JERSEY CITY, N.J. Lord Abbett & Co.s top executive, Managing Partner Robert Dow, is tweaking the firms management structure to install his eventual successor and the next generation of leadership for the $117 billion money manager.
In an interview, Mr. Dow said he appointed Daria Foster, a partner and the senior director of global client service at Lord Abbett, as managing partner to replace him, putting her in line to take the reins of the firm when Mr. Dow decides to step down.
The 62-year-old Mr. Dow, who will now assume a broader strategic role as senior partner of privately owned Lord Abbett, added he has no imminent plans to retire and intends to remain with the firm for quite a while.
But, because of the firms significant growth in recent years Lord Abbett managed roughly $18 billion in 1996 when Mr. Dow became top dog the business needed a more direct senior authority to work alongside him.
Managing a firm that had $18 billion in assets, 200 employees and 15 products is a lot different than managing a firm that has $113 billion, 800 people, a multitude of products and distribution channels that didnt exist 10 years ago, he said.
Roughly 50% of Lord Abbetts assets are in mutual funds, compared with 70% in 1996. The balance has shifted as the firm has grown its institutional and separately managed account businesses in recent years. The firm managed $33 billion in institutional and $21 billion in separately managed account assets as of June 30.
The complexity of its business, combined with the need to formally recognize an heir apparent, prompted Mr. Dow to promote Ms. Foster this month, he said.
Ms. Foster is taking on more responsibility for the firms day-to-day operations, in addition to her current oversight of both the institutional and retail businesses.
On the investment front, Ms. Foster is already making moves to solidify the firms next generation of leadership. Effective Oct. 1, Robert Gerber will be chief investment officer, a post Mr. Dow has held since Robert Morris retired as CIO about six months ago. Mr. Gerber has been director of high-trade taxable fixed income.
Such moves are consistent with Lord Abbetts philosophy of grooming future leaders internally, said Michael Breen, an analyst who covers the firm for Morningstar Inc. in Chicago.
Being a privately owned company with roughly 50 partners gives Lord Abbett more opportunities to lock in its most important people, reinvest in the business and ultimately better develop its talent internally, Mr. Breen said.
The model and alignment of interests with private ownership can certainly be a competitive advantage, he said.
Such advantages will be critical to the firms growth. As Lord Abbett has grown larger and seen more competition in the investment management industry both from traditional and alternative investment firms Mr. Dow said it will be a considerable challenge to duplicate its growth rate of the past decade.
However, Ms. Foster said the firms executives have identified several new opportunities and channels for growth. For one, she said that Lord Abbett has been more aggressive in its pursuit of investment-only defined contribution business, an area where the firm runs roughly $10 billion in assets, according to Pensions & Investments data.
Also, Ms. Foster said Lord Abbett is targeting insurance companies searching for mutual fund managers to subadvise their variable annuity products.
In other more quiet efforts, Ms. Foster said the firm has been developing operations and strategies outside of the U.S. With offices in London and Japan, as well as a joint venture fund company that officials formed in China last year, Lord Abbett is in the early stages of globalizing its business. Now, close to 98% of its assets are managed on behalf of U.S.-based investors.
It is in its infancy, but we can take the capabilities that we have been developing and, with certain modifications, we should be seeing asset growth coming from overseas as well in the not-too-distant future, said Ms. Foster.