Throughout his stellar 30-year career on Wall Street and beyond, Dan Draper (MBA ’99) has run funds with billions of dollars in assets under management and grown significant global enterprises, but one of the wisest investments he made was in himself by earning his MBA.
“It’s a big financial commitment, but certainly for me, it’s been an incredible return on that investment,” Draper says of his MBA from UNC Kenan-Flagler Business School. “You pick up so many skills. It’s almost like you graduate and are ready to go as a CEO, but no one will hand you the keys to the kingdom yet.”
Today he is CEO of S&P Dow Jones Indices, one of the indexing industry’s biggest names and home to iconic financial market indicators such as the S&P 500 and the Dow Jones Industrial Average. It’s a career peak for Draper that began with his MBA and led him to working on three continents at a throng of major financial institutions.
He’s had a varied career, crossing the sell and buy-side of finance – and the globe. The connecting thread through it all has been a clear purpose: creating value for investors and, ultimately, mom-and-pop savers.
“Indexing is about offering investors transparent data, tools and benchmarks to build much more efficient and low-cost portfolios to meet their goals — whether that’s buying homes or saving for retirement,” Draper says.
He’s got some hard numbers to back that claim up. The CEO points to exchange-traded funds (ETFs) that track three of the core indices he’s responsible for: the S&P 500, which tracks the stock performance of the largest U.S. listed companies; the S&P 400, which serves as a gauge for the mid-cap U.S. equities sector; and the S&P 600, which covers smaller U.S. listed stocks.
ETFs usually offer much lower fees than their mutual fund counterparts, which partly explains why they have exploded in popularity in recent years, driving significant growth for index providers like S&P Dow Jones Indices. But these indices add value themselves.
“We estimate that if you compare the fees of ETFs and passive investment funds versus comparable active strategies over 26 years, index-based investing has saved investors over $400 billion in fees,” Draper says. “We’re putting money back in people’s pockets. It’s pretty powerful.”
That purpose has been his north star throughout his three-decade career, which began at Salomon Brothers in Jakarta, Hong Kong and New York. It also includes 14 years in London at a swathe of bulge-bracket investment banks and asset management firms: Goldman Sachs in equities research, wealth management at UBS, a stint at Barclays and senior roles at Lyxor Asset Management and Credit Suisse (now part of UBS), heading up ETFs.
Then he crossed the pond and returned to the U.S., joining Invesco as managing director of ETFs before taking the helm at S&P Dow Jones Indices as CEO.
What practical lessons has he learned along the way?
Some are behavioral. “Finance is a competitive world, but you have to develop a sense of humility,” says Draper. “There are always going to be smarter and more capable people, so assessing where you can add value and building a network of relationships so that you can leverage the strengths of your team is key.”
While moving into leadership positions, he quickly realized that success rests upon the shoulders of others. “Yes, the leader sets the strategy and mission but, ultimately, it’s the talent you can attract, put in the right place and incentivize to work together around a common purpose that makes the difference.”
His MBA provided the building blocks of that specific leadership capability. Draper cut his teeth in banking, but he majored in liberal arts at the College of William & Mary. He went to business school to bolster his management skills.
“What UNC Kenan-Flagler does so well is provide that wider perspective, thinking about organizational behavior, human resources and marketing, bringing these broader elements to bear,” he says.
He also chose UNC Kenan-Flagler because of the practical, get-your-hands-dirty learning experience that the Business School is known for. “That was one attraction; the professors are very hands-on.”
Arriving on the Chapel Hill campus, he found that embarking on the MBA program was like drinking water from a firehose. “It’s a fast-paced curriculum, you are put through your paces,” he says.
It was during the dot-com boom in the 1990s, a time of massive growth in internet adoption and valuations in tech companies, before the boom turned to bust. “It was incredible to be in a leading academic environment when things like email and search engines were really exploding,” says Draper.
The first year of the MBA program gave him a solid grounding in the core business and management subjects, but he appreciated the second phase of the program — when he could specialize in finance — even more. “You really dig into the cutting edge of your chosen field,” he says.
He recalls fond memories of taking finance professor Greg Brown’s second-year class in derivatives. These financial contracts enable investors to hedge a wide range of risks, and Draper sold them in his first job at Goldman Sachs after getting his MBA.
Moreover, the knowledge has stood the test of time, serving him well today. “A big part of my company’s revenue comes from futures and options contracts, so even today the basics of that derivatives class, all those fundamentals, are extremely valuable,” Draper says of S&P Dow Jones Indices.
Keen to give back to an institution that has given him so much, he’s actively involved with UNC Kenan-Flagler today, speaking with groups in London and now serving as a board advisor for the Center for Excellence in Investment Management. One priority for him is to embed diversity, equity and inclusion (DEI) into the investment profession, as well as environmental, social and governance (ESG) concepts.
“Post 2008 financial crisis, it’s become really key to ensure there are proper ethics, and to view the investment management industry as a change agent for society,” he says. “There are so many incredibly smart people in the profession, but we need to make sure we put people in leadership positions with the aspiration of creating common good.”
In 2017 the Aspen Institute named him as a Finance Leaders Fellow, a program designed to inspire an active role in shaping the global finance industry’s future through values-based leadership. He remains a member of the Aspen Global Leadership Network.
“At Aspen we always ask ourselves, what is a good society? It’s kind of a question for Plato,” says Draper. “It’s important to ask questions, especially with all the change we see around us. What is the proper role for business in addition to producing profits and serving shareholders, but also for employees and for societies where you have a broader responsibility?”
What is his advice for students? He urges them to use their MBA as a pivot point and reflect on how the role of business in society is changing.
“This is an incredible time to be an MBA student, so use the time to think through these bigger issues, and what they mean for you in your career,” he says.
“You will be responsible for managing large teams and organizations in the future. These are pivotal years for building these foundational ideas and preparing for the journey ahead.”