Banks are increasingly turning to the mutual fund industry to find executives to run their proprietary mutual fund programs.
Last year 11 banks filled high-level positions with talent culled from the funds industry, said an executive recruiter.
So far this year, First Union Corp., Charlotte, N.C., has hired Donald A. McMullen, former president of American Capital Management and Research Inc., to head its capital management group.
Windle B. Priem, vice chairman of Korn/Ferry International, the New York recruiting firm that paired Mr. McMullen and First Union, said it won't be long before a mutual fund executive fills a bank's top spot.
Mr. Priem is in charge of recruiting senior executives for financial institutions, and has been doing so for 16 years. Earlier, he was a vice president of corporate banking for Marine Midland Bank.
Q.: What positions are banks looking to fill with mutual fund executives?
PRIEM: Banks are looking for over-all managers and people to run the mutual fund piece of the bank. They want individuals to build up their fee- based business. They're also looking to fill positions in individual or institutional money management.
Q.: What kinds of executives do banks want to run their mutual fund programs?
PRIEM: They're looking for someone who understands the mutual fund business inside out. These executives, for the most part, are not in the commercial banking industry. Most of the talent is coming from the mutual fund industry.
Q.: What specific skills are banks looking for in these executives?
PRIEM: They're looking for more than an investment professional here, they're looking for a business builder. What's needed here is a person with superb marketing and positioning skills.
In addition they have to be up to speed on all the regulatory issues and compliance. But the most important characteristic they're looking for is someone who's had actual experience building a mutual fund business.
Q.: What areas of the bank will have the most demand for executives in 1995?
PRIEM: I think the single biggest area that is going to be hot this year is the retirement business.
The money keeps flowing into 401(k) (plans), and there will be a strong fight between asset-management firms, banks, and insurance companies for a share of that market.
The banks want in to that area because in many cases it utilizes a bank's mutual funds and it brings in more money from already established business relationships. But it's an area where banks have further to go than they do in the mutual fund business.
Q.: Are banks also hiring mutual fund executives for their trust and private banking units?
PRIEM: There is some demand, but nowhere near the pace that you see on the mutual fund side.
Q.: Have mutual fund executives had any difficulty fitting into the bank culture?
PRIEM: I'd say yes, because in many cases these individuals have never worked in a commercial bank before.
Many times they're coming in to a publicly held firm from a private company and are having to deal with a tremendous amount of management coordination and accountability - many of the things you find in the largest organizations that aren't in place at smaller companies. There's always a risk that these people might not adjust.
Q.: Many of these executives are accustomed to large bonuses. How are banks coping with the issue of compensating them?
PRIEM: They're doing well. The large banks and the money center banks are all playing the capital markets and know what it is to pay a foreign exchange trader, or a derivatives or corporate finance chief.
Three or four years ago it was an issue, but not today. Banks have had to go head-to-head with the Wall Street firms. I think that we've crossed the compensation bridge.
Q.: Why don't banks look to other banks for mutual fund talent?
PRIEM: Well, they do. Look at Chris Maxwell, who's at Key now but first helped Chase start their mutual funds up. And we'll see more of that.
But really, at the end of the day, it's just tough to find good talent that can do this type of work.
If this were easy to do, then why would they pay people like me these handsome fees to find and place these individuals? It's all a function of supply and demand.