Special to the Globe and Mail
by Tom Bradley and Lori Lothian

His Market Savvy and Concern for Clients Helped Build a West Coast Powerhouse

Few icons of the investment industry are celebrated outside the confines of Bay Street, but Bob Hager is one.

Bob, who died on Oct. 7, was a driving force in building one of Canada’s most successful asset managers. In 1965, he (centre of picture) and partners Art Phillips (left) and Rudy North (right), started a fledgling firm called Phillips, Hager & North. By the time he retired in 2001, PH&N’s family of mutual funds had given thousands of Canadian investors access to direct, low-cost investing and the firm had become the largest independent manager in Canada. When it was sold to Royal Bank in 2008, assets under management were $69 billion.

There were many people who contributed to the firm’s success, but it was built in Bob’s image and on his personal values. Like Bob, the company was quiet and understated, growing without advertising, acquisitions or sales commissions. The values of the firm were grounded in the best interest of the clients.

Robert Stewart Hager was West Coast to the core, born in Vancouver in 1937 and raised in the Kerrisdale area. He went to high school at Magee, and received a commerce degree from nearby UBC. After marrying Judy, his long time sweetheart, he ventured south to earn his MBA at the University of California at Berkley, then returned to begin working with Phillips and North.

PH&N was unique in the early years. The young partners, along with Dick Bradshaw (who just missed getting his name on the door), used to brag that the company was the largest investment counselor in Western Canada. Truth told, it was essentially the only investment counselor in Western Canada.

In the early days, it relied heavily on Art’s financial resources and track record. He was the oldest of the four and had already tasted success while running the All-Canadian Fund.

PH&N didn’t truly catch fire until it won an important pension client in Eastern Canada in 1972. By then, it had established an outstanding record and was in position to benefit from an emerging trend that saw pension plans shift their assets away from the traditional providers – trust and insurance companies – to independent asset managers.

Bob didn’t have a sales bone in his body, but his values and sensibility were the best marketing tools a firm could have. Clients took to PH&N because it was humble about its successes, and brutally honest about its mistakes. No matter how good the results were, Bob often led off client presentations with what went wrong. There were meetings where the client had to remind him that the returns were actually very good.

Clients and consultants also liked that the company’s ownership was spread widely amongst employees. Bob and the other senior shareholders were generous in this regard. He always said that he didn’t mind selling shares to a new partner, as long as he or she helped build the business. He was happy to own a smaller piece of a more successful firm.

While PH&N was primarily a pension manager in the early days, Bob and his partners had the foresight to create a family of mutual funds, partly in response to pension trustees and executives who wanted to put their personal money with the company. It was telling that Bob never viewed the funds’ low fees as a marketing ploy or missed profit opportunity. To him, they just seemed appropriate.

Not only did his gentle nature appeal to clients, it also set the tone inside the firm. Executive rank or shareholding meant nothing to him. He bonded with people at all levels of the organization.

Whether he was President and CEO (1973-87) or Chairman (1987-2001), he was subject to the same ridicule as everyone else when his picks in the basketball pool went bad. After stepping back in 1987 to focus on his clients, he subsequently worked for three CEOs: Bradshaw, Tony Gage and me. He grumbled from time to time, but his support was unwavering.

Bob’s warm personality hid an intense, competitive fire. He couldn’t stand mediocrity and took it hard when the firm wasn’t performing well. As Dick says, “Bob worried so much that the rest of us didn’t have to.”

As the firm grew, Bob’s dedication to clients, common sense approach to investing and decisiveness in troubled times, continued to influence the analysts, portfolio managers and support staff he worked with. He never mailed in a client meeting, even though his experience and stature would have allowed it. He prepared extensively, to the point where he was no fun traveling to a meeting.

Flights home, on the other hand, were enjoyable. Bob was an engaging and interesting seatmate. He always had stories to tell of the early days and was a wealth of knowledge on sports, golf courses, Four Seasons Hotels and Air Canada’s fleet.

At his core, he was an investor, and his simple approach helped ground more than a few young analysts. He reminded them that bottom-line profits drove stock prices, not the more fashionable EBITDA numbers (earnings before interest, taxes, depreciation and amortization). He was not seduced by fancy wrapping on investment products.

Bob’s most lasting lessons came in weak markets. While he worried incessantly about his clients, it never prevented him from acting. Indeed, that’s when he was at his best.

Some words of wisdom:

• “With every bear market, there are always unknowable concerns, and every time we’re told that this bear market is different.”
  
• “Make sure you go up with more than you went down with.”
  
• “My best trades turned out to be the ones when my hand was shaking as I gave [the equity trader] the blue ticket.”

One particularly memorable moment came in September of 1998. The S&P/TSX Composite Index had dropped more than 20 per cent in August and the research team was shaken. Bob’s not-so-gentle nudge moved them to start buying stocks.

“We will be buying into these companies as the market declines,” he said.

Bob and his wife lived in the same home for 38 years, but traveled extensively throughout their 57 years together. Their philanthropic interests were many and varied, but they took a special interest in helping young people achieve their potential.

Bob’s retirement passions were rugby, fishing, gardening, travel, his daughters Leslie and Shelley and their families, including six grandchildren.

His family and friends will miss his stories, his laugh, his irreverence, his grumpiness, his kindness and his wise counsel.

Canada lost a great investment executive at a time when he’s needed the most. “Bob was our keel,” Bradshaw says. “He kept us focused on our goal of achieving the best possible results for our clients.” He was the conscience of a firm that was known for its conscience.