PEOPLE: JAMES W. MACALLEN — THERE’LL BE WHOLE LOTTA SHAKIN’ GOIN’ ON AT BEANTOWN’S BABSON

Newly installed chief executive James W. MacAllen wants to shake things up a bit at Boston’s David L. Babson & Co. The 54-year-old Mr. MacAllen hopes to ignite something of a mini-renaissance at the venerable money-management firm, which has $22 billion in assets under management and is well known as a home for old-line Brahmin money.

Mr. MacAllen recently called Babson’s top 25 executives to a day-long retreat to discuss the future of the firm. The meeting marked the first time Babson’s executives had such a discussion in nearly a decade, he says.

“A lot of interesting things came out of that meeting,” says Mr. MacAllen, who succeeded longtime CEO Peter C. Thompson at the end of April. Mr. Thompson will retire at the end of June.

“While there is a strong team orientation at the firm,” he says, “there’s less focus on what the overall firm is doing and on sharing information.”

Mr. MacAllen came to Babson in early 1996 as a portfolio manager and became chief investment officer a few months later. Prior to that, he did an 18-month stint as a portfolio manager at Hagler Mastrovita & Hewitt, a Boston-based money manager with about $1 billion in assets under management. Earlier, Mr. MacAllen served as president of Wilmington Capital Management, a Delaware money manager where he worked from 1983 to 1994.

Ironically, Mr. MacAllen’s resume also includes nine years at Massachusetts Mutual Life Insurance Co., which purchased Babson in 1995. When he left Mass Mutual in 1983, he was in charge of its securities investment division.

“This job is really coming full circle for me,” Mr. MacAllen says.

Mr. MacAllen’s appointment comes at a pivotal time for Babson. Considering the breakneck speed at which the money-management business is consolidating, what Babson does today in the way of gathering assets is likely to determine the course of its future, say industry experts.

ripe for change

“Babson is ripe for a major change,” says Louis Harvey, president of Dalbar Financial Services, a Boston mutual fund research company. “The company is either going to grow assets dramatically or become part of someone else’s assets.”

So far, the company — which has about $4 billion in retail money — seems determined to grow assets. The first major undertaking in that direction is to step up its

efforts to cater to high-net-worth investors.

Babson, which currently oversees about $1.3 billion in assets for wealthy clients, just struck a deal with its parent that calls for Massachusetts Mutual’s approximately 5,600 agents to begin making referrals to Babson. In exchange, the agents will receive a portion of the annual fees the money manager charges.

The deal is significant because it’s the first time Babson has attempted to go beyond relying on word of mouth to grow its high-net-worth business. It’s also the first time Babson has attempted to collaborate with Mass Mutual.

“In the past, we’ve seen some referrals of this type, but very little compared to what we think we will see as we make the agents more aware of what we are doing.” says Mr. MacAllen.

quantitative try next

Babson is also about to take a stab at a new investment discipline: quantitative investing. For the past three years, Babson has been quietly polishing its skills at the investment discipline with good results: The D.L. Babson Quantitative Equity Fund returned 45.33% for the year ended March 31, a full three percentage points better than the average large blend fund, according to researcher Morningstar Inc.

Babson currently manages about $150 million in various quantitative products, which include the one institutional mutual fund and three private accounts for institutional clients. It plans to start marketing its efforts in the quantitative arena in the coming months, Mr. MacAllen says.