Scott Powers Named SSgA's New CEO

By Murray Coleman

State Street Global Advisors named Scott Powers as its new chief executive and president on Friday, replacing James Phalen, who is returning to head the parent State Street Corp.'s (STT) international investment trading and servicing operations.

Powers, 48, comes to SSgA from Old Mutual PLC, another London-based financial services giant. What is interesting, however, is that Powers was in charge of Old Mutual's aggressive revamping of its U.S. funds business.

Working from his base in Boston, the ex-Mellon marketing whiz in the past few years managed to whittle Old Mutual's lineup of money managers down from 40 to around 16 by mid-2007. At the same time, Powers led a near tripling of assets.

Old Mutual is pursuing a model in the U.S. of buying up well-known and established small and mid-tier asset managers and serving as a sort of holding company. The idea is that under one brand and with centralized resources, smaller money managers can reap the benefits of those working at bigger shops.

Most of Powers' focus was on institutional markets, which should play to SSgA's strengths. But he's known for his expertise with active funds at shops that weren't positioned as low-cost leaders. Under Powers, Old Mutual did embark on a significant fee-cutting agenda. He's also keen on building advisor channels to market funds, which should be a plus to SSgA's already healthy exchange-traded funds business.

But in the active mutual funds market, Powers was trying to sell Old Mutual's load funds against industry giants like Capital Research & Management's American Funds family and Franklin Resource's funds carrying both the Franklin and Templeton monikers. Analysts have noted he faced a stiff uphill battle against much large rivals with established ties in the advisement community.

By jumping to SSgA, Powers benefits by joining a true powerhouse, both in institutional markets as well as in the ETF business. And it should be noted that even though he dramatically cut costs and reduced overlap, Powers was able to significantly boost assets and profitability at Old Mutual.

In fact, he had Old Mutual's U.S. investment management arm on course to top $600 billion in assets by 2011. That would be up from less than $130 billion when Powers took over seven years ago. Currently, Old Mutual's U.S. units manage about $330 billion in assets.

By comparison, Powers will be joining a firm that had $2 trillion in assets under management heading into 2008. At the end of 2002, SSgA had about $1.1 trillion in assets.

The addition of an industry veteran with a track record like that of Powers' also clears the way for SSgA to move past its recent management shakeup tied to the meltdown in credit markets.

Earlier this year, State Street said it was setting aside reserves of $618 million to cover any possible lawsuits over subprime mortgages.

On that same day in January, SSgA announced that William Hunt was stepping down as chief executive. He was replaced on an interim basis by Phalen.