How to manage clients’ money, what is failure like and how to overcome it, who can be a good analyst? At a mentor lecture at the Corvinus on 21 November – under the auspices of the Banker Training Mentoring Programme – students interested in the topic asked the young professional a lot of questions.
Balázs Szabó said that he had been working for Hold Asset Management since 2016 and became CEO in a very short time. This is his first and so far only job. ‘Actually, I started at Concorde Asset Management, but then the company changed its name to Hold Asset Management, so the split from Concorde Securities was clear. I always wanted a job that allowed intellectual freedom, and I didn’t find that everywhere, but I found it at HOLD,’ he said about his early days. He briefly introduced the company: they currently manage assets in a value of HUF 650 billion. Hold does not provide investment advice in the way commercial banks do, for example; if they see that a client has accumulated, say, HUF 20 million, they call the account holder and offer their investment advisory services, helping the client to decide what to invest in, and at the end, the client makes the decision. ‘We are not investment advisors, in our case, it is not the client who decides, it is us. If the client trusts us, they simply transfer a part of their assets – in private asset management this means at least HUF 120 million – and leave the decisions up to us. We build their portfolio and modify it if we find it necessary,’ the CEO explained. He added: the HUF 120 million threshold in the private asset management activities of the Hold indicates that this is an absolutely small segment of the population, as the majority of people in Hungary have no savings at all nowadays, and even the replacement of a broken washing machine presents a huge problem. The next level is when someone has some savings, then they mostly keep them in deposits, maybe in government bonds, because they are now intensively advertised. Currently, only a few percent of Hungary’s HUF 100,000 billion in savings are in shares – it means the absolute minority of people, which is a question of financial education, too.
How did you start, what did you look for at the beginning of your career?
In answer to questions, Balázs Szabó said: naturally, he also started as an analyst, i.e. he helped a fund manager. This means you have to follow the big industries and monitor the macro situation, too, at the same time. He pointed out that it is not possible to know all the details about an industry or a company, and that is not the decisive factor anyway. What you have to decide is this: what are the really important pieces of information about a company, what is the input to focus on that can make a company undervalued on the stock market.
Szabó also told the audience frankly that in the first two years of portfolio management he was very stressed, he felt that his work was a failure, he even lost money when the stock market crashed because of the Covid epidemic – so he ‘made’ HUF 600 million from HUF one billion. (Actually, in such cases, HOLD provides you with a coach and a psychologist, if you wish.) ‘We always tell our clients that it is not worth investing for a short term, because we cannot guarantee good returns in one year, the role of chance is too big in that case, and if you want to get good returns, you need to invest for at least 3-5 years,’ the CEO explained.
Szabó became a portfolio manager at the age of 26, and later won the Emerging Portfolio Manager of the Year award twice for the Hold Expedition Investment Fund. He became Deputy CEO and then, in this autumn, CEO, when the former CEO, Botond Bilibók decided to retire at the age of 50 and chose him as his successor. (Bilibók continues to be a member of the Supervisory Board and a co-owner, supporting the work of HOLD in this way.)
The CEO also spoke about the Banker Mentoring Programme, where he said he had gained a lot of valuable experience in 2014. He was able to get acquainted with a lot of activities going on inside banks, and on one occasion he and some colleagues even travelled to Slovenia to closely observe the liquidation of a bank near bankruptcy. It was also very interesting, they learned a lot about the case.
Speaking about his goals, Szabó mentioned that HOLD would like to present themselves primarily in the online space, as their target audience is an absolute minority of the population, the very wealthy. They have a new online asset management service, too, which he wants to further improve. He is one of the hosts of the HOLD After Hours podcast, too, in fact, this is one way of promoting their services. In his opinion, it is an important principle that you should always be honest with clients, tell them what realistic returns can be expected over what period of time and, of course, inform them correctly about the charges affecting them. You also need to talk about the risks, openly and clearly – there is no difficult subject that could not be discussed in a way that the customer understands. The financial awareness of the Hungarian population was also discussed at the event; in the expert’s opinion, that is extremely low. This is one (but only one) of the reasons why so many foreign currency borrowers were trapped in the past.
Who makes a good portfolio manager?
When asked who makes a good portfolio manager and what qualities are needed to make good decisions, the CEO said: ‘I think you need to have a good analytical mind, for instance, if you do not understand business economics at university, that is not a good sign. It is also important to be interested in all the big issues in the world up to a certain level, as the expected future of a share is influenced by so many factors, from local wars to gas prices. Of course, you cannot know all the details and you do not have to, because you can make a good decision with less information, too. Good stress tolerance is essential, as this is a very stressful profession. In addition, you have to get used to the fact that if you achieve bad returns, you will be openly criticised by others – you have to be able to tolerate that,’ he said.
As for what could be done to improve the financial education of the Hungarian population, he said that education could start in secondary school, dealing with issues such as taking out a loan or what it means to buy a property, i.e. things that everyone will encounter at least once in their lives. After the discussion, the audience surrounded Balázs Szabó and Attila Soltész, and it seemed that even two hours were not enough to ask all their questions.
The Banker Training Mentoring Programme has been in existence since 2008, at the event it was presented by the president of the programme, Attila Soltész. In every spring semester, 10-12 mentors and mentees meet and talk, the mentor may even employ the mentee for a short period of time, but in any case shares his/her business philosophy, experiences and decisions with him/her. Some of the founding mentors were, for example, Péter Felcsuti, Csaba Lantos, Júlia Király and Sándor Czirják. Initially, mentors were mainly bankers and financial professionals supporting students in financial study programmes, but now the primary objective is to help future leaders get started, and there are not only investors and bankers, but sociologists and winemakers, too, among the mentors. The work is currently managed by the Alumni Board, and the mentors are well-known, successful people again, such as Károly Gerendai – this time not as the main organiser of Sziget Festival, but as the manager of his restaurants, or Gábor Szendrői, the managing director of Hungary’s leading transaction firm. Balázs Szabó has also been a mentee before, so it is worth applying for the spring programme – you have until 1 December to do so, and the admission committee will select a group of 15 people from the applicants. The programme is free of charge.