Market veterans call efforts by multiboutique holding companies to add value for affiliates a key to maintaining cohesion, especially after generational transfers leave executives in charge of the affiliates who didn't benefit from the initial sale of a stake in the firm to the holding company.
The broader the range of affiliate interests, the trickier it is for the holding company to provide value-added services, noted Jeffrey Margolis, the president of Roslyn Heights, N.Y.-based money manager consultant Margolis Advisory Group Inc. With OMAM, for example, the same institutional distribution assistance welcomed by smaller affiliates would be less useful to a $50 billion affiliate such as Acadian Asset Management LLC, which has its own distribution team, he said.
An executive with one of OMAM's 18 affiliates, who declined to be named, noted that for much of the past 10 years, the holding company targeted building out a platform of retail mutual funds, for which the affiliates could act as subadvisers, as a prime focus of its efforts to add value for those affiliates. While appreciated, the effort has failed to gain significant traction, the executive conceded.
Asked whether building a retail platform remains a focus for the holding company, Mr. Bain said decisions on retail distribution — both in the U.S. and overseas — are still a few months off.
By contrast, Mr. Bain said the institutional opportunity is clear, with non-U.S. distribution in particular a centerpiece of the multiboutique holding company's growth strategy going forward.
OMAM has to make the most of its “unique positioning as a multiboutique business (with) a genuine non-U.S. franchise connection” that can help garner incremental asset flows for its affiliates, Mr. Bain said.
That opportunity reflects a difference between the institutional marketplace in the U.S. and abroad, where investors actually expect to hear from a money manager's parent company, noted Mr. Bain. The Old Mutual PLC franchise can be a competitive advantage for OMAM overseas if the holding company can better leverage the brand to attract institutional clients there, he argued.
According to parent company Old Mutual PLC's May 12 announcement of its latest quarterly earnings, non-U.S. clients accounted for 28% of OMAM's total client base as of March 31.
The executive OMAM will tap to deliver on the potential of that global distribution strategy is the one remaining gap in Mr. Bain's new executive lineup, after the company announced key hires last week.
On May 11, OMAM said Steve Belgrad — a veteran of competing multiboutique AMG — will join the company June 1 as an executive vice president and chief financial officer.
Together with Mr. Bain and Linda Gibson, chief operating officer and head of affiliate management, Mr. Belgrad will be the third member of the firm's four-person executive management team.