Voice of Experience: Marlys Appleton, Vice President and Chair of Sustainability Steering Committee, AIG Investments

by Pamela Weinsaft (New York City)

Marlys Appleton, chair of AIG Investments’ Sustainability Steering Committee, is a champion for and architect of the integration of sustainability into the investment process. But it is a role no one – not even she – could have foreseen when she began her career more than 20 years ago.

Upon completing a fellowship and an MS from MIT’s Sloan School of Management, Appleton started her multi-disciplinary career as a financial analyst at Morgan Stanley. But she switched paths and companies a few years later when she heard the siren call of sales. “It looked as if people were having more fun and making more money [on the sales track].” When Appleton reached out to management to try to make the switch, she was told that, while adding her to the sales force would likely upgrade the skill level of the force, the head of the sales desk only hired his ski buddies. It was an important lesson for Appleton, who then realized that not all promotions are based on one’s abilities; some are based purely on who you are.

She then joined Bank of America as an institutional fixed income sales person, ultimately becoming the top producing salesperson on the East Coast in the bond trading operation for the bank. She attributes that success to her thoroughness and her ability to build trusting relationships with clients. “I’m an information hound,” says Appleton, “I want to know and understand everything myself before presenting it to clients. I think that what made me the most comfortable was what made the clients most comfortable with me. I was successful because, over time, the foreign and domestic banks and domestic money managers I had as clients learned that I wouldn’t lead them down the wrong path and they could trust me to deliver for them.”

Six years later, via connections made through a former co-worker, Appleton was recruited by E.F, Hutton to cover institutional accounts selling corporate bonds and U.S. treasury and mortgage securities. Less than a year after that, in the wake of the 1987 market crash, the highly leveraged firm went out of business.

Appleton was quickly snapped up by Swiss Bank Corporation (now UBS), who had been a client of hers for several years, to head up its institutional sales desk in N.Y. “The goal of UBS at that time was to achieve primary dealer status with the NY Federal Reserve Bank. My new role was great because I was able to create my own team as well as conceive, define and implement the strategy to increase market share dramatically, which is necessary to achieve that status.” Utilizing Appleton’s strategy, it took only 18 months—instead of the usual 24—to achieve primary dealer status.

The Challenge of On-Ramping in the Financial Industry

Following that monumental achievement, Appleton decided to temporarily take a huge step back from the world of finance. “After being in an achievement mode and reaching that level, I started thinking that there something else I needed to be paying attention to in my life. I was involved in a romantic relationship with a partner who had two children and I wanted to focus a bit on my personal life. So I left the markets and became a full-time stay-at-home housewife and stepmother.”

But when she decided to return to the workplace three-and-a-half years later, Appleton realized it would be more difficult than originally anticipated. “I found out that once you’ve been out, no matter what your reasons, it is very difficult to convince people that you are going to stay.”

She added, “I think, based on conversations with other women, that is still the case today. When women take time off, it is still a challenge to come back. It doesn’t matter if they’ve been doing things to keep their skills current or they’ve been involved in community activities, or other things that tap into their many skills. It is still tough once one has decided to take time off for any reason. And while there are some progressive financial services companies out there like Goldman Sachs [that provide a way to return to the industry], I don’t think that’s the norm. Now that it is such a competitive market, it is even probably worse.”

Since the direct path back into finance proved impossible, Appleton found an alternative route: academia. She obtained an adjunct teaching position in the Finance and Law Department at NYU, and developed two highly popular courses on fixed income securities. While there, she became acquainted with Professor Tom Ho, who eventually hired Appleton to work in his well-known risk management consulting firm, Global Advance Technologies. “It was a backdoor way back into the fixed income markets,” explained Appleton.

At GAT, she worked as a senior consultant for with blue chip insurance companies, asset managers and broker dealers on risk management solutions. Shortly after MSCI Barra acquired the firm, Appleton was one of three people recruited by Blackrock to work in their fixed income analytic group. “One of the major projects I worked on was partnering with PwC to manage an audit of Blackrock, which ultimately led to the creation of Blackrock Solutions to which the risk management function of Blackrock is now outsourced. I worked on defining their analytics and production processes, and provided recommendation as to how to improve them to meet new regulatory standards.”

Championing Sustainability At AIG Investments

Subsequently, when Appleton learned that AIG Investments was looking for a fixed income expert to help it upgrade its option adjusted analytics for its $500-billion fixed income portfolio, she jumped at the opportunity. Her initial task was upgrading the basic analytic approach to meet the needs of executive management. “One of the things that I brought was market knowledge and expertise as well as process knowledge. The years of working in the fixed income markets and running a sales desk gave me insight into the analytic process that traders and senior management need. It also gave me the credibility to speak and respond to the people who were managing and overseeing the portfolios.”

Her success caused management to take note, leading to several advancement opportunities, including, in 2005, her appointment to an elite six-member team established by the CEO to analyze AIG Investments’ potential approach to climate change and other emerging risks. Appleton was then tapped to spearhead the integration of the new ESG (Environmental, Social and Governance) due diligence process which had been advanced by the team. Although Appleton had no knowledge or experience in this space, she immediately understood its implications and jumped at the chance.

Appleton advises that it is exactly that sort of stretch assignment that women should push themselves to take, adding, “You really need to gravitate towards those projects because that is where begin show you can accomplish something.” In her current role as chair of the Sustainability Steering Committee, she establishes strategy, leads and helps guide the enhanced analysis across the different asset classes. She also oversees different analytic and production processes, including the performance measurements and benchmarking of alternative and derivative assets.

She envisions a day that she will be exclusively dedicated to assessing emerging risk. “[This area] is a mega trend that has already taken off; it is a core business risk and very important no matter what industry you are in. But, how sustainability is defined is a function of a particular industry and the emerging risks profiles and performance balance out slightly differently depending on what industry you are assessing. The interesting thing about being in the financial industry and at a global investment institution is that one has the opportunity to assess sustainability risk across industries: energy, information technology, metals and mining, pharmaceuticals, etc.” She added, “Sustainability is the wave of the future and where I see my career path going.”