Spear’s learns how Stanley Fink, former CEO of the Man Group, philanthropist and multi-millionaire tycoon, traded in his City pinstripes for Courchevel salopettes.
About ten minutes into breakfast on Jermyn Street at Franco’s in Mayfair with Stanley Fink, former chief executive and now deputy chairman of Man Group, I found our conversation drifting away quickly from the fall of the dollar and the advantage of managed futures to likely skiing conditions in Courchevel this winter.
This is because Fink – who was brought up in Manchester where his father made lamp-shades – already owns one luxury hotel there, the deluxe Le Kilimandjaro, and is building another. This latest development project is clearly a passion and Fink obviously derives as much pleasure from his new success as a luxury hotelier as he did from being the architect behind the Man Group’s growth into one of the world’s leading alternative investment companies.
It’s always interesting to see the choice of private investments made by today’s super-rich financiers or hedge-fund kings once they are risking their own money entrepreneurially. They invariably choose investments (trophy hotels, casinos or shops like Smythson) they fervently hope their friends will enjoy splurging out on. This theory certainly seems to hold true for Fink’s latest private investment and directorship, buying a pricey chunk of the new luxury lifestyle accessory, Key-2 Luxury Ltd, which offers ‘VIP privileges and upgrades’ and all manner of other key-holder benefits from leading designer brands. ‘For example, you can rent a Porsche for the weekend and get given an Aston Martin,’ says founder David Johnstone. ‘The key-ring offers complimentary bottles of champagne for life and much more’.
When I asked Johnstone how he got Stanley (worth approximately £145 million) to get out his chequebook, he told me, ‘It was simple. We had lunch and Stanley said he wanted to buy a stake. The deal was done over coffee’.
Fink confirmed this when I brought the deal up, and explained why he thought the luxury sector was one of the few areas that – should a recession hit in the UK following the sub-prime credit crisis in the US – he thought would survive without too much collateral damage.
‘I’ve got a general theme that, as the world gets richer and – putting aside for a moment the problems of poverty and global warming, which are big issues for the planet – I am a believer that the price of most things that people need in life has got relatively cheaper. Therefore there is more money around to spend on luxury goods. Hence my own interest in investing in products that I would like to use myself or appreciate, like ski resorts.’
Which is more enjoyable, I asked, building hotels or hedge funds? ‘They are totally different. I love the intellectual challenge of building a fast-growing financial services business and the creative side of designing new products and services, such as Man’s environmental finance business. However, I like the fact that real estate and hotels are tangible. I think that most people, particularly when they already have experience running businesses in the financial world, like to have something they can relate to: “The client experience”.’
Does he have a quota system, like hotels such as The Palace in St Moritz, where only a certain number of Russian guests can book in at a certain time? ‘No, we don’t – all you can do is point out to guests that the hotel will probably have a lot of Russians in certain weeks and they can make their own choice, equally we would point out that there are a lot of British guests over Easter.’
Fink began coming to Courchevel ‘quite late’ in his skiing career, taking his lead from the ex-chairman of the Man Group (Michael Stone) who had had an apartment there. I fell in love with Courchevel because I think it is by far the best resort in Europe. It’s got the biggest lift system, and some very high pistes which you can ski when the snow is bad in Easter or December. Also some very low pistes with good tree lines for when the weather or visibility is bad. It’s also got several Michelin-starred restaurants and many of Europe’s most modern deluxe ski hotels. In fact, it has pretty much everything.’
Like many top financiers, Fink has found that the internet and his Blackberry now allow him to live a mobile life – away from his London desk – that simply would not have been possible a decade ago when he was helping create the Man Group, largely through organic growth, but helped by some shrewd acquisitions that were well integrated. ‘It’s certainly a trend,’ Fink admits. ‘Intellectual capital is now incredibly mobile and you can do probably 70 to 80 per cent of what you need to do as a hedge-fund manager from outside the office.’
Do you get some of your best ideas on the slopes? ‘Yes, I get some whilst skiing and some in the bath, not usually in the office. The office is usually a place of meetings and rushing from one thing to another. So, yes, you do get some more creative ideas when you are out of the office’.
A few years back, Fink had a health scare which caused him to re-assess certain aspects of his life. Now that he doesn’t need to work to make money, he admits his priorities have changed, albeit he does everything in life with a passion (including work). Fink’s new mobile and less corporate lifestyle have made him a perfect sort of client for David Johnstone’s new VIP lifestyle accessory business, Key-2 Luxury. Fink’s eye was caught by the corporate gift Key-2 Luxury and he decided to buy the key-rings for his closest friends and Man Group’s VIP clients. ‘Most wallets these days are full of plastic, so when you pull out this (at which point Fink pulls out the distinctive Key-2 Luxury keyring from his pocket) it’s sort of different.’
I asked for an example of when he uses his membership. ‘I booked a very comfortable limousine for my family to catch the Silver Jet at Luton and we got the limo service at both ends complimentary. It’s certainly made my life easier. A typical current benefit is, if a key-holder goes to a Key-2 Luxury recommended restaurant and orders a fantastic bottle of wine, they will receive the second one complimentary continuously all night. It is not aimed at people who need extra treats, but for most people if there is an opportunity to get a better service and an upgrade for the same money, they will take it.’
I notice that the word ‘discount’ is never used by either Fink or Johnstone. Was this deliberate, I asked? ‘Offering members’ discounts can be tacky and less classy than offering complimentary services,’ says Fink. ‘What we tend to do is offer more for less, so if you go and buy one thing, you may get extra complimentary stuff on top.’
Is he worried that there will be a recession soon because of the credit crisis? ‘The thing about a top-end market is that you always have a group of people who will be very rich. So for the next five years it may be the Russians or, if the oil price remains very high, it might well be oil sheiks, but there is never going to be a shortage of cash in London.’
Does he think London is matching Geneva and Zurich in terms of wealth management capital? ‘Yes, I think that London is punching above its weight now. If we are not complacent and we don’t screw it up then, yes, I think London is here to stay as a financial capital. The danger is too much regulation or inefficient infrastructure. Currently, London has a balanced approach to regulation based on principles based that are the envy of the world. If you make the effect of regulation so detailed (like Sarbanes Oxley in the US) that people feel the need to consult their lawyers before they do anything commercial, then you just get drowned in bureaucracy. I think, up until now, London is doing quite well, but we should not take that for granted.’
Has he ever thought of moving to Switzerland or Monaco? ‘I live in London, I consider myself and my family as British, with the benefits and obligations that brings, which includes paying income tax on my earnings. I have a home in Spain and the hotel in Courchevel. I spend five or six weeks in Spain, but London is really home where I have a decent bit of green around my house.’
An entrepreneur at heart, Fink says he has a ‘very modest’ personal investment portfolio and a ‘bigger’ portfolio of businesses. Part of his drive comes from the hard-working values of his own family background in Manchester. Fink was educated at Manchester Grammar before going on to Cambridge in the 1950s.
A well-known and highly active philanthropist in the UK, Fink has been involved with ‘Arki’ Busson’s ARK charity for many years now as well as helping to build the Evelina Children’s hospital at Guys and St Thomas’s and being sponsor of two Academy schools. He was a leading giver to charity even before philanthropy became fashionable.
Fink freely admits that the amount of money he made almost overnight when Man floated in 1994 suddenly gave him a different perspective on money; he was able to pay off all his loans, buy some family properties, and earning cash became less of a financial imperative. Other things – such as philanthropy – suddenly became more important. ‘After the float, I sold a few shares to pay off my various loans, and from then on my cash flow increased as I had my bonus plus dividend. And because all these things happened at once, our disposable income increased dramatically and, yes, I woke up one day and realised that my life was now very different.’
So what did he do with his new wealth? ‘Well, the first thing we did was to try to share our good fortune with our family, helping them improve the quality of their lives in a few ways.’
It is worth noting that Fink has been involved in philanthropy for many decades. ‘I met my wife when we were both dong social work. I was eighteen and she was sixteen. We met each other at Youth Volunteer Servicing in north Manchester. We lived about a mile apart. We met painting some old people’s homes. For me, it was love at first sight but, for her, it took just that little bit longer. I grew on her.’
As one of the most respected City figures, I wanted to know what Fink’s views were on the new private equity tax proposed by Alastair Darling; and whether he thought the new proposed £30,000 flat-tax for non-doms would result in an exodus of City types fleeing Mayfair rents for a view of Lake Geneva.
‘No,’ he says. ‘I think that the tax measures proposed by the Tories and partially emulated by the current chancellor are frankly not at the level that would seriously change anything. In some cases, like US nationals, the tax may even be deductible from the tax paid.’
But it’s like the Congestion Charge, I suggest. You start off with a £30,000 tax and, a few years down the line, it’s £50,000 – the issue is now on the government’s agenda and it’s potentially a can of worms.
‘It is and it isn’t,’ Fink says. ‘It depends exactly how the tax will be charged.’ Of the private equity tax, Fink says he personally would have much preferred some sort of surcharge tax across the board, with all people earning more than £100,000 paying the full tax that could be offset by more philanthropic giving, so that a private equity person paying an extra ten per tax would have had the choice to pay that extra money to charity, instead of the government. ‘I think some sort of surcharge would have been much healthier and if full offset for charity had been offered, could have led to an explosion of philanthropy,’ Fink adds.
Fink applauds the boom in philanthropy from the hedge-fund community. ‘Many people that work in the City who are making big sums of money themselves are giving back very big sums.’ The reason for this new wave of generosity, says Fink, is that the tax system has totally changed the wealth landscape. People who grew up before the 1980s, when taxation was 60, 70, or 80 per cent – well, their primary purpose was simply to hang on to capital.
‘However,’ he says, ‘if you made your money today, at a fairer tax level of about 40 per cent, then I think at some point you realise that you will not be able to spend all your capital and philanthropy starts entering the equation more naturally.’
Fink acknowledges that he was lucky with his own education. His father was self-employed and the Fink family lived in a modest three-bedroom semi-detached house in Crupsall north Manchester, later moving to leafier Prestwich. ‘I mean it was never a financial hardship but I saw my father having to struggle financially to cope with impending retirement.’
It was partly witnessing the hardships endured by his father’s generation that made Fink determined to break out of the mould and become a financial success. Or as he says, ‘I think my main drive initially was to sort of map out a career that freed me from being trapped as a “wage slave” at 50.’