An Investor Conversation with Clarence Faulkner

The Decider

Clarence M. Faulkner

An investor conversation

In late October, our editorial team sat down with Clarence M. Faulkner, Managing Director of PMI, shortly after unveiling his new offices in Road Town, a major upgrade that brings WALL STREET to Road Town complete with a top tier trading floor. We wanted him to share his insights behind what is a great leap forward, deeper into the financial services, at a challenging and pivotal time in the global finance marketplace. The early stages of a period when volatility is creeping back, inflation, transitory or not is on the rise, China is maturing and decoupling from the US, serious supply chain issues plague global manufacturing and production, coupled with rising energy prices, just as the world attempts to finally pivot to a green future.

What was your inspiration for taking PMI to the next level?

A genuine passion for helping people in a meaningful way. For the most part, retirement planning, pension plans, and investments are contributors to a sustainable life. Our approach is to educate and provide solutions that persons can control, the key ingredient to sustaining their lives and those dependent on them.

Give our readers a bird’s eye view of PMI products and services?

The firm specializes in the field of pensions and Investments.

On Pensions, we consult, manage, and administer pension plans and social protection systems that conform to the operational efficiencies of each entity. PMI’s customized approach affords companies the flexibility of having a system that contributes to the overall environment of managing their human capital, while complementing their desired outcome.

On the Investment side, we offer investment research and analytics, search and selection of securities, portfolio management, private wealth management, each of which can be used as economic substance by BVI international business companies.

Your upgrade is taking place at a challenging and pivotal time in the global finance marketplace. After what has been a relatively calm period and one of significant growth, post the 2008 global financial crisis, volatility is creeping back, inflation, transitory or not is on the rise, China is maturing and decoupling from the US, serious supply chain issues plague global manufacturing and production, and energy prices are rising just as the world attempts to pivot to a green future. What do you see as the key drivers for PMI’s growth prospects over the next decade?

I believe this is a good time for us. I have always maintained that every crisis creates opportunities. As stated, we have had a pretty good bull run over the last 12 years. Despite some short-lived events, we continue to bounce back locally from the trio of storms in 2017 and globally over the previous 18 months from COVID-19. As the world rebounds from COVID-19, we are witnessing persons being more conscious about their financial affairs. We see technology enabling solutions. Most importantly, commerce and trade must continue to foster global growth and its economic offshoots. Locally, are we prepared for the next cycle of economic growth, economic activity? At PMI, we are. Companies and their employees demand better services from their pension service providers, and companies and families are increasingly looking for alternative ways to effectively manage their assets.

What role does Asia play in your long-term plans for growth?

With the Asian peninsula being the largest geographical market share of our international business companies and the recent demands for economic substance, we see the added value by offering a more in-depth service, leveraging those companies domiciled here. As mentioned earlier, commerce and trade must continue, companies and family financial demands remain, and our vehicles continue to enable solutions. PMI sees the added value created in the investment space, with the launch of an investment trading floor from right here in the BVI, assisting BVI-based vehicles.

Clearly, the pivot to a green global economy now seems finally in the cards, are you focusing on specific opportunities in the green space as part of PMI’s growth strategy?

Green energy and green economics have become more prevalent in everyday conversations, because of increased global awareness and concern for climate change. We are now navigating in a world where resources other than fossil fuel are used to generate electricity. Among the renewable energy sources are water, wind, and solar energy. So naturally, there are green investment opportunities to explore, and while PMI has not adopted a direct approach to green investments, indirectly, if the fundamental is investible then yes, we will explore all avenues for investment. PMI continues to monitor international discussions, led by key agencies such as the OECD and the United Nations – to name a few, on the relationship between sustainable development and investments, specifically the need for global best practices to create a regulatory framework conducive to green investment. In short, as the work continues in this area by the requisite gatekeepers, so too will PMI’s interest and research efforts.

Does BVI prowess in the global financial services space create regional opportunities for PMI?

Once there remains economic activity, trade, facilitation of business transactions, BVI vehicles should always aim to be part of that discussion. Any Company, family office, plan sponsor, or individuals seeking the full range of pension services and/or investment-related services creates an opportunity for PMI to assist.

You have clearly assembled an able team, tell us about the team and your strategy in building it?

There is always a delicate balance in finding the right individual(s) based on the company’s growth trajectory. People are creatures of habits and will react in an environment where they can thrive. We have a unique way of building the Team. Everyone on staff has a say in whether a new candidate will join the Team. Competence and experience are all very important, but the real challenge is knowing if the person fits and do they buy into our purpose and business model. I am very excited about the team we have assembled. A mixture of youth and experience creates an amazing balance, but a group buying into this journey is a testament to our process. The right aptitude matched with the right attitude continues to produce amazing results for us.

Let’s look at PMI in five years, where do you see the firm? What metrics would denote success to you?

An increase in the number of companies throughout the region using our services, increased percentage of BVI domiciled investment entities using our services, growth in our Team, not just numbers but also in experience, personal development, and advancement. Where we are in our history, the importance of technology and financial transactions, Investment has to become casual conversation, where the public is aware and advanced on investment products and services.

Do you see a need for governmental action that would further spur and foster such investment?

We must accept that the BVI of 1980 – 2000 was a different era, 2000 – 2020 was another, and I dare say 2021 – 2040 will be another. With this, the everchanging dynamics of a people and the environment in which we live will demand that we evolve into a more financially savvy jurisdiction. In my opinion, Government’s role should be to create and foster an environment conducive for businesses to thrive. The environment includes the various elements of infrastructure, access to a higher level of education, enforcement, and management of our natural resources, and being prepared to execute based on calculated risk.

You have brought Wall Street to Road Town, what has been the feedback to date?

That has been the saying lately. The response has been unbelievable, especially from youngsters who have asked their parents to come by and witness firsthand the analyst and traders in action. We are able to show persons at all levels how the investment process is executed. Our Client Relations area has been busy; we have already added to that Team a new member based on the volume of new accounts since the launch. It’s a good place to be.

Look into your crystal ball for a moment, how do you see the BVI evolution and continued role in the global financial services space?

We have to continue the fight that we are a legitimate enabler of commerce, fostering economic activity, promoting and elevating financial services, and leveraging the foundation of those yesteryears as we contribute to the new BVI economy and the global economy. When we look at the global wallet and the role the BVI plays in managing and or creating vehicles that form part of that wallet, how much more of that wallet can we assist with? We should not and cannot afford to simply sit back and lose the portion we have earned over the years.

As you know, Robert Mathavious retired late last year after yeoman’s work at FSC and positioning the BVI financial services sector on the global stage. Who, in your opinion is the next Robert Mathavious in waiting? And how do we foster and nurture a talent pipeline that produces future Roberts and Clarences?

Let me be clear, I consider that there will never be another Robert Mathavious. He is extraordinary, and the BVI should be so very proud to call him one of our own. I also believe that we have some very bright and talented persons amongst us. In most cases, some are oblivious to their potential - clueless about whom they will become and what they will eventually produce. The real question is, ‘Are we creating the right environment for future visionaries and leaders to make a worthy contribution?’ Have we accepted that we can and should play a major role in the global economy, despite our size? The BVI should neither settle nor simply exist. The BVI should and must be recognized as a Territory of visionary leaders in financial services.

The BVI was instrumental in facilitating the rise of China and thus helping to move hundreds of millions from poverty to the middle class globally via its facilitation of globalization, was that BVI high watermark in the global financial services space? Is there a similar opportunity in Africa and India as they rise, not to mention aspirations for Global Britain?

One such initiative is China’s Belt and Road Initiative that should link Asia, Europe, and Africa to promote integration, trade, and economic growth. Complementary to this will be the economic multiplying effect that will continue to reduce poverty and elevate the middle class. The flexibility of BVI vehicles can indeed continue to play a role in initiatives such as this one. Many of the new Leaders in Africa have embarked on various initiatives to create economic prosperity for their respective countries.

Is it time for the jurisdiction to engage in McKinsey 2.0 focused on the sector’s next decade?

More importantly, if one has not been completed, I believe it is time for the jurisdiction to conduct an autopsy and postmortem of McKinsey 1.0. Retrospectively, what did we take away from the McKinsey assessment, and how did it translate into how we do business? What were the economic and social impacts on our jurisdiction? To plan for the next stage or decade, it behooves us to learn from our past. What have we learned? The dynamics of the global economy have changed. We must therefore be progressive to remain a global partner in commerce and trade.

You were, for many years the brain power and the architect behind the growth of the SSB investment portfolio. As the SSB enters maturity, how do you see its evolution?

I consider maturity for the SSB to be a good number of years off – about another 20 – 30 years. I would like to believe that the foundation of the investment policies and procedures remains robust, factoring in the necessary adjustments based on actuarial studies and investment strategies based on market outlooks. The System continues to benefit from what can be termed a transient workforce. As we continue exploring additional avenues to transform the BVI economy, I hope that new ventures create employment opportunities at the highest level where meaningful contributions are remitted to the system, increasing the gap between contributions against benefits and expenditures. There should always be recognition of extending that period of equilibrium and the continued long-term sustainability of the system. If the execution of the governance framework remains, the longevity of the system will outlive us as we know it.

What’s currently keeping you awake at nights?

Nothing really, when it is time to sleep, I do – However, my mind is always on the next hurdle in this journey, and how can I continue advancing and making a difference in what I do at the Firm, the lives of my team members, and our clients. Also, watching my kids grow up and creating an environment where they can thrive also consumes headspace, as the world is continuously changing. I contemplate how I can help prepare them until they are ready to walk their path in life. I do not worry about things I have no control over, and for those, I can contribute to, I am not afraid to make a tough decision.

You are clearly a strong family man, tell us about striking the work-life balance, and does owning the company help?

One of the things I try not to do is mix the two. Family time is family time, and work is work. The greatest contributor to all of this is my wife and kids. They understand what I am doing, and I am forever grateful for the sacrifices made to allow me to do what I do. I do not have an office at my residence because they must have full access to me when I am at home. It is an understanding and a belief that we communicate and appreciate what is at stake regardless of the circumstances. I have also instilled a similar philosophy at PMI. Despite our core functions and focus, the Team understands that family matters are non-negotiable. In other words, where the family is involved - drop PMI’s work and go. Family should always come first.

Owning the Company has both pros and cons. For example, I have the flexibility to schedule my time around important family matters; however, what example would I be setting for the staff to follow. Therefore, I am always very mindful of who is watching - whether my kids or my Team.

How does Clarence Faulkner relax and enjoy downtime?

The interesting thing is that I am always relaxed, as I have mastered the trait of not worrying about things I cannot control. Just a few hours in my ‘boardroom,’ which is either my outdoor garden or on the water with my Dad and son, and it does not get any better than that. That is my downtime.

What book is currently on your night stand?

Actually, over the last few months no real book per se, instead more of a focus on strategy especially with the recent launch of the new Offices, and already locked into the next hurdle. For example, looking at avenues of increasing the level of discussions on investments between parents and their kids. I am currently immersed in building a program on how we can bridge the gap and start the discussion at an early age. I have laid out the concept on my dining room table that will eventually feed into building investment portfolios for kids, based on what kids/ teenagers/young adults are doing today. Thus far, my 12 and 13 year old have joined me as a test case and I am very optimistic that we will add others as part of the pilot going into the final product. | BB