After 19 years at Mackenzie Financial Services Inc., David Feather went straight to his new job as president and managing director of Toronto-based Russell Investments Canada Ltd. without taking a single day off. Knowing he was taking on a new challenge, he simply didn’t want to waste any time.

“There was no time off in between, and the past two months have turned out to be the most emotional time in my life,” says Feather, who had occupied the president’s chair at Mackenzie. “If I ever change jobs again, I might take a day off in between.”

What had made the transition so emotional was the outpouring of responses from the many colleagues, clients and industry contacts he had bonded with during his time at Mackenzie, for which his responsibilities covered fund distribution, sales, product management and the nurturing of subadvisory relationships. Feather, who became a family man just within the past couple of years, has always poured his heart and soul into his job. Thus, he’s been touched by the expressions of appreciation, many of them from financial advisors he will continue to deal with from his perch at Russell.

“If I was ever going to leave, now was a good time,” says Feather, who at 46 still has youthful exuberance and an overwhelming passion for the investment industry. “It broke my heart to leave Mackenzie, but it’s the right move. This is a new challenge, a new approach to doing business and a great gang of people. And at Mackenzie, there are a lot of great young people, and my leaving gives them a chance to step up.”

Feather says Russell’s business takes him back to his roots at Mackenzie in the 1990s, for which he developed its subadvisory business with a roster of outside fund managers. Although Mackenzie marketed a variety of mutual funds managed by both in-house managers and independent subadvisors, Russell’s claim to fame is independence and objectivity — and there are no in-house managers.

Russell offers a variety of investment vehicles, including stand-alone mutual funds, multi-fund portfolios, wrap accounts and separately managed individual accounts. All, however, are managed by a carefully selected and rigorously scrutinized independent stable of global money managers. Feather describes Russell’s diversified investment approach as “M-cubed,” as it involves multiple asset classes, multiple managers and multiple styles.

Tacoma, Wash.-based parent Russell Investment Group has US$185 billion of assets under management in 46 countries and almost US$1 trillion under advisement. The parent is well known for creating various global stock indices covering more than 50,000 benchmarks in 65 countries, including the Russell 2000 small-cap index. In Canada, the multi-manager Sovereign Investment and the LifePoints programs are popular with financial advisors.

“The independent approach to product development and investment management is a model I truly believe in,” Feather says. “Many investment companies got away from that and, for profitability reasons, have relied on in-house teams. But when you are not tied to existing models of investment or you don’t own the distribution arm, you rely solely on the quality of the product and service. Russell’s greatest strength is being a manager of managers.”

Russell offers the skills of some 20 global managers to Canadians, many of which are otherwise accessible only on an institutional basis. The Canadian roster includes Beutel Goodman & Co., Foyston Gordon & Payne Inc. and Picton Mahoney Asset Management (all of Toronto), as well as Regina-based Greystone Managed Investments Inc.

“Managed products, by and large, have served Canadians well,” Feather says. “It’s a tougher battle now with the maturity of the fund industry, and with alternative products and approaches such as exchange-traded funds, discount brokerage accounts and wrap accounts making inroads.”

Feather will work closely with all of Russell’s client groups, including institutional, consulting and retail. On a retail basis, the firm works closely with advisors to help them structure managed portfolios for clients using complementary asset classes and fund managers. Purchase minimums, which begin at $25,000 for programs such as Sovereign, create stability and help keep expenses down for clients, Feather says. Russell’s products are sold only through the advisory channel and are not available through discounters. The majority of AUM in Canada are held at the full-service firms, but fund dealers are also clients.







@page_break@“Russell’s success in the consulting industry reinforces its knowledge and strength when it comes to retail, and that’s a real plus,” Feather says. “The product lines support each other. There’s retail pickup because of the expertise in consulting and institutional, and vice versa.”

Feather had encouraged new product development at Mackenzie, and he expects to be a force behind product expansion at Russell. He expects there could be some innovation in investment categories not widely available in Canada, such as commodities. Because of Russell’s work on index development, the firm would have a knowledge advantage in the creation of ETFs in Canada. But, Feather says, even if some index-based products make it into the mix, Russell is at heart an “active shop” and supports active investing rather than passive.

“Russell does business globally, which means the Canadian business arm can harness global knowledge synergies and take new products into the marketplace much more efficiently than a stand-alone firm,” he says. “As long as the enduring investment theme is relevant to Canadians, we will look at a new product. But at the same time, we want a relatively narrow product shelf with the best ideas.”

Feather expects Russell’s expertise in selecting superior managers will be increasingly important. The 1990s were characterized by rising markets and a bullish environment, in which it was difficult for fund managers to add value, but he expects the coming years will see returns even more difficult to come by.

“The baby-boom generation is getting older and more risk-averse, and will be drawing down pensions and spending retirement savings,” says Feather. “Over the next decade, we will be seeing more outflows. It will be the reverse of the 1990s, when a lot of money was flowing into stocks. Manager selection and security selection will be more important than ever. The opportunity for good investment people and advisors to differentiate themselves will be higher than any decade in my work life. It’s no longer an easy game.”

Feather says the biggest challenge in his new role will be becoming familiar with the consulting services Russell offers to pension plans, endowments and foundations.

Although Feather’s hoping to take a bike trip this summer and spend time with his two young daughters, both of whom are under three years of age, he also expects to work long hours: “Odds are that an advisor in Vancouver can call me at night and I’ll still be at my desk in Toronto. When you love what you do, you tend to work hard. But I plan to focus on having some downtime with my family as well.” IE