Robert Wolf | Advisory Board Interview

The Wall Street Week advisory board is a prestigious group of industry professionals that help guide the show’s editorial content. We will periodically interview a different member of the board to discuss a range of relevant topics.

Robert Wolf is Founder and Chief Executive Officer of 32 Advisors and the Chairman of Measure, a 32 Advisors Company offering drone advisory services. Prior to forming 32 Advisors, Robert spent 18 years at UBS, a global financial services firm. There he held several senior positions including Chairman and CEO of UBS Americas, President and Chief Operating Officer of the Investment Bank, Global Head of Fixed Income and Chair of the Diversity Committee. He joined UBS in 1994 after spending approximately 10 years at Salomon Brothers as a Vice President in Fixed Income Sales and Trading.

In addition to his role at 32 Advisors, Robert was appointed a member of President Obama’s Council on Jobs and Competitiveness from 2011-2013, a member of the President’s Economic Recovery Advisory Board from 2009-2011 and was on the Homeland Security Advisory Council’s Border Infrastructure Task Force in 2012. In June 2013, the White House appointed Robert to the President’s Export Council.

 

Interviewer: Why are you excited about the return of Wall Street Week?

Robert Wolf: Today the general public is nervous about investing in the markets and to have a show like Wall Street Week that actually focuses on the “everyday” individual is much needed. It is important that people understand what investing over the long term means and are comfortable with the possible risk and reward scenarios. Many of the financial shows discuss day-to-day volatility of the markets and this is really not how the general public invests. The show discusses topics like macroeconomic trends, supply and demand flows and the impact of geopolitical risk, which gives the individual an important base to feel more informed on what to do with their money and investments.

What’s your personal investing philosophy?

My personal investing philosophy has been incredibly conservative, and likely more conservative than anyone that you will have on the show. Throughout my nearly 30 year career on Wall Street I was restricted from buying individual stocks and bonds thus I started a municipal ladder early on in my career where every year I buy certain dollars amount in municipals and keep extending my maturities annually.   Believe it or not, it has become a disproportionate amount of my invested portfolio, probably 75%. The other 25% is a little more risky, and it will be probably a combination of private equity, venture capital, and real estate. It’s a bit of a barbell approach, with 75% conservative municipals and 25% quite riskier (although diversified).

Besides compliance reasons, what factors helped shape your investing philosophy?

It kind of just worked for me. I didn’t feel like a guy that understood the stock market as well, I was always on the fixed income side of the business. When I began investing, indexing wasn’t really around. And for me, my ladder of municipals, over the last 25 years, have performed quite well.

What initially inspired your initial interest in finance?

I went to undergraduate school at the University of Pennsylvania’s Wharton School. When I graduated, I actually wanted to go to medical school, but I had a Wharton undergraduate degree that I used to practice my interviews and what better than at Wall Street firms. One of the firms that I interviewed at called Salomon Brothers was just the perfect fit for me. Back in the ‘80s. I like to say that they were looking for the rocket-scientist jock and as an Ivy League guy and a former D1 football player; I knew I was at least one of the two.

What led you to get active in the public sector and what was that experience like compared to the private sector?

Being an advisor to the President of the United States, whether Democrat or Republican, is an incredible honor; and, I have been fortunate to have served President Obama on three boards: The Economic Advisory Board chaired by former Federal Reserve Chair Paul Volcker, The Council for Jobs & Competitiveness chaired by GE CEO Jeff Immelt and the Export Council chaired by Boeing CEO Jim McNerney. These appointments have allowed me to use my Wall Street experience during a period where the intersection of public policy and finance has been more intertwined than ever before. My roles on these boards/councils gave me the opportunity to use my private sector background and work on causes that are for the greater good of our nation such as infrastructure, immigration and education.

How did you get your role with the Obama administration?

In mid to late 2007, when he was running in the primaries as then Senator Obama, we started talking a lot about the global economy and the financial markets and some of the headwinds that we may facing as a nation. At that time, I was the President of UBS, and we were having our own issues. I was explaining to him what was going on with leverage in the system and we started talking a lot about it and the risks. I then also began talking often with Austin Goolsbee, who was his chief economist during that time, about the housing market and banking system and built a great relationship with him. The three of us starting talking and emailing all the time and by August 2007, I become one of candidate Obama’s key economic advisor with a main focus on the financial services sector and financial markets.

How would you rate the government’s role in the economic recovery?

Well, there’s no question what the Fed and government did by providing an incredible amount of liquidity into the system during these tumultuous times was key. Equally important, was making sure the large banks were not nationalized and de-levered by raising equity and make sure the deposit base was not panicked by increasing the FDIC safety net. This was very different than what happened in rest of the world and why our recovery has done better sooner. By no means do I want to imply that we are satisfied where we are today with the recovery, we would like GDP to be north of 4% and wages for the middle class to rise. But it’s going to take time.

I think one of the biggest missed opportunities is that we should be spending money on infrastructure. It’s the fastest multiplier of GDP growth. For every dollar spent, it’s a 1.6 or 1.7 times multiplier and for every billion dollars spent, it produces 25,000 to 50,000 jobs, and it’s something this country needs drastically. I would agree with the President, who’s been a big proponent on infrastructure spending, that this should be accomplished through public-private partnerships. I have touted that this country needs a national infrastructure bank. I testified in front of the Senate and I’ve written op-eds on the needs for an infrastructure agency or bank.

Why do you think Washington has been unable to come up with a solution for infrastructure spending when the concept seems to have broad support?

I think with infrastructure, there are a couple reasons. One, there is a nervousness around more government involvement from the private sector. The whole idea of public-private partnerships or private-public partnerships get the private sector and the public sector nervous about who’s winning and who’s losing. In my opinion, thus can be a win-win relationship.

Secondly, a national infrastructure bank is often compared to a government-sponsored enterprise like Fannie Mae and Freddie Mac, which rehashes bad memories which it just not accurate. Lastly, it’s tough to get Republicans and Democrats to work together even on something so bipartisan as infrastructure. We have to put politics aside and do what’s best for the country.

How do you think we repair those relationships between the public and private sector and achieve bipartisanship over the next decade?

U would say we have to pick some things that we agree on together and have it actionable plan. Infrastructure’s one of those real possibilities. Others could be our country’s exports initiative, free trade or even visa reform. We should pick things that we know are bipartisan in nature then get to the table and figure it out. We should put our politics aside and just move forward. We have to make sure that we have the right regulatory framework, but it would be great if some of our regulation was a little more principles-based than rules-based, because something like Wall Street and finance is such a dynamic environment and you can’t write every rule down.

Is there anything outside of finance that’s influenced the way you approach business or investing?

I would say a couple of things. My high school and college years shaped me dramatically and my ambition to be a top student-athlete was always important. For me, I love playing competitive sports and was one of those “locker room jocks” that liked to be around the yelling and screaming. Maybe that is also why I thrived at a place like Salomon Brothers post college where that competitive environment and excitement my personality well. I think that when playing sports, you learn to deal with ups and downs very quickly and you learn that you can be all-everything one moment and then all of a sudden you’re eating humble pie the next. Wall Street is very similar and its Darwinian environment brings with it a new scorecard each and every day. I was prepared for that by being part of a sports team that had those ups and downs.

The second influence were some very key words of wisdom from Warren Buffett early on in my career. When he came in and rescued Salomon Brothers in the early 90s, he said something to our firm that has stayed with me through my years of running UBS and 32 Advisors, “if you don’t want to read it in the front page of the paper, then you probably shouldn’t do it.” That’s a good rule to live by. You kind of know right from wrong, and if you are making a decision on a client and/or transaction and unsure which way to go this approach has always served me well.

You talked about how you take a very conservative approach to investing. How should the average American think about investing?

I think a balanced approach is incredibly important. People should have an amount in hard assets such as property and real estate and another amount in cash because it’s important to have some real liquid savings for a rainy day. Then I think they should have some exposure in to fixed income such as municipals or corporate bonds, but more of a buy-and-hold scenario so you know you’re clipping a coupon. I also recommend some dollars to a combination of different type of risk equity where maybe part should be indexed equity so they have growth over time; whereas, the other part should be a little more risk, something like high-yield bonds or venture capital or private equity.

What traits do you think define successful people?

I have a few traits that are incredibly important to me: honest & ethical behavior, strong communication skills, hardworking, well-read, and passionate and a prudent risk taker. We live in the greatest country that’s incredibly dynamic with a lot of entrepreneurial spirit. Take advantage of that. Take advantage of educating yourself daily by reading and being curious. You’re around smart people all the time. Ask questions. Do things that make you smarter by the day.

What would you consider your greatest achievement?

Well, my greatest achievements without a doubt is my family I am incredibly proud of my wife, Carol, who works in development for Sandy Hook Promise (which focuses on gun violence prevention against children), and my two sons who have grown up to be caring, compassionate and respectful young adults.

What advice would you give someone looking to work on Wall Street?

You can’t make up for hard work. I am someone that no longer needs an alarm clock. I’m usually up at 5:15am each morning. That was from my days of trading at Solly where I always read a few daily papers and research before work and then had to beat my boss into the office. If needed I am someone who can burn both ends of the candle any given day and work off my adrenaline. I am always thinking and moving on something I’m excited about. I believe if your profession excites you and you’re ambitious and passionate about it, then you’re going likely work harder and smarter than your peers and have a real good possibility of a strong career.

The one thing I always tell people is to find that work-life balance. For me, while my kids were growing up, it was coaching. I loved coaching my kids and their friends in the community and being involved and watching their sports. I also enjoy my weekend hoop game that I have been playing for over 20 years (especially the competitiveness, trash talking and shutting down all work during those few hours). Recently, my work with President Obama and his administration has been an amazing experience. A little tip, find something outside of work that can get you excited and go do it, because it makes going back to work more enjoyable.

What role do you see China playing on the world stage over the coming decades?

We have to be watchful of China, respect China, work with China, and understand China. We have to do the same with other large countries around the globe whether in the Middle East, Africa, Latin America or Eastern Europe. Certainly, with China and the development of the Asian Infrastructure Investment Bank, they see an opportunity around the globe to invest in infrastructure and work heavily in places like Africa where there is rapid growth and in many ways the US is playing catch up.

What do you think the most important macro-investing theme will be over the next 20 years?

I think it’s going to be the paradigm shift of lower energy prices around the globe, both due to the proliferation of clean energy and consumer behavior due to climate change. It will have a huge impact on manufacturing and other growth opportunities.

What’s your view on the current monetary policy environment?

I’m nervous about asset inflation and staying in this low-interest rate environment for the foreseeable future. Although we are in a low-growth environment with little inflation, I am skeptical about whether keeping rates at zero are having any real economic benefit.

Do you think given what’s going on around the world with now China lowering rates, the ECB and the Bank of Japan continuing to do QE, do you think there’s some fear about the dollar becoming too strong?

There’s no question that we live in an environment where governments around the globe tout a “strong dollar” policy, but it is just rhetoric as truly everyone wants their currency to be comparatively low to enhance its own economy via tourism, exports and trade. Yes, I think that there will be nervousness if the US dollar strengthens too and its negative impact on growth especially in the manufacturing and export led sectors.

 

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