Paul Guest (BA 1999, International Relations and Economics) has led a global career in finance. Based in London, he is the lead strategist, for UBS Asset Management’s real estate & private markets business. After earning his Master’s in Economics from the London School of Economics, he worked as an economist for Scotia Capital in Toronto and then headed to London, eventually becoming Moody’s chief European economist. He moved to Singapore to take on the role of global capital markets research director at Jones Lang LaSalle (JLL) and then Asia Pacific regional head of research and strategy for LaSalle Investment Management. As an undergraduate student at U of T, he took advantage of scholarships to study abroad.
Arts & Science spoke with the global finance expert at the new UBS headquarters near London’s Liverpool Street Station the day after the 2016 US election.
How did you come to study international relations and economics at U of T?
I didn’t start out to study economics, but originally got in to U of T to do scientific research, macrobiology. I worked one summer assisting in a lab, and the lab owner said, you’re suited to working with people not microscopes, you should try something different. She was right. I didn’t know what to do so I signed up for international politics because I liked to travel. Economics filtered in because my marks were higher and they boosted my GPA for the courses I enjoyed taking, like history, political science and international relations. So I ended up as an international economist by accident.
What were the most formative experiences for you as an undergraduate?
I took most of my courses at the then Munk Centre for International Studies, which had a collection of international studies programs in Trinity College. U of T’s support in broadening my horizons through these programs was critical. What my BA gave me was exposure to a huge range of courses — East Asian civilizations, macroeconomics, Canadian foreign policy, different languages — as well as to professors and students from diverse backgrounds. U of T’s multiculturalism gets bandied about all the time, but it’s true. I could feel international on my own campus.
Also critical was earning scholarships to study outside the province, at places like Laval, made possible by winning a CD Howe Scholarship, in Germany, through the Trans-Atlantic Summer Academy, and in London, thanks to the Melzer Travel Scholarship. I have to say, my history professor Bob Bothwell was very supportive in this regard, as he pointed me to the scholarships.
How important was it to do the Master’s after?
It was necessary because I didn’t know yet what to do. I was already committed to doing a Master’s a year and a half before the end of my undergrad. But more than that, I needed that year to be able to do this job and others like it that I’ve had.
My undergrad taught me how to learn. It taught me various schools of research analysis and critical thinking. But I didn’t do much thinking of my own before the Master’s, and this is a feature of how much knowledge needs to be transferred before you can articulate a different point of view. I was asked in my Master’s not to relearn, synthesize or critique, but to come up with new thoughts. And that does make a big difference for my job, which is head of strategy for a $90+-billion+ real estate and private markets business.
It meant that I can sit on an investment committee and when an unknown situation arose – like Trump just winning — where you don’t have all the answers, all the data, I can confidently advise on what we need to do.
So what have you advised your clients on, in light of the outcome of the US election?
Real estate is an illiquid asset class and we move pretty slowly. I’ve spent most of this morning telling my clients: What does this mean for your investments? Nothing. What does it mean in the next two years? Not a lot. After that? It could mean a lot because Trump might cancel NAFTA and reverse environmental policy. His ability to implement those moves will depend on Congress and his own party, and that will come out over time. Unlike Brexit none of your values are going to change in the short term.
What does a lead strategist at a global real estate & private market company do?
Most investment businesses have a research and strategy team. Research does the research and analyzes what the market is doing and reports on it — that’s very similar to what is done on the sell side.
Strategy seeks to answer the question, so what? What do I do with that information? Strategy is taking the research and making money out of it or, conversely, reducing risk, which improves your returns. What I tell my team is we help the investment professionals make better decisions.
You’ve worked around the world. What benefit does such experience of cultural and societal difference give you?
I’ve always worked with people from different cultural backgrounds — I’ve managed Pan Asian and Pan European teams, for instance. You realize people don’t think and operate in the same way. You see it reflected today in a macro sense: the British want out of the EU; they say, we are a big trading nation and they need us more than we need them — which is true in dollars and cents, and when you think like an Anglo Saxon, because Anglo Saxons put a lot of priority on business. They ignore the fact that for continental Europeans, Germans in particular, the whole is greater than the sum of its individual parts. So a company in Germany will put the survival of the EU ahead of their trading partnership with the UK, whereas UK companies wouldn’t do that. So this view that you can have your cake and eat it too is a fundamental misunderstanding of cultural norms. And when managing teams working around the world, you’re trying to get investors to understand these differences.
I’m not an expert. I’m still learning every day. But that experience of different countries helped a lot — the fact that I’ve been in the buildings I’m talking about, that I’ve met the clients and, for instance when I was presenting in Tokyo, I could say, it was nice to see you in Osaka last year. As globalized as we get, the personal touch still matters.
And, of course, growing up in a multicultural environment like Toronto helped a lot.
What does it take to be successful in an international career?
I started out with a desire to see the world. Everything else is a consequence of that. I didn’t set up to be an economist or strategist. I wanted to travel. To walk the streets of Osaka or visit a market in Marrakesh. All through high school and university I took every opportunity to get out there. I sit here as a result of that, and not as a desire to sit here.
International careers require a lot of travel and there are personal consequences. I’m pushing 40 and have a 2 ½-year-old at home. With Moody’s and JLL I was traveling 3 weeks a month — to Russia or Czech Republic or Dubai or Poland. I’m now in a position where I’ve been able to scale that back and send other people. But if you want the credibility of building a big international career, it does require personal sacrifice. And if you’ve talked to people in aid work or the UN, it’s the same thing.
What advice do you have for students considering a career in your sector?
Two things are important and there is one challenge.
First: Build networks and contacts proactively. I have lots of students contact me, and I will give the time of day to those who say, I’d like to talk to you about the industry. Most people will and those who won’t, you probably don’t want in your contact list anyway. Even if you don’t land a job, you’ve still made a contact.
Second: Get some kind of job experience along the way. It doesn’t have to be a six- or 12-month placement; it can be a lot less for the right students to learn the necessary lessons.
For example, when I was at Moody’s, it took me a year to retrain grads for working and by that I don’t mean that they were substandard, but the thinking process that goes behind constructing an academic paper — introduction, build up your arguments in the body, conclusion — is different from a business document. In a business document, you start with the conclusion and then only tell them what they need to know to support that conclusion — that’s it. Short, punchy. That inversion of the whole argumentation process takes a while to learn and if you’ve had that lesson along the way, it is a less steep learning curve.
And of course the benefit of having some business world exposure is that one is already building networks.
In more general terms, a challenge for my industry — and for academic institutions training people for this field — is that for the past 25 years now finance in all of its aspects — banking, hedge funds, real estate — has been a leading sector of the economy , and it’s not now. It’s shrinking, through regulation. As Brexit and now Trump show us, globalization is getting rolled back. So the driving force behind financial and trade deliberalization, the cooperative game between nations, to use game theory terms, is weakening. This is my personal view.
Academic institutions by their very nature have to be backward looking in order to be forward looking, to learn from knowledge, experience and data to educate the next generation. But if we’re at a turning point, and if I’m right that globalization is getting rolled back and the finance sector is shrinking, the world that they’re going to be working in is going to be very different from the last 20 years. I’m not talking about entire sectors like tech and pharma that are growing.
Why do you think that is?
I think globalization failed a significant minority of people, and for another significant minority who support globalization — and I count myself among them — we’ve failed to make the case of how globalization benefits them. And so they feel they have been marginalized or left behind; Brexit and the election of Donald Trump are a protest vote against the view that globalization and liberalization have benefited the few at the expense of the many. No one during the Brexit campaign was making a case to the British that the reason you get to go on a holiday in Spain every year and afford it is partly because of the EU. No one said that. Now, if you want to go to Majorca next year, it’s going to be a lot more expensive and more complicated — well, sorry, visa requirements, immigration regulations etc.
There’s a well-justified reaction against globalization because people have been left behind — they always are — and the establishment hasn’t made the case to them of what their benefits are. And the global financial crisis and quantitative easing and asset pricing made that worse. Quantitative easing is one of my pet peeves.
You’re also a mentor. Tell us about that.
UBS has a mentoring program where they match senior execs with charities in East London, in Hackney. I’m the mentor for a francophone children’s youth group because I speak French. I am currently helping them through the corporate sponsorship approach and with their pitches.
What is your greatest success to date?
Personally, my daughter and wife — family is more important at the end of the day; they’ll still be around when profit goes down.
Professionally, what I set out to do, I’ve done: I wanted to see the world, I’ve traveled to 90 countries, studied in five or six, worked in a half dozen and I still get to travel regularly.
But I’m most proud of this. I took over European research at JLL just before the global financial crisis. I had 135 staff across Europe and our industry, real estate, collapsed. At one point we were exploring shutting down the entire department, so firing 125 people. Ultimately, I did fire 40 of them, which was unfortunate but cutbacks had to be made. I reformulated the team partially as a consultancy business and agreed with the heads of business that we could be more like strategy and provide advice and get the company to see the value of what was effectively a cost centre so we could retain some jobs.
I was quite proud of the fact that rather than some nuclear solution where they got rid of the whole business line and then would have to recreate it again when things got good, we came to a solution where not only did it improve the value the department was adding to the overall firm, it saved jobs.
The alumni of that team meet up regularly for a curry night in London. Very few are still at JLL; 20-25 are heads or deputy heads of strategy or research at investment firms in London, or senior researchers at other property agencies. That’s your brain trust for the real estate group in London. So we did something right with that team. None of them went to U of T though.