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By Tom Karow
Roosevelt alumnus Robert van Brugge is chairman and CEO of Sanford C. Bernstein, a Wall Street research firm that is ranked number one in its industry for overall quality, detailed financial analysis and original research, according to independent surveys of major institutional clients. During an interview in his midtown Manhattan office, van Brugge, 44, talked with Roosevelt Review editor Tom Karow about his time at Roosevelt, his career and what qualifications he considers important in job applicants.
When Robertt van Brugge attended Roosevelt in the late 1980s, he was an honors student whose outgoing personality made him popular with fellow students, faculty and staff. His campus home was the former Herman Crown Center and he did everything from secretarial work to serving as president of the student senate. "Robert was the kind of student who somehow found his way into my presence," said Ted Gross, president emeritus of Roosevelt. "He was personable and enthusiastic then, and I'm not surprised that he's done well."
Gary Langer, associate professor of economics, also recalls van Brugge. "Robert was so good that after he took all of our undergraduate courses, he started taking graduate courses," Langer said. "He was also computer literate ahead of his time. after the Economics Department got its first computer, Robert organized and digitized all of the department's records in less than a week."
Respect for van Brugge's work continues. In its 2012 annual report, AllianceBernstein, a global asset management firm and parent company of Sanford Bernstein, said that during the past year, van Brugge led Bernstein research services "to strong market share and increased profitability."
ROBERT VAN BRUGGE In 1986, I was a member of a Dutch education program that was actually part of the Marshall Plan. It brought 50 high school students to U.S. colleges for a year. I went to Roosevelt and liked it so much that after one year, I decided to stay. Roosevelt was generous enough to give me a scholarship for the final three years.
RvB I loved living in the U.S. and Chicago. I liked the culture and the people. And I loved Roosevelt and living in the dorm for four years. It was just a very diverse, fun environment where I made great friends and had an opportunity, I felt, to make a difference. For example, I was president of the Student Senate.
RvB I had a double major in economics and political science. In fact a couple of adjunct faculty members in the Economics Department that I got to know hired me on a part-time basis while I was a senior. I also worked for them for a little while after I graduated before I had to move back to Holland to complete my military service there.
RvB Yes, and it came from Roosevelt and the faculty. It was a small turnaround consulting firm that bought minority owned companies and helped out small minority owned firms that had gotten into financial trouble. I helped them run a business and found I really enjoyed the intellectual challenge, business strategy and finance.
RvB Yes, I was a commercial lender with First Colonial Bankshares Corp., a small regional bank. Then I applied to business schools and got into Wharton (the business school at the University of Pennsylvania) where I supplemented my Roosevelt degree with an Ivy League degree.
RvB I found that when I was applying to business schools, my application was different. Many of my classmates went to Ivy League colleges as undergrads and worked at Wall Street banks before applying. I said if you want diversity of thought, hard work, results, consider me.
RvB Having seen the CEOs of large companies at work, I actually didn't aspire to that anymore. It seemed to me that they spent much of their time running from meeting to meeting and not enough time on content and strategy. I really like problem solving and intellectual challenges and I didn't see that so much in the role of CEO. I know that's a bit ironic, considering my current job!
RvB It was 2002 and I got a call from a recruiter who said, "We're looking for someone to become a Wall Street analyst." In 2002, being a Wall Street analyst was about the most despised occupation you could imagine. There were many incidents of conflict of interest. I had seen some analysts' reports and I didn't believe they were intellectually rigorous. I told this to the recruiter and she said, "This is not your typical Wall Street bank. This is a firm that does it very differently." She said the firm was Sanford Bernstein, and frankly I had never heard of them at the time.
RvB 33, married with one child and another on the way. Plus we had literally just moved into a new house in Chicago three months earlier. So I flew to New York for the interview, which as a matter of fact, was conducted in this very office (on the 15th floor of the AllianceBernstein building at 1345 Avenue of the Americas).
RvB Yes, I was so impressed by the firm, the people, the product, and the process that I decided to take the plunge and move to New York. I started covering the U.S. beverage industry, companies like Coca Cola and Pepsi. I was, however, familiar with the industry as some of these companies were among my clients at McKinsey.
RvB The secret to success is that you have to differentiate your research from that of everybody else. We go head-to-head with Morgan Stanley, Goldman Sachs, UBS, you name it, all the major investment banks. You have to be willing to take risks. A lot of analysts will only write down what the managers of the companies tell them. They're not going the extra mile of analyzing facts and making assumptions. You need to go to the plants, go to the stores, meet with suppliers, meet the customers, do primary consumer research. At Sanford Bernstein we do all those things. We try to come up with a better answer.
RvB When I was an analyst, one thing that we wanted to do was figure out the cost structure of the delivery systems of Coke and Pepsi. At the time, there was a lot of speculation that they were going to essentially do away with their traditional distribution systems. So we actually followed their trucks around in a car and using a stopwatch we determined exactly how long it took a delivery person to take the products off the truck, stock the shelves, etc. We tried to estimate what it would cost to do this by using a third party distributor. Our conclusion was that it was much too risky to change the delivery system as the potential cost savings could easily be eaten up by lower sales effectiveness. So we said we don't believe that the soft drink companies were going to do this. And to this day, they haven't done it.
RvB Five years. I was then tapped on the shoulder when the position of our Director of Research came open. They recognized, I think, that I could provide some advice to newer analysts, even though most of them operate very independently. I also had done a lot of work on valuation and therefore was in a good position to train our new analysts. I did that for four years and then when our CEO was promoted to a larger role at the parent company (AllianceBernstein), I was asked if I wanted to step into his role. I thought that was a great honor and I accepted.
RvB About 60 around the globe. A big area of growth for us right now is Asia and I have spent a lot of time flying back and forth to Hong Kong and Singapore where we've opened offices. We're also strong in Europe. I go to London often and I spent a year living there between 2009 and '10. We keep on gaining market share every year, which is a great thing to see.
RvB They are technically permitted, but they cannot trade in the opposite direction of their recommendation. What it means is that by and large, our analysts do not own stocks in their covered companies.
RvB Typically every analyst produces one or two books per year. Although things change quickly, we always try to come up with a five year forecast. The fundamentals for large businesses don't change all that fast. Our job is to see what is secular and what is cyclical, what the external environment is vs. what's under control of the management team. I'm proud to say that Sanford Bernstein is considered to be the highest quality brand in investment research. We will only hire the very best people for every position.
RvB I personally do a ton of interviewing and recruiting. We don't hire a single analyst at this firm unless I get to see him or her, but that's only after they've already gone through about 15 to 20 other interviews. We only hire one out of every 15 or so people we talk to.
RvB One that tells me how you distinguished yourself. Don't give me a description of your job. That's boring. Say, I finished first out of 100 people doing such and such. I was the youngest person promoted among all my peers. I single-handedly opened up the largest account. I took the initiative to start up a new business line. It is those things that are important to show that you're entrepreneurial, that you're a go-getter, that you can produce results.
RvB I think it's important to get your foot in the door somewhere and just make a difference. It doesn't have to be at the biggest company. It doesn't have to be the ideal job you saw for yourself. It's far more important that you just make the most out of every opportunity because that will help you sell yourself, either internally at that company or to move on for another job. I also would advise against frequent job hopping. As somebody who looks at resumes all the time, when you see people who constantly change for the fast buck, that's not the type of person I want to hire or that most people want to hire. You need to show some consistency and have the perseverance to hang in there and see something through.
RvB Well, that obviously is the big question in the entire investment industry. Index funds can only exist if there are active managers to keep the market efficient. If everyone purchased index funds, you would see massive upswings and downswings in the market. Plus I think that you will find over long periods of time, actively managed funds may be better in terms of downside protection in a down market. People need to select the right managers and stick with them, but unfortunately the last few years have not been very kind for active managers.
RvB Yes, just last year. I waited a long time as my parents are still back in the Netherlands. I love living in New York and working for a great company, but I am still partial to Chicago – I still root for all of the Chicago sports teams!