Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Bryan Gray released after 32 years in custody
Bryan Gray, a genuine stalwart of, and major contributor to, the strong position of Australia and New Zealand’s asset servicing sector, has retired. He spent 12 years at State Street followed by nearly 20 years at J.P. Morgan.
Gray is the only person to have been chair of the Australian Custodial Services Association twice, in two separate stints. While he built his career in sales, he made his name as the go-to person for not just those working with him but for many in the wider sector.
He has already joined his first board, a not-for-profit which operates 22 retirement and aged-care facilities, which he is enjoying so much he is about to be made the chair of the audit and risk committee. He says he is looking to join more charitable organisations and will remain open to suggestions for part-time positions in the financial sector.
Gray, 58, became a chartered accountant after graduating from the Victoria University of Wellington, NZ, in 1986 and joined Deloitte full-time. Like so many of his generation, he decided he would like to travel to London and, like so many New Zealanders, started off in Sydney to earn more money for the trip. After various temping roles as an accountant, he was asked to apply for a full-time role as a salesperson at State Street.
While temping at MLC he worked on the Victorian Transport Accident Commission account and did such a good job, and perhaps with some luck, the firm was given another $800 million to manage for its client. Paul Talbot, then in business development at State Street, MLC’s custodian, saw his potential in client-facing roles.
While he isn’t actually a New Zealander by birth – he’s Scottish – he had the accent and put up his hand to get involved when State Street pitched to become NZ Provident Fund’s custodian. It won the business and decided to open an office in Wellington in 1991. Gray again put up his hand.
“I was a one-man band there at the start,” he says. “When Marsh Carter (the State Street Securities Services global CEO) visited Australia, it was suggested he visit the organisation’s newest office. We spent a couple of days together, which was great. A bit later I ended up getting an award and had to go to Boston (State Street headquarters) to a big gathering, of maybe 300 people, to collect it. Marsh sought me out and introduced me to several others among the executive team… We had about 25 people in Wellington by the time I returned to Sydney in 1994.”
Gray thought he was going back to custody in Sydney but was seconded off to the then-fledgling State Street Global Advisors, where he worked in business development for two years before taking up the head sales role at State Street’s Australasian securities services division, which then had about 500 staff.
In that role he got to make his only trip back to his birthplace of Glasgow to help on a global pitch for one of NAB’s subsidiary banks of the time, Clydesdale Bank. Sorting out NAB’s backoffice situation in the UK, which was a mess by Australian standards, was Pat Liddy, who was on secondment in Glasgow for three years. Liddy had also worked at State Street and had subsequently become a competitor as head of sales at NAB Asset Servicing.
Gray and a colleague, Michael Brager, now State Street’s Executive Vice President, Head of International Hubs at State Street in Sydney, went to pitch for the Clydesdale business, with Liddy presiding over the contract. Gray recalls: “After the meeting, Pat took us for the obligatory drink. It started to get late and I asked whether they would have some dinner. Pat said something like: ‘Welcome back to Glasgow son. We don’t have dinner when we’re drinking here’.”
Liddy says he was just doing Bryan a favour so he could get a better sense of where he came from. Like Bryan’s father, Liddy had been a sub-mariner in a short career prior to financial services.
Gray, a consummate story teller, says his father was a signalman in the Royal Navy based in Glasgow. “One time he was on an aircraft carrier and sent to climb up the ship’s signal tower. He refused to go because he was afraid of heights. The Navy gave him the choice of either going up the tower or being transferred. He was transferred to a squadron with no heights – the submarines – where he worked on Britain’s first nuclear sub, HMS Dreadnought.” The family migrated to New Zealand when Bryan was eight.
Gray got another chance to work in London around 2000. State Street had sold its super fund business to Commonwealth Bank, in the belief that funds were not profitable enough or suitable for State Street’s sophisticated securities services offering designed largely for US mutual funds.
State Street decided to sell its super business to Commonwealth and enter a strategic alliance whereby the Australian bank would also do State Street’s sub-custody. (The US is the only country where State Street does its own sub-custody). But this alliance didn’t last long. Commonwealth decided to exit most of its own custody business, in a deal with Citi, and NAB ended up winning much of the former State Street super business. Not long after, with Liddy leading the charge, NAB overtook State Street to become the largest custodian in the market.
It took State Street several years to get back into super and several years more to once again become a force among the big funds. But Gray must have obtained some satisfaction in regaining the mantle as the largest, from NAB in 2017, on behalf of J.P. Morgan.
When the State Street business had shrunk he wondered what that would mean for him and put out feelers for a move to London with State Street. He went to London and Luxembourg and met with colleagues there but it was apparent, in 2001 (tech wreck and September 11), that the heady all-expenses paid days for expats were finished. Also, he was worried that his wife, Kissane, whom he met at State Street, might find the move too difficult with young children and want to return home early.
So, he asked Laurence Bailey, then chair of ACSA as well as regional head of J.P. Morgan based in Sydney, about possibilities. Bailey recalls welcoming the opportunity to work with Bryan, who made a seamless transition to the shinier offices down the street.
Bailey, now retired to the US but making frequent trips back to Hong Kong where he spent a big part of his time at J.P. Morgan, says: “Bryan’s retirement is another nail in the coffin for the old guard who were there at the start of superannuation and securities administration reform in Australia.
“Bryan, while a true salesman, thriving on the thrill of the chase, is also a true ‘client guy’, where doing the right thing for a client was always more important than a sale and the resulting bonus. Bryan is also somewhat unique, being known as a true-blue Aussie when he is, in fact, as Kiwi as it gets.
“Having led the sales efforts of not one, but two, global custodian giants, with a dash of funds management thrown in for good measure, as well as a solid grounding in fund accounting, Bryan is recognised and respected by all, and will be envied as he spends more time on boats, ski slopes and on the backs of motor bikes.”
Another former boss at J.P. Morgan, Jane Perry, says Bryan contributed significantly to the whole of the business, while heading sales and a member of the leadership team. “He was a great team player, with a deep understanding of the industry and long-standing relationships with clients.”
Perry, who became the chief executive of Qantas Super after J.P. Morgan, says he was a great supporter of women in the workplace and in the industry generally and was a big help in increasing the level of diversity at the firm.
“He has such a nice inclusive style about him,” she says. “It meant that he was sought out by people across the business for advice or help. His knowledge also meant that he had great credibility with the staff.”
Perry, now a professional director as well as the independent chair of the Fund Executives Association Ltd, remembers pitching with Bryan for the custody business of Qantas Super in a tender situation. “We won that business. And then I ended up as his client,” she says. Qantas is still an important client for J.P. Morgan.
Nadia Schiavon, the head of securities services for J.P. Morgan in Australia and New Zealand since 2015, said: “Bryan is a widely respected, knowledgeable and thoughtful leader. He is known within the industry for his partnership and exceptional client focus, and this has helped J.P. Morgan achieve the number one custodian position in the local market.”
David Knights, the ACSA chair, said: “On behalf of ACSA, I would like to thank Bryan for his tremendous contribution to our industry over 30 years, twice serving on the ACSA board from 1998-2001, and from 2007-2010.
“Bryan is a strong advocate for the industry, and his wisdom was recently called upon to assist the industry through the response to the coronavirus pandemic. We wish Bryan and his family all the best for retirement.”
One of the things Gray did in his second stint as ACSA chair was to open up the organisation to technology companies and other third-party providers to securities servicing, through the establishment of an associate member category. He also supported the retention of control over the various working groups which were important in discussions with regulators in particular, after ACSA had outsourced its secretariat to the FSC.
The importance of the association’s work, as separate from the work of the FSC, was further cemented with the appointment of Rob Brown as chief executive in 2017. Brown, also an experienced former custodian, said of Gray: “Bryan is one of a small-but-important group of ACSA alumni who have a deep understanding of the industry and how it truly adds value to the institutional investor. I have worked with Bryan directly over many years and wearing different hats. I’ve seen firsthand his ability to bring a pragmatic solution focus to every discussion, whether facing clients, regulators, or dealing with market infrastructure.”
Looking back on what would appear to have been a charmed career, Gray says the last 20 years at J.P. Morgan, in particular, had been “sensational” for him. “I have enjoyed every minute of it.”
He had already started his own form of transition to retirement last year, orchestrating his replacement, by long-time colleague Nick Paparo, who took the reins as head of sales and Gray moved to a four-day a week role.
“I started to play more golf last year, when we could, so I’ll be doing more of that now,” he says. “And catching up with people more. And, of course, our motorbike trips.”
Gray is among the more adventurous of a small group of finance industry people who ride motorbikes, having traversed the US on a Harley – every biker’s dream – and travelled far and wide in Australia and New Zealand on various sets of two wheels.
