The news that Liberty Financial Cos. was trimming the staff of its bank marketing unit by 10% couldn't have come as too much of a surprise to anyone who has talked to Kenneth R. Leibler lately.
Mr. Leibler, chief executive of the Boston-based financial services company, makes no bones about the fact that helping banks sell investments is a bumpy business.
"If we had to just make money on that process, this would be a tough year for us," he said in a recent interview at the American Banker's New York headquarters. The run-up in interest rates over the past year has slammed the value of bond mutual funds - the very products that fueled the retail investment boom at banks.
Mr. Leibler is quick to emphasize that Liberty has "a long-term commitment to working with banks," and has pockets deep enough to support the bank sales effort during market downturns.
But, as he points out, there's far more to Liberty Financial than running sales programs at banks. The company, a unit of insurer Liberty Mutual Group, is a diversified asset manager, with $29 billion under management.
In addition to the bank marketing group, Liberty Financial also owns Keyport Insurance Co., an annuity company, and Stein Roe & Farnham, a money management firm that caters to high-net-worth clients.
Though the company has its hands in several different parts of the investment business, Mr. Leibler says its overarching goal is to amass assets to manage. The aim is to ensure that Liberty will have a steady flow of investment advisory income during slow sales cycles.
In the past year, the company has been an aggressive acquirer of mutual fund companies. Last October, it announced plans to acquire the Colonial Group, a Boston-based fund company, for $310 million. That acquisition, set to close in March, will add $14 billion of assets under management to Liberty's coffers.
Shortly after, Liberty snapped up Newport Pacific Management, a $650 million-asset money manager that specializes in Asia.
Liberty is on the lookout for more acquisitions, Mr. Leibler said. For one thing, he said, "We need more equity assets. With all the things Colonial brings to us, they are still largely a fixed-income firm." Right now, roughly three-quarters of Liberty's assets are in fixed-income investments; Mr. Leibler would like to move toward a 50-50 mix of fixed- income and equity investments.
Mr. Leibler, who joined Liberty Financial as president in 1990 and was promoted to chief executive last December, is certainly well qualified to lead Liberty through such a transformation: he practically grew up on Wall Street.
Before joining Liberty, Mr. Leibler spent 15 years with the American Stock Exchange. In 1986, at the age of 37, he became its president, making him one of Wall Street's youngest stars.
Now 46, Mr. Leibler clearly likes the opportunities he sees in asset management. Baby boomers are moving into their wealth-building, wealth- preserving years. They want and need help in managing their finances.
As for the banks, they "are well positioned in all these trends," Mr. Leibler said. "The mistake is to want to do too much, too soon, by themselves."
