Fund firms step up hiring

As investors slowly dip their toes back into the stock market, mutual fund companies are cautiously hiring again.
DEC 09, 2009
As investors slowly dip their toes back into the stock market, mutual fund companies are cautiously hiring again. BlackRock Inc., for example, is quietly adding to its roster of sales representatives who court financial advisers and other intermediaries. MFS Investment Management also recently announced plans to hire 100 employees over the next three years, half of whom will be based in the firm's overseas offices. And Pacific Investment Management Co. LLC is building its active stock management capabilities and could recruit an existing team of managers from one of its many rivals. Other asset managers are considering a “lift-out” of an entire team to fill holes in their lineups, said Paul Legvold, head of recruiting firm Heidrick & Struggles International Inc.'s North American asset management practice. Hiring by asset managers has picked up steadily since July, he said. Part of the reason for the in-crease is the market rebound, said Kristen Schriver, president of Investment Management Recruiters LLC. “But beyond that, it's about stability returning to the market,” she said.
Indeed, after relentlessly slashing head counts over the past 18 months, many asset managers are coming to the conclusion that they can't afford to delay rebuilding their businesses. “It is very clear that after starving these businesses, in order to have a business in 2011, you have to start investing in 2010,” said Cornelia Kiley, co-head of the asset and wealth management practice at Russell Reynolds Associates Inc., another recruiting firm. While still in its early stages, the hiring rebound represents a significant turn of events in the fund industry. Amid the downturn, the fund industry underwent massive job cuts. Among the companies affected were Fidelity Investments; Putnam Investments; The Capital Group Cos. Inc., whose Capital Research and Management Co. unit advises the widely popular American Funds; and BlackRock.

NEW PAY ERA

To be sure, the days of exorbitant salaries and lavish bonuses are unlikely to return — at least not anytime soon. “Compensation has been jawboned down,” said Edward McGlynn, managing director of Financial Recruiters LLC. Apart from not wanting to overpay for talent in a stabilizing but still shaky economic environment, firms are nervous about drawing scrutiny from regulators, legislators and investors for their compensation practices, he said. So far, most of the hiring has been focused on the sales and marketing side of the fund business, observers said. When the stock market fell, many firms slashed their external wholesaling teams by 25% to 50% Now they are looking to rebuild their roster of sales representatives. And many are intent on hiring so-called product specialists — that is, reps “who can have more complex discussions with the client,” Ms. Kiley said. Technological services are an-other area where many firms are looking to hire. “The pursuit of operating efficiency will lead to significant investments in technology, more-sophisticated shared-services platforms and more-complex outsourcing arrangements,” according to a report Russell Reynolds sent to clients this month. “This will drive a resurgence of recruiting for "next generation' technology executives to lead these initiatives.” On the investment side, demand for fixed-income and emerging-markets managers — two areas of the market that fared better than most during the financial crisis — is likely to pick up in the months ahead, according to recruiters. Firms looking to build in those areas, however, aren't merely chasing returns, Ms. Kiley said. As more baby boomers retire, interest in bond funds will likely grow, she said. And emerging markets, according to many industry watchers, will continue to outperform more developed markets for some time to come, Ms. Kiley said.

UNCERTAIN TIMES

Still, these are uncertain times for many mutual fund companies. Investors poured $144.7 billion into mutual funds during the third quarter, bringing the year-to-date inflows to $273.2 billion, according to Morningstar Inc. That puts the industry on track to break the 1997 record of $300 billion in net new-cash flow. But not every fund company is benefiting equally. Last week, Franklin Resources Inc. announced a 22% jump in its fiscal-fourth-quarter profit due to a greater inflow of cash into its funds. Meanwhile, such firms as BlackRock and Legg Mason Inc. posted higher profits but saw more money move out of their funds than into them. “A lot of these firms are still in tough shape economically,” Mr. Legvold said. E-mail David Hoffman at [email protected].

Latest News

As layoffs commence, Commonwealth’s digital guru jumps ship
As layoffs commence, Commonwealth’s digital guru jumps ship

Christopher Blotto moved this month to Janney Montgomery Scott.

Fintech bytes: Advyzon lays claim to new category with 'all-in AI' launch
Fintech bytes: Advyzon lays claim to new category with 'all-in AI' launch

Finturk also added new form-filling and cash sweep tools to its AI-first CRM platform, while Zeplyn builds advisor coaching into its own AI operating system

There’s no advisor playbook for family succession feuds, but these skills help: UBS
There’s no advisor playbook for family succession feuds, but these skills help: UBS

“Ultimately, you just try to embrace collaboration,” said Greg Merrill of UBS.

NorthRock widens Minneapolis reach with Kowalski Financial deal
NorthRock widens Minneapolis reach with Kowalski Financial deal

Building on its Personal Office platform, NorthRock Partners' latest transaction brings more than $200 million in assets under management and five employees to the growing RIA.

Osaic deepens RISR partnership as advisors race to serve aging business owners
Osaic deepens RISR partnership as advisors race to serve aging business owners

Expanded deal pairs succession-planning software with a broker-dealer network already logging rapid AI adoption among 11,000 advisors.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income