Autumn 2012

SPONSORED PROFILE: Home-grown talent

Sponsors-choicePeople are considered the greatest asset at T. Rowe Price. Flemming Madsen talks about attracting, nurturing and retaining talent in a business that depends on intellectual capital. Corporate culture – with a strong emphasis on attracting, nurturing and retaining the best people—is at the core of everything that happens at T. Rowe Price. Flemming Madsen, head of Asia Pacific investment services at T. Rowe Price, says understanding the value of leveraging other people’s work is essential. “We hire smart, independent thinkers who are willing to share and are used to collaborating,” Madsen says. A global research platform – which everyone contributes to and draws from – connects investment professionals across regions, sectors and asset classes. The platform is so effective because it is supported by a culture of sharing, debate and the transfer of knowledge. “Sharing investment ideas is absolutely key. Only then can we ensure that the best investment ideas are utilised and transferred into the widest possible number of appropriate products.” To form and foster a collaborative environment, T. Rowe Price establishes mentoring relationships and encourages life-long learning. T. Rowe Price hires most of its investment professionals following summer internships, which Madsen says are “effectively one long job interview. The best and brightest will be invited back and offered a job.” Over the years the number of interns has varied, depending on internal demand, but the firm has been running the program consistently for 25 years – in both up and down markets.   One element has not changed: everyone is assigned a mentor. Some keep their mentors for only a short period of time; others will work with them for years. Madsen says the mentoring relationships are formed to ensure the transfer of the corporate culture. “People do not survive in the long term if they are unable to share ideas and collaborate. Only through collaboration are we able to leverage the talent of individuals.” Most investment professionals start out as analysts, mainly because the in-house approach to managing money is bottom-up, driven by fundamental research and analysis. While some move on to become portfolio managers, Madsen says specialising in a sector can be equally rewarding. Evaluating individuals – how well they communicate, share ideas and connect with their peers – is an integral part of the corporate culture. “We are able to track how good their advice was. We record what was bought and sold based on an analyst's recommendation. We measure the real dollar impact and make sure the analyst gets rewarded accordingly.” This emphasis on collaboration has fostered remarkable longevity. On average, T. Rowe Price investment professionals have 20 years experience and have stayed with the company for an average of 15 years. Corporate culture has also shaped the way T. Rowe Price has grown as an asset manager. The focus has been on growing organically, not through mergers and acquisitions. “We take a deliberate approach to developing new investment capabilities, focusing on the market opportunities and the long-term needs of our clients. Our key goal is to enhance what we can do for existing clients rather than simply looking for revenue growth.” “Mr. Price, the company’s founder, used to say, ‘if you take good care of your clients, the clients will take good care of you,’” Madsen says. In other words, if you do a good job, growth will follow. “We have been building our business carefully, making sure we can deliver the best investment products and service models. There are places that might look attractive to us in terms of asset gathering, but if we cannot deliver the best solutions we will not pursue them.” “We like to grow organically, but we also recognise that if we want to be successful in certain markets and within certain investment capabilities, we sometimes need to deviate from this strategy and bring in key talent or resources from the outside.” India is one example. The company in 2010 acquired a 26% stake in UTI AMC, one of the largest asset management companies there. “They had the footprint – the brand name, something that would take many years for us to accomplish on our own.” UTI AMC was “a good match”, Madsen says, adding that the two companies had similar corporate cultures, which has led to strong collaboration between the organizations. Globally, the asset manager does business in 35 countries, with 10% of the business outside its home market in the US. Madsen says overseas expansion has been focused on fewer key markets, rather than an all-out “go everywhere” expansion strategy. “Asia Pacific is clearly a major growth area, and we see a larger build-up in the region,” he says. At the moment, 41 out of 400 investment professionals are located in Asia with another 45 who cover client relations and operations in the region. T. Rowe Price opened its first Asian office in Tokyo in 1982, followed by Hong Kong in 1987 and Singapore in 1996. In Asia, the business focus is on Australia, Japan and the ‘Greater China region’, encompassing China, Hong Kong and Taiwan. Australia is a relatively recent addition. The firm now has an equity investment team there after having built a strong client relations presence that predominantly targets superannuation funds. In the Greater China region, the business is largely geared towards institutional investors. While the US home market still accounts for a significant portion of the firm’s client assets, Madsen says he expects the overseas share to continue to grow over time. In addition to institutional opportunities, the Asian retail mutual fund market offers good potential for growth. Demand on the retail side is considerable, but it will take time for firms that are newer to the market to build brand and support more retail-oriented strategies. While T. Rowe Price is keeping an eye on expansion and opportunities, the focus remains first and foremost on the existing client base and product range. Flemming Madsen is head of Asia Pacific investment services at T. Rowe Price ©2012 funds global

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