Reclining on a black sofa in newly renovated offices near London’s Liverpool Street station, Patrick Thomson appears surprisingly at ease. Less than two months ago he would have been anything but. Then, the UK’s £10 trillion asset management industry was reeling from a market meltdown and the near-collapse of a string of niche pension funds in the wake of then-chancellor Kwasi Kwarteng’s mini-budget.
Thomson, who had joined the Investment Association as its new chair that very week, had to act fast: the lobby group coordinated with Treasury officials and regulators including the Bank of England in trying to stem an asset sell-off that threatened to infect other parts of the financial system.
The episode raised concerns over the way some fund managers arranged controversial hedging contracts for workplace pension funds. These were blamed for magnifying the market turmoil and forcing the Bank of England to step in with a £65bn emergency bond-buying programme.
Without that support, the Bank warned that “a large number” of funds managing money on behalf of UK pensioners would have been left with negative asset values and cash demands they could not meet – and were ultimately at risk of going bust.
It led to an industry that rarely makes headline news being splashed on the front page of newspapers such as the Sun and Daily Express. “Squeaky fund time: the day £1tn was nearly wiped off our pensions,” the Sun boomed.
On tomorrow's front page: £1trillion of Brits’ pensions narrowly saved from collapse as Truss and Kwarteng accused of going AWOL during meltdownhttps://t.co/pKvr3RdfTP pic.twitter.com/poE3B2xyj5
— The Sun (@TheSun) September 28, 2022
But while there were particular concerns around how some of his members – such as BlackRock and Legal & General – were handling the wider crisis, Thomson, who also heads the Europe, Middle East and Africa asset management operations of US giant JP Morgan, insists the crisis was no “smoking gun” and that his members do not require any extra oversight from regulators.
“We are very, very, very heavily regulated,” he says.
Thomson insists that the market meltdown was a rare event, and says no one could have predicted that the investment strategies used on behalf of pension funds would lead to a market sell-off.
“It’s certainly something that needs to be looked at quite carefully, and there will be lessons drawn from that, but I think it’s important to put it into context,” he says.
Thomson’s coolness under fire during one of the asset management industry’s most chaotic episodes could easily be credited to a 27-year career in the City. But it is more likely to be rooted in his military background: he started working in the Square Mile at the relatively mature age of 28, after a five-year stint in the British army.
Born in Edinburgh to a military family, Thomson grew up used to constant upheaval. He and his two younger brothers zipped around the world as his soldier father took posts across Africa and Europe for the army.
Thomson’s mother estimates that the family had moved 22 times by the time he went to university. They spent three years in Zimbabwe in the early 1980s, when he was a teenager.
“We went just after the civil war and it was a country in transition,” he says. “It was an extraordinary experience because at that time there was such optimism, and they’d been through this real hardship.”
Those formative experiences drew Thomson to the same career as his father: he took a scholarship that meant he had to serve five years in the army after graduating from Edinburgh with a degree in French literature. But Thomson says he never had a fixed career plan, and having met his wife halfway through his service, he eventually yearned for relative stability for his family.
However, the route from infantry captain to one of the most prestigious roles in asset management was not a well-trodden one, and the decision to go into the City was, by his own admission, a fluke. “I didn’t know anything about asset management,” he says.
Thomson spied a graduate programme at a bank whose name he recognised: JP Morgan. He recalls walking into the bank’s asset management arm on Pall Mall in London and feeling “a little intimidated”.
But his military training – which he says instilled in him the discipline, teamwork and determination needed for success in the City – soon kicked into gear, helping him climb the ranks at the US bank after postings to Paris, Singapore and New York. In 2017, he was made chief executive of the asset management arm’s EMEA operations and was personally trained by JP Morgan boss Jamie Dimon.
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CV
Age 55
Family Five children.
Education University of Edinburgh and Royal Military Academy, Sandhurst.
Pay Undisclosed.
Last holiday A weekend in Devon.
Best advice he’s been given Aways try to listen.
Biggest career mistake Being too slow on people decisions.
Word he overuses ‘A bunch of’.
How he relaxes With family.
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“The grounding I got in the army was a very good foundation. But actually, the stuff that I have learned here – formally and informally – has really been extraordinary,” Thomson says.
With the added responsibility of chairing the Investment Association, however, Thomson is again seeking stability – this time for the entire asset management industry. And while that might be a tough ask given the recent turmoil and oncoming recession, he says he fees reassured by the new team in Downing Street and the latest economic update. “Markets have reacted calmly to the government’s autumn statement,” he says.
And while millions across the UK will be worried about falling living standards and the impact of inflation, he hails this as “a real opportunity for me and the industry to demonstrate our value”.
“At times like this, fund managers have an important role in enabling people to look forward to a secure standard of living in later life.”
