As a tenured professor at the University of California at Berkeley, Rui de Figueiredo applied game theory and applied statistical models to research political and economic institutions. As the Co-Head and Chief Investment Officer of Morgan Stanley's Solutions & Multi-Asset Group, he uses this skillset to help clients find unique solutions to investment problems.
The group, which sits within the Investment Management Division, includes nearly ten different teams that collaborate to find those solutions for a vast array of Morgan Stanley clients, including public pensions, sovereign wealth funds and high-net-worth individuals.
The managing director says he is proud of how the group leads through innovation, forging deep partnerships with businesses inside the bank, and with clients. "And that’s only accelerating," he says. "It's great to be connected to a business that is committed to new ideas and innovation.”
De Figueiredo recently took time out to talk more about it.
I am the Co-Head and CIO of Solutions and Multi-assets within the Investment Management division. Our business has a number of different businesses within it, but at the core, we are focused on solving problems for clients and not only developing investing strategies.
In order to do that, you need a very good platform with a lot of resources. And you then need to put those resources together in flexible ways to deliver solutions. We do that in a number of contexts. Not everything is so customized—we do have products. But those products are inspired by client problems.
I spend time on both the investment side and the client side, trying to think about ways to bridge them. I'm very involved with some of our largest clients, both institutional and high-net-worth individual clients. While we work on customized investment strategies, we also provide value to our clients beyond just the investments. It's not just managing a client’s assets, it's supporting them outside of investing, such as providing content, ideas and access to others within the firm.
We are very cognizant of what is going on throughout the investment world. We're constantly looking at markets, looking at innovations in finance, scanning the latest research and connecting them to specific client situation.
We want to provide a solution, but we first need new tools to help us better understand the problem. So we have to go and find or develop techniques to do that.
Our clients’ problems can be complex, so we have to think critically and creatively about how we are going to solve them.
Our team is made up of investors and analysts who have diverse background, and we use that to our advantage, gathering information from a variety of sources. Ideas can come out of academia like using data or analytics in new ways. Ideas may also come from our clients. For example, a client may come to us to find a way to generate income on a portfolio that integrates a particular liquidity and cashflow profile. We develop a solution for them and then may realize that it can be tailored to help us solve the needs of another client.
I first worked as a management consultant after graduating from college. I was living in Australia at the time and enjoying it, but I knew I wanted to go back to school. I decided to pursue a doctorate in political science. While I was in graduate school, I also received a master's degree in economics.
I entered academia on a tenure track at the University of California at Berkeley, while continuing to consult on projects. That led to consulting work for the asset management business of a major bank, which was trying to solve some investment problems for their own portfolios and for clients. I was coming at it from a slightly different angle, as a social scientist rather than just a pure finance guy. And we had some success. I think my different perspective helped me and my team develop ideas that had some traction. So I kept consulting while I was on the faculty at U.C. Berkeley. I had been consulting for Morgan Stanley for several years when the bank offered me the full-time position I have now.
Our team takes an academic approach to our work. We are as rigorous as possible. We're not just looking at things that are working and assuming they will continue to work. We are trying to understand why they work that way and whether that is an anomaly. That approach is at the core of the social and natural sciences, so I’m able to use my background in those areas in my role at the firm. If we are building a solution around a certain phenomenon, we need to be confident it is going to persist.
We work with clients to achieve their mission beyond just trying to maximize their wealth. For example, we have one client who had a significant liquidity event and she wants to donate her money eventually. But while she's in the process of doing that, she wants the investments to make money and have a particular social impact. The ability to help a client have a positive impact on the world is very fulfilling.
We also work for large public pension funds. I relate to this as a former employee of the state of California. You realize in this role that you work for firemen and teachers and you have something beyond a fiduciary duty. These people are depending on your performance. Delivering that is rewarding.
We need our team members to be flexible in their thinking and flexible about ideas and functions. The people who work on our teams are experts in certain fields but are able to engage very rigorously on the investment side, analyzing investments, understanding them, identifying new ideas. They also understand how to engage with our clients.
Culturally, we look for people who are able to work in teams. It's not a one-man show. We have a number of different businesses, but all of them are characterized by delivering value by combining new ideas and high quality execution, so that, in the end, one plus one equals three.