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market is going to change all the time, so having char-
acters that want to find out more and make changes
before anyone else, to improve things, is a mindset that
is really important.
“That’s not to say that it wasn’t important before, but
now more than ever because everything is constantly
changing. Microstructure, regulation, technology; you
can’t be scared of it, you need to embrace it.”
One area of technological development that the
buy-side has keenly embraced in recent years is that
of artificial intelligence (AI). Liontrust isn’t currently
using AI within its processes but McLoughlin says the
firm is examining its options and he has had numerous
discussions with brokers and other counterparties that
are able to demonstrate tangible benefits from having
implemented such systems. However, that’s not to say
that everyone in the industry is fully on-board with
wider adoption of AI models just yet.
“It’s quite exciting, but a bit scary at the same time,”
he says. “The scary part is when you don’t understand
why it did made a certain decision. Sometimes, you’re
not going to be able to tell, and that scares people.
Uncertainty in financial markets? Nobody likes that.
We need to be able to explain things to boards, to
investors, to regulators, and you need an answer. That
will come in time and we are getting there.”
Yet despite the advancements in AI and ever-increas-
ing breadth and depth of available data, McLoughlin
passionately emphasises the more traditional, or
“softer”, side of the trader skillset which he believes
will continue to play a central role in any trading
operation, with relationship management as a defining
benchmark for those that perhaps do not possess
technical capabilities that extend to coding or building
AI systems.
“The key to this business is relationships, both
internally and externally, with brokers, investors, fund
managers and the media,” he says. “You can spend a
long time building up a relationship and trust and it’s
that quick [snaps fingers] to break it apart. So, you
need people to have those soft skills at the same time
and technical knowledge.”
Handling change
In much the same way that Liontrust has undergone
its own periods of evolution with the acquisition of
Alliance Trust and Neptune, so too have the markets
provided plenty of change for McLoughlin and the
rest of the asset management community to contend
with. The increasing focus from investors on sustain-
ability is one that McLoughlin believes the firm is now
well-placed to make a “positive global impact”. He also
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points to a generational change
that is taking place among a new
wave of investors that prefer to
manage their pensions via phone
apps, rather than the more tradi-
tional means.
“The way that they behave will
be different to the way they behave
and invest now,” McLoughlin says.
“That is going to be interesting to
see, but I think it will be driven by
technology and how easy you can
make it for people.”
However, uncertainty has become
something of a constant for the
financial markets in recent years,
with the introduction of MiFID
“I saw MiFID II as an
opportunity to try to get
ahead of the game, just
by trying to understand
as much as possible
about what was changing
and what opportunities
it brought."
II at the start of last year and
the ongoing issue of the United
Kingdom’s departure from the
European Union, which continues
to drag out towards an unknown
conclusion. McLoughlin acknowl-
edges both events as significant
costs for the asset management
and brokerage communities, but
recognises the different impacts on
the market, highlighting increased
barriers to market entry as a result
of Brexit — which could in turn
reduce competition and increase
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