Out of Africa: Newton Investment Management's Paula Walter

Paula Walter’s route to her current role as CTO of Newton Investment Management in London can best be described as meandering. Born and bred on the Southern tip of Africa, she graduated with an honors degree in linguistics from the University of Cape Town, before accepting a scholarship to Oxford University in the UK where she studied linguistics and philology, culminating in a doctorate in experimental phonetics. While the academic excellence is unquestionably meritorious, the subject matter, especially as it pertains to the capital markets in general and financial technology in particular, is hardly run-of-the-mill. 

When Walter left Cape Town and headed the 6,000 miles north to the UK, she hadn’t seriously contemplated a permanent move to the more temperate climate of England—but then she also hadn’t reckoned on meeting her husband-to-be, a German national also studying at Oxford, during her first term at Merton College. But when she did, her world changed.

“I met a man after a month at Oxford,” she laughs. “They come at exactly the wrong point in your life—he was there for a year and we both had every intention of returning to our respective homes, but we ended up staying; we now have British passports and English kids. He’s a research scientist, so, although we looked, finding the right work for him in South Africa wasn’t really going to happen.” 

The ‘Vampire Squid’

So what does a fresh-faced Oxford graduate and business neophyte do once she has completed her studies? Simple: She joins Goldman Sachs. “I thought I would survive for two years,” Walter says. “I went on the graduate program, which was brilliant—they took me to New York for three months, I stayed in a fancy apartment in Manhattan, and I went on amazing training courses.”

“Everyone does these jobs differently. For me, it’s around the balance between the business strategy and being a proper partner with the business, understanding technology developments and the solutions, and marrying the two. And I think it’s fine to have contentious points and tough conversations, because then you know you’re talking about what really matters.”

Walter’s initial designation at Goldman, which she referred to as the “vampire squid” during her recent keynote presentation at the Buy-Side Technology European Summit in London—echoing Matt Taibbi’s 2009 polemic in Rolling Stone—was as a developer, working on the firm’s institutional sales technology supporting its equities business. 

It wasn’t long, however, before she requested “a proper programming job, not just databases,” an appeal that triggered her move to the firm’s famed and much maligned proprietary trading desk. “That was very interesting,” she recalls. “I was on the trading floor surrounded by real-time pricing feeds, C++ P&L engines and all sorts of market stuff ticking along. That was my first foray into understanding the buy side, because effectively the prop trading piece was a buy-side business within the broker-dealer.”

That early buy-side experience helped pave the way for Walter’s transition into the institutional buy-side world when in 2005 she moved to the firm’s traditional asset management business, Goldman Sachs Asset Management (GSAM). “It was a good role—a team-lead role. It was a more stable environment and I was also beginning to think about starting a family and how I might combine all that. So I moved to GSAM and ran a trade processing and operations technology team.”

Walter clearly enjoyed the change: She spent nine of her 14 years at Goldman Sachs in that part of the business, although she is quick to point out that she moved into new roles every two or so years. During that time she was team leader for trade-processing technology, managing teams across London, New York and Bangalore; she also had stints as global head of funding technology, and EMEA head of distribution technology. And for good measure, she had two children, both boys. 

Newton 

In October 2014, after 14 years at Goldman, Walter relocated to the buy side proper when she moved to Newton Investment Management, a London-based long-only asset manager with approximately $70 billion under management, a change that she describes as a big decision for her. “I was at Goldman for 14 years, I knew the place and understood its career structure, but it was too good an opportunity to turn down,” she says.

In December 2012, Newton, a wholly owned and autonomous subsidiary of BNY Mellon since its May 2002 acquisition by the New York-based financial services conglomerate, announced that it would be divesting its £3.5 billion ($5 billion) wealth operation, focusing exclusively on its institutional asset management business, a decision that indirectly led to Walter’s arrival at the firm in early 2015. Newton’s private wealth practice was snapped up by Edinburgh-based Standard Life Wealth in a deal worth £83.5 million ($118.6 million), announced just two months later, swelling Standard Life Wealth’s assets under management to approximately £5.5 billion ($7.8 billion). 

“Newton had gone through quite a lot of business change,” Walter explains. “The firm was historically a private-client business as well as an institutional asset manager, but they divested the private client business and decided to really focus on the institutional side. So they made some changes around that—platform and strategy changes—and then said, ‘okay, we’ve got the shape of the business, but we’ve got a technology platform of the past.’” 

According to Walter, Newton’s technology stack had been built specifically to support its private wealth offering, which, when it morphed into and became more of an institutional asset management business, meant that it was no longer able to adequately support the breadth and scale of the business. But when Walter arrived at Newton, the firm was finally ready to pull the trigger and revamp its technology. 

“They wanted to bring somebody new in to help the firm drive that strategy and figure out how to change the department,” she recalls. “What I liked about the opportunity was that it was a clearly defined role, the business was clear about its strategy, and there was a remit to change what the firm had in terms of its technology. My remit was to come in, build my team, and define what I was doing. That was the exciting part for me. It was not about babysitting something that was operating well—it was about the opportunity to come in, shake it up, figure out what needed to be done, and change.”

Changes

They say that a new broom sweeps clean, and nowhere in business is this more pertinent than when a new CIO or CTO takes the reins of a firm they have recently joined. Walter acknowledges the changes she effected shortly after arriving at Newton, the first of which was hiring a number of full-time staff members, which, she says, now stands at approximately 40. She explains that Newton had a large number of contractors on its books when she arrived, which she replaced where possible with full-time appointments. 

“We also had a bit of an onshore-offshore model when I arrived and I think we needed to be more onshore-focused, aligning the teams more clearly according to the business functions they support,” she says. “At some point, I think you become quite aligned with the systems you have rather than the business functions you’re supposed to be supporting. We also needed to go back and really engage with our stakeholders and establish our overall priorities, change the governance culture to make stronger connections between business owners and what we were working on, introduce more agile, iterative ways of working, and trim the number of things we were doing to make them more impactful.” 

Given the extent to which Walter talks about Agile software development, she is clearly a proponent of the methodology, although she says she doesn’t blindly follow its principles at the expense of practicality and logic. “I remember one of my tech mentors at Goldman back in 2001—who, incidentally, is now at BNY Mellon—who handed me the Agile Manifesto and said that we should be doing all this stuff,” she recalls. “Goldman isn’t big on forcing particular methodologies on people and neither am I—it’s about saying, what are the principles and what are we trying to achieve? I wouldn’t say that we are doing classic Agile software development—at Newton we need to do more around working collaboratively, being able to course correct, rolling out smaller projects, failing faster, and allowing us to try things.” 

According to Walter, the firm’s technology strategy hinges largely on the business owners describing to her and her team the specific business problems they are looking to solve, trusting the team to address those issues, and then looking at them together to figure out whether they are hitting the spot or not. 

Collaboration, she says, is crucial. “If you ask them to tell you what they need, often they aren’t able to articulate exactly what that is because it’s not their day job to know about tech solutions—they should be able to articulate the business problem they’re trying to solve, and we should be there partnering with them and looking at a number of ways we can solve it. We’re a small enough business that we can identify where our strategic investments should be, and we can focus on what is commoditized and where we are just keeping the lights on and invest in the places where we need to.” 

Plans

It’s fair to say that Walter currently has a lot on her plate. She explains that Newton is looking to upgrade its accounting, performance and client-reporting platforms, while, like a large number of buy-side firms, it is also grappling with the challenge of upgrading its various databases. “We’re still a work in progress,” she laughs. “We have a lot of projects on the go—I inherited a very ageing platform and we are doing major surgery on the plane while it continues to fly.” 

Given that Newton is a BNY Mellon subsidiary and that Eagle Investment Systems is similarly owned by the world’s largest custodian, not to mention Insight Investments, one of the UK’s largest investment managers with approximately $625 billion under management, all three of which are located in the BNY Mellon Centre near Blackfriar’s Bridge, is there an obligation to implement Eagle’s technology? Yes and no, Walter says. “Yes, we look at Eagle as a solutions provider and strong partner and we use Eagle products, but we also have the flexibility as a boutique to select other tools if more appropriate for the problem we are trying to solve,” she says.

Walter cites her single biggest challenge relates to Newton outsourcing its accounting and back-office functions to a shared group within BNY Mellon. It’s not something she or Newton has done before, so she’s currently focusing on how exactly that arrangement might pan out, while in the same breath she appreciates that accounting functions tend not to provide investment managers with a means of differentiation. 

“If you do it wrong, it’s a disaster,” she laughs. “So there’s value in doing it right, but it’s not a business differentiator. Your accounting system shouldn’t be a business differentiator in the investment management business—if it is, there’s a problem. So we’ve taken the decision, together with BNY Mellon, that there is some synergy in having a shared back-office service for a number of boutiques, and we’re currently working out how we will onboard onto this platform. That will involve some business, process and system changes, and lots of integration, and we need to do it right.” 

As for the front office, have those functions been taken care of from a technology perspective? “I’m sure there is always more that we can do, but where we have been investing recently is on the research platform,” she says. “Newton is a long-only, fundamental, research-driven business and so we’ve enhanced the platform and how the front office captures and shares information.” 

Mistakes

When asked about things she has done in the past that perhaps she might do differently if she could do them over, Walter answers without hesitation: “I constantly do things wrong,” she says. “An obvious one and a particular pain point for me is when I had a team working on a project and it wasn’t going well. I really ought to have pulled the plug on it, but instead I continued to invest in more people and time and it took way too long. We got there in the end, but I don’t think the result justified the effort. That’s why I am so keen on the ability to course correct quicker now,” she says, a clear reference to one of the principles of Agile development where practitioners are encouraged to pivot or terminate a piece of work or even an entire project if it is deemed unlikely to achieve its intended goals. 

And a final question for Walter before she heads off back to the coal face. What, in her opinion, makes a good CIO? This time she is more circumspect: “Everyone does these jobs differently,” she says. “For me, it’s around the balance between the business strategy and being a proper partner with the business, understanding technology developments and the solutions, and marrying the two. And I think it’s fine to have contentious points and tough conversations, because then you know you’re talking about what really matters.” 

Paula Walter Fundamental Data

Name: Paula Walter

Title: Head of IT, Newton Investment Management, London

Hometown: Cape Town and Richmond, UK

Education: BA (Hons) linguistics and BSc (Hons) mathematics, the University of Cape Town; DPhil and MPhil (linguistics), University of Oxford

Family: Married with two sons, ages 7 and 9

Favorite Things: Running, yoga and playing the piano