Mutual fund companies are beefing up their sales departments, a sure sign of optimism in an industry that was hit hard by the financial downturn
Mutual fund companies are beefing up their sales departments, a sure sign of optimism in an industry that was hit hard by the financial downturn.
J.P. Morgan Asset Management, BlackRock Inc. and T. Rowe Price Group Inc. are among the firms actively recruiting wholesalers and sales executives. The pickup is happening as many companies are seeing higher fund inflows, thanks, no doubt, to improved fund performance.
“When a track record is terrible, why do you need people to promote it?” asked recruiter George Wilbanks, managing director of Russell Reynolds Associates Inc.'s investment management practice.
The market's continuing rise — the Dow Jones Industrial Average closed last Thursday at 12,763.31, up 95% from its 12-year closing low of 6,547.05 on March 9, 2009 — has led investors to pour $40.3 billion into stock funds during the first quarter, compared with $19.7 billion during the same period a year earlier, according to Morningstar Inc.
In general, the pickup in the equity market has brought about “a sense of renewed optimism” among asset managers, said recruiter Jim Houston, a partner at The Prince Houston Group, which has seen the number of searches for fund distribution executives double over the last 18 months.
The majority of those searches were for new positions, he said.
J.P. Morgan plans to increase hiring of sales and distribution representatives globally by 15% this year, said George Gatch, chief executive of the investment management Americas business. BlackRock, meanwhile, intends to expand its retail-distribution team in the United States by 15% over the next 12 to 18 months, said Joseph DeVico, U.S. private-client national sales manager.
T. Rowe plans to increase its sales team this year in response to “the rebound in the markets and a higher level of business activity,” recruiting manager Beth Norton wrote in an e-mail. At press time, the company was unable to calculate how much its hiring will increase this year.
Although firms are expanding their sales teams, they are hiring selectively, said recruiter Jane Hobson Marcus, a senior partner in the global asset and wealth management unit of Korn Ferry International.
“The hiring is happening — particularly for firms targeting high-end registered investment advisers — but firms are taking a more careful approach,” said Ms. Marcus, who has seen a 20% hike in hiring for distribution positions so far this year.
Many firms are looking for experienced sales executives and reps, recruiters said.
Before the downturn, firms just wanted numbers-oriented sales reps, but today they want people who have an understanding of how the entire organization operates, said Joseph McCabe, vice chairman of CTPartners.
“Firms want individuals who view distribution as an organizationwide responsibility,” he said. “It's about getting people who will rally the whole organization around the distribution process.”
Part of that is looking for more knowledgeable wholesalers, Mr. DeVico said.
“The person we are looking for today is more experienced than what we have focused on in the past,” he said. “Financial advisers are demanding people who are more skilled.”
Fund companies are more willing to pay for the right sales personnel. Indeed, wholesaler compensation is back to where it was before the recession, industry observers said.
A sales executive can expect compensation in the high six figures, and in some cases seven figures, up at least 30% from 2009, Mr. McCabe said.
Similarly, firms are offering experienced wholesalers first-year guarantees that are up 30% to entice them away from their jobs, he said. Although firms traditionally offer experienced reps guarantees to ensure that they will earn, at a minimum, what they were making at their old jobs for the first year, in 2009 many firms were only offering guarantees of six months, if that, Mr. McCabe said.
For many firms, the increase in hiring accompanied the introductions of new products, said Marilyn Prince, a partner at Prince Houston Group.
“The market is stronger, and firms want to make sure they have a wider range of products and salespeople with relevant experience,” she said.
Retirement is a focus at many firms.
For example, BlackRock this year hired two former executives of National Retirement Partners Inc., a retirement-oriented broker-dealer that LPL Investment Holdings Inc. bought last year. Over the past 18 months, BlackRock has doubled its 70-person defined-contribution group, Chip Castille, head of the firm's DC business, said in March.
Similarly, T. Rowe in February hired Scott David, the former president of workplace investing at Fidelity Investments, to head third-party distribution, filling the position after 17 months.
J.P. Morgan is also making several hires in the retirement sales area, tapping sales executives with fixed-income expertise, said managing director Jed Laskowitz.
Last month, the firm hired Lee Beck, a former senior vice president at Pacific Investment Management Co. LLC, to oversee sales with key-party distributors. Then it added Bob Fields, a former senior vice president and municipal bond manager at Pimco, to oversee West Coast sales of J.P. Morgan's fixed-income products.
But beefing up its fixed-income strength doesn't imply a change in J.P. Morgan's focus, Mr. Laskowitz said.
“We train our salespeople to be experts on all asset classes,” he said.
E-mail Jessica Toonkel at jtoonkel@investmentnews.com.
