One on One: "Scudder today … [is] an 80-year-old startup that has a lot of assets"

Thomas F. Eggers helped put the roar back in the Dreyfus lion, but can he save the Scudder ship as president and CEO? If anyone can, it’s Mr. Eggers, analysts, company executives and competitors say.

“It’s a daunting task,” says Burton Greenwald, a Philadelphia fund consultant. “They have a huge job to do of integrating themselves into the intermediary community. Tom took on the exact same job at Dreyfus, so he has done this exercise before, and he’s done it quite well.”

Mr. Eggers was hired by William Shiebler, the new head of Deutsche Asset Management’s Americas business in New York.

“Time will tell, but I went with the most capable person I could,” Mr. Shiebler says. “We were very fortunate to be able to recruit Tom.”

Dreyfus Corp. in New York had $77 billion under management when Mr. Eggers arrived in 1996, and it had $188 billion when he departed last month – a year after the CEO who recruited him, Christopher Condron, left to head AXA Financial Inc.

Though Scudder Investments is in tougher shape than Dreyfus was in upon his arrival, the New York company’s relationship with Deutsche Bank AG and sheer size give it a leg up, Mr. Eggers says.

Mr. Eggers inherits responsibility of Scudder’s assets of $104.7 billion. Add that to Deutsche Bank’s $52 billion of retail assets and he’s in charge of $156.7 billion.

He relishes Deutsche Bank’s global reach, an asset that was lacking at Dreyfus.

Q What is Scudder’s identity today?

A I don’t think a lot of people in the business today identify the Scudder brand with anything. They might know the name. I knew Scudder. I knew they were a fund company. They were in New York, I knew they were in New England, and that’s about it.

I talk to the intermediaries today, and there’s not a lot of content to what Scudder is. There’s also confusion between Scudder and Kemper because Kemper was very big in the intermediary market. So is it Kemper the insurance company? Is it Kemper the fund company? There’s a lot of confusion.

Our early research shows us [the identity] is associated with financial services. It’s not necessarily associated with anything good or bad.

Q Is there a name issue as well?

A [Scudder Investments is] certainly the name we hope to bring into prominence. Now, for those folks who have been in the industry like you or myself, is it Zurich Scudder? Is it Scudder Kemper? I mean, what is the name? That’s been a problem. The confusion around the name for the last few years has been a very big problem.

We’ve got to stick to our story from this point forward.

Q What was the name and identity difference at your old job?

A Obviously, I had an advantage at Dreyfus. Everyone knew the name. They knew the lion. There’s no such thing here. We’ve got to come at it a very different way.

Q What strengths of Dreyfus do you hope to bring to Scudder?

A Dreyfus made a successful transition from a retail-direct money market muni fund company to one of the top five the past couple years for industry flow share up to the first quarter of this year, being right up there with Fidelity and Vanguard in net new assets.

So one of the goals in coming to Dreyfus was to create multiple distribution channels. That’s my goal here as well. If you essentially look at Scudder today, you’re going to say it’s an 80-year-old startup that has a lot of assets. And that’s the way we approach it.

Q Should advisers feel threatened if you keep open a retail channel?

A We do have lots of retail customers, some of which have been with the firm for several generations. So while we’re not accenting that business, it’s not a business we’re looking to grow through acquisitions or competing with the intermediaries that we work with. So our goal with our retail business is to keep it and grow it, but through our existing clients.

Q How will you help the fee-only independent adviser?

A I think by having a product set that meets their asset-allocation needs, they’ll be able to serve clients better.

They’re going to get institutional-quality asset management across a myriad of different asset allocations in one mutual fund family.

Also, you’ve got LPL that does some load business, some no-load and some wrap business, and I want to be flexible on fees. Schwab, Fidelity, Waterhouse – we support all the platforms with the right technology and the right information.

And we’re very focused on maintaining our high service rankings in our intermediary service area. Dalbar consistently notes us as one of the best in the industry.

Q Where will you be positioned in terms of pricing?

A We’ll probably shoot to be at the 50th percentile. Pricing is not a moral issue; it’s a choice of the client. Whether it’s the distributor or the end client, I want to be flexible at whatever level they’re comfortable with.

Q What is going to be the fundamental shift to break you out of the doldrums?

A You have a lot of things up in the air, but the confusion is going to become less. We have a strategy. We have goals. The company’s got to focus externally on its customers through intermediaries. The company’s spent the last few years focusing internally.

How do we merge these funds? Who is going to be in charge of sales? What is our support model going to be?

You make all those decisions, which distract you from serving the needs of your customers.

Q What drew you to Scudder?

A One is Bill Shiebler. He’s a legend in the industry and an exceptional human being, very well respected by people in the industry, so a lot of it’s got to do with the personal relationship I’ve had that goes back some years.

The second thing is the asset management of Deutsche Asset Management. It’s probably the biggest and the best.

The next reason is global reach. Deutsche Bank’s got a huge footprint there, and it would be nice if at some point a strong retail brand in America could be a strong brand outside America. There are not a whole lot of companies in a position to really deliver that.

Q Scudder isn’t known for service. Are changes afoot?

A Changes are in place as we speak. This week, Scudder’s retail services center is going to be lit up in Chicago. We’re going to take the model that earned Kemper awards and apply it to Scudder customers.

Q Are you optimistic about mutual funds? What about separate accounts?

A I’m optimistic about the asset management business, but I do think that most mutual fund companies have to expand their horizons a little bit.

The mutual fund business may be OK for, say, the next 50 years. But retail investors are looking for more-sophisticated products like separate accounts or wrap fee programs.

Q Will Scudder enter that business?

A I don’t think Scudder can be viable and relevant to the retail investor unless we’re involved in that business.

And one of my top three priorities is to get us into the wrap fee business as soon as possible. We have the tools to get there, but so do a lot of other companies.

I do think that with some of the Deutsche Bank investment products, we can probably make the cut on the analytics side. We also have to make sure we have all the services to meet the needs of our clients.

At Dreyfus, in a two-year period, we built a managed-accounts business which generates about a quarter of a billion in net inflows a month.

But we made major resources available, and we really built it before we went out to drive it.

SNAPSHOT

Thomas F. Eggers, 49, president and CEO of Scudder Investments, Deutsche Asset Management’s U.S. retail business in New York

Assets under management: $156.7 billion

Career: 1996-2002, with Mellon Financial Corp. as CEO of Dreyfus Service Corp., and as of 2001, president of Dreyfus Corp. in New York; 1979-96, managing director and principal of Mitchell Hutchins Asset Management Inc., a PaineWebber Inc. subsidiary in New York

Education: Marquette University College of Journalism, 1972-76; executive training certificate, Securities Industry Institute at the Wharton School of the University of Pennsylvania, 1988