Ludovic Djebali
former Co-Head of EMEA Distribution @ Source ETF

… if you empower people, they will come back with bright ideas and help you move the business forward

Ludovic Djebali was convinced to switch to a sell-side role by his line manager in 2005. Since then, he has worked his way up to co-head of EMEA distribution for Source and has led the second largest sales team in Europe, introducing smart beta ETFs, active ETFs and educating clients across the continent about the structure and benefit of these transparent products.

Ludovic spoke to Jobs In ETFs about how he built up and contributed to the two ETF businesses that now represent €90 billion in assets in Europe. He also shared his view on switching divisions in a company, why first impressions matter and the best way to ask for a pay rise – by not asking in the first place.

Jobs In ETFs: How did you get into the ETF industry?

Ludovic: By switching from the buy side to the sell side. My role as product development and engineer at Societe Générale was my first job, which included building structured products and managing active funds.

My business line manager said, ‘You should sell products’ and said I would be good at it. At the time I didn’t really think about having direct contact with investors, I was building products, looking at collateral, writing market material – I was explaining how products worked and I really liked the educational component of that job. My manager said, ‘Just think about it.’

This was in the early days of ETFs, when they represented only around 170 products with €56 billion in AUM in Europe. Today it’s €673 billion in Europe alone.

I’m glad I made the change. I think it’s good for people to see and do different things as it allows you to better understand what clients need and what products should be offered to the investor community. Never say ‘no’: try out new experiences, think outside of the box and get outside of your comfort zone. Like a managing director of a hotel, they should start off by cleaning the rooms before managing the whole business. Both will be important to build your own experience.

JE: Is switching between departments easier to do within the same company, as recruiters typically tend to look for direct experience in the role they are advertising?

Ludovic: It’s easier to do it in the same company, yes, as you will build strong relationships with your managers. I moved from the retail network at Soc Gen to the investment bank, and my manager pushed me to do that. Your manager must also be a mentor and someone who can push you, especially to gain different experiences in a large company. How can he or she expect you to stay committed otherwise?

Source had 10 employees and we ended up with 90 people. People management has been an important challenge for me – the way you manage four people is different to the way you manage 26 – and second, you need to spend a huge amount of time with each person, to make sure they align with you and they trust you.

I’ve always been doing sales and sales management but step by step as I built trust with my managers I became more focused on strategy, moving up from a pure bottom up approach in sales to a more strategic view to build and develop the business across EMEA.

As to whether you pick to work for a small or large business, it depends on what you expect from this business and how your managers will deal with you. If they have good will and you earn their trust, you can do a lot of things.

JE: How do you build trust?

Ludovic: To build trust you need to be fair, get on with your colleagues, work harder than anyone else and work collaboratively. Another piece of advice is to find a business you strongly believe in and take it to the next step.

In my last roles at Soc Gen, Lyxor and Source, I found great leaders to work with and am still in touch with most of them today. Also, stick to your principles. You’re not just working for a firm, you are working with people and for people and you should all share a higher cause that you believe in.

I don’t believe in luck, only hard work.

JE: When would you say that you were most outside of your comfort zone?

Ludovic: When I moved to the sell side. I remember my first day at Lyxor; I sat down at my computer and someone said, ‘You need to call clients and book meetings to explain how ETFs work’. I gathered all my courage to make those first calls. I scheduled 300 meetings with clients in the first year.

I met many CEOs and CIOs across Europe and EMEA thanks to my job as sales manager, in Germany, France, Benelux, the UK, and Italy. I’m still in touch with them and I’ve built very strong relationships – again, built on trust. It has then led to senior management asking me to head up a strategic account management role for Source alongside my other responsibilities.

During my career, I’ve really focused on the fact that I’m dealing with people and that’s important. A career lasts 30 years at least. You are here for a long time and your paths will cross several times with those who you are dealing with today. Build sustainable relationships with them. You can’t do that if you only sell products.

JE: Did your sales strategy change after those 300 meetings?

Ludovic: Most investors in Europe had not heard of ETFs at the time so it was first about explaining the structure of ETFs and their benefits, instead of trying to actively sell the products. Education was the priority and helped to prepare the ground to sell ETFs.

I’ve led many smart beta initiatives, including the first, in Europe as sales manager and it was a new area of investment when I started at Source in 2009. Five years after joining the industry, education was still an important catalyst for investors to be comfortable with such products. After all the educational work by ETF providers during the first decade, that work paved the way for more sophisticated products in Europe. When we first launched Active ETFs at Source in 2011 we faced the same issue of education. Investors were reticent but we worked hard and we raised more than €8 billion. I was personally very active in developing a specific approach to selling, marketing and communicating such products that were not traditional market cap weighted strategies.

What has been interesting is that from 2011 we have seen a strong decrease in the number of products that are being launched. The first 10 years in the industry were more like a race to market new and fashionable ETFs and exposure, and now it’s more disciplined. Now, ETF providers ask clients what problems they are trying to solve, and they should put the client at the heart of the product management process in a systematic way.

JE: How does one personally navigate working at a company during a change of management, like you did at Source?

Ludovic: You need to welcome that in a positive way. It means that other people think the business is worth considering and I believe that disruption has to be viewed as positive. With change comes opportunity and it seems easy to say that but it’s true. If you act in this way and have this belief, good things will happen. You need to align with your company and trust your managers, and if you can’t agree to do that, and if you don’t, you need to leave and follow another route.

JE: What is the best way to ask for a pay rise?

Ludovic: You don’t ask for it. You need to earn a pay rise. If you join finance just to make money, it won’t happen. The best way to be successful and earn money is to buy into something, to strongly believe in what you are doing. I don’t know any manager or billionaire who wakes up one morning and says, ‘I’m going to be a billionaire in 30 years.’ You need to work out how to be fair, to act with good will, and then things will happen.

Your manager has also to give you a framework with clear objectives that you will both agree and review on a regular basis.

You have to trust that the job you have done will deserve a pay rise. You can’t ask for it unless you’ve done everything to deserve it. Do the best you can and be good at what you’re doing and good things will happen. Too many people are asking, asking, asking. I’ve co-managed a large ETF team of 26 sales guys and I knew straight away who would deserve it, and it was not usually those who were asking for it.

JE: What is your tip for being a good manager?

Ludovic: First, you need to trust your team and empower them. You will be surprised, but if you empower those people they will come back with bright ideas and help you to move the business forward.

The market is demanding innovation at such a rapid rate that ideas cannot only come from a leader, but must come from everyone else involved. Therefore, leadership is shifting from telling everyone what to do, to empowering others to come up with the best and brightest ideas that have you may not have thought of before.

As a manager, one of your goals should be to help your people to step up. If they get promoted you should benefit from that as well. You cannot succeed alone.

And leading by example is a key value. I will never ask someone to do something I can’t do myself, and you need to trust that as a team it will lead to a better outcome.

JE: How important are first impressions?

Ludovic: You have only one chance to make a first impression. This is extremely important. But having said that, as a manager, you also need to give someone a chance as people can always improve. Managers should help people and give them the opportunity to perform. You must allow and enable your team to step up, as if they don’t, nothing will happen for you.

JE: What trends do you see coming in the ETF world?

Ludovic: Newcomers have as much chance to succeed as we did at Source if the business model is robust and backed by capital. At Source, the founding partners were smart as they hired very senior people from the beginning who had relevant experience in ETFs and an entrepreneurial mind set and that was one catalyst to deliver on the business plan. You can waste so much time and money if don’t have the right people on board.

Innovation is and will become even more important in the coming years: in the way we’ll educate investors, in the way we conceive and launch products, and in the way we sell them and develop distribution processes.

Another form of innovation brought by Source has been the development of partnerships with major asset managers such as Pimco. Very early on, we understood that clients were underserved by the existing fixed income offering and it was translating into a low penetration rate in clients’ portfolios. I contributed to design and led some initiatives across Europe and we’ve raised €8 billion but I have to admit it has been challenging to introduce the first actively managed ETFs in Europe. There are still many opportunities in fixed income that will need to be taken up by new players or existing ones.

The challenge for most of the existing players will be to adapt their business model as the price war and margin compression will dramatically change their economics and priority of their business in the next three to five years. And this will lead most providers, who are not backed up by large asset management arms, to think outside of the box.

These big guys will keep going at what they are good at and the biggest should win this fight. But all the others will need to adapt their models and find additional drivers of growth, not necessarily becoming a specialist – smart beta, active ETFs etc – or generalist, but finding a middle ground in which they can operate. However, the future will certainly see more niche players with non-market cap weighted investment solutions. There are important product gaps to fill and new products to develop.

We expect $1000 billion AUM by 2020 so there are more opportunities and a lot of ground to play with. I see four challenges or trends ahead: smart beta, education, fixed income and retail investors. With MiFID II, the legislation puts emphasis on protecting investors, avoiding conflict of interest and banning commissions in respect of portfolio management and advice. The legislation will create a level playing field and reshape the European financial landscape. I think that will lead to the democratization of ETFs even more.