Stephanie Flanders on seeing investment from the inside

Stephanie Flanders 700 x 450

A lot of things in the investment world have changed since Stephanie Flanders was at the BBC, yet it has been just over two years since the previous economics editor joined JP Morgan Asset Management as chief market strategist for the UK and Europe. While many saw the move as a surprising one, her arrival at the fund group was a natural next step.

Prior to joining the broadcaster in 2002, Flanders’ colourful career involved four years as an advisor and speechwriter to US Treasury secretary Larry Summers, where she was closely involved in the management of the emerging market financial crisis in the late 1990s, as well as stints at the FT and New York Times. However, she started out as an economist at the London Business School and Institute for Fiscal Studies.

She says: “Economics was at the heart of the news stories when I was growing up in the 1980s. I have always wanted to understand and be able to explain what was happening in the world, and most things tend to be around economics and finance. Once you see the world that way it is hard to see it any other way.

“But I have always been more of an economist than a journalist so in that sense, inevitably, I wasn’t going to do the job forever.”

And so it was that after five years as economics editor Flanders left for the City in 2013. Despite missing working at the BBC, in particular at Radio 4, she says she is happy to leave behind “the daily hamster wheel” of the 10 o’clock news and trying to condense a story into two-minutes’ worth of television.

“For me, [the move] was about learning the investment management business from the inside because that is something I knew was important to the global economy,” she says.

I am also enjoying being somewhere that it is truly global. The BBC is still quite centred on the UK, particularly at the moment.”

Indeed, she says she is happy not to be in her old role during the EU referendum campaign, as having to present the costs and benefits of staying or not would be difficult.

She says: “The challenge at the BBC is that you have to be an expert and show your judgment but you cannot do that in a way that is politically imbalanced.

“I used to find that a struggle; not because I had strong views but because you have to be fair on both sides, all the while doing live television. It is difficult for the BBC because it is perceived to be pro-European and it will be concerned and defensive about it. It may mean it not covering it very well.”

Many would see a move from being a journalist to working as a market strategist for one of the world’s biggest financial institutions as intimidating but Flanders found the transition easier than expected.

“They’ve been really nice to me,” she says. “It was a good transition and I was talking to clients very quickly. I was lucky because people knew who I was and there was a great demand for me to talk to clients.”

Flanders likely had the pick of the bunch when it came to choosing what asset manager to work for but her reasons for deciding on JP Morgan go further than just its global reach.

She says: “It is probably one of the very few institutions that has maintained people’s confidence and respect throughout this whole financial crisis period. Even just looking at share prices, there are only two institutions trading above where they were in 2009. There is no other institution I would have felt as comfortable coming to work for.”

“Also, for me, the asset management side was attractive because I am not very interested in the short-term trading mentality. As an economist and policy person I think asset management incentives are more aligned with the broader public interest.”

When it comes to the challenges of the role, however, Flanders says the most difficult has been learning how to deal with the compliance aspects.

She says: “People have strong views about the regulation of banks, and I think we are in favour of many of the changes that have happened, but a lot of the policy and the academic communities are very ignorant about what these controls actually mean internally.

“My friends in think tanks and former journalistic colleagues have no idea how much know-your-customer rules or conduct regulations change our day-to-day business.

“The amount of control and how that affects our ability to do business, particularly when it comes to small businesses or developing country clients, is really eye opening. It stops us from doing things that a lot of people would like us to do.”

Flanders recognises public opinion has marked economists as misleading or untrustworthy since the financial crisis of 2008.

She says: “Economists have had a bit of a rethink because there were some quite big holes in their analyses, particularly that of the academic economists. Some of the analysis of the financial sector turned out to be missing rather key elements. It is a question of trust.”

As for today’s markets, Flanders describes them as hesitant and lacking in confidence.

She says: “Most of the fundamentals today look OK but not great. It is hard to get excited by developed markets, as investors get easily distracted by the bad news.

“One of the dangers before the financial crisis was that people were suspending their disbelief. Our stories now are not that beautiful, they are a bit messier, but maybe they have more reality in them.”

Five questions

What’s the best advice you’ve received? 

Think before you speak.

What has had the most significant impact on financial advice in the last year?

Clients asking tougher questions.

What keeps you awake at night? 

Britain leaving the EU.

If I was in charge of the FCA for a day, I would… 

Get all the staff to spend a week working in the compliance department of a bank.

Any advice for new advisers? 

Before you try to discuss a product to clients, try explaining it to your kids.