Where Do Asset. Key Findings from an Analysis

Transcription

1 Where Do Asset Management CEOs Come From? Key Findings from an Analysis of CEO Career Dynamics

2 Methodology This study presents key findings from an analysis of the profiles and career paths of CEOs in the asset management industry Our analysis included 96 CEOs across 46 large firms and 46 boutique asset management firms. Summary of key findings CEOs of large asset management firms: Of the 48 CEOs profiled, 37 (77%) have been appointed since Spikes in CEO appointments occurred in North America during the financial crisis and in 202 in Europe, possibly due to profits failing to recover to pre-financial crisis levels. Approximately 29% were externally appointed, roughly in line with other industries. While buy-side experience is prevalent among these CEOs, over half have never held an investment role in their career. There are differences in profiles between CEOs of independent, bank-linked and insurancelinked firms. Bank-linked CEOs often come from buy-side and other non-asset managementrelated parts of financial services. In contrast, CEOs at both independent and insurance-linked firms tend to come from within the asset management industry, most commonly serving as the CEO with a smaller firm prior to assuming their current role. Only one in five CEOs have international experience, which is notably lower than in other parts of financial services. For comparison, in insurance three in five CEOs have international experience. CEOs of boutique asset management firms: While the CEOs of boutique firms on multi-manager platforms are primarily promoted internally (similar to large firms), the majority of CEOs of independent asset managers are founders. Investment roles are the most commonly-held positions immediately prior to being appointed CEO. Furthermore, the vast majority of CEOs have held investment roles at some point in their careers. This is a reflection of many boutiques still being run by founders who are often investment professionals. Unlike CEOs of large asset management firms, CEOs of both multi-boutique and independent boutique firms tend to have ongoing, direct involvement in the investment process after being appointed to the CEO role. Recent shifts in CEO profiles: Approximately a quarter of appointments have taken place since 202. Our analysis reveals three shifts in the profiles of recently-appointed CEOs:. Recently-appointed internal candidates: All recently-appointed CEOs of boutiques were promoted from within, as were four in five CEOs of large firms. This is likely a reflection of the need for candidates to know both the product, investor base, as well as being familiar with firm-specific challenges. 2. Sales experience, at the expense of investment experience: This trend is especially visible for boutique firms. It is likely a reflection of the need to have a more client-centered strategy and of investment professionals wanting to remain hands-on portfolio managers, which can become challenging if that person is also to successfully fulfil their CEO responsibilities. 3. Rising emphasis on international experience: This shift only applies to large firms, which already tend to be global or multi-regional institutions.. Where applicable, we profiled co-ceos 2

3 CEOs of Large Asset Management firms There are significant differences in CEO profiles across different types of asset management firms

4 An overview of the large Asset management Firms included in our analysis Aberdeen Edinburgh London Toronto Boston Chicago San Mateo Newport Beach Des Moines Newark Baltimore Los Angeles The Hague Frankfurt 2 Zurich Beverly San Francisco 5 Paris Malvern New York Atlanta 30 6 North America Europe Company Category Location Company Category Location BNY Mellon Investment Management Deutsche Asset & Wealth Management Goldman Sachs Asset Management HSBC Global Asset Management JP Morgan Asset Management BNP Paribas Investment Partners Paris, France Lazard Asset Management Natixis Global Asset Management Paris, France Morgan Stanley Investment Management Credit Suisse Asset Management Zurich, Switzerland Wells Fargo Asset Management Zurich, Switzerland San Francisco, CA, USA UBS Global Asset Management Ameriprise Financial MFS Investment Management Old Mutual Asset Management Putnam Investments Principal Global Investors Des Moines, IA, USA PIMCO (Part of Allianz Asset Management) Newport Beach, CA, USA MetLife Investment Management Prudential Investment Management Newark, NJ, USA Manulife Asset Management Toronto, ON, Canada Invesco Atlanta, GA, USA Legg Mason Baltimore, MD, USA T.Rowe Price Baltimore, MD, USA Affiliated Managers Group Beverly, MA, USA Eaton Vance Management Fidelity Investments State Street Global Advisors Wellington Management Company Northern Trust Asset Management Chicago, IL, USA TCW Group Los Angeles, CA, USA The Vanguard Group Malvern, PA, USA BlackRock Neuberger Berman TIAA-CREF Asset Management Franklin Templeton Investments San Mateo, CA, USA Frankfurt, Germany Standard Life Investments Edinburgh, UK Frankfurt, Germany Allianz Global Investors (Part of Allianz Asset Management) Aegon Asset Management The Hague, Netherlands Aviva Investors Prudential plc AXA Investment Management Paris, France Aberdeen Asset Management Aberdeen, UK Legal & General Investment Management Schroders Amundi Paris, France For bank- and insurance-linked asset managers, the CEO was defined as the member of the management team with responsibility for the asset management business. For asset management firms that are subsidiaries of larger financial institutions, company category was determined based on the parent company s largest business line by revenue. Note: The co-heads of Credit Suisse Private Banking & Wealth Management, Goldman Sachs Asset Management and Allianz Asset Management were profiled 4

5 Route to the top for CEOs AT large Asset management Firms Year of Appointment for Current CEOs A notable share of current CEOs at North American firms were appointed in the midst of financial crisis. A similarly notable share of CEOs at European firms were appointed in 202. Internal Vs. External Appointments The majority of group CEOs are internally appointed, with few founders at the top. Women represent 8% of current CEOs. In total, 37 of 48 (77%) have been appointed since CEO turnover at North American firms spiked during the financial crisis 6 CEO turnover at European firms rose as profits failed to recover to pre-financial crisis levels Founder 4% No female founders Internally appointed 67% YTD 2 Externally appointed 29% 3 females internally appointed = 9% of all internal appointments. female externally appointed = 7% of all external appointments. Role prior to appointment to CEO Immediately prior to being appointed to their current roles, roughly half of the CEOs in our analysis either held senior investment positions or served as the CEO of a smaller asset management firm. 28% 2% 8% 3% 0% 0% CEO of Asset Management Firm Investment Senior role within Financial Institution 2 COO of Asset Management Firm 3 Sales Others. Includes regional subsidiaries of global asset managers 2. Financial Institution includes banks, insurance companies and private banks 3. COO of Asset Management Firm includes the titles COO, Deputy CEO, Vice Chairman and Head of Global Strategy 5

6 Core experiences of CEOs of large Asset management Firms Prior buy-side and sell-side experience The vast majority of CEOs have buyside experience. Nearly half have sell-side experience. And fully 40% have both buy- and sellside experience. 8% Sell-side Both Neither 46% 40% 9% CEOs without buy- or sell-side experience come from a variety of backgrounds, including law, strategy consulting, private banking, corporate banking, and retail banking. A Closer Look at the Nature of Experience Prior to Appointment as CEO While a clear majority of CEOs have buy-side experience, less than half have investment experience. Investment & Other No Prior Buy- Side Experience Functions 23% 9% 54% Of ALL Group CEOs have not held an investment role in their career Investment Only 23% Non-Investment Experience Only 35% Gender Diversity While gender diversity is a concern, asset management has more women at the top than many other industries. For comparison: 8% of global asset management CEOs are female, compared with 6% for global banks and 2% for insurance companies 8% 6% All women were 92% appointed after % Men Women 45 Global Asset Management Firms 50 Global Banks 2% 40 Global Insurance Companies. Includes functions such as sales, operations, finance and product development 6

7 CEO Route to the top by firm type Internal Vs. External Appointments Bank-linked firms tend to appoint their CEOs internally, while insurance-linked tend to appoint their CEOs externally. % Founder 63% Internal 26% External 0% Founder 86% Internal 4% External 0% Founder 53% Internal 47% External Prior buy-side and sell-side experience Prior sell-side experience is dominant for CEOs in bank-linked asset managers. In insurance-linked companies, almost all CEOs have buy-side experience. 84% 32% 64% 7% 93% 40% Buy-side Sell-side Buy-side Sell-side Buy-side Sell-side Nature of Experience before Appointment to CEO Over half of CEOs at independent and insurance-linked asset managers have held prior investment roles; by contrast, roughly a third of bank-linked firm CEOs have previously held investment roles. Investment & Other Functions 37% No Experience 6% Investment Only 29% Investment & Other Functions 7% No Experience 35% Investment & Other Functions 20% No Experience 7% Non- Investment Experience Only 40% Investment Only % Non-Investment Experience Only 37% Non-Investment Experience Only 29% Investment Only 33%. Includes functions such as sales, operations, finance and product development 7

8 CEO Route to the top by firm type Role held prior to Appointment to CEO and insurance-linked firms tend to appoint CEOs with recent asset management leadership or investment experience. Bank-linked firms, on the other hand, look more broadly within the financial services talent pools. INDEPENDENT 37% 2% 6% % 5% 5% 5% CEO of Asset Management Firm Sales Investment Operations Function within Financial Institution 2 Sell-Side COO of Asset Management Firm 3 Lawyer BANK-LINKED 30% 4% 4% 4% 4% 7% 7% CEO of a Financial Institution 2 COO of Asset Management Firm 3 Investment Operations Function within Financial Institution 2 Sell-Side Sales CEO of Asset Management Firm INSURANCE-LINKED 33% 33% 20% 7% 7% CEO of Asset Management Firm Investment COO of Asset Management Firm 3 CEO of a Financial Institution 2 Consulting. Includes regional subsidiaries of global asset managers 2. Financial Institution includes banks, insurance companies and private banks 3. COO of Asset Management Firm includes the titles COO, Deputy CEO, Vice Chairman and Head of Global Strategy 8

9 International Experience Nationality While all North America-based firms have CEOs who are from the region, the picture in Europe is more varied: 7 out of 6 Europe-based asset management firms have a CEO whose nationality is different from the company s HQ. Percentage of CEOs with Same Nationality as Company HQ 00% North American Firms 56% European Firms Examples of Firms with CEOs Whose nationality IS different from their company s HQ Sarah Russell Australian Sridhar Chandrasekharan Indian Andrea Rossi Italian Michele Faissola Italian Mark Zinkula American Elizabeth Corley British International Experience Only 9% of CEOs have worked in more than one country. Work experience in Europe and North America Stephen Potter James McCaughan Work experience in North America, Europe and Asia Douglas Hodge 9% Work experience in Europe and Asia Sridhar Chandrasekharan Sarah Russell Work experience in North America and Asia Kai Sotorp Peter Bain Work experience in North America, Europe and Middle East The majority of CEOs with multiregion experience gained it through internal POSTINGS. Andrea Rossi (Europe and Middle East) Robert Leary (USA and Middle East) 9

10 CEOs of Boutique Asset Management firms Scale matters, as the profiles of CEOs at boutique firms differ significantly from those of large firms

11 An overview of the boutique Asset Management Firms included in our analysis Stavanger Edinburgh 9 Boston Milwaukee 2 Chicago 3 2 San Francisco Pasadena Los Angeles Overland Park 4 3 Rye Teaneck Baltimore Philadelphia London Geneva Paris New York Arlington San Diego 33 3 North America Europe Company Category Location Company Category Location Sands Capital Arlington, VA, USA Edinburgh Partners Edinburgh, UK DoubleLine Capital Los Angeles, CA, USA Unigestion Geneva, Switzerland Hotchkis & Wiley Los Angeles, CA, USA Colchester Global Investors Artisan Partners Milwaukee, WI, USA Jupiter Fund Management Baron Capital Management Majedie Cohen & Steers Carmignac Paris, France Fred Alger Management Skagen Funds Stavanger, Norway Alcentra Baring Asset Management Pzena Investment Management Waddell & Reed Financial, Inc Overland Park, KS, USA GAMCO Investors Rye, NY, USA Brandes Investment Partners San Diego, CA, USA Investment Counselors of Maryland ECM Asset Management Insight Investment Baltimore, MD, USA Newton Threadneedle Babson Capital Boston Company Copper Rock Capital Partners Loomis, Sayles & Co. Harris Associates Chicago, IL, USA Nuveen Asset Management Chicago, IL, USA AllianceBernstein ClearBridge Investments Cutwater Asset Management Dreyfus Epoch Investment Partners Jennison Associates Oppenheimer Third Avenue Management LLC TimesSquare Capital Management, LLC Western Asset Management Pasadena, CA, USA Delaware Investments Philadelphia, PA, USA Highmark Capital Management San Francisco, CA, USA Mellon Capital San Francisco, CA, USA Wells Capital Management San Francisco, CA, USA Systematic Financial Management Teaneck, NJ, USA

12 CEO Route to the top by firm type Internal Vs. External Appointments While CEOs of large firms and boutiques on multi-manager platforms are more likely to be appointed internally, the majority of the CEOs for independent boutique asset management firms are founders. LARGE FIRM CEOs MULTI-BOUTIQUE SUBSIDIARY CEOs FOUNDER 4% 4% 7% 29% EXTERNAL INDEPENDENT BOUTIQUE CEOs 55% INTERNAL 67% 89% 0% 35% Role prior to appointment to CEO Investment and COO roles are the most commonly-held positions prior to being appointed to CEO at boutique asset management firms. LARGE FIRM CEOs 28% 2% 8% 3% 0% 0% CEO of Asset Management Firm Investment Senior role within a Financial Institution 2 COO of Asset Management Firm 3 Sales Others MULTI-BOUTIQUE SUBSIDIARY CEOs 60% 32% 4% 4% Investment COO of Asset Management Firm 3 INDEPENDENT BOUTIQUE CEOs 75% Sales CEO of Asset Management Firm 0% 5% 5% 5% Investment COO of Asset Management Firm 3 Senior role within a Financial Institution 2 Sell-Side CEO of Financial Institution 4. Includes regional subsidiaries of global asset managers 2. Includes functions such as sales, operations, finance and product development 3. COO of Asset Management Firm includes the titles COO, Deputy CEO, Vice Chairman and Head of Global Strategy 4. Financial Institution includes banks, insurance companies and private banks 2

13 Core experiences of CEOs, by Firm type Functional Experience Before appointment to CEO CEOs of boutique asset management firms are much more likely to have investment experience when compared with CEOs of large firms almost 85% of independent boutique CEOs have an investment background. Large firm CEOs Multi-boutique subsidiary CEOs Boutique CEOs Investment Only 23% 58% 85% Investment & Other Functions 23% 2% 5% No Investment Experience 54% 2% 0% Share of CEOs with DIRECT, ON-GOING Involvement in The investment process Unlike CEOs of large firms, CEOs of both multi-boutique and independent boutique firms tend to have continued direct involvement in the investment process. Large firm CEOs Multi-boutique subsidiary CEOs Boutique CEOs 0% 39% 60%. Looks across the entire sample 3

14 Recent shifts in CEO profiles Recently-appointed CEOs are more likely to have been promoted internally, more likely to have sales experience, and less likely to have investment experience; at large firms, recently-appointed CEOs are also more likely to have international experience

15 Three Recent shifts in CEO profiles across all firm types. Growing emphasis on internal candidates INTERNAL VS EXTERNAL APPOINTMENTS CEOs appointed before 202 CEOs appointed since 202 LARGE FIRMS 6% Internal 9 p.p. 80% Internal BOUTIQUES 52% Internal 48 p.p. 00% Internal 2. Growing emphasis ON SALES AT THE EXPENSE OF INVESTMENT EXPERIENCE SALES EXPERIENCE CEOs appointed before 202 CEOs appointed since 202 LARGE FIRMS 5% 8 p.p. 33% BOUTIQUES 0% 50 p.p. 50% INVESTMENT EXPERIENCE CEOs appointed before 202 CEOs appointed since 202 LARGE FIRMS 55% -28 p.p. 27% BOUTIQUES 94% -44 p.p. 50% 3. Growing emphasis ON INTERNATIONAL EXPERIENCE, But FOR LARGE Firms ONLY INTERNATIONAL EXPERIENCE LARGE FIRMS CEOs appointed before 202 CEOs appointed since 202 2% 2 p.p. 33% BOUTIQUES 2% -2 p.p. 0%. Includes profiles of 4 CEOs where information was available 5

16 About Russell Reynolds Associates Russell Reynolds Associates is a global leader in assessment, recruitment and succession planning for chief executive officers, boards of directors and key roles within the C-suite. With 350 consultants in 44 offices around the world, we work closely with both public and private organizations across all industries and regions. We help our clients build boards and executive teams that can meet the challenges and opportunities presented by the digital, economic, environmental and political trends that are reshaping the global business environment. Global Offices Americas Atlanta Boston Buenos Aires Calgary Chicago Dallas Houston Los Angeles Mexico City Minneapolis/St. Paul New York Palo Alto San Francisco São Paulo Stamford Toronto Washington, D.C. Asia/pacific Beijing Hong Kong Melbourne Mumbai New Delhi Seoul Shanghai Singapore Sydney Tokyo Europe Amsterdam Barcelona Brussels Copenhagen Frankfurt Hamburg Helsinki Istanbul London Madrid Milan Munich Oslo Paris Stockholm Warsaw Zurich Copyright January 205, Russell Reynolds Associates. All rights reserved