The high-profile arrival of Michael Dobson as chief executive of Schroders had an unfortunate consequence for David Salisbury – he was fired.
While Dobson was being feted as the man to turn around Schroders’ fortunes when he was appointed last October, former chief executive Salisbury slipped quietly out of the back door – after 27 years with the firm.
He has since moved back into fund management but has not chosen the obvious route of moving to a direct competitor of Schroders. Rather, he is trying to launch a new business in London.
Salisbury has joined US firm Dimensional Fund Advisors, based in Santa Monica, California, to drive its push into the UK institutional market.
Salisbury, who was educated at Trinity College, Oxford, joined Schroders as a research analyst in London in 1974. He transferred to New York two years later and was head of research by 1980.
Four years later he became chief executive of Schroder Capital Management International, building the business into the largest non-US fund manager of international equities for US pension funds. This is the period that he remembers most fondly from his career with the firm.
“The time that I enjoyed the most was building up the North American business. I joined in 1984 when there were six people in that unit and we had well under $1 billion and in 12 years we went to over $20 billion,” he recalls. “It was just huge fun. We had something that people in the US needed because they wanted to diversify internationally. We had some fantastic marketers in New York. We managed to marry up the best of British and American and now we are doing precisely the obverse.”
Salisbury became chief executive of Schroder Investment Management in 1998. Two years later, following the sale of the group’s investment banking business, he became head of Schroders plc. However, Schroders has been through difficult times in recent years and Dobson’s appointment was not a huge surprise to the outside world.
Despite being cut loose after so many years with Schroders, Salisbury has no harsh words for his former employers. “I have refused to comment on my departure but I have extremely happy memories. I enjoyed my time at Schroders enormously,” he says, though he admits it took some readjustment after spending his entire professional life at one firm. “When I first left, life seemed quite strange.”
He realized he was not ready for early retirement. “A little voice said to me: ‘When you’re 80 and your grandchildren ask you what you decided to do when you were reasonably financially secure, what will you tell them?’ I have an opportunity to follow my instincts and take more risk.”
That risk extends to his having a stake in the business but he feels confident of its success, particularly as Schroders originally lent Dimensional’s founders the seed money to start the business and Salisbury sat on the firm’s board for eight years.
Dimensional takes its inspiration from the work of two professors, Eugene Fama at the University of Chicago, its director of research, and Kenneth French of Dartmouth College. Fama and French have produced numerous influential works on investment and believe strongly in the efficiency of financial markets – that the prices of shares do generally reflect the view of investors as a whole and that outperforming markets is difficult. Higher returns come from taking higher risks and, according to Fama and French, smaller companies and highly rated value companies offer the best opportunities for returns.
Salisbury recognizes that a purely theoretical approach to investment may not be to everyone’s taste but says Dimensional has something to offer the market. “I don’t think people will ever be ready for ivory tower theories that are not practical,” he says. “People may be ready for a more engineered approach to investment. My role is to translate what otherwise might be seen as highbrow into easy to understand.”
