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Rating:American Century's Thomas: Want Freedom? Work for Cancer Researchers. Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, August 15, 2014

American Century's Thomas: Want Freedom? Work for Cancer Researchers.

Reported by Tommy Fernandez

It's the kind of discovery that will mean the difference between life and death for many cancer sufferers.

Injecting anaerobic bacteria into cancer tumors to break them down from the inside. The treatment, published on August 13th in the periodical Science Translational Medicine, was developed by researchers at BioMed Valley Discoveries, the Johns Hopkins Kimmel Cancer Center, the University of Texas MD Anderson Cancer Center and other collaborators.

There are lot of interesting details to this research, but one that would be especially relevant to fundsters is the following: BioMed is part of the Stowers Group of Companies which receives its funding from an endowment supporting the Stowers Institute for Medical Research.

A Fund Firm Owned by Researchers
This institute was established by Virginia and James Stowers, who also founded the $140 billion fund giant American Century.

The institute also happens to own roughly 43 percent of the fund company.

Hence, some 40 percent of the fund firm's profits go every year to the institute's cancer research, totaling roughly $1 billion since this arrangement was established in 2000. (Roughly another $1 billion was donated by Stowers when he sold another 40 percent to outside investors in the 1990s. More on that later.)

How does a fund firm give away nearly half of its profit every year to medical research and still do well? Actually, president and chief executive Jonathan Thomas says the arrangement offers a number of benefits.

"When you know that more than 40 percent of your profits go to fund these cures, it truly inspires our employees every single day to do extraordinary things," he recently told MFWire. "It has a profound impact on culture. People are excited to come to work, knowing that their efforts fund these life-saving cures."

Stowers' Mandate
The Stowers story dates back nearly 30-years. James was diagnosed and treated successfully for prostate cancer in 1986, and in 1993, his wife Virginia underwent surgery for breast cancer. Their daughter Kathleen also successfully battled breast cancer a few years later.

Out of gratitude, Stowers first sold off 40 percent of the fund firm to JP Morgan in the early 1990s. JP Morgan had since sold off that share to CIBC, which retains ownership of this portion to this day. He and his wife founded the Stowers Institute in 1994.

The roughly 43 percent portion of American was assigned to the Stowers Institute in 2000.

Some 13 percent of the firm is owned by employees and other shareholders.

Benefit of Being Owned by Scientists: Long Term Focus
Thomas, who has held his position since 2007, says that the firm's ownership structure allows for a great deal of stability.

"Being privately owned and being controlled by a medical research organization gives us a very long-term horizon. Their needs align very well with the way we run our company. That alignment is probably a major distinguishing factor for American Century compared to most of its competitors," he said. "We don't have any pressure at all to achieve quarterly financial targets, allowing us to be a very client centric organization."

American Century Now
In 2007, the firm adopted a decidedly institutional bent.

"We calibrated the entire organization to institutional standards, believing that if we could become successful with the world's most sophisticated clients that success would trickle into the intermediary and retail channels as well. Everything we do, our infrastructure, the way we run our money, is very much geared towards institutional standards," Thomas said.

The company is divided into two global pieces, a $10 billion international business based out of London and Hong Kong, and the American business based in Kansas City. There are six investment departments: global and non-U.S.; U.S. Growth Equity; U.S. Value Equity; Disciplined Equity; Fixed Income and Asset Allocation.

The firm's U.S. sales organization is a massive army helmed by chief client officer -- Americas Peter Cieszko. This army is divided into three pieces.

There is the Intermediary Sales Team led by senior vice president Joe Schultz, with 48 externals and 48 internals, a 12-person national accounts financial intermediary team; an eight person national accounts financial institutions team, three people on platform development and a business development strategy person.

Then there is the DC I-O sales team led by SVP Rick Luchinsky, with 16 externals, eight internals, one national accounts person and two practice management folks.

Lastly, there is the institutions team led by SVP Sheila Hartnett-Devlin, with five consultant relations folk, 16 product strategy folk, four business development people and seven client relationship management specialists.

The firm is a top ten target date fund shop via its OneChoice product. However, the firm approaches sales differently from others in the top ten in that American Century has no affiliated recordkeeping partner. Instead, the firm sells the products either directly to investors or via consultant relationships.

With regards to the fund supermarkets, Thomas said that the firm works "very closely" with Fidelity and Schwab on their NTF platforms.

"They are very important clients to us," he said.

Thomas said that the firm is in the process of planning its 2015 budget and that there will likely be a need to grow its sales force to meet increased demand, but he said it was too soon to develop any concrete numbers.  

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