Tom Jones' days as a civil rights activist at Cornell University landed him on the cover of Newsweek in 1969. Mr. Jones led a takeover of the student union building, protesting the disciplining of black students who had demonstrated to get the university to start a black studies program. Now chairman and chief executive of global investment management and private banking at Citigroup and chairman and CEO of Citigroup Asset Management, Mr. Jones had a corner office on the 46th floor at 7 World Trade Center, putting him in the middle of the Sept. 11 tragedy. He talked about his experience that day and about the future of the asset management industry with reporter Phyllis Feinberg.
Q What was it like being in the middle of the chaos on Sept. 11?
A Frankly, it was pretty surreal. You start out on a beautiful late summer-early fall day at one of the most magnificent locations in the greatest city in the world and a few minutes later there's death and destruction all around you. A shift in the circumstances and I wouldn't be doing this interview or seeing this person or having those thoughts - it's otherworldly.
(When) the first plane hit I heard a huge explosion. I got up and went to my window and saw a huge hole in the tower. Then I turned on the TV. I watched until about 10 minutes later when the second plane hit. It was obvious this was not an accident. I could see people jumping out of the tower. I thought we should evacuate and find a way out of the building. It was a glass-enclosed lobby, which could have been smashed by debris. It took security about 10 minutes to locate a rear exit through the kitchen.
We walked out the rear exit and started walking north. About 10 blocks from the site at Franklin Street we saw the South Tower crumbling before our eyes. A woman asked if there were people in there and I looked at my watch and saw that it was about an hour (since the plane hit, so) they must have cleared the building. Little did I imagine there were thousands of people in there. When the South Tower collapsed, a cloud started coming up West Broadway and we ducked in a side street and got in an alley. We walked through alleys downtown and had to walk uptown. I walked up to 53rd and Lexington Avenue to the Citigroup building where I had an office. I didn't learn that 7 World Trade Center had collapsed until about 6 p.m. when somebody told me.
Q How did you begin the disaster recovery process?
A I told Evan Merberg, my chief administrative officer, to start the recovery process after we walked uptown. We started a disaster recovery call sequence the next day, holding calls at 8 a.m., 2 p.m. and 8 p.m., and continued the calls until (Oct. 1). All of the department heads and human resources people were on the calls.
Two days later we were back in business. We had 1,100 people in 7 World Trade Center and by Thursday we had 200 people back at work. The first thing we brought back was the fixed-income area because those markets reopened on Thursday. We ramped up steadily over the succeeding days and spread out in multiple locations. We had 400 in our Rutherford, N.J., disaster recovery location and 250 people working out of Stamford (Conn.), where we have a lot of our institutional business.
Q What kind of reaction have you been getting from your clients?
A The clients have been extremely supportive. We've gotten telegrams, e-mails, wanting to ask about the welfare of our people and expressing support. There was almost no portfolio activity of any significance.
We have sent communications out to all of our clients telling them we're in business and established portfolio operations as markets reopened. We were capable of executing all business functions. But we did not say it was business as usual. It was phenomenal the way people worked around the clock to get us back. It was an incredible effort.
Q Where do you see the future growth for Citigroup Asset Management?
A I think our business is in three pillars. One pillar is the U.S. retail business, where we have been extraordinarily successful in the last few years. I plan to focus more on the second pillar, our institutional business, and the third pillar, the global private bank. On the institutional side we have formed the global research platform, a buy-side fundamental and quantitative research platform, which will reach coverage of 2,000 companies next year. I expect to derive very strong institutional growth from this research process. That will be our flagship product for the global institutional effort and the global private banking effort. We'll also make additions to our client servicing staff, our sales and trading and our strategic consulting staff.
I think our timing is perfect. The intellectual capital of good fundamental research should be valuable now as these will be markets where it's possible to differentiate between companies.
Q Will Citigroup Asset Management make any acquisitions?
A We made a substantial investment to build out our research capability and don't feel the need for mergers. To do a merger to gain size or scale - the economics of it aren't very appealing at the kind of prices paid for asset managers.
Q Where do you see the industry and Citigroup Asset Management in 10 years?
A I think the industry will be dominated by a handful of very large global competitors and a handful of boutiques that are good at one or two types of products. I see us as one of the global firms. It won't just be a matter of size. You'll have to be pretty good at what you do ... The Citigroups of the world will bring those boutiques into our firms so those firms will get distribution.
Q You were a student activist in the 1960s. Why did you decide it was better to work within the system?
A I think the system changed more than I did. This country has changed more in 32 years than I thought was possible . . . if the country shows it will change I'm basically a forgiving person. I feel we should move on. People who dwell on prior injustices are prisoners of history.
Thomas W. Jones, chairman and CEO, Citigroup Asset Management
ASSETS UNDER MANAGEMENT:
PERFORMANCE (3 years ending June 30, according to PIPER):
Return vs. benchmark
Large-cap value: +4.6%
(-80 basis points)
Balanced portfolio: +5.0%
(-30 basis points)
Convertible bonds: +11.2%
(+210 basis points)
High-yield bonds: +0.1%
(+90 basis points)
Core fixed income: +6.0%
(-20 basis points)
Enhanced core +4.7%
fixed income: (-150 basis points)