Nicholas Lopardo, the chairman of State Street Corp.'s fast- growing global asset management business, has long been known as a demanding executive.
But Mr. Lopardo chuckles when he recounts how the troops reacted to his recent directive: that State Street increase its non-U.S. share of money under management from 20% to 50% by 2000.
"My folks all jumped out the window when I said fifty-fifty," Mr. Lopardo said.
Evidently, they survived the landing.
Following Mr. Lopardo's lead, State Street Global Advisors is planting stakes from Chile to China in one of asset management's strongest pushes into markets outside the United States.
The company's entry into foreign markets-the asset management unit now has clients in 18 countries-had generated about one-fifth of State Street Global Advisors' $458 billion of assets at March 31. And foreign clients, ranging from government and corporate pension plans to high-net-worth individuals, account for about one-third of the unit's roughly 1,000 "relationships."
The framed photograph behind Mr. Lopardo's desk-showing him shaking hands with China's president, Jiang Zemin-is emblematic of the State Street executive's latest pursuit: building relationships in countries where he hopes to make plenty of money.
China, with more than one billion people, is a market that Mr. Lopardo, 51, is particularly high on. His unit is laying the groundwork to eventually sell retail mutual funds there, though he does not expect the Chinese authorities to grant approval for U.S. companies to begin selling in the country anytime soon.
"It won't happen tomorrow," Mr. Lopardo said. "But when it does happen, you can't walk up to the window and say, 'I want to be a player.' You have to begin the process of planting stakes now."
Mr. Lopardo's approach to global asset management has won the plaudits of industry watchers who are impressed by the way his unit, once known for selling low-priced index investments to institutions, managed to expand its asset base by 33% from 1996 to 1997. It did so by catering to active and passive investing styles alike.
"Something is working here if they have that kind of growth," said Thomas Theurkauf, an analyst at Keefe, Bruyette & Woods Inc.
Today, State Street is one of the top five U.S.-based asset managers, along with Fidelity Investments, Barclays Global Investors, Prudential Insurance Co. of America, and Capital Group.
Most of the credit is heaped on Mr. Lopardo, who took over State Street's asset management operation a decade ago, when it had only $20 billion of assets. "Nick has taken this from ground zero," said Milton Berlinski, a managing director at Goldman, Sachs & Co.
Mr. Lopardo concedes that his goal of deriving half of State Street Global's assets from outside the United States is a stretch. But his unit's actions in recent months suggest that he is serious about an effort that-at least for now-does not require making any sizable acquisitions of overseas money managers.
Instead, the unit is creating most of its new business through a combination of solo efforts and joint ventures with money managers worldwide.
Last year the asset manager formed a separate business unit with a mandate to develop and manage a wide variety of investment initiatives throughout the world, particularly in developing countries.
Since then, Mr. Lopardo's operation has opened an office in Santiago, Chile, its first South American office. It also formed a joint venture with a mainland Chinese investment company that it hopes will lead to government approval to sell mutual funds. And it has entered into a slew of partnerships with money managers in Italy, Austria, and the United Kingdom.
In addition, the asset manager now has nine full-time "investment centers" around the globe-including locations like Paris, Sydney, Hong Kong, and Tokyo-where portfolio managers are in residence.
Mr. Lopardo now spends about three-quarters of his travel time outside the United States, meeting with clients, going on sales calls, and firing up the employees at newly launched operations.
He is also preparing his business for an expected shift away from the traditional pension client to what he calls the "instividual" market: pretax institutional retirement money that is controlled by individual employees.
In fact, he takes particular delight in the fact that a recent Goldman Sachs study on "Asset Management in the 21st Century" is essentially a recitation of his own playbook for the coming years.
"They stole my business plan," he said, waving a copy of the report.
The Goldman report, released last month, says that the international movement toward giving employees more control of their retirement savings will force asset managers to become more consumer-focused. It means that companies that once could focus on merely winning over institutions will have to build brand names as other consumer companies do to win customers.
"Branding and distribution, always important, will reassert their primacy in attracting assets," the report said.
Though the State Street Global Advisors name does not have much brand equity in the global consumer marketplace, Mr. Lopardo is hardly discouraged.
"True, it's not recognizable to the man on the street that's going to buy a mutual fund over the phone," he said. "But I've never said that we wanted to be in that business. I can still get at the consumer without having retail mutual fund brand capability."
Mr. Lopardo's goal is to win over employee-consumers by first winning over their employers, through prompt administration of corporate retirement programs.
"I believe that the firm that captures that, captures them at their work site, is the firm that will really have the advantage," he said. "You will be able to take the employee from their early working career to their post- retirement."
Though making a few acquisitions would help Mr. Lopardo move toward his goal of garnering $600 billion of assets, he is leery of the prices State Street might have to pay.
"So far, it's all been grown internally without acquisitions," he said. "Does that mean we won't acquire anyone? No. But the price and the fit will have to be appropriate. We are not ready to chase high multiples, nor do we have the size to do that."
