CHICAGO, June 5 (Reuters) - Long-time banking innovator Arkadi Kuhlmann likes to take control of his own money. That’s hardly surprising for an executive who introduced consumers to direct, branchless banking as the founder of ING Direct Canada in 1996.
Kuhlmann expanded to the United States four years later, with ING Direct USA (now CapitalOne 360 ). It became the country’s largest savings bank and No. 1 direct bank, with more than $84 billion in deposits and 7.8 million customers.
Kuhlmann, now in his 60s and residing in Delaware, is about to launch a new startup bank, ZenBanx Inc, whose slogan is “around the corner, around the world.” It will be the sixth bank he has founded over the course of his career, which he started as a business professor shortly after graduating from the University of Western Ontario.
Reuters caught up with him at C2-MTL, a leadership entrepreneurship conference in Montreal in May, to talk about how he deals with his own finances.
Q: Were you interested in money as a kid growing up in Toronto?
A: I wasn’t interested in finance at all. I was interested in nature - geography, geology, that kind of stuff. My mother was in finance. She was an accountant, a finance person, and she was sort of my signpost.
Q: As a banker, are you a pretty good saver?
A: I got that drilled into me early from my mother. If you never save anything and get told at age 35 that you have to save, it’s a bit like saying you gotta start running. I think it’s very difficult to do.
Q: You became interested in making money when you were a university professor and your fiancée ditched you for a stockbroker?
A: I was at the University of Western Ontario. She says, “I gotta give you your ring back. I can’t get married. I can’t live with you as a student-professor-teacher - you don’t make enough money.” So it broke my heart. I went down to the bulletin board. The highest-paying jobs at the time were in business and accounting, and I said, “Okay, I‘m going to go be a millionaire by the age of 30.” And then I went into business and made money.
Q: What are your indulgences?
A: I have a retreat in Georgian Bay (Ontario). It’s on a little island because I like Canadiana, I like the northern Canadian woods. I spend money on that place. It’s the place where friends get together, so it’s actually a gathering place. I love to sail so I have a small sailboat.
I ride two Harleys. The reason I started with bikes was because when I was at university I didn’t have any money for a car. Do you have any idea how hard it is to get a date when you don’t have a car?
Q: Who manages your money?
A: I manage it myself. I‘m not a trader; I don’t sit in front of the screen. You shouldn’t be too much mucking around with stuff. The science has proven that if you keep trying to make adjustments all the time, you end with the average or below the average. You need to avoid the ups and downs. But there is a time when you need to make adjustments.
One thing I do is diversify but not too much, so I don’t have 100 stocks. I also found an interesting little rule that works really, really well: If a stock goes up 30 percent, I sell it. If it goes down 20 percent, I sell it. We get carried away too much with our winners and we hang on to our losers too long. We have too much emotion tied up in it.
Q: You believe in direct involvement?
A: There’s nothing more discouraging than to put money into a mutual fund or some kind of a venture and other people lose the money for you. The emotional damage to you of having no control is horrible, and you’ll never invest again.
Q: What advice would you give to investors in today’s market?
A: My philosophy is stay simple. The statistics are if you buy 10 stocks, you actually know those 10 stocks because you buy the product, like Levi‘s, or whatever it is. I don’t know why we have more mutual funds than stocks. It doesn’t make any sense to me.