Legendary investment guru steps down
Stephen Jarislowsky is retiring as chief executive officer at Montreal-based Jarislowsky Fraser Ltd., the firm he built into a legend in Canadian money management.
But nobody expects the 87 year-old to be any less vocal than he’s been over his 57-year career in the investment business.
He will remain chairman of the firm while he moves out of the CEO job to facilitate “succession planning.”
A series of management changes was announced at the company, which is facing increased competition in the Canadian investment industry and has seen its assets under management decline over the last few years.
At the same time, two key executives, president Len Racioppo and executive committee member Marc Trottier, are leaving to launch their own business.
Jarislowsky, a fixture on the Montreal scene for decades, wasn’t talking about the shakeup Tuesday but it’s unlikely he will be quiet for long.
He is easily the most outspoken money manager you will find in an industry that’s marked by discretion and reticence.
Jarislowsky has never been shy about criticizing corporations, regulators, governments or anyone else that has offended his sense of right and wrong.
As a shareholder rights activist, he has railed for years about issues like excessive compensation paid to executives or takeover deals that are unfair to shareholders.
He’s long criticized the kind of speculative trading in financial products that triggered the financial crisis of 2008-09.
There’s no self- censoring mechanism. Sometimes, on the other end of an interview with him, you have to ask yourself whether he really meant what he just said.
Jarislowsky’s reputation has carried him a long way in this business, but so has his firm’s performance on behalf of clients, helping him build a personal net worth approaching $1.5 billion.
However, competitive pressures are growing. Four years ago, Jarislowsky Fraser had $52 billion under management, today that’s down to $37 billion.
Jarislowsky’s brand-name presence at the firm has been so large that it may have slowed the succession to a new generation of managers.
The money management industry is more competitive than ever as big banks barge into the business, either by acquiring existing investment management firms or building their own formidable operations from within.
For example, TD Asset Management had $177 billion under management at the close of 2011, according to a ranking by the magazine Benefits Canada.
Phillips Hager & North, now owned by RBC Global Asset Management, clocked in at $176 billion. CIBC Global Asset Management had $82 billion.
U.S.-owned players like State Street Global Advisors and J.P. Morgan are more present than ever in the Canadian marketplace.
And in the pension fund management business, more boutique forms are springing up to offer new management styles and philosophies, while Jarislowsky Fraser has long stuck with an approach that favours large-cap stocks with global franchises.
If those competitive pressures had something to do with the management changes announced this week, the firm isn’t saying.
“Steve had already publicly announced in 2011 that he was trying to find a way to stand back from day to day operations,” said Pierre Lapointe, who takes over as head of the executive committee.
“This is a way for him to move toward retirement. We were already working on a plan to sort of ease him out. This reorganization is the first step.”