Newspaper icon
The latest issue of Financial Standard now available as an e-newspaper
READ NOW
Featured Profile: Brett Cairns
Calculated risk taker
Magellan Financial Group chief executive Brett Cairns hasn't traditionally been one for the limelight. Here, he shares his journey to now and the risks he's taken along the way.

Magellan has captured column inches right from its start in 2007, but its current chief executive Brett Cairns has largely stayed out of the headlines. It took him a little longer than some of his colleagues to enter funds management however, having first navigated a brief career in chemical engineering and a longer one in investment banking.

An interesting shift, but not unusual for the Cairns family. Cairns' younger brother Troy also made the jump from science to investment banking to funds management and is now a portfolio manager at Aussie equities boutique Quest Asset Partners.

I've got a range of interests. For me, the key to this is interest... I am not going to do something that I am bored by.
Growing up, his mother worked as a hairdresser and father as an accountant, who later became the chief financial officer of a large fabric importing business.

"It's partially where I get some of the finance interest from... a lot of the import required currency hedging. So he would talk a little bit about that in the early days," Cairns says.

Cairns attended Birrong Boys High, where math and science were particular areas of interest, and he followed through on that with an undergraduate degree in chemical engineering (which he finished with first class honours) at Sydney University, followed by a post doctorate in the subject.

"I enjoyed chemical engineering a great deal and got a lot out of it...But as I worked my way through it, [I] came to the conclusion that [I] probably didn't want to work in the industry, because if I was ever going to do something in that space it was going to be more academic," he says.

"I always had an interest in finance...It's not uncommon for engineers or others, particularly [of] quantitative background, to find a way into finance."

While studying, Cairns also enjoyed swimming and then water polo - the sport would eventually lead him to Magellan.

But first, Cairns commenced his career in financial services at Citibank in the early 1990s, working in its market risk management area while doing a masters of business administration. While there, he was headhunted to join Credit Suisse, which at the time was focusing on derivatives. Finally, Cairns rose to head Merrill Lynch's debt capital markets in Australia during an eight-year stint before joining Babock & Brown.

His introduction to Magellan came via its co-founder Chris Mackay. The two met as teenagers while playing water polo, and when Mackay and Hamish Douglass were working together at Schroders, Cairns met the latter as well.

Cairns joined the Magellan board in 2007 as a non-executive director and, when Mackay stepped down as chair [he set up a new funds management business, MFF] in 2013, Cairns moved first into a non-executive chair and then an executive chair role.

Five years into the chairmanship, Cairns and then chief executive Douglass swapped roles so Douglass could focus on investments.

The duo's public personas are in sharp contrast to each other. Both are exacting and detail oriented but Douglass comes across as forthright and aggressive (for example, at Magellan's annual roadshows) while Cairns is mild mannered.

"We both do push along things. I do it a bit differently - we've both got different styles. Hamish has had to adapt over the years...since Magellan first started because he was at the front of, particularly the investment side of things, explaining and sort of arguing the cases, and the investment process," Cairns says.

In that time, Magellan has taken some big bets, including listing its funds as ETFs which until then were largely limited to passive strategies, and which involved working out a new portfolio disclosure regime with ASIC and the ASX to protect Magellan's investment ideas.

It recently revealed a new suite of lower-cost funds, and has been working on a retirement income product. As this profile went to print, the firm invested about $150 million for a 40% stake (but 4.99% voting interest) in a new investment bank staffed by industry heavyweights.

On the flip side, Cairns has ruled out going into unlisted assets or looking at a fixed income house in past interviews. Magellan's funds are long-only and it has never, in its 13-year history, dropped fees on its retail funds.

To an outsider, the company can seem risk averse and risk tolerant at the same time.

"It's a throwaway line I pinched from [late baseball legend] Yogi Berra, you don't want to make the wrong mistake. What he means by that is, you don't want to do something that can put you in peril, blow you up essentially," Cairns says when asked how he thinks about risk taking.

"The active ETF, while we spent time and money and effort on that, it wouldn't have been the end.

"We don't want to go and gear ourselves massively to go and take a big punt on something."

The firm now employs about 130 staff. When it comes to hiring, Cairns says it wants people who are dynamic, ready to roll up their sleeves and not looking for a structured environment.

"We want people who think and act like business owners rather than approaching their job as hired people who are there to just clip the coupon. One of the terms we use is "rent seekers"," he says.

"We are pretty diligent. I'm trying to keep the bureaucracy out of what we're doing."

For leading the company, Cairns was paid $1.5 million in FY20, not including variable remuneration of $772,500, which he was eligible for but waived.

He owned 1.1 million shares in MFG at July 28, which would have been worth about $65 million at time of writing. He also holds units in many Magellan-owned funds.

How he invests hits the news sometimes, including a $7.5 million purchase of a sub-penthouse in Sydney's The Rocks, reported by
Domain in 2017.

"I've invested my own money for some time as well...So I've got a range of stocks and I've got to be a little careful in that because obviously conflicts start to creep in. So a lot of what I have been doing recently is back into the funds," he explains.

He also invests in some unlisted companies, within and outside financial services. One example is a startup called HealthMatch, which connects patients with drug trials. The investment was via venture capital firm Tempus Partners, at which he serves as a non-executive director.

In his spare time, he still likes to swim and describes himself as a 'pretty ordinary golfer' who is starting to focus on getting better.

He has three children, including twins who are studying commerce degrees - but there was no pressure on them to go down the finance route, he says.

"No not at all...I mean I started in engineering and you don't really know where you going to end up. They've got a good education and a few options up their sleeves," Cairns says.

But what of his own future?

"I am very keen to continue doing this. And then we will see where we collectively can go," he says.

"I've got a range of interests. For me, the key to this is interest...I am not going to do something that I am bored by."

Link to something w0TsZq6J