What Impact Will Leadership Changes at SSGA Have?

State Street Global Advisors announced that Cyrus Taraporevala is replacing Ron O'Hanley as SSGA's president and CEO effective immediately. In a letter announcing the leadership change to SSGA clients, Taraporevala indicated that he's fully committed to SSGA's strategic direction and does not envisage driving any radical shift in strategy.

Under O'Hanley's tenure, SSGA has taken steps to focus its product development, reduce fees on select funds, and double its risk management and sales personnel. These initiatives keep SSGA is on the right track, but it's too early to tell if Taraporevala can seamlessly transition to lead SSGA down the path that O'Hanley set.

Taraporevala joined SSGA in April 2016 as global head of Product and Marketing and to oversee the post-merger integration program for SSGA's acquisition of GE Asset Management. In February 2017, SSGA appointed Taraporevala as head of the Global Institutional Group at SSGA, where he was responsible for leading the global client-facing, product, and marketing teams delivering SSGA's capabilities to institutional investors around the world.

Taraporevala's career path prior to joining SSGA largely mirrored O'Hanley's. Like O'Hanley, Taraporevala previously worked at Fidelity, Bank of New York Mellon, and McKinsey & Company. Taraporevala led Fidelity Investments' Retail Managed Accounts and Life Insurance and Annuities businesses. At Bank of New York Mellon, he served as the head of North American Distribution. Previously, Taraporevala helped to oversee Legg Mason's institutional business, directed business strategy for Citigroup Global Investment Management, and was a partner in the Financial Institutions practice of McKinsey & Company.

O'Hanley joined SSGA as president and CEO in April 2015 from Fidelity Investments, where he served as president of Asset Management and Corporate Services. Prior to his time at Fidelity, O'Hanley ran Bank of New York Mellon's asset management division and previously worked at McKinsey & Company, where he founded the firm's Investment Management practice.

Upon his arrival, O'Hanley didn't hesitate to put his stamp on SSGA's institutional and retail businesses. He led the firm's $485 million acquisition of GE Asset Management, which closed in July 2016. The goal of the acquisition was to expand SSGA's alternative investment capabilities and to grow its outsourced chief investment officer and defined-benefit retirement plan businesses.

On the mutual fund and ETF front, SSGA has pruned its fund lineup, expanded its self-indexed offerings, and sought to reposition many of its market-cap-weighted funds under O'Hanley's leadership. SSGA shuttered more than 40 funds and launched over 30 during O'Hanley's tenure from April 2015 through the end of October 2017. Before O'Hanley took over in April 2015, SSGA had shuttered less than 40 funds. More recently, SSGA reduced fees on 15 market-cap-weighted ETFs and rebranded them as the SPDR Portfolio suite to compete with low-cost index-tracking fund sponsors. Three of these funds switched to track internally developed indexes to reduce licensing costs and lower expense ratios. The announcement of the new SPDR Portfolio suite coincided with the news that SSGA inked a deal with brokerage firm TD Ameritrade to replace competitors' low-cost market-cap-weighted funds on its commission-free ETF list with SSGA-sponsored funds.

State Street Corporation announced that Jay Hooley will retire as CEO by the end of 2018 and will remain chairman through 2019. State Street's board of directors named Ron O'Hanley as Hooley's successor. O'Hanley previously served as president and CEO of SSGA, the trust bank's $2.7 trillion asset management business. State Street had appointed O'Hanley as vice chairman of State Street in January 2017. As part of the transition, O'Hanley will replace Mike Rogers as president and chief operating officer of State Street Corporation, who will retire at the end of 2017. O'Hanley will take over the CEO role of State Street Corporation upon Hooley's retirement and give up his president and chief operating roles at the end of 2018.