Aoifinn Devitt: This podcast series is kindly supported by Franklin Templeton and Alvine Capital. Franklin Templeton is a global investment management firm that provides a broad range of investment solutions, including mutual funds, ETFs, alternative investments, wealth management, and technology-enabled financial services. Founded in 1947, the firm manages approximately $1.8 trillion in assets under management and serves individual and institutional investors across more than 150 countries. Alvan Capital was founded in 2005. It’s a European-focused private capital advisory and placement agent that provides capital-raising services to investment managers from its bases in London and Stockholm. It creates bespoke capital-raising programs that blend appropriate investor targeting and sophisticated marketing to deliver a fundraise aligned with institutional expectations.
James Mitchell: The cost savings that you initially expect from taking that step of no longer paying a third party and of doing things internally are always much higher than those you’ll achieve. It’s inevitable that there are layers of complexity and consequently cost to your organization to in-house that you don’t see at the first step. And consequently, you need a pretty decent margin for error when you set out on these projects if you’re gonna take that step. I think it’s also really important to think about the timeframes required to achieve these goals and how they’re related to the duration and complexity of the assets that you consider to in-house. And that’s not a one-for-all question to answer.
Aoifinn Devitt: I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast. A podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by James Mitchell, who has a portfolio career including a strategic advisory role with Rewired Earth, as well as Empathy, a company committed to supporting families through bereavement. He holds a number of other advisory and director roles, and prior to his portfolio career was a director at Goldman Sachs, Barclays, and Phoenix Group. Welcome, James. Thanks for joining me today.
James Mitchell: Thanks, Oifen. It’s great to be here.
Aoifinn Devitt: I’m excited. Well, delighted to have you. And I reached out to you, you are one of the rare guests that we’ve met originally through LinkedIn. I thought your LinkedIn post around empathy was particularly resonant, something that was being introduced to the UK, clearly filling a gap in the market there, not a traditional finance-related post. So we’ll definitely come on to that. But when we did meet, then it was quite clear that you had a very interesting background. And I’d love if you could start us there, talk us through your background and how you entered into finance.
James Mitchell: Happy to do that. So as you said, I’ve been in the city for about 25 years. And I spent the vast majority of the first 2 decades at Goldman Sachs. I then moved for just a little under a year to Barclays. And since the summer of 2019, I shifted across to the buy side, first for Reassure, which was part of Swiss Re at the time. And then for Phoenix, which is now rebranded to Standard Life. My entry point to the City was a little bit non-standard. I read mathematics at Imperial College, and as was the habit of most of my fellow undergraduates, I went through the milk round process. Sadly, but maybe for a good thing in the future, I didn’t succeed in any of those roles. And as a result, I decided to go off and do a bit of snowboarding for a year in Meribel in the Three Valleys. I’ll come on to that later on. But after not achieving my objective of getting a job in the bank through the Milgram process, I came back to the city and I got a 1-week temp job at Goldman on their employee trading desk through an agency. As I have done throughout my career, working the network and understanding and trying to get a clear picture for how the bank functioned internally, I stayed for 3 months in that role and then got a permanent job on the equity trading floor as a trading assistant on a program trading desk. I think those roles are largely gone now. But it was certainly a fascinating baptism into the world of finance to understand the way that the equity trading floor functioned. I was in that role for about 18 months. I then moved into a sales role. And then for the largest part of my career at Goldman, I worked in and subsequently co-ran the transition management business in Europe. And that’s a business which back in the early 2000s was helping almost exclusively to find benefit pension schemes, manage the risk and cost of portfolio change when they modified their portfolios. One of the big things they were doing back then was moving away from portfolios which were predominantly UK equity, diversifying to global assets. And that was something which we were helping them with. We built a business, we expanded across not only securities franchise, but also investment banking and the asset management part of the firm. And subsequently worked with insurers, sovereign wealth funds, and high net worth family offices to achieve those same goals. Today I own this, I’d like to own something different. What’s the most cost-effective and risk-mitigated process to move from the current situation to my target portfolio?
Aoifinn Devitt: Can you tell me a little about that time at Goldman Sachs? What did you learn there?
James Mitchell: It was a pretty interesting time, those 18 years to be at Goldman. First of all, the tech bubble burst. We then went through a slow rebuild, then through the GFC. All of that built resilience for me in the way that I applied myself to my career. We also saw the business become much less successful in the US with my colleagues in that team in the States. And really, that enabled me to evolve and develop my personal skills, my sales skills, and to work with what I believe, and, and still believe, is a fantastic group of people then and great teams. And it really is about the people where you stay. So subsequent to my career at Goldman, I moved, as many do, with a number of individuals individuals to Barclays and set up the same business at Barclays. That was great fun. We did a couple of successful transactions. But again, it’s the people that make the joy in your day. I was offered in the spring of 2019 to go and join an insurance company. So moving from the sell side to the buy side and to try to build a business there. So at the time, Reassure in the UK was a part of Swiss Re. We had a relatively small team and a book of business of about £40 billion split between insurance buyout, which has subsequently grown substantially, and a policyholder savings unit. After joining a team, we relatively quickly doubled the size of that portfolio through a couple of pieces of M&A. But then actually the seismic moment from my previous role was when Phoenix negotiated to buy Reassure from Swiss Re and really changed the problem set for me as a part of the asset management exco. So my role was to govern and administer the outsourcing of asset management. To asset management partners, and to evolve those partnerships for the benefit of the firm. Doing that at Phoenix was a massive challenge. The business grew substantially through what were some very challenging times of COVID some interesting market cycles, particularly Liz Truss’s experiment with the UK economy, which was relatively short-lived. But overall, great fun in growing a business and people by, what, about 10x over the time period. And massively expanding the level of expertise and knowledge base internally to be able to do more things with assets and deliver better value to our customers. And I think that’s an interesting topic because that question as to whether you run money internally or outsource to third-party asset management partners continues to be a point of debate in the business. And it’s one that we could probably discuss next.
Aoifinn Devitt: Definitely. Well, there’s a lot there. And I suppose just before we go into some of your core beliefs, and particularly I think let’s pick up on that on the governance side, clearly a tremendous amount of change that you’ve been through. Industries is having their life cycles and you having to move to the next heat map in a way as to where the, the business opportunity is. Getting back to governance and core beliefs, can you maybe talk us through some of those as they’ve evolved, particularly as you look at strategic partnerships? Consolidation of the industry, the plight of smaller players, anything that you’ve now come away with as the way you approach your portfolio career?
James Mitchell: Sure. So I think even from way back in the early 2000s, there has been a trend towards fewer larger institutions to run money in the UK, and globally as well to a certain extent in the pensions and savings business. As you evolve to a larger cost base, you feel that you have a higher capability to drive economies of scale in the fees that you pay outsourced entities. But also at some point, the pound value of the numbers that you’re writing checks for become very large. And that, I think, asks and forces organizations to ask the question, are we getting the best value here, or could we bring some of this in-house and do it ourselves? And it’s a good question to ask. It really is, but it does require a lot of caution in making decisions and thinking about how you’ll structure that because in-house, it’s not always the right solution. I think you can generally say that there are some real truths, and then I’ll come onto a couple of them. But I think first of all, the cost savings that you initially expect from taking that step of no longer paying a third party and of doing things internally are always much higher than those you’ll achieve. It’s inevitable that there are layers of complexity and consequently cost to your organization to in-house that you don’t see at the first step. And consequently, you need a pretty decent margin for error when you set out on these projects if you’re gonna take that step. I think it’s also really important to think about the timeframes required to achieve these goals and how they’re related to the duration and complexity of the assets that you consider to in-house. And that’s not a one-for-all question to answer because, for instance, the economy of scale breakeven cost for global passive equities is much, much higher than that you might expect for running a portfolio of government bonds. Then, and I think in many cases, it always comes back to this one point, your people and your teams are critical. It’s not just about the dealing desk that’s going to do that job, the entity that you face when you outsource. But about everyone that sits around them, not only in a context of full-time employees, but the exec and the non-exec that stand above them and ask them questions and challenge them, but also delegate to them. And that group of people have got to be happy with the implications of those in-housing decisions. And in particular, that delegation step where it might have been the case in any organization that they were used to sitting down once a quarter and being able to see what happened last time and understand the continuation to the point today. The more that you delegate to teams to make decisions, write checks to, to do investments and everything that’s associated with that, the much greater opportunity there is for a shift in position between those quarterly meetings. And the management and the committees and the chairs have got to be ready for that and understand it because if they don’t, You get a real problem in restrictive control when people react to change that they weren’t expecting. I think we’re going to continue to see a lot more consolidation in industry, whether it’s as a function of the continuation of the buyout trend where a lot of capital is being moved into only, what, fewer than a dozen institutions, or simply as a function of the fact that legislation is asking things like DC Master Trusts to be larger than a minimum size. I certainly don’t believe that it’s the case that all of those organizations should insource. It isn’t always the right decision, but you do need to sit down and make a clear case for both, and then commit and resource, because without the resources, it will definitely fail.
Aoifinn Devitt: And I think what can often happen with insourcing is there is such a desire to do it correctly or to not to fail, that it can often be a maximalist approach to hiring at that stage. And the whole point of outsourcing in the first place was cost saving. And in a way, it can actually go in the counter direction when, because it maybe insources with a model that is perhaps no longer fit for purpose, given where we are in terms of the disintermediation. I definitely want to put a pin in the discussion around AI and its disruptive effect, because I know that the insurance industry is massively, was beneficiary of some of this the insights. But before getting onto that and more macro issues, can you talk us through some of your board roles, your advisory roles today?
James Mitchell: Happy to.
Aoifinn Devitt: Because that’s how we connected, and I think some of these are particularly close to your heart.
James Mitchell: That’s correct. I mean, I’m working on a number of different projects, but I think the two that I really wanted to talk about were Empathy and Rewire Earth. I’ll take them in that order. So Empathy is an established technology company in the US. They’ve been around for 6 years, and they’re transforming the way the world plans for and navigates life’s toughest moments, the point of death of relatives, and how you help individuals through those periods of time. They’re super tough emotionally. Everybody knows that. They’re also very different and difficult administratively, and people need support for those challenges because this is happening a lot. I think I pulled a number out and I looked at it and thought I had to check it 4 or 5 times because it— couldn’t possibly be right. But in the UK, we expect to see £7 trillion of money changing hands in the next 30 years from older generation baby boomers into young. And obviously, that process typically is sometimes within one generation, the spouses, one dies, unfortunately, and the other survives, and then on to the kids. And that is a super tough thing to get right. It’s also something that people have very little knowledge about when they go into it and are not necessarily well prepared for. And that’s what Empathy does. It has a product that looks at how do I administer for this and control it. So in a key example, I go and I jump on the phone with my mom and we have a chat on a Sunday evening, and she’s got a bunch of files behind her desk, and that’s where all the information is. And I know that, and she knows that. But what Empathy does is takes that and make it electronic, make it shareable amongst the beneficiaries of the estate or the control of the individual whose estate it is, and connect it to all these different accounts and services. So now when an individual dies, I’ve got an up-to-date, accurate record of their assets and the management of the inheritance of that portfolio to the next generation or to a spouse. Is so much simpler. Take that administration, make it easy, support that individual through a very difficult time in their life. Why is that interesting to the insurance sector? Well, insurance product deals with exactly this event, and being there for your customers will only pay dividends for you in the future.
Aoifinn Devitt: And can I add, I think that’s also a hugely important area for wealth managers. Oh, it is. Anyone advising that family office. Because I know, I think we’ve all seen this in our friends and loved ones, people who posted at the bereavement are absolutely bogged down in the painful paperwork that goes after these events and to the exclusion of even being able to grieve the event. And this is, it’s surely in this day and age, as you said, there should be a way to minimize some of that burden.
James Mitchell: Totally agree. I think the impact that, you mentioned AI, This product is tech-enabled, but the impact that that can have to individuals’ lives—
Aoifinn Devitt: Mm-hmm.
James Mitchell: —is massive. So maybe I could switch and talk a little bit about Rewire Earth now. So one of the big challenges in the UK is that lots of institutions are credit poor but asset rich. Typically, they’ve got infrastructure which is crumbling, They have a need to solve for that. And in a lot of cases, they’re maxed out on the credit card. They can’t borrow from the banks because the duration of the asset’s too long, and they don’t have the right covenants and financial security to get access to other borrowing sources. So, they’ve got a couple of options. They can put a load of plasters on that asset and continue to operate and see what happens in the future. That’s a little bit head in the sand. They could sell those assets typically to large private equity and lease them back. And that works. It appears to solve a problem, right? They then get a shiny new heating system or whatever it is, or solar plant. But the challenges with that for me is that then takes a large part of the profit from that infrastructure and flies it out, maybe to the States, maybe to that parent and wherever they are in the, in the world. And it’s really only a temporary fix. Sure, it might be a 30-year temporary fix, but in 30 years’ time, we’ll be left with exactly the same problem. The infrastructure will be broken, the asset will be returned, and they’ll be looking to do the same thing again. So Rewire Earth comes along and says, okay, let’s throw a rope around place-based community where this is happening and think about how we solve for lots of different challenges. That’s one of the reasons I like it. There’s a lot of complexity. Let’s take the organization and work with them so that they can upgrade their credit ratings, reinvest the surplus from the earnings on their assets back into the local community, and consequently, not only attract investment from organizations who are looking to generate returns for the savers, the parents in that community, but generate jobs for the next generation as well. And then alongside it, and one of the things that I’ve, I’ve worked out a lot in my previous role was the growth early-stage venture market. Let’s put a bunch of venture tech alongside it, which enhances the efficiency of the processes within the pillars of the business and provides a positive wind to that economic ecosystem. What do they get? They get an addressable market where they can apply their technologies, test them out in the short term. And we create a win-win. Now I’ve described it as if it was easy. It’s clearly not. But the thing that I would say is the solution here is infinitely scalable in the UK across local authorities, councils, universities, large-scale infrastructure projects, because a lot of the organizations who face the challenge I described are repeatable across the UK many, many times. Mm-hmm. So that’s what we’re working on at Rewired Earth. I think there’s some real potential to have huge impact in local communities, but also solve for lenders’ requirements and institutions’ credit rating challenges.
Aoifinn Devitt: And it’s interesting because that in a way, we’re holding two ideas at once in the sense that yes, this is complex, yes, this is challenging, but equally the impact is the most visceral and simple of all. Because it’s locally felt. So it’s actually, it’s far from complex, the impact. So I think this is, I think, something I’m seeing with a lot of local and responsible investing in general. And it also, I think it ties to governance. Sometimes, you know, we have to get through a tremendous amount of complexity to have the impact that has been needed all along. And the sense that perhaps the reason it’s been needed is because if it was easy, it would’ve been done before. But it takes these kind of innovative solutions.
James Mitchell: Agreed.
Aoifinn Devitt: And bringing me to the other angle of the conversation, which I wanted to talk about, was your board roles and the way you perceive, ’cause you do have a number of board roles within your portfolio career, the way you perceive the role of a director today, some of the challenges that governance presents today, maybe because of this complexity, this AI, this AI rupture that we mentioned, how do you seek to deliver value as a director?
James Mitchell: I think the job inevitably is becoming much, much harder because as organizations do move down a path of bringing expertise in-house and applying themselves across a broader range of specialist areas, you’re required to have a higher knowledge base to govern them. I think you have to recognize that. You have to say, we need more skill. And I think that there is a requirement to enhance the level of capability within non-executive roles so that it correctly spans the organization’s appetite for new skills. And then I think you have to be ready to take a little bit more risk And this is not necessarily a problem within just corporates. It’s also true within the general investor population in the UK. We are moving in a world where a lot of asset pools are being channeled towards buyout insurance, Solvency II rule sets to manage their portfolios. And the new capital coming from defined contribution savers and workplace pension schemes doesn’t have the capacity to replace that, that was invested in more risky assets previously in defined benefit pension schemes. And so I think not because we need to build the UK economy or invest in more businesses in the UK from the perspective of social growth, that’s an interesting byproduct, but simply because we are becoming far more risk-averse as a nation, we need to try to check that trend.
Aoifinn Devitt: Great, great observation. I like the exhortation to become at least more comfortable taking risk at that governance layer. And then just moving to some personal reflections, clearly you’ve had, we’ve talked a little bit about that snowboarding, maybe we can bring that in here in terms of your personal interests. But let’s start with more of a reflection on highs and lows. So clearly a career that has seen industries grow and contract, and now in this phase, we are seeing nascent industries take flight. Have there been any highs and lows over the course for you personally, and What were some of the lessons you took away from the lows?
James Mitchell: You know, I’d go back to the GFC as a kind of seismic event in my learning experience. So if you paint the context of the excess from previous years and then the realization that a lot of stuff was going to tumble down, and then I’d go back to the weekend immediately after Lehman was— they pulled the plug. And I was in the building. Because I was helping their accountants and liquidators think about the nature of the assets that they held and the derivatives which were gone because they defaulted and work out how they could effectively manage that new portfolio as they look to generate value for their creditors. You learn a lot about people and the fact that you’ve got to be humble when you’re talking to individuals who are flying high one moment and were all out of jobs. And then you think about how that evolved over the next 24, 48 hours. I learned a lot about how to sit down with an individual, understand what they were doing, lead with a bit of kindness, and then work through their problems. One of the things I am— somebody said to me once was kind of like, you’ve got a— let’s say you have a 40-year career in finance. That’s probably a little longer than most people survive, but there you go. Effectively, every day that you work is 1 basis point, 100th of a percent of your career. And if you think about the focus that, let’s say, early-stage venture puts on finding 7 basis points of assets to generate the returns for the whole fund, that kind of tells you how important every single day is, because you don’t know when those 7 days are going to come. So you just have to turn up and prepare every day as if it was really one of those 7.
Aoifinn Devitt: Fantastic advice, and I think a statistic worth pondering there. But do tell us about your personal interests, because I think that’s another, I’m sure, where some of these ideas take root. Snowboarding for at least a year, cycling now. What interests you, and what do you gain from these kind of challenges?
James Mitchell: So cycling first, I think. And, you know, I grew up in Cambridge, so I could pretty much cycle before I could walk. It’s something I’ve, you know, I used to commute at school and all of those things, but I really only Started enjoying it as a sport in a combination with skiing in Does Alpes in the summer. I go downhill mountain biking below the glacier and ski on the glacier. And then seriously, when I took up road biking, when I left Goldman, I had the compulsory 2 or 3 months off. And in that timeframe, I took a bike and a small set of panniers and cycled across the south of France on my own over about a week and a half. A lot of time for contemplation in those, what, 900 kilometers, and a fantastic experience. And I have translated that into using cycling for commuting, using it as a source of kind of wellness and exercise, and also stepping up and using it to raise funds for other organizations. So I’ve sponsored and led couple rides for groups of, what, 60 to 100 people from London to Paris. Mm-hmm. And most recently, this year will be the 4th year that I take on the Manchester-London cycle ride for Ambitious About Autism, where we go up to Manchester on a Saturday afternoon and about 200 cyclists will get up at 4:30 in the morning and start the 365-kilometer ride back to London that evening. I love it as a sport. It’s exciting, it’s exhilarating. It can be a little scary. It took me 2.5 hours to cycle up Ventoux, the bald mountain in the south of France last year, and not many minutes to come back down at a much greater speed. It was wonderful fun. I think it’s a great social sport as well. I just enjoy it a huge amount, and I think it’s something that I’ll continue to do for the rest of my life. I suppose other passions, I love to travel. Sometimes with a bike, some— most of the time not. Been all over the world. I normally have at least one, if not two cameras with me. I’ve been taking pictures of sports, portraiture, and wildlife for nearly 30 years now. It’s something which— it gives you an alternative perspective and it enables you to share that perspective with others through the lens, which I really enjoy. Music’s been a big part of my life, both performing and watching. I met my wife who’s a violinist in a symphony orchestra. And I think being a performing musician teaches you a huge amount about stepping up on stage in business as well. It gives you the nerve and doesn’t solve for the nerves because you always want a little bit of nerves when you go and present. It just keeps you alive, but it gives you that experience from a very early age. And I’ll look to continue doing it. I don’t play professionally anymore, and I’m more likely to be singing karaoke than Carmen these days.
Aoifinn Devitt: Fantastic reflections. And yes, there’ll be many musicians and dancers on this podcast who have taken those performance skills and abilities to connect with an audience and truly perform into the finance world to great effect. So more overlaps than many of us would’ve thought initially. Just a final two questions. First one is about key people. Any key people throughout the course of your career who were particularly impactful for you?
James Mitchell: I mean, I think you have to start with family. My parents, wonderful kind of instigators and instillers of value and discipline in work. And then leaders and bosses. I never forget asking one of my first bosses at Goldman to review a pitch document before I sent it to a client. And he looked at me and he said, “I don’t need to read it. If you’re happy with it, send it.” And in a second, ownership and responsibility is transferred, and that felt fantastic. But then I had to own it. And I think, you know, you give guidance and you steer and you coach from over the shoulder, but in a leadership role, only by trusting your reports can you get to the day when one of them will be your boss.
Aoifinn Devitt: I always do point out this is not an exhaustive list, so I’m sure there have been many more, but I, I do think that that’s good advice for the next set of hierarchies. And so tied to that, is there any key word of wisdom or many words that you would leave us with in terms of whether it’s advice for your younger self or words to live by?
James Mitchell: You know, I think in terms of that, I mean, be brave, don’t be afraid to fail. Tomorrow the sun will always rise. And then I think lastly, you know, try not to let your current perspectives limit your future ambitions.
Aoifinn Devitt: Fantastic. Well, James, I would think Renaissance man is not a term I throw out quite commonly, but certainly when we met, I was, a little overwhelmed by just the various paths that we could have taken here. And I think to tie together both the work at Empathy as well as— taking together the work at Empathy as well as Rewired Earth, two seemingly disparate directions, but actually joined up by simple human impact.
James Mitchell: Mm-hmm.
Aoifinn Devitt: As well as the massive experience you’re taking in from the private sector and all of its complexities, as well as its being a change agent itself. I’m very excited to have you as a voice on LinkedIn, as a voice on this podcast, and thank you for coming here and sharing your many words of wisdom with us.
James Mitchell: Thank you. Pleasure to be here.
Aoifinn Devitt: This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: This podcast series is kindly supported by Franklin Templeton and Alvine Capital. Franklin Templeton is a global investment management firm that provides a broad range of investment solutions, including mutual funds, ETFs, alternative investments, wealth management, and technology-enabled financial services. Founded in 1947, the firm manages approximately $1.8 trillion in assets under management and serves individual and institutional investors across more than 150 countries. Alvan Capital was founded in 2005. It’s a European-focused private capital advisory and placement agent that provides capital-raising services to investment managers from its bases in London and Stockholm. It creates bespoke capital-raising programs that blend appropriate investor targeting and sophisticated marketing to deliver a fundraise aligned with institutional expectations.
James Mitchell: The cost savings that you initially expect from taking that step of no longer paying a third party and of doing things internally are always much higher than those you’ll achieve. It’s inevitable that there are layers of complexity and consequently cost to your organization to in-house that you don’t see at the first step. And consequently, you need a pretty decent margin for error when you set out on these projects if you’re gonna take that step. I think it’s also really important to think about the timeframes required to achieve these goals and how they’re related to the duration and complexity of the assets that you consider to in-house. And that’s not a one-for-all question to answer.
Aoifinn Devitt: I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast. A podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by James Mitchell, who has a portfolio career including a strategic advisory role with Rewired Earth, as well as Empathy, a company committed to supporting families through bereavement. He holds a number of other advisory and director roles, and prior to his portfolio career was a director at Goldman Sachs, Barclays, and Phoenix Group. Welcome, James. Thanks for joining me today.
James Mitchell: Thanks, Oifen. It’s great to be here.
Aoifinn Devitt: I’m excited. Well, delighted to have you. And I reached out to you, you are one of the rare guests that we’ve met originally through LinkedIn. I thought your LinkedIn post around empathy was particularly resonant, something that was being introduced to the UK, clearly filling a gap in the market there, not a traditional finance-related post. So we’ll definitely come on to that. But when we did meet, then it was quite clear that you had a very interesting background. And I’d love if you could start us there, talk us through your background and how you entered into finance.
James Mitchell: Happy to do that. So as you said, I’ve been in the city for about 25 years. And I spent the vast majority of the first 2 decades at Goldman Sachs. I then moved for just a little under a year to Barclays. And since the summer of 2019, I shifted across to the buy side, first for Reassure, which was part of Swiss Re at the time. And then for Phoenix, which is now rebranded to Standard Life. My entry point to the City was a little bit non-standard. I read mathematics at Imperial College, and as was the habit of most of my fellow undergraduates, I went through the milk round process. Sadly, but maybe for a good thing in the future, I didn’t succeed in any of those roles. And as a result, I decided to go off and do a bit of snowboarding for a year in Meribel in the Three Valleys. I’ll come on to that later on. But after not achieving my objective of getting a job in the bank through the Milgram process, I came back to the city and I got a 1-week temp job at Goldman on their employee trading desk through an agency. As I have done throughout my career, working the network and understanding and trying to get a clear picture for how the bank functioned internally, I stayed for 3 months in that role and then got a permanent job on the equity trading floor as a trading assistant on a program trading desk. I think those roles are largely gone now. But it was certainly a fascinating baptism into the world of finance to understand the way that the equity trading floor functioned. I was in that role for about 18 months. I then moved into a sales role. And then for the largest part of my career at Goldman, I worked in and subsequently co-ran the transition management business in Europe. And that’s a business which back in the early 2000s was helping almost exclusively to find benefit pension schemes, manage the risk and cost of portfolio change when they modified their portfolios. One of the big things they were doing back then was moving away from portfolios which were predominantly UK equity, diversifying to global assets. And that was something which we were helping them with. We built a business, we expanded across not only securities franchise, but also investment banking and the asset management part of the firm. And subsequently worked with insurers, sovereign wealth funds, and high net worth family offices to achieve those same goals. Today I own this, I’d like to own something different. What’s the most cost-effective and risk-mitigated process to move from the current situation to my target portfolio?
Aoifinn Devitt: Can you tell me a little about that time at Goldman Sachs? What did you learn there?
James Mitchell: It was a pretty interesting time, those 18 years to be at Goldman. First of all, the tech bubble burst. We then went through a slow rebuild, then through the GFC. All of that built resilience for me in the way that I applied myself to my career. We also saw the business become much less successful in the US with my colleagues in that team in the States. And really, that enabled me to evolve and develop my personal skills, my sales skills, and to work with what I believe, and, and still believe, is a fantastic group of people then and great teams. And it really is about the people where you stay. So subsequent to my career at Goldman, I moved, as many do, with a number of individuals individuals to Barclays and set up the same business at Barclays. That was great fun. We did a couple of successful transactions. But again, it’s the people that make the joy in your day. I was offered in the spring of 2019 to go and join an insurance company. So moving from the sell side to the buy side and to try to build a business there. So at the time, Reassure in the UK was a part of Swiss Re. We had a relatively small team and a book of business of about £40 billion split between insurance buyout, which has subsequently grown substantially, and a policyholder savings unit. After joining a team, we relatively quickly doubled the size of that portfolio through a couple of pieces of M&A. But then actually the seismic moment from my previous role was when Phoenix negotiated to buy Reassure from Swiss Re and really changed the problem set for me as a part of the asset management exco. So my role was to govern and administer the outsourcing of asset management. To asset management partners, and to evolve those partnerships for the benefit of the firm. Doing that at Phoenix was a massive challenge. The business grew substantially through what were some very challenging times of COVID some interesting market cycles, particularly Liz Truss’s experiment with the UK economy, which was relatively short-lived. But overall, great fun in growing a business and people by, what, about 10x over the time period. And massively expanding the level of expertise and knowledge base internally to be able to do more things with assets and deliver better value to our customers. And I think that’s an interesting topic because that question as to whether you run money internally or outsource to third-party asset management partners continues to be a point of debate in the business. And it’s one that we could probably discuss next.
Aoifinn Devitt: Definitely. Well, there’s a lot there. And I suppose just before we go into some of your core beliefs, and particularly I think let’s pick up on that on the governance side, clearly a tremendous amount of change that you’ve been through. Industries is having their life cycles and you having to move to the next heat map in a way as to where the, the business opportunity is. Getting back to governance and core beliefs, can you maybe talk us through some of those as they’ve evolved, particularly as you look at strategic partnerships? Consolidation of the industry, the plight of smaller players, anything that you’ve now come away with as the way you approach your portfolio career?
James Mitchell: Sure. So I think even from way back in the early 2000s, there has been a trend towards fewer larger institutions to run money in the UK, and globally as well to a certain extent in the pensions and savings business. As you evolve to a larger cost base, you feel that you have a higher capability to drive economies of scale in the fees that you pay outsourced entities. But also at some point, the pound value of the numbers that you’re writing checks for become very large. And that, I think, asks and forces organizations to ask the question, are we getting the best value here, or could we bring some of this in-house and do it ourselves? And it’s a good question to ask. It really is, but it does require a lot of caution in making decisions and thinking about how you’ll structure that because in-house, it’s not always the right solution. I think you can generally say that there are some real truths, and then I’ll come onto a couple of them. But I think first of all, the cost savings that you initially expect from taking that step of no longer paying a third party and of doing things internally are always much higher than those you’ll achieve. It’s inevitable that there are layers of complexity and consequently cost to your organization to in-house that you don’t see at the first step. And consequently, you need a pretty decent margin for error when you set out on these projects if you’re gonna take that step. I think it’s also really important to think about the timeframes required to achieve these goals and how they’re related to the duration and complexity of the assets that you consider to in-house. And that’s not a one-for-all question to answer because, for instance, the economy of scale breakeven cost for global passive equities is much, much higher than that you might expect for running a portfolio of government bonds. Then, and I think in many cases, it always comes back to this one point, your people and your teams are critical. It’s not just about the dealing desk that’s going to do that job, the entity that you face when you outsource. But about everyone that sits around them, not only in a context of full-time employees, but the exec and the non-exec that stand above them and ask them questions and challenge them, but also delegate to them. And that group of people have got to be happy with the implications of those in-housing decisions. And in particular, that delegation step where it might have been the case in any organization that they were used to sitting down once a quarter and being able to see what happened last time and understand the continuation to the point today. The more that you delegate to teams to make decisions, write checks to, to do investments and everything that’s associated with that, the much greater opportunity there is for a shift in position between those quarterly meetings. And the management and the committees and the chairs have got to be ready for that and understand it because if they don’t, You get a real problem in restrictive control when people react to change that they weren’t expecting. I think we’re going to continue to see a lot more consolidation in industry, whether it’s as a function of the continuation of the buyout trend where a lot of capital is being moved into only, what, fewer than a dozen institutions, or simply as a function of the fact that legislation is asking things like DC Master Trusts to be larger than a minimum size. I certainly don’t believe that it’s the case that all of those organizations should insource. It isn’t always the right decision, but you do need to sit down and make a clear case for both, and then commit and resource, because without the resources, it will definitely fail.
Aoifinn Devitt: And I think what can often happen with insourcing is there is such a desire to do it correctly or to not to fail, that it can often be a maximalist approach to hiring at that stage. And the whole point of outsourcing in the first place was cost saving. And in a way, it can actually go in the counter direction when, because it maybe insources with a model that is perhaps no longer fit for purpose, given where we are in terms of the disintermediation. I definitely want to put a pin in the discussion around AI and its disruptive effect, because I know that the insurance industry is massively, was beneficiary of some of this the insights. But before getting onto that and more macro issues, can you talk us through some of your board roles, your advisory roles today?
James Mitchell: Happy to.
Aoifinn Devitt: Because that’s how we connected, and I think some of these are particularly close to your heart.
James Mitchell: That’s correct. I mean, I’m working on a number of different projects, but I think the two that I really wanted to talk about were Empathy and Rewire Earth. I’ll take them in that order. So Empathy is an established technology company in the US. They’ve been around for 6 years, and they’re transforming the way the world plans for and navigates life’s toughest moments, the point of death of relatives, and how you help individuals through those periods of time. They’re super tough emotionally. Everybody knows that. They’re also very different and difficult administratively, and people need support for those challenges because this is happening a lot. I think I pulled a number out and I looked at it and thought I had to check it 4 or 5 times because it— couldn’t possibly be right. But in the UK, we expect to see £7 trillion of money changing hands in the next 30 years from older generation baby boomers into young. And obviously, that process typically is sometimes within one generation, the spouses, one dies, unfortunately, and the other survives, and then on to the kids. And that is a super tough thing to get right. It’s also something that people have very little knowledge about when they go into it and are not necessarily well prepared for. And that’s what Empathy does. It has a product that looks at how do I administer for this and control it. So in a key example, I go and I jump on the phone with my mom and we have a chat on a Sunday evening, and she’s got a bunch of files behind her desk, and that’s where all the information is. And I know that, and she knows that. But what Empathy does is takes that and make it electronic, make it shareable amongst the beneficiaries of the estate or the control of the individual whose estate it is, and connect it to all these different accounts and services. So now when an individual dies, I’ve got an up-to-date, accurate record of their assets and the management of the inheritance of that portfolio to the next generation or to a spouse. Is so much simpler. Take that administration, make it easy, support that individual through a very difficult time in their life. Why is that interesting to the insurance sector? Well, insurance product deals with exactly this event, and being there for your customers will only pay dividends for you in the future.
Aoifinn Devitt: And can I add, I think that’s also a hugely important area for wealth managers. Oh, it is. Anyone advising that family office. Because I know, I think we’ve all seen this in our friends and loved ones, people who posted at the bereavement are absolutely bogged down in the painful paperwork that goes after these events and to the exclusion of even being able to grieve the event. And this is, it’s surely in this day and age, as you said, there should be a way to minimize some of that burden.
James Mitchell: Totally agree. I think the impact that, you mentioned AI, This product is tech-enabled, but the impact that that can have to individuals’ lives—
Aoifinn Devitt: Mm-hmm.
James Mitchell: —is massive. So maybe I could switch and talk a little bit about Rewire Earth now. So one of the big challenges in the UK is that lots of institutions are credit poor but asset rich. Typically, they’ve got infrastructure which is crumbling, They have a need to solve for that. And in a lot of cases, they’re maxed out on the credit card. They can’t borrow from the banks because the duration of the asset’s too long, and they don’t have the right covenants and financial security to get access to other borrowing sources. So, they’ve got a couple of options. They can put a load of plasters on that asset and continue to operate and see what happens in the future. That’s a little bit head in the sand. They could sell those assets typically to large private equity and lease them back. And that works. It appears to solve a problem, right? They then get a shiny new heating system or whatever it is, or solar plant. But the challenges with that for me is that then takes a large part of the profit from that infrastructure and flies it out, maybe to the States, maybe to that parent and wherever they are in the, in the world. And it’s really only a temporary fix. Sure, it might be a 30-year temporary fix, but in 30 years’ time, we’ll be left with exactly the same problem. The infrastructure will be broken, the asset will be returned, and they’ll be looking to do the same thing again. So Rewire Earth comes along and says, okay, let’s throw a rope around place-based community where this is happening and think about how we solve for lots of different challenges. That’s one of the reasons I like it. There’s a lot of complexity. Let’s take the organization and work with them so that they can upgrade their credit ratings, reinvest the surplus from the earnings on their assets back into the local community, and consequently, not only attract investment from organizations who are looking to generate returns for the savers, the parents in that community, but generate jobs for the next generation as well. And then alongside it, and one of the things that I’ve, I’ve worked out a lot in my previous role was the growth early-stage venture market. Let’s put a bunch of venture tech alongside it, which enhances the efficiency of the processes within the pillars of the business and provides a positive wind to that economic ecosystem. What do they get? They get an addressable market where they can apply their technologies, test them out in the short term. And we create a win-win. Now I’ve described it as if it was easy. It’s clearly not. But the thing that I would say is the solution here is infinitely scalable in the UK across local authorities, councils, universities, large-scale infrastructure projects, because a lot of the organizations who face the challenge I described are repeatable across the UK many, many times. Mm-hmm. So that’s what we’re working on at Rewired Earth. I think there’s some real potential to have huge impact in local communities, but also solve for lenders’ requirements and institutions’ credit rating challenges.
Aoifinn Devitt: And it’s interesting because that in a way, we’re holding two ideas at once in the sense that yes, this is complex, yes, this is challenging, but equally the impact is the most visceral and simple of all. Because it’s locally felt. So it’s actually, it’s far from complex, the impact. So I think this is, I think, something I’m seeing with a lot of local and responsible investing in general. And it also, I think it ties to governance. Sometimes, you know, we have to get through a tremendous amount of complexity to have the impact that has been needed all along. And the sense that perhaps the reason it’s been needed is because if it was easy, it would’ve been done before. But it takes these kind of innovative solutions.
James Mitchell: Agreed.
Aoifinn Devitt: And bringing me to the other angle of the conversation, which I wanted to talk about, was your board roles and the way you perceive, ’cause you do have a number of board roles within your portfolio career, the way you perceive the role of a director today, some of the challenges that governance presents today, maybe because of this complexity, this AI, this AI rupture that we mentioned, how do you seek to deliver value as a director?
James Mitchell: I think the job inevitably is becoming much, much harder because as organizations do move down a path of bringing expertise in-house and applying themselves across a broader range of specialist areas, you’re required to have a higher knowledge base to govern them. I think you have to recognize that. You have to say, we need more skill. And I think that there is a requirement to enhance the level of capability within non-executive roles so that it correctly spans the organization’s appetite for new skills. And then I think you have to be ready to take a little bit more risk And this is not necessarily a problem within just corporates. It’s also true within the general investor population in the UK. We are moving in a world where a lot of asset pools are being channeled towards buyout insurance, Solvency II rule sets to manage their portfolios. And the new capital coming from defined contribution savers and workplace pension schemes doesn’t have the capacity to replace that, that was invested in more risky assets previously in defined benefit pension schemes. And so I think not because we need to build the UK economy or invest in more businesses in the UK from the perspective of social growth, that’s an interesting byproduct, but simply because we are becoming far more risk-averse as a nation, we need to try to check that trend.
Aoifinn Devitt: Great, great observation. I like the exhortation to become at least more comfortable taking risk at that governance layer. And then just moving to some personal reflections, clearly you’ve had, we’ve talked a little bit about that snowboarding, maybe we can bring that in here in terms of your personal interests. But let’s start with more of a reflection on highs and lows. So clearly a career that has seen industries grow and contract, and now in this phase, we are seeing nascent industries take flight. Have there been any highs and lows over the course for you personally, and What were some of the lessons you took away from the lows?
James Mitchell: You know, I’d go back to the GFC as a kind of seismic event in my learning experience. So if you paint the context of the excess from previous years and then the realization that a lot of stuff was going to tumble down, and then I’d go back to the weekend immediately after Lehman was— they pulled the plug. And I was in the building. Because I was helping their accountants and liquidators think about the nature of the assets that they held and the derivatives which were gone because they defaulted and work out how they could effectively manage that new portfolio as they look to generate value for their creditors. You learn a lot about people and the fact that you’ve got to be humble when you’re talking to individuals who are flying high one moment and were all out of jobs. And then you think about how that evolved over the next 24, 48 hours. I learned a lot about how to sit down with an individual, understand what they were doing, lead with a bit of kindness, and then work through their problems. One of the things I am— somebody said to me once was kind of like, you’ve got a— let’s say you have a 40-year career in finance. That’s probably a little longer than most people survive, but there you go. Effectively, every day that you work is 1 basis point, 100th of a percent of your career. And if you think about the focus that, let’s say, early-stage venture puts on finding 7 basis points of assets to generate the returns for the whole fund, that kind of tells you how important every single day is, because you don’t know when those 7 days are going to come. So you just have to turn up and prepare every day as if it was really one of those 7.
Aoifinn Devitt: Fantastic advice, and I think a statistic worth pondering there. But do tell us about your personal interests, because I think that’s another, I’m sure, where some of these ideas take root. Snowboarding for at least a year, cycling now. What interests you, and what do you gain from these kind of challenges?
James Mitchell: So cycling first, I think. And, you know, I grew up in Cambridge, so I could pretty much cycle before I could walk. It’s something I’ve, you know, I used to commute at school and all of those things, but I really only Started enjoying it as a sport in a combination with skiing in Does Alpes in the summer. I go downhill mountain biking below the glacier and ski on the glacier. And then seriously, when I took up road biking, when I left Goldman, I had the compulsory 2 or 3 months off. And in that timeframe, I took a bike and a small set of panniers and cycled across the south of France on my own over about a week and a half. A lot of time for contemplation in those, what, 900 kilometers, and a fantastic experience. And I have translated that into using cycling for commuting, using it as a source of kind of wellness and exercise, and also stepping up and using it to raise funds for other organizations. So I’ve sponsored and led couple rides for groups of, what, 60 to 100 people from London to Paris. Mm-hmm. And most recently, this year will be the 4th year that I take on the Manchester-London cycle ride for Ambitious About Autism, where we go up to Manchester on a Saturday afternoon and about 200 cyclists will get up at 4:30 in the morning and start the 365-kilometer ride back to London that evening. I love it as a sport. It’s exciting, it’s exhilarating. It can be a little scary. It took me 2.5 hours to cycle up Ventoux, the bald mountain in the south of France last year, and not many minutes to come back down at a much greater speed. It was wonderful fun. I think it’s a great social sport as well. I just enjoy it a huge amount, and I think it’s something that I’ll continue to do for the rest of my life. I suppose other passions, I love to travel. Sometimes with a bike, some— most of the time not. Been all over the world. I normally have at least one, if not two cameras with me. I’ve been taking pictures of sports, portraiture, and wildlife for nearly 30 years now. It’s something which— it gives you an alternative perspective and it enables you to share that perspective with others through the lens, which I really enjoy. Music’s been a big part of my life, both performing and watching. I met my wife who’s a violinist in a symphony orchestra. And I think being a performing musician teaches you a huge amount about stepping up on stage in business as well. It gives you the nerve and doesn’t solve for the nerves because you always want a little bit of nerves when you go and present. It just keeps you alive, but it gives you that experience from a very early age. And I’ll look to continue doing it. I don’t play professionally anymore, and I’m more likely to be singing karaoke than Carmen these days.
Aoifinn Devitt: Fantastic reflections. And yes, there’ll be many musicians and dancers on this podcast who have taken those performance skills and abilities to connect with an audience and truly perform into the finance world to great effect. So more overlaps than many of us would’ve thought initially. Just a final two questions. First one is about key people. Any key people throughout the course of your career who were particularly impactful for you?
James Mitchell: I mean, I think you have to start with family. My parents, wonderful kind of instigators and instillers of value and discipline in work. And then leaders and bosses. I never forget asking one of my first bosses at Goldman to review a pitch document before I sent it to a client. And he looked at me and he said, “I don’t need to read it. If you’re happy with it, send it.” And in a second, ownership and responsibility is transferred, and that felt fantastic. But then I had to own it. And I think, you know, you give guidance and you steer and you coach from over the shoulder, but in a leadership role, only by trusting your reports can you get to the day when one of them will be your boss.
Aoifinn Devitt: I always do point out this is not an exhaustive list, so I’m sure there have been many more, but I, I do think that that’s good advice for the next set of hierarchies. And so tied to that, is there any key word of wisdom or many words that you would leave us with in terms of whether it’s advice for your younger self or words to live by?
James Mitchell: You know, I think in terms of that, I mean, be brave, don’t be afraid to fail. Tomorrow the sun will always rise. And then I think lastly, you know, try not to let your current perspectives limit your future ambitions.
Aoifinn Devitt: Fantastic. Well, James, I would think Renaissance man is not a term I throw out quite commonly, but certainly when we met, I was, a little overwhelmed by just the various paths that we could have taken here. And I think to tie together both the work at Empathy as well as— taking together the work at Empathy as well as Rewired Earth, two seemingly disparate directions, but actually joined up by simple human impact.
James Mitchell: Mm-hmm.
Aoifinn Devitt: As well as the massive experience you’re taking in from the private sector and all of its complexities, as well as its being a change agent itself. I’m very excited to have you as a voice on LinkedIn, as a voice on this podcast, and thank you for coming here and sharing your many words of wisdom with us.
James Mitchell: Thank you. Pleasure to be here.
Aoifinn Devitt: This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
