Claire Kyle, CFA
CFA charterholder since: 1999
Education: BA in Mathematics from University of Minnesota, MA in Economics from Northwestern University
Books on the docket: “Apart from a random number of junkie mysteries, I’m just working through a very interesting book called Super Crunchers by Ian Ayres that talks about how thorough analysis and mining of large databases is changing the world and policies. It was a present; I was talking about “fat tails” to my kids and they decided this book was perfect for me”, shared Claire.
Motivation through the day-to-day: “Everyone has limits to the amount of time available to them each day. You need to be realistic in just knowing that there are tradeoffs. Tradeoffs aren’t a bad thing, they’re just a fact of life, so go with it,” Claire asserts.

As director of Pension Investments for Bank of Montreal’s Pension Fund Society, you and your team are the fiduciaries responsible for the retirement funds for all BMO employees. How does that mandate translate into what you do on a typical day?

Claire Kyle: My team is involved in the investment side of the business–we’re not involved with the benefits payouts or policies. We oversee the investment strategy and sub-advisors for all assets in the plan and help set the policy. In-house, we conduct some currency management, but other than that all of our asset class portfolios are managed by third-party firms. We’re responsible for their selection and monitoring what’s going on in the portfolios. We also are responsible for the financial statements of the pension plan, and for ensuring cash flows are available for the payouts.

Is this what you always wanted to do when you “grew up”?

CK: Oh no, it was far later in life that I decided that this is what I wanted to do. In my previous position with another large financial institution, I worked in their asset management group and was responsible for some of the functions related to the pension plan; that’s when I started to get interested in pensions. In this part of the industry you can see extreme opposites in terms of organizational structure. In some firms, pensions are just managed as a marginal part of someone’s role whereas for larger corporations, there is typically a specialized team that provides this function. I wanted a role with a range of responsibilities and depth to pension management. Although I’m not sure that I had childhood dreams of doing this, I am very happy doing what I’m doing and truly love this role.

Such passion–what else do you enjoy about your role?

CK: The diversity. The pension area has seen a lot of change lately and the great thing about this role is that we get a regular stream of interesting and bright people approaching us with great ideas about how else we could manage the plan. It’s very intellectually stimulating… and the people in the industry are wonderful. It’s a small enough industry that people know each other very well.

Do you share ideas and strategies with peers?

CK: Yes but it’s not only that; there is an association called the Pension and Investment Association of Canada. It started decades ago because at that time pension plans were small and typically only had one person at each firm looking after it and [they] needed to be able to share ideas. Now plans have grown but people still like to share ideas with peers, and it’s very much self help. You can ask a question on a website and ask for insight or solution to a problem and people will answer in a very valuable way.

Over the past six months, some investors just haven’t opened their statements, waiting until it’s all over. You don’t have that luxury.

CK: No–far from it. We track the markets daily. We look at market indices and have a good idea of where we’re at; we also look at our manager’s asset values every day. In our area, the goal is to try to stay on top of everything as best as possible but to remember that we are a long-term investor. We’re not going to change strategies too quickly, and of course trying to move $30 million to $50 million in the market isn’t insignificant, and isn’t always easy. We spend a lot of time reporting on performance and conducting manager due diligence, ensuring our sub-advisors are sticking to their styles, disciplines and the restrictions we place on them.

Do you think the market meltdown has changed how folks conduct due diligence?

CK: Not really but across the industry it has caused people to become aware of things that they may not have been following as closely before, and in some cases to step up their levels of oversight. One set of issues that came up and hit some Canadian pension funds hard was the third-party asset backed commercial paper debacle. Also, the Lehman bankruptcy caused people to think more and more about risk, especially in terms of credit and counter-party risk. If you look at your fixed income portfolios, fixed income managers usually found that playing the credit game was a safer way to add value than through duration; of course that hasn’t been the case recently. In the pension area, I think that we have to look at things in greater depth and gain a clearer understanding of all aspects of the investment business. In some cases, a manager may have some risks that they didn’t know were there. It’s really that there are more aspects to consider about risks and different ways to measure them. As well, we can’t loose sight of the fact that there’s risk with operations and not just the markets.

What are the biggest challenges for you at the present time?

CK: Realizing that you’re a long-term investor and trying to keep a long-term focus, because you do feel the pain. With a pension plan, we’re restricted by the policies and it’s painful to watch these assets evaporate. At the same time, it would be easy to go very defensive now, and what makes it so hard now is that we’re really in such unprecedented times. Although markets were bad back in the ‘30s government and monetary policies are different now. Also, the exchange of information is so instantaneous problems can’t be contained. Who would have thought six to seven years ago that Nortel would go bankrupt? Or that the U.S. investment banking industry would be shaken out.

Please take me through your career – your life history.

CK: I started out with a math major in undergrad and shifted into economics for graduate school–pretty much one dissertation short of a PhD.

What stopped you?

CK: I didn’t want to teach. I wasn’t sure if I wanted or needed the PhD but I did teach for a year after graduate school. Then I got married and worked for the city of New York (I’m originally from Minnesota) on a special study about their budget crisis at the time. Then I moved to Canada and worked for the economics department of a bank, before moving back to NYC. At that time, TD Bank was good at taking chances on people and they put me in their merchant banking group, during the LBO craze. That’s when I started to get interested in the business from an investment viewpoint. I also worked in corporate finance, and back in Canada spent time in M&A, insurance, and finally went to the asset management group. I started out there working on top-down economics work, but slowly got more involved in the pension plan management work that the same unit was looking after. It was interesting and at that time there didn’t seem to be many people who gave it much attention–so that’s why I got more active in the industry.

Have you been involved in any industry associations?

CK: I was chair of the Pension and Investment Association of Canada in the early 2000s, and before that was active on their investment policy committee. I’ve also been on the Advisory Board for the Canadian Investment Review journal.

Toronto CFA Society, with over 7200 members, just had another nearly 150 new charterholders inducted with their designation. How would you advise them or anyone else aspiring for a career in this industry?

CK: I obtained my charter to remain marketable. I learned a lot and still find all the readings and the journals incredibly relevant and valuable to stay on top of things. My team members with responsibility for investment due diligence and oversight are also CFA charterholders. I think that the charter is really like a union card. You need it. Beyond that I’ve seen that people enter the industry in a number of ways. If you’re really interested and get in at any level and you learn, you’ll get chances at advancement. You shouldn’t worry too much about how you get in, initially. It’s how you deal with opportunities that come afterwards and showing that you can add value. But it is tough now with many firms’ revenues down 25 percent or more.

So we’ve established there is a lot going on–how do you recharge?

CK: I try to sleep in on the weekend. I may not be the best at managing the balance–I have two grown daughters so it’s easy to just work too much. But what you do need to do is plan things in your calendar and get out there. I get to the gym, see friends weekly, putter in the garden, cook, or plan a vacation. I’ve been visiting Barbados each year for the past 25 years. That’s something I’m looking forward to.

What gets you through the tough times?

CK: Bits and pieces of my experience have helped. I’ve been fortunate in my career to try a variety of things and all of that helped. I didn’t receive my charter too long ago (in the late 90s) but I’d had enough work experience to carry it over; and a lot of the knowledge helps me get through–I can reflect on earlier experience to get through tough situations now.

Member Profile is a regular feature of The Analyst. Do you have suggestions for members that we should profile? Email us with the member’s name and a few sentences about who he/she is and why this person would make an interesting choice for a profile. TheAnalyst@torontocfa.ca