Hartford Financial Services Group Inc. has reached outside the company to find a leader for its rapidly growing mutual fund business.
Keith Sloane, who was the managing director of product marketing for Wachovia Securities, assumed the newly created post of senior vice president in charge of Hartford's mutual fund and 529 college savings businesses, the company announced this month.
The mutual fund family, created in 1996 with the introduction of seven funds, had over $50 billion of assets under management by Oct. 1, according to Hartford.
The lineup increased to 54 funds this year with the addition of an asset allocation fund and two fixed-income products. The Simsbury, Conn., company's fund assets have risen 38% in the last year and doubled in less than three. What's more, its retail fund sales for the first nine months of this year rose 35% from the same period last year, to $10.8 billion.
Hartford has enjoyed mutual fund success that is rare among insurance companies because it already had in place a strong annuity distribution capability that its mutual funds could leverage, said Burton Greenwald, a mutual fund consultant in Philadelphia.
The company's early embrace of the subadviser model was another key, Mr. Greenwald said.
"They got out from under that cloud, the idea that insurance companies can't manage money," he said. "Hartford is an outstanding example of a success story."
Hartford's funds are subadvised by the institutional money managers Wellington Management Co. LLP and Hartford Investment Management Co.
Nationwide Financial Services Inc. is following in Hartford's footsteps. In August, the Columbus, Ohio, company took a big step in outsourcing the management of its funds when it sold 21 mutual funds to Aberdeen Asset Management Inc., a Philadelphia unit of Aberdeen Asset Management PLC of Scotland.
Mr. Sloane said Hartford has an opportunity to grow even faster by capitalizing on the funds' performance and brand recognition. It sells its funds through wire houses, independent advisers, and banks; Hartford executives have said the company actively sells its funds through 49 of the 50 largest banking companies in the country.
Along with its mutual fund business, Mr. Sloane will oversee Hartford's 529 college savings program, which has about $1 billion of assets. It is too early to discuss how that business might expand, he said, but there is a strong case to be made for trying to make it happen.
"The outlook is very, very good," Mr. Sloane said. "There is still a significant educational opportunity for investors to find an appropriate use for 529s as an investment vehicle."
Hartford offers 529 savings programs for West Virginia. Last month the company signed a 10-year contract with the state in which it agreed to lower fees, simplify choices, and enhance customer service.
At Wachovia, Mr. Sloane led the mutual fund business along with marketing and product development efforts for 529 plans and other financial products. However, he said that working at a bank-owned brokerage does not necessarily mean that he has more insight into banks than into other distribution channels.
"I never felt like I worked for a bank," he said. "It always felt like part of a subsidiary of a large, diversified financial institution."
Before his 12-year stint with Wachovia, Mr. Sloane spent 11 years at PaineWebber Inc. There he played a "significant role in growing the proprietary asset management and mutual fund businesses," according to Hartford.
"This perspective from working on the broker-dealer side gives me, I think, a unique viewpoint on their key priorities and initiatives," Mr. Sloane said. "What comes along with that are important relationships in the broker-dealer community."
