Mark R. Fetting thinks that he can hit the ground running as the new president and chief executive at Legg Mason Inc.
Mark R. Fetting thinks that he can hit the ground running as the new president and chief executive at Legg Mason Inc.
His appointment Jan. 28 ended a 10-month search for a successor to Raymond "Chip" Mason, 71, whose history with the firm goes back about 50 years to his founding of Mason & Co. Inc. in Baltimore.
Mr. Mason will now serve as non-executive chairman.
In one of his first interviews since taking the helm at the prominent asset management firm, Mr. Fetting, 53, talked about his plans for improving service and global expansion, as well as addressing stock fund redemptions, which totaled $6.7 billion in 2007.
Q: How has your eight years at Legg Mason prepared you for this position?
A: I think I was identified because of being an internal-change advocate. We need to do things differently. We need to pick up the pace on some other fronts. After eight years here, I know how to get it done.
Q: In what directions do you plan to take the company?
A. On a growth-oriented basis I am looking forward to focusing on four areas.
First is investing and really making sure that we deliver the kind of performance our clients want even if the short-term numbers aren't where they want them to be. We are letting them know we have a portfolio process and our philosophy is strong.
Second is servicing, working more closely with our affiliates, whether that's on trading systems, technology support to legal and compliance, to distribution to our clients. Also servicing with the clients we deal with directly through our mutual fund operations. We want to offer best-in-class service.
Third is marketing. We can do and should do a better job globally. We have made a certain progression and restructuring on our sales front. The theme here is continuous improvement. We have done quite a lot of restructuring of the sales force since December 2005. We made a shift from proprietary products to open architecture. That creates a bit of a noise in the system. With that completed, we can focus on growing.
Where we need to add, we will. And where we need to make changes we will.
Then there is marketing in the broader sense, and basic branding issues. We need to look at what is the right position for Legg as compared to each of our affiliates. The further we get away form the Northeast, the more we have work to do.
Fourth, is global.
Q. Can you discuss Legg Mason's plans for global expansion?
A. We've made a lot of progress and could benefit by having more hands helping us. Our continued focus in the acquisition area is on international investment opportunities. Clearly we are working harder in that space. If we could find a manager who is really best-in-class in international equities, that would be a nice addition to our lineup.
We are looking for an asset manager with an existing European equity business, who already has assets and distribution, preferably someone on the ground in Europe. The company is looking in the range of a $1 billion to $2 billion purchase.
We're also launching a new subsidiary of Legg Mason.
We considered the success of Brandywine Global Investment Management [of Philadelphia], growing from $6 billion to $50 billion over the last eight years.
Part of that impressive growth was the international equity team headed by Paul Ehrlichman, which we plan to spin out in the new subsidiary to be launched in Wilmington, Del., in April with $10 billion.
The global fixed-income and U.S. value equity teams will remain with Brandywine in Philadelphia and we're very excited about their continued strong growth.
We will have the right kind of product launches, where it makes sense.
We did launch recently some mutual funds in China and co-branded them with Citibank [NA of New York]. Something like China will take time. You've got to have seasoned people working on this.
We will bolster our leadership areas, such as in Japan where we have nice flows coming in. Our total assets in Japan are in the $80 billion range.
Q. Why the plans for expansion globally?
A. I think the opportunity is there. We need to be more ambitious and aggressive about capturing it.
Q. What is the industry likely to see more of in terms of servicing?
A. We will launch a new financial adviser website very shortly.
We are building a site for advisers and a separate portal for wholesalers.
It will be launched to several thousand advisers in the April/May time frame. And then we will ramp up our marketing effort to expand its use.
The portal for wholesalers will promote an exchange of ideas among internal and external wholesalers and include access to marketing materials.
The adviser site will be customized to the firm and include a calendar function to post Legg Mason events, conference calls and will also have podcast capabilities.
The advisers will know exactly what they can sell and what marketing materials are available to them. Some of the initial content will also include material from our Advisor Partnership Program, primarily focused on practice management. They can access information on the web and then turn to the wholesalers for the value-add. It's designed to complement the relationship.
Q. What are some of your top priorities going forward?
A. Our equity funds are our key priority. And we have made further reduction in our exposure to structured investment vehicles.
Equity outflow is our No. 1 priority. In our case we have some managers who continue to do very well. Royce & Associates LLC [of New York] is an example, and is doing well across small and micro-cap. Batterymarch Financial Management Inc. [of Boston] is doing well in international and emerging markets and Brandywine Global Investment Management LLC with international value.
A number of our affiliates are short, including Bill Miller's Capital Management Group [of Anaheim, Calif.], and some with ClearBridge Advisors [of New York] and Private Capital Management [of Naples, Fla.]. They are watched. They are doing all that their clients want and expect.
They acknowledged some shortfalls. Such as Bill (Miller) about getting into certain positions too early. But they are working hard. We are going to support them in any way we can.
Q. Can you elaborate further on the structured investment vehicles exposure to date?
A. The SIV exposure, which is in our liquidity business, has been reduced to 2.6%. Those assets have grown to $168 billion. Of that only 2.6% is in SIV. Of that 2.6%, 0.6% is in bank-sponsored SIVs. So it's now down to 2% of more general SIVs. We will do everything we can to get that lower.
Q. Your bio mentions that you successfully managed a congressional campaign. When was that and what did you learn from that that helps you in managing an asset management company?
A. I was coming out of graduate school and it was 1979. It was Beverly Byron, who represented the 6th Congressional District of Maryland. We had a budget of $25,000 and a lot of shoe leather. We took 72% of the vote and she held the seat for six or seven terms before retiring.
I can say I never worked harder than when I ran that campaign.
What you learn is the importance of staying in touch with the people and then translating that into the right policy — in our case, the right business strategy.
I work best when I am hearing directly from clients and what their issues are, spending time directly with the affiliates and keeping close to the pulse of the marketplace, and then translating that into strategies and an action plan.
Sue Asci can be reached at sasci@crain.com.
