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Exclusive Q&A: Tim Dolan, CIO Of GP Brinson Investments

by trusted insight posted 6years ago 7623 views
Family Office
Tim Dolan is the chief investment officer at GP Brinson Investments, which manages the family wealth of Gary Brinson and the assets of the Brinson Foundation. Dolan holds a bachelor of arts in history and an MBA from Cornell University. Prior to joining Brinson, Dolan spent 13 years at Goldman Sachs.

Dolan was recently named to Trusted Insight’s ranked list of the Top 30 Chief Investment Officers With Ivy League Education – Part 2. He graciously spoke with Trusted Insight on November 23. The following interview has been edited and condensed for clarity. 

Trusted Insight: You earned an undergraduate and MBA degree from Cornell. After spending that many years at Cornell, how did you like it? 

Tim Dolan: Quite a bit. It was a different undergrad and graduate school experience as an undergrad, I was the first person from my family to ever go to college. So going to an institution like Cornell where “any person can find instruction in any study” was a real eye-opening experience for me. Coming from a humble background, it was valuable to attend an institution large enough to stretch me, to open my eyes and mind to the world. 

Furthermore, Cornell brought a diverse group people together in one idyllic campus. I learned quite a bit from my fellow students. I was fortunate to meet a terrific group of friends in college who I still count as dear and valued friends today. Cornell and the relationships I developed as an undergrad expanded my horizons then and now. I learned that I didn’t know what I didn’t know, and as those friends enjoy pointing out, I am still learning what I don’t know.  

In graduate school, it was very different. I went there for a specific reason: to invest my time to learn and grow as a professional. I had a more defined sense for what I needed to learn, was hungry to learn and was more engaged academically. Unlike Cornell University, The Johnson School is relatively small, which suited me well. At the graduate level, I was the beneficiary of being a student in a familiar and beautiful campus environment and getting very specific instruction from some first-class professors like Harold Bierman and Joe Thomas, who taught me lessons and skills I’m still using today.  By the time I went to graduate school, I had a better appreciation for what a special place Cornell was, and I was determined to get the most of out the experience. I think I was successful in that endeavor.

So the two experiences were very different, although they were both at the same university. In undergraduate school my “education” was more personal, I learned that I didn’t know what I didn’t know. By the time I went to graduate school, my educational vacuums were readily apparent to me, so my graduate education helped me fill that vacuum and develop a professional skill set. I benefit from both experiences today.

TI: Your undergraduate degree is in history. How did it lead you into the world of investment?

TD: Well, being the first person in my family to go to college, I didn’t really have much guidance as an undergrad; I didn’t know what I didn’t know. History allowed me to pursue a personal passion I knew I’d enjoy. I had no idea I’d ever be in the investment business. 

That said, the study of investments includes history. If you think about it, a lot of what we do in the investment industry is historical analysis. As you’ve heard often I am sure, Mark Twain said, “history doesn't repeat itself, but it rhymes.” Investment analysis is often the study of what took place in the past, understanding that history and then applying quantitative and qualitative analysis to improve decisions about what may happen in the future. So I think for the investment business, having an interest in and a sense of history is invaluable.

TI: Do you think your experience at Cornell played an important role for your success at your career, and would you still be at where you are if you attended a different school?

TD: If I’ve had any success, I am indebted to Cornell, both undergrad and grad. How much, I don’t know. What I do know is that my Cornell experiences have been vital to my growth as an individual and professional. For someone who came from a humble background, the opportunity to attend an institution like Cornell at two inflective points in my life was irreplaceable. So my Cornell experience was transformative, at least for me.

I grew up in a blue-collar community, and I didn’t know much beyond my home town of Cincinnati. I had a very loving family and was content. So when I went to Cornell, I met a diverse group of individuals who helped me expand my horizons. I played football and was fortunate to see all the Ivy League colleges. I’d never been to the part of the country before, so the road trips were a particular joy for me. I played with and against many of the same guys for four years. My friends, who are still my friends, helped teach me who I was and who I could be, and I’m grateful for that. It was a way for me to explore, see places and meet people that I wouldn’t have otherwise. My family made the drive to Ithaca for home games, so in many ways, my undergraduate education was a family affair. It was a lot of fun for all of us.

When I went to graduate school, the only “bond” I knew was 007. The Johnson School was a place where a liberal arts undergrad could develop a well-rounded graduate academic foundation with a focus on finance. It opened doors for me that I didn’t even know existed beforehand, one of which was to Goldman Sachs. That was a good door.

Looking back on it, I am also grateful for the many individuals in the Cornell community who helped me along my way. At one time or another, administrators, professors and coaches all lent me a hand when I needed it. And I needed it. If they hadn’t helped when they did, I don’t know where I’d be today.  

TI: How did the experience at Cornell shape your value/character as an institutional investor? 

TD: In graduate school, some of my great professors were also great people. They focused on the fundamentals of quantitative and qualitative right and wrong. That dynamic was so aligned with what I found when I joined Goldman Sachs. The business principles at Goldman Sachs were consistent with the education I received at the graduate school from those great professors. They helped support and develop a formative and fundamental belief within me that if an individual works to develop the quantitative and qualitative skill set and does good work for the right reasons, success would find them.  At Goldman Sachs we described this as being “long term greedy.” Once again, those really great professors I had in graduate school were people that I could respect not just for their intellect, but also for who they were, how they presented themselves, and represented the school. I thought wow, that’s aspirational.  

TI: What is the most important lesson or most interesting experience you had at Cornell? 

TD: When I started graduate school, I took my first statistics test. I was a history major, and there were not a lot of statistics in my study of history. I did not do very well at all.  

The intro to statistics professor at that time was Joe Thomas, and he wrote on my test “See me about this.” I went to see him, and he really called me on the carpet and said, “Look, you know this is important. You should focus in this class, you can do better than this, and I’ll help you. I expect to see you again.” 

That was the point where I felt confident that I could apply myself to something, that I could learn and improve as a student and a person, and I had somebody who was going to help me do just that, who cared to make a difference and would hold me accountable. I thought that was empowering and inspiring in its own way. Importantly, I had and have a tremendous amount of respect for Joe Thomas. I didn’t want to disappoint him. It was a very important moment for me, and Professor Thomas was right – statistical analysis is a foundation of what I do today.

TI: You’ve worked at Goldman Sachs for 13 years before you joined the GP Brinson Investments. What led to the career shift?

TD: I had the unique opportunity to learn from a great investor, Gary Brinson, and to, once again, grow as a person and as an investor. I was 40-years-old and, once again, I knew what I didn’t know; I had a lot to learn. I knew Gary was a great teacher, so he could help me learn. It worked out really well. 

TI: How’s your experience working with Mr. Brinson? 

TD: Gary is a great investor, and he’s also a very talented teacher. He has taught me, as I said, quite a bit. More than he maybe thought he was going to teach me, I suspect. 

Investing is an exciting business because it is so dynamic, but the fundamentals are still the fundamentals. There is no alchemy or pixie dust. Gary appreciates and enjoys the dynamism of the business, and his resident knowledge of investment fundamentals never ceases to amaze me. There’s always the opportunity to learn and, once again, it’s invaluable to me that I work with a person who is aligned with and more than capable of helping me do my best to be the best investor I can be.

TI: What are some important lessons that he’s taught you?

TD: Similar to what Joe Thomas taught me, to really do the hard work and commit 110% to do my best to develop my intrinsic skill set. Gary holds the bar high. I like that.  

What we try to do here is simply do everything as well as it can be done, absent that the best we can do it. You know, at the end of the day, that’s really all you can ask of yourself. 

TI: As chief investment officer at GP Brinson Investment, you manage the investments for both the Brinson family and the Brinson Foundation. Because of the distinct nature of family office and foundation, I would assume the investment approaches to be very different. Would you mind to elaborate?

TD: The Brinson Foundation has a federally mandated payout ratio, so its portfolio is sensitive to that fact, which means it exists in a moderate risk habitat. Gary and the family don’t have that a mandated payout ratio and are therefore unencumbered and can seek, and hopefully exploit, what we characterize as lumpy and discontinuous opportunities. 

TI: How about your personal asset allocation strategies? In today’s market environment, which asset class is your favorite? 

TD: It’s hard to find a favorite today. Given the measure of global central bank intervention, particularly in government bond and agency mortgage markets, it’s difficult to find attractive opportunities. Today’s environment of depressed interest rates and compressed risk premiums is a challenging starting point for prospective returns for almost all asset classes.

TI: Today’s market conditions are quite tough. What is your outlook for global growth headed into 2016?

TD: In terms of global growth, it has has been subdued since the Great Recession. Despite the aforementioned central bank intervention, it’s very hard to see what unfolds prospectively. Once again, we have significant central bank intervention in all of the developed markets and now in China as well. 

That said, global growth will ultimately be driven by the same factors that have contributed to economic growth throughout time: individual drive, ingenuity and hard work in environments governed by the rule of law.  

TI: What’s the #1 lesson you’ve learned during your career as an institutional investor?

TD: Always work very hard to continue to develop your skill set. Always apply that skill set in the best interests of your client. Everything else tends to take care of itself.

TI: Is there anything I failed to ask you that I should know about you or your investment philosophy?

TD: There is a crucial distinction between being in the investment business and being in the business of investing. I count myself extraordinarily fortunate that I am in the former, and Gary Brinson makes that possible. 

We are in the investment business; that’s what we do. We do our analysis, we invest and judge ourselves by the quality of our work and decisions and their resultant outcomes, which is the investment return. Over time, this process serves us well, but not all the time or necessarily when we want it to. 

Likewise, I make mistakes. I am in an environment where I can admit them and learn from them. If we were in the business of investing, our investment business model would be challenged because business risk would govern investment risk. Although it is almost always lonely and often uncomfortable, I like being in the investment business rather than the business of investing, because investing is fascinating and dynamic. Our business model affords us the opportunity to take advantage of lumpy and discontinuous opportunities when they present themselves, which is often when business risk is most extreme.

To learn more about the top-tier institutional investors, check out Trusted Insight's list of Top 30 Ivy League Graduate Chief Investment Officers - Part 2.