Content provided by Robyn Murray, Freelance Writer
Scott Kubie is on his way to what he expects will be a two-hour meeting at church. His second of the day. He’ll gulp down some dinner before he rushes out the door, and in a few days, he’ll be heading out again. This time for a three-week sabbatical. A trip to Europe – his first. And for a guy who studies maps for fun, that’s surprising.
Kubie is a font of knowledge on world history and geography. Global powers and the forces that drive societies have always intrigued him. “I just like the way economics [sees] the world,” he says. “It’s like anthropology in some ways.”
As chief investment strategist at CLS, Kubie’s interest in the social aspects of economics and his religious faith help define his investment philosophy, which is motivated by a simple idea: Do right by people. Kubie believes lasting investments are those that create a larger societal good. And for the past 20 years, that idea has made Kubie a good fit at CLS.
“All of a sudden, now everything mattered.”
Scott Kubie grew up in the small town of Blair, Neb. just north of Omaha. After high school, he left to study economics and business at Trinity University in San Antonio, Texas. “I had a slight tan in four years,” Kubie says with a typically playful laugh. “The first winter I was back here, I lost it. It hasn’t been back since.”
After graduation, Kubie moved back to Omaha and quickly found there were fewer economists than economics majors. So he got a job at a telemarketing firm where he stayed for five years and was promoted seven times. “I was the king of the dinky promotion,” he says. In fact, he rose from telemarketer to network control manager.
While he enjoyed his last role at the company, Kubie had developed a passion for investing while working on his MBA at the University of Nebraska at Omaha. “It all started with a B+ in finance,” he says with a laugh. As an undergrad at Trinity, Kubie had struggled in finance class (a B+ didn’t cut it) because he couldn’t connect the subject to the real world. When he enrolled in the master’s program, he tried an experiment to apply it to real life. “I took every dollar I had, which was $2,500, and put it all into Citi Group stock,” he says. “I basically sat in that classroom and asked how what we were learning – how would that affect Citi Group?”
“That totally worked for me,” he says. “All of a sudden, now everything mattered – because it all mattered to Citi Group.”
Kubie made $1,000 on that first stock and went on to found an after-hours investment club. A few years later, in 1995, he responded to an ad in the local paper for a money manager position at CLS. At the time, the company had about 20 employees (it now has more than 90) and managed $275 million in assets (that’s grown to $6.5 billion). He asked for a 20 percent pay raise, got offered a 20 percent pay cut instead, and took the job.
He knew it was the right move. In his interview, Patrick Clarke, the founder of CLS, asked Kubie’s view on doing right for clients, and he gave what he describes as a pretty bold answer. “I’m a fairly religious person,” he told him, “so I believe you have an ultimate duty to do the right thing for people that you serve.”
“I didn’t know I was talking to one person who’d been to seminary and two other people who were extremely active in their church,” Kubie says. “That probably turned out to be a really good answer.”
In 20 years, Kubie says the spirit of the company, which is now run by Clarke’s son Todd, hasn’t changed. “The energy and passion and culture that Patrick Clarke and his partners established way back in the 90s is still alive and well today,” he says.
“The people at NorthStar [CLS’s parent company] are really focused on doing the right thing.”
“Within its realm, economics has a lot to say. But it should never have the last word.”
Kubie is still motivated by that basic principle, but he also loves the thrill of competition. “I like to win,” he says. “So it matters a lot to me how well we do.” His views on that performance, however, have evolved over the years. “The ultimate good in economics is in some ways efficiency,” he says. “But efficiency is often not the ultimate good that society should be surrounded by.” For example, Kubie says, growth in the U.S. during the Rockefeller era was extremely strong, and the economy took massive steps forward. “But it was very disruptive for a lot of people,” he says. “There’s a limit to how far growth can take you.”
That view is reflected in how Kubie sees investing, in which he believes advisors should focus on the best outcome for the individual, rather than what produces the highest returns. Some investors are more comfortable with a lower-risk, protection strategy, he says, “even if that strategy causes them to have slightly lower returns than the other one.” But the fact is, he says, “they might not have stayed in the other one.”
“Within its realm, economics has a lot to say,” Kubie says. “But it should never have the last word – it’s not real good at defining what’s good, what’s bad, what’s fair, what’s right.”
Kubie says that lesson was re-learned during the Great Recession of 2008 when the financial industry re-packaged worthless assets and sold them for more money. Ultimately, he says, “that value disappears.” Kubie believes the role of finance is to fund projects and businesses that are beneficial to society. “When it gets too far outside of that, bad things happen.”
In the financial industry, the trend is moving away from investments based solely on growth toward more customized portfolios that work for the individual. And that works for Kubie.
“Fiduciary values are important,” he says, “but my faith makes that fiduciary sense even stronger.”