Pension executives are beginning to react to executive-level staff changes at transition managers, with some launching searches to potentially replace their existing slate of managers.
In the last two years, more than a dozen senior officials have either switched firms or left the business, the most recent being Fred Fogg, who moved to Citigroup to run the New York-based firm's U.S. transition management unit. He previously ran transitions for Morgan Stanley, New York.
Executives have also left Deutsche Bank Securities Inc. and Goldman Sachs, both in New York, and Russell Investment Group, Tacoma, Wash.
These changes are significant to plan sponsors, industry players said, because every executive has a different approach to the business and they are not interchangeable among firms.
In addition, the changes underscore the fact that several firms — brokerage houses and investment banks mostly — are attempting to break into transition management from scratch.
Responding to these changes, the $35.4 billion Teachers' Retirement System of Illinois, Springfield, last week issued an RFP for six transition managers. The move came after four of the system's six approved managers — Goldman Sachs, Russell, Deutsche Bank and Morgan Stanley — experienced senior management changes. The system's other approved transition managers are State Street Corp., Boston, and Northern Trust Corp., Chicago.
"TRS has relationships with all the firms, but we have yet to sit down with some of the new staff that has been brought in to develop an understanding of their philosophy," said Eva Goltermann, the system's public information officer. "Our investment staff is used to dealing with senior-level staff at these firms and they left, so we just don't have a good understanding of (the firms') philosophy or processes."
Ms. Goltermann said even firms that have not experienced senior-level management changes need to rebid and that some incumbent firms might end up on the system's new roster.