like to be seen as “someone who made a positive difference, through charity or business.” What kind of difference would you like to make?
I would like to make a difference in many ways. Through example in business, to show that one can succeed whilst remaining a decent human being who treats colleagues and clients well. Through an example in philanthropy, to show people that living a balanced life and dedicating a good share of ones time and income to others can result in a fulfilling and fun life. By sharing some of the upbringing of my 3 wonderful children with my wife Barbara. I am really proud of my 3 children, Alexander, Gabriella and Jordan.
You once said in a newspaper interview that you thought that work “is a good example to your children I have three kids and I don't want them to regard themselves as trust fund kids.” Are there perils involved in leaving large estates to children? What advice would you offer to persons in this situation? Should kids receive a solid grounding in financial skill in order to avoid future pitfalls?
Everyone must make their own decisions on how to bring up their children. I am quite open with mine and they can see the sort of wealth and lifestyle we have. They can also see the effort and sacrifices that went into achieving it. They do get practical lessons in finance and philanthropy – but might they make mistakes in their personal or business lives – of course! A good parent tries to give them the tools to avoid making mistakes – but then helps them recover if and when they do.
During your tenure, Man has become increasingly involved and participative in the world of culture, entertainment and the arts. One of the bestknown examples is the Man-Booker literary prize. In what other ways is this vocation manifested and to what extent is it a reflection of your own tastes and interests?
We decided to raise Man’s profile as at one point when we entered the FTSE-100 – we were known as the biggest success story noone had heard of. We looked at several areas which fitted with our corporate objectives of excellence and would be motivational for our staff and clients.
The Man Booker Literature Prize was one of these, as were several sports sponsorships and other literary and music awards. I did and do love literature, particularly well written fiction.
You are also a very keen sportsman: a regular golf player, skiing, tennis, soccer (Mr. Fink is a Manchester United fan). Is this a reflection of your competitive nature or are there other motivations?
I have always been reasonably competitive and have preferred to participate in sports than to watch it – albeit with the exception of ‘bridge’, I was never particularly gifted at any. Due to age and old injuries, soccer and tennis are now things of the past but I love skiing and golf. Indeed I recently took up snow boarding!
You have interests in the Hotel Kilimanjaro in the Courchevel skiresort. Is this related in any way to your love of skiing?
Absolutely – I also love the concept of providing the sort of deluxe services for families with children that was missing when I started taking my family skiing some 20 years ago.My business partner, Philippe Capezzone and I are really proud of the hotel.
What else do you enjoy doing in your spare time (if you have any after so many activities)?
I like to read and complete sudoku – where my ambition is to be able to beat my wife and one of her friends who are awesome at this game. I also have quite a few private business projects and investments.
You are still a very young man (50, in September 07?). Apart from your work with philanthropy, and continuing to chair Man's strategic committee, what other projects do you have for the future?
I am involved in quite a lot of private business ventures with good trusted partners, mainly in real estate and the hotel business.