A little less than a year after being acquired by UniCredito, Pioneer Investment Management named Daniel Geraci CEO, replacing David Tripple, who stepped down at the end of September. As CEO of Pioneer, Geraci, formerly the president of Fidelity Investments' private wealth division, will be responsible for leveraging the wealth management products and services of its Milan-based parent company, Unicredito.
Mutual Fund Market News' Andrew Greene caught up with Geraci shortly after he was named CEO to discuss his plans for Pioneer. An edited version of their conversation follows.
MFMN: Congratulations on being named CEO of Pioneer.
Geraci: I think it's a tremendous opportunity. It's a great firm with a great history and more people need to know the story.
MFMN: It seems like UniCredito's acquisition of Pioneer may have breathed some new life into the firm.
Geraci: Well, absolutely. What was most attractive for me was the position the parent is taking. UniCredito has put a huge commitment on the table with the acquisition, they invested a tremendous amount in the business after they bought it and they have resources that really need to be tapped to their fullest to help leverage the business here. And at the same time they're also a great partner because they recognize that the U.S. business needs to run in a way that's appropriate for this market using a competitive U.S. model.
MFMN: That's really where you step in, isn't it?
Geraci: Yes. My background is in the brokerage business and the full-service side. I have a number of years' experience in distribution and marketing to intermediaries both in Canada and here in the U.S. with Fidelity. That's really the heart of the market for [Pioneer], so this gets me back into a part of the business that I really enjoy and that's dealing with the investment community.
MFMN: One of the roles you will fill with Pioneer will be leveraging UniCredito's product and service capabilities. How is that likely to manifest itself?
Geraci: UniCredito's strategy in Europe and especially in their core market in Italy is a wealth management strategy. They are a leader there already with respect to things like wrap and separate account capabilities and other types of alternative investment capabilities.
As we all know, the mutual fund market place is so fragmented and it's such a fight for market share right now. I think to be successful firms are going to have to be willing to play in every segment of the investment management arena and consider themselves investment managers, not as fund managers only.
And that's a big distinction for some firms. So if you see yourself as an investment manager it becomes a matter of, How many types of product structures can I put out in the marketplace to catch asset flow?' If you just use mutual funds then you're keeping yourself from a huge area of opportunity in the areas of separate accounts and sub-advised portfolios for the separate account and annuity arenas, etc. It really becomes paramount that companies create as many vehicles through which advisors and intermediaries can push flows.
MFMN: Isn't there a substantial technology investment you have to make in order to develop products and operate in the separate account marketplace?
Geraci: Absolutely. The good news is that the parent company has the platforms already built to support those alternative investments and separate accounts. Where many firms in the mutual fund space have entered into those arenas and had to acquire or build their own platforms, because it is a different business to administer than a mutual fund, we have that capability already in existence. That gives us a leg up. We have experience with it institutionally and for us here it's a matter of taking that off the shelf, getting it packaged and getting out there and getting some distribution relationships established and bringing it to market.
MFMN: From the wholesaler standpoint, they have to get up to speed on the product as well and it's a different animal than a mutual fund.
Geraci: It is a different animal. Back in my Canadian brokerage days I introduced separate accounts to market back in 1989. I can tell you that it's difficult at first for people, whether they are advisors or wholesalers, who aren't familiar with the nuances of it to grasp the differences between it and mutual fund investing and other types of managed accounts. But once they do, it's a very straight forward conversation.
The good news is in this business we're not going direct with the product and because we're dealing with intermediaries, there isn't a wirehouse broker who doesn't know how to present the separate account story to a client because that industry has had it since the late '70s.
MFMN: In terms of Pioneer's fund business what do you expect in the way of new products or services?
Geraci: Pioneer started incubating a number of things earlier in the year, such as global sector-type funds. You talk about leveraging [UniCredito's] capabilities, they have tremendous investment management capabilities in the mutual fund business, as well.
Part of the strategy will be that we go after a serious share of the international equity marketplace while continuing to build our domestic equity capabilities. You have to have a full product line and we intend to cover as much of the product spectrum as we can with our own management capabilities. Where there are areas where we feel we may not be best suited or may not have the desire to play in certain areas, then we will look to do something from a partnership standpoint.
It's a clean slate and it's wide open, which is one of the attractions. The objective is to grow the business and having the flexibility to do what's necessary is a big plus.
MFMN: Have you established any preliminary goals for the firm?
Geraci: I think the perspective at this stage is to ensure that far more investment firms, far more broker/dealers and their advisors know the Pioneer story and understand the commitment we're making to them as partners for the long term. We want to get the word out that, although this is a 73-year-old firm with a great history, we're going to act like a start up. I consider it a 73-year-old start up. That's the way that I look at it.
We're going to go out and establish relationships with far more advisors then ever before in the firm's history because that's the real key. It's a relationship business and first and foremost we have to have a clear story we can tell, a strategy we can articulate and have advisors see us as a partner for the long term and then go out and tell that story over and over.
At the same time we have to say to people, Don't judge us by what we're saying. Watch us and judge us by what we do.' Whether it's delivering products, superior, service, great marketing support for advisors or plain and simple good old-fashioned, solid performance, those are all of the things that have to be there before we can start to talk about how much in flows we're projecting, what level of net and gross sales we think we can do and where net assets will be in three or four years. That all follows. Too many firms focus on getting sales for the sake of sales and in a great market they do well because that tide lifts everybody's boat and in a bad market they suffer. We have to build a business plan that is far more controllable in our hands than simply riding along with the market. In a down market that's when you should be capturing market share.
MFMN: What is Pioneer's primary distribution channel?
Geraci: Primarily it has been the wirehouse marketplace. And more and more in the last year or so the independent advisor marketplace has come up the curve quite a bit.
MFMN: The independent advisor channel is tough to market to and a lot of firms seem to be turning to technology to address those challenges.
Geraci: We have a very well resourced e-commerce group. The Web site had received a number of accolades. We have responsibility for the global e-commerce support, so we support the banks in Europe as well. So we're sitting right here in the heart of it and I can tell you that the technology aspects will be critical. We're looking at several types of tools to help advisors with their business and bringing asset allocation capabilities and things of that nature to the market. It's a crowded market, at least from a technology standpoint. But history has shown that if you can establish some sort of a technology relationship with that advisor you have a leg up on every other money manager that's doing business with them because you have a relationship that extends beyond the product. To me, that's one of the most critical things of building and maintaining an advisors business in this marketplace. You have to provide more than just a product or you'll swing, based on performance, in and out of favor.
MFMN: Your role at Pioneer is going to be pretty different from what your role has been with Fidelity, won't it?
Geraci: At Fidelity, with Private Wealth Management, we're in a direct business, we're dealing directly with investors. The branch is run under my direction [as is] the whole product offering for the high-net-worth end of the marketplace and the reps that face off against those clients. So, those are two different businesses completely.
At Pioneer my goal is really to drive the strategic thinking and direction of the organization. We have tremendously talented people there to execute and I hope to bring a strategic focus and energy level that will allow us to execute and hit those targets. I will clearly focus my time and energy on the distribution and marketing aspects of the organization because those are the real engines to growth for that type of business and because that's where my background is heavily weighted. That's why I think UniCredito saw such a good fit.