Over the past ten years — and especially the past five years — the amazing phenomenon that was PIMCO has morphed into a firm just like all the other major fund companies.
The founding generations have either retired or been pushed out after Mohamed El-Erian returned in January 2008 and tried to remake the firm in his own image using the 2008–’09 financial crisis as a “get out of jail free card” — during which time one senior managing director voiced concern that by giving Mohamed unprecedented sweeping powers for change, “I fear we have created a monster.”
The real pivot point was the decision to implement a harsher, more demanding PIMCO — as if it was already not enough of a gut-wrenching place. With the return of Mohamed, each year the bottom 10 percent (whatever that means) had gotten unceremoniously jettisoned. The organization moved away from, like a production line during the Industrial Revolution, generalists who got to see the results of their labors and owned the results to client-type channels and product specialists. And, of course, the firmwide mantra was sell, sell, sell — then sell some more. The list of aberrations goes on.
PIMCO has lost the plot and is now just like all the other plankton-consuming fund-company whales that must keep moving forward scooping up indiscriminate amounts of assets to stay alive.
I remember clearly a stakeholders’ meeting in which an outside consultant presented findings characterizing PIMCO as “culture of demeanment” that if not checked, would result in internal strife, poor performance, staff turnover and other typical human-resources complaints. Bill Gross was clearly disturbed and perplexed. “I don’t believe it,” he said. “PIMCO is a family. We support each other, we are loyal to each other. That could never happen here.” And he meant it.
But Bill was wrong. His PIMCO had already changed forever more.
David Young is the founder and CEO of Newport Beach, California–based Anfield Capital Management. In 2008 he retired as executive vice president with Pacific Investment Management Co. after holding several positions, including head of the firm’s account management group in London, which oversaw approximately $50 billion in assets across more than 200 client accounts.
