"You gotta be tough": Hard lessons from AGF's Blake Goldring
We talked to Goldring about upheaval in the mutual fund industry, taking heat from Bay Street and his father's legacy
Blake Goldring is a nice man—ask anyone. He's friendly, generous and thoughtful. Whether he has been an effective CEO is another question. In 2000, when investment visionary Warren Goldring (1) handed his son "the keys to the car," AGF Management Ltd. was arguably Canada's most successful mutual fund company. Seventeen years later, it is greatly humbled. From a peak of nearly $40 in 2007, its stock price has fallen to below $7, and it has approximately $18 billion fewer assets under management. This can't all be laid at Goldring's feet, of course. The investment landscape has dramatically changed. The high-fee, active-management mutual funds upon which it built its brand are falling out of favour, threatened by low-fee, passive exchange-traded funds. And consolidation has left AGF as one of the few major independents still standing. Now, with his company having just celebrated its 60th birthday, Goldring would like it known that there's life in AGF yet—though his hesitant manner suggests a man uncomfortable with the task of convincing anyone that all is well.
It's hard to talk about your father in objective terms, but what kind of a man was he?
A man of integrity. He was an intelligent, hard-working, a little more quiet individual. But very thoughtful. And he would make, you know, visionary-type decisions. He was always very proud of being independent. The banks were not really a factor back then, but you know, there were a lot of wheeler-dealers and people wanting to do thises and thats coming together. And he believed there's a really excellent value proposition by having an in-house investment management team.
Did he groom you for the day you would take over?
Look, I had no intention early on of joining the firm. I mean, I went to INSEAD, did my MBA, had a number of interesting job offers, even being Revlon's representative up in Scandinavia, believe it or not. But in the end, my
father said, "You know, marketing and selling is something that you're going to have to do anyhow. You're going to have to learn that skill. But the kind of rigour of credit analysis and what have you—you'll get that best at a bank." So in the end, I joined the Bank of Montreal in Paris.
Were you fluent in French?
Absolument. Bien sûr! I'd taken courses and summer immersion in Quebec, which helped me get to INSEAD, and vice-president of a national students' organization that got people jobs internationally. I spent a summer working for a Japanese bank.
So you learned Japanese as well?
It's a tough language! I did learn a karaoke snack song, though, which is important. I still remember it. [He sings quietly] "Kokono ro, soko kara sibireru yoona, toiki ga setsunai"—I can go on and on. It's a Tokyo love song.
How long before you joined AGF?
I worked for the bank close to five years. Things were going really well for AGF. It was '87. I came aboard, and then, of course, the crash happened. [Grim chuckle] That whole period was pretty horrific. I still remember it, because it was my dad's 60th birthday. We were at the CN Tower. I'd gone in with my siblings on a plane with a "Happy Birthday Dad 60th" banner. I'll never forget that plane going around while my dad was [bends down, hands to head] stressed like mad. I don't think any of us really knew the severe pressures he was under.
How did he counsel you through that period?
Well, you know, you gotta be tough. You gotta buck up. Always be forthright with clients. Explain honestly. And properly set expectations.
It was in 2000 when you took over as CEO. Did you feel ready?
Absolutely. By that stage, I had spent time as the president and chief operating officer, so immersed in the whole back-office piece of the business. Then, of course, I'd done sales and marketing and overseeing that side of it, and spent time on the fund management side. And I decided to pick up my CFA as well. So it was in 2000 my father said, "Here are the keys to the car. Drive it." And I can honestly say, there was only one decision ever where he made a move—he made this senior management appointment when I was away
in England. And I was livid. And it never did happen again.
How would you sum up the last 17 years? Is there a word you'd use?
I would say transformative. We've moved from our roots of being a traditional mutual fund company, which is what my father did, to really be cognizant of the changing world, changing desires of clients, the role of technology, the regulatory environment—these are all powerful themes. Moving early on, before others did, into the whole institutional space. Moving into the high-net-worth area. More recently into alternatives. Basically I said, "Look, we've gotta be there." It's been very exciting.
You are very well liked in the industry. But do you think you've been underestimated over the last 17 years?
Well, results speak. [Chuckles] I mean, that's the thing. There were a number of very, very good years. There were some tough years. I've made some very strong decisions to reorient and redirect the organization, and I've gotta say, you know, the strategy is…we're executing right now, we're making good progress. So, you know the Street—the Street can be very unforgiving if you lose them money. You know, I was kind of taking it on the chin and making decisions and, you know, powering through difficult times, and that's…that's leadership.
And that's tough.
Tell me about a time you were tough.
[Exhales] Well, you know, rather than play sort of a Bad Cop, Tough Cop sort of thing, I mean, there are decisions with people all the time, but I believe fundamentally in treating people respectfully. There are times where if things are not working out, I mean, the numbers speak. You know, I've had to say goodbye to some very close colleagues at different times. Make a decision about reducing, reallocating our dividend, a couple of years ago. (2) And these are tough decisions, right? And they're not made lightly, and then you have to sell that.
In the retail space, well, guess what? We made $151 million net sales in February. We've had a 62% increase year-over-year. We are razor thin to getting there, where people at one point counted us out. Our high-net-worth business has been going solid. Our alts business, you know, didn't have anything there two years ago. We will close this year at $1 billion. And we have $1 billion in ETFs and, you know, I'd see that being a $5-billion industry for us. In the next, sort of, five years.
You said people had counted you out. How did you know?
You would just see the redemptions, right? That's the scorecard right there. You know, we're in a business where this product is sold, not bought. You need insurance. But you don't need this product. That's where, you know, you need to have very strong relationships. And, you know, after a 30-year career, I've got a pretty good sense of what people are thinking. And I can tell you, there's been a wholesale change. Talk to advisers. In part, it's why the stock is up 30%. (3)
You've spoken of the tough decisions you've made, but there was one you didn't make, which was to sell. When so many other independents like you were allowing themselves to be bought up, why didn't you sell?
I believe fundamentally that we can bring value from the different products and solutions for investors. And that this is one market that doesn't need to be dominated by large financial institutions, that differentiation is a good thing, and that Canadians ultimately do like—call it the values of an independent organization, where people have skin in the game.
Did anyone try to buy you?
Over the years, there have been a number of overtures where people have sat down to talk. Never have we ever received an actual offer.
So you've never had that gut-wrenching moment.
Where we've had to go to the board or any of that? No.
What would you say is the best decision you've made over the last 17 years?
[Long pause] Very good question. [Chuckles] Because you never think of the span of time here.
I know, it's hard.
Let me just think in the span of time. [He looks at Karrie Van Belle, AGF's senior VP of marketing and communications, sitting in on the interview] Karrie wants me to say hiring her, which is probably not a bad point. [Long pause] Well, gee. There are a few. Making a decision to buy into a company called Smith & Williamson. (4) I mean, that was one of those great little gems, which you get little value for in the market. You know, I think it has to come down to people—inculcating this culture of collaboration and openness in this firm, you know?
It's quite a different environment now for mutual fund companies, and most of your profits still come from mutual funds, am I right?
You're correct. But my vision, if you will, from the firm that my dad started—which was a mutual fund company—is to really transition toward a global asset management firm. When somebody comes with an idea, I say [he taps the table], "Is this going to help us achieve that?" If it's an idea that doesn't really fit within that, then really, let's not have a long discussion.
Before we end, tell me about sitting beside Shania Twain at a Raptors playoff game.
[Startled] How do you know that?
Someone told me.
I didn't recognize she was Shania Twain. It was very nice chatting in between timeouts. Then, unfortunately, they put the camera on her and everything changed. You've got the bozos yelling. She just kind of hunkered down with her partner and their fun got dissipated. That's the part of celebrity—I don't have to worry about that. I can just go and—
Nobody knows who you are.
Nobody knows. So it's sort of nice.
1. Warren Goldring—who launched the first U.S. equity mutual fund in Canada, in 1957—passed away in 2009.
2. In December, 2014, Goldring slashed AGF's dividend by 70%. When the stock began trading that morning, the price tanked by 21% in three minutes.
3. From a low of $4.13 in January, 2016.
4. AGF bought a 32% stake in the U.K. financial services company in 2002.