2018 Knowledge Brokers

Greg Allen

This October, Greg Allen celebrated his 30th anniversary with Callan, an independently owned investment consulting firm in the Bay Area.   

Shortly after receiving a master’s degree in applied economics and a bachelor’s degree in economics from the University of California at Santa Cruz, Allen went right to work as an analyst for Callan. Today, he’s the CEO.  

“I’ve basically been here more than half of my life,” said Allen, who is based in his hometown of Mill Valley, California, just north of San Francisco.

The firm works with large institutional investors, from public pensions to corporate plans to defined contributions, to endowments and foundations, and advises on more than $2 trillion in client assets.

“Essentially any institutional investor over about $500 million in assets would be a prospective client for us,” he said.

While Allen said he spends a fair amount of time on the daily strategic operations of being the chief exec, his passion, he said, is in research.

Case in point, Allen is also the firm’s chief research officer.

“I still consider leadership on research to be really important,” he said. “I try to write. I try to lecture, and to come up with cool new ways of looking at our world.”

The firm is also home to the Callan Institute. Launched in 1980, the Institute allows colleagues to conduct research and share knowledge both within the firm and externally to other investment professionals.

“The day-to-day work is fascinating,” Allen said of research. “We get to work on some of the most vexing problems facing the world’s largest institutional investors. The Institute has afforded our research professionals with a professionally managed education platform to broadcast their research, to educate our industry, and ultimately to contribute to better outcomes for beneficiaries and for society as a whole.”

One major trend he’s noticed because of his research is the impact that passive management or index fund investing has had on the industry as a whole.

“It’s really a different animal,” Allen said. “For the most part, it’s a mechanical process. It doesn’t really require portfolio managers and analysts so much as it requires really efficient operations and trading. It is the application of technology and automation to what has traditionally been a labor-intensive industry, and it has had many of the same effects that automation has had on other industries like farming or manufacturing.”

One of these effects has been a significantly reduction in the number of investment managers and investment management products in the institutional space compared with 10 years ago. Allen estimates that the number of institutional investment products focused on US stocks, for example, has dropped by over 35% over the last decade.

On the plus side, this automation has resulted in significantly lower costs for individual investors in 401(k) plans. “At the institutional level, for example, participants in large plans can now invest in the equity market through an index fund and actually pay zero fees,” Allen said. “This compares with expenses of 25-50 basis points for passive strategies 10 years ago, and expenses in the 35-60 basis points range for actively managed strategies. It’s a pretty big difference, and the biggest beneficiaries are the end consumers, regular people saving for their retirement.”

By Kellie Ell

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