Can Sandy Weill's Daughter Pep Up Smith Barney's Mutual Funds?
Until 1993, Smith Barney Inc. was a faint blip on the mutual-fund industry radar screen. For all its haughty advertising about making money the old-fashioned way, the prestigious Wall Street firm was well behind its peers, with just $9.7 billion in fund assets and an embarrassing shortage of top-performing funds.
Then Jessica M. Bibliowicz, at that stage a 34-year-old marketing whiz, showed up. In 1994, she left the top sales post at Prudential Securities' mutual-fund subsidiary and took the job of rebuilding Smith Barney's funds, just after its merger with Shearson Lehman Brothers. Now managing $74 billion in assets and the nation's ninth-largest fund group, Bibliowicz is turning a laggard into a tough competitor. Her goal? To become the sixth-largest fund company within three years, with more than $100 billion in assets. "The incredible power of this company has not yet been tapped," she says.
She faces an uphill battle: Most brokerages have been losing mutual-fund market share for a decade. But she has a solid track record--and numerous fans, including her father, Sanford I. Weill, the chief executive of Smith Barney's parent company, Travelers Group Inc. "She'll never get the label off her back" that she's Sandy Weill's daughter, says Michael Downey, her former boss at Prudential. But "it's obvious she didn't get that job just because of her father....She's a terrific motivational leader."
"TOURIST ATTRACTION." One of two Weill children at Travelers--her older brother Marc is chief investment officer--Bibliowicz was brought up in the world of investing. "It's nice to have this stuff in your blood," she says. She started out as a sales representative at American Express Co. in 1981, avoiding working directly for Weill until joining Smith Barney in 1994. "I wanted to prove myself without my father's help," she says. When she came to Smith Barney, some employees were skeptical, but attendance went up at staff meetings. "I was the tourist attraction," Bibliowicz says. Personable, articulate, and strong-willed--just like her father--she and Weill are close. Bibliowicz says her father dotes on her children, 7 and 5. But at work, she respects the chain of command, reporting to Smith Barney Chief Executive James Dimon.
As a key player in one of the fund industry's biggest gambles, her toughest test is yet to come. Earlier this month, Smith Barney began selling 2,700 no-load funds alongside its own proprietary funds, marking the first time a major Wall Street broker has sold no-loads. Smith Barney could see a big drop in both revenues and assets under management if too many customers buy no-load funds, which carry a 1.5% annual "wrap" fee instead of the 5% up-front sales loads charged by Smith Barney's in-house funds. "We're not a proprietary fund company," she says. "We're a fund company period."
To keep Smith Barney's funds competitive against no-loads, Bibliowicz is gearing up to exploit one of Smith Barney's biggest untapped assets: a network of 37,000 insurance agents and brokers in the Travelers organization licensed to sell mutual funds. That's more than industry leader Merrill Lynch & Co.'s 13,800 brokers. Bibliowicz also created a new group of asset-allocation funds, called the Concert Series, that will become a core offering in the company's 401(k) retirement program.
AXED. Perhaps more important, she has improved the performance of Smith Barney's in-house funds. Three years ago, the firm had only two Morningstar-rated five-star funds. Now, there are seven. Paul Rice, a Morningstar Inc. analyst, says Smith Barney's 70 funds have advanced from being below average in 1993 to "about average" through June. Among the funds that Bibliowicz axed: one run by market prognosticator Elaine M. Garzarelli, who "made good top-down calls, but didn't back them up with good stock picks," Bibliowicz says.
Bibliowicz has now become one of the highest-ranking women in the mutual-fund industry, along with Fidelity Investments' Abigail Johnson, daughter of Chairman Edward C. "Ned" Johnson III. And at just 36, she seems to be injecting into Smith Barney some decidedly newfangled thinking.
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