In 25 years in the financial services business, Jeff Carney, recently appointed as president and CEO of Toronto-based Mackenzie Financial Corp., has held senior posts at some of the biggest and most powerful firms in North America – including Toronto-Dominion Bank, the Canadian and U.S. arms of FMR LLC (a.k.a. Fidelity Investments), U.S.-based Putnam Investment Management LLC, Bank of America and Charles Schwab & Co. Carney has occupied executive suites from Toronto and Boston to San Francisco.
Now, Carney, a 52-year-old native of Red Deer, Alta., has returned to the site of his early career in Toronto after assuming both the top job at mutual fund giant Mackenzie and simultaneously taking on the title of co-president and co-CEO of Winnipeg-based parent company, IGM Financial Inc. about a year and a half ago. Although Carney’s experience encompasses both the retail and institutional side of the business, he believes the key to success in the mutual fund industry is anticipating and meeting needs of ordinary working people as they navigate volatile markets and the financial challenges of retirement.
Mackenzie holds $72 billion in assets under management, 70% of which is in retail funds and 30% in institutional and strategic alliance accounts.
“My strength,” says Carney, “is that I’ve seen retail financial consumers in every business model. I’ve always made that my focus, and it has served me well. If you add value and help investors achieve their goals, [financial] advisors will also do well.”
Carney has spent time in securities analysis, built a brokerage business from scratch and overseen mergers and acquisitions. His familiarity with the money-management business extends in a variety of directions, encompassing the workings of discount and full-service brokers, bank branch networks and mutual fund distributors. All of that experience provides a unique perspective as Carney steers Mackenzie through a landscape in which formidable competitors – such as the powerful wealth-management arms of the big banks, other mutual fund giants and the providers of exchange-traded funds – are fighting hard for the same clients.
Carney has clarified his overriding strategic priority, which is to serve the financial needs of investors in ways that are meaningful “in their eyes.” All areas of Mackenzie’s business, including mutual fund management, service, distribution, communications, fees, education and culture are focused on this goal, he says: “If we serve and retain the end-investor, and earn respect though our actions, we win the advisor.
“We want to make a tangible, emotional connection with the client,” Carney adds, “and ‘in their eyes’ is very important. For example, volatility is not something investors enjoy; they don’t want wild rides. If volatility is higher than their expectations, that won’t create a good feeling, and it will be stressful for both clients and advisors.”
Changing needs
Under Carney, Mackenzie has just completed streamlining its fund family and a comprehensive retail pricing review, resulting in fee reductions for 13 funds. Mackenzie also has lowered administration fees on its entire lineup of Series F funds.
It’s important that Mackenzie provide alternatives for changing investor needs, Carney says. For example, investors want a healthy retirement income in retirement, and Mackenzie offers a selection of funds with a range of mandates. This range includes traditional fixed-income securities, global dividends, floating-rate loans and strategic portfolios holding a mix of income-producing assets.
New ideas under consideration include mutual funds in various asset classes that incorporate derivatives or short-selling strategies, with the goal of achieving absolute returns in all conditions rather than reflecting market moves. This autumn, Mackenzie deepened its global expertise with the formation of an emerging-markets investment team based in Singapore.
Mackenzie has 11 investment management teams that manage some 90 mutual funds under such brand names as Ivy, Cundill and Mackenzie. Carney says it’s important that each team’s portfolio-construction strategies be clearly defined, communicated and adhered to. If a specific fund is being recommended by advisors as part of a diversified portfolio, that fund is expected to offer a particular type of asset class exposure and strategy. For example, certain funds have been designed to meet specific needs, such as low-volatility stock exposure.
Carney, through his experience in analyzing client outcomes with products such as 401(k) U.S. retirement plans at firms he worked for in the U.S., holds the view that investors need to be firmly guided to develop effective investment strategies. For example, clients with 401(k) plans are automatically placed in “life cycle” mutual funds rather than cash as the “default position” if no other election is made when those clients open accounts. Life-cycle funds ensure these hold a mix of fixed- income and equities, as well as ensuring that as they move closer to retirement, the composition of the portfolio tilts more toward fixed-income and money markets, putting greater focus on capital preservation.
Carney views this approach as being more effective than “hundreds of meetings on factory floors” to educate workers on retirement planning. People usually stay put rather than trying to make their own investment decisions, he adds, and it’s better to stay in an appropriately balanced portfolio than in a no-growth option such as cash.
Another prong in Carney’s approach is building relationships with advisors by delivering practice-management assistance through a variety of channels, making the most of the Internet to deliver more sophisticated web content and timely interpretation of global events. Carney believes that investors achieve better outcomes with the help of financial advice that encourages a long-term perspective, suitable asset mix and regular contributions. He supports disclosure of advisor compensation and believes the best scenario is one in which clients can make an informed choice of the various options – from low-fee, discount brokerage options to funds with imbedded trailer fees.
“Running a company is like running a mutual fund,” says Carney, who likes to read biographies of successful entrepreneurs, such as Steve Jobs of Apple Inc. and Howard Schulz of Starbucks Corp., in his spare time. “There are many components that need to work together, and a lot of different things going on.”
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