A View from the Top: A Palestinian-born story-teller taking on the asset management industry

As chief executive of Hermes Investment Management – the money manager set up to run the BT Pension Scheme – Nusseibeh manages around £30.8bn assets

Professionally, Nusseibeh says, his main responsibility is to make the world a better place for those retiring (Hermes Investment Management)

In some ways Saker Nusseibeh is just another investment professional earning a chunky salary in the City of London. He’s an Old Etonian, lives in Kensington, sends his three children to top schools and universities and has the confidence befitting his title, as chief executive of Hermes Investment Management – the money manager set up to run the BT Pension Scheme.

But in other ways he’s nothing like his peers. Instead of a Rolex or Patek Philip, a worn, braided bracelet sits on his wrist. The Financial Times once got away with describing him as a "hippy" and when quizzed about his career, life and ambitions, he segues nimbly between references to Greek mythology and lyrics by Simon and Garfunkel or Dire Straits. He's a true child of the 1960s.

He has a PhD in medieval history and is evidently an academic, but he’s also a dog-lover, an avid environmentalist, a philanthropist and a passionate story-teller. When, over tea in his East London office I ask him how he ended up leading a multi-billion global investment company he thinks for a minute and then – without a hint of irony - says in lightly accented English: "I sort of got here by accident.”

Nusseibeh was born in East Jerusalem in 1961 and, after finishing primary school, was sent to Eton at the impressionable age of 15. Although he admits he was among the most privileged boys of his generation, he differed from his college chums in that he had experienced devastating conflict before stepping into the hallowed halls of the English public school system. He witnessed the Six-Day War of June 1967 – a conflict that left tens of thousands dead and many more wounded. A traumatic experience for anyone – let alone a mere child. But Nusseibeh says that he reaped lessons from that experience for both his career and life, many of which he still implements most days decades later. One example of such a lesson, he says, is that “the downside is not that the market might go down. The downside is, in fact, that everything might go down”.

After school, Nusseibeh moved to London in 1979, where – as a student at the prestigious King's College - he shared a bedsit in King's Cross with a Battersea rescue hound. It was a rough area, the domain of prostitutes and drug dealers. Three decades later the neighbourhood of that time is largely unrecognisable and Hermes, under his watch, is proving instrumental in turning it into one of the chicest, most vibrant districts in the capital, replete with educational facilities, a school for the deaf, affordable housing, bars and celebrity-frequented restaurants.

Speaking to dozens of finance executives over the years has taught me beyond a shadow of a doubt that humility and investment management don’t often go hand in hand. Sharp elbows are likely to get you further than a considerate nature, but true to his modest temperament and mild manner, Nusseibeh is not one to brag.

After graduating, he couldn't get a job in academia as he had hoped, so in 1987, through a family connection, he ended up getting accepted onto the graduate programme of Mercury Asset Management, a pillar of the London investment scene at the time. In 1996, he joined Trust Company of the West (later the TCW Group) and stints in senior asset management positions elsewhere followed, before he joined Hermes as head of investment in 2009 - a move which he describes as "the luckiest thing that ever happened to me". He became chief executive in 2012.

Luck or not, Nusseibeh these days oversees in excess of 100 investment professionals and a total workforce of more than 350, across offices in Singapore and New York as well as London. Hermes has around £30.8bn of assets under management and over £264bn in assets under advice, or stewardship. It is also considered one of the most sustainability-focussed among all major asset managers.

Nusseibeh lives just off High Street Kensington and although he’s been working in the City for around three decades, with only short spells abroad, and even though he’s the first to admit that the financial system as we know it is deeply flawed, he shows no signs of Square Mile fatigue. Even the tube during rush hour doesn't seem to unnerve him.

Professionally, he says, his main responsibility is to make the world a better place for those retiring, and that means that to him he has “the best job in the world” and one for which he enjoys waking up in the morning. But plain sailing it is clearly not and there are plenty of things keeping him up at night.

At the very heart of it, Nusseibeh believes that there are fundamental misunderstandings around the function and purpose of asset managers. He says that the perception that the industry is all about competition is entirely erroneous and also argues vehemently that the complex financial models and systems upon which we rely daily are dangerously outdated.

He’s a preacher of the importance of trust across an industry that is still reeling from a massive subprime mortgage crisis, a Libor scandal and countless other examples of misconduct. So in 2011, he decided to take action and help the sector recover its reputation and dignity by launching the 300 Club with eight of his colleagues - a group of investment professionals from across the world aiming to respond to what they call an “urgent need to raise uncomfortable and fundamental questions about the very foundations of the investment industry and investing”.

Members include the former chief investment officer of Schroders, Alan Brown, and Robert Talbut, the former chief investment officer at Royal London Asset Management.

Nusseibeh says that the formation of the club was at least partially borne out of his anger at his colleagues in 2009 after the financial crisis. “[They] knew the system was broken but no one stood up to do anything about it.”

It derives its name from the 300 Spartans who fended off the Persians at the Battle of Thermopylae in 480 BC. The club “pushes people to question established truths of the industry” says Nusseibeh. The story of the 300 has become a symbol of what can be achieved by a small band of high conviction individuals against overwhelming odds.

The club's charter warns that a broadly held belief, that complex and expensive financial models and investment structures will deliver a good outcome for investor, is wrong and that the ways in which we currently measure the success of an investment has “severe limitations”. It cautions that market dynamics are “likely to be increasingly atypical” over the coming years and that we therefore need to radically rethink the way that we measure success. In other words, we’re need to brace and adapt in order to be able to confront the turbulence that might be to come.

Nusseibeh explains that some of the investment costs buried in the complex structures that we use in finance could lead to a poor performance for clients, irrespective of what the market does. And he also says that we all need to get our head around the fact that there’s no such thing as a risk-free baseline – like US treasury bonds or even gold— against which to measure investment.

The charter argues that “over reliance on a continuation of the implicit status quo is likely to prove extremely costly to those who chose to ignore the potential ultimate impacts of emerging instability”. And while that might sound like a bit of a mouthful to you and me, Nusseibeh sums it up characteristically succinctly: “We have a moral responsibility to make a change”.

Other elements of finance and banking could do with a major shakeup too, he says, not least the amount of money that a tiny minority of company bosses get paid. Data from the Equality Trust charity shows that average CEO pay at the UK’s 100 biggest companies is currently over £5m. “I don’t have a problem with people being paid a lot,” he says. But he does have an issue when money no longer functions as an incentive for business leaders to act in the interests of – not just themselves and their companies— but also the wider industry and the societies in which they operate. He himself received a base pay of £428,000 last year, and a bonus which is set against a range of metrics that are strictly assessed by a remuneration committee of independent non-executive directors. Much of his compensation is deferred over three years and £250,000 is payable at a three-year vesting cliff.

As our conversation draws to a close, I ask Nusseibeh where he sees himself in ten years.

For the first time since I sat down with him, he laughs to the point where I almost feel embarrassed at having asked the question. Then, bluntly and honestly, he says he has no clue. “But I will tell you a story to answer your question,” he says, before explaining that it’s a wisdom his late father imparted upon him in a letter to boarding school some forty years ago.

"Society is made up of three classes: an upper class, a middle class and a lower class," he says. The upper class, he explains, consists of anyone who provides a service - a lawyer, doctor, teacher, judge, even a street sweeper and a servant - but doesn't expect anything back. “The middle class is made up of those who provide a service - the same doctors, lawyers, street sweepers and servants - but also expect something back.”

Finally, he says, the lower classes are all those who don't provide a service and exclusively take from society. "I will always aspire to be a member of that upper class," he says. “And if everyone else did the same, we’d have a lot less to worry about.”