Peter Lynn is 38, fresh faced and full of enthusiasm. This self-confessed maths-lover and actuary is now, after 10 years with Tyndall, the company’s New Zealand managing director and he’s keen to get on with the job.
But, he says, the New Zealand funds management industry “has never been great growth market”. The reasons, primarily to do with tax discrimination and defective industry regulation, don’t matter except, of course, to industry players. The upshot of these market realities, from Lynn and Tyndall’s perspective, is that growth must come at the expense of their competitors. His management strategy is simple – capture market share. “We want to leapfrog over the other three or four companies that are currently bigger in the marketplace than we are,” he admits.
Is growth really the right management priority in more cynical investment marketplace? Hasn’t the financial world changed little in recent times?
“I guess that’s good point,” he says reflecting, just momentarily. He soon points out that, as wholesalers, Tyndall hasn’t been as exposed to as much criticism or cynicism as investment bankers on the retail side of the investment business. He concedes, however, that for the moment anyone involved in the financial or banking world is viewed with “greater degree” of suspicion. “In many cases with good reason. There are lot of sharks out there,” he offers.
On the other hand, Lynn thinks new legislation designed to tidy up and tighten regulations governing the industry, and some improved governance, will “go some way toward” improving overall perceptions of the investment sector. And with its clean performance track record, he thinks Tyndall will benefit when it comes to making performance comparisons.
Things in the money markets may not be quite as they were, but there are some management practices Lynn won’t change during his watch – in particular, the fund managers he employs. “They have done great job over the past decade and so I have no intention of changing them,” he says emphatically.
“I have two main aims. One is to improve Tyndall’s [market] visibility.” He rationalises that, because the name Tyndall lacks widespread, top-of-mind brand recognition, it needs an even greater level of investment performance than its competitors to sway investor attention.
And while Tyndall may not be performing in the more hyped world of investment retailing, Lynn argues, the company needs better general market recognition to overcome the “first hurdle” of recognition when decisions are made to appoint fund manager.
He also wants to improve Tyndall’s product distribution. “We need to get better understanding of the skills we have to offer the market. It is tied to better awareness,” he adds. “But it is more about being out there and winning the business.”
Lynn’s strengths and enthusiasm as product champion and advocate for marketing Tyndall more aggressively are obvious. But this new chief executive is “not yet sure” how to describe his management and leadership style. “I think I am open and honest,” he says. He believes these attributes are, now, important to finance industry managers and leaders. “Yes. I need to be open, honest and available,” he adds.
He is, he says, pleased that New Zealand is finally putting more effort into compliance in the finance industry. “This is key to the problems we have had in the past.” He admits greed “can take over” in his industry. The excesses of the late 1980s and then the first half of the current decade have hopefully taught the world some useful “lessons about debt”, but he accepts that lenders were as much at fault as the rapacious borrowers. “Lending criteria were just far too lax,” not that new legislation will necessarily change bank credit regimes.
The evidence of greed, lending excesses and failure to learn lessons from the past notwithstanding, Lynn retains his “faith” in the relevance, importance and intrinsic economic value of the investment industry.
“There is,” he says, “a fundamental need for dynamic investment sector. People need to invest money. The reason for my faith is that I know an awful lot of people from all around the world in the industry who are both smart and genuinely concerned about investing money wisely and to the advantage of their clients.” Ponzi fund crooks like America’s Bernard Madoff are, in his opinion, small minority who give the investment industry bad name.
Does that mean the world should forget the obvious and unforgivable but non-ponzi driven indiscretions of the world’s largest Main Street and Wall Street bankers? “Actually no. I am not sure some of the lessons we should have learned from the past have been learned too well,” says Lynn. “Some of the [subsequent government] grants and stimulation payments were just taken by the banks which then started making big profits again, without putting that money out into the wider economy.”
Lynn does not advocate “new business model” for the investment and banking industries. But he would like to see more new and “innovative investment products” to complement existing cash products – bonds, equities, property and the like. “There need to be new ways of getting investors better returns and reducing the overall risk in their portfolios,” he enthuses. “At the end of the day, everyone is concerned about losing money. That is all people care about.
“We need to come up with smarter ways to avoid losing money or, at least find ways to lose less when the market turns down. We need to find innovative investment products that are less risky.”
Lynn agrees that the investment world, and the world in general, will be more volatile in future and he must lead his company through that volatility. Asia will, for example, change the investment and banking landscape. “We will be much more influenced by what happens in China in particular,” he says.
“Look at what is happening now. Inflation is coming through [into the New Zealand economy] not because wages are going up, or because New Zealand or American companies are lifting their prices. It is coming through because China is putting its prices up for reasons relating directly to demands on the internal Chinese economy. As the Chinese economy inflates, as it is and will, the rest of the world will have to suffer that inflation, ready or not.”
The prospect of driving his company through this period of dramatic change is, he says, exciting. “It’s what makes this industry fascinating. It is very dynamic industry,” he adds rejecting any suggesting that the investment industry model is broke and in need of repair. “This industry is full of very smart people who can, and will, find ways to fix it to the extent it needs fixing.”
He does accept that the average individual’s trust in his industry has been severely shaken. He counters that “the majority of people in this industry are very trustworthy”, and new leaders, like himself, will make greater commitment to “morality” in financial management.
He concedes that the investment banking industry is still, by and large, viewed as morass of low principled leaders and individuals. He does not view the investment management industry in the same way. “Investment management is the other side of [retail] investment banking and the investment management sector is working very hard to improve its standards, across the board.”
Lynn takes some heart from signs of improved governance standards in his industry. “This is hard one because, to be honest, I don’t think governance standards have been up to much in New Zealand.” Self regulation has not, in his opinion, done the industry any favours. “New legislation will help change that. I think industry regulation is, finally, catching up with and implementing the standards we need in place.”
Finally, Peter Lynn would like Tyndall to become be
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