PolicyCast: Making It on Wall Street

Kirk Willison, Arch MI’s Vice President for Government and Industry Relations:

Welcome to the second season of the Arch Mortgage Insurance PolicyCast. Over the first 21 episodes, we’ve gained valuable insights from some of the nation’s most prominent policymakers and policy influencers, U.S. Senators, HUD officials, housing industry CEOs, authors and leading thinkers at Washington’s policy centers. And the second season promises more of the same, but we have made one important adjustment in response to our viewers’ requests. We know time is precious, so we’re aiming to condense our interviews to roughly 15 to 20 minutes. Now, in some cases, like with our first guest of the second season, that may mean splitting the conversation into two PolicyCast episodes to cover topics in greater depth.

And we begin our second season with a woman who never hesitates to confront the odds. Ivy Zelman is considered by many to be the foremost housing industry equity analyst, and she heads Cleveland-based Zelman &Associates. It was recently acquired by the commercial real estate firm, Walker & Dunlop. She’s best known for being first out of the box predicting housing’s downturn of the first decade of this century. And it wasn’t a forecast for the faint of heart. Zelman faced significant pressure from her own firm to brighten her negative outlook, but she persisted and was soon proved right. Zelman had an unusual rise to the top of her profession. Ivy may be her name, but unlike most of her Wall Street colleagues, her education was anything but … She describes her personal story in her new book, “Gimme Shelter: Hard Calls + Soft Skills from a Wall Street Trailblazer.” Her contrarian predictions for today’s housing industry will be the subject of our second episode that will be released soon.

Welcome to the Arch Mortgage Insurance PolicyCast, Ivy. Through your career as a housing industry analyst, you’ve experienced the best of times and the worst of times. And I think that’s probably true in your professional life as well it is for the fortunes of the housing industry. You’ve had a fascinating rise to the top of the field that’s been captured in your new book, “Gimme Shelter.” So, in Part One of our conversation, I’d like to talk about how you found your way into your career, some of the advice you received along the way and what you would tell other women and men who are just starting out in the housing industry. In Part Two, which will be the next episode of the PolicyCast, we’re going to review your current forecast for the housing industry and get your thoughts about how housing policy should be structured to meet the needs of our population. Let’s get started.

Ivy Zelman, CEO Zelman & Associates:

Oh, thank you so much for having me. It’s an honor to be with you. And I think back on my almost 30 years, I hate to even say 30 years because it makes me feel so old, but it will be 30 years officially. In 1990, I started working at Salomon Brothers after graduating college. So the book was really about trying to pay it forward, inspire young people, men, women, anyone interested in a career in finance and, hopefully, share some of my lessons along the way. But it’s been interesting because a lot of people that are very tenured and have successful careers will say, having read the book, “It really resonated with me because I thought of my own career and the hurdles and things that I had to overcome.” But my rise to, as you say, the top of the industry like that as a person in the housing sector [who] started actually in investment banking. I was at George Mason University and I was majoring in accounting.

Willison:

And you wanted to become an accountant, right?

Zelman:

Well, I thought it was a safe thing to make sure I could get a job. That was the key. And I actually put myself through undergrad. So, I went to night school and worked full-time and I worked secretarial jobs mostly. But my last job was working for Arthur Young, which for those of you that are too young to know, Arthur Young is now Ernst & Young. And a lot of the accountants that I’d interact with would be like, “You don’t want to work as an accountant. You should go get a job on Wall Street.” And I didn’t even know what Wall Street was. So, I started pursuing an interest in investment banking, reading at the library, going to the little catalog cards and looking up books and annual reports to be smart enough to go to an interview if I ever even got one.

But I actually was in investment banking for two years and really didn’t like it at all. I was a grunt working 80- to 100-hour weeks and Salomon Brothers had a big Treasury scandal for those that may remember back in the early Nineties where the CEO, John Gutfreund, had to step down. There were a lot of openings and one of the openings was in equity research. And I tried to go to business school — like 95% of the training program that I was in. Everyone pretty much was there for two years and then would go get their MBA. So I applied to most of the top schools and, unfortunately, didn’t get in my chosen ones I’d applied to. I applied to Harvard, Stanford, Northwestern, and they all rejected me. Pretty sad but I said, “Listen, if I’m not going to get in the best school, I have student loans already … I just need a job to pay my rent.” So I started looking internally after being deflated and rejected from the Ivies. So I started looking internally at Salomon Brothers openings and Bruce Harding, who was a lead analyst covering SNLs and Fannie and Freddie, he did the firm a favor and picked up the housing stocks because Bob Bishop, who was the analyst, quit to go work on the buy side. So, there was an opening and it was going to work in equity research … I was just grateful to get an opportunity to get a job to pay my rent. And that’s been the story ever since. I’ve been in housing since that initial break. I guess that was my big moment. Although everyone in investment banking told me, “You don’t want to go into research. It’s just like the worst place to work. You’re just monkeys. You just write what management tells you to write.” But at that time, I was just happy to get a job again and pay the rent.

Willison:

Well, Ivy, a couple things become really clear in your book and that is you had a knack for networking and you relied upon caring mentors and we often hear about how important networking is. It’s not easy to do for most of us. What was the secret to your success?

Zelman:

Being able to ask for help and recognizing that people that are passionate about what they do, if they see that passion and you’re interested in pursuing a career in [the field] they’re in and they really see the look in your eye that you’re determined, I think they’ll really go out of their way to help you. So, I pursued that strategy and pretty much anyone, if they were breathing, I would ask them about their career and have them tell me, “What you do you like about what you do?” And it started back at Arthur Young, and everybody I’d ask about their careers, they would say they didn’t like what they were doing, a lot of them. So, as I was digging and learning, I think the more people I spoke to, I think I really started to appreciate the importance of just gathering information to be smarter and maybe eliminate some of the directions that I didn’t want to go in.

As a mentor, and now I’m a mentor to many, I think that it takes work to be a mentee because a mentee really has to be proactive because I don’t chase my mentees down. If they don’t call me, that’s their loss. And they need to do their homework. And if I tell them things I recommend that they should do, like read “The Wall Street Journal” every day or have you read anything about the company you’re going to be interviewing with? Have you done your homework? I think those are things that really are not as common as you’d think. I’d say getting people to recognize that they need to show grit and determination and passion. Because when you as a tenured executive see that passion, then you want to help.

And I think it’s okay to ask for help and so many young people don’t like [to ask] … I would literally tell a class of 150 sophomores and juniors, “If you’re interested in chatting with me after this presentation … reach out to me. My email address is [email protected].” My huband would say to me, “Are you out of your mind?” And I’d say “I’m going to get one or two emails,” and, sure enough, I’d get one or two emails. And even those people, when I speak with them, a lot of them don’t follow up. So, I can tell you when you’ve spoken to hundreds of young people, either high school or college, literally less than 1% will follow up with me. So, don’t be afraid to follow up. Don’t be afraid to reach out and ask for help.

Willison:

That’s really solid advice because I think most people, particularly when they’re just starting out, are very nervous about how is someone going to react to me.

Zelman:

Everyone hates to bother people and I don’t want to bother them either. They’re busy and a lot of people will say that to me, “I know you’re so busy, but [I] say to them I’ll let [them] know when I’m free. This  weekend I’m free so if you want to chat, text me Saturday morning and I’ll let you know what time.” But I think that networking is a way of life. It really is. And I’ve been networking since I guess I was in high school … I have a lot of curiosity about life and being interested in learning about people’s journey and how they got where they are going. I never stop asking questions.

Willison:

For someone who wants to be like you and actually be a mentor, how do you suggest that they go about that so that they can help others who are coming up into the profession?

Zelman:

Well I think there are a lot of young people that will reach out, whether it’s via LinkedIn or just even applying to the firm that you work at through human resources. If they’re a candidate, especially the young people that might be starting out, [reach out] and say “I’m a new associate here.” Maybe they can go to HR and say for the newer people that are within the department, “I’m interested in being a mentor. So if you want to connect me.” At Salomon Brothers, we actually had a buddy program and our buddy program was the youngest analysts were matched with a salesperson, and that salesperson was going to, hopefully, help them and guide them to how to best service clients. That buddy system really enabled a lot of the younger people that weren’t really comfortable necessarily or equipped to knowing how to interact with clients, and they would get advice. But just like any buddy system, it’s the same thing. You have to be as the young part of the buddy system, the younger one, the associate, you have to go out of your way to really ask your mentor for help. And I think that’s one of the strategies I would use — through HR and or if you get people trying to connect with you via LinkedIn — write them back and say, “I’m happy to chat with you.”

Willison:

One of the things that you’ve experienced is you’ve gotten this holistic view of the entire housing field. A lot of our viewers are going to be mortgage loan officers and lenders. How best can they get that big picture of where the housing industry is and where it’s going?

Zelman:

Well, hopefully, they subscribe to Zelman because that’s what we do. But we do offer free content. So, if you go to our website, which is zelmanassociates.com, you can read our newsletter monthly, which is free. We post blogs regularly. But really from our perspective, making a really great sauce if you’re a cook or a great stew has lots of ingredients, and you really have to be able to bring it all together to have a perfect sauce. I think from our perspective, having many silos within the housing ecosystem, if you just analyze one, let’s say, spoke of the system, you’re not going to be fully equipped to really I think have that holistic view. We pull it all together. So, whether it be through the mortgage industry, the home building industry, the brokerage industry, the rental industry, the building products industry … By triangulating all of the information that we have together, it really gives us a more informed view. Hopefully we’re the only ones doing that, so they need to just come to Zelman.

Willison:

You might have seen “The New York Times” had a recent article pointing out how difficult in the pandemic era that work is for new hires. They’re working from home, they’re not in an office and they’re not building the kind of relationships that were invaluable in your own career. There’s no one in the office to show them the ropes. What advice would you give to those type of employees?

Zelman:

Well, it’s an environment that we’re all challenged with, whether we’re young or we’re very experienced. So, I would say that I would lean on those that you feel most comfortable with, whether it is via Zoom or just chatting on the phone more regularly. I have an associate who’s the newest member of Zelman’s research team in New York, but her direct report is in Chicago, and he relocated for love a few years ago. He has been with me for close to 15 years. And they are on Zoom all day long, and she just is constantly pinging him. To have eye contact is really important, to be able to look at someone. And when I do reviews with young people right now, because I’m physically not with them and trying to read body language is tough when you’re on the phone … So, I like to have that connection through Zoom if I can’t be there in person with them to be finding ways that I can help add value to them in any way and be helpful. I remember Bruce Harding, who was my, boss in research, and I used to stand in his office and be like, “What can I do now?” and he’d say ”What? You’re done with that already?” And he’d have to drum up something for me to work on. But I think it’s about having the young associates feel comfortable to be proactive and asking, “Can we do it via Zoom? Because I’d love to see you while we’re chatting.”

Willison:

You acknowledged in your book that your journey was made more difficult because you were a woman. Particularly in the times that you were working your way up on Wall Street. Is it still harder for a woman to succeed on Wall Street?

Zelman:

I’d say that early on as I think about my career, I wasn’t really even focused on the fact that I was a woman as much as I was just with really smart people and felt extremely intimidated coming from a state university that no one ever heard of until we finally went to the Final Four. I was probably in my thirties and people then said, “Oh I know George Mason,” but it was really not a well-known university, and all the kids I interacted with or people that I interacted with had been from the best and the brightest. So, I didn’t really worry so much about being a woman, but I do think that being in a minority segment of any population, you’re going to find there are biases … There were 70 analysts in my two-year training program, and I was one of three women and there was definitely a double standard. Like when the guys would come in late after being out on a binge with their buddies and they would roll in at 10 a.m. when you’re supposed to be there at eight, the managing directors would say, “Oh come tell me about it so I can live vicariously through you.” There’s no way a woman could walk in late and say, “Well I have a hangover because I went out and got wasted.” So, I mean, you would see just the way it sort of leans more to that locker-room kind of chatter. And, frankly, I got right in the middle of it. If I heard a story or I didn’t really mind the potty mouth, and I grew up as one of three girls as a tomboy, and I can hang with the boys …  I never really felt that being a woman was an impediment, but there were times that I had real jerks that I had to interact with and men who didn’t really respect and appreciate that they were working with women who had every right to be there like they did.

So, but that can happen with women too. So, I don’t know. I actually think today you have an advantage being a woman on Wall Street because of what is much more, I think, expected now in the environment that we live in. And, I was sexually harassed by someone at Salomon Brothers and … I wound up with HR and my senior management, and … they were going to move me out of my department and that was the solution. And I look back on it now and I was like, “I don’t want you to move me.” It was a year I’d been at Salomon Brothers. I just knew intuitively that I would somehow never get that stigma off of my career.

And everybody had been whispering so I said “No.” But, it was an epiphany for me because here I am 30 years later …  It never even dawned on them to fire the [guy]. It just wasn’t even an option. Today, that guy would be fired. I mean there’s a difference, there’s a new guard in town and women are being lifted because, frankly, they need to have more women on Wall Street. So, women are being promoted, women are getting opportunities and I hate to say it because this will probably be completely against the grain of what people want to hear. But, being a woman today, you have a lot more advantages than being, frankly, a white male Caucasian.

I have a 19-year-old son who reminds me of that every day that it’s a lot harder for him than it is for women … because we need to have diversity. And that’s a focus of every management team, and they’re all being evaluated by the little acronym [ESG] as I’m sure you surely know (Environmental, Social, Governmental investment). So that acronym is going to make it easier for women on Wall Street and they will get promoted and, hopefully, we’ll find more equality in compensation. Because that’s always been a one of the things that stood out is the inequality is how people are remunerated.

Willison:

One last question for this part. What would the Ivy Zelman today tell the Ivy Zelman when she was 20 years old in order to help her through her career?

Zelman:

I think that the Ivy Zelman today would tell her to persevere and her hard work is going to pay off. And those 100-hour work weeks are going to be worth it And just put your head down and work as hard as you can and you’ll get a good return on your time.

Willison:

Ivy, thanks very much for the time. I look forward to talking to you about the forecast for the housing industry.

Zelman:

Thank you.