Takeaways from ‘08
By Kristian D’Agostino, Head of Business Development for ETF Listings, Nasdaq
About the Author
Kristian D’Agostino is Head of Business Development for ETF Listings at Nasdaq, where he works with issuers bringing new funds to market.
A CAIA charterholder with more than 20 years in asset management, he is a recognized voice on ETF strategy and market structure and a frequent moderator at industry events.
He holds a degree from Rutgers University and is based in the New York City area.
As I reflect on my own unique experience at an asset management firm in the fall of 2008, I often think about what I learned from that lived experience that shaped my career moving forward. Many people have similar stories, mine is just one of them.
Two years into my career, I started as a mutual fund specialist, working at an asset manager in New York, seated on an internal sales desk. The internal sales desk was composed of mutual fund specialists (who handled general inbound phone calls from financial advisors and RIAs), internal wholesalers (who were assigned regional coverage, mainly focused on outbound dialing to financial advisors and RIAs), and retirement specialists (focused on anything retirement account related). My team was staggered in between internal wholesalers. Altogether, there were about 50 of us.
The mutual fund specialist role largely had a few basic responsibilities: fill literature orders (such as fact sheets or prospectuses that advisors would use with clients), provide overviews and updates on mutual funds, and seek out potential leads for the internal wholesalers to pursue as follow up. Additionally, each month we were evaluated on three recorded calls at random and were scored based on a quality monitoring system; the better your calls, the better you were paid. Ultimately it felt like the role was straightforward, and the goal was to earn a role as an internal wholesaler after a few years. Over the next few months, however, my mind shifted away from the future, to the immediate and now.
September 2008
On Friday, September 12th, 2008, I arrived at work to light heckling from a colleague who sat across the aisle from me, who happened to be a University of North Carolina graduate. My alma mater, Rutgers, had just gotten thrashed by the Tar Heels the night before, 44-12, and were off to an 0-2 start; I spent most of my day wondering if I should still be paying for season tickets.
The following Monday, September 15th, 2008 football was the farthest thing from my mind. Lehman Brothers filed for bankruptcy, which to this day is the largest bankruptcy in U.S. history. Also, Merrill Lynch was bought by Bank of America in the same day. The very next day, the Fed was forced into action to bailout AIG, while the Reserve Primary Fund “broke the buck” (money market funds target a stable $1 NAV through investments in short-term, high-quality investments, and aim to never lose money) falling to 97 cents that same day. This was only the second time in U.S. history that a money market fund had dipped below $1.00 per share. By Friday, September 19th, the U.S. Government proposed a plan for a massive financial rescue of the US economy, whereas in a meeting the day prior Ben Bernanke, Federal Reserve Chairman at the time was quoted behind closed doors as saying “If we don’t do this, we may not have an economy on Monday.”
Take this into account; I had been taking inbound phone calls from financial advisors for exactly 14 working days by September 19th, jumping on anywhere from 30-40 phone calls a day, which were on a rinse/repeat of questions from financial advisors. The psychological impact of a money market NAV declining below $1.00 per share, led to questions on every single type of investment which had been deemed low risk to high-risk. The following week Washington Mutual filed for bankruptcy; the 1st and 2nd largest bankruptcies in U.S. history had just occurred within 2 weeks of each other, which was followed by the U.S. House rejecting the initial TARP (Troubled Asser Relief Program), which led to a ~9% drop in US equity markets.
By the end of September, I felt like I had just been in a paint shaker machine. Murphy’s law felt pervasive, and here I was “easing” into my new role. After my first call review session with my manager, it was evident that I was backpedaling on every call. No control, no cross-sell, nervous to ask for the financial advisor’s name or what firm they worked for, and I was reacting. I was not in control of myself or the conversation. I also knew very little about the products and markets at that point; I was regurgitating back to advisors what was fed to me from product management teams, as there were constant updates on the products and markets. I did not actually know what I was talking about, because I lacked deep knowledge of markets, asset classes, portfolio management, and the psychological aspect of a financial advisor when managing their clients and book of business. It felt less like swimming in the deep end, and more like swimming in the middle of the ocean, with no land in sight.
October 2008
The days in October started to mesh, however something I started to notice progressively throughout the month was the trains cars on the 6:08am train from suburban New Jersey I was taking to New York were seemingly less populated than the previous month. Typically, by the time you hit certain stops closer to New York, every seat was taken. It was evident every day there were increasingly more empty seats, and a good 12 years before working from home became commonplace.
To begin the month in markets, the Emergency Economic Stabilization Act was signed, creating the Troubled Asset Relief Program, where the US Treasury would step into the market to purchase up to $700bn in “troubled assets” largely residential and commercial mortgage-backed securities that had significantly declined in value. That same day Wells Fargo acquired Wachovia. The next week felt like a plane dropping mid-air in turbulence; US equity markets fell 18%, with the rest-of-the-world following suit. Central banks across the globe started cutting rates, Iceland’s banking system collapsed (read Michael Lewis’ book Boomerang to get a sense of how this happened), and banks were given emergency capital injections. October 24th, 2008, global markets kept falling; Asia, Europe, the US…all down again, with a real sense of fear that despite everything that was being thrown at the economy and markets, this would not be slowing down anytime soon.
It was another nerve-rattling month for everyone. I started to wonder if this would ever end, as every day, I became increasingly consumed by what was happening in global markets. I empathize with people whose roles were much more vulnerable to the stress of what was happening. I know my days honestly felt like a blur; dozens and dozens of financial advisors calling to know “What is happening?”, “How is this impacting XYZ fund?” “What are the portfolio managers doing to stop the declines?” I was doing my best to lean into calls with confidence. I know my role in this was small, however, I do know that picturing my mother and father being clients of whatever financial advisor I was on the phone with at any given time gave me perspective on my purpose to deliver my best.
November 2008
One particular day in November I recall arriving 20 minutes before I was scheduled to sign into my phone to start my day at 9:00am ET. There was an electronic board that hung from the ceiling in the middle of the sales desk, almost like a scoreboard, which showed how many calls were being taken, and how many calls were waiting. It was common to see calls waiting throughout the day (anywhere from 4-5), but this day there were double digits (I don’t remember the exact number, I just remember a feeling of instant stress knowing I had to hit the ground running when I signed in). Once 9:00 am hit, I signed into my phone, and my first call arrived immediately and the question was (paraphrasing) “Did I see correctly that one of your bond funds dropped 30+% overnight?” I replied, “that’s correct”, to which the advisor replied, “I’m not sure what to say to that, I have never seen anything like that, even in equity funds” and then promptly he hung up. I was too naive to understand what had just happened; however, our firm was not alone as stories of this nature were pervasive throughout the industry. Mortgage defaults were beginning to creep up, and the mortgage-backed security market had essentially frozen; forced selling at massive discounts was impacting many firms and funds. As the month wrapped, funds across all risk-spectrum were selling off on down days with negative news. Days of positive news brought massive upswings in the market. The volatility and ups and downs of market were like kayaking in the ocean during a hurricane.
It felt as if every mutual fund from every firm was being questioned, with a common question being “What are they doing to stabilize these funds?”, “How much cash can they move to?”, “What’s the safest option you have that I can switch to?” Additionally, following down market days I would usually spend my morning answering, “Why was your fund(s) down?”, and ironically following up market days the opposite “Why was your fund(s) up?”
The compounding effect of answering these calls, trying to help financial advisors, staying within the parameters of my quality metrics, and trying to ensure I was hitting my availability for calls numbers took its’ toll on me both mentally and physically. Every single day was stressful, and many of the conversations felt as if they were aimed at me personally (which they were not). I absorbed that stress every day, in addition to the 3+hours of roundtrip commuting to get to and from work, because at the time I was not making enough money to move out of my parents’ house. In addition to the day-to-day calls, and the commute, I found myself checking the daily NAV (the net asset value, which represents the per-share value of a mutual fund) re-pricing on my BlackBerry (the iPhone was barely a year old at that point, and I personally couldn’t wrap my head around buying a phone with no buttons), which typically took place around 6:15pm on the ride home, hoping I would see a handful of funds have positive returns for the day. After a long, stressful day, seeing negative returns before even arriving home caused undue stress and months of interrupted sleep, knowing what I was walking into the next day already.
December 2008
By December, things felt like they were easing up a bit. Bernie Maddoff had famously been arrested for running a Ponzi scheme, the Fed cuts rates to 0-0.25%, and the U.S. Government bailed out GM and Chrysler. Even despite all of this, the U.S. equity market ended the month close to flat, and despite the easing up feeling, we were still tackling tons of questions. Many products across the industry faced challenges, redemptions, and poor performance. A handful of funds in particular invested in less-liquid instruments and was only available for purchase or redemptions on a quarterly basis; those conversations were the most difficult in that despite all that happened in the last few months, these types of products we locked up until January, and if it wasn’t moved in September, there was nothing you could do but wait.
Not facing a constant wave of market impact events every day, provided much-needed downtime between calls. I was surrounded by much more experienced colleagues, and we would joke around, talk about calls, or bounce ideas of each other. I valued hearing how other people approached calls and financial advisors, how they navigated difficult discussions, how they prepared for calls, what they read on any given day, or just learning about who they were. The people around me (and the internal sales desk as a whole), was an amazing place to be early in my career, and 18 years later, thankful I started on the phones with no place to hide during the financial crisis.
What lessons did I takeaway?
Control what you can control
Focusing on the task at hand on any given day, helped blind me to what was happening in the outside world. I had zero control over central bank decisions, portfolio managers positioning, or what the equity markets would do day-to-day. I did have control over the quality of my phone calls with advisors and my product knowledge. Knowing I could improve my quality scores motivated me to narrow my focus to deliver my best on each call. Doubling down on what I could control, and letting everything else fall by the wayside, helped alleviate enormous stress off my plate.
Learn from others experience
Simply sitting where I sat on the internal sales desk, I had a front row seat to people senior and junior to me, all navigating similar circumstances. Being able to hear how others were pitching, overcoming obstacles, defusing situations, and being stewards of the firm was amazing to witness. Picking people’s brains between calls, during lunch, over coffee, helped me further consider refining my own dialogue with financial advisors, as well as my thinking. There was also a constant flow of information sharing with my colleagues to help the group build on their existing skillsets. The lesson is to be curious; if you’re in sales, talk to operations, if you’re in trading, talk to marketing. Learning from other experiences, regardless of role or tenure, can not only help expand and refine your skillset, but also offers the opportunity to build long-term friendships.
Don’t take things personally
The biggest mistake I made during that time was taking things personally on these phone calls with advisors who were experiencing stress themselves. As I made mistakes early on calls, call coaching and a realization that I am on the phone to help (this wasn’t someone calling my personal phone), my perspective shifted significantly. Financial advisors were under an immense amount of pressure from their clients, and my role existed to help them to guide their clients’ discussions or help them find a suitable alternative given the circumstances. I learned how to offer them space to share what was on their mind, and once we had agreed where the issue was, to work with them to find a solution. By not taking anything personally, it allowed me to focus on solving the situation at hand and finding resolution.
Define Clear Boundaries, Find Healthy Outlets for Stress
During that time, and throughout much of the early part of my career, I became consumed with my job and viewed it as my identity, which was extremely unhealthy. In 2008, I was not exercising, eating healthy, or sleeping well. I never took breaks in that I felt like I couldn’t and felt burned out all the time. It took me a few years to adapt to a healthier lifestyle, and today, I have a much clearer sense of healthy outlets and boundaries. Take breaks, go for walks, go outside when it’s nice, and make time for your hobbies and things you prioritize in your personal life. In doing so, I find my work to be more effective, have more energy, and am much happier day in and day out.
Epilogue
Three years following the financial crisis I found myself in an elevator with Neel Kashkari, who had led TARP, and was tasked with engineering the bailout of financial markets. I briefly introduced myself and felt obligated to ask him about the financial crisis; I don’t remember exactly what I said, but it was along the lines of “What was that like?” I don’t remember his response, but it was simple and he was polite and upbeat, so in retrospect, if he could present himself that way (given the magnitude of what he gave of himself and had to handle), I had no reason not to sunset those memories and be happy for how that experience shaped my perspective on what I consider challenging times.
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