Still fired up: What’s next for investing legend and activist Stephen Jarislowsky

Stephen Jarislowsky at his home in Montreal in 2006. In February, Jarislowsky announced he was selling the investment manager that bears his name to Scotiabank for $950 million.Christinne Muschi for National Post

By David Dias

Stephen Jarislowsky never set out to make anyone rich, least of all himself. Sure, he’s loaded. Over 63 years, the founder of investment manager Jarislowsky Fraser Ltd. has accumulated a fortune estimated at more than $2 billion. And, yes, he has spent his career helping top pension funds provide their members with cushy retirements, but extravagant wealth was never the goal. “It was preservation,” Jarislowsky says. “Make sure that these people, after having been our clients for 20, 30, 40, 50 years, would have a period in their lives — so-called golden years — without any worries about where the money is going to come from.”

Jarislowsky admits he could have sprinted and taken more risks, but he chose to run a marathon instead. That race is almost over. On February 12, the still feisty 92-year-old announced he would sell the firm that bears his name to the Bank of Nova Scotia for $950 million. The acquisition will shore up the bank’s relatively weak institutional investment arm, while assuring continuity for investors holding some $40 billion in assets under management.

Jarislowsky is a legend in Canada’s investment scene. He fled Nazi Germany, immigrated to the United States, joined that nation’s army to fight in the Second World War and then studied engineering at Cornell University and business at Harvard University — all before co-founding JFL in 1955.

As a fund manager, Jarislowsky was a pioneer and rabble-rouser. He introduced research techniques that went beyond mere asset valuation and sought to size up the managers themselves. Later on, in the 1990s, he turned his attention to the greed he witnessed in the executive ranks, tangling with titans over what he perceived as corporate wrongdoing.

Jarislowsky has also argued vociferously in favour of a single national securities commission, something he could use as the JFL transaction seeks approval by various regulators. The bank has offered to pay him in shares, which could expedite matters, but he’s at the mercy of bureaucrats for now. “There are regulatory issues,” he says. “We have to get permission from all the securities commissions, and I don’t think you can push civil servants faster than they want to work because they get their backs up and then it takes even longer.”

Assuming the deal is approved, Jarislowsky doesn’t plan on going anywhere. Scotiabank has assured him that JFL will keep its name and its managers will be left for the most part to their own devices. Scotiabank has also invited Jarislowsky to keep his plant-filled office in the Sherbrooke St. headquarters. “Obviously, I’m not the type of person who can sit at home and watch television or do crossword puzzles,” he says.

Though his personal involvement was never a deal-breaker, Jarislowsky says he would not have sold if he felt the bank was going to strip away the corporate culture he worked so hard to build. What has always set JFL apart, he says, is its focus on finding investments supported by great management. “The data doesn’t mean anything,” he says. “What is important in a corporation is the management, and whether the industry is growing or not growing.”

Jarislowsky, who says he’s been a lifelong student of ethics, also looks for strong governance and an ethical corporate culture when identifying the best long-term investments. He was often dismayed by what he found, so he decided to do something about it. In 2002, he and Claude Lamoureux, then president of the Ontario Teachers’ Pension Plan, founded the Canadian Coalition for Good Governance, which has been instrumental in advancing shareholder rights in Canada.

Philanthropy is also a part of Jarislowsky’s ethos, and he has, through the Jarislowsky Foundation, provided grants to initiatives in medicine, the arts and education, including the endowment of more than 23 university chairs “Over time, we would like to build a much larger foundation,” he says, so “that’s an option” for where some of the money from the sale of his business is likely to go.

Praiseworthy as these achievements may be, Jarislowsky’s proudest is not his philanthropy, nor the significance of his business dealings. It’s the manner in which JFL has conducted its affairs. “We have never had a lawsuit with any client in 63 years and we don’t know of any complaint to the securities commission in all that time.”

Six decades without a single client lawsuit. Add that one to the legend. FPM

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