In a move to bolster its battered image, long-suffering Putnam Investments last week said that it is hiring industry veteran and former Fidelity Investments executive Robert L. Reynolds as its president and chief executive, effective July 1.
In a move to bolster its battered image, long-suffering Putnam Investments last week said that it is hiring industry veteran and former Fidelity Investments executive Robert L. Reynolds as its president and chief executive, effective July 1.
Boston-based Putnam also named its current president, Charles "Ed" Haldeman, 59, as chairman of Putnam Investment Management LLC, the company's mutual fund management arm. He joined Putnam in 2002 and served as co-head of the firm's investment division.
Mr. Haldeman was named president and chief executive in November 2003. While rumors circulated in recent months about his potential departure, he confirmed in a May 3 article in the Boston Globe that he had reached a contractual agreement to stay at Putnam through 2010.
Last week at a press conference, Mr. Haldeman said that, following Putnam's acquisition by Power Corp. of Montreal and meetings with Jeffrey Orr, Putnam's board chairman, he agreed to work through a transition period.
"Jeff said they thought it was important for me to stay on as chief executive officer," Mr. Haldeman said. "I felt my role was to position Putnam with leadership to act way beyond me."
As the first mutual fund company charged with wrongdoing in the market-timing scandal that rattled the industry several years ago, Putnam has suffered from high turnover among its portfolio managers and has seen investors yank billions in assets from its funds.
Putnam's stock and bond funds experienced outflows of $12.5 billion last year and $14.9 billion in 2006.
Mr. Reynolds, 56, who was once viewed as the heir apparent to Fidelity Chairman Edward C. "Ned" Johnson II, left the Boston-based fund giant in June 2007 after serving as vice chairman and chief operating officer since 2000. Prior to that, Mr. Reynolds was president of Fidelity Investments Institutional Retirement Group.
He joined Fidelity in 1984.
In a press conference last Thursday, Mr. Reynolds acknowledged his background.
"I think it's an advantage in the fact that Fidelity competed in many different markets," he said.
"I did start the 401(k) business at Fidelity, and it had a reasonable amount of success," Mr. Reynolds said.
NEW PRODUCTS
Putnam's institutional business has been growing and took in $2.2 billion last year.
The firm is likely to introduce some new products in the next six months, Mr. Reynolds said.
His first task is to get to know the people and organization, he said.
"Cutting costs is not on my agenda. I believe that no company has cut their way to success or greatness," Mr. Reynolds said.
"I approach this job with one thought in mind and that's winning," he said. "We're going to have to have the best team on the field."
Mr. Reynolds also has some background in team building. He was a college football referee for 15 years and was a finalist to become National Football League commissioner in 2006.
"I think he wants to be the CEO of a major business enterprise," said Burton Greenwald, a mutual fund consultant based in Pittsburgh
"He wants to run an operation," Mr. Greenwald said. "It wasn't going to happen at Fidelity."
Mr. Reynolds brings talent and experience to the job at Putnam, Mr. Greenwald said.
"Bob has broad administration skills and talents. I think his mandate will be to make some changes," he said.
"Putnam is a franchise that is withering," Mr. Greenwald said. "There has to be some very dramatic changes to turn that around."
The change in leadership signals that Putnam is ready to compete head-to-head with crosstown rival Fidelity, some say.
"This is not a shot at Fidelity's bow. This is a shot right at their main mast," said Jim Lowell, publisher of the Fidelity Investor newsletter in Needham, Mass.
"This is someone who knows virtually all of the tricks up Fidelity's institutional sales' sleeves. He knows all of the people who are the decision makers on all of the plans," Mr. Lowell said.
"There couldn't be a better fit," he said. "[Mr. Reynolds] has few rivals in the industry in terms of his intuitive grasp of how to sell products to institutional clients."
For some, however, new leadership may not be enough to gain back their trust.
"We used to use Putnam heavily," said Patricia Hinds, principal at Granite Financial Inc. of St. Cloud, Minn., which manages $95 million in assets.
"Then with everything that happened in 2000 with the market, their struggle with management issues and style drift, we really backed away from them," she said. "It left a bad taste in my mouth."
Whether the company can turn around remains to be seen.
"The change lends some credibility," Ms. Hinds said. But "I'm not so sure I'm ready to bring Putnam back in."
E-mail Susan Asci at sasci@investmentnews.com.
