Seven months into the job as an executive vice president of PIMCO and head of the $2 trillion fund manager’s operations in Australia and New Zealand, Adrian Stewart is putting together a task force to combine the firm’s own strengths with the clout of Allianz – PIMCO’s parent company, and the largest life insurance company in the world.
And Stewart’s sights are set firmly on the retirement income market, which he says is ripe for a shake-up and the introduction of innovative and forward-thinking solutions.
As a former executive director of Macquarie Bank, Stewart (pictured) competed against PIMCO for about a decade. He says he had some idea of the company’s capabilities, but reckons many of its strengths have been “grossly underestimated” by the Australian market.
“I’d had an on-the-surface look; but when I had a really deep look, there is a breadth of capabilities that will be relevant in the Australian marketplace going forward that I think we can launch,” he says.
“Extending upon that, one of our more medium – not so much short-term – objectives is retirement income.
“When you look at the landscape, the demographics are familiar to us all. But we talk to a lot of big institutions that are clients, and the questions are still remaining: What is the solution going to be? How do we meet this massive growing demand for investors to meet their requirements?”
Task force
Stewart says PIMCO has not exploited its parent company fully to develop solutions for the Australian market, but a task force convened to oversee the development of a suite of retirement products will examine how it can draw on Allianz’s strengths, as well as on PIMCO’s own capabilities.
Stewart says it is unlikely there will be a single, silver-bullet retirement-income product.
“I think it’s clearly going to be a combination of a whole series of solutions blended together that can be adjusted along the way,” he says.
“But when you look at the current landscape, you’ve got a monopolisitic player in the annuities market, and I think a potential opportunity for us is we have a parent who’s the largest insurance company in the world, and you have a firm like PIMCO which is really the largest income manager in the world – that’s really another way of defining fixed income.
“If we put our minds to this, we’ve got some really clever people, both within Allianz in the US and Munich, and we have some great capabilities, I think if anyone can find a solution, it could be us.
“Despite our business as usual, of tapping into some of our existing strategies that have been highly successful elsewhere, we can create something that’s quite unique.”
Early days
Stewart stresses that the process is in its early days, but he says it has the support of the parent companies.
“I have had meetings with the board here at Allianz, with the chairman; with a couple of very senior people in Munich; and very senior people in PIMCO; and we’ve put together a task force here in Australia to begin our due diligence,” he says.
“We’re bringing together some expertise, which will income some external inputs as well, to essentially look at what is the next generation of annuity-style products, and then what strategies need to sit to support that to deliver a product or multitude of solutions.”
A key aspect of the task force will be to include key financial planning licensees early on in the discussion. Stewart says the days are long gone when a product manufacturer could just take what it does and push products out to the market.
“I’ve spoken to a number of clients, large clients, about the potential for us to think about this problem and try to solve it, and they are very excited about that,” Stewart says.
“We have the capabilities; we just haven’t put them together yet, really, here. We have done this offshore. We have worked with Allianz on annuity-style products, in the US and UK and Europe, so we have got a lot of expertise to tap into internally.
“But we would be well supported from the Australian wealth management segment if we could work on this, and again, this goes to one of the advantages we have in that we don’t compete with any of them in terms of the advice market. And we’re not going to, and so we would be a viable provider.”
Internal expertise
Stewart says the task force will include internal expertise, including representatives from both its institutional and wealth management, or retail, businesses.
It will also include Laura Ryan, recruited recently from AustralianSuper, and the head of PIMCO’s New Zealand business.
“At at the start we have an internal team, but we will be pulling in some external inputs as well, as we find our direction with this,” Stewart says.
“The engagement with clients is critical. How many examples do we know over the years where products are launched and they’ve missed the mark completely?
“It’s the most critical point in the process.”
Stewart says 2015 will mark the relaunch of PIMCO into the Australian marketplace, a move to a new head office in the Sydney CBD, and an expansion in staff numbers from the current 32 to 47.
“We’ve been here for over a decade and I’m sure that when you walked into he office it didn’t present you with the fact that we are a global $2 trillion firm,” Stewart says.
“We want people to now, when they walk into our office, that they are walking into a PIMCO office, and we are investing their clients’ hard-earned money in this office.
“They’ll be able to meet with an investment professional who is highly technical, who can engage with them at the appropriate level. We’re lifting the standards right across the board.
“This is one of the most unique opportunities for a business in the Australian marketplace. We’ve got this blockbuster brand that in many ways has been under-recognised.”
