WEBVTT - Businessweek Talks- Invesco CEO Marty Flanagan

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic from Bloomberg Radio. Well the Atlanta

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<v Speaker 1>based money manager Investco. They reported earnings today topping Wall

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<v Speaker 1>Street expectations. They operate twenty five countries roughly one point

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<v Speaker 1>three trillion in assets under management. So we are delighted

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<v Speaker 1>to welcome Investco President CEO Marty Flanagan in another edition

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<v Speaker 1>of Bloomberg Business Week talks to be featured in an

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<v Speaker 1>upcoming issue of Bloomberg Business Week magazine. Marty, nice to

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<v Speaker 1>have you here. How are you well? Thanks to happy

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<v Speaker 1>and UHO, great and happy one to you and all

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<v Speaker 1>your listeners and watchers. Well, good to have you here

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<v Speaker 1>in fingers Cross. That is not like how do you

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<v Speaker 1>see it? And do you think it's going to be

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<v Speaker 1>another difficult market year? Uh? Look at you bring up

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<v Speaker 1>a good point. Was you know something that none of

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<v Speaker 1>us have ever imagined living? And uh, I will say

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<v Speaker 1>a lot of the work that was done in sets

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<v Speaker 1>up a very interesting environment going in one. I think

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<v Speaker 1>everybody's looking for strong economic growth in the United States,

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<v Speaker 1>in particular in those countries around the world, driven by

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<v Speaker 1>the optimism and the ability to start to get back

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<v Speaker 1>to work with the vaccine coming and all us frankly

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<v Speaker 1>learning how to work in different ways. Yeah. Absolutely. Well,

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<v Speaker 1>what's interesting is our Peter Koy, Bloomberg Economics editor, uh,

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<v Speaker 1>Bloomberg Business Week Economics editor. He's got a story out

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<v Speaker 1>there about whether or not we're setting up to be

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<v Speaker 1>like the roaring nineteen twenties, the what we saw after

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<v Speaker 1>another time period in our history where we had a pandemic,

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<v Speaker 1>we had a tough economy. Um, and whether or not

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<v Speaker 1>we see we you know, we come roaring back. How

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<v Speaker 1>do you see it? Do you think that we might

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<v Speaker 1>be creating bubbles right now and that we're going to

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<v Speaker 1>pay the piper at some point, or do you see

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<v Speaker 1>us setting up for maybe a really positive type of

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<v Speaker 1>market environment, some economic momentum that feels much more normal

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<v Speaker 1>and maybe even upbeat. Yeah, so, uh, lots of good

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<v Speaker 1>thoughts there. Let's go to the more immediate outlook, and

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<v Speaker 1>I think you can really have, as your connects are saying,

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<v Speaker 1>a really strong economy right with all the fiscal stimulus

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<v Speaker 1>has been put in there, with all the monetary policy

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<v Speaker 1>of changes that have been put in monetary support. But Frankly,

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<v Speaker 1>all businesses really put the head down and did everything

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<v Speaker 1>they can to be operating more efficiently. You know, really

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<v Speaker 1>is a protection last year been you look into this year,

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<v Speaker 1>you can see some real earning surprises. We're going to

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<v Speaker 1>need that because of some of the evaluations. But you know,

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<v Speaker 1>the momentum that we're seeing in our business is as

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<v Speaker 1>strong as it's been in two and a half years.

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<v Speaker 1>So I do think that as part of the optimism

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<v Speaker 1>that's coming out of it, and really people seeking greater

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<v Speaker 1>returns as you know, with heels being so low and

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<v Speaker 1>you know so much of the markets. So Marty, what

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<v Speaker 1>will the pandemic? What's been the impact on your business

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<v Speaker 1>and running uh a money management business? Uh in what

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<v Speaker 1>has been kind of the lasting impact here? Yeah, so

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<v Speaker 1>I would, uh, you have to put in perspective, um,

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<v Speaker 1>you know, I would say it was harder for money managers.

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<v Speaker 1>I'd say us, I will say specifically than the national crisis,

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<v Speaker 1>just because the steepness of that and so quickly the

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<v Speaker 1>market pullback. And whoever would imagine having in your global

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<v Speaker 1>workforce working from home. We didn't, everybody else did. But

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<v Speaker 1>how we're interacting the clients around the world has forever changed. Um. Yeah,

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<v Speaker 1>every you know that we can bring uh you know,

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<v Speaker 1>the whole organization to our clients in a moment's notice.

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<v Speaker 1>Now we could have done it before. It just wasn't

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<v Speaker 1>the cultural thing to do. We will end up seeing

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<v Speaker 1>clients in person going forward. But these digital engagements have

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<v Speaker 1>just really changed the game. I think that's a really

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<v Speaker 1>positive thing. Um And I will say the other thing.

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<v Speaker 1>Our industry has been, as you know, you know, going

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<v Speaker 1>under tremendous change. And that was happened before the crisis.

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<v Speaker 1>But the bigger gonna be bigger and their only stronger.

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<v Speaker 1>It's going to happen faster posts this pandemic. Well, and

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<v Speaker 1>it's interesting. We've seen a fair amount of consolidation too

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<v Speaker 1>in your industry. What's your expectation do you think that

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<v Speaker 1>there will be further consolidation within the asset management and

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<v Speaker 1>money management industry this year? I do? You know, Look,

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<v Speaker 1>I've been saying that for a period of time, but

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<v Speaker 1>I will say, uh yes, ever since I've gotten the industry,

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<v Speaker 1>there's calls for consolidation. Very little happened. It's very different though.

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<v Speaker 1>Now clients are working fewer money managers than that's happening

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<v Speaker 1>around the world. Uh, there's a greater expectation what clients

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<v Speaker 1>want from money managers. That's ultimate a very good thing

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<v Speaker 1>for clients and consumers, but it is putting a lot

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<v Speaker 1>of pressure on money managers and that is really where

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<v Speaker 1>you absolutely need scale within your business at multiple levels UM,

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<v Speaker 1>and that's how you're going to serve your clients. They

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<v Speaker 1>want depth and breadth and capabilities beyond just managing money.

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<v Speaker 1>So I think you're going to continue to see combinations.

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<v Speaker 1>But the other thing, YEA, the growth, it's not all

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<v Speaker 1>going to be through M and A. I mean there

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<v Speaker 1>will be just firms that are disadvantaged to leave no

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<v Speaker 1>good of the stronger firms. Nelson Pelts is on your board.

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<v Speaker 1>His try On Fund Management has a nearly ten percent

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<v Speaker 1>holding in the company, I think the third largest in

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<v Speaker 1>invest go. What's the end game? I mean we're just

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<v Speaker 1>talking about consolidation UM. What are you hearing from him

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<v Speaker 1>or what do you expect in terms of how this

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<v Speaker 1>relationship might impact the company? Yes? So, Uh, Nelson joined

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<v Speaker 1>the board as it ed Garden, his partner and Tom Fink,

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<v Speaker 1>who was the CEO of UM Bearings at the end

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<v Speaker 1>of last year. As you know, both all three really

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<v Speaker 1>talented people that they know that's center extremely well. UM

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<v Speaker 1>and uh Nelson and Ed and UM consists of our

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<v Speaker 1>board view the industry in a very same way, UM

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<v Speaker 1>that it can just be a large, growing industry, but

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<v Speaker 1>it's going through dramatic change and that UM, you know,

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<v Speaker 1>this this sort of movement to stronger and stronger, larger

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<v Speaker 1>than more capable firms is really you know, top of

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<v Speaker 1>mind with them, and UM, you know, it's just very

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<v Speaker 1>helpful to have you know, people have been through uh

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<v Speaker 1>all sorts of change in development and other industries to

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<v Speaker 1>and bring in that perspective. So it's been early days

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<v Speaker 1>for all three of them, but it's been great additions

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<v Speaker 1>to what is already a very strong board. Is it

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<v Speaker 1>safe to say you have to you have to be

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<v Speaker 1>bigger to go after the likes of black Rock and Vanguard. Uh? Yeah,

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<v Speaker 1>So I look at a different way. Really, it's really

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<v Speaker 1>to serve our clients, right, and you know what we're

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<v Speaker 1>seeing from our clients all around the world is they

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<v Speaker 1>want everything for passive portfolios, to factor portfolios, to high

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<v Speaker 1>conviction active alternatives, and they want you know, a bunch

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<v Speaker 1>of analytical tools and support to help them do their job.

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<v Speaker 1>And you really have to have skill to do that.

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<v Speaker 1>And so not just you know, investment keep uh skills,

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<v Speaker 1>but also the operational skills and the ability to invest

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<v Speaker 1>in things like technology of CERTA clients. And if you

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<v Speaker 1>do that very well, UM, you know you're going to

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<v Speaker 1>continue to grow. Hey listen, you know you just said

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<v Speaker 1>you know, yeah, I know you talk about all the

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<v Speaker 1>options that your clients want, and that's really what you

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<v Speaker 1>know what you guys stay focused on what your clients want,

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<v Speaker 1>want investors want. But I do wonder to UM, we've

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<v Speaker 1>had so many conversations here at Bloomberg about you know,

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<v Speaker 1>actively managed e t f s. You know, what do

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<v Speaker 1>you think is the future of that? So we just

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<v Speaker 1>launched for nonparents parent ETFs in December. UM, it's actually

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<v Speaker 1>very interesting. So obviously the EATYP growth has been just spectacular.

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<v Speaker 1>It's largely been in capulating indexes as you know, uh,

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<v Speaker 1>but where we have been very successful is in the

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<v Speaker 1>factor area. So it creates another alternative where you can

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<v Speaker 1>have no transparent ets for active management within a different vehicle.

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<v Speaker 1>There is a preference towards that vehicle. UM. That said,

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<v Speaker 1>we're really excited with the launches, but I suspect this

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<v Speaker 1>kind of take some time before you're going to see

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<v Speaker 1>a lot of momentum in the area. But again, very

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<v Speaker 1>few money managers have that capability one of them, and

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<v Speaker 1>we're happy to have it. Hey, listen, One place that

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<v Speaker 1>you guys are seeing a lot of momentum in and

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<v Speaker 1>you continue to focus on it, Marty, is obviously what

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<v Speaker 1>you're doing in China. And I know you guys are

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<v Speaker 1>looking for growth. I think you put this out last

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<v Speaker 1>year of more than your China assets in three years. Um,

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<v Speaker 1>how is that going? And I know you've been looking

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<v Speaker 1>to boost your ownership to I think in the joint

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<v Speaker 1>venture that you have there. How is it going? And

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<v Speaker 1>are you at all a little nervous about a new

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<v Speaker 1>administration and what the relationship will be between the US

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<v Speaker 1>and China. So UM, you know, right now we manage

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<v Speaker 1>seventy six billion dollars of assets in China for Chinese,

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<v Speaker 1>whether it be through our joint venture you're referring to

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<v Speaker 1>directly with institutions. The growth has been unbelievable. It was

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<v Speaker 1>a record year again for um our China business. In

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<v Speaker 1>the last half of the year, they had something like

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<v Speaker 1>seventeen billion dollars and that inflows. So it is um,

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<v Speaker 1>you know, an overnight success after twenty plus years. Uh,

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<v Speaker 1>you know in the marketplace. UM, I think frankly, uh uh,

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<v Speaker 1>the relations between US and China is important. Uh. It

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<v Speaker 1>was definitely creating complications for all of us that were

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<v Speaker 1>operating there. Um, you know, not in the material way,

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<v Speaker 1>but I'd say it was uneasy as you were looking

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<v Speaker 1>into the future. And I think it's really important for

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<v Speaker 1>two world powers to um, you know, be on the

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<v Speaker 1>same page, and it's good for each country, is good

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<v Speaker 1>for the world. So I'm hopeful that that's what's gonna

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<v Speaker 1>happen us we look forward here. Okay, it does feel

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<v Speaker 1>like a little bit of a new day, safe to

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<v Speaker 1>say early days, but it sure does. Yes. Well, let

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<v Speaker 1>me also ask you, um, just some of the things

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<v Speaker 1>you just have about a minute or so, a minute

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<v Speaker 1>and a half left here, some of the things that

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<v Speaker 1>we are talking about increasingly, whether it's bitcoin, whether it's

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<v Speaker 1>Robin hood, what of kind of some of the newer

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<v Speaker 1>trends that are out there that you find it interesting

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<v Speaker 1>that you think investors overall, folks in the financial community,

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<v Speaker 1>in the investment management world need to pay attention to

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<v Speaker 1>right now. Yeah, so it's it's a good question. It

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<v Speaker 1>all depends on who you are, right but I think

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<v Speaker 1>you have the reality still gets back to basics. Truly

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<v Speaker 1>understand what you're trying to accomplish, what returns you're trying

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<v Speaker 1>to get, what risk really to take in, you know,

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<v Speaker 1>the basic of time horizons. Uh, developments such as bitcoin

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<v Speaker 1>and the like. I think it's still early days. It's

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<v Speaker 1>obviously very very topical. You're seeing a lot of energy

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<v Speaker 1>behind it right now. Uh, I'd say it's not not

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<v Speaker 1>for everybody. And my basic view is that, um, very interesting.

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<v Speaker 1>But you know you're going to see central banks in

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<v Speaker 1>the game, you know, at some point too, and I

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<v Speaker 1>think that puts the value of it at risk quite frankly.

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<v Speaker 1>Is that two years after so I don't know. Yeah, Hey,

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<v Speaker 1>let's one last thing. Um, spacks is another thing that

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<v Speaker 1>they're just kind of exploding. Um. Does it make you

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<v Speaker 1>at least a little bit nervous in terms of what

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<v Speaker 1>that might mean for the investment world? Does that look

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<v Speaker 1>like a bubble to you? And just got about thirty

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<v Speaker 1>seconds here, Yeah, so any time something grows that fast

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<v Speaker 1>and it's so wonderful. It's probably good to question, you know,

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<v Speaker 1>how long it's gonna last, so I would warn the

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<v Speaker 1>bubble camp quite frankly. So all right, we're gonna leave

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<v Speaker 1>it on that note. And Marty, thank you so much.