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Michael Underhill, Chief Investment Officer for Capital Innovations, LLC was a Vice President at AIM from 1997 – 2001. In this Q&A, Underhill describes the journey that led him to create Capital Innovations, based in rural Pewaukee, Wisconsin, how the industry has changed, and why he considers himself “commercially unemployable.” 

Q: What inspired you to start your own firm?

A: Something I noticed at the big Wall Street firms was that they were always focused on a style box – small, mid, large, growth, value – always producing widgets. They were creating products, but not necessarily solving problems for clients.

Growing up in a military family, my father used to preach a Latin phrase: “gesta non verba” – “deeds, not words.” I chose Main Street over Wall Street because of all the things that were going on at the time with big cities, and the challenges they pose when raising children. Today I live out in the sticks of Wisconsin in farm country, I wear a Timex instead of a Rolex, and I don't have a private plane.

Growing up in a military family, my father used to preach a Latin phrase: “gesta non verba – deeds, not words.”

MikeAndSusan 32812 5X7

Q: How did you get Capital Innovations off the ground?

A: The first thing I did was take time off, spend some time with the family and get my head together. I also spent time with my attorney to focus on the governance model of the company. After 16 years of working with some of the largest asset managers in the world, I was subject to non-compete, non-solicitation and non-circumvent agreements. My attorney, Steve Eckhaus, was my best friend when we got this business started and he’s one of the best guys I know. Steve represents people like Gary Black, former CIO at Goldman Sachs. He is also the attorney for Sally Krawcheck, and is with one of the oldest law firms in the United States (Cadwalader, Wickersham & Taft).

 

 Q: How did your time at AIM shape you personally and professionally?

A: “People are the product” is what they used to say at AIM when I was there from 1998-2001, and it resonated throughout the organization – from portfolio management, to operations, to sales, legal, finance and administration. Objective number one is a cultural fit, followed by competency. I was taught that if you lead with cultural fit, the competency will follow. At Capital Innovations we can train people if they have a first-class temperament. If they have a first class mind, all the better.

One of the phrases that you'll come across in our job descriptions is “low ego,” a phrase that is sort of incongruent with this business nowadays. Low ego means you come in to work and do your job and have a sense of pride about it. You contribute to the team. You may not always get it right, but you strive for excellence every day of the week. That steady strain of discipline, tenacity and focus helps you deliver investment returns for your clients. That comes right out of the AIM playbook!

 

Q: You mention the value of mentors. Who are yours?

A: My father for character, Steve Jobs for innovations and John Taylor, Stanford University for personal freedom and fiscal/monetary policy.
At AIM my mentors were Abbott Sprague, Mark Santero and Pat Bray. They all knew what it takes to be successful as they not only had first class minds, but more importantly, first class temperaments.

 

MDUWheat

Q: What did the market look like in 2007?

A: We went out in 2007 with the idea of offering managed accounts of publicly traded securities in infrastructure, timber and agriculture, but we did it in an innovative way. We didn’t just say we had experience – we really had the experience. We said, “Real assets is all we do.”

Our first client was the California Public Employees Retirement System (CalPERS). They were working with a consulting firm that was using real estate returns and real estate risk numbers as a proxy for infrastructure investments. The first thing we did was help them really understand that real estate and infrastructure are drastically different asset classes.

 

Q: How would you describe launching your own investment firm?

A: Steady strain. I'm 46 years old, and I've run 26 marathons raising several million dollars for cancer research as a tribute to my father, and I’d have to say that starting an asset management firm in 2007 was more difficult than running a marathon. It's almost like an Ironman challenge. 

 

Q: What was it like being the first Chairman of the United Nations Principles of Responsible Investment (UNPRI) Initiative?

A: Uncharted territory working with asset managers, asset owners, pension funds, sovereign wealth funds, family offices and a wide range of global institutional investors from dozens of countries. Most of the people involved wanted to do the right thing, but several people had different visions as to how to do it. Imagine riding a unicycle downhill while juggling a chainsaw, a burning torch and a machete. Lots of politics, cultural differences and opinions, so having strong management skills was part of the job. My father was 2nd Marine Corps Division in WWII, and he used to say “you need to build a bridge before you burn it.” Leading the drafting of the investment guidelines for the UNPRI Infrastructure initiative was a transcendent experience.

Imagine riding a unicycle downhill while juggling a chainsaw, a burning torch and a machete. 

Michael Underhill, on the challenges of being first Chairman of the UNPRI Initiative

Q: What advice would you offer a portfolio manager just starting out? 

A: Never lose sight of who you are and why you're in this business. It’s all about the clients.  You've got to take care of them – your fiduciary responsibility comes first and foremost. You’ll be offered opportunities to climb the corporate ladder, you'll be offered opportunities to go on fast-moving trains and travel around the world. Be true to yourself. Second, find people who are willing to spend their time as a mentor to you. And when the time is right, turn around and pay it forward.

If you were at the Local Pour April 7 you know what a great time we had. From the marketing and institutional group reunions, to friends’ expressions of delight and lots of hugging and enjoying the outdoor patio, you are sure to enjoy the pictures which are now online.

“It was exciting,” said Patti Hefley. I was calling and texting and saying look, get a babysitter. Fly in. Do what it takes.”

That is exactly what happened. As the evening started, a hotel van pulled up and out came the institutional guys. The group included Pat Bray who is in Austin, Texas; Neal Seidle who lives in Oklahoma; Bruce Simmons who is in Austin and still with the firm; Mark Santero who works for Oppenheimer Funds in Connecticut; and Bill Wendell, with Access Distribution Partners in Delaware.

aim institutional group

Andy Beal, Invesco, flew in from Ohio. From the West Coast, Linda Pix who is Managing Partner of Integrated Advisors Network arrived from California. Linda was enroute to Dallas and made a detour. Lanny Sachnowitz and Bret Stanley work together and Lanny was in town to visit family and meet with Bret. Polly Ahrendts made her regular appearance, coming in from New Mexico.

Gene Needles travels from Dallas each year and Kelly Niland, who is also in Dallas working for Garcia Hamilton attended.

Patti wrote a letter asking Joel Dobberpuhl if he might attend. “He and I were very close for a long time and then we both left AIM and we lost track of one another. Time went on. He was one of my boys and he became so successful. I googled him and found an address and said it has been too long,” she said. “After ten minutes saying how I never heard a word from Joel, he walked in and I just about cried,” laughs Patti. With personal outreach from Patti, Dawn, Barrett Sides, Ann Srubar and Margaret Vinson, we were excited to have so many friends from out of town join the crowd.

patti joel

There were local surprises too. “Jaws dropped when Mike Cemo walked in. Mike was the chief of our sales and marketing department. He loved the company,” said Patti.

Bob Graham wrote the following email to the organizers: Congratulations on organizing what I think may well be the best AIM Alumni Happy Hour yet and many thanks for all the effort you put into it. Particular thanks go to Patti who used handwritten notes to cajole some of out of towners to attend for the first time. It was really great to have all of them as well as so many of our home town folks there. The fact that so many alumni continue to show up for these events just shows how much everybody at AIM liked the people they worked with and how lucky we all were to be able to work at AIM. It is such a gift to me to be able to see the alumni happily reuniting with their former colleagues and to hear them tell of their fond memories of AIM. AIM certainly seems to hold a special place in the hearts of those who worked there, which does wonderful things for my heart.

Thank you for helping us all briefly recapture the spirit of AIM.

Bob Graham

Other regulars included Dawn Hawley, Mark McMeans, Abbott Sprague, Ginger Neal, Gene Needles, Paula Permente, Sharon Lester, Charles Scavone, Mary Gentempo, Jennifer Tickle, Michelle Grace, Mary Benson, Anne Warnock, Jim Salners, and Ana Hernaez.

Log on and click on Photo Gallery to see the pictures taken by our own Dawn Hawley. “I was excited to see so many friends at the event and I was to get pictures of everyone,” said Dawn. With a crowd of more than 100, Dawn succeeded.

“The Local Pour was a great place with ample parking and a patio. We needed the room and people stayed late into the night. We look forward to building on the momentum and getting an even bigger crowd next year,” said Barrett Sides. 

Log on to see the event album.

treywilkinson headshotTrey Wilkinson recalls how Ted Bauer lived the philosophy that we are put on this earth to produce and every day you should “get up and get after it, keep your mind and body engaged.” At a time when many people choose to retire, Trey points out that Ted was starting his own company. “Ted had the courage to build something that became a success and an inspiration,” says Trey.

In both his professional and personal life, Trey follows this same philosophy. In addition to starting his investment firm in 2011, Trey is very active in his community, particularly at the University of Houston where he currently serves as Chairman of the Board of the University of Houston Alumni Association Foundation.

It is through my alumni association with the Bauer College of Business and now the University of Houston Alumni Association that I am a part of Ted Bauer’s legacy.

Trey Wilkinson

“Mr. Bauer’s gift transformed the University, and it is an honor to volunteer at a place where Ted created his legacy. It is up to the alumni and current students to keep that legacy going. Ted was a visionary and an incredible person. You can see through his actions how important it was to do good,” says Trey.

As AIM employees personally witnessed, AIM was a valuable philanthropic partner. Employees saw what good deeds could do, and the positive change they could bring about.

Many AIM colleagues will recall that when Ted made the gift to the University, he became even more involved. “I believe Ted attended every commencement he could until he passed away. He spoke at the lecture series and met students. Certainly, Mike Cemo laid the ground work. Mike guided Ted to make a financial commitment to the University. The legend is that Ted made his gift without having set foot on the campus.

Our firm includes more than 400 University of Houston alumni. Look how they helped make AIM.

Mike Cemo

”That resonated with Ted. He changed the University, and we can never fully repay him,” remarks Trey.

Trey is also a member of the University of Houston’s Board of Visitors and the Houston Cougar Foundation, in addition to being President of the University of Houston Honors College Advisory Board. He is a past president of the C.T. Bauer College of Business Alumni Association (2006-2007).

Mentoring some students and his involvement in scholarships is something Trey values. “Education is so important,” he says. “The University is a pubic institution that is state-supported, not state-funded. We need to do more in the private sector to make ends meet,” he points out.

Trey has been in the investment business since 1996. As a portfolio manager, he managed over $200 million for high net-worth clients at U.S. Trust, Bank of America Private Wealth Management. He also spent seven years in the institutional channel for AIM Investments (from 1996 to 2003). His final position was Key Account Manager/Regional Sales Director. During his career, AIM helped pay for Trey’s MBA.

In 2009, Trey left U.S. Trust and began thinking about embarking on his own journey. He says, “I had an opportunity through my University of Houston connections to join a boutique firm. One of my clients there approached me to manage their family’s wealth. We founded Trinity Legacy Partners in November 2011 and we managed over $85 million for our clients at the end of 2015.” Trey gives credit to the AIM executives that he worked with for several years.

Every single day I try to emulate the culture and business practices that Ted, Bob and Gary instilled in us.

Trey Wilkinson

“I am certainly not saying Trinity Legacy Partners will become anything close to AIM but we can sure try,” says Trey. “I also follow the client-centric focus Mr. Bauer always talked about. This relates to both the people and the product – both the people you are working with, and your clients.”

trey rainbow

Golf was a passion of Ted Bauer’s, and Trey was privileged to play with him a couple of times while at AIM. Trey had a successful junior golf career and came to University of Houston on a golf and academic scholarship. He was drawn to the University, which had won 16 National Golf Championships. He is currently a member of Champions Golf Club in Houston, and also an active member of Royal Dornoch Golf Club in Scotland. Trey and his wife Kimberly travel to Scotland annually, and Trey plays every year in the Carnegie Shield, finishing runner-up in 2013. He had the distinction of being ‘the American’ who made it to the final round of the 100th staging of the Carnegie Shield Tournament at Royal Dornoch in Scotland. Tucked away north of Inverness, the course is the fifth-best in the world according to Golf Digest.

In 2013, The Scottish Golf View wrote: “A last place seed was beaten by American Visitor Trey Wilkinson from Houston, Texas who showed his pedigree by beating in the next round, the Holder John Forbes (Inverness) on his way to the final to meet former winner Chris Mailley.” While Trey fell short of taking the Shield across ‘the pond’, he was thrilled with his achievement.

Trey’s activities are many and varied, but whether he is distinguished as the top American golfer at the Royal Dornoch in Scotland, mentoring a University of Houston student, or working on behalf of his clients, he finds that ‘it is all intertwined”.

trey kilt

“When I started working at AIM and then Mr. Bauer made his gift, AIM was a rocket ship at the time. It was an exciting place to be, and I had the utmost respect for the people with whom I worked. My favorite memory of AIM is the relationships, the people and the friendships. I treasured the conversations with the portfolio managers, and respected the earnings driven strategy we managed for our clients. That earnings driven strategy is alive and well today at Trinity Legacy Partners,” shares Trey.

downloadJulian A. (Sonny) Lerner a pioneer of fund management, passed away at his home on Thursday March 10, 2016.

Julian will be remembered by many former AIM employees as the founder of the Charter Fund. Speaking about Julian, Bob Graham said it is important to note that the acquisition of the Charter Fund by AIM occurred about the same time as the Weingarten/Constellation funds.

These acquisitions transformed AIM into both a money market and retail firm. "This," recalls Bob, "was our entry into the retail business. We had a few small funds, but by acquiring these funds and keeping their managers who had produced great results we got into the adviser community, promoted these funds and built a name for AIM in the retail business."

Bob recalls that Julian was a key factor in building the business and he represented AIM well. 

It was a win-win situation because it was a tough market. Julian was selling directly and AIM provided the marketing muscle to build the assets in his fund.

Bob Graham 

Lanny Sachnowitz recalls what an honor it was to work for two legendary portfolio managers in Julian and Harry (Hutzler). “My colleagues and I had the chance to serve as understudies to two of the finest stock pickers in the business. I was fortunate to work closely with and ultimately succeed Julian on the Charter Fund, the fund I think he took the most pride in managing since its inception in 1968. A press article about Julian's retirement from managing the fund is available here.

I am sure that Julian would be proud to know that of all the funds AIM launched, acquired, merged or closed, the Invesco Charter Fund endures nearly 50 years on.

Lanny Sachnowitz

Lanny also recalls Julian’s sharp wit and wisdom that far exceeded what can be learned from any finance textbook. Julian was known for his sound intuition about the stock market and developed some simple, but powerful rules that served his shareholders well and made the "Charter story" quite compelling. “He was seriously competitive but never took himself too seriously,” found Lanny. “He was confident in his abilities but was always approachable and respectful of another point of view, especially when it came to delegating portfolio decisions to us young and ambitious "kids." He also had a great sense of humor and I remember accompanying him on a number of marketing trips around the country and admiring his ability to both educate and entertain his audience,” said Lanny.

Dick Berry knew Julian and Peggy and their family for 20 years before AIM acquired Charter and Dick began sharing offices with him. "We were both living in Dallas. I was doing tax-free mutual funds for AIM. It was a comfortable environment. Julian was a little eccentric at times, which made him interesting," recalls Dick.

Dick knew Julian served in WWII, but he had not known any specifics. One day at lunch, Julian was talking about General Patton, and how he was in the infantry walking with the tanks through France into Germany. Someone asked was he afraid? "Are you kidding? Julian replied. "I was walking through Nazi Germany. Of course I was afraid," Dick remembers Julian saying.

Dick echoed Lanny, sharing that Julian was very very competitive. He was a mall walker and he and his wife Peggy were religious about walking the Galleria Mall at about 7a.m. every day. He wanted to outperform everybody. In business, he wanted to outperform all the fund managers, not just those at AIM. He would calculate the funds daily. It was all very friendly and cordial.

If the measure of a life is a measure of love and respect, Julian measured up very well,” shares Lanny. “The enduring memory I have of Julian is that he was so kind and grateful for his family and friends, and for the business opportunities he had in his life.

Lanny Sachnowitz

Yet, despite all he accomplished, he never forgot where he came from,” said Lanny. As Jon Schoolar put it when Lanny shared with him the news of Julian's passing the other day, "he was the best of the best generation.”

Read Julian Lerner's obituary here.



hal barrSales guru Hal Barr turned author spent ten years at AIM from 1995 to 2005, with his final position as Director of Sales Strategy and Planning. "AIM was the highlight of my working career. It was a phenomenal place to work.  Ted Bauer, Bob Graham and Gary Crum drove a sense of community and family. I had not eperienced it before then and I have not experienced it after AIM. When the take over came thorugh it definitely changed the whole complexion of the company. And with the passing of Ted Bauer, the change was complete," reflects Hal.

Now Hal is focused on selling a book he authored. What I learned, shares Hal is that whether you sell widgets or financial services, "it is mostly psychology and art rather than science". Hal spent the last year and a half driving a limo, thereby giving him the down time to write his book. "It was humbling, but it gave me the time to complete a passion. Now I am working with that company to help them grow their business," shares Hal.

His sales knowledge and experience are shared in his book, The First Billion’s The Toughest which is available as a hard cover and an eBook on Kindle. Hal says of his publication:

It is the culmination of 30 years in the profession of sales and highlights the many insights and lessons learned. From first reader reviews , people found it insightful, interesting and valuable in raising their sales to a new level.

Hal Barr, Author

"I learned that you can really craft your skills after one billion. Being in the financial services industry, they come in at the tens and thousands. The book is there to circumvent the 15 years it took me to get the first billion. The second billion took me three years. It takes a lot of time to make the first billion," says Hal.

Read an excerpt from the book below:

"That is what sales is all about — it is making people feel comfortable with the decisions they make. If you would admit it, we are all engaged in wide varieties of activities that are in essence sales each day, be it trying to make a point during a board meeting in your workplace, or persuading our kids to heed our advice. Probably, the biggest sales proposition you will ever make is persuading someone to marry us; it is simply an attempt to sell something — love — to a person to whom you are attracted. I mean seriously, it does not get any bigger than that. To say we hate selling may be true, since we are all involved in selling each day of our lives, we could tell that understanding the Art, Science and Method of sales can help us become more successful in any endeavor we pursue."

Make an advance purchase at www.selling8020.com.  As ever, we are proud of the talented individuals of AIM and their great accomplishments.