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I Don’t Want to Be a
Role Model

Angelien Kemna, the reluctant face of an industry.

Reported by Elizabeth Pfeuti
Illustration by Jody Hewgill

Angelien Kemna does not want you to look up to her.

Yes, she is the woman credited with keeping a steady hand on the world’s second largest pension as the worst crisis in a generation hit global markets—but don’t ask her to be anyone’s poster child.

“I feel extremely uncomfortable that people sometimes see me as a role model,” says the former CIO, now chief financial risk officer of APG. “I don’t want to be that and I don’t feel the need to be that, either.”

One of the most powerful people—no “powerful woman” label need qualify that statement—in finance is visibly uncomfortable when the subject of role models is broached. She hesitates and searches for how to phrase her answer, scanning the walls of her office that are adorned with everything that makes her, she says. There is some Chinese calligraphy (a gift from APG’s Hong Kong office when she stepped down as CIO last year), a basketball (a gift from APG’s New York City office on the same occasion), a collection of framed certificates and other formal documents relating to her academic career and commercial life before APG. There is also a seven-by-ten foot climbing wall.

“I never look up to people,” she manages. “I don’t know why...”

In fact, the recipient of CIO Europe’s inaugural Lifetime Achievement Award does look up to—or rather feels profound respect for—people who have the same approach to things as her.

“I feel strongly about people who share the philosophy that it’s other people’s money they are dealing with,” she says finally. “I invest every euro like it belongs to my mother-in-law—and I always have.”

It is this philosophy that brought her—and APG—to where they find themselves today. And it could all have been very different.

It was 2008. Kemna and her husband had moved to the US following her resignation as CIO and CEO of ING Investment Management in Europe. She was looking into the expansion of renewable energy, among other interests, all of which focussed heavily on giving something back to society. One of these interests was a part-time professorship at Erasmus University Rotterdam, which meant she spent a lot of time crossing the Atlantic.

“When the crisis really hit, we saw how pensioners in Atlanta were truly affected,” she says, her tone betraying the emotion she still feels about the situation. “The individual system with the 401(k) is a monster, especially for the people 60 years old or more. We lived in a town house, in a gated community, and were by far the oldest residents when we moved in. Then, all of a sudden, we saw a lot of elderly people coming to live with their children. Even worse, about 100 miles from Atlanta, they had a tent camp.”

For the woman who had spent her entire academic life and career in finance, it was not the collapsing markets she found shocking, nor bailouts of failing banks. It was the effect the crisis had on individuals that hit home the hardest.

“The US individual system with the 401(k) is a monster. All of a sudden, we saw a lot of elderly people coming to live with their children. Even worse, about 100 miles from Atlanta, they had a tent camp.”“We were going back and forth to the Netherlands, and the impression there first of all was, ‘Is there a crisis?’” she says, adding that the rest of Europe had a similar reaction. While the Eurozone crisis was yet to play out, Kemna believes much of Europe was protected by its pension system— and she wanted to protect that for as long as she could.

“We have this brilliant system here where people can nag about having to take a discount of 0.5%,” she says, referencing criticism when benefits are shaved to ensure the prolonged health of the rest of the fund, “and I thought, ‘What about 50% or even more?’ I was very worried about the society here, and if they would be able to adapt to an individual system like they had done in the US—and unfortunately, more and more in the UK—which is a nightmare.”

Then she got the call from APG—or ABP as it was still known back then—which looks after the pension benefits of Dutch civil servants, teachers, and other public sector workers. It has 2.8 million beneficiaries and today runs around €425 billion.

A plan began to form.

By taking on the CIO role, she could combine doing something for society along with pushing onwards with sustainability or renewable energy. “I said, ‘I’ve seen so much misery and if I can do anything to help to safeguard the money for the participants of the pension funds that we work for, then I would really feel that I’m contributing.’”

So she took the job. Making the decision, however, was the easy part.

In 2008, the Dutch government had decreed that ABP should be split in two: an asset management and administration unit, and the actual pension. The new service provider, which would class the pension as a client, would be named APG. Kemna would run it as a non-profit venture.

When she arrived in September 2009, her first job was to take control of this transition. She immediately realised the enormity of the task ahead.

“It’s an emotional thing,” she says, remembering her first couple of months in arguably the biggest job in pensions. “If you used to be on the board of directors of a pension fund, where for years you had the people doing the administration and asset management within your own group, it felt safer than having someone do it from the outside. There were lots of understandable questions: ‘Are they still going to work for us as well?’ ‘What will be their own goals be?’”

Kemna keeps returning to this phrase: the passion for the individual, which, she explains, is at the root of everything she has done at APG.“On top of that we took over another organisation: Cordares, which became another client,” she says. “Mentally, we were a zero-client organisation and before we even realised we had one client, we had multi-clients plus a reorganisation to carry out...”

Then, another client was brought on board, bpfBouw, the industry-wide pension fund for Dutch construction workers—all while the crisis raged and Greece’s debt problem began to infect the rest of Europe.

“The first year I worked a lot, drawing on the passion I have for the individual and continuously making that part of the decisions that I made,” she says.

During the course of our hour-long interview, Kemna keeps returning to this phrase: the passion for the individual, which, she explains, is at the root of everything she has done at APG.

“That has actually been my motto,” she says. ”It’s not about the gazillions or billions. It’s about the €800 per month, per pensioner, that we want to pay out today, tomorrow, and over 30 years. It’s about the policeman, the nurse, the grammar school teacher. They’re not in the top 2%; they don’t have share portfolios; they can’t do it themselves. They’ve cared for us, so we should care for them.”

Sitting in her office on a grey April morning, it’s difficult to doubt her passion. But did she ever regret leaving the golf courses of Atlanta? After all, we are all human.

“Yes,” she says with a wry smile. “The first nine months for me were like three years. So many things had to be set up in such a short period of time. If I had not had the CEO background, I don’t think I could have moved so quickly with as many of the decisions that I took.”

But this experience could easily not have happened.

Years ago, Kemna was European CIO at Robeco, one of the Netherlands best-regarded banks and asset managers, but felt her career was stagnating. She was asked by someone she knew well to work with him at ING Investment Management—another domestic player—as its global CIO.

Frustrated at Robeco for a lack of upwards career trajectory, she agreed.

However, a year and a half later, ING Investment Management decided to split up into regions, leaving her back as European CIO—the role she had left at Robeco. This time, however, she would have been overseen by people who knew very little about asset management—compared to her lifelong experience—and she was not prepared to be frustrated again.

It was a pivotal moment.

“Because I was angry, I spoke to the guy who hired me and for the first time in my career, I put my fist on the table and said, ‘I’m not going to accept this.’” She thumps the table for emphasis.

“‘Make me the CIO and the CEO of Europe,’ I told him,” she says, again banging the table. “He asked, ‘Do you think you can do it?’ I said yes. And I got it.”

She admits it was a bold move.

“As a woman, you have to ask. Guys ask all the time. If you have a male boss, he expects you to ask, so if you don’t it’s easy for him to overlook you.”“I had to become a CEO—and I had no experience whatsoever. But I am proud as it was the first time that I stood up for myself in such a way,” she says. “As a woman, you have difficulties expressing you want to move on. Even I, who am pretty self-confident, don’t find it that easy.”

Kemna uses this story when talking to women both in and outside the industry on career progression. A section on APG’s website is dedicated to displaying the gender balance—or imbalance—within the organization. Tellingly, the initiative launched in 2009, the year Kemna joined.

A graphic on the website shows asset management having the closest to gender parity across all APG departments. She would like to see more women in the top levels, but admits she sees few who have the desire or determination to get there.

“As a woman, you have to ask,” she urges. “Guys ask all the time. If you have a male boss, he expects you to ask, so if you don’t it’s easy for him to overlook you.”

Do we all need a “fist on the table” moment? Maybe, she says. Certainly, Kemna would not be sitting at this table at APG today without hers.

“Because I was angry, I spoke to the guy who hired me and for the first time in my career, I put my fist on the table and said ‘I’m not going to accept this.’”

 

(Continued...)

“If I had not asked at ING Investment Management, I wouldn’t be here,” she says. “You need to have the intuition to make decisions—sometimes within a week.”

So what exactly did she achieve while CIO of the newly transformed APG?

“We were able, with the investment returns that we made, to completely absorb longevity risk,” she says with just a dash of pride.

In its latest available annual report—2013—ABP, the largest client of the group, quoted a threeyear average total return of 7.7%. In 2014, the pension saw a 14.25% gain on its assets. Its (very prudent) annual return target is 3.25%. ABP’s funding ratio has hovered around 100% to 105% for the last few years, the rates against which it is measured having being hammered by the crisis (and creating most of the chatter in the Dutch pension sector).

Despite taking on the CEO role, Kemna is first and foremost an investor. She earned her PhD in derivatives and was one of the first to author a paper exploring exotic forms of her subject matter. As a specialist in the field of financial engineering, she knew where to draw the line at APG.

“It’s very good if people are creative, but there is a fine line between effective and a hobby,” she says. One of her first moves in the new role was to implement the Controlled Simplicity programme, which looks at what contributes to the totality of the portfolio and what is too complex. Anything deemed the latter falls in to the “hobby” category and is abandoned.

“Even if you would make alpha out of a strategy, if in the back office and IT you have to pay so much, you lose it all,” she says, remembering why they were all there—that monthly €800. “Not everybody liked this…” From which I can sense there has been more than one heated debate on this subject.

“So we lost some people who did not like it, and we lost others because we stopped strategies,” she says, more sadness than regret in her voice. “It was a pretty tough programme, and we took it pretty far. By turning around the company, moving more from external mandates to internal mandates, we have also saved costs but not at the detriment of the returns.”

APG now manages around 80% of its clients’ assets in-house. This gives them more control, she says, for elements such as sustainable investing to be blended into the investment approach.

But internal mandates mean more internal staff. How has APG squared the circle of getting the best people without paying top dollar?

“In my career, I’ve found the people love the professionalism more than the money. Asset management is unique in this, even on the commercial side.”“The crisis helped,” she says matter-of-factly. “More asset and portfolio managers felt more comfortable doing something for society than just for the money, and still were able to be very professional. It’s a brilliant combination.”

She mentions Ronald van Dijk, who appeared on CIO’s Power 100 in 2012. He used to manage a €2 billion portfolio. He now manages €100 billion. “The professional challenge more than compensates, plus the good feeling that he’s contributing to society is perfect,” Kemna says.

In her new (additional) role as a board director for UK railway pension fund Railpen, she has had similar discussions. “Given where you work, you will never be able to pay the remuneration that you get from a bank, so you have to have the other fringe benefits. In my career, I’ve found the people love the professionalism more than the money. Asset management is unique in this, even on the commercial side.”

Of course, compared to the salaries of most of ABP’s members, the money is still good. No one is that naïve. And securing talent in New York City and Hong Kong, where APG’s satellite offices are located, does not come cheap either, but is essential for APG to put its clients’ money to work in those regions.

“If you need to do illiquid investments, you need people on the ground,” she says. At the end of 2013, ABP had more than €32 billion in these asset classes. “The other element is to be able to build a network with your local partners not just at the top level, but also at the portfolio manager level to do deals together. It enables you to be strong.”

APG’s portfolio of real or illiquid assets runs through power generation, transport networks, even to a chain of mid-range Indian business hotels.

But this “power of the network” is being used outside of deal-making too.

“We have to promote the buy side and long-term institutional investors,” she says. “We have to network together; we have to squeeze out the middleman if necessary and do deals directly with one another.”

It goes further than cutting out the middleman. Kemna wants—and has succeeded in getting—a fair fight in the market. As the financial crisis was abating, APG turned to assess the damage and found, in some instances, it had been taken for a ride.

“I got angry with the investment banks that sold us the wrong products—so we went after them,” she says. “All of them. We got money back and we made a statement there.”

In 2013, ABP settled lawsuits with Deutsche Bank, Goldman Sachs, and JP Morgan. The pension fund received undisclosed—but suspected to be fairly substantial—sums from the three banks, or their subsidiaries, over sales of mortgage-backed securities.

And the fight continues. The phone rings as we talk. She is arranging a lawyer to take on another provider—I don’t find out which one—who is trying to play a trick.

“I’m not having it,” she says plainly. “It’s not just the investment bankers; it’s not only other financial institutions; it’s everybody who wants to profiteer from our pensioners. I’m perfectly happy to pay for services rendered. But if I feel it’s not a good deal, they’re not taking something away from me: they’re taking something from people who cannot do anything about it.”

In her new role monitoring financial risk, you get the feeling there will be even more providers in her crosshairs.

“We have to stand up and say, ‘We don’t accept what you do,’” she says, referencing a worldwide network of which APG is part. “Whether it’s in fees or pulling tricks. The larger sovereign wealth funds, institutional investors, and pension funds should and will continue to work together more strongly,” she says, emphasising the intention of the sector.

That means banging on doors in The Hague and Brussels too. “We went to regulators and said, ‘We understand what you’re doing, but did you take into account a, b, c, d—and is that what you want?’ A lot of unintended consequences hurt the members.”

“We have to stand up [to some providers] and say, ‘We don’t accept what you do.’ Whether it’s in fees or pulling tricks.”But this is all done behind the scenes. As any journalist who has asked for an interview knows, Kemna eschews the spotlight, (“Live TV is the worst and takes so much time and preparation.”) only appearing once during the crisis.

“A lot of people were screaming and the members—the policemen, the teachers—they thought their money was gone. And it wasn’t,” she exclaims. “It wasn’t gone at all. I had to tell them that.”

She doesn’t feel the need for more exposure. “If something had happened at APG Asset Management for the money to have been lost, there would have been a chain reaction in the media. It would have triggered discussions about the validity of the system,” she says. “At that time, everything was used to try and break down the current system.”

The very system she had come back into finance to protect. So she kept her head down and worked.

So why did she stand down as CIO?

“If you look at my career, you see that I do something, I finish it, then I move on. It’s part of who I am,” she says. “It takes me a few months to work out what I want to do, and I execute. Then I feel someone else should take the next step.”

With this in mind, early on in her tenure she brought on Eduard van Gelderen, who took over last year.

“I felt he would be in the role longer term; only timing mattered,” she says.

This is also the first time that the organisation has promoted from within to fill such a high position, and she wants it to encourage the rest of the staff to reach higher.

She has remained with APG to bring the chief financial risk officer role to the “next professional level”—essentially, getting the different units to work individually and as a whole. But this is a molehill compared to the mountain she has just climbed.

“I think you need one transition like that in your life,” she says leaning back in her chair to fully take stock of what she has achieved. “It was a very good experience, but it’s probably not very healthy to repeat it. What we have done has at least pushed the discussion on the pension system back five years—and that’s a long time in pensions.”

As we are wrapping up the interview, and turning our chat to the climbing wall, it turns out there is one person Kemna admires.

“I am totally impressed with Angela Merkel, what she does, how she does it, and also her intelligence and compassion,” she says. Kemna met the German chancellor along with presidents Francois Hollande and Barack Obama on her mission to protect and improve pensions.

“The men had their ‘guys’,” she says, “But Merkel knew our business herself and wanted to know more.”

For Kemna, it’s not about role models or plaudits or press. It’s about creating a network of people with a passion for the individual—and that €800 a month.