18: Rob Prugue - Internalisation, Outsourcing and Mental Health

[i3] Institutional Investment Podcast

Rob Prugue is probably known best for his 15 years at the helm of the Asia-Pacific business of fund manager Lazard Asset Management. A role he left at the beginning of this year to ‘hang up his boots’, as he called it. Before Rob joined Lazard, he spent time at pension fund SAS Trustees amongst other roles and at this pension fund he was part of the internal investment team. He witnessed first hand how the pension fund decided to outsource its asset management functions as it felt it was doubling up on risk. Considering that many Australian pension funds are now moving towards inhouse management Rob has a unique view on this trend. We will also speak about Rob’s efforts in reducing the stigma around mental health. He is the founder of People Reaching out to People, or PROP, which has set up a short educational program that gives free guidance on how to interact with people who have potentially suicidal thoughts. For more information, please visit www.prop.org.au 4:00 Taking a sabbatical trip and volunteering in an elephant sanctuary 5:00 Starting in the investment industry 8:00 A government job will through you in the deep end much quicker than Wall Street 9:00 Joining 3 months before the ‘87 crash was a great entry 11:00 Crisis times is when only the big boys play 13:30 The reality of investment is that information is asymmetrical 15:00 I’m the poster child of internalisation 16:00 SAS Trustee’s decision to get out of in-house asset management 18:00 The cost savings from internalisation, while valid, is also an agency risk 21:00 Internalisation might solve some capacity problems, but introduces a range of other risks 21:45 There is no such thing as passive; you’ve made an active decision 24:00 How do you deal with the people aspect of internalisation? Firing teams can be tougher than terminating a mandate 25:00 Not once have I come across a statue of a fund manager 26:00 You want a manager that has been bloodied three times 27:00 Buying into Flight Centre 29:00 Building the Asian business of Lazard 31:00 Should you never internalise? 31:00 Industry fund no longer exist; they are mutuals 36:00 Longevity insurance 38:00 Suicide awareness and People Reaching out to People (PROP) https://prop.org.au/ 45:50 Be aware of the difference between empathy and sympathy 48:00 Emotional intelligence and mental health 50:00 Is the hyper-masculinity of the investment industry exacerbating mental health issue? 53:00 The PROP educational series