In another acknowledgment of the rapid rise of independent investment advisers, Putnam Investments is creating a distribution channel dedicated solely to selling its products to them.
The company, which has $62 billion in retail mutual funds and $52 billion in institutional products, has appointed Catherine A. Saunders, the former head of its North American institutional business, to head its new registered investment advisory business.
“The RIA channel merits its own individual focus,” Robert Reynolds, Putnam president and chief executive, said last week. “Many RIAs are small and don't have home office support, so we want to reach out to them and service them beyond investment products.”
Putnam has no plans to establish a broker-dealer to compete with The
Charles Schwab Corp.,
Fidelity Investments and other money management rivals that use their brokerage firms to capture custody advisers' assets, said Mr. Reynolds, a former Fidelity executive. The firm realizes it has to work more closely with custodians to favorably position its funds for advisers in no-transaction-fee fund supermarkets sponsored by Fidelity, Schwab, Pershing LLC and TD Ameritrade Holding Corp., he said.
Paying for distribution and client service by those firms is a necessary cost of business, Mr. Reynolds said.
Ms. Saunders has been given the responsibility of devising recommendations for a product mix that appeals to RIAs and developing a staff that can provide continuing “thought leadership” to advisers. For example, the firm wants to offer tools for creating a mix of funds to replicate certain indexes or returns and to hold conferences for advisers featuring investment strategists and practice management experts.
The Putnam products most alluring to advisers of late have been in fixed income, large-cap equity and absolute-return funds, executives said.
For Ms. Saunders, who has been with Putnam for more than 20 years, the assignment is decidedly narrower than her former position.
Since December 2007, she has led scores of employees serving U.S. institutional investors, while her colleague Joseph Phoenix ran the international institutional business from London. He is moving back to Boston to head a newly organized global institutional management business combining the geographic sectors.
Ms. Saunders is launching the RIA business with a fledgling staff of three regional salespeople, a product specialist, a platform specialist and a marketing writer. All are current Putnam employees.
Mr. Reynolds said that he expects Ms. Saunders to report back to him with a growth plan within two months.
“This is a perfect intersection for us,” she said of the RIA marketplace. “It's retail in its focus on end investors but institutional in mind-set.”
Ms. Saunders, like Mr. Phoenix, will continue to report to William Connolly, Putnam's head of global distribution.
Putnam's organizational change came during the same week that Citigroup Inc. put its imprimatur on the RIA model by announcing plans to shift retail brokers in its bank branches to a fee-based advisory model from their traditional commission-based transactional orientation.
“This model is where the market is headed, and it will help us offer clients greater flexibility, transparency and meaningful investment choices,” Terri Dial, Citigroup's head of North America consumer banking and global consumer strategy, said of the shift.
E-mail Jed Horowitz at [email protected].
