Kevin A. Rowell is the newly knighted president of Safeco Mutual Funds, a job he assumed this past September. With nearly $3.3 billion in assets under management across its 19-fund lineup, the SAFECO funds are managed by Safeco Asset Management Co., a division of Safeco Life & Investments, which is itself a unit of Safeco Corp., the Redmond, Wash.-based insurance company.
Rowell joined Safeco from Alliance Capital Management in New York, where he most recently served as the head of broker/dealer global relationships. Rowell recently spoke with Mutual Fund Market News Editor-at-Large Lori Pizzani about his firm's initiatives for the new year and beyond.
MFMN: What is your No. 1 goal?
Rowell: My goal is to have the mutual fund business become a good, solid, core business of Safeco Life & Investments, through a good lineup of funds that will fill 70% of an adviser's needs.
Our goal is not to compete with the fund titans of the world or to fill-up every style box. We don't want a Lithuania Fund. We're not going to come out with a REIT Fund, or some other kind of esoteric product. Let somebody else chase that.
Our big focus is not to come out to the marketplace and say, hey, we've got all kinds of funds for you.
MFMN: What have you learned in your first few months in office?
Rowell: Well, the biggest surprise for me was how enormously well run Safeco is. We have a depth of quality resources to tap. We also have great funds and great service. But we need to improve our name brand recognition. We also want to refine our focus to advisers.
MFMN: Where can one find the typical Safeco adviser?
Rowell: For one, financial institutions, such as banks. We are the 11th-largest annuity seller in banks. But we also sell through registered investment advisers (RIAs), which is a relationship-oriented business.
We also have a huge group of independent agents who are happy with, and used to selling, our products. But there's never been a major focus on distributing our mutual funds. There are 37,000 agents that are licensed to sell Safeco products. But right now, only about 1,000 of them sell Safeco mutual funds.
For all three groups, distributing annuities and life products have been very successful. Now we want to add mutual funds into the mix.
MFMN: How will you do that?
Rowell: We are planning a series of free value-added workshops to help advisers rebuild their franchises. These workshops won't be run by a Safeco insider delivering a hidden commercial.
Instead, we will teach them how to transition to a fee-based business, how to approach clients, and how to recruit and add brokers. We're offering a workshop, say for banks, on how to hire reps, what to ask in an interview, how to ask the right questions. . . .
Advisers also want someone who can help them rebuild their business in light of the bad market environment. We want to become good partners with our advisers. We want to find some good firms and become important to them. Our goal is not to get on every single short list in America.
MFMN: You didn't mention distributing through the larger wirehouses or even regional broker/dealers. Do you expect to add them as distribution partners?
Rowell: No. We have 50 wholesalers now and we are in a hiring mode, selectively adding resources. But we are not going to hire 300 wholesalers and try to compete with the big-name competitors, the titans out there. Banks, agents and RIAs are still our focus.
Originally, my former employer Alliance was not in the bank channel. I was the national sales manager for the bank marketplace, and we went from zero dollars to $2 billion a year in just over two years. We didn't do it focused on product, but, rather, with service, and by not trying to be all things to all people.
MFMN: What are your goals for Safeco Mutual Funds for 2003?
Rowell: While Safeco is currently a top 50 asset manager out of about 600 companies, we want to get ourselves more established and develop our brand name recognition. One of our greatest weaknesses is our need to leverage our strong, conservative brand name. Once people look under the hood, they'll be pleased.
MFMN: And just how do you plan to get them to look under the hood?
Rowell: We have a big Northwest footprint. Our regional name recognition is helped by our name on the major league baseball franchise Seattle Mariners' Safeco Field ballpark, which we purchased the naming rights for in 1998. We will also do some advertising in trade publications.
Right now, we are a very small entity in the adviser-sold marketplace. We want to educate the marketplace about our heritage and leverage our brand-name recognition.
We will also be bringing out new share classes in 2003, both for institutional investors and retail investors.
Right now our funds have all share classes: no-load, A. B, and C.
MFMN: If you already offer all of these share classes, then what can you tell me about the new ones? This sounds intriguing.
Rowell: I can't tell you about them - yet. We'll make a decision about them in February.
But I can tell you that we will also be adding additional sub-advisers. We have two now, Dresdner RCM Global Investors, which manages our U.S. Growth and Small Company Growth Funds, and Bank of Ireland, which manages our International Stock Fund.
MFMN: Do you have plans to expand Safeco's separately managed account business?
Rowell: We will not be focused in this market, although we do offer some separately managed accounts. But they are for much larger-scale players. Everyone is looking to tap the higher-net-worth investor. But this is not an area where we have scale. Lots of firms are now realizing they don't have the necessary scale, either.
The bread and butter of our business is the $100,000 to $1 million investor.
MFMN: And looking beyond 2003?
Rowell: Our grand goal is to become recognized as a premier investment management firm, known for investment performance and world-class service.