10 Questions for: Robert Reynolds, President and CEO of Putnam Investments

Talk about trial by fire. Bob Reynolds took over at Putnam Investments last summer, just before the storm hit. Not only is he tasked with bringing Putnam back to its former glory, he has to do it in the midst of a once-in-a-lifetime global meltdown. You think he'd be ... pessimistic, for lack of a better word. Not the case. We sat down with Reynolds to ask him about his priorities and his view of the fund industry's future.

1. Boomer Market Advisor: You couldn't have chosen a more challenging time to take over as head of Putnam Investments. What is your primary focus area?
Bob Reynolds: I took over last July and you're right, it was a challenging time, but it was an opportune time as well. As an organization we took a look at everything across the board to gauge the best way to respond to, and grow stronger from, the situation. We see it as presenting us a tremendous opportunity. We're also looking across the entire market for opportunity, not matter where that takes us; whether it's fixed income, or U.S. and non-U.S. equities, the global asset sector.

2. BMA: Let's face it, Putnam has had a rough time during the past few years. But you view it as an opportunity?
BR: It has been rough, but it's a great company with a great brand. And the Putnam distribution model is the distribution of the future, meaning we reach anyone that offers the skill set of advice. With the number of baby boomers retiring (combined with the current financial crisis), the advice model will be more and more important.


3. BMA: From a product development standpoint, how is Putnam responding to the crisis?
BR: Coming out of this, I do believe that long-only products will be the flavor of the day; more traditional types of mutual funds. Having said that, there are certainly opportunities for product innovation and development. We'll soon be offering a suite of absolute return funds that use a variety of methods to deliver positive returns at very predictable levels of risk and volatility. We'll also be charging a fee for performance. Like the advisors we partner with, it gets us on the same side of the table as the investor.


4. BMA: How does your parent company assist you at a time like this?
BR: Our parent company is Power Corp. and we're in a division known as Power Financial. We report up through Great West Life. As a result, we're definitely looking at the insurance aspects of retirement income. Going forward, we plan to draw on the insurance expertise to develop products that will help turn a lifetime of savings into a lifetime of income; that's a heavy focus for us.


5. BMA: You're talking about products such as retirement income funds and mutual funds combined insurance wrappers, that sort of thing?
BR: Exactly. We want to provide our investors whatever they need to ensure a steady income stream in retirement. We'll work with whomever we need in order to do that.


6. BMA: Are there any bright spots (from a sector standpoint) at this point, or is everything dismal across
the board?
BR: Fixed income is set to provide equity-like returns, which is something that we really haven't seen. If you're a patient and diligent investor, you'd have to look at fixed income at this point. Sitting here today, you can really look to any sector anywhere across the board, and realize this is the chance of a lifetime from a value standpoint. But it won't be a light going off or a staring gun sounding. That's, again, why getting with a trusted advisor to begin the dollar cost averaging and other things is so important.

7. BMA: What changes will we see in the fund industry when all is said and done?
BR: The danger to over-regulate is definitely there. I hope that doesn't happen, but it probably should when it comes to certain sectors of the financial services industry, like derivatives.


8. BMA: But won't the changes that resulted from the mutual fund scandals of 2003 mitigate some of that?
BR: Not a whole lot of regulation came out of that, actually. The industry took positive steps to address it themselves.


9. BMA: Putnam's research found that bear markets typically last 14 months. If we entered into all this in December 2007, does this mean we're now almost through it?
BR: Yes, absolutely. I think we'll come out of this much sooner than most people think.


10. BMA: Why? That's not what we're hearing from most other experts.
BR: From a global standpoint, we're all in this together. It started in the fixed income market, and like the U.S., other countries are taking necessary steps to provide liquidity to the fixed income market. The combined effort of pumping all this liquidity into the market will have a tremendous positive effect.