Over a year has passed since Mohamed El-Erian abruptly quit the helm of Pacific Investment Management Co., the $1.7 trillion global financial powerhouse based in Newport Beach, California.
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He has left behind the ugly headlines baring his conflict with Pimco’s so-called “Bond King,” Bill Gross. He has left behind the stress of watching clients, in search of higher returns, and pulled tens of billions of dollars out of the firm.
And he has left behind the outsized pay packages that came with the post of chief executive and co-chief investment officer: His 2013 bonus was $230 million, according to a Bloomberg report.
So, how’s El-Erian doing?
“My life has been incredibly fulfilling,” he said in an interview last week.
The 56-year-old economist still rises at 3:30 a.m., as he once did when he commuted from his Laguna Beach home to Pimco’s trading floor. But now he spends the pre-dawn hours writing a book (working title: “The Only Game in Town: The Rise and Possible Fall of Modern Central Banking and What it Means For You”) and penning columns for Bloomberg and the Financial Times.
Then he makes breakfast for his 11-year-old daughter before driving her to school.
Even before the Pimco blow-up, El-Erian had been thinking about his lack of work-life balance. Several months before he resigned, his daughter had handed him a list of events he had missed. Her first day at school. Her first soccer match of the season. A parent-teacher meeting. A Halloween parade.
Now, he says, he gets to pick her up from school and accompany her to after-school activities.
El-Erian spends about half his time as “Chief Economic Adviser” to Pimco’s parent company, Allianz SE, the Munich-based financial services firm, which provides him offices on the ground floor of a Newport Beach office tower.
A PhD in economics who was a fixture on financial television programs over the years, he says he has turned down government job offers and directorships at Fortune 500 companies. Instead, he chairs President Obama’s Global Development Council, and serves on a slew of non-profit boards.
“I am privileged to decide what I really want to do,” he says. “What I really want to do is be exposed to various ideas. Nothing incentivizes you more than when you have to write.”
El-Erian’s central bank book won’t be his first. His 2008 volume “When Markets Collide” was a business best-seller.
And if his life today sounds a bit tranquil, it nonetheless harkens back to an early ambition: A career in academia. He abandoned that path at 23, when his father, an Egyptian diplomat, died, leaving him to help support his mother and sister. So he took a better-paying job at the International Monetary Fund.
Did his eventual path to the top of Pimco have nothing to do with the allure of power and money?
El-Erian acknowledges that “the world of finance I’m interested in does pay off,” but he prefers to talk about the intellectual challenge: “I loved working at Pimco. You are surrounded by the smartest people in the business.”
He won’t discuss the circumstances of his departure – and reportedly signed a non-disclosure agreement. But he recalls with fondness Pimco’s “incredible environment – an environment of discussions. Of a clear mission to deliver the best you can to the client. A long term orientation – an investing orientation, as opposed to a trading orientation.”
El-Erian’s only business venture these days is an investment of several million dollars in a Costa Mesa startup, Payoff Inc., which helps overextended families refinance credit card debt at reduced rates. He joined Payoff’s board after meeting the founder, Scott Saunders, who had a child in his daughter’s drama class.
“It’s an incredibly talented bunch of people with a ton of experience and commitment,” El-Erian said. “I was captivated by their mission."
In a wide-ranging interview, El-Erian discussed topics ranging from the global economy to the rise of inequality in the United States, his personal financial portfolio and his love of Twitter.
Here are excerpts:
Q. You are speaking Tuesday at an event focusing on economic inequality. Why?
A. Income inequality has risen so much that consumption as a whole is undermined. That’s because rich people have a much lower propensity to consume than poor people. But it is the rich people that have captured all the income growth for the last seven years.
A little bit of inequality is good for the system because it creates incentives. A lot of inequality actually creates negative economic effects. It has become an inequality of opportunity.
Continue reading: http://www.ocregister.com/articles/pimco-656718-erian-people.html
