The world is nervously watching and waiting.
Greece continues to reel from a financial crisis that began in 2009. Greek incomes have fallen, unemployment has risen, austerity measures are in place, and protests are a common occurrence. The country’s third international bailout was finally agreed to in August, and the most recent prime minister resigned, calling for an early election.
China’s growth is apparently slowing a great deal more than the country reports. Trying to bolster its economy, China made a surprise devaluation of its currency, the yuan, in an effort to strengthen exports; increased spending; lowered interest rates; and is essentially buying stock to prop up its stock market. Manufacturing numbers are at a six-year low. Concern is growing that the world’s second largest economy could drag everyone down with it—but no one really knows what to expect.
The U.S. Federal Reserve has been signaling that, for the first time in nine years, it may raise the Fed funds rate, the amount banks charge each other for overnight loans and an important benchmark for the financial markets. In fact, the rate has remained at its all-time low, between 0% and 0.25% since December 2008. At the end of July, Fed policy makers issued a statement that they remain on track to raise rates sometime before the end of the year. Nothing, however, has happened yet. More important for jittery watchers, no one knows exactly when it will.
“Good investors are disciplined in terms of sticking to a plan. Emotion, almost every time, works to the disadvantage of an investor—you tend to make the wrong decision at exactly the wrong time.”
Not surprisingly, the U.S. stock market is reacting badly. After a seven-year bull-market run, volatility is on the rise, and markets are dramatically down since mid-year highs. August saw the worst week for the market in four years.
What’s a rattled investor to do? Pull every dollar out of the market and hide it under the mattress? Or maybe double down and plow any excess cash into a market filling with potential bargains? It’s enough to induce high anxiety, particularly in those of us who remember the financial crisis of 2008. That’s exactly the wrong state of mind, say investment gurus. Instead, stay calm and stick to your plans.
“Diversification and discipline—that’s pretty fundamental,” says Donald J. Heberle, the brand new CEO of BNY Mellon Wealth Management. “Good investors are disciplined in terms of sticking to a plan. Emotion, almost every time, works to the disadvantage of an investor—you tend to make the wrong decision at exactly the wrong time.”
He should know. In May, Heberle took the reins of a major division of BNY Mellon, the fifth largest bank in the United States. The organization was formed in 2007 when two venerable institutions, the Bank of New York, oldest in the country and established by Founding Father Alexander Hamilton, merged with Mellon Financial, founded in 1869. Heberle is taking on the Wealth Management division, a burgeoning area fresh from a recent expansion.
Asset or wealth management is a broad concept, encompassing more than just investment advice. In general terms, wealth management allows affluent individuals and families to avoid seeking advice from a raft of disparate professionals. Those who use wealth management benefit from a one-stop financial shop, in which multiple services are coordinated to manage their money and plan for the future. Wealth management can encompass investment advice, and investment management, private banking services, accounting and tax services, retirement planning, legal advice, philanthropic support, estate planning, and more.
Heberle’s appointment to CEO of BNY Mellon Wealth Management follows the retirement of the prior division head of five years, Larry Hughes, who spearheaded an aggressive expansion. In fact, Heberle inherits a group ranked as the seventh largest wealth manager in the country, according to Barron’s, with $194 billion in private client assets and a network of offices in the United States and internationally.
How do these seasoned investors view the current uncertainty, one of a market’s worst nemeses? In a whole different light.
“I definitely think there’s more volatility ahead,” concedes Heberle. “The Fed has tried to be pretty transparent that rates are headed up. I think they’d like to do it in the fall, and they’ve signaled that the increase is going to be relatively gradual. That doesn’t mean, though, that once they start raising rates they’re going to raise them every meeting for twelve in a row. And there’s certainly geopolitical risk out there. Right now, Greece is getting a lot of headlines, but China matters more. It’s a bigger economic story, so we’re going to hear more about that market. And for people who are looking for reasonable points of entry into the market, it’s important to use that bit of weakness as an opportunity. I’ve gotten to the point of seeing opportunity in [difficult conditions], as opposed to getting overly emotional.”
Level-headed indeed. Heberle personifies his unflappable philosophy, and it has clearly served him well, in investing and in his larger career. Personable and even-tempered, the youthful 49-year-old with striking silver hair manages to balance the role of self-assured, crack CEO with that of a respected leader.
“A lot of people in this business have huge egos,” observes William “Bill” White, retired head of BNY Mellon’s Pittsburgh family office group. “They’re very direct, can be very emotional in defending their positions. Things can get very dicey. But Don is calm and engaging and a very quick study. He’s able to manage whatever situation he’s in and focus on the job.”
White first met Heberle back in 1994. It was an ironic beginning.
“I’m sorry, but we can’t offer you a position,” White said regretfully to the 28-year-old Heberle, who was seated expectantly in his office. At the time, White was head of a group at Mellon Bank in Pittsburgh that managed personal investment for affluent individuals. White saw talent in the young man, but unfortunately, Mellon had acquired the Boston Company (along with Larry Hughes) the year prior and merged with mutual fund manager Dreyfus Corporation just that year. This had led to a tremendous influx of personnel, resulting in pressure from the leadership to keep expenses down. Wherever possible, the company was to avoid adding staff. To make things tougher, here was a young candidate with no direct experience in actual portfolio management.
A shame, thought the senior manager. He saw strong qualifications and potential. Luckily, there was something else: That unusual name seemed too familiar. In the small-world city of Pittsburgh, White discovered he was a high school friend and college fraternity “big brother” to Heberle’s cousin Joe. Periodically, cousin Joe the stockbroker would nudge his buddy Bill with a reminder: “Hey, how’s the hiring scenario, any new openings?” And sure enough, two years later, a position opened.
The Heberles—Don, wife Audrey, and their toddler—were at home when the phone rang. The “Pittsburgh guy” was still living not far from where he’d grown up and working as a management consultant. It was lucrative and terrific experience but a grueling lifestyle. The “family man” was on the road five days a week, and the travel was wearing thin. With baby boy #2 on the way, the strain was increasingly difficult and they’d come to the decision that enough was enough. Heberle had decided that he would begin the job search once again. He never got that chance.
The phone rang that weekend with White on the line. Would Don be interested in chatting about a possible position? “Interested?” thought Heberle. It couldn’t have been better timing. Heberle was ready and excited to make the change. Audrey was delighted. Nearly 20 years later, Heberle is sitting in the Wealth Management CEO’s chair. He also maintains his position as president of BNY Mellon Pennsylvania. It’s undoubtedly a very big job.
So how does a boy from the Pittsburgh suburbs rise to the C-level? Heberle’s example highlights three elements, the first being plain old energy and hard work.
While growing up in Bethel Park, the oldest of three brothers had maintained a crack-of-dawn paper route to make extra money. It was the only time available for the self-described “sports nut” lettering in three demanding sports (and keeping up his grades) at the local public high school.
“It sounds a little cliché,” Heberle says, “but playing sports helped immensely. You learn—whether it’s playing one sport or three—how to be disciplined about your time, balanced in terms of what you do. It really helps in terms of prioritization.”
“A lot of people in this business have huge egos. They’re very direct, can be very emotional in defending their positions. Things can get very dicey. But Don is calm and engaging and a very quick study.”
That prioritization paid off. When it was time for college, he snagged a prized spot at Harvard—and discovered that college life would require him to finally choose baseball, football, or basketball. He settled on football, starting three years as a wide receiver and cornerback, as well as a member of the 1987 Ivy League Championship Team. Somehow, between practices, games, and the general jam-packed life of a college undergrad, he kept up with his classes, graduating with a degree in economics.
He didn’t slack off after commencement. While working his first job, engaged to be married, the ambitious Heberle decided he needed more to further his career. He wanted an MBA but was reluctant to leave a good position and the workforce, particularly with marriage on the horizon. Considering his options, he immediately turned to the top-notch business school right in his backyard, Carnegie Mellon’s Graduate School of Industrial Administration (now the Tepper School), ranked tenth in the United States by Bloomberg Business. Uniquely, the school was founded on the basis of a then-new quantitative and analytical way to teach business management—management science.
Even better, Tepper had introduced a flex-time option, allowing students like Heberle to continue work and complete their degrees at night. “Perfect combination,” thought Heberle. “Get a degree from a program like Tepper, one of the best in the country, and keep working.” It was not a schedule for the faint of heart. He was accepted, and in 1992, a newlywed Heberle buckled down. Although some might have been intimidated, he was fascinated by the quantitative rigor, thrilled by classes like operations research with its mathematical methods for analyzing and solving problems. In typical fashion, he finished the challenging program in finance and accounting early, in December 1994.
But hard work alone often is not enough, and Heberle notes a second key to success. “Be willing to be visible, to step outside your day to day and do something else,” as he says to earnest students searching for the secret. “Getting involved gives you that opportunity to demonstrate other things you can do to a broader group of people.” He recounts a noteworthy example: A BNY Mellon senior manager asked a group of employees to examine—on their own time—a potential business opportunity. Heberle readily joined in, despite the added workload. The team spent hours researching, interviewing, and crunching numbers. They came back with a proposal saying, yes, there’s a great opportunity and the company should grab it. Management agreed—and asked Heberle to head the brand new unit.
In an interesting twist, White was then reporting to the young man he’d initially hired. “As it should be,” White thought, nearing retirement. “You want to have somebody in place with the talent and experience.”
And key number three? Heberle credits the education he received at Carnegie Mellon. When they first met, White believed Heberle’s education put him a cut above. As White says, “That was the direction the business was going—a quantitative approach to investment management and the ability to manage very, very large amounts of data in trying to forecast the economy, the various market segments, and individual companies.”
“He had this technological proficiency that very few had. He could slice and dice data every which way.”
But White also recognizes that being a successful investment manager requires more than number crunching. You can’t be staring at your computer while meeting high-level clients in the conference room. He recalls Heberle’s ability to “anticipate objections and address them in the presentation. There was very little left for the client to say except, ‘OK.’”
“He’s very well versed on the latest research,” agrees Robert Dammon, Tepper School dean and one of the leading researchers Heberle would invite in to discuss their latest work on personal investment. “But very few people can take it to the next level. Many have strong analytical skills, they’re great at individual contribution in that first job, but then when they get to a point where they’re starting to manage others, they have difficulties. Not Don. He was successful right from the beginning.”
A senior executive recently described Heberle as “not the loudest voice in the room, but when he speaks, everyone listens.” Rafael Munoz, a BNY Mellon financial analyst, agrees. He first heard Heberle speak at a bank lunch-and-learn, soon after he’d joined BNY Mellon’s finance department in 2010.
As he munched on his ham and cheese, Munoz liked what he heard and decided he should hear more: “I built my relationship with Don over time, first through professional and business-related interactions, and then, after having built a professional foundation, I sought his mentorship.”
The mentorship happened to include Heberle chatting about his CMU education and the “great analytical thinking” he’d gained at Tepper. The recollection had a “profound” influence on the young professional: “Don influenced why I chose Tepper to pursue my MBA.”
Munoz earned his graduate degree last spring. A few months later, he and a colleague were taking a break at a Wealth Management group meeting. As she congratulated him on his recent MBA and exciting promotion to portfolio manager, she wondered whether he knew that Heberle also attended Tepper. Munoz laughingly filled her in. A few moments later, Heberle walked by, and she blurted: “Don, do you know you’re the reason Rafael went to Tepper?!” Heberle smiled and he and Munoz started to compare notes, swapping war stories of being “game team president” for the school’s capstone project.
In his new position, Heberle will be based in New York but continue to maintain a “meaningful presence” in Pittsburgh, particularly as his younger two children finish high school. And through it all, he’s continued to give back to Tepper with both his time and support. He speaks to student groups, serves on alumni panels, and willingly mentors young aspiring executives, like Munoz.
Recently, Heberle and his wife made a substantial pledge in support of the David A. Tepper Quadrangle, a 4.5-acre site that will be the centerpiece of Carnegie Mellon’s new north campus. The initial project will be the new campus gateway and home of the Tepper School of Business.
What counsel would he give to the young men and women who will be sitting, as he once did, in offices around the country, hoping to land that dream job?
“I do have this conversation a lot with young people,” says Heberle thoughtfully. “They’re coached to ‘own your own career,’ ‘navigate your own road,’ and it’s good advice, important for them to have some idea of what they want to do, where they want to do it. But it’s not always a straight line. I didn’t really have it all that planned out, certainly not the way it ultimately unfolded. I go back to my first days, and if somebody would have asked me, ‘What’s your career going to look like, and where are you going to be in 15 or 20 years?’ I don’t think I would have gotten it close to right.”
Heberle pauses. Then adds, “But looking back on it, I don’t think I would have changed a lot, either.”