October 20, 2016 – The $37 billion University of Texas Investment Management Co. is looking to replace past chief executive officer Bruce Zimmerman, who recently stepped down. The third largest U.S. college endowment is currently reviewing executive search firms to lead this important assignment.
Mark Warner, one of the organization’s senior directors, is currently serving as interim CEO. He is a candidate for the permanent position of CEO and chief investment officer, said Karen Adler, a University of Texas System spokeswoman.
“We have the utmost confidence in Mark Warner and his ability to provide leadership and make progress while we conduct a national search for UTIMCO’s next CEO / CIO,” said Jeffery Hildebrand, chairman of the UTIMCO board and vice chairman of the UT System Board of Regents. “We have a tremendous opportunity to build on UTIMCO’s strong foundation, and I have no doubt that the opening will attract the best possible talent to both protect and grow our investments for the benefit of Texas public higher education.”
The University of Texas Investment Management Co. is an investment management corporation whose sole purpose is the management of investment assets under the fiduciary care of the board of regents of The University of Texas System. Created in 1996, it is the first external investment corporation formed by a public university system in the nation. It invests endowment and operating funds in excess of $19 billion.
Demonstrated Skills Sets
According to recruiters who hope to be in the running for this prestigious assignment, the endowment will likely be seeking candidates with proven track records and who have a demonstrated track record for managing large sums of money. Mission-driven leaders, they said, or those with global vision, for example, need not apply. Even leaders with proven financial skills sets might not be worthy. This position is all about track record specificity.
This was the case recently when David Barrett Partners placed Nirmal P. Narvekar as the new CEO of Harvard Management Company, the investment management arm of Harvard University. Since 2002, Mr. Narvekar was president and CEO of Columbia University Investment Management Co., which oversees investment strategy for Columbia’s $9 billion endowment.
“Harvard Management Company was very focused on a proven CIO who had demonstrated outstanding performance, ideally over at least a 10-year time frame, coming from a platform with size and scale,” said managing partner David Barrett, who spearheaded the search.
“There was a high level of interest and the search committee had very good options,” Mr. Barrett added. “But ultimately, it was Narv’s track record, both as an investor and as a team leader, that clearly distinguished him.”
Under Mr. Narvekar’s leadership, Columbia University’s endowment returned 7.6 percent on investments for the fiscal year that ended in June 2015 (the latest period available). Its annualized five-year and 10-year returns, net of fees, were 12.3 percent and 10.1 percent. By comparison, Harvard University’s endowment has experienced both several leadership challenges and lackluster returns in recent years. Its endowment returned negative two percent on investments for the fiscal year ending this past June, below the one percent return of Harvard’s benchmark policy portfolio.
Boutique Investment Specialist
Mr. Barrett is certainly no stranger to finding these sorts of investment leaders with proven track records. He and his partners are considered top boutique recruiting specialists in the field. They operate from offices in New York, Boston, London and Hong Kong and serve traditional and alternative money managers, endowments, foundations, family offices and sovereign wealth funds. The firm was by a team of investment management recruiting industry veterans from large, multinational search firms who were drawn to establishing a focused investment and wealth management boutique. Just recently, the firm placed Jack Mahler as the first chief investment officer of the Cystic Fibrosis Foundation.
Investment Professionals In Demand
According to recruiters specializing in the investment function, demand for executive level, ‘high impact’ investing talent has been on the rise, and that demand is expected to soar in coming years. But recruiters say these roles can be generally difficult to develop and ultimately recruit for clients, given their multi-disciplinary and evolving nature.
“Recruiting top talent in our space has always been challenging and, even with the ongoing advances in technology and proliferation of third-party candidate databases, it will not get easier,” said Mr. Barrett in an interview with Hunt Scanlon Media several months ago. He said pay was a key factor; successful professionals are paid well throughout the sector, he opined, giving little incentive or reason for them to consider moves elsewhere.
“In an increasingly competitive marketplace, the challenge for recruiters in this space will be to demonstrate they have the relationships, market credibility, and industry knowledge to not just serve up candidates, but to deliver the right candidates,” he added.
How Search Firms Are Responding
Search firms have been expanding to better serve investment-related organizations in order to handle the onslaught of their broadening senior level talent needs. Here’s a brief look at what’s been happening around the industry lately:
Futurestep just established a dedicated credit union and community banking recruiting practice area and has named Mike Juratovac as sector leader. The practice falls within Futurestep’s North America financial services practice. Mr. Juratovac brings with him more than 20 years of executive search and consulting experience, with a specific focus on financial services – credit unions and community banks in particular. There are nearly 6,000 federally insured credit unions in the U.S., with more than $1.2 trillion in assets. “As the credit union industry continues to evolve in complexity and sophistication, the need for strategically placed business partners who can provide counsel on compensation, board governance and talent acquisition has never been more important,” said Mr. Juratovac.
According to research from credit union specialist recruiters D. Hilton Associates, more than 4,000 of the credit union industry’s CEOs and senior managers have left or will be leaving the workforce in the next five years. Therefore, according to one of the firm’s most recent reports, leadership development, succession planning and employee retention have never been more critical than now.
Futurestep’s parent company, Korn Ferry, just appointed Pascal Smith as global sector leader, asset management (alternative and traditional). With strong global client relationships, Mr. Smith also focuses on working with hedge fund and alternative investments clients across a wide range of strategies.
RSR Partners recently named Wyatt Uhlein as a senior member of the firm’s financial officers and investment banking practices. Mr. Unlein will take a lead role in executing searches throughout the financial services spectrum, while advising the firm’s senior leadership on market trends and business development. He joined RSR Partners from UBS, where he served as an investment banking recruiter, leading searches at all levels in the Americas.
Ward Howell International appointed Theodore ‘Ted’ Petrara as a partner and global leader of its insurance and alternative investments practice groups. Mr. Petrara’s team delivers executive search and leadership advisory services to insurers, reinsurers, hedge funds, and other originators and investors in the alternative risk transfer space. Mr. Petrara served as CEO of Ethical Integrity Corporate Standards SA, a Geneva-based corporate governance consultancy.
London-based Hanover Search Group named Paul Merlin as associate partner in the firm’s wealth management practice. Mr. Merlin has worked on a large number of search assignments in the wealth management arena for over 14 years. He has an exceptional track record of delivery with his main expertise being in distribution. Mr. Merlin ran his own firm for the past six years.
Marlin Hawk just added Glenn Allen as a senior consultant in its financial services practice in New York. He provides market intelligence, talent management and executive search services to a range of clients — from investment banking, asset management and hedge funds to consumer banking, credit cards and mobile payments companies. For the past five years, Mr. Allen has been a senior talent acquisition contractor at Citi, in charge of executive recruitment for capital markets and consumer banking.
Top Searches In the Investment Sector
- New York REIT has retained executive search firm Spencer Stuart as it seeks to identify potential new independent members for its board. New York REIT is a publicly traded real estate investment trust listed on the NYSE that acquires income-producing commercial real estate, including office and retail properties, in New York City. Spencer Stuart was also recently selected by FelCor Lodging Trust Incorporated to lead its search for a new CEO. FelCor is a real estate investment trust which owns a diversified portfolio of primarily upper-upscale and luxury hotels that are located in major and resort markets throughout the U.S.
- Kensington International placed Maria C. Coyne as CEO of the Cornerstone Fund. Partner Brian Clarke led the assignment. Ms. Coyne brings over 25 years of experience to the Cornerstone Fund from financial services firms, including KeyBank and Bank One. The Cornerstone Fund is the financial services arm of the United Church of Christ (UCC) and provides investment opportunities (selling fixed-rate notes to UCC members).
- Korn Ferry has been retained by the South Carolina Retirement System Investment Commission to lead its search for a chief investment officer. The organization is seeking someone with a minimum 10 years of relevant investment experience with a pension plan, foundation / endowment, trust organization, investment banking firm, asset management firm or financial consulting firm, with responsibility for the formulation and / or implementation of investment policy for substantial portfolios utilizing all major asset classes. In July, Korn Ferry recruited Scott Davis as CIO of The Indiana Public Retirement System. Mr. Davis, a company insider, had been serving as the system’s deputy CIO and director of public equity during the search process.
- Heidrick & Struggles has been selected by the California Public Employees’ Retirement System (CalPERS) to lead its search for a new chief actuary. For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. This past summer, Heidrick placed Marcie Frost as CalPERS’ new CEO. Renee Neri, a partner in the firm’s New York office and a member of the firm’s asset management & wealth management practices, led that search. Ms. Frost is a 16-year veteran of the pension industry, having most recently served as the director of the Washington State Department of Retirement Systems.
- DHR International placed Russell Read as chief investment officer of the Alaska Permanent Fund Corporation. The search was led by Carol Hartman, managing partner of the firm’s financial services practice in North America, and partner James Schroeder. Mr. Read formerly served as CIO at CalPERS. The Alaska Permanent Fund was created by referendum in 1976 to save a portion of the state’s oil revenue for the future. In 1980, the Alaska State Legislature created the Alaska Permanent Fund Corporation to manage the investments of the Permanent Fund outside of the State Treasury.
- Earlier this year, The Prince Houston Group recruited Mark Anson as chief investment officer of Commonfund, a leading manager for endowments and foundations. Previously, Mr. Anson served as chief investment officer of the Robert Bass Family Office. Commonfund was founded in 1971 as an independent non-profit asset management firm with a grant from the Ford Foundation. Today, the company manages customized investment programs for endowments, foundations and public pension funds.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media and Dale M. Zupsansky, Managing Editor, Hunt Scanlon Media