«The basic principles of investing have not yet been rewritten.»
Founding Partner and CIO of OLZ
Carmine Orlacchio is founding partner and CIO of OLZ, a Swiss asset management company pursuing a risk-based investment approach. While “Nino” focuses on optimal diversification in his day-to-day business, he personally went all-in to get the firm up and running.
What does success mean to you?
For me, success has more to do with a qualitative than a quantitative – i.e. financial – dimension. I measure success by the legacy that my professional activity leaves behind. I have (co)founded a company, shaped a corporate culture, and helped develop an investment approach. Have I created added value for our clients? Have I earned the gratitude of the company’s employees and stakeholders in general? How much of all this will outlast my active professional career?
What is it that motivates you?
The daily challenge of doing the right thing. When investing money, you’re challenged every day anew not to lose sight of the big picture and not to succumb to short-term dynamics. My goal must be to improve the long-term efficiency and effectiveness of our investment solutions. In doing so, I must be very aware of the emotional dimension of my profession. It is both challenging and motivating to keep putting things into a long-term framework and not give in to the temptation to act in the short term. The basic principles of investing and risk management have not yet been rewritten.
What was the biggest challenge you faced at the start of your career?
Privately, it was a great challenge to find the balance between my family and building the company. Fortunately, my wife was very understanding. Professionally, it was a huge challenge to build up an asset management business from scratch – in other words, without any existing clients, assets, products or track record. We started with a good idea, a clear vision, and a lot of idealism. The first years were tough.
Who comes to mind if you are asked to name a «high achiever»?
I’ll limit myself to the financial world. One of the top achievers by far, not only performance-wise, is certainly Ray Dalio, who’s very much on-trend right now. I read about his “Principles” 20 years ago and found his approach very inspiring. He didn’t preach profit maximization and say that all the rest would then follow by itself. My favorite evergreen is definitely Harry Markowitz. His groundbreaking insights are unfortunately all too often trivialized, for example by unrealistic assumptions about the market portfolio and the efficient frontier. Markowitz is often quoted, but – dare I say it – rarely read. Another great figure in financial market science is Daniel Kahneman. He contributed significantly to the realization that even the king of investors is naked, in other words that investors are only human beings, not masters of the universe or optimization machines. We need to be aware of our limitations and the cognitive distortions that influence our decisions.
What are your leadership principles?
Leadership can only succeed with mutual recognition. To receive recognition, I need to be close to my people, to recognize and understand their needs, wishes, and problems. That way, I can support them in their professional development and thereby help the company to move forward. This is my job. I follow an integrative approach, listen, analyze, and I’m also willing to accept a different point of view than mine. A leader isn’t like a star that shines in its own light, he or she is more like a planet, reflecting the light of the people he or she leads. It makes me proud to see how the people I work with have developed and grown over their many years with the company. Thanks to them, OLZ has become a success story.
What do you enjoy most in your job, what least?
As a member of the board of directors and management of OLZ, as well as being responsible for operational business processes, I’m increasingly absorbed by new regulatory tasks. This is rather dry and expensive for the company – and not very inspiring. On the other hand, I’m always full of energy when I’m working on investment solutions or solving organizational challenges.
What advice would you give to someone embarking on a career in asset management today or your younger self?
Money isn’t the most important thing. As a career starter, don’t choose the employer that pays the most, but choose an intellectually stimulating environment. Let yourself be guided by curiosity and the ambition to understand everything. To the junior who joins our company, I say, “In the first few years, you’ll work on your professional foundation.” When you’re young and full of energy and ideas, you should go that extra mile and take risks.
What are you thankful for?
For the fact that I’m not materialistic. Above all, money gives me the freedom to think and act.
What is your favorite food or menu?
I won’t even start on la cucina italiana, the list of fine Italian dishes is simply too long and varied to choose one. It’s as if you were asking me who I love most: my wife or my mother. So let’s concentrate on Swiss cuisine instead: Suure Mocke mit Härdöpfustock, a hearty meal of beef braised in wine with mashed potatoes!
What book are you currently reading?
I’m currently reading a classic from the 80s, Tom Wolfe’s “The Bonfire of the Vanities”. The author ironically denounces the selfish “greed is good” attitude that dominated the financial industry in the 80s and 90s, which finally culminated in the Great Financial Crisis of 2008. What fascinates me about the author Tom Wolfe is how he, with a sharp eye on the financial industry, mercilessly exposes the contradictions of the US economy and society and holds up a mirror to the entire western culture. In a way, I found in his books an explanation for today’s flood of regulation that is now spilling over me/us with the well-meant intention of healing the financial industry from its sins.
What famous person would you like to meet?
Papst Franziskus, aber nicht, weil ich Italiener binPope Francis, but not because I’m Italian and had a Catholic education. I consider him one of the few influential people in the world – if not the only one. He builds bridges rather than walls and follows an inclusive approach. It’s no coincidence that he chose to name himself in memory of St. Francis: he’s trying to revolutionize an institution with 2,000 years of history that’s also been overshadowed by scandals, bringing it back to its original spirit and more in line with its grass roots. Mission (almost) impossible.
What was your favorite subject at school?
History. In the first years of school, I was fascinated by Greek and Roman history. In high school and later at university, I was fascinated by the idea of history as evolution, as a consequence of social and technical progress that promotes new forms of economic organization of a society, new forms of civilization and culture. Thus, over the years, I implicitly moved on to philosophy.