Gloria Niet/The Globe and Mail
If only CI Financial Corp. could have a mulligan, because the timing of its chief executive officer's retirement threw Bay Street for a loop.
In the same week the asset manager announced that CEO Steve MacPhail will leave the company, CI settled with the Ontario Securities Commission to return $156-million to mutual-fund investors for miscalculating fund valuations, while also paying $8-million to the regulator. Skeptical outsiders started to worry that Mr. MacPhail was pushed out because of it.
Not so – not even close. Mr. MacPhail's retirement was in the works for some time, and institutional clients were told it could be coming for many months. The current chief is about to be 60 years old, and he always said by that age he'd look for a change of pace.
To clear the air, CI founder and executive chairman Bill Holland went so far as to stress that the regulatory problems first cropped up on his own watch. "This error started in 2009, and I was the CEO in 2009," he said in an interview, adding that the retirement announcement timing's was completely "coincidental and very unfortunate for [Mr. MacPhail.]"
Still, the announcement is intriguing because of who CI named as its next leader. Peter Anderson, the next CEO, is technically an outsider, considering he currently runs Aston Hill Financial, but he is also a CI veteran who rose to chief investment officer until he left in 2012. He and Mr. MacPhail were in the running for the top job, and Mr. Anderson eventually left after the other guy got the position.
In 2016, his skill set is in heavy demand, say people who follow CI closely. Broadly speaking, Mr. MacPhail was the best guy under the old ownership structure. When he was appointed CEO in 2010, Bank of Nova Scotia still owned 38 per cent of CI, and that limited the asset manager's ability to make strategic decisions.
Because it had a major partner to appease, CI's management was more inward looking and focused on things such as costs.That suited Mr. MacPhail well because he's a hard-nosed operator. And he did a good job – the stock's up about40 per cent since he took over, despite the recent broad market correction.
But now CI's entering a new era. In 2014, Scotiabank abruptly announced it was selling most of its stake for $2.6-billion, and that gave the asset manager free reign to do what it liked. Time to start looking outward in a new growth era. Mr. Anderson is good at that, because he has an intimate understanding of CI's mutual fund business, and is a consummate gentleman who has good relationships across the industry. His expertise is also crucial at a time when the mutual fund industry faces major regulatory headwinds amid a crackdown on fees and investor disclosures.
While the new CEO will be leaned on for his fund business expertise, CI has hived off some of the position's oversight and given responsibility for legal and operational matters to Sheila Murray, who is now president. And no one should forget that Mr. Holland is still very active in the business. Though he took a step back when Mr. MacPhail was first appointed CEO, he remains executive chairman, and he's far from hands off.
Tim Kiladze