AllianceBernstein loses DC veteran to Russell

Today marks defined-contribution veteran Richard Davies’ last day at AllianceBernstein LP; he will be joining Russell Investments June 1.
Mr. Davies was senior managing director of defined-contribution and subadvisory relationships at AllianceBernstein. At Russell, he will be the managing director for defined contribution and report to Greg Gilbert, chief executive officer of Americas Institutional.
Davies’ exit is the latest in a series of departures since AllianceBernstein’s leadership change at the end of 2008, when chief executive Lewis A. Sanders left and Peter Krause replaced him.
Departures include those of John Mahedy, chief investment officer for U.S. and North American value equities, in 2009. Mr. Mahedy rejoined Mr. Sanders at his new firm, Sanders Capital LLC.
Last year, Lisa Shalett, head of growth equities, left to join Bank of America Corp. as chief investment officer of Merrill Lynch Global Wealth Management. And brothers Mike and Jim Reilly, who were on the team managing the AllianceBernstein Large Cap Growth fund, also parted ways last year.
Mr. Davies declined to comment.
“Any time there’s a big leadership change at the top of a big organization, that can lead to some other organizational changes; people might have not been happy,” said Katie Rushkewicz, an analyst with Morningstar Inc.
AllianceBernstein will not fill Mr. Davies’ position, said John Meyers, a spokesman for the firm. Rather, it will bolster the upper ranks of its defined-contribution department, and other individuals will take on Mr. Davies’ duties.
From the defined-contribution side of the business, concerns about turnover at AllianceBernstein was a contributing factor behind Morningstar’s low ranking of the firm’s target date funds, said Laura Lutton, editorial director for Morningstar’s research group. Last month, Morningstar ranked 21 target date fund families based on its assessments of fund management, the investments made and the fees charged.
AllianceBernstein was at the bottom, along with OppenheimerFunds.
“Part of that has to do with our concerns about stewardship, the care of capital and what’s going on from the chief investment officer level,” Ms. Lutton said. “I think that our confidence in them will grow as we become more comfortable that people who are in their seats will stay there.
Chief investment officer turnover tends to trickle down to analysts and fund managers, she added.
Target date fund assets seeped out of AllianceBernstein last year as the firm experienced a 3% decline in its organic growth net of performance — a loss of $66 million, according to Morningstar. As of Dec. 31, target date fund assets totaled at $2.2 billion.
Meanwhile, Russell Investments has been on the rise, experiencing an organic growth rate of 26% last year, reflecting a gain of $166 million. The firm ended the year with nearly $1 billion in target date assets, according to data from Morningstar.