That was quick!
In what seems like the blink of an eye, 25 years have passed since I started Kathy Freeman Company. It’s been a wonderful ride – we’ve worked with so many amazing people over the years. At the same time, the sheer magnitude of change in the investment industry has made our work incredibly exciting each day.
In celebration of this milestone, we reflected on the macro and talent trends that we’ve seen over the years and conclude with a look ahead.
The Go-Go ‘90s
When I started the firm in 1992, the investment industry was in tremendous growth mode. It was a time when mutual fund distribution was taking off. Fund companies were beginning to market their products with a variety of share classes. It was a world without ETFs, as unimaginable as that is today. The 401k market was just getting its footing, and there were no target date funds. Asset managers could still sell direct to plan sponsors or Taft-Hartley plans without using a consultant. Custodians emerged and began serving an entirely new segment of wealth management, independent wealth managers called Registered Investment Advisors.
Executive search during this time had more to do with assessing for skills and capabilities that firms found translatable and less to do with finding those with similar jobs since there were no similar jobs. Because there weren’t enough experienced individuals for these new positions, we were called upon by our clients to define the competencies for a particular role and scan broadly across the market to find talent that could potentially be a fit. Sometimes we prioritized around a rolodex of relationships, technology capabilities, or simply by the process they applied to their work.
Boom & Bust of the ‘00s
The 2000s were an equally dynamic period. Following 9/11 and the dot.com bubble, there was a five-year window of growth before the financial crisis hit in 2008. The Great Recession rearranged the landscape in the investment industry.
In terms of talent in this market cycle, many exceptional individuals found themselves suddenly seeking new opportunities. With two distinct periods of industry dislocation, the competition for a limited quantity of compelling positions was fierce.
The industry turmoil also meant that individuals who were performing at a high level at their firm were very reticent to change. The fear of another correction increased the possibility they could find themselves vulnerable to a workforce reduction, so not making a move elsewhere seemed to be the preferred path.
Firms that were hiring demanded the highest caliber of candidates. They didn’t want to choose among only dislocated executives. We were tasked with engaging those who were seemingly uninterested in considering other opportunities. To help us address this challenge, we created a proprietary annual survey to measure drivers of job satisfaction among currently employed industry leaders. This invaluable tool, which we continue to leverage today, keeps us in sync with the mindset and mood of the market to move immovable talent for our clients.
A Sobering Bull Market
In this decade, the industry has enjoyed a bull market, but the record-setting advances have been tempered by other factors. Passive investing has taken a significant toll on actively-managed firms. It’s becoming evident that scale is necessary to survive in this new era of shrinking margins. We’ve witnessed record-setting M&A in 2017 across both asset management and wealth management.
In today’s maturing industry, we continue to see people displaced by consolidation. Once again, many highly-engaged executives remain unwilling to consider a change. CEOs and executive leaders unable to execute their vision of growth are losing their seats in the ongoing consolidation. In this environment, we are being asked to identify special talent – those not defined by what they have done, but more importantly, how they think about the future.
We feel confident about the future of the investment industry as we enter another dynamic phase of the market. We continue to be bullish that this industry represents opportunity for those just starting out in their careers, for those who continue to build onto their resumes, and for those who are prepared to transition into Board of Director work.