Where Do Asset Management Ceos Come From?

Where Do Asset Management CEOs Come From?

Key Findings from an Analysis of CEO Career Dynamics 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 profiled1, 37 (77%) have been appointed since 2006. Spikes in CEO appointments occurred in North America during the financial crisis and in 2012 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 insurance- linked firms. Bank-linked CEOs often come from buy-side and other non-asset management- related 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 2012. Our analysis reveals three shifts in the profiles of recently-appointed CEOs: 1. 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.

1. Where applicable, we profiled co-CEOs 2 CEOs of Large Asset Management firms

There are significant differences in CEO profiles across different types of asset management firms An overview of the large Asset management Firms included in our analysIS

Aberdeen Edinburgh 5 The Hague London 2Frankfurt Toronto Zurich Boston Paris Beverly Chicago Malvern Newark San Francisco Des Moines San Baltimore Mateo Los Angeles New York Newport Beach Atlanta

30 16 North America Europe Company Category Location Company Category Location BNY Mellon Investment Management Bank-Linked New York, NY, USA Deutsche Asset & Wealth Management Bank-Linked Frankfurt, Germany Goldman Sachs Asset Management Bank-Linked New York, NY, USA HSBC Global Asset Management Bank-Linked London, UK JP Morgan Asset Management Bank-Linked New York, NY, USA BNP Paribas Investment Partners Bank-Linked Paris, France Lazard Asset Management Bank-Linked New York, NY, USA Natixis Global Asset Management Bank-Linked Paris, France Morgan Stanley Investment Bank-Linked New York, NY, USA Credit Suisse Asset Management Bank-Linked Zurich, Switzerland Management UBS Global Asset Management Bank-Linked Zurich, Switzerland Wells Fargo Asset Management Bank-Linked San Francisco, CA, USA Standard Life Investments Insurance-Linked Edinburgh, UK Ameriprise Financial Insurance-Linked Boston, MA, USA Allianz Global Investors Insurance-Linked Frankfurt, Germany MFS Investment Management Insurance-Linked Boston, MA, USA (Part of Allianz Asset Management) Old Mutual Asset Management Insurance-Linked Boston, MA, USA Aegon Asset Management Insurance-Linked The Hague, Putnam Investments Insurance-Linked Boston, MA, USA Netherlands Principal Global Investors Insurance-Linked Des Moines, IA, USA Aviva Investors Insurance-Linked London, UK PIMCO Insurance-Linked Newport Beach, CA, USA Prudential plc Insurance-Linked London, UK (Part of Allianz Asset Management) AXA Investment Management Insurance-Linked Paris, France MetLife Investment Management Insurance-Linked New York, NY, USA Aberdeen Asset Management Independent Aberdeen, UK Prudential Investment Management Insurance-Linked Newark, NJ, USA Legal & General Investment Management Independent London, UK Manulife Asset Management Insurance-Linked Toronto, ON, Canada Schroders Independent London, UK Invesco Independent Atlanta, GA, USA Amundi Independent Paris, France Legg Mason Independent Baltimore, MD, USA T.Rowe Price Independent Baltimore, MD, USA Affiliated Managers Group Independent Beverly, MA, USA Eaton Vance Management Independent Boston, MA, USA Fidelity Investments Independent Boston, MA, USA State Street Global Advisors Independent Boston, MA, USA Wellington Management Company Independent Boston, MA, USA Northern Trust Asset Management Independent Chicago, IL, USA TCW Group Independent Los Angeles, CA, USA The Vanguard Group Independent Malvern, PA, USA For bank- and insurance-linked asset managers, the CEO was defined BlackRock Independent New York, NY, USA as the member of the management team with responsibility for the Neuberger Berman Independent New York, NY, USA asset management business. TIAA-CREF Asset Management Independent New York, NY, USA For asset management firms that are subsidiaries of larger financial Franklin Templeton Investments Independent San Mateo, CA, USA 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 Route to the top for CEOs AT large Asset management Firms

Year of Appointment for Current Internal Vs. External CEOs Appointments A notable share of current CEOs at North American The majority of group CEOs are internally appointed, firms were appointed in the midst of financial crisis. A with few founders at the top. Women represent 8% of similarly notable share of CEOs at European firms were current CEOs. appointed in 2012.

In total, 37 of 48 (77%) have been appointed since 2006. Founder No female CEO turnover at North 4% founders American firms spiked during CEO turnover at European the financial crisis firms rose as profits failed to recover to pre-financial 6 crisis levels

5 Internally appointed

4 4 67%

3 females internally appointed = 9% of all internal appointments. Externally 2 2 2 2 appointed 1 female externally 1 appointed = 7% of all 29% external appointments. 1 1 1 1 1 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

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% 21% 18% 13% 10% 10%

CEO of Asset Investment Senior role COO of Sales Others Management within Financial Asset Management Firm1 Institution2 Firm3

1. 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 Core experiences of CEOs of large Asset management Firms

Prior buy-side and sell-side experience Buy-Side Sell-side Both Neither The vast majority CEOs without of CEOs have buy- buy- or sell-side side experience. experience come Nearly half from a variety of have sell-side backgrounds, experience. And including law, fully 40% have strategy consulting, both buy- and sell- private banking, side experience. corporate banking, 81% 46% 40% 19% and retail banking.

A Closer Look at the Nature of Buy-Side 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- Buy-Side Side Experience Functions1 19% 23% Of ALL Group CEOs 54% have not held an investment role in their career

Non-Investment Buy-Side Buy-Side Investment Only Experience Only 23% 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 45 50 40 92% appointed after 2008 8% Global Asset Global Global Insurance Men Women Management Firms Banks Companies

1. Includes functions such as sales, operations, finance and product development 6 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. Independent Bank-Linked Insurance-Linked

11% 63% 26% 0% 86% 14% 0% 53% 47% Founder Internal External Founder Internal External Founder Internal 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. Independent Bank-Linked Insurance-Linked 84% 93% 64% 71% 32% 40%

Buy-side Sell-side Buy-side Sell-side Buy-side Sell-side

Nature of Buy-Side 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. Independent Bank-Linked Insurance-Linked Investment & Other Investment & Other Buy-Side No Buy-Side Investment & Other Buy-Side No Buy-Side Functions1 Experience Functions1 Experience No Buy-Side Buy-Side Functions1 7% Experience 7% Non- 37% 16% 20% Investment 35% Buy-Side Experience Buy-Side Only Investment Only 40% 29%

Buy-Side Non-Investment Investment Only Buy-Side Buy-Side Non-Investment Investment Only Experience Only 33% Buy-Side 11% 37% Experience Only 29%

1. Includes functions such as sales, operations, finance and product development 7 CEO “Route to the top” by firm type

Role held prior to Appointment to CEO Independent 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%

21% 16% 11% 5% 5% 5%

CEO of Asset Sales Investment Operations Sell-Side COO of Lawyer Management Function Asset Firm1 within Financial Management Institution2 Firm3

BANK-LINKED 30%

14% 14% 14% 14% 7% 7%

CEO of a COO of Investment Operations Sell-Side Sales CEO of Asset Financial Asset Function Management Institution2 Management within Financial Firm1 Firm3 Institution2

INSURANCE-LINKED 33% 33%

20%

7% 7%

CEO of Asset Investment COO of CEO of a Consulting Management Asset Financial Firm1 Management Institution2 Firm3

Nationality While all North America-based firms have CEOs who are from the region, the picture in Europe is more varied: 7 out of 16 Europe-based asset management firms have a CEO whose nationality is different from the company’s HQ. Percentage of CEOs with Same Examples of Firms with CEOs Whose Nationality as Company HQ nationality IS different from their 100% company’s HQ Sarah Russell Australian Sridhar Chandrasekharan Indian 56% Andrea Rossi Italian Michele Faissola Italian Mark Zinkula American

North American European Elizabeth Corley Firms Firms British

International Experience Work experience in Europe and North America Only 19% of CEOs have worked in more than Stephen Potter one country. James McCaughan

Work experience in North America, Europe and Asia

Douglas Hodge

Work experience in Europe and Asia

Sridhar Chandrasekharan

19% 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 multi- Andrea Rossi (Europe and Middle East) region experience gained it through internal POSTINGS. Robert Leary (USA and Middle East)

9 CEOs of Boutique Asset Management firms

Scale matters, as the profiles of CEOs at boutique firms differ significantly from those of large firms An overview of the boutique Asset Management Firms included in our analysis

Stavanger

Edinburgh 9 London Geneva Milwaukee Boston 1 4 Paris Rye1 Chicago2 Philadelphia Teaneck1 1 3San Francisco Overland Park Baltimore 13New York Pasadena1 Los Angeles 1 1 2 1Arlington 1San Diego

33 13 North America Europe Company Category Location Company Category Location Sands Capital Independent Arlington, VA, USA Edinburgh Partners Independent Edinburgh, UK DoubleLine Capital Independent Los Angeles, CA, USA Unigestion Independent Geneva, Switzerland Hotchkis & Wiley Independent Los Angeles, CA, USA Colchester Global Investors Independent London, UK Artisan Partners Independent Milwaukee, WI, USA Jupiter Fund Management Independent London, UK Baron Capital Management Independent New York, NY, USA Majedie Independent London, UK Cohen & Steers Independent New York, NY, USA Carmignac Independent Paris, France Fred Alger Management Independent New York, NY, USA Skagen Funds Independent Stavanger, Norway Pzena Investment Management Independent New York, NY, USA Alcentra Multi Boutique London, UK Waddell & Reed Financial, Inc Independent Overland Park, KS, USA Baring Asset Management Multi Boutique London, UK GAMCO Investors Independent Rye, NY, USA ECM Asset Management Multi Boutique London, UK Brandes Investment Partners Independent San Diego, CA, USA Insight Investment Multi Boutique London, UK Investment Counselors of Maryland Multi Boutique Baltimore, MD, USA Newton Multi Boutique London, UK Babson Capital Multi Boutique Boston, MA, USA Threadneedle Multi Boutique London, UK Boston Company Multi Boutique Boston, MA, USA Copper Rock Capital Partners Multi Boutique Boston, MA, USA Loomis, Sayles & Co. Multi Boutique Boston, MA, USA Harris Associates Multi Boutique Chicago, IL, USA Nuveen Asset Management Multi Boutique Chicago, IL, USA AllianceBernstein Multi Boutique New York, NY, USA ClearBridge Investments Multi Boutique New York, NY, USA Cutwater Asset Management Multi Boutique New York, NY, USA Dreyfus Multi Boutique New York, NY, USA Epoch Investment Partners Multi Boutique New York, NY, USA Jennison Associates Multi Boutique New York, NY, USA Oppenheimer Multi Boutique New York, NY, USA Third Avenue Management LLC Multi Boutique New York, NY, USA TimesSquare Capital Management, LLC Multi Boutique New York, NY, USA Western Asset Management Multi Boutique Pasadena, CA, USA Delaware Investments Multi Boutique Philadelphia, PA, USA Highmark Capital Management Multi Boutique San Francisco, CA, USA Mellon Capital Multi Boutique San Francisco, CA, USA Wells Capital Management Multi Boutique San Francisco, CA, USA Systematic Financial Management Multi Boutique Teaneck, NJ, USA

11 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 MULTI-BOUTIQUE INDEPENDENT FIRM CEOs SUBSIDIARY CEOs BOUTIQUE CEOs FOUNDER 4% 4% 7% EXTERNAL 29% 55%

89% 10% INTERNAL 67%

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% 21% 18% 13% 10% 10%

CEO of Asset Investment Senior role within a COO of Asset Sales Others Management Firm1 Financial Institution2 Management Firm3 MULTI-BOUTIQUE SUBSIDIARY CEOs 60% 32% 4% 4%

Investment COO of Asset Sales CEO of Asset Management Firm3 Management Firm1 INDEPENDENT BOUTIQUE CEOs 75%

10% 5% 5% 5%

Investment COO of Asset Senior role within a Sell-Side CEO of Management Firm3 Financial Institution2 Financial Institution4

1. Includes regional subsidiaries of global asset managers 3. COO of Asset Management Firm includes the titles COO, Deputy CEO, Vice Chairman and Head of Global Strategy 2. Includes functions such as sales, operations, finance and product development 4. Financial Institution includes banks, insurance companies and private banks 12 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 Independent subsidiary CEOs Boutique CEOs

Buy-Side Investment Only 23% 58% 85%

Investment & Other Buy-Side Functions1 23% 21% 5%

No Buy-Side Investment Experience 54% 21% 10%

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 Independent subsidiary CEOs Boutique CEOs

0% 39% 60%

1. Looks across the entire sample 13 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 Three Recent shifts in CEO profiles across all firm types

1. Growing emphasis on internal candidates INTERNAL VS EXTERNAL APPOINTMENTS CEOs appointed before 2012 CEOs appointed since 2012

LARGE 61% 19 p.p. 80% FIRMS Internal Internal

BOUTIQUES1 52% 48 p.p. 100% Internal Internal

2. Growing emphasis ON SALES AT THE EXPENSE OF INVESTMENT EXPERIENCE

SALES EXPERIENCE CEOs appointed before 2012 CEOs appointed since 2012

LARGE FIRMS 15% 18 p.p. 33%

BOUTIQUES1 0% 50 p.p. 50%

INVESTMENT EXPERIENCE CEOs appointed before 2012 CEOs appointed since 2012

LARGE FIRMS 55% -28 p.p. 27%

BOUTIQUES1 94% -44 p.p. 50%

3. Growing emphasis ON INTERNATIONAL EXPERIENCE, But FOR LARGE Firms ONLY

INTERNATIONAL EXPERIENCE CEOs appointed before 2012 CEOs appointed since 2012 33% LARGE 21 p.p. FIRMS 12%

BOUTIQUES1 12% -12 p.p. 0%

1. Includes profiles of 41 CEOs where information was available 15 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. www.russellreynolds.com Global Offices Americas Asia/pacific Europe • Atlanta • Beijing • Amsterdam • Boston • Hong Kong • Barcelona • Buenos Aires • Melbourne • Brussels • Calgary • Mumbai • Copenhagen • Chicago • New Delhi • Frankfurt • Dallas • Seoul • Hamburg • Houston • Shanghai • Helsinki • Los Angeles • Singapore • Istanbul • Mexico City • Sydney • London • Minneapolis/St. Paul • Tokyo • Madrid • New York • Milan • Palo Alto • Munich • San Francisco • Oslo • São Paulo • Paris • Stamford • Stockholm • Toronto • Warsaw • Washington, D.C. • Zurich