YOU may think that the switch from work as an emergency room surgeon to a perch at the helm of fund giant BlackRock's Asia Pacific operations is a dramatic one. Geraldine Buckingham, the firm's senior managing director and chair of Asia Pacific, says it was the culmination of "a series of small decisions''.
Ms Buckingham obtained her medical degrees - Bachelor of Medicine and Bachelor of Surgery - from Monash University in Australia. The fork in the road came when shortly after qualifying as a doctor, she completed a Master of Philosophy degree at Oxford University as a Rhodes scholar. She gave herself two years to explore areas other than medicine.
"It wasn't that one day I woke up and said I wanted to be in asset management. I'm quite intellectually curious… The deal I struck with myself is that I would do something else for two years. It was long enough for me to try something, but short enough to be able to go back to medicine.
"What do you qualify for if you have a medical degree but don't want to be a doctor? I was fortunate that consulting firms were open-minded in terms of background.''
A stint at McKinsey in New Yaork was an opportunity to get her feet wet in asset management. She rose to become a partner at the firm's financial services practice, helping institutions navigate the post-crisis world. The transition from doctor to financial services consultant was challenging, she recalls. "I remember sitting with one of the senior persons I worked with on my first asset management assignment at McKinsey. I asked what a mutual fund was. I really didn't know anything. It was a learning curve.
"But I was keen to learn. I found it interesting and wanted to do more. Ultimately I enjoyed the transition and felt it gave me a broader set of options and possibilities for the future.''
She found she enjoyed asset management work. "I liked the clients, the content. I found that the core of asset management is helping people prepare for retirement which is very motivating, very much aligned with my interests and public policy. BlackRock was a client so it was the classic consultant-to-client move.''
Ms Buckingham joined BlackRock in 2014 as head of Americas, and in just about a year became global head of strategy before taking on the Asia Pacific role earlier this year. In 2017, she was named among Fortune's "40 under 40'' as a rising star at BlackRock.
She sees parallels between her former medical career and asset management, and credits her medical experience with her ability to stay calm under pressure. "I jokingly say nobody's dying… Our clients have challenges; patients have illnesses. As a doctor we think about differential diagnoses. For clients, it's solutions. Ultimately (asset management) is a deeply people-engaged business, trying to help institutions or individuals with critical issues for the future. We talk about the value of diversity in teams. For an individual to have a broad range of experience in different organisations, different parts of the world, there is value in that. I feel very grateful for the opportunity.''
Expanding presence in Asia
On Ms Buckingham's shoulders today sits the challenge of expanding BlackRock's Asia Pacific business, with China as a major linchpin. The nearly-US$7 trillion group manages some US$487.2 billion in assets in the Asia Pacific, accounting for 7 per cent of total assets under management at end-September 2019. Her task, as chairman Larry Fink has said, is to build a "truly local'' presence in Asia. Thanks to liberalisation moves, China has raised the limit for foreign ownership of asset management firms from 49 to 51 per cent, and is set to allow 100 per cent foreign ownership in 2020.
At the same time, China equities are becoming part of MSCI indices in larger proportions. The weighting of China A shares in the MSCI Emerging Markets index recently rose from 2.55 to 4 per cent. Its weighting is set to rise to 20 per cent in three increments of 5 per cent each, in May, August and November 2020.
China bonds also debuted on the Bloomberg Barclays Global Aggregate Index this year.
Said Mr Fink in his 2018 letter to shareholders: "Asia is expected to drive 50 per cent of the organic AUM growth in the asset management industry over the next five years, largely driven by China, where there is increasing demand for more diversified and long term investment solutions. Our goal is to become one of the country's leading global asset managers.''
This is occurring at a time of an ongoing trade war and tensions between China and the US. Says Ms Buckingham: "I was really excited to be given the opportunity to come to Asia for three reasons. I spent a lot of time looking at and thinking about Asia in my (previous) strategy role. For BlackRock, Asia will become strategically more important overall. There is obviously enormous economic growth, savings and wealth, and we help people to move from savings into investments. There is also a real retirement crisis in many countries in Asia. I think BlackRock should play a role to address that.
"Secondly, many investors around the world are under-allocated to Asia. One of the things we can do is to educate and ultimately make available to them the opportunity to invest in some of the fastest growing economies in the world. Creating that global connection is important.
"Thirdly, Asia is a place of extraordinary innovation particularly in technology. There are many countries in Asia where retail financial services are not becoming digital; they are digital. As we learn more and think about how that impacts asset management, that's exciting not just for the business here but also for the wisdom and learning we can take to other parts of the world. To be near that innovation, to be able to deeply understand it, engage it in our business, and to export it to other parts of the world - I found that very compelling.''
She confesses that she herself didn't grow up a digital native. "I remember when my parents bought a CD player. I remember my first cell phone and my dad's first cell phone was like a brick. I'm not on social media at all, but I'm anxious when my cell phone isn't in reach."
Still, technology will have an "extraordinary'' impact on asset management, she says, even if the industry may be something of a laggard at the moment. Distribution is an obvious area of change with the rise of robo advisers. Another area is the use of big data for investment insight. "The impact on investing is already very significant. Operations and the cost of a trade are dramatically impacted already.
"I think all elements of the asset management value chain will be changed by technology. Sometimes when incumbent managers feel change coming, they want to resist it and protect what they have. One of the things I admire about BlackRock - and we need to keep pushing ourselves on this - is the willingness to lean into change. Ultimately we need to serve our clients and help them reach their financial goals. If technology can help us and them, the obligation is on us to think of how to evolve the business to serve them better.''
One common theme in Asia is the need for more retirement savings. "The fundamental problem is people don't have enough to fund a retirement where they can live in dignity. Part of the problem is demographic, and (ageing) is playing out dramatically in this part of the world... We've also lived through a decade of very low interest rates, which may be further extended. In the traditional ways, people invest for retirement, the math doesn't work right now. And there doesn't seem to be any indication this will materially change in the next few years.''
The retirement challenge, she says, will need the efforts of multiple parties including governments, employers and asset managers. "We need to stop thinking about retirement as accumulating to 65 and then decumulation. We need to really think about income generation. The traditional ways of doing that via a 60/40 portfolio doesn't work in this environment. We need to help people invest through retirement... This is an area where technology can be incredibly helpful... how we can use technology to provide advice to people so they can make good decisions.''
Market volatility and geopolitical tensions can be intimidating to individuals. Ms Buckingham urges a long-term view. "When you invest for the long term, the day-to-day noise of the trade war isn't as relevant to the portfolio as it feels like from day to day. It's very clear that you will do better by keeping money in the market, through the compounding effect of time.''
US-China tensions, however, are deep-seated and strategic, she says. "It may be a geopolitical reality for 10 or 20 years... There is no doubt there has been an evolution or shift. We see very high cash allocations around the world, something in the order of US$75 trillion, earning nothing. Money in the mattress is not a good strategy for individuals or institutions.''
She notes that discussions in Asia about ESG (environment, social and governance) have gone up in volume and frequency. "Focus and interaction on ESG are very much heightened in Asia but we're not seeing the money move in proportion to the conversations. Japan and Australia are exceptions.''
The challenge in ESG investing lies in the definitions and comparability of data. "What are we actually talking about and how do we measure it? Are we sure about the quality of information? I think a lot of work needs to be done to align the data and definitions with what we mean.'' She recalls that she was in a recent panel discussion where BlackRock was given a very good ESG rating compared to another firm, based on the fact that BlackRock had fewer offices and employees.
"It was a very crude metric and example, but that's the thing about data - measuring things in a basic way.''
Impact of ESG on investment
Another aspect is to help investors understand how ESG impacts their portfolio. "Even if we set aside the moral issues around the environment, ESG is about the potential risk in a portfolio. If someone buys a large amount of assets that over time may become stranded because of their carbon, you want to understand that purely as a risk, not even as a judgement. Our analysis shows that companies that are more carbon-conscious and carbon-light (perform better) over time.''
BlackRock has launched a suite of core sustainable ETFs and an ESG money fund in Asia. "So even with something as simple as cash, you're able to put it into a money fund with strong ESG credentials.''
The environment is something she is deeply concerned about, particularly now that she has a one-year old baby. "I worry about the environment. I do think we're at an inflection point. While I have faith in humanity and its ability to innovate its way out of many problems, I worry that the environment is an issue where we need a global response. The ability of the world to form a global response to anything right now feels really diminished.''
"I look at my one-year old who has every chance of living to 100. I worry about the world not just in terms of natural disasters but the social implications of what climate change does. We'll have an extraordinary number of refugees. The wealthy can afford to insulate themselves, but others can't. It will be a wonder if governments can be more focused on educating people, providing healthcare, helping the environment rather than screaming at each other across party lines.
"Business is an incredible stakeholder in society. We need to take that responsibility seriously; people are looking to the business world to be leaders in the community, to have a voice and ultimately benefit society as a whole... I'm hopeful for humanity, but we need to do better.''
Chair and Head of Asia Pacific BlackRock
Born in 1977 in Canberra, Australia
2002 Earned Bachelor of Medicine and Bachelor of Surgery (MBBS) degrees from Monash University
2006 Earned a Master of Philosophy degree in Comparative Social Policy from Oxford University
2007 Joined McKinsey & Company
2014 Joined BlackRock as head of Americas
2016 Senior managing director, global head of corporate strategy, BlackRock
2019 Senior managing director and chair of Asia Pacific, BlackRock "