The Northern California Regional Council represents 35,000 men and women in carpentry and related crafts. Traci Dority-Shanklin’s interview with Bob Alvarado takes us on a journey of a growing benefit fund and how the role of “trustee” has changed radically with the complexity of the financial markets. He emphasizes the importance of understanding government regulation, on-going education, and the importance of the fund professionals.
This is The World of Multiemployer Benefit Funds Podcast with your hosts, Tom Shanklin and Traci Dority-Shanklin, managing partners at Sisu Investment Partners. If you’re interested in labor and union benefit funds, well, you’ve landed in the right place. We are a go-to source for all things union benefit fund related, and we are going to bring you interviews with key decision makers and fund professionals that guide these plans. They’ll share their insights, experience, unique perspectives, all of the latest developments, and tips to unlock the mysteries of multiemployer benefit funds. The time is short, so let’s get started. Please welcome Tom and Traci.
Traci Dority-Shanklin 0:45
We are excited and honored about our guests today, Bob Alvarado. Bob is a friend, but more importantly a respected labor leader. Bob has a distinguished background in labor and is currently the executive secretary-treasurer of the Northern California Carpenters Regional Council. The Northern California Carpenters Regional Council represents 35,000 men and women in carpentry and related crafts.
Traci Dority-Shanklin 1:11
He is also the co-chair of the corporate board of Carpenters Administration Fund, which oversees almost $7 billion in assets. And 2006, he was appointed to the California Transportation Commission, and is on the board of directors for the International Foundation of Employee Benefit Plans. Bob, thank you so much for being with us today. We are honored.
Bob Alvarado 1:37
My pleasure. Good morning.
Tom Shanklin 1:39
Hi, Bob. It’s Tom. We always like to begin our interviews by having you tell us a little bit about your background and what led you to a career path in labor and ultimately to your current position?
Bob Alvarado 1:49
Well, I was I was 19 years old and going to school, working at a gas station, and all the folks that came in, I was going to be a computer programmer. And all those folks who came in, were just never really happy. They didn’t smile. They didn’t fill-up their tank, they didn’t maintain your vehicles. I just kept paying attention to that. All the construction guys who came in all had new vehicles. They always maintained them. They always filled them up. And they always just really happy. So, I just kind of kept watching that. And then I thought, you know what, that’s what I want to do for a living. I grew up on a ranch, I’m good working with my hands, have a pretty good work ethic.
Bob Alvarado 2:29
And so pretty much I broke my mother’s heart by not being the first in our family to graduate from college. So, I became a carpenter. It’s only real job I’ve ever had as an adult. And it’s probably the best decision I ever made. I did the apprenticeship in – in July of 1972, and immediately was picked up by two or three very, very good journeymen who became mentors. And one of the requirements was I had to attend the local union meeting with my journeymen. And that kind of got me involved in a local union. Uh, they both pushed me to start running work. I was obviously in my third year of apprenticeship, so I’ve been running work – big work a long time. And started running work, actually, in my third year of apprenticeship, worked my way up, and was running a small development company, when we started having problems in the residential sector.
Bob Alvarado 3:28
So, my local union actually came to me and asked me if I would go to work for them. And obviously, I turned them down. I was making pretty good money and, and really enjoying what I was doing. And my boss at the time, the owner of the company, had been familiar with my career and, and just told me, you know, they’ve been real good to you, and it’s time for you to give back. So, why don’t you go to work for them for a year, and if it doesn’t work out, you come back, they will keep building projects. Well, the good thing about working for Jack was we built projects from we buy a lot, get it through the planning process, and then build a project.
Bob Alvarado 4:06
So, that was a part of construction that I wasn’t familiar with that I really got to learn. So, after a year, I found out that I really loved what I was doing. And I didn’t go back to Jack, which upset him a little bit. But in the long run, he was very supportive and very proud of what I was doing. So, I worked my way up to the union started as an organizer, became a business agent, a senior business agent, the assistant to the executive secretary. And in 2001, I ran for this position and became executive secretary-treasurer to job I still hold today.
Traci Dority-Shanklin 4:41
With your tenure in the labor movement, can you explain the importance of pension and health and welfare funds to union members?
Bob Alvarado 4:49
Well, you know, there’s a couple things that are unique to construction. One is the moment we set foot on a job, we’re working ourselves out of a job. So, it’s a – it’s a temporary position at best, even when you hook up with a company for the long term, there’ll be periods of no work. So there has to be a place, a central place that you can send and build wealth for retirement.
Bob Alvarado 5:19
I mean, not only is it a temporary not so much temporary, not only is it a seasonal profession, but it’s a profession that’s pretty hard on your body. So, if you didn’t have for instance, a health and welfare plan, those injuries just you know, cumulative injuries, not job site injuries, but cumulative injuries, like shoulders, and knees, and backs could literally bankrupt you.
Bob Alvarado 5:41
And, you know, you get to that age where you want to get married and want to have children and without a health and welfare fund, you know, kids being kids, I broke bones, I, you know, just gotten boy trouble. And those required little trips to the doctors, and if nowadays especially back when we were kids, it was a hardship, but now it would literally bankrupt you. And then as you work your way through your career, and you get older, and finally comes time for you to hang up your hat, there’s something for you there to keep you going other than Social Security.
Bob Alvarado 6:15
I mean, hopefully you’ve bought a house. And that’s your – your little bank. Hopefully, you’ve put money aside during the good times. So, you’ve got a little bit of cash, but a pension. And an annuity, really, I think, takes a lot of worry out of the equation about what I’m going to do when I could no longer work in the trade. So, pension and health and welfare are probably are two most important functions as a union.
Tom Shanklin 6:43
Something that’s certainly increasingly needed and in demand these days with – with some of the changes we’ve had. Bob, we’ve both been in the business a long time, and I guess I’d be interested to hear how you think the role of the trustee has – has evolved over the years in terms of administering these plans?
Bob Alvarado 7:01
Well, I’ll just use a personal example. You know, and it’s – it’s the same that every trustee faces all across the country on a multiemployer fund especially a construction fund. When in 2001, total funds for the carpenters was about one and a half billion dollars – $1.2 billion. And we had three money managers, pretty much stocks, you know, the 6040 stocks and bonds thing where there were no consultants. And as we – we started getting bigger, if you will, I went to that then executive-secretary told him we need to look at a different way to invest in what’s kind of amazing we’re about to reach $2 billion. Do you realize how much money $2 billion is, and we’re carpenters and millwrights and drywall. We’re contractors for those three crafts, and we need to find somebody that will guide us through this minefield as we grow. So, we hired an investment consultant.
Bob Alvarado 8:05
And then I was allowed to sit down and with that investment consultant and design a plan, pretty much take us into the future, which included different asset classes other than stocks and bonds. And this was the big thing in – in the day was when we got into high yield bonds, it was very controversial, because Mr. Milken had just did his thing with the junk bonds and – and that hangover was still there. But it’s one of the best moves we ever made. That was the very first controversial asset class, if you will, that – that we got into and then you turn around and you look at today, we’re almost $7 billion in assets, total funds. We have a consultant. We have 21 money managers, and about, I don’t know 10 or 12, different asset classes.
Bob Alvarado 8:58
Everything from – from foreign emerging markets to, again, the high yield bonds and, you know, small cap, mid-caps, mid, large cap. I mean, they’re just, it’s so big now. And then you put the government regulations on top of that: picture protection; HIPAA; all the rest of the stuff that goes with trying to manage the funds, so the role of the trustee, as it used to be a meeting, you know, once a quarter and everybody got together and ate lunch and, and did a little bit of business. Now is truly a board meeting. It’s advanced to the point where when you shine your name on the dotted line, pledging your personal assets before didn’t mean anything. Today, it means everything.
Tom Shanklin 9:46
Oh, indeed, I suppose with the complexity, the markets, and the new, actually new strategies, and asset classes being developed all the time, it’s – it’s certainly where you’ve got to turn to the professionals a lot more so than in the past.
Bob Alvarado 10:01
I was really lucky when I first started in that my boss that seen something. And so actually, when I first went to work for the council as Jim Green’s assistant, I spent three weeks in San Francisco with our – with our then largest money manager. And we started from the very beginning. This is a stock. This is a bond. This is a derivative. This is this; this is that.
Bob Alvarado 10:26
I just looked at it. I never took any financial classes in college. I don’t know what you’re talking about. He goes you just need to pay attention. You don’t need to know the asset class. You just need to know when the bastards are lying to you. And that’s the best advice I ever got. Because you can – I’ve been to the Wharton School. I take continuing education which we’ll – which we’ll talk about in a little bit, but you do have to know a little bit and – and you have to kind of – if nothing else, just read up on that buzzwords, if you will, so that you know when somebody is telling you the truth and somebody’s just trying to mislead you?
Traci Dority-Shanklin 11:02
Right. Clearly, you have to be sophisticated to be a pension plan trustee today, seeking the education and a broad understanding of investment solutions is great advice. You mentioned early mentors in your career since taking on a leadership role and you yourself becoming a mentor for others, what do you think is the most important skill or ability a labor leader needs to effectively manage?
Bob Alvarado 11:26
Well, above all, I think patience. You can never decide that you know it all. So, you can never quit your ongoing education. The labor unions now are facing more and more legal challenges as well as management challenges. So, it’s one of those things that are pretty much ever evolving. We have the same run in the union. I run the union like a job site. You know, the organizers and, uh, new folks are the premises. The business agents are your journeymen. The managers are – fit into the foreman/superintendent role. And I just happen to be the project manager.
Bob Alvarado 12:07
But just like anything else, if you see a new employee that shows some promise, then it’s our job to make sure that we mentor them that we get them the education that they can use later on. Whether it’s to become a manager or a trustee, we need to never stop challenging them. It’s a different world. I mean, we never faced the legal challenges that we do now. Well, we personally, I inherited a pretty good deal here. But we’re now faced with the challenges from the government on right-to-work and the right-to-picket. The right to do those things that we do to keep our organizations strong are all under attack right now. And so that’s a different thing that you need to look for and look at.
Bob Alvarado 12:57
So, as you grow your crew you need to not stifle participation, if you will, Jim gave me the best couple of – the best pieces of advice I’ve ever got before I took this job. We had a staff meeting. And there were seven or eight conversations going on at one time. And when we were done, Jim and I were sitting in this office, and he said, “What do you notice about that meeting?” And, you know, being young, it’s, well, you know, we had seven or eight conversations going on at one time, all the people in the room were able to keep up with that. And we got a lot done in – in a short period of time. Jim said, “Nope, you missed it.” He goes, “The best thing about that meeting was, I was not the smartest guy in the room.” But think about that. If you’re the smartest guy in the room, when you have a staff meeting, then you’ve done it wrong. You need to hire good people. You need to hire smart people and you need to let them go do their job.
Bob Alvarado 13:52
And then the second thing is you got to be humble. You know, you – you’re not the smartest guy in the room by design. You got to let these folks do their job. And when it all comes down to it, as these – as these individuals start gaining more and more confidence, they’re gaining more and more knowledge. Some people might take that as a challenge. So, Jim, again being the man that he was, said, “Not only do you hire people smarter than you, you really have to breed your own competition.” This is an elected position.
Bob Alvarado 14:29
So, sometimes people get intimidated about an individual, especially a younger individual, gaining a little bit more popularity, gaining little bit more insight in a certain part of the job. And they just chop their heads off. But it does the organization absolutely no good. And in the end, it’s almost like an interbreeding. And you get the same people with the same attitudes all running for office. And that doesn’t allow your union to grow and prosper. You need new ideas. You need those young people coming up and providing the energy. I mean, I’m getting kind of long in the tooth here. And where I was out, two and three and four nights a week, I just can’t do it anymore. But I have people coming up behind me, who can still do that two and three nights a week and make the organization look and become stronger than it’s ever been before.
Traci Dority-Shanklin 15:31
I love what you said about supporting and lifting up people who are up and coming or showing that they can be up and comers. I think culture is such a catchphrase today. But that really epitomizes culture. But what I heard is that culture really starts at the top. So, I applaud you for the organization you’ve been leading and the way in which you’ve bred that among your – your staff and people. So, are there any issues impacting your fund that investment managers should understand so that they can be more helpful in the management of your money or the funds money?
Bob Alvarado 16:14
Yeah, I mean, it’s obviously diversification is – is something that you really have to look at. I mean, with the way it – what you try and do is you try and increase your hours, at the same time that you’re increasing your earnings and put – put hay in the barn, if you will, for those down years. So, you hope you never have hours down at the same time that you have your earnings down. And we have thought over the last, especially to this last growth cycle, that we would be – that we would have both, but the market is so volatile now that it’s almost to the point where you can’t depend on it. I mean, you have a guy in the chair right now who can – who can send the markets tumbling with a tweet. And he has no, he has no problem tweeting. I wish somebody would take his phone away.
Bob Alvarado 17:09
We should be in this biggest earnings period that we’ve ever had. We should be, but we’re not. I mean, hours are at record hours. And that’s kind of really holding defined truths. So, you know, when you look at a manager, you not only – they not only have to look at the upside, they got to also bring your plan for the downside. And you never really thought about that when you hired a money manager before until you get somebody that – that over a quarter will dump 20 something percent, you know, and it’s like, how do you set yourself up in a position to lose 20 something percent? So, you have to look at both sides. Now. Those money managers come in with us. I want to see a plan for the upside. And I want to see a plan for the downside too.
Traci Dority-Shanklin 17:57
That’s great advice.
Tom Shanklin 17:58
Bob, you alluded to the sort of the political environment we all work in today. And I would go as far as to say there’s never been a greater need for unions than – than today. And given all the inequities in the workplace and sort of the headwinds that – that they face, but just curious as to your perspective on what unions are doing, or what they could do to become more relevant, and influential in advocating worker rights and gaining membership?
Bob Alvarado 18:24
There isn’t a greater need. I think from the very beginning, we’re almost in the same position that our forefathers and foremothers were 70, 80, 100 years ago. We’re pretty much rebuilding the labor movement, and the way you do that is you have to stay relevant. So, those folks in those organizations that are so narrowly focused, uh, will never succeed. They have to kind of open up your eyes. You have to take in the whole world. And sometimes you even represent folks that aren’t members over your unit.
Bob Alvarado 18:59
We have an organization, Part of Us Smart Cities Prevail, that’s taken on the right-to-work challenge all across the country. So, we’ve been involved in Michigan, we’ve been involved with St. Louis, we’ve been involved in New Mexico. And if you don’t go out farther, it’s pretty much protecting yourself. You know, if you’re going to fight – fight on somebody else’s turf, and not at your front gate, so we’re looking we’re taking a nationwide look at right-to-work.
Bob Alvarado 19:28
And we’re going into those states, we’re putting money and – and men and resources to help them with that fight to make sure that they stay if they beat back that right-to-work challenge, but locally, you know, now you have to become involved in politics. You have to become involved in – in the planning and – and approval process. You have to be most important, I think, is you need to be involved in the community. And if you can stay involved in those three things, I think you’re gonna – you’re going to prosper because everybody needs to see that we started out – the union started out as a fraternal organization.
Bob Alvarado 20:11
We’ve become the business side of that fraternal organization. But we just can never forget that we are a fraternal organization. So, you got to hire people that understand. It may not even be a carpenter. I have a research department, who are all college graduates who utilize statistics and every other little computer nook and cranny to get in there and give us the information that we need. We have a compliance department who uses other tools, neither one of them is a carpenter four of them aren’t. But you got to go outside the organization sometimes to get what you need to make this organization successful.
Bob Alvarado 20:53
So, there’s all these different things now that I don’t think were really contemplated when we were at – when we were growing up, if we will, as a union, but are now pretty much required. So really, I think the community is probably the most important, and then the rest of those fall behind it. But if you’re going to stay relevant, you’ve got to have public opinion on your side. And you just can’t be – there’s a time and a place to be a bully. And there’s a time and a place to show the empathy and involvement that we do.
Traci Dority-Shanklin 21:23
I have a closing question. Are pension funds and health and welfare funds, a big conversation point when organizing new workers?
Bob Alvarado 21:34
They’re big. I started out as an organizer. And you know, when you’re young, when I started when I was 19, a pension plan didn’t mean a thing. And a health and welfare plan didn’t mean a thing to me. I mean, you’re young and invincible. So, when I became an organizer, you know, I think I was 33 years old when I became an organizer, you find out pretty quick that those are the things – that’s what the difference between us and them. Assume the bad guys was – was the health and welfare and pension. And how do you explain that to this young, healthy individual? Well, you know where you do it?
Bob Alvarado 22:12
You do it in the kitchen, and you make sure that the wife is there. Because most of the time just like in my family, that’s the brains of the outfit right there. And when you start talking about pension and health and welfare, and what it can do for your family, especially have children and what happens when you get old, and you have, uh, at least a steady source of income, other than social security, you start talking about those things. And probably 80% of the way into the conversation, the wife would come to the table and just sit. And I would invite her in and ask her, you know, go ahead and ask any question you want, and we would have a conversation.
Bob Alvarado 22:50
And if you’re smart, you understand that you have to look forward to the future. And most men aren’t that smart until we get hurt the first time or we get thrown out of work for a long, long time. But the people that run those households, a single father, for example, will really understand the need for pension and health and welfare. And I think that’s what stands us apart. What like I said, we’re a seasonal workforce, and there’s a central place where all of your contributions go. And then when it’s time to – to call it a day, he was locking one door and take care of everything in one spot. That’s important.
Traci Dority-Shanklin 23:31
So, as someone who grew up around the labor movement, what I love that you touched on is that you were sitting in someone’s kitchen when you’re having that conversation. I think it speaks to something that maybe people outside of labor don’t understand about labor is that it truly is a family or to – to use your words a fraternal organization that supports each other in good times and bad and I think it’s a really cool that those conversations – those real conversations are happening in people’s homes with the family in mind.
Bob Alvarado 24:07
In my organization, everybody starts as an organizer, everybody, except the research and compliance. Everybody else starts as an organizer. And you got to spend at least a couple years doing those kitchen talks before you move on to the business agent, senior business agent, district manager, and senior staff, so that everybody has the same idea of where we came from. And then we can never forget that the minute you stop coming into those kitchens. You’re – you’re taking your first step to irrelevance.
Traci Dority-Shanklin 24:44
So important for people to understand about labor. Bob, I think that about wraps it up. Is there anything you’d like to say that maybe we haven’t touched on today?
Bob Alvarado 24:55
I think other than I guess we need to talk a little bit about relationships, you know, with politicians, with city planners, you know, I encourage the people that work for me to develop those relationships. And you know, you’re gonna have a lot of acquaintances in the work that we do. It’s important to develop friends.
Bob Alvarado 25:16
You know, not every – every money manager is going to be your friend. And not every consultant is going to be a friend, not every contractor is going to be your friend. But you need to develop those relationships. And if you – if you come away at the end of the day, and – and you’ve got more friends than acquaintances, you did it right.
Traci Dority-Shanklin 25:35
That’s awesome. I totally agree. And I feel honored to call you a friend, Bob, so thank you so much for today.
Bob Alvarado 25:42
Thank you. You’re welcome.
Tom Shanklin 25:44
Yeah, we really appreciate this. I think that there’s – there’s a need and when you talked about becoming relevant, you know, we certainly are advocates of the social media. And this is just one – one additional platform to get out there and let people know what the union movements all about and – and how it helps people. So, we thank you for helping us spread that message.
Bob Alvarado 26:07
You’re welcome. We’re just talking to you both.
Traci Dority-Shanklin 26:10
Yeah, thank you very much.
And that’s it for this week’s episode of The World of Multiemployer Benefit Funds Podcast. We would love to hear from you, and if you have any comments, questions or suggestions, head over to www.multiemployerfunds.com, and let us know. Tom and Traci, thank you for joining us, and we look forward to next time. For even more information and resources, head over now to www.multiemployerfunds.com and get involved.