Barclays Global Investors Revamps DC Biz

October 12, 2001 ( - Barclays Global Investors is combining part of its US defined contribution business with its US Institutional Business channel, according to an internal memo obtained by and confirmed by a BGI spokesman.

Another part of the business will be combined with a newly created intermediary channel. As a result, the firm’s defined contribution arm will reduce its staff by 25. The move was announced internally in a meeting in San Francisco yesterday.

A spokesperson for Barclays confirmed the memo and added that “the decision to do this was a result of a company-wide strategy review. During the process it was noted that there was overlap in the defined contribution and defined benefit areas.”

No Dramatic Changes

Lee Harbert will head the new channel. BGI said in the memo that its defined contribution clients should not anticipate any dramatic service changes. As part of the restructuring, BGI’s US Individual Investor Business group will assume responsibility for selling the firm’s products to broker/dealers and financial advisors. 

The memo continued that BGI’s decision to reorganize its business stemmed from a need to eliminate overlap and realize important efficiencies for clients.

“Our strategy focuses on integrated, strategic relationship management for U.S. institutional investors and special partnerships with targeted large distribution organizations,” said Garrett Bouton, head of the global individual investor group at Barclays, in the memo. “We can be more effective by combining the sales and service efforts with IB and by creating a new intermediary business.”

Sticking with the Business

BGI’s CEO Pattie Dunn said in the memo the restructuring is not an indication that the firm will be exiting the defined contribution market nor a response to the current turbulent economy.

“This is was just a clean cut case of BGI needing to re-think its growth strategy and how to best service existing U.S. clients,” said Dunn in the memo. “We are continually looking at our business from a value-creation perspective. Occasionally, that may result in jobs eliminated or changed. But we do not have plans to dramatically change our business strategy in a way which would result in major job reductions.”

Barclays Global Investors is the world’s fourth largest defined contribution manager, with over $115 billion in 401(k), 457 and 403 (b) assets.