Interview by Oliver Kirkbright, General Manager and Editor, The Finance Hive
Interviewee: James Switzer, Global Head of Fixed Income, AllianceBernstein
As James Switzer sits down with me, most of Europe has some element of restrictions in place to control COVID-19, news is breaking of a faster spreading, mutated strain in the UK and cases in the US are hitting record numbers on a daily basis. This has made the prospect of returning to full trading floors seem just as distant as it was in summer, with senior leaders accepting that remote working is the new normal going forward.
While it is without doubt that the technology behind trading desks has more than delivered for remote working, the long-term human impact on trading teams has taken on increased importance. To adapt to remote working and maintain trading excellence, James has transformed how he communicates, supports and develops his centralised trading desk of 24 traders, including how he is maintaining the proud culture of AllianceBernstein while being away from the office.
James’ New York based trading desk works in conjunction with Portfolio Management teams based in London and Hong Kong spanning several asset classes with a desk underpinned by best-in-class technology. We asked James to share his experience and advice for buy side heads leading their trading desks into a new era of remote trading.
Thank you for taking the time to talk to us Jim! What steps have you taken to best replicate communication and leadership from the trading floor in our new world of remote trading?
We have really embraced Zoom and are fluent across a number of other platforms which are commonly used. We have recognised that there has to be a form of over-communication, you have to err on the side of talking too much and over-communicating in this current environment if you want to retain the quality of communication you had pre-COVID.
We use several Zoom channels across different asset classes and encourage management, traders, analysts and portfolio managers to treat it like a squat box. So if somebody wants to know what is going on in securitized, investment grade or municipal trading for example, they have the Zoom link and can jump into the particular channel at any point throughout the day. This gives everyone who would have been on the trading floor the chance to hear and tap into ongoing, back and forth communication between our trading desk and the investment team about what is happening in markets and how they are navigating them. To ensure this is a success, we guarantee that there is always at least one Portfolio Manager and an assigned ‘trader of the day’ on each channel. This means that if a trader has a question they can tap into this ‘squat box’ and get an immediate answer.
We also run regular, more formal meetings which are based around different parts of the market and asset classes. These are ran by key individuals and management working across these areas, but we also invite the wider trading and investment teams so again they can dial in and tap into the knowledge we share during these meetings. We have found that truly embracing Zoom, creating specific channels with dedicated personnel running them, and opening up all meetings to the trading desk has enabled our people to keep their finger on the pulse as to what is going on.
Very often communication is overheard on the trading desk and this information gets disseminated through the floor; we don’t have this now and it has proved to be a major disadvantage to remote working. The channels and chats we have created go above and beyond replicating this.
Alongside the video communications through Zoom, we have enhanced our use of Symphony by designing Trader/PM chats which are created for high level Q&A’s and conversations. Our senior management team can log into these at any point to get a feel for what the market is behaving like and how the investment desk is reacting. This now acts as a more frequently used communication tool for us versus email.
You have to err on the side of talking too much and over-communicating in this current environment if you want to retain the quality of communication you had pre-COVID."
We use several Zoom channels and encourage people to treat it like a squat box. If somebody wants to know what is going on in securitized, investment grade or municipal trading for example, they can jump into that channel at any point."
AllianceBernstein have recently gone through a huge relocation to Nashville, so you had already began some elements of remote management between New York and Tennessee. How did this benefit you when COVID-19 hit?
Fortunately for us this was a major advantage. Before COVID some of our key teams including Legal, Business Development, Product Management, Marketing and IT all relocated to Nashville while our trading desk remained in New York. In particular we had to work very closely with our IT teams during this transition and this presented key challenges that other asset managers have since faced throughout the pandemic.
During the move to Nashville, we initially went through a period that was incredibly disruptive which significantly impacted our projects, what was being accomplished and our timelines. On the back of this, we stepped in to re-think how we should communicate and work together to push key projects forward.
On the back of reinventing our communication strategy we saw productivity and efficiencies start to rise again. Rather than making communication work as you go along, it is essential that you step back, re-think and build a new strategy for your communications when working remotely to make sure you are maintaining excellence and reducing silos. Now, you would never know we had these issues or that we did it any other way and it is absolutely incredible as to how we engage.
Zoom and Symphony are a key part of our DNA and decision-making process; being able to iron out these key challenges pre-COVID and build a dedicated communication plan has been a major benefit for us.
It is essential that you step back, re-think and build a new strategy for your communications when working remotely to make sure you are maintaining excellence and reducing silos."
What impact has the transition to home had on your recruitment and training programmes and how have you adapted to this to ensure the development of your trading desk does not suffer?
At the beginning of the pandemic it was very difficult to integrate new and junior staff. For example, when we turned on Zoom I would see 20 screens and 15 of those were stagnant or had cameras turned off. We found that it was typically more junior people who did not feel comfortable speaking and turning on cameras because it was intimidating. It is simple but absolutely imperative to have everyone turn their cameras on in meetings so you can get to know people and build confidence on both sides, especially with associates and interns whom you no longer have the chance to support in the office like you used to.
Our Summer Intern Programme, which feeds into our Rotational Associate Programme (a two-year programme where each candidate does four rotations through four different asset classes), were particularly affected by COVID. Unfortunately, there is no magic recipe to truly replicate the benefits junior staff would get on the trading floor, so as a leader you really need to take a hands-on type of approach to get these individuals embedded into your business.
To do this, we ensure any work interns and associates get is heavily project based. We also pair these individuals with leaders in the business who are very organised and are especially effective at communicating through Zoom and Symphony. To make your recruitment and training programmes a real success remotely, you need to ensure wherever you place new candidates there is a real need, there are projects they can work on, and you can hold them accountable to these projects.
In addition, you have to be able to hold your management team member accountable to ensure that the experience for interns and associates is positive, and that these individuals will come out the other side of any remote training programmes better for it which will lead to better results for you as a business. This goes hand in hand with screens on for meetings, faces to names on Zoom, and getting these candidates feeling comfortable and talking in public.
When I think about integration into the business and culture, it is essential to put a face to the name and have them participating in meetings. We now have meetings that are run by junior staff and we rotate through who is going to run them on a daily basis. It puts less experienced staff in a slightly uncomfortable position which is good, plus it is a way for us to get to know them, hear them and talk to them. As leader in this situation, you really do need to bend over backwards and it must become part of your behaviour to reach out to people on a consistent basis whom you don’t usually talk to, set up a meeting, and have one-on-one discussions to continue to build relationships.
It is simple but absolutely imperative to have everyone turn their cameras on in meetings so you can get to know people and build confidence on both sides."
We ensure any work interns and associates get is heavily project based. We also pair these individuals with leaders in the business who are very organised and are especially effective at communicating through Zoom and Symphony."
How have you replicated the ‘non-formal’ development opportunities that you have when working on a trading floor?
We are big believers in ‘agile development’, which means that development does not come from empowering senior management to give controlling and commanding tasks to inexperienced traders.
Here at AllianceBernstein we empower team members, we entice them to make the decisions and give them projects to own which they need to push across the finishing line themselves. In practicing agile development, we have found that it is much easier to create developmental opportunities for the more junior staff on the team. Some of our most prided projects, such as our ALFA tool, internal OMS and EMS, Autobidder and algo price engines, have all been built by small teams of different people, and every single one has had a junior person included on the team.
This is embedded in the culture we have created; everybody feels like they are empowered and we are all pulling in the same direction. Even if we hire somebody with zero experience in portfolio management and trading, we still see this as offering huge value to us as they are not anchored in the way we do things and bring in a fresh perspective. We ask them to learn our systems and understand what we are doing here, but beyond that we want them to feel comfortable to ask why, to push back and say, ‘there might be an easier way to do this’.
We talk about diversity in a true sense, but you should also think about diversity of background; people coming from different backgrounds, different jobs, and different parts of the country to come together as one. These are the kind of people we look for who are unanchored, who will come in to look at how we do things and question why. This helps us think of ways we can strengthen our process, create innovation and create efficiencies.
Some of our most prided projects, such as our ALFA tool, internal OMS and EMS, Autobidder and algo price engines, have all been built by small teams of different people, and every single one has had a junior person included on the team."
You should also think about diversity of background; people coming from different jobs, and different parts of the country to come together as one."
Remote working has transformed how trading floors operate and communicate. While this still presents a huge challenge, what positive changes in the way you work will you will ensure remains in place once you return to the trading floor?
For us, this has completely levelled the playing field across geographies and asset classes which was previously dominated by New York, and the communication is now much better. Whether it is looking at our offices in Hong Kong, London and New York or looking at our performance across different asset classes, we have become much more streamlined, efficient, and changed how we think about things.
Too often, ideas and decisions that came out of New York did not get disseminated efficiently to London and Hong Kong. COVID brought equality between investment team regions and it has allowed both London and Hong Kong to become much more integrated into the decision-making tree here. On the other side of the vaccine and when we are back in the office, we must not fall back into the bad habits of people making decisions in silos. I think any kind of new normal when we are back will be based on a percentage of the teams getting back to the trading floor, so with people not in the office we will still be heavily reliant on video communications, which to me is a big positive.
Secondly, we have really embraced technology and the electronification of our trading business. We know that when you have something fully electronic there is a lot less that can go wrong versus when you run many manual processes. We were already pushing the electronification of our fixed income desk, but throughout COVID we have rolled out more tools which enables us to connect with the market electronically. With people working on manual trades while at home a lot more can go wrong, so for us it is essential that we continue to grow our electronic trading capabilities. Coming out of COVID, we are going to put our foot on the gas pedal to push electronification forward to get as much of our workflow streamlined and automated.
In a world where we are racing to zero and clients are demanding to pay less, we are striving to become more systematic. At AllianceBernstein this means mass manufacturing at a lower cost. The technology we are building helps with this, but there is also a behavioural side in which we recognise that we need to be able to build portfolios in a faster, more efficient, and cheaper manner. We were already looking at this pre-COVID and have embraced this further since March, and now we are only going to think about how we can push the boundaries even further. If you can fund portfolios faster, then you have the flexibility to offer more customised solutions and meet the demands of the market, and you can generate alpha at speed so we are constantly thinking about how we can improve organisational efficiencies across the investment life-cycle. COVID has made us sharper and more focused, and understand what really matters and what does not, ensuring we are prioritising and leaning into these areas that really matter.
Whether it is looking at our offices in Hong Kong, London and New York or looking at our performance across different asset classes, we have become much more streamlined, efficient, and changed how we think about things."
In a world where we are racing to zero and clients are demanding to pay less, we are striving to become more systematic. At AllianceBernstein this means mass manufacturing at a lower cost. We recognise that we need to be able to build portfolios in a faster, more efficient, and cheaper manner."