Russell Investments’ newish president and chief executive, Andrew Doman, the first ‘outsider’ to take the top job, has notched up nine months at the firm. The ex-McKinsey & Co executive spoke to GREG BRIGHT about the evolution of Russell.
For Andrew Doman, there seems nothing but opportunity facing Russell Investments in the years ahead.
The chief executive, who joined Russell early this year after 22 years working at management consultancy McKinsey & Co, says that he has spent a lot of time speaking with people about new products and services in development.
“I have been astonished by the quality of the ideas here,” he says in an interview. “I see my role as letting people get on with their work and trying to speed up the process.”
The most recent idea being rolled out to clients globally is a new service which makes medium-term asset allocation recommendations (sometimes called dynamic strategic asset allocation) which Russell calls ‘Enhanced Asset Allocation’.
This service was designed and tested largely in the firm’s Australian office, overseen from Tacoma head office by the Australian-born chief investment officer, Pete Gunning.
Doman too is Australian, although he had worked in London since 1990, as is the London-based European head, Alan Schoenheimer.
Doman says that it is a coincidence in one sense that the three Aussies have been moved into their respective senior roles, but in another sense it’s not.
“Australia is a bellwether market for us,” he says. “It’s a place where we go to beta test our products and services. It’s a great training ground with sophisticated intelligent clients.”
Doman believes that with the globalisation of most industries comes increased specialisation.
“Globalisation and specialisation go hand in hand,” he says. “Every consultant has to go deeper in their field and they have to be prepared to travel.”
The Russell structure is to be a networked global firm.
“There’s always a role for local content and local relations. But at the same time clients are not satisfied with that. They want access to global competencies. All clients give me a consistent message: ‘wherever we are we want the best of Russell’.
The retailisation of funds management in most countries is a key theme for Russell, which has had its history primarily based in the institutional area.
“We’re in the midst of a long-term global transition,” Doman says. “We’ve done a lot of thinking about the retirement game Retailisation means that Russell has to adapt. We’d like to be the ‘Intel inside’ of retail distribution channels, such as the banks and independent broker dealers.”
He says he doesn’t believe in the “self-serve model” where consumers of complex financial products make their own decisions.
Because of behavioural biases, putting aside education, consumers will often make the wrong decision in reaction to recent events.
However, he says that the firm is committed to traditional asset consulting too. It’s not just a multi-manager with good research.
“Consulting gets us onto the client’s side of the table,” he says. “Helping clients gives us an important psychological advantage.”
Nevertheless the bundled implemented consulting and multi-manager offerings are the number one “method of sale” for Russell in the US and some other countries. Trustees of defined benefit pension plans, in particular, are keen to outsource at least the investment component and in many cases the whole plan.
While Russell has not historically been a big acquirer of businesses, Dorman does not rule this out to help future growth.
“I’m open to (acquisitions) but I’m cautious. We have so many opportunities for organic growth I would worry that an acquisition might be a diversion We have a lot of innovation to be rolled.”
He adds that there are not too many parts of the business where is disadvantaged because of scale. Globalisation gives a firm more scale.
