Dan Chornous, CFA
CAREER HIGHLIGHTS

• Chief investment officer of RBC Global Asset Management Inc. (RBC GAM)
• Member of the RBC Pension Investment Strategy Committee
• Chair of the RBC GAM Investment Strategy Committee (RISC)
• Vice-chair (current) of the Canadian Coalition for Good Governance; chair from 2012 to 2016

What made you decide to become a CFA charterholder?

After graduation in 1980, I began my career at Great-West Life as an investment analyst trainee. The leaders of the company’s investment division were among the early CFA charterholders, and they encouraged all of us to enrol in the program. That was certainly good advice.

How has the CFA designation, and the knowledge you’ve gained through completing the program, helped you in your career?

The CFA program was an essential part of my development as an analyst. And, quite obviously, I must be one of many thousands with this view.

Michael Mauboussin [author of The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing] and others have linked the massive growth in the number of CFA charterholders to the narrowing dispersion of returns within stock markets. Our business has been industrialized through the sharing of a common body of knowledge that’s been established with academic rigour, raising the general level of skill among money managers. Wondering why alpha is so scarce? Blame it on the CFA!

What are the main challenges facing investors today?

The combination of scar tissue from the financial crisis and the prospect of low returns for an extended period in fixed income markets may encourage complexity in asset management solutions. Innovation in finance is obviously a good thing, but complexity can make it difficult to understand possible outcomes through a full set of market environments. It can also obscure the true cost of a solution. An example of this might be a benefit that is given up over the long term in an attempt to manage drawdowns in the near term. In my mind, when designing solutions, simplicity and a long time horizon are frequently a good combination.

What are two or three of the most important aspects of shaping investment portfolios?

Knowledge of a client’s risk tolerances across many dimensions is as important as understanding their return goals. Hopefully, the value of a long time horizon is relevant and acknowledged.

Successfully mapping these goals and tolerances to a strategic asset mix—the second step—will be a function of how vividly the descriptions from the first step are captured.

Having a deep solution set for executing the plan has become increasingly important.

Finally, you have to manage your client’s near-term expectations and your portfolio managers’ investment options.

Describe your connection to the Canadian Coalition for Good Governance.

RBC Global Asset Management was the first bank-owned asset manager to join the CCGG, and we have been highly engaged members throughout its 15-year existence. I’ve had the privilege of chairing the coalition and continue to sit on its board. The CCGG has accomplished a lot: moving majority voting and say-on-pay into the mainstream in Canada, and advocating for gender diversity on boards and a national regulator, to name a few. The members believe that effective corporate governance is a pre-condition to sustainable growth in the economy and that Canadians should accept nothing less.

What books or research papers have most influenced your work and outlook?

My favourite reading falls into two big buckets: learning about investing and the investment process, and learning about learning. Superforecasting: The Art and Science of Prediction by Philip Tetlock and Dan Gardner is a recent example of the first— an engrossing stats text!

From the second bucket, Anders Ericsson’s Peak: Secrets From the New Science of Expertise had an even bigger impact on me. It helps us understand how we learn and, more importantly, how we can learn better.

We log and analyze everything we can at RBC Global Asset Management—that message is common to both books. A large part of successful investing is being able to thoroughly understand all aspects of our proposition and process, and to identify through rigorous review what parts of these can be improved upon.

Who is your career model and why?

I’ve been in this business too long and have met and worked with too many fine people to have a single role model.

John McCallum, a professor of macrofinance at the University of Manitoba, opened my eyes to macro analysis: the integration of history, economics, and finance. At the time, I didn’t realize I was heading out on a path that I’d still be on today.

Ted Ransby, my first boss in the business, was a CFA and an engineer. I think his training as an engineer encouraged constant attention to the process of investing.

I joined RBC Capital Markets in 1987 with Bill Moriarty as its research director and, ultimately, head of global equities. He emphasized the integration of fundamental, quantitative, and technical analysis, and focused our work as analysts on securities with a “strong DNA.”

What’s some of the best advice you’ve received in your career?

I spent many years in research at RBC Capital Markets. Throughout that time, Tony Fell was the CEO and chair. Through example, Tony built a culture that fostered ambitious, even aggressive, bankers, traders, and analysts, balanced by the need to always deal fairly and nurture relationships with clients and partners for the long term.

How do you give back?

My wife and I are both graduates of the University of Manitoba [U of M]. It’s raising $500 million for capital and academic purposes. The U of M does wonderful things for the province, including its Indigenous communities. We’re happy to be a small part of helping with that.