By naming NationsBank Corp.'s Mark H. Williamson its next president and CEO, Invesco Funds Group last week sent a strong signal to banks in the fund business: They are fertile ground for fund companies looking to recruit top-level talent.
Mr. Williamson, 46, is not the first banker to jump from a commercial bank to the fund industry. But his new job is believed to be one of the most senior posts at a mutual fund company ever secured by an executive who cut his teeth at a bank-managed fund.
The development solidifies banks' position as serious players in the mutual fund business. But it also places banks at a higher risk for losing their best fund executives to mutual fund companies willing to offer top dollar-and top titles-to bank-trained talent.
"The banks have made a major push into the mutual fund business, and in order to do so have acquired talented people to run their businesses," said Robert H. Graham, chief executive officer of AIM Management Group PLC and head of managed products at Amvescap PLC, Invesco's parent.
Mr. Graham said that at NationsBank Mr. Williamson had "overseen the growth of their fund organization from a relatively middle size, to one of the larger fund groups."
Mr. Williamson, 46, had been at Charlotte, N.C.-based NationsBank for 14 years. Most recently the banking company's consumer investing executive, his duties included the NationsFunds, the banking industry's fifth largest fund complex, with $33 billion of assets under management.
Until now, bank-fund executives who have crossed over to the fund industry have made the transition lower down the hierarchy. Some, like Edward "Jack" Smiley, moved over as fund managers. Mr. Smiley left NationsBank in 1996 to go to Eaton Vance Corp., Boston.
Others made the move to head bank channel distribution efforts. Richard A. Davies, who joined New York-based Alliance Capital Corp. in 1995 from First Chicago Corp., did just that, though his responsibilities have recently expanded.
But Mr. Williamson's move raises the stakes significantly, observers said. Their most senior-level fund talent is now at risk of being picked off by a nonbank competitor looking for a CEO.
If key people start to leave bank fund operations, "not only will it be a drain of talent, it will be an embarrassment," said Greg Knopf, a senior vice president at Union Bank of California and head of its mutual fund business.
Though banks are beginning to recognize the need to offer competitive pay packages to executives in their asset management areas, "they're moving very slowly," Mr. Knopf said.
Part of the problem for many banks is that mutual funds and asset management is not a core business. Even at the largest banks, these areas are "still a relatively small slice of the profit and loss," said Alliance's Mr. Davies.
"Getting to be the CEO of the only line of business your company is in- that's got to be pretty attractive," he said.
The wide variety of businesses banks compete in is an issue for bank portfolio managers, said Herbert Hunt, an executive recruiter with H.I. Hunt & Co. in Boston. At banks, asset managers often "piggyback" on other bank departments-some of the assets they manage come in through a variety of bank relationships.
That can affect their compensation. At fund companies, pay packages are based not only on fund performance but on the assets a manager brings into the fold.
According to Mr. Hunt, bank portfolio managers can hope to make anywhere from $100,000 to $250,000 a year, while someone in the same position at a fund company can make twice that amount.
"Bank executives are prime candidates to bolt because they want greater opportunity and financial reward," said Geoffrey H. Bobroff, a mutual fund manager based in East Greenwich, R.I. "The frustration level (at banks) is high."
At NationsBank, Mr. Williamson's move speaks to the quality of the NationsFund team, said Robert H. Gordon, Mr. Williamson's successor as president of NationsBanc Advisors Inc.
"I think what Mark leaves us with is a depth of talent that I would put up against any mutual fund company," Mr. Gordon said. But that is clearly a double-edged sword.
"Because we're active out there in the industry," he added, NationsBank "becomes a natural place to look for talent."
Mr. Graham said he has known Mr. Williamson personally for years. Both men sit on the executive committee of the Investment Company Institute, the Washington-based trade group.
"We wanted Mark, we went after him first to see if he was available, and we're very pleased to be able to get him," Mr. Graham said.
But Mr. Bobroff said that Mr. Williamson will have some wood to chop at Invesco. "Mark's got a major challenge in a direct marketed, undersized family," Mr. Bobroff said. He said that Mr. Williamson's future will depend on how he manages to grow Invesco's $17 billion of fund assets.
The potential for growth is there, given Invesco's lineage, said Philadelphia-based mutual fund consultant Burton Greenwald.
The Denver firm's parent, Amvescap, has $192 billion of assets under management.