Jay Wilkinson is the new director of INVESCO Retirement's alliance sales division. He succeeds Tony Cox who was named director of INVESCO Institutional's financial services division. Atlanta-based INVESCO Retirement is a subsidiary of AMVESCAP Plc., the parent company to both AIM and INVESCO fund companies.
Mutual Fund Market News' Andrew Greene recently caught up with Wilkinson and discussed his strategy for growing INVESCO Retirement's assets. An edited version of their conversation follows.
MFMN: Can you tell me a little bit about yourself and your career path?
Wilkinson: I actually grew up in Oklahoma and went to Norman High School and went to Duke University, where I graduated with a degree in Political Science. I then to the Episcopal Theological School in Cambridge, Mass., and got a Bachelors in Divinity. It's an Episcopal seminary, but it's affiliated with Harvard.
I worked in the Richard Nixon campaign in 1968 and in 1969 I became a member of the White House staff. I reported directly to [Chief of Staff] Bob Haldeman for a year as staff assistant to the president. I returned to Oklahoma in late '69 and ran for the United States Congress in 1970 and lost. It was the only year that the Republicans didn't win a seat from Minnesota to Texas.
MFMN: Sounds like you didn't choose the right year to run.
Wilkinson: No, I really didn't. I thought I could shake enough hands to win, but regretfully I just didn't quite get it done. I then worked with the U.S. Justice Department for a year and then joined a company called Planned Marketing Associates, which was a mass marketer of all insurance lines of businesses--property, casualty, hospitalization and retirement plans. I worked there for four years and that company was acquired by K-mart in the early-seventies. I left a year later and joined PEBSCO [Public Employees Benefits Service Corporation]. I became national sales director around '78. And then we began to grow the 457 business through the United States Conference of Mayors and the National Association of Counties. In 1982, Nationwide Insurance Corporation acquired PEBSCO and at that time I became president and remained in that position for 15 years. When I left we had grown the assets to approximately $14 billion. We had over 6,000 city and county political sub-divisions that were clients of ours and six state governments as well. I was responsible for client relationships and also primarily running the sales division, which was comprised of 400 individuals.
I left primarily because Nationwide decided to make some operational changes and they merged the company that I ran with a sister company that was responsible for the K-12 business and they put the other guy in charge.
MFMN: And in '97 you started with INVESCO?
Wilkinson: That's correct. Herky Harris, who is the CEO of the INVESCO Global division, which is one of INVESCO Retirement's major lines of businesses under the AMVESCAP structure, read of my leaving and asked me to come down and talk about joining INVESCO.
MFMN: And you were in charge of strategy for the 457, 403(b) and 401(a) channels?
MFMN: What was INVESCO Retirement's marketshare like in those channels when you arrived and what strategies did you implement?
Wilkinson: It was quite small at the time, but INVESCO Retirement is somewhat unique in the manner in which it is structured. We have two divisions, one of which is our full service record keeping division where we provide full service plans for large 401(k) clients. So, we provide the full service record keeping, enrollment as well as investment products for our partners. The second division, the one that I will be responsible for now, is called the alliance division.
And through the alliance division, we work through alliance partners which are comprised of insurance companies and consultants.
We first obtain shelf space and position the INVESCO mutual funds and commingled trust funds into the various packages of these alliance partners who bring the distribution to INVESCO. The second phase of it is to then work with their field forces to explain the advantages and benefits of the INVESCO funds, because, of course, they have large portfolios comprised of other funds.
There is one other piece of it, which is what we call the investment only phase where it is not uncommon for a large jurisdiction like the City of New York or the State of Florida, to go to bid for a certain fund in a certain style or class.
Because INVESCO Retirement has a very capable and disciplined full service division, I knew that in our strategy we could either provide the full realm of benefits and services to government jurisdictions or we could try to grow the assets through INVESCO's alliance partners. Because of my background at Nationwide, I knew how expensive it was to develop distribution capability that would be required to deliver all of the enrollment services for the plan. I was also quite aware of the limited number of companies that had the dominant market share in the business. There were really only seven or 10 of the companies in the 457 marketplace that had the dominant share. So, I assumed that if we could position ourselves to get some of the INVESCO funds into the lineups of these large distribution groups, that we would be successful. And that's in fact what happened.
INVESCO, as you well know, has a wide range of very competitive investment vehicles, primarily mutual funds, and we were able, primarily because of exceptional performance results, to be recommended by a number of these large companies in the public sector market. And some of them are as I mentioned my old company, Nationwide, Great West Life, VALIC, ICMA, Hartford and Prudential.
We were able to position the INVESCO funds into their lineups and then their distribution forces were responsible for educating the employees about the benefits of our options. And it was primarily through those distribution channels and also through our positioning in some of the larger jurisdictions, [that we grew our assets].
So it was basically trying to recognize the opportunities in the public sector market. And then there was a second piece that was an equally important part of the strategy. I knew that if I was successful in getting INVESCO funds into the government channels, that most of the alliance partners would want to proliferate and expand the INVESCO options in other channels as well, such as 401(k). So, just using a couple of examples, with Nationwide we were able to generate a substantial amount of assets in their pension/401(k) channel. With VALIC, we've been able to position our INVESCO assets in their lineup. And almost all of the companies that I mentioned have large positions in the whole defined contribution marketplace, so we tried to expand our government strategy into the full defined contribution retirement strategy with these partners.
MFMN: So it was a strategy in which you leveraged your government sector business to gain access to the rest of the retirement markets?
Wilkinson: That's correct. It's not uncommon. It varies from company to company, but it is not at all uncommon for each company to have maybe a singular product development department and if they are making decisions in the government channel you'd have an advantage in going into a 401(k) channel as well.
MFMN: Is it easier to start in the government retirement sector and expand into other retirement channels?
Wilkinson: I really don't think so, it's just that was where I had my contacts and that was the universe that I had been in for 15 years and that's where I had my relationships. The INVESCO Retirement division, when I came into it, we already had good contacts in the 401(k) channel so we were able to leverage and move on.
And there was a third piece to the strategy. I told both Herky Harris and Bob O'Connor, who is the president and COO of the INVESCO domestic retirement group, that it didn't make sense to me to create a separate wholesale network for just the public sector. The 457 sector, as you well know, is very similar to 403(b), 401(k) and 401(a) and we all know that things are changing from year to year. It seemed to make a lot of sense to use the same wholesale regional support group to service all of the channels, and that's what we did.
MFMN: In total, how big is your wholesaler network?
Wilkinson: Right now we have seven wholesalers.
MFMN: Can you quantify how your strategy converted into growth of assets under management or administration?
Wilkinson: We were able to generate from less than $250 million in assets to over $2 billion. We tried to focus not on large case or small case, but we tried to focus on the whole universe out there. We were pretty fortunate because we've had good opportunities to have INVESCO funds in both the large jurisdictions and 10,000 jurisdictions. When you have that many pay centers each month or every two weeks sending contributions for INVESCO funds, we get a great opportunity to increase the assets.
MFMN: Can you tell me how those assets break down among the various retirement channels?
Wilkinson: We have, in the alliance division, approximately $11 billion in assets and I would guess that most of those assets are in the 401(k) channel. The entire division of INVESCO Retirement is over $34 billion dollars. So the alliance division has been a very important ingredient in the development of the entire INVESCO Retirement group. And, as I mentioned earlier, I think one of the great mystiques about the way it is structured is that it has two components--the full service record keeping as well as the alliance division--which is somewhat unique in the industry.
MFMN: As the new director of alliance sales, how is your role in the company going to change?
Wilkinson: I think the main difference will be that I'll be responsible for the total operations within the alliance division which will be more similar to my former position at Nationwide. I've enjoyed the four-year period that I've been here. I've worked closely with Tony Cox, who was in this position, as well as the vice presidents and regional vice presidents. I've had really very few people reporting directly to me and I have not been responsible for the line of business per se. So I look forward to working more closely with all of the individuals within the division as well as Bob O'Connor.
MFMN: Are there any new initiatives or changes that you foresee making to the division in the near future?
Wilkinson: I don't really think so. I hope I bring a degree of continuity to the operation. I think that we've functioned quite successfully in the past and I'm just looking forward to the opportunity to keep things running smoothly.