Jan 9, 2024 Nurole logo
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Support (& challenge): how the best boards embrace mistakes, look to the future, and support fund managers and CEOs, with Martin Gilbert

🎙️ You can listen to the full podcast interview with Martin on Apple Podcasts and Spotify.

Martin is Chair of Revolut and Co-Founder of Aberdeen Asset Management. Tune in to his conversation with Nurole CEO Oliver Cummings to hear his answers to:

  • How did the board add value during Aberdeen’s organic growth? (1:45)
  • How did the board help through acquisitions? (3:45)
  • How have you learnt from your mistakes? (7:35)
  • How did you balance instinct with analysis? (8:54)
  • How does the board’s role at Revolut compare to Aberdeen? (12:19)
  • Has the world become less forgiving, and what can boards do to help? (17:30)
  • Why do you take on roles at listed companies? (19:26)
  • What value can CEO-NEDs add to boards (and vice versa)? (22:10) 
  • How do you identify high-risk / high-value employees? (24:49)
  • What value have “future” sub-committees added? (26:18)
  • How should boards manage their high-risk / high-value employees? (28:42)
  • How can investment trust boards help their executive decision-makers? (33:15)
  • What are the traits of the best investment trust board members? (35:44)
  • Do investment trusts need cult fund managers? (39:43) and
  • ⚡The Lightning Round ⚡(43:49)

*This is an AI-generated transcript and contains inaccuracies*

Oliver Cummings: [00:00:00] Hello and welcome to another episode of Enter the Boardroom with Nurole, the business podcast that brings the boardroom to you. I'm your host, Oliver Cummings, CEO of Neurol. Today's guest, Martin Gilbert, has 40 years of experience in the asset management industry. He was co founder and CEO of Aberdeen Asset Management, which later merged with Standard Life to form Standard Life Aberdeen.

Following the merger, Martin was respectively co CEO Vice chair of the group and chair of Aberdeen Standard Investments, the asset management business of SLA. In 2015, Martin was ranked by Harvard Business Review 22nd out of over 900 in its list of the world's top performing CEOs. He's currently chair of Revolut, Asseco, Tosca Fund, Net Zero Technology Center in Aberdeen, and Scottish Golf. He is also a senior independent director at Glencore plc and non executive director at the european tour 

martin a huge welcome And thank you so much for joining today. 

Martin Gilbert: No problem. [00:01:00] I'm looking forward to 

Oliver Cummings: Martin you were co founder and CEO of Aberdeen from 1983 to 2017. And, during that period just had an incredible growth journey. I think in the first year, the business had 70 million pounds of AUM and reported. Profits before tax of 87 pounds. And by 2016, that was 352 million pounds of profit with 312 billion pounds. AUM. Now in the first part of that journey, I think Aberdeen grew organically . It sounds like you had an amazing group of people around the table. Can you think of specific ways that they added value to you?

Martin Gilbert: I think bear in mind, we were sort of there at the beginning of asset management to a large extent, because what you see now in asset management is a huge industry. Back in the 80s, it was a cottage industry, and there might have been four big asset managers in the UK in the 90s, so they were [00:02:00] really helpful to us, especially in terms of strategy, especially in terms of corporate advice.

Because for the first few years, as you say, we did grow organically but then after that, we we really grew by a mixture of organic growth and inorganic growth or acquisitions in the asset management space. So we made about 40 or 50 acquisitions at at Aberdeen, but but the board were especially helpful.

During the early years and guiding us because we were so small at that time. I mean it's, it's quite a long time ago, so most people won't remember the BP rights issue in 1987. These sort of things were where the board really helped because a lot of them had experience before. I mean, interest rates were. Still at well over 10%, 14, 15%, so yeah, it was really useful to have their to have their [00:03:00] take on the interest rate environment in those days. 

Oliver Cummings: Very interesting. Okay, so you moved into this heavy acquisition phase and you acquired a number of businesses. How did the board support you through that? 

Martin Gilbert: I think a really good director is questioning when things are going well and supportive when times are tough. Now, a lot of directors are the opposite. They're very supportive when things are going well and when things start to go wrong, they become questioning as opposed to supportive because we didn't sign up for things to go wrong, if you follow me. So, I think once you put that lens on directors.

So often when things were going really well, the really good directors would be questioning you much more than, you really thought was relevant, but they were actually digging away and making you think about things. 

And good directors also [00:04:00] would say to you during the tough times, don't try and trade yourself out of this. This area don't cut at the point of maximum pain, so there are various, various attributes I would place to really good directors during that period.

And yeah, they would stop us doing some acquisitions and that turned out to be correct and when you look back and they would be very questioning when you were making acquisitions as well, which. They would always look at the downside of doing something. 

 In my time, we'd five or six very good chairmen who were incredibly supportive. So, we, we were just really lucky with the quality of directors. We had, we'd no right to have such good directors over the years. 

Oliver Cummings: Can you bring that a bit to life and how they did that? Because I came from a private equity background originally. And so I've seen many acquisitions done when the entire boardroom was pregnant with deal fever [00:05:00] and an information bias, everyone had done, you know, done a lot of work and therefore. There was a natural desire to get the thing done, a sort of sunk cost to it, and actually it was very difficult in those situations for anyone to pull the whole, that whole momentum back when, you know, people had started framing things in a certain way. What did the directors that you worked with who did that effectively go about that?

Martin Gilbert: I'll give you one example. A guy called Joe Bernard Stewart, he had been chairman and CEO of Fleming's And Flemings had a mandatory retirement age of 60. So here was a guy, just absolutely at his peak we were fortunate, he had a house up in Aberdeen, so, a holiday home up in Aberdeen, and he wanted to have an interest up in Aberdeen and it was that sort of director and I remember him, he was, he was incredibly good.

He just would be very, [00:06:00] very forensic in his questioning, but very, no, not in a nasty sort of way, but very, very good questions. He would say. Why do you want to go into private client asset management, for instance, to justify it? And the end we didn't because you know, once he, once you, he made you think about it, it changed your mind, but you're right.

You know, there gets a momentum to a deal and it is very difficult to to stop a deal. And, and there was one recently at AssetCo where I felt uncomfortable and didn't stop it. And of course it turned out to be the wrong decision not to stop it. So, yeah, you've got to I should have pressed harder as chairman and said, Look, guys, I've seen this before. We shouldn't do this. And yeah, you, it's, it's a very delicate balance being at. Being a good director. I

Oliver Cummings: mean, hindsight is a wonderful thing, and obviously we all have 20 20 vision [00:07:00] with hindsight. I think what's always interesting to me is how one goes back, and independent of the outcome of the decision or the action, what is there that we could have done differently at the, at the time? Because it's easy to say, I should have pushed harder, but I'm sure at the time you were doing your best. So, is there anything that you Kind of learn from those experiences that you have actually being able to. Operate differently as a result. 

Martin Gilbert: One of the things I've learned is always go with your first instinct. And don't change your mind. Now, you know who the good people are, and you know who the people who are less good. And what you should do is make your decision quickly and implement your decision quickly because that is what people want. They don't want uncertainty. They want to know what's happening very quickly.

And people can then plan their lives. They either stay or they leave or [00:08:00] whatever. So that, that probably more than anything else is. What I learned anytime I changed my mind, I'd live to regret it months later because you didn't do what you should have done, so to speak. 

Oliver Cummings: I guess that that falls a little bit into that sort of Gladwell school of thinking of you know, when you face with really complex decisions, tap into your emotions because you can overanalyze them.

There's another book I was reading recently called Decisive by Chip and Dan Heath where they have a Model rooted in a whole load of data that says, you know, what they call wrap. So they encourage people to widen the options, then test them as much as you can for the sort of real world applicability of them, get some distance from them, and then assume it's going to fail and do a pre mortem on it.

And I suppose that widen the options piece runs against a little bit that instinct, because I sometimes find it a bored me to, I'm sort of [00:09:00] instinctively. You know, thinking, okay, yes or no, we shouldn't be doing that, but that widen the options, how do you reconcile the tension there? Between those two things of following your instinct with making sure that you're considering enough So you're not just biased by what happens to be in front of you at the time? 

Martin Gilbert: I think I think that by having a good team around about you you do want some people in your team who who do look at the downside of Of any action I've always tended to be just looking at the upside and thinking look I can I can sort this I can make it work.

So I was very very lucky During the years, the twenty odd years at Aberdeen, we had a very strong team of accountants and lawyers who were there at the start of the business and were there right till the end, right till the merger with with Standard Life and to a certain extent They would be the counterweight to my incredible [00:10:00] optimism that I could make anything work, basically.

And they would say, listen, just don't do this. So, yeah, I think that's how we did it, by having good, having complimentary people round about you. And that's why you don't need people who are all the same in an organization. 

Oliver Cummings: I love that. So you, you have the natural optimist of a classic entrepreneur, and you're saying surround yourselves with the book critics sort of the author.

So you get that balance. How does that fit? So then with your earlier point around holding with your initial. View because if you've got someone like you who's the author who's got your initial view Yes, this is something we should do we should go ahead and you've got someone else whose initial view is no for all these reasons Somehow one has to reconcile those and someone has to get 

Martin Gilbert: yeah, they would always trust my instinct up to a point But if it was something they genuinely believed was wrong, they would [00:11:00] they would Really put their foot down at that point and say, listen, this is not what we should be doing, but yeah and to a certain extent, they use that, people use that card rarely, don't they?

And when they do use it, you should listen. Because there's usually a really good reason if someone who is more deeply analytical than you and who's much more into the figures than you, like our CFO, Bill Rattray, if he said to me, Martin, this is not for us, I would say, Okay, I understand. Tell me why. But I would not. I would try and answer his concerns, but if I couldn't, we wouldn't do it. 

Oliver Cummings: Really interesting. Let's talk a bit more about Revolut, because obviously that is, you know, one of the archetypal technology players, I suppose, in the sort of fintech space. 


Oliver Cummings: How different do you see the running of that organization now, versus the organization you ran? Have some things [00:12:00] fundamentally changed, or is it, it's essentially the same with a few superficial. Changes in terms of the things that you have to get right as a board 

Martin Gilbert: I think that what you need to do, so obviously at Revolute I've moved from being a CEO of a founder to being the chairman of and Handling and being chairman to a founder the reason He selected me, or the reason we decided to go the course we have is because I had founded a business.

He wanted someone who'd grown a business, scaled a business, and had the necessary regulatory experience. So, to a certain extent, I can handle him. I think I handle him pretty well. Because he's a typical founder, especially of a fintech, and he's older than, than me when he started the business he's much, much richer [00:13:00] than than me, but but apart from that, he's, he's driven, he's very, very good.

But I think what you have to do as chairman is understand what, how to handle it. And that's the, that's the key I would say to being the chairman to a founder of a business, even though you are a founder yourself. It's very different

. First of all, establish the boundaries between the chairman and the And the CEO I think that is very important because nothing is going to frustrate a Nikolai more than someone who thinks he's a hands on chairman and who's going to, uh, be running the company or thinks he's going to be running the company and he's there to to overly govern the CEO.

Martin Gilbert: So we have very clear boundaries. I never interfere. I speak to him every week. I never [00:14:00] interfere in any management decisions. I help him. If I do have something, I do speak to him directly. I'll say to him, I think we need to put more resource in here or more resource in there. And what I've found is he's a brilliant listener, very very smart.

 He listens, he understands the point. And if he agrees with it, he'll implement it straight away. So it's establishing those boundaries. Then the next most important thing is to, as I said earlier, to be supportive. When things are not going according to plan, which is inevitable in a founder led business or a, or a small FinTech with very short lines of communication.

Controls would tend to lag behind the growth because everything is designed to implement fast growth and scalability. So yeah, that's also really, really important to be supportive. 

Oliver Cummings: Can you give me [00:15:00] some examples of, of when you've done that and how, how you've gone about it?

Because I guess there's one thing to sort of sit there going, look, well, I'm sorry, that must be tough for you. But ultimately that I don't know it doesn't really help much when you're there and I think I 

Martin Gilbert: think You know if something goes wrong, I said I wouldn't worry about it if I was you we'll get over it, you know, just Like everything else, you know that people Don't make people as smart as him never make the same mistake he pain, or he'll ask me, how serious is this?

I say, look, it'd be better if it hadn't happened, but but look, we'll, we'll, we'll manage it and we'll get through it. And, and I suppose really looking back to Aberdeen, when we were going through the really tough times in 2002 to 2005. I had chairman who supported me and the board supported me a hundred percent.

I offered my resignation and, and they didn't accept it. And they said, no, we, we want you to sort this [00:16:00] out. And I, and, and I did, but they were incredibly supportive. I mean, nowadays there is no chance I would have survived that sort of That sort of period of being under regulatory scrutiny and being investigated, all these things.

So I think to have a supportive board, because being chairman, being CEO is a really tough job. And the last thing you need is to be looking over your shoulder to see that the board are not supporting you. So I've always made it absolutely clear with companies I'm chairman, I'm 100 percent biased behind the CEO.

But in return, they've got to be absolutely open with me or with whoever's chairman and tell me what the problems are. You don't want to be hearing about them second hand. You want to know there's a problem quickly. You want to know how it's being dealt with. But in return, your job is to support him through the tough times as well as [00:17:00] the good times.

Oliver Cummings: It feels to me like the world has become a less forgiving place of mistakes and has forgotten actually the value of mistakes. When people make mistakes, as you say, when they're smart, they usually learn from them and they're better for them. 

And yet most of the time now, when I see I guess Alison Rose was a good example of people making Mistakes who have huge amounts of talent People have different views on how big a mistake that was and what's an unforgivable mistake. But the board there stood behind initially and then got blown out the way effectively by the sort of court of public opinion political political opinion 

Does it feel like it's got harder. And do you think that's right? And, and, and what can boards and chairs in particular do in the face of that sort of onslaught when they're trying to do the right things in difficult situations like that? 

Martin Gilbert: Oh, I mean, you're undoubtedly right. The world has become a much less forgiving space.

And as I said, I wouldn't have [00:18:00] survived the 2002 to 2005 onslaught on so to a certain extent. The news is less immediate. It's much more immediate now, it was less immediate then, so there wasn't the same pressure that comes on boards. 

The regulators now are far tougher you saw that with the NatWest situation where The board were probably minded to support, as you said, the court of public opinion, plus the, and the court of public opinion tends to sway politicians and regulators, so so it just became impossible to for the board to continue supporting A CEO they probably had absolute faith in for, for running the business going forward.

So yeah it is a much less forgiving place as you've as you've said. 

Oliver Cummings: [00:19:00] Okay. Now you, as I touched on at the beginning, you're a very rare and I think really critical sort of archetype to have sitting in listed company boards. Most founders I know, successful founders I know, just wouldn't want to be on a listed company board. You've got all the governance, you've got all the reputational risk, you're not compensated.

As, as you could be if you were to, you know, if you're capable of getting those sorts of roles, you're capable of getting far better compensated executive roles. And there is a lot of box ticking that you have to go through. So what on earth? Is the reason that you sort of take on these, these listed?

Martin Gilbert: Well I think it's very important for CEOs to take on one additional non executive role because even though you're busy, you're actually an ideal non exec. When I was at Aberdeen, I did first group, which I was lucky enough to be a founding director of, and we built that into the biggest surface transport company in the world from 200 buses in Aberdeen.

And then [00:20:00] I did Sky, which was fantastic, and Glencore. And you learn from these boards, I mean, you, you really do, and so the experience is invaluable. So, I'll always do interesting boards, so I put Sky and Glencore and First Group into that category. What I'm not that keen to do is just what I would term a, a big box ticking board that you're not really understanding or that you can't make a difference.

So I enjoy small ones as well, especially if you can get some equity. You can make money at these and obviously at Revolut we were given some, when we weren't being paid director's fees, we were given we were given equity in the. The business, which has been nice. So yeah, I don't do it for nothing.

I do Scottish golf for nothing, by the way, but I'm, I'm passionate about diversity and participation in golf. So I do that for nothing and[00:21:00] I enjoy that as well. So yeah, if you can get, if you CEOs to come on, it's really useful. And if you can get a CEO to come on, an active CEO, it's even better.

Because, A, they're short of time, so they're not going to interfere in the The day to day running of the business, but what they're going to do is really give you incredible incredible support because there's a sort of, if you're a fellow CEO, you support the other CEOs because really they're the only people you can speak to.

So you give incredible, you get incredible support, incredible information and incredible just knowledge of other businesses from doing it. 

Oliver Cummings: Yeah, funny. I've talked a lot in the past in the podcast about my favorite book is called CEO excellence, where they look at the data of the highest performing CEOs.

And one of the common characteristics is they all have an independent board role because as you said, it helps them reframe and be better at their own job as well as, [00:22:00] but we haven't, what we haven't talked so much about is the value that they add. On the boards themselves. And it sounds like you've worked with quite a few.

Can you expand a bit on that where when you have CEOs on your board, I guess there's always the risk that they will be too executive. But where, what value have you got? Can you think of specific examples? 

Martin Gilbert: Well, I don't think they can be too executive because they don't have the time. So I think that's one of the great attributes is Here's their very high level and they're very, they get straight to the point.

They understand strategy. They understand the problems you're going through because. They can be similar problems from another industry. So they make very, very good and they're interested. They're also good CEOs are super interested, super inquisitive and super just want to mop up information.

And they spend all their time, I used to spend all my time on other boards, trying to understand how that board worked, how that company worked. I [00:23:00] copied ideas from Sky, I, I copied an idea from James Murdoch to form a committee. Not a board directors, one board director and, and employees to look at the technology.

What was, what was coming down the road? What would, What would make us a better company? So we used to spend a lot of time on that. Look at the future. And as I say, it wasn't typical board directors, but I'd learned that idea at Sky. I learned, I learned lots of, I learned from first group about safety.

I learned from first group who, to look and see what the most critical person in the hierarchy of a company is. Who is the person that makes that company work? And the first group in the yellow bus division, it was the depot manager. The depot manager had to get a hundred yellow buses out in the morning to pick up school kids.

He had to get them out. If he didn't, people weren't going to pick up the school kids to go to school. [00:24:00] And the knock on effects of that were, dramatic. So I learned there and I look at supermarkets. Who's the most critical person in the hierarchy of a supermarket? And I look at it in banks as well. I look and see, is it the bank manager or the country manager? Or is it, I want to, that's the sort of inquisitive nature you need to have as a non exec. 

Oliver Cummings: I love that. So, so tell me, so who is it in a supermarket? Who is it in a, in a bank? And what do you, how do you use that insight as a board member once you've got it?

Martin Gilbert: Well, I use it and I use it in investment as well because I mean, yeah, let's take the supermarket as an example. I mean, I suspect it's the most important person in the structure there is the person who runs that individual store. Because a good store manager or a, or if you look at it in banking I think in, in big banks, it would be the country manager who's the [00:25:00] most important person.

In a big retail bank, as they used to be, it would have been the bank manager themselves who. You, everyone, et cetera. So, so yeah, it's really, and, and to a certain extent, I think sometimes they, sometimes the unforeseen circumstances of dismantling an organization, you've got to look through as well because, uh, because I'm not sure in banking, for instance, with the sort of power being taken away from the branches, it's really helped.

It's really helped the the, The product and it's become less customer orientated, which of course is what's allowed revolutes of this world to come absolutely through the front door and take huge, huge amounts of business away from retail banks. Yeah, 

Oliver Cummings: I sometimes cry with laughter going through some of the traditional banks customer experience just thinking there is clearly [00:26:00] no one on that board who has been through this experience as I get transferred, you know, from one country to the next and told each different department has the solution to my problems until eventually after about 15 loops, I get back to the person who I started with, who also laughs at the experience.

 I love this idea of the sort of futurist or future oriented subcommittee because there's a, there's some really interesting data on that that shows. The highest performing boards simply spend more days on their strategy than low or mid impact boards. 

And I suppose by having a dedicated committee focused on looking forward, you're going to achieve that or are much more likely to achieve that. Can you give me some examples of a practical value that came out of that? And is that now something you do with every board? 

Martin Gilbert: It was an idea, as I say, I picked up from James Murdoch on the Sky board and we implemented it at Aberdeen and, and as I say, it wasn't a typical board committee.

It was chaired by a member of the board, but you need [00:27:00] someone who's pretty tech savvy to chair it. And then you get people from across the organization. We would run a competition as well to come up with ideas that would make our business more efficient. 

And they did. They came up with brilliant ideas and and You know, in an organization, I mean, to go back to the sky team the sky board, I mean, one of the things I learned there was that marginal improvement that if you get 1%, I mean, it really does work. 

And that's what you want in an organization as well. You don't need to be making huge bigs. You just look for 1 percent here, 1 percent there, 1 percent here, 1 percent there. It certainly accumulates across the across the the organization. So yeah, it was great.

But also what it did was it brought the people in the organization more [00:28:00] towards the board. They could see the board were interested in what they had to say. And yeah, there's obvious frustration that you don't implement every idea. It's still incredible what you can achieve if you unleash the power in an organization with ideas.

Oliver Cummings: You create that sense of autonomy, mastery and purpose in the, in the words of Daniel Pink it's very, very powerful. I want to go back to that idea, the concept that you outlined there of the person at the sort of point of, I think you called it most risk, where they have the sort of highest impact.

Once you've identified those people in an organization as a board member, what are you doing with them? And how does that change or how are you interacting with that knowledge? 

Martin Gilbert: I remember speaking as a person with the most impact in an organization. I remember one of our directors saying, Look, there's someone in your organization, he's sitting [00:29:00] probably in the basement, he's sitting there and he sees every email that's going through this organization.

He's sitting there and he's in, he's sitting in front of the screen and all he sees is stuff. He said he's probably paid nothing. You better identify that person and pay him a bit more, because that is your biggest risk of cyber leak. You just pick off that one person who sees everything, and I'll always remember that advice.

And we looked for that person, and they were in the basement. No, they were in, yeah, they're never in the best area. So it's about finding that and then, and then really empower, making sure you look after that person more than anything else. So when we used to go on site visits at First Group, the CEO was brilliant, right up to that.

The depot manager, shall we say, when we were at a yellow bus depot and just say, what a great job you're [00:30:00] doing. How many buses have you got? Is there anything I can do to help? aLl of these sort of things that just make that person feel appreciated. And you take a store manager in a supermarket, again, direct, you go and visit them and just tell them what great job they're doing, basically.


Oliver Cummings: love that. It reminds me, I've often heard people say that, you know, often it'll be 10 percent of the organization will be creating 90 percent of the value, and yet very rarely does the CEO and the board Allocate their time proportionately for that value creation. It sounds like you're saying when you're identifying those points of highest leverage, it's both risk and also value creation.

You create time at the board to follow through on that 

Martin Gilbert: or? You, you create time around the board to follow up on that. So you make sure the board meet these people at a dinner or at [00:31:00] drinks after the board or whatever it might be, you just make sure, you know, if you go to the Singapore office, you have a staff function, you make sure, you know, I would say to the head of Singapore, tell me who you need me to speak to.

And you know, he would say, go up to this guy, say this, go up to this guy and say that. So you've got to be that, you've got to be that good at at detail as well. You go up. Up and do that and with fund managers, you've got to remember it's a really tough job being a fund manager because you're measured every day and always my advice to them was, look, if you're underperforming, whatever you do, don't try and trade your way out.

Oh, are you happy with the stocks you hold? Yeah, I am. I say, hold on then don't trade and because You've got to remember, there's a propensity amongst management, directors, whatever, [00:32:00] to cut at the point of maximum pain. The really good fund managers could go through that point of maximum pain and come out the other side.

So, a good example would be Shall we say in 1990, the late 90s, tech stocks, if you remember, were going through the roof. And people didn't own them. And then they would cut, just cut, just, they can't, I can't take this pain any longer. Say in November of 99, and they would buy. And then the market, they, they all fell in 2000.

And that to me is the double whammy. You've lost on the way up and you lose on the way down. So you've got to, you've got to have that you've got to have that mental toughness to just get through the pain. 

Oliver Cummings: It feels to me like that's probably a challenge that a lot of investment trust boards right now are wrestling with where [00:33:00] probably a lot of their value is. Encouraging the you know, the investment decision makers to hold the course and not to sort of make changes when I can think of a number right now that are under huge pressure because they're sort of, you know, traded down significantly. iS that, is that something that you found your boards? Sort of giving, giving you value with?


Martin Gilbert: I mean that comes back to my point I said I would repeat earlier, which is good directors are supportive at the moment, whereas the poorer directors are being questioning when things when things have started to go wrong and you know. and genuinely believed. Why did you not foresee this was going to happen?

And, and they've got to have that toughness to just see it through. Now, let's wait and see what, how, how some of them some of them do react, but I'm with you a hundred percent. They've just got to stick. As long as they're doing the right thing, they should stick with it. The portfolio [00:34:00] they have, what I would say, again, that I've learned from managing over 40 investment trusts at Aberdeen is, is a lot of managers, and I place this at the managers rather than the board.

A lot of the managers don't manage the structure, i. e. they don't buy back shares enough. They don't manage the structure. They think their job is just managing the portfolio. Their job is not only to manage the portfolio, but also to manage the structure. And that's where boards also should step up and say to the manager.

Listen, we're on a deep discount here, buy in the stock, buy in the stock, buy, buy, buy. And, you know, a lot of them don't want to, so, so. 

Oliver Cummings: It always strikes me as an area where, where the court of public opinion is often incredibly ill informed and the sort of the debates that rage on about, you know, whether, you know, managers should be buying back. Stocks and [00:35:00] whether that provides value to the underlying shareholders or not. Just sometimes it's just completely, 

Martin Gilbert: if you're buying back stock at a big discount it's good for the shareholders, 

Oliver Cummings: a wonderful thing. You're getting to invest, reinvest at discount rates and the things you already know and understand to find new things

. I just want to touch on we'll go back to the, the sort of topic of investment trust. Particularly, you've obviously had huge amounts of experience there. We have a lot of investment trusts hiring board members through the platform. It's become a bit of a specialty, 

Oliver Cummings: and One of the things that sometimes amazes me is how little some of the boards seem to think about their strategy and don't think of themselves in terms of how do we create a, you know, competitive moat? 

 How are we going to differentiate ourselves versus other players there? And they have quite the, the ambition and the strategy and the vision for what they're trying to achieve as an organization is, is very limited.

And I think it goes a little bit to the point you were making earlier around. They don't think of not just what are [00:36:00] they investing in, but how are they managing the sort of the corporate structure for someone listening to this now, who is a board member on an investment trust. What and who, who wanted to know?

Well, you know, Martin, what are the things that I can do that would be most valuable as a board member for this investment trust? What are the best of investment trust board members that you've seen doing? 

Martin Gilbert: I think they're asking questions about the structure. Basically. Why is this, why are we. less well rated than X who are in the same sector. And normally it's because they don't work hard enough on differentiating themselves from other trusts in the the same sector as then. 

They don't, they're not skilled enough. A lot of them at marketing as well. How do you create that? Yeah, that [00:37:00] aura that even though you're not performing that well or that you that you still have a cult following.

And I always used two at Aberdeen who had that cult following. One was Hugh Young, obviously in Asia. Great, great fund manager especially in the early years, he, he had a really great, great following you, you saw it in fidelity with and with Bolton, he had that cult following. You see it with Bruce Stout at at Murray International.

He'd get 500 people at the AGM to listen to say how bad the world was. And then you're sort of James Anderson at Bailey Gifford at the other extreme. But that's what you want. You want something that's just going to take you out of the ordinary a bit. And and that's going to make retail investors.

 Buy the [00:38:00] shares because it's all about retail investing in these businesses and whether we like it or not, as an asset manager, we always wanted asset managers to, we wanted it to be an Aberdeen sort of client. base, but what individual investors want is a story.

 They want to say, look, I'm, I'm in Hugh Young's fund or I'm in Anthony Bolton's or whatever it is. So yeah, it was those, they've got to manage the structure better. Because to a certain extent they can't manage the portfolio because that's delegated away to the, the, the relevant asset manager, and they've got to trust him to do the right job.

Oliver Cummings: Interesting. Terry Smith is one that sort of really stands out for me in that, in that brand in the sort of I 

Martin Gilbert: love Terry. I know Terry really, really well is he's a brilliant fund manager. The game, he's got that aura, you know what a business he's built and, and he does it. Yeah. Again, he's got that cult [00:39:00] following.

I don't trade. I just buy good quality stocks. I hold them and I, I, I, I hold them through the cycle and occasionally he'll, you know, attack someone like the CEO one of my friends, the CEO of Unilever even though, uh, I thought it was a bit unfair, but, but he, he's, he's, he's a really, really good fund manager.

Oliver Cummings: So does that mean, do you think as a board member, if I'm sitting there listening to you now, I'd be thinking, gosh, maybe if my manager right now hasn't got that personality, that cult, that clarity of vision, you know, there are so many investment trusts where they're investing in, I don't know, like 50 plus stocks where they don't really understand them as opposed to, you know, a lot of the ones you've talked on there, how real sort of conviction more from that school of Benjamin Graham investing. So is, is that what you would be encouraging? 

 I'm not suggesting they go down a particular style like value because of course, James Anderson was at the other extreme from value. [00:40:00] One of my friends. Who's a big investor. He holds two investment trusts. He holds James Anderson and he holds Bruce Stout and he sees them in the same day and they have diametrically opposite views of the world.

Martin Gilbert: And then of course over the last 10 years, James Anderson has far outperformed, but probably over the last two years, Bruce Stouts had a, had a better time. So you need balance in your portfolio. So what I'm suggesting is just taking a look at it from the outside in rather than the inside out. You've got to trust your fund manager to manage the money.

Then what you've got to do is decide whether you Promote him to, to be the person that you, you use to market it. And, unless you're a very old one, of course, a very old trust, which has been around a hundred years, which a lot have. Sometimes, sometimes, of course, they're the structure's fine. The, the name is fine, you [00:41:00] know.

 It's just look at it from the outside in. What would make me? Buy this why would I buy this over X and then one of the other investment trusts in the sector? 

Oliver Cummings: Yeah, it strikes me as remarkable that many of them haven't really come into the 21st century with the way they market your digital consumer 

Martin Gilbert: and data! I'm not convinced they use, a lot of them use data as much as they, they should. Some do, some don't, but what I'm saying is the data's there. Look at the data. Why does X not own this fund? And these sort of things that are natural, shall we say, that should be natural is why do Bruin Dolphin not own this? Why do they own that? Or, you know, these sort of questions are what you should be 

Oliver Cummings: asking. 

Okay. So that's three really powerful things to think about the manager and their cult, then approach to marketing and the structure making sure you're optimizing that anything else that you'd sort of add to that list of things to really be focused on as an investment trust.

Martin Gilbert: [00:42:00] No, I think those are the key things obviously gearing, you've got to decide gearing and buying, managing the structures, gearing as well, but whether you buy back these sort of things. So yeah, look, it's a great vehicle. I mean, they are the best vehicles to manage money, to invest in as well. And directors can make a difference if they ask the, the questions. One of my rules about going on boards is can I make a difference? 

Oliver Cummings: Yeah, it's interesting. One of the, it comes up actually, we, we run these mastermind groups for board members. And one of the things that comes up with those that we do for investment. Trustful members is sometimes they feel quite powerless to make changes because they don't feel like they've got that classic CEO board relationship And it sometimes feels to me like they they don't realize how much they could change when you get people from other Organizations who are sit on boards they're asked, you know, their challenge often to them is well why what's actually stopping you and often? There's a sort of moment of [00:43:00] insight. Well, I think 

Martin Gilbert: I think the way to look at it is the manager is the CEO And your job is to hire and, you know, as chairman, your job is to, is to be the non exec with the, the, the CEO, so to ask the questions and decide whether it's the right CEO or not, which which you have to, are they performing well? Are they, have they got a good process? All of these sort of things. Those are, those are what they should be spending their time on. 

Oliver Cummings: Gosh, Martin, I love that. That's going to be so valuable for those sitting on investment trusts listening. Time has flown by, which means it's time to go to our lightning round where I'm going to say a question and ask you for a quick response if you're ready.

All right. So first up is the boardroom behavior that irritates you the most. 

Martin Gilbert: None. Nothing irritates me. 

Oliver Cummings: You've never been annoyed in a boardroom? Never. 

Martin Gilbert: Wow. Never fight with a non executive director. 

Oliver Cummings: Fantastic. It reminds me of a line I recently [00:44:00] heard. Never fight with a pig because you get dirty and the pig enjoys it.

Martin Gilbert: exactly. 

Oliver Cummings: The best book every board 

Martin Gilbert: member should read and why? Oh, I like the Gladwell Micro microeconomic books. I just love them because it's all practical. I don't like macro. I like microeconomics. 

Oliver Cummings: YOur favorite quote and why? 

Martin Gilbert: It's better to try and fail than never to have tried at all. Too many people don't try.

Oliver Cummings: ThE worst professional advice you have ever received.

Martin Gilbert: To not take my friend to the treasury select committee with me. And they wanted him, not me. But when I appeared without him, they killed me instead. They called me a, they called me a sophisticated snake oil salesman, there you go. 

Oliver Cummings: And last but not least, three things that our listeners should take away from this if they take nothing else.

Martin Gilbert: Be supportive in tough times, [00:45:00] questioning and questioning in good times. And don't cut to the point of maximum pain. 

Oliver Cummings: Wow, Martin, that's been such a privilege. I love hearing from founders who've built successful businesses and then also had an amazing experience as a board member.

So thank you so much for taking the time to share an experience. That's been amazing. 

Martin Gilbert: It's been a pleasure. Thanks, Oliver. Take care. 

🎙️ You can listen to the full podcast interview with Martin on Apple Podcasts and Spotify.

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