An interview with Michinobu Suzuki, head of Japan and senior managing director of Nuveen

Heidrick & Struggles’ Sari Hattanda speaks to Michi Suzuki about his wide-ranging experience in the asset management industry.

Sari: What specific goals did you have in mind when setting up Nuveen Japan?

Michi: Japan is an attractive market for the asset management industry with high growth potential. I was deeply impressed by the national initiatives including those from the Financial Services Agency and Tokyo Metropolitan Government to support the industry's expansion. 

We launched this Japan branch with two visions for the market: as a marketing hub catering mainly to institutional investors (outbound investment of Japanese capital), and as an investment platform for domestic equities, real estate, etc. (inbound investment of foreign capital).

Regarding the former, we observed growing interest in alternative investments, which told us the timing was right to enter the market. Within alternative products, there is strong demand for infrastructure, farmland, and timberland, known as real assets. For example, driven by the need for carbon neutrality and decarbonization, there has been a growing interest in timberland investment strategies. Of the approximately 3 trillion yen of assets under management we have raised from Japanese investors, about 600 billion yen are allocated to alternative investments.

As for the latter, we aim to both manage funds delegated to us by Japanese investors and promote investment in Japan by overseas institutional investors. Typically, foreign asset managers collect funds from Japanese institutional investors and invest them in the assets in the US and Europe. We believe in contributing to the growth of the Japanese market. We allocate funds collected from our parent company, TIAA (Teachers Insurance and Annuity Association of America), and overseas institutional investors to invest in Japanese asset classes. 

Sari: There are a number of foreign asset managers who set up offices in Japan around the same time as Nuveen. Some have already withdrawn. What differentiated you and enabled your success?

Michi: Something that differentiated us when we started in Japan was that we took a gradual approach. I started with only one resource — myself — and did not hire anyone immediately. Some companies spent too much money from the outset, with a full team and fancy office set-up in central Tokyo.

I was originally based in Hong Kong and did not add aggressive headcounts until the Japan business made a revenue base. After 2019 when our AUM exceeded 1 trillion yen and business was on track, I added around 3-4 people annually. I made sure that these hires were the right cultural fit and aligned with our values. A mismatch can damage the entire organization. Instead of hiring full members from day one, we gradually grown our team, weighted more on culture fit perspective. I believe our office has a very high retention rate because of this hiring policy ever since the launch of this office.

Sari: What key strategies did you employ?

Michi: We have provided a variety of investment strategies tailored to the needs of Japanese institutional investors and been flexible according to the market. Our pre-Japan mid to long-term business plan anticipated business development centered on alternatives. However, soon after establishing the Japan office, the pandemic hit. This saw market liquidity temporarily dried up, making it difficult to expand allocations to alternatives, particularly among institutional investors. Fixed income and equities became the core of our business until the end of 2020. For fixed income, strategies involving US municipal bonds, corporate bonds, and securitized products attracted the clients. The demand for alternatives began to increase again as the market stabilized in 2021. Our success in Japan is also due to our respect for Japanese market practices and business customs. For example, while other foreign asset management companies tend to select foreign-affiliated partners for administration based on the headquarters' intentions, Nuveen Japan collaborates with major local Japanese trust banks for most of its accounts. In terms of product offerings, our extensive lineup makes it challenging to cover all investors across Japan, so we partner with domestic financial institutions such as trust banks and securities companies.

Sari: How do you manage expectations from headquarters? 

Michi: While many other foreign-affiliated Japanese subsidiaries operate below APAC hubs in Hong Kong or Singapore, we consider it a significant advantage that our organization is directly under the global US headquarters. We believe that maintaining close communication with headquarters’ management and investment teams through not only email, but regular online meetings is crucial in preventing discrepancies in understanding. In working closely with our headquarters, we strive to respond more swiftly to clients' needs and requests.

I spend most of my time educating headquarters about the Japan market. It takes time to develop the relationships with Japanese clients necessary to win mandates, and they tend to require a lot of servicing. I have also explained that timing is important when it comes to taking on large accounts to ensure we have the right resources.

A value we share is that of diversity. We have two female Managing Directors, which provides a great balance across the team. 

Sari: Can you provide an overview of your current team structure?

Michi: We have increased resources in line with business growth. We have about 30 employees and recently relocated to a larger office. We believe that building a stable organization is critical to continue to offer high-quality services to our investors. Maintaining diversity is extremely important part of this. Although we are still a small organization, we have a gender ratio of around fifty-fifty, and we strive for a balanced hiring in terms of age, experience, and background.

Before establishing our Japan entity, I conducted extensive research on other peers. I found that many of them had an imbalance in terms of gender and age diversity. From the outset, we have strived to build a diverse organization with a long-term perspective for stable operations. Our focus on creating a comfortable working environment has resulted in high employee retention, which we believe contributes to building strong and trustworthy relationships with our clients.

We also value good work-life balance. I set an example by always using up all my annual leave every year. Of course, there are days that I have late-night calls with global teams, but I believe in working sustainably.

Sari: What are your future goals for Nuveen in Japan? 

Michi: We will continue to provide attractive asset classes and investment products customized to the needs of our Japanese clients. While our business has primarily focused on financial institutions, we plan to expand our services to pension funds, university endowments, and retail clients. Recently, there has been an increasing inflow of funds from high-net-worth investors, and we expect this trend to accelerate.

For individual retail investors, we have consistently offered multi-asset products that contribute to long-term asset formation. The demand for multi-asset products is also high among institutional investors and has been positively evaluated by the Financial Services Agency. To support the government’s vision of establishing Japan as an "Asset Management Nation", Nuveen Japan plans to meet expectations through our product offerings.

As Nuveen is a privately owned company, we are not pressured to chase short-term profits, allowing us to align with our clients' needs and focus on long-term returns. Our thorough support system is also reflected in our low redemption rates. In the future, we will continue to aim for improved risk-adjusted returns in our investments while enhancing our client-focused services.

Sari: What advice do you have for the next generation of aspiring leaders?

Michi: Building on experience takes time, but accumulating on knowledge can be achieved by effort. I invested a lot of time in studying to gain deep knowledge. This helped me build credibility and trust with my clients and colleagues.

I would suggest having role models, visualizing someone who inspires you, and taking away good points from them. I have obtained areas of strength from all mentors and seniors, and even from clients that I have encountered throughout my career.

I was still in my mid-30s when I became Japan Country Head in 2018 [one of the youngest in the market at the time]. Being young was an advantage as I could still be very hands-on. I was deeply involved in day-to-day business, numbers, and documentation. Being a playing manager is critical, especially in a start-up situation. 

I have always appreciated the engagement with my clients and have endeavored to gain learnings from them. These relationships are now a critical support to our business. 

Sari: What advice do you have for Japanese executives who want to join these companies?

Michi: I believe that continuing to develop both soft and hard skills, regardless of your title or years of experience, would expand your career opportunities. Additionally, I think it is important to always strive to be in a positive environment and proactively meet with people who are pursuing the career path that you are aiming for.  

Sari: What advice do you have for the global leaders of these firms as they seek to attract and retain Japanese executives?

Michi: It is important to share the firm’s culture and vision with the individual while emphasizing mutual respect. If we can understand the mission well and work with pride, I am confident that long-term trust and business success will follow.