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Voice of Experience: Erika Karp, Managing Director and Head of Global Sector Research, UBS Investment Bank

karpBy Melissa J. Anderson (New York City)

“I believe diversity is an economic imperative – period,” said Erika Karp, Managing Director and Head of Global Sector Research at UBS Investment Bank and Chair of the Global Investment Review Committee.

A founding member of the UBS Executive Diversity Council, a steering committee member of the firm’s All Bar None women’s network, as well as the business champion behind the creation of UBS Pride, UBS’s GLBT employee network, Karp is dedicated to the value of diversity.

Citing the importance of differentiated perspective, creativity, and entrepreneurship that diverse individuals bring to the table, Karp said, “The challenge for anybody is getting to have an important voice…being heard.”

She explained, “The trick is being both patient and assertive.”

A Continuous Learning Process

“I help run global research at at UBS Investment Bank,” said Karp – she is also Chair of the Global Investment Review Committee, member of the UBS Research Managing Board and the Americas Equity Business Committee, and was appointed to the IB Board in 2007. She also represents UBS Investment Bank Research on behalf of the UBS Wealth Management Investment Office in Zurich.

“Ten years prior to this, I was in institutional equity sales at Credit Suisse. And before that, I received my MBA from Columbia in Finance and a BSE from The Wharton School.”

Before going back to school, Karp worked in institutional sales at IBM. She said, “The switch from institutional sales to research management was valuable. I’m a big believer in diversity in perspective and experience.”

She continued, “The learning curve was very steep – and [in financial services] the learning processes continues forever. …The sky is the limit in terms of learning. There are few final answers – there are always pivotal questions. The industry demands every intellectual facility that you have.”

“That’s what’s so exciting to me.”

It makes sense that someone so motivated by questions would work in high-level research. She said that her proudest professional achievement so far is “building an initiative we call Q-Series(TM) into arguably the most well known globally branded research product in the world.”

She explained, “It allowed me to combine my unique sales background with the extraordinary UBS heritage of research.” Designed to apply the Socratic method to investment research, the Q-series attempts to address critical, structural investment questions with which clients struggle, with proprietary analysis and primary research “providing clear research conclusions.”

She also described another research product the firm is working on – the “UBS Global I/O (TM) [input / output] report “authored by multiple analysts in multiple regions, around a single data point. Analysts collaborate to simultaneously articulate the investment implications for everyone around the world.”

What’s so exciting about the product, she explained, is that “it can’t be created without collaboration.” It’s not just valuable for global clients, but also for regional portfolio managers as well. She said, “US portfolio managers can not optimize their alpha without a global perspective – better predictive insight comes from real collaboration.”

The other interesting thing about the Global I/O product? Karp developed it, and the Q-Series, while out on maternity leave.

She joked, “I have three little girls, the Q-Series (Ruby) , the Global I/O product (Molly), and the Global Portfolio Manager’s Spotlight (Hanna).

Approaching an Inflection Point

Karp said, “I am wildly interested in ESG [Environmental, Social and Governance] investing. I deeply believe we are at an inflection point in the industry. The issues of ESG are becoming mainstream.”

“The material issues related to individuals, companies, governments, effective risk management, where capital should flow, and the future are absolutely critical to mainstream investors.” She also mentioned that questions related to ESG are appearing on the CFA exam, and that ESG courses are beginning to crop up in MBA programs – evidence, she says, of the growing popularity of ESG in the industry. Signatories of the UN “Principles for Responsible Investing” will need appropriate frameworks for incorporating these critical issues into their investment processes.

“One key mission investment banks is to facilitate the flow of capital. It should go, for example, to alternative energy or companies with great governance – if we are doing our jobs right,” she explained.

Advice: Stay Open to Opportunities

Karp is a big believer that not knowing all the answers is what keeps people moving forward. “I’m glad I didn’t know what I know now when I was first starting out on Wall Street… I think I would have found it too daunting.” She continued, “The complexity, the sensitivity, the competitiveness – had I known how hard it is to be really special, to really differentiate yourself, to really optimize your business… I’m glad I didn’t know.”

She explained, “During my ten years at UBS, I have worked toward continuously redefining my role and to continuous refinement. I don’t want my energy to decline. I don’t want to get too comfortable.”

“A clear, totally assured view,” she said, “would limit opportunities.”

“Let me tell you a story,” she continued. I used to be a lousy gin player. I would play with my grandpa and I would lose every single hand.”

“One day I had an epiphany, and I realized that I could draw my next card and simply keep or discard it depending upon the hand I had already decided I was trying to make. Or, I could simply ask myself ‘does this card in some way make my hand better?’ If it did, I could change direction. I started winning. Now I’m a pretty good card player.”

In light of this, she said, young women entering the industry should look for opportunities to show their value, “Find a need in your client base – and I define the client base very broadly – find an unfulfilled need and provide differentiated solutions.”

For women advancing toward leadership positions, she said, “The goal is to have a voice that is valued and respected – and to that end, my advice is not that dissimilar. Find that need and utilize your skill set. I’m a big believer in redefining and refining yourself as opportunities present themselves. Keep an open mind.”

The best advice she’s gotten, she said, is, “really be authentic – know what you’re really great at and do more of that in the direction of opportunities.”

Finding a Voice and Finding Balance

“During a cycle of economic challenge, issues of diversity can take a back seat to issues of expediency. Getting that voice takes patience. It takes time, and a track record of success and credibility. And an organization accepting of different voices,” Karp said.

“Great managers hire people who bring a different perspective.” She continued, “It’s very important that differences of style are embraced, resourced and given a voice.”

One of the ways UBS is working toward retaining more diverse voices, Karp said, is through its women’s network, All Bar None. She said, “what’s been most satisfying and sustainable [about All Bar None] is the extent that it offers connectedness.”

She explained, “The reality is, one of the currencies that we have as a financial institution is that we can offer connectedness. A great network can make it harder to leave UBS – you really value the relationships with people you admire, respect, and like.”

When she’s not working, Karp said, she prefers to be with her family. A mother to three young girls, she explained, “Work/life balance exists only for moments in time. Having a family, if you want to be successful in a high powered career, is achievable.”

She continued, “It’s a pendulum from having absolutely no work/life balance to doing it fairly well. Hopefully you get more moments as you achieve more.”

“The way I do it is through knowing how to prioritize,” she explained. “When I am present, I am extremely present – intellectually, emotionally, physically. It really is about the quality of time and not just the quantity. Being fully present is enormously important.”

Karp, who cites both Nelson Mandela and Jim Henson as sources of inspiration, sits on the board of Congregation Beit Simchat Torah, the world’s largest GLBT synagogue, and is active in GLSEN [the Gay, Lesbian and Straight Education Network], and a number of other GLBT organizations. She also enjoys poker, tennis, hiking, boxing and Jazz (her wife Sari is a Jazz singer in NYC) – as well as spending time with her family at their house in Sag Harbor.