“Even though I’ve been working with ETFs for over 20 years now and have seen tremendous growth and change, I believe that right now we are at the very beginning of what will be the greatest time period for ETFs going forward”
Jobs in ETFs (JIE): Tell us about your career path and your introduction to ETFs.
Douglas Yones (Yones): After college, where I completed undergraduate degrees in Finance and Economics, I entered the financial services industry. My first job had the title “Stockbroker,” and I believed strongly in obtaining further education. After a few years, I felt it was time to make a move to a firm that supported this pursuit. I joined the Vanguard Group, and over the next few years, I was able to complete my MBA at Villanova alongside earning my Chartered Financial Consultant license from The American College.
I spent 17 great years at Vanguard where I regularly progressed into new areas or projects, obtaining exposure to diverse parts of the asset management business and financial services industry. After 10 years in the brokerage-dealer business, where I was involved in moving the business online and implementing best execution order routing, I switched over to Financial Advisor Services and became heavily involved in anything and everything ETFs. This ranged across product development, index management, index relationship, capital markets, sales & distribution and marketing. All facets of the business were wide open and there was very much an attitude of ‘if you want to go tackle that new challenge, run with it, it’s all yours’. There was so much to learn and to be involved in since the ETF marketplace was only beginning.
JIE: Tell us about your international experience and time living in Hong Kong.
Yones: Time on project teams opening and developing international markets – including Europe, Canada and Asia – eventually led to a 3-year move to Hong Kong. There, we launched the original series of ETFs for Asia and helped to further develop the Australian market.
During the first conversation about launching Hong Kong ETFs, I suggested I wasn’t the right person for the role. I had never been to Asia at that point, nor did I have a grasp on the Asian ETF markets at that time. My advocate for taking the role was a stakeholder in the London business as we were working to launch the first set of UCITS ETFs for Vanguard – this was not someone in my direct line of reporting, but one of the stakeholders that I would frequently meet with during my time working in the UK. During these trips, I was diligent about setting full agendas, identifying goals for each meeting and developing relationships with new people in the region. Then on the trips home, I was equally diligent about recapping each meeting, setting forth the action points and following up with my new connections. I like to think that my stakeholders recognized this as valuable work ethic and the skills needed for opening up a new market.
Over-delivering led me to the opportunity to live and work and build a new branch of our business in Asia. I learned early on in my career that any task handed you was an opportunity to over-deliver, and a way to open the door to more opportunities.
Building a business in Asia was an incredible experience and made possible by a mix of good luck, good timing and a willingness to take on any new challenge. That’s a constant for me – always being excited by the opportunity to learn something new, to tackle a problem and find solutions where there doesn’t seem to be one.
JIE: It sounds like you had a fulfilling time at Vanguard. How did your move to the NYSE come about?
Yones: After Hong Kong, I moved back to Vanguard’s headquarters in the US and remained heavily involved in ETFs. The NYSE approached me with a view to developing the ETF business in a new way. We spent time charting a strategic shift and new vision for the business plan. We wanted to turn the New York Stock Exchange into a consultative partner for asset managers in the ETF industry. ETFs were quickly becoming about a third of our volume each day, and we knew there was an opportunity to serve the industry in a bigger way than ever before.
JIE: Are there core values that have served you along the way, taking you to where you are today?
Yones: Number one for me is that people come first – both in work and in life. When you wake up in the morning with the belief that everyone you meet has incredible value, and it’s your job as a leader to extract that value, it changes the way you think about the people you surround yourself with, and what you know you can achieve by working together. We all have different capabilities; we’re all great at different things. Just like a Tetris puzzle, no one piece is the same shape, but together we can be extremely powerful.
The second thing that has always been a mantra for me is to over-deliver on everything. For example: let’s say you are asked to cover a meeting to represent your busy boss. Go to that meeting, take notes, write up an easily digestible synopsis, maybe add an executive summary up front with some key decision points and your own recommendations. If that’s what you deliver for a basic meeting, what else does that demonstrate you are capable of producing for the business? Trust me, your boss will wonder that too.
My third mantra is to always be in the moment. I always try to live my life in the moment. Outside of work is a good example of that: my family knows that when it’s dinner time there’s no electronics. The phones are gone and we’re involved, we’re in the moment. The same for work. If you are in a meeting, be in that meeting. When you need to work on a long-term project, block the time and stick to the plan.
This can and does work, but we can be so busy that we forget to be in the moment. For those who haven’t read the ‘8th Habit’ by Stephen Covey, it’s probably one of the greatest books to touch on this idea, full of tips on how to manage your life so that you can define your life’s priorities and then powerful tricks for how to stick to them.
JIE: Are there elements of culture at the New York Stock Exchange that drew you to the business and keep you there?
Yones: The shared ICE/NYSE culture is 100% team work, 100% collaboration, and 100% about always doing the right thing. There are no party lines, no politics, no focus on hierarchy. It drew me in immediately and over 4 years later, it’s everything I had hoped it would be and more.
Even though it’s a 6,000+ person company, ICE feels like a nimble entrepreneurial organization. Everybody’s in it together, constantly looking for new opportunities and asking if there are better efficiencies that we can provide to the markets – whether it’s ETFs, trading hard and soft commodities, helping companies go public or creating a platform for investing in crypto currencies such as Bitcoin.
Yes the NYSE dates back to 1792 and is one of the oldest organizations in the country, yet to work here feels like you’re working at a start-up with all the passion, excitement and fire that comes with it. It’s a combination of the power house brand that the world knows alongside an entrepreneurial, customer-centric spirit and drive.
JIE: What’s the secret to staying happy and positive at work? Any secrets you can share?
Yones: I read this many years ago, I wish I could remember where, but it’s the greatest tip about how to “be happy” that I could offer anyone. Trust me, it works – people just have to be willing to let it work – and it’s ridiculously simple.
Every morning before you start your day, unplug – so no distractions – and take 2-5 minutes to go through everything in your life that is positive.
When you start the exercise your mind actually fights you. You might tell yourself you’re healthy, but then your mind starts reminding you that your knee hurts or you should be working out more… Begin by wrapping those thoughts in a bubble and let them float away.
It takes time to master, but with practice every day, your mind gets stronger at blocking the negative thoughts. Like a workout programme, it takes time to kick in.
Once you get really good at it, you can prep for important events like a speech or a major client meeting. It’s like a super power that you can use at any time. I started 15 years ago and still do it every day. It’s not anything magical, but it actually does work. And I think the article said 10 minutes was the magic number, but 2-5 has always worked for me.
JIE: What do you look for in a team member?
Yones: I look for an attitude, a positive mindset, someone who is willing to learn and adapt. More important than experience is that someone is excited to learn new things and new skills.
The world of ETFs is growing so fast that all of us have to be learning all of the time. I feel like I’m learning something new every day, so I value a positive attitude and a willingness to dive deep and learn.
The best teams are those where we are surrounded with people that enjoy each other, believe and love the work we do, and strive towards achieving aggressive goals. When that happens I find we’re no longer “working”, we’re coming in every day and spending time with the people we enjoy being with, all while executing with a passion to meet and exceed our stated goals.
JIE: It’s an exciting time for ETFs. The 20th anniversary, breaking through the $6 Trn mark globally at the end of last year, the SEC decision on the ETF rule and non-transparent ETFs. What are you most excited about for the ETF community?
Yones: Even though I’ve been working with ETFs for over 20 years now and have seen tremendous growth and change, I believe that right now we are at the very beginning of what will be the greatest time period for ETFs going forward.
Investors today are not just better educated, but they actually care about being better educated and want to seek out and find information about their investments. They are focused on transparency: knowing what they own and how they own it. The ETF industry has built-in transparency on overall fees and the total cost of investing.
At the same time, you have more product issuers developing unique and innovative products to cover almost every investment option. On top of that, just about every brokerage firm has gone to zero commission for ETFs in the past 4 months.
Based on the combination of these factors, the future for ETFs has never been brighter.
JIE: So it’s a great time to be in the industry. How about entering the industry?
Yones: Whether you’re in this industry today or you’re planning to enter, doesn’t really matter. The market growth rate from here should be exponential.
Even for institutions that have historically only considered ETFs, with zero commission platforms and global access the ETF wrapper is moving to the top of the lists.
This goes all the way down to the individual investor. My daughter makes about $100 a day when she babysits. Due to changes in the industry in the past 6 months, she can now take that $100 and buy a portfolio of ETFs that’s diversified globally across every single asset class – for zero commissions. Never before have investors had this opportunity. Consider the number of investors that have been left out of the growth of the equity and fixed income markets because buying $100 worth of stock with $10 in commissions meant losing 10% of your return. You’re not making that back up, so there’s no reason to invest. All of that changed in the last few months, so there has never been a better time to use ETFs to invest.
JIE: What do you see as the greatest challenge on the horizon?
Yones: At the NYSE, we’re building a market structure that can support and grow alongside significant industry growth. We are the ‘E’ in ETFs, and we are always focused on shaping the next developments in capital markets for the ETF industry.
In 2020 we are evolving different models for ETF trading, and plan to offer ETF issuers even more choice. Later this year we’ll offer issuers to be able to choose the Designated Market Maker model for their ETFs, which is the hallmark of the New York Stock Exchange Floor. We’re excited to debut this model to the ETF industry and to extend the benefits of state-of-the-art technology combined with human judgment and accountability.
JIE: Looking back at 2019, Fixed Income ETFs was one of the main stories. Do you think that will continue in 2020 and beyond, and are there other trends that you think are going to define the next few years?
Yones: There was over $155 billion in net cash flow last year into fixed income ETFs which is impressive considering there’s still considerable uncovered ground for product development in the space. We believe that continues into 2020 as asset managers grow and develop their product offer in this space. ICE Data Services notably has been developing and acquiring many of the major indices not yet covered by ETFs, and as result we have a lot to offer asset managers looking to take advantage of this trend.
JIE: If you had one piece of advice for the ETF industry looking forward into the future what would that be?
Yones: This is applicable to more than just our industry – anyone who wakes up every day ready to go out to learn something new will continue to be better off. The ETF industry is evolving and the regulatory, capital markets and competitive landscapes continue to change. So if you wake up every day and learn something new, then you’re well positioned to evolve alongside the industry and find new avenues to success.
JIE: If you had a super-power, what one thing would you change in the ETF space?
Yones: Perfect trading for every ETF every single day!
JIE: You’ll be speaking at the upcoming Inside ETFs event in Florida which kicks off January 24. Can you tell us a bit about your session on the SEC ruling on non-transparent ETFs and implications for asset managers and investors?
Yones: As I mentioned, I think this is the most exciting time for the ETF industry in the last decade. The opportunity set is real and it’s available to everyone.
The idea that a traditional fund manager will now, pending all approvals and products going live, be able to apply their exact same modelling and alpha generating investment behavior within the ETF wrapper is a win-win-win across every part of the business. Active managers will have access to the benefits of increased efficiencies and a distribution model that is truly global – in a wrapper that can reduce the total cost of investment.
Our session will cover all of the different active non-transparent models that are currently approved by the Investment Management division of the SEC. The NYSE ETF Team is working with every single model and we are excited to list and trade them on our Exchanges.
I would highly encourage anyone with questions to attend this session and connect with me and my team to talk through plans afterwards.
JIE: What’s work life balance for you and how do you achieve it?
Yones: I think work life balance differs for everyone. I fall back on my ‘be in the moment’ mantra. Stephen Covey talks about this process and includes a great exercise in his book to help achieve personal balance: write down a list of the most important things to you in your life e.g. personal health, your overall wealth, success in your career, family time, time with your partner, time playing a sport, reading time, etc. and force yourself to rank them top to bottom.
It challenges you to be honest with yourself, and then his book teaches you to build your life around the list, which is easier said than done. However I can tell you that continually going through the exercise helps keep you on track.