Whyte takes the fall at AIC

(March 16, 2005) Faced with a steadily-worsening run of net redemptions, executive vice-president David Whyte has left AIC, just nine months after joining the Burlington, Ont.-based fund company.

Whyte, who led the firm’s sales and marketing team, resigned on Tuesday, an AIC spokesperson confirmed. Late Wednesday afternoon, AIC announced it had appointed John Miller as senior vice-president, sales.

Miller has managed the AIC Value Fund (with chief investment officer Jonathan Wellum) for nearly three years.

“John’s mandate at AIC is to build upon the sound advice imparted by David Whyte, Andrew Dorrington and Paulette Filion,” said AIC CEO Michael Lee-Chin in a statement. “Both Andrew and Paulette will continue in their current key roles. Much of the ground work has been laid, and under John’s stewardship we expect to see tangible improvements in our sales and in our service levels to our advisors.”

“We acknowledge that there is a great deal of noise in the marketplace concerning AIC,” Lee-Chin added. “We are fortunate to have someone of John’s capabilities in the organization who is the perfect candidate for the job at hand. This is a testimony to the strong bench strength we have at AIC.”

The press release gave no reasons for Whyte’s resignation.

The industry veteran left AIM Trimark last summer and moved to AIC, with a mandate to re-connect with advisors, boost the company’s wholesale and marketing team and help turnaround a long spell of redemptions.

However, things have gone from bad to worse during Whyte’s brief tenure, with outflows peaking at nearly $400 million last month, according to data from Morningstar Canada, following $303 million in redemptions in January.

Still, although the redemption situation deteriorated under Whyte, that’s not necessarily his fault, insiders note. “He had a short time and was in a difficult situation,” one source said.

“But when things get worse, someone is going to take the fall.”

The company has endured more than three years of net redemptions ($2.2 billion last year alone) and has seen its assets shrink to $10.4 billion.

Another insider says he’s surprised Whyte is gone, considering so much was made of his hiring. “I think his short tenure is a bad signal about the challenges at AIC. If things are so bad that Whyte couldn’t stay long enough to give his planned turnaround a real shot could imply that things are really bad in Burlington.”

Redemptions aren’t AIC’s only challenge. The firm was one of five fund companies ordered to pay restitution to investors by the Ontario Securities Commission in December for market timing, a blow to AIC’s “Buy, Hold and Prosper” slogan.

AIC funds haven’t been shooting the lights out either. The firm’s largest fund, AIC Diversified Canada, is up just 2.3% over the past three years. The fund suffered outflows of $139 million in February.

“While the fund has been a top-quartile performer over 10 years and second-quartile over five years, it has had poor performance over the past three years,” says Rudy Luukko, investment funds editor at Morningstar Canada.

In fact, AIC’s largest three funds by assets (AIC Diversified, AIC Advantage, AIC Advantage 2) have been fourth-quartile performers over three years and one year, Luukko notes. “This would be a hurdle for any marketing team to surmount.”

In January, Whyte told ADVISOR Group executive editor Darin Diehl that Wellum and Chin had done an “amazing” job of rebuilding the investment department and that the firm was well-positioned to do “good things on the investment side of the business.”

“2005 for us is all about re-building the relationships, making sure we do the basics very well, and making sure people understand what they are getting when they look at AIC,” Whyte said in an interview in the first issue of Advisor’s Edge Report.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(03/16/05)

Doug Watt