Charles Skorina & Company
● RETAINED EXECUTIVE SEARCH ●
Our Clients: Boards, Asset & Wealth Managers, Family Offices
We recruit CEOs and CIOs, advise on performance and pay, M&A consulting
LATEST NEWSLETTER
Sam Gallo and Endowment of the Year winner, the University System of Maryland Foundation
Each year Institutional Investor Magazine hosts a Hedge Fund Industry Awards dinner. This year’s gala was held on April 27th and celebrated superior portfolio construction and manager selection.
Among the notables, the event featured two outstanding investment heads we just happened to have recruited in the past.
Jon Glidden, director of pensions at Delta Airlines received II’s Allocator Lifetime Achievement Award and Sam Gallo, chief investment officer at the University System of Maryland Foundation accepted II’s endowment of the year honor.
Our warmest congratulations to both winners.
We managed to catch up with Mr. Gallo during a recent conference in Charleston, SC and asked him how he built an elite, award-winning investment program, what to look for in a successful CIO candidate, and what fresh challenges lay ahead.
The Endowment Elite, A conversation with Sam Gallo
Skorina: Sam, it was almost eleven years ago that I first called you about the University System of Maryland Foundation (USMF) CIO position and look where you are now.
First, you received an endowment of the year award from Institutional Investor, then you celebrated ten years as the university’s chief investment officer. Congratulations!
You don’t have the usual up-through-the-nonprofit-ranks background of a typical endowment CIO, would you take a moment to give us your highlights.
[Note: The USMF consists of twenty-plus schools with combined total assets of about $2.2bn.]
Gallo: Thank you for the kind words, Charles. Briefly. I began my career as a valuation modeler, pivoted to trader and portfolio manager, then moved to several investment and operational consulting roles, and finally on to my current position as an endowment CIO.
The last, of course, is thanks to your call so long ago.
Skorina: Your mission when you joined USMF in 2012 was to invest smartly for the future, build a team and investment strategy, and develop a commercially oriented white-glove client service model. Ten years later you receive the Endowment of the Year award from Institutional Investor.
Let’s dive right in and ask the money question, how did you do it?
Gallo: That’s a big one Charles and complex, but here goes. The key to success for any nonprofit fund begins with the Board and Investment Committee.
Boards want and expect a “world-class investment program.” But to achieve this goal, they must be willing to provide the resources and governance structure to flourish.
What boards put into it, is what boards get out of it. It’s that simple.
Think Profit Center
Skorina: Ok. But what does that mean? If a foundation, endowment, or pension fund wants an elite program, what does it take to build one?
Gallo: Let’s start by talking about our golden rule, which is, all decisions are linked and have consequences, so think and plan ahead. Be smart, be strategic. It matters.
Boards and administrations trip up when they view their investment offices as cost-centers. We are not cost centers. We make money for our schools.
Investment offices should be viewed as what they really are, essential profit-generating business divisions of the larger institution.
These offices should be nurtured, resourced, and report directly to the CEO, just like any other critically important revenue generating division.
Six Signposts on the Road to Riches
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Angela Miller-May, new CIO at Illinois Municipal Retirement Fund (IMRF)
11yrs Chicago Teachers’ Pension, 13 yrs Fiserv, MBA, DePaul, BA Northwestern
Matthew Mendelsohn, Yale’s new CIO
Lisa Howie, new CIO at Smith College
12yrs Yale investment office, AB, molecular biophysics Yale ’00 & MBA Yale ’08
Amy Falls, moves to Northwestern University as CIO
x CIO Rockefeller U, x CIO Phillips Academy, x MD Morgan Stanley, MPP Harvard, BA, Georgetown
SKORINA IN THE NEWS
9-2-21 Forbes: Insiders say Yale missed an opportunity to add diversity to its iconic $31bn endowment.
9-1-21 Institutional Investor: How to Reach the Allocator C-Suite.
5-7-21 BloombergNews: Yale Names Alex Banker Interim Endowment Chief, Plans Search
5-6-21 The New York Times: David Swensen, Who Revolutionized Endowment Investing, Dies at 67
5-6-21 Forbes: Yale Endowment Chief David Swensen Leaves Legacy of Top College Investment Leaders
CHARLES A. SKORINA & COMPANY works with leaders of Endowments, Foundations, and Institutional Asset Managers to recruit Board Members, Executives Officers, Chief Investment Officers and Fund Managers.
Mr. Skorina also publishes THE SKORINA LETTER, a widely-read professional publication providing news, research and analysis on institutional asset managers and tax-exempt funds.
Our Practice:
• We recruit Board Members and Executive Officers, Chief Investment Officers and Senior Asset Managers.
• Our research and analytics are backed by over thirty years of hands-on recruiting experience and an unrivaled personal network.
• We collect performance, compensation, and background data on most senior institutional investment professionals in the U.S. and the funds they manage. We analyze that data to construct profiles of those managers and their funds, identify best-in-class people, and map their career trajectories.
• We share our research and insights in a widely-read professional newsletter – THE SKORINA LETTER – and website – www.charlesskorina.com.
• The New York Times, Wall Street Journal, Bloomberg, Thompson Reuters, Financial Times (Fundfire), Institutional Investor, Pensions & Investments, Private Equity International, and the institutional investment community use our research and analysis. Skorina has been interviewed on chief investment officer compensation issues on Bloomberg TV.
• Our work is regularly re-printed in Allaboutalpha.com and other industry magazines, blogs, and third- party web postings.
• We focus specifically and effectively on the world we know: Board members and Executive Officers, Chief Investment Officers, and Senior Asset Managers at institutional investment firms and funds – including sovereign wealth funds, endowments, foundations, pension funds, banks, investment banks, outsourced chief investment officer firms (OCIO), and sell-side money managers.
Prior to founding CASCo, Mr. Skorina worked for JP MorganChase in New York City and Chicago and for Ernst & Young in Washington, D.C.
Mr. Skorina graduated from Culver Academies, attended Michigan State University and The Middlebury Institute of International Studies at Monterey where he graduated with a BA, and earned a MBA in Finance from the University of Chicago. He served in the US Army as a Russian Linguist stationed in Japan.
Charles A. Skorina & Co. is based in Tucson, Arizona.
OCIO Spring Update 2022: Last Man Standing
Our latest Outsourced Chief Investment Officer report features a list of 103 OCIO firms, each with updated contact information and AUM numbers. It’s the most comprehensive and accurate available.
For the nine months ending December 31st, 2021, the managers on our list added $381 billion (an 11.64% gain) in AUM, totaling a record $3.658 trillion dollars in discretionary outsourced assets.
But after years of steady growth, it’s apparent there’s a shakeout underway.
As we noted in our February 2021 OCIO update, discretionary asset managers without products to sell are notoriously hard to scale. Brilliant, original strategies lose their potency when they are widely copycatted. Or, a strategy works in one season, in one kind of market, but not in another.
That’s why so many OCIOs and RIAs now have private equity partners or reside within much larger financial or consulting organizations.
As Jon Hirtle, executive chairman of OCIO provider Hirtle Callaghan, remarked to Alicia McElhaney in a recent Institutional Investor article, “In business school, they teach you there’s a group of pioneers. If it works, there’s a flurry of copycat activity. And then there’s a shakeout and a consolidation.”
From our vantagepoint, it looks like the industry is entering the consolidation phase.
Wealth management M&A activity reached an all-time high in 2021, with an announced 307 transactions according to Echelon Partners’ 2021 RIA M&A Deal Report.
Over the last sixteen months, CapTrust acquired Ellwood Associates, iM Global Partners bought Litman Gregory, New Providence joined The Colony Group, Focus Financial bought CornerStone, and US Bank swallowed PFM – five firms on our last OCIO list.
And from what we hear there is plenty of dry powder and amenable prospects waiting in the wings.
Barron’s reported last November that “KKR is taking a stake in Beacon Pointe Advisors, the largest female-led RIA, in a deal that values the acquisitive firm at over $1 billion.” This after KKR invested in and then exited from Focus Financial, another RIA and OCIO aggregator.
Given this merger merry-go-round, we took our cue from Institutional Investor and spoke with Mr. Hirtle, “a pioneer in the outsourced chief investment officer business,” as Ms. McElhaney put it.
What did he think about the buy-out mania? Is the independent OCIO model still viable? And if so, how does one keep the “barbarians” at bay?
We include our conversation with Mr. Hirtle below.
What about the elephant?
Our data suggests that demand for outsourced investment services will continue to grow at a healthy rate, but that new entrants face formidable odds.
Why? Because there’s an elephant in the room. Concentration. A handful of managers control the bulk of the money.
Just eight providers – Aon, Blackrock, Goldman Sachs, Mercer, Russell, SEI, State Street, and Willis Towers Watson – manage well over half the OCIO assets, $2.073 trillion of the $3.658 trillion AUM.
That’s fifty-seven percent of the outsourced pie. And they kept a tight hold on their market share in our latest reporting period, securing fifty-five percent or $211 billion of the $381 billion gain.
Big Eight ranked by AUM Size
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