Pinnacle founder on avoiding ‘rockstar culture’ in fund management
Pinnacle’s founder, Ian Macoun, has explained how he has structured the firm with its affiliate boutiques in order to avoid the negative impact of key person risk.
Speaking at the Morningstar Investment Conference in Sydney, Ian Macoun, founder of Pinnacle, said succession planning was a key criteria when it decided to partner with a boutique.
Pinnacle had 15 different “affiliate” firms within the business, including Firetrail, Plato Investment Management, Metrics and Hyperion Asset Management.
Macoun said: “We designed this model to overcome the flaws we saw in the industry. This rockstar culture has been a problem for a very long time, and we said from the beginning that we were not going to have that.
“We have key people and leadership, but we only partner with people who operate in a team-like way. We spend a lot of time with people before we decide to partner with them to understand their ambition and how they think, and we run a mile when we hear people talk about ‘I’.
“This key [person’s] risk is arrogance; it’s people who think everything depends on them.”
Last year, Magellan Financial Group was hit with outflows when chief investment officer Hamish Douglass took a leave of absence from the firm and chief executive Brett Cairns had also departed several months prior.
In order to avoid this impact, Macoun said Pinnacle placed a huge emphasis on succession, including linking how departures were paid to the quality of succession planning.
“We talk about succession even before we start with a boutique and they are constantly developing younger people and building teams.
“It’s good to have the financial incentives right so that when a key person seeks to retire, how much they get for selling their equity depends on the state of their succession planning for their business, so there’s financial reasons to make sure that happens.”
This had worked well for Pinnacle, Macoun said, and the firm had successfully managed to avoid negative impacts from staff departures.
“The system works; we have not had key departures and no bad situations for investors.
“It’s not that there are never any people problems in a boutique, but if you stay close to them and work on any issues, then they don’t become big problems.”
AUTHOR
Laura Dew
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