Author: Mary Gooderham Canadian Family Offices

With a background as a business journalist and a pioneer in capital markets, Helen Kearns knows the importance of identifying powerful stories in the investment world.

Today she is the CEO of Bell Kearns & Associates Ltd. in Toronto, a family office that builds deep relationships with money managers while making portfolios understandable to its ultra-high-net-worth clients.

Kearns began as a freelance business reporter in Montreal, which introduced her to the quarterly reports of companies based there. She joined the Montreal Gazette to cover the flight of capital from Quebec following the election of the Parti Québécois, then was hired by Business Week magazine in Toronto to report on Canada.

She moved to the investment business in 1980 when she was recruited by Richardson Securities as just the second woman in Canada on an institutional desk in the industry. She advanced to head of institutional sales and trading for the company, which became Richardson Greenshields of Canada Ltd., the first woman in North America in that role.

She founded her own institutional investment firm, Kearns Capital Ltd., served three terms as a governor of the Toronto Stock Exchange and became the first president of Nasdaq Canada.

In 2005, Kearns became a member of the Ontario Teachers’ Pension Plan board and joined Robert Bell in his company, RS Bell & Associates Ltd. Within a year she became an equity owner and president of the firm, which was renamed Bell Kearns & Associates in 2009.

Today the firm has 14 staff, including two artificial intelligence experts who have joined it under a program of the Vector Institute, which works to accelerate the use of AI in business.

Bell Kearns has 45 clients, 80 per cent of them families and the rest foundations and investment corporations, with some $2.5 billion in assets under management. Robert Bell remains as chairman while daughter Susan Bell serves as president.

Kearns spoke with Canadian Family Offices about the influence of her early career, how the company applies a pension playbook to investing and the power of high-performance thinking.

How did your background in journalism shape what you do today?

I was really good at identifying powerful ideas and stories in the investment world. At Business Week, you had to have high-performance ideas to get in the magazine, and you need high-performance ideas if you’re going to keep, win and build client trust and relationships in the investment business.

How did your transition to the investing business go at Richardson?

On an institutional sales desk at an integrated brokerage firm, the job is to sell great ideas to the large financial institutions, pension plans and money managers. But I did not know the language of the investment business at all.

Were there other challenges?

Being the only woman, it was a very tough start. There was lots of bias.

After the first year, my boss called all the guys on the sales desk into a meeting room to vote on whether or not to let Helen into the bonus pool. And the vote was no. I’m the only person I know who spent a year in the wading pool for a bonus!

How did you get past that?

When someone tells you you can’t do something, it starts a real fire inside. I had a mentor named Jalynn Bennett who said, ‘Helen, I want you to call me every day and give me your latest research and what is going to be moving markets.’ That helped me grow. From there I became a top gun in sales for the next 16 years.

After that you became the first woman to start an institutional brokerage firm in Canada and then head of Nasdaq Canada. What was next?

I got two phone calls in June of 2005, one from the Ontario Teachers’ Pension Plan to go on the board and one from Rob Bell. And I took both calls.

How did the Ontario Teachers’ position influence you?

Going on the Ontario Teachers’ board was a masterclass in long-term investing and the innovative platforms it was bringing into the mix. Neil Petroff was CIO, and as he said, ‘We’re going to use all the tools in the toolbox, which is all the asset classes, to drive long-term risk-adjusted returns.’

And what about Rob Bell?

Rob had built BellCharts, a successful mutual fund research firm he sold to Morningstar, and he started our firm in 1991. I had been researching the family office business, and I knew this was a very disparate business, but interesting. I could take 25 years of investing experience and bring it to clients.

What is the raison d’être of Bell Kearns?

Bringing high-performance thinking. We do not get paid by any managers; we are truly independent. If you scratch below the surface, there’s a lot of ties to fee-based compensation in the family-office industry. Our only source of revenue is our fees from our clients.

It’s incredibly important, because it perfectly aligns you with your client. If you have a fee-based link to some manager, it’s going to cause you to think twice about whether or not that manager should be fired, because you’ve got this source of extra revenue.

We deliver a framework for making informed decisions to create a sustainable, long-term portfolio. I think of this framework as a house. The foundation layer is risk appetite. And if there’s more than one person around the table, we make sure that we hear all the voices.

Then we go to the second level in the house and we do portfolio construction. What asset classes, what mix do we need to drive the risk-adjusted returns that this client is looking for?

Was your experience at Ontario Teachers’ important in that?

Yes. That’s really one of the things that I brought to the company, leaning into pension thinking. I just wrote a piece for our quarterly letter on why we admire Canadian pension funds. Number one is they set in place an outstanding governance system to incentivize long-term thinking.

Following a pension playbook helps an investor do that?

We want our clients to understand the structure of their portfolios and whether they are achieving the long-term, risk-adjusted rate-of-return goals that will meet their needs. Because we’ve been doing this for 33 years, we understand cycles. We know there’s going to be down cycles. So one of our biggest messages is: ‘Thou shalt not sell when markets are correcting.’

Any examples of such investments to mention?

We don’t manage any money. We hire outside managers and our clients allocate to these managers. We help them choose managers in every asset class, whether it’s equities, fixed income, real estate, private equity, hedge funds, infrastructure.

How do you choose these managers?

We send our team out to more than 300 manager meetings a year. We’re like super talent scouts in investing.

In the ultra-high-net-worth sphere, everyone is talking alternatives these days.

There is what I call ‘the cocktail party feature’ to alternatives. It’s a cool factor to talk about private equity. But it’s only cool until there’s a downturn and you can’t get out of it for 10 years-plus. Liquidity is incredibly important.

So, proceed cautiously?

Absolutely. You have to ensure that the allocations to alternatives are sized appropriately, given the additional risk.

For instance, you can find an alternatives hedge fund manager who specializes in fixed income and is taking on more risk than your core manager, but you don’t want to allocate half of your fixed-income assets to a higher-risk strategy. You might give them five per cent, and that five per cent is going to be ‘sweating.’ Then, if taking on that additional alternatives risk takes a bad turn, it’s not going to take down the whole portfolio.

How does your company ensure that clients really understand their portfolios?

Coming from journalism and growing up in the investment industry, I realized that the investment industry loves to make people feel that the investment industry is smarter than them. That’s the modus operandi. And I don’t buy that. Our firm goes by a quote I love from Albert Einstein: ‘The definition of genius is to make the complex simple.’

We write clearly and we meet with each client to go through our quarterly report, which is typically invested through multi-manager strategies. We show each manager’s returns and how they’re doing, very clearly. But we also aggregate all of the manager returns into a custom benchmark at the top, so they know how all their assets are doing.

Speaking of complexity, tell me about this interest in AI and your work with the Vector Institute.

We have been part of the FastLane project, started by the Vector Institute, which gives us access to two masters students in computer engineering generative AI. They were selected by Bell Kearns and seconded to the firm for four months. We paid a portion of the cost.

What have they been doing?

We proposed three use cases but went with the one we call ‘low-hanging-fruit.’

Though we only have 45 clients, we have over 200 strategies that are up and running, so we have what I call the Niagara Falls of quarterly reporting. It just pours in here, and we have to distill it. So we want to build a tool for how these different strategies are doing.

Did it work?

We’re not at a solution, but we’re close, so we have hired them for another four months to complete the project. It’s not perfect, but man, is it exciting.

Is client privacy protected?

They are not part of the Bell Kearns system. So we’ve completely ring-fenced our client information. The only thing they have access to is capital markets information.

What is the overall promise of AI in your industry?

Let’s put it this way: If Bell Kearns receives the Niagara Falls of information every quarter and reports on it, what do you think it’s like at Ontario Teachers’, with $250 billion in assets? It’s an efficiency tool.

What’s the top issue wealthy families are facing today?

They’re thinking about their legacies. They want to make sure they have all the pieces in place for a smooth transition to the next gen.

How does Bell Kearns help with that?

Many of our clients have been with us for a long, long time, so they have seen the benefits of long-term thinking. Long-term thinking is easy to say and really, really hard to do, especially when the market drops 20 per cent.

So they have seen the benefit over this long sweep of time where we’ve had COVID, a rapid rise in interest rates, the global financial crisis, two wars. When we build portfolios, we say we’re building a ship that can go through the North Atlantic. We know there’s going to be storms, but it’s going to get from shore to shore.

Responses have been lightly edited for clarity and length.

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