Here’s What Chris Ailman Says Didn’t Change in His 40 Years

“Changing the face of Wall Street is absolutely critical.”


Courtesy photo/ Illustration by II

Chris Ailman, who has served as a CIO in one capacity or another since 1985, has watched as the institutional investment business has gone through huge changes, from technology to investments and globalization. He hopes some changes, such as increasing fees, will slow. And that issues like sustainability and the diversity of the industry’s work force will finally change for the better.

Ailman, one of the industry’s longest tenured CIOs, recently announced his plans to retire from the California State Teachers’ Retirement System. He spent the past 24 years at the helm at CalSTRS, and was CIO for the Washington State Investment Board and the Sacramento County Employees Retirement System before that.

Ailman reflected on what has changed since he got his start — and where he hopes the industry will go next.

“When I went to school, the term chief investment officer wasn’t widely used and public pension plans as we know them basically didn’t exist,” Ailman said. “I grew up here on the West Coast so even Wall Street and money management weren’t really talked about. When you talk about the growth of the industry, I was fortunate to grow right along with it.”

According to Ailman, both asset classes and tools have grown incredibly complex over the years. He recalled that when he started out in the industry, stocks were divided between U.S. and non-U.S. — and the two were distinct asset classes. Currency management was a “foreign concept” to some investment offices at the time.

Pension portfolios have grown more complicated, as asset owners have added a broad range of privately-held assets, derivatives, and niche asset classes like litigation finance.

“It’s immensely more complex and immensely more global,” Ailman said. “Wall Street never ceases to amaze me when they create new products and tools.”

Ailman saw rapid changes in technology during his time as a CIO. He started out working in tools that are now long-gone, including Word Perfect and Telerate to stay on top of financial data, and then watched as the industry pivoted toward Bloomberg terminals.

Early on, according to Ailman, one of the biggest challenges was accessing information.

“You have to be constantly asking questions and seeking more information,” Ailman said. “In the old days, it was hard to get information. Nowadays it’s plentiful, but some of it isn’t accurate.”

Along with the industry itself, investment fees have grown substantially over the years — and that’s cause for concern, according to Ailman. “I’m worried about fees,” he said. “I’m worried that some of the services provided are far too expensive for the value they deliver.”

As he plans to move on from the CIO seat, Ailman is hopeful that his compatriots can continue to carry the torch for certain issues that he spent the latter part of his career focused on. Sustainability and climate change, of course, are hugely important to Ailman, who plans to spend time on that issue after he leaves his seat at CalSTRS.

“Almost all [asset owners] have a long time horizon,” Ailman said. “They — and their money managers — need to be much more attentive to sustainability.”

Ailman also emphasized the need for the industry to improve its diversity moving forward.

“Changing the face of Wall Street is absolutely critical,” he said. “Group think is the enemy... You need global perspectives for these global problems.”