Our actions are most often dictated by our thoughts and beliefs. Our attitude is so important in determining the outcome of our life.
As a part of our series about business leaders who are shaking things up in their industry, I had the pleasure of interviewing Michael Skillman.
Michael Skillman is the CEO of Faith Investor Services, an ETF issuer solely dedicated to bringing to market faith-based investment products that adhere to specific religious values. Previously, Skillman served as CEO of Cadence Capital Management, and has more than 30 years of asset management experience.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
Thanks for speaking with me today. When I got out of college, I thought that I wanted to be a corporate CFO and was hired into a GE-style rotational financial analyst training role at an aerospace company. I quickly learned that engineers were always going to run an aerospace company, and that finance was really viewed as a necessary evil. If I wanted to be in the mainstream of a company, I needed to get a job in financial services. I took a job at Pacific Life Insurance Company as a financial analyst, and, through that experience, I was introduced to money management. And as you may know, PIMCO, the bond firm, was started by three Pacific Life employees. After nearly 15 years of success, the insurance company decided to branch out into offering equities. I was fortunate to get involved in the group that started the equity management set of boutiques, and that launched my career into the investment management business.
In my original role as an analyst, I gained valuable understanding of the markets that paved the way for me to transition to raising capital from institutional investors. I was given the responsibility of focusing on institutions in the western United States to raise money for the newly minted equity investment firms, which included my old firm Cadence Capital, Parametric, and NFJ Investment Group. I ultimately gravitated to working mostly with Cadence Capital, and later was offered a role at Cadence that brought me to Boston.
At Cadence, we managed equities for many of the largest institutions in the US, and had a 30-year history of generating good investment results and success for our clients. As the years went on, the business dramatically changed, and the role for smaller boutiques was being taken over by the behemoth investment management firms. After a long, successful run, we made the decision to return capital to our investors at the end of 2020. An old colleague at Cadence, Joe Valdman, shared an idea with me to start a faith-based ETF platform. We had built and managed exchange-traded funds, and thought that there was a growing demand in the space for faith-based investing. This led to the launch of Faith Investor services earlier this year.
Can you tell our readers what it is about the work you’re doing that’s disruptive?
Our new company, Faith Investor Services, is a faith-based ETF platform, and we’re doing a few things that are different. One, we’re catering to the growing interest of investors to align their values with how they allocate their capital in a vehicle that’s easily accessible to investors. And second, we’re using digital marketing as our primary means of distribution. The days of flooding the market with salespeople and large travel and entertainment budgets are over. It’s an expensive business model, and COVID really taught us the limitations of that model, when you can’t see people face-to-face. We view our use of technology, being small and nimble, as a strength that allows us to reach a broader audience. This combination is what we view as disruptive and cutting-edge about our distribution strategy. Our first offering is a Catholic-values ETF in partnership with the Knights of Columbus that strictly adheres to the investment principles of the Catholic faith.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
You know, there’s one example that’s stuck with me from the early days of my career. I was 24 or 25 years old, and I was transitioning from being an internal analyst to spending time in the marketplace, raising money from institutions. Early on, I secured a meeting with the chief financial officer of a large, publicly traded company, Potlatch. At that time, they were based in San Francisco. At that age, I thought I knew a lot more than I did. I was so happy that I had secured this meeting with this important executive. However, I realized shortly into the meeting that I was woefully underprepared. And he let me know it, saying, “Young man, don’t come into my office and waste my time.” Understandably, he wanted someone he spent time with to be prepared and to understand his company’s business needs. That experience left a lasting impression on me. I vowed never again to be unprepared for an important opportunity. While funny in hindsight, that lesson has served me well throughout my career.
We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?
So, I’ve been fortunate to have many mentors throughout my career. The most important, though, was Dave Breed. He was the original founder of my old firm, Cadence Capital. Dave is an extremely intelligent man and a great investor, but he had an even greater sense of the business of money management. He taught me many valuable lessons and had a lot of sayings that we affectionately named “Breedisms.” I think the best one of all time that really had a lasting impact on my life and my career was: “Do things you like, in places you like, with people you like.” If you can check all those boxes, not only are you going to be happy, but you’re going to have a much greater chance of success in your career. I’ve really tried to let those principles guide me throughout my life.
In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is a positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?
I think, quite simply, that positive disruption involves doing something different, better, faster, cheaper, and seeing commercial success as a result. So, I think it’s kind of easy to talk about positive disruption, but you know there’s an old saying that “sometimes you’re the bug, and sometimes you’re the windshield.” Meaning the outcome depends on what side of the issue you’re on. Being on the losing side of disruption can have unintended outcomes.
For example, many would argue that the creation of the 401(k) plan empowered investors to save for retirement, become aware of investing, and, importantly, allowed for portability in the job market, as people tended to move increasingly from job to job. However, this disruption also caused the decline of the defined benefit pension plan in America. For those readers that don’t remember, the pension was a promise to pay you a guaranteed amount of money in retirement for life. And generally, the longer you were at the company, the more rewarding that benefit was. What we’re starting to see today is, really, with most people having only a 401(k), they are very unprepared for retirement. They just don’t have enough money with their 401(k) investments to live the same kind of lifestyle through retirement. Frankly, it’s one of the greatest ticking time bombs that nobody is addressing today. This change had a monumental impact on the entire investment management industry and led to a massive consolidation in the investment industry. So, you need to be aware of disruptive trends that can become headwinds. Then, you can put yourself in the best possible position to either insulate your business or take an alternative course that can help you go on the offensive.
Can you share 3 of the best words of advice you’ve gotten along your journey? Please give a story or example for each.
Pursuing career interests in something you enjoy, and very importantly, with people you like and trust, is still number one. Early in my career, I had the chance to work for a New York-based investment firm with a “famous” investor. But I really didn’t enjoy what I was doing, and the culture — not that there weren’t good people — but the culture just wasn’t a fit for me. Fortunately, that guiding principle allowed me to have the confidence to nip it in the bud and leave after only six months, which is not easy to do as a young person in your career, to leave something and feel like you’re quitting. It’s important to have the courage of your convictions.
Another great maxim of business advice that was imparted on me was to recognize that you’re doing one of three things in an investment organization. You’re either creating revenue, you’re helping to reduce expenses, or you’re making someone else’s life easier. And if you’re not doing one of those three things, stop! It’s kind of funny to say it out loud, but that advice has really helped me along my career as a framework for how I make decisions, how I implement my management style, and how I advise others on how they’re thinking about their role and decisions they make, whether that’s pursuing new product lines, client types, acquisitions, or setting strategy.
And the final principle probably comes from many different people and things I’ve read along the way. If you make a mistake, admit it. It’s not the mistakes or problems you encounter, but how you respond to them. For example, in the depths of the global financial crisis, it wasn’t necessarily that we made a mistake, but we had executed a management buyout two years earlier. That transaction involved borrowing 30 million dollars from several banks and an even larger amount from a private equity investor. When the markets were cut in half, so were our revenues. But guess what, our expenses weren’t. We were in a very tough position there in the later stages of 2008. But what I learned from that guiding principle is just to be honest. Be honest with your employees, with your investors, and with your lenders. We had to make painful headcount reductions, but thankfully, we were able to renegotiate with our bankers to keep the firm alive. So again, I think how you respond to problems and/or mistakes, admitting them or just being transparent, is probably the best piece of advice I’ve ever gotten.
We are sure you aren’t done. How are you going to shake things up next?
I’m passionate, on a personal level, with what we’re doing at FIS, and we’ve only just gotten started. We have an incredible first partner with the Knights of Columbus; they’re a rock-solid organization. We’re fortunate they’ve chosen to work with us to launch ETFs. We plan to launch our second fund by the end of the year, with a different partner, and we’re laying the groundwork to work with others as we branch out, to offer not only Catholic-values investments, but other faith-based investments for various other denominations and people of faith as we move forward. Our digital marketing efforts have just gotten started, and we’re getting a great response right out of the gate, so I’m also excited to shake things up with how we’re expanding our use of social media and all things digital.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
Sure. You know, there’s a book early on that had a tremendous impact on my life, and it’s an old one. In fact, it goes back to the ’30s. It’s Napoleon Hill’s “Think and Grow Rich.” And while the title sounds a bit like an infomercial, the principles laid out in it are very impactful. The short version is that your thoughts and attitudes determine the outcomes in life. Don’t play the victim and stay positive in your life. Those tenets have had an important impact on my life and my career. I find, at times of difficulty, you need to go back to those tenets and be reminded of them sometimes.
Faith is important to my personal life, and so I also have several podcasts that keep me centered on my walk with God. Finally, there are two important podcasts that keep me connected with current events. The first is Bill O’Reilly’s “No Spin News.” I really like Bill’s wit, his insights. And the second podcast is also important to me. It’s by Dennis Prager; he does a weekly fireside chat. Dennis also publishes daily and he’s nationally syndicated on the radio. He’s very intelligent, knows his history, and is a man of deep faith.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Henry Ford has a famous quote: “Whether you think you can or you think you cannot, you’re always right.” Our actions are most often dictated by our thoughts and beliefs. Our attitude is so important in determining the outcome of our life. This has been one of the most empowering concepts in my experience.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
When we launched Faith Investor Services, the idea was that we could empower investors to make a positive difference in the world with how they allocate their capital. Now, I’m a little bit humbled to call it a movement, but I think that would be something that we aspire to: to be able to impart upon investors the idea that, by allocating money in line with their faith-oriented beliefs, they can make a difference in how companies respond, and therefore can make a difference in the world. So that really is our aspiration and one of our main goals, as to why we started Faith Investor Services to begin with.
How can our readers follow you online?
Readers can feel welcome to connect with me on LinkedIn and Twitter, or follow Faith Investor Services on Twitter, LinkedIn, and Facebook. They can also learn more about what we’re doing at faithinvestorservices.com.
This was very inspiring. Thank you so much for joining us!
Thank you for having me!