Hank Herrmann, CEO at Waddell & Reed, to retire after 45 years

Hank Herrmann, chief executive of Waddell & Reed Financial Inc. for 11 years, is retiring from the Overland Park-based mutual fund and money management company after a 45-year career there.

Herrmann, 73, will step down Aug. 1, and Philip J. Sanders, senior vice president and chief investment officer, will succeed him as CEO.

“I believe now is the time for the next generation to move the company forward,” Herrmann said in the announcement. “Having worked closely with Phil over nearly two decades, I am confident he is the right person for the position.”

August’s transition will cap Herrmann’s long run at Waddell & Reed, where he started in 1971 as an investment analyst. He has been a portfolio manager and was chief investment officer when named CEO in May 2005.

He will remain nonexecutive chairman of the company’s board of directors. With $95.2 billion in assets under management, Waddell & Reed is the 64th largest mutual fund group, according to MutualFundDirectory.org.

Sanders, 56, joined Waddell & Reed in 1998 as a portfolio manager and became chief investment officer in 2006.

Through much of his tenure, Herrmann has been one of Kansas City’s most widely cited voices on financial markets. He frequently offered concise assessments of complex situations.

“I’m under my desk,” Herrmann said in March 2008 amid the financial crisis as the Federal Reserve was working to keep investment bank Bear Stearns afloat.

The nation was in the grips of a credit crunch, Herrmann had surmised, and he’d never seen a credit crunch that didn’t lead to a recession. The recession that followed became known as the Great Recession.

As CEO, he also took steps to steady the company amid the tumult, with layoffs late that year aimed at cutting payroll costs by 15 percent. Revenues from managing Waddell & Reed mutual funds were being bludgeoned by a falling stock market that drained fund assets that were the basis of management fees.

“The market’s taken a cleaver to our assets under management,” Herrmann explained in November 2008.

Asset declines more recently have again led to layoffs at Waddell & Reed, pushing job losses to 10 percent of the company’s workforce this spring.

Herrmann had begun his tenure as CEO in 2005 amid turbulent times for the company.

His predecessor, Keith A. Tucker, was battling the IRS over a disputed tax shelter he’d purchased from KPMG, which was Waddell & Reed’s auditing firm at the time.

Waddell & Reed also settled regulatory questions over variable annuity exchanges — in part by paying investors $11 million in restitution — a month before Tucker stepped down in May 2005. The company elevated Herrmann to CEO.

Under Herrmann, the company also soon settled an eight-year battle with former Waddell & Reed broker Stephen Sawtelle by agreeing to pay $7.9 million.

Less than three years into Herrmann’s term as CEO, crosstown rival American Century Investments paid Waddell & Reed a $145 million compliment. It had that much invested in Waddell & Reed’s publicly traded stock, becoming its single largest shareholder with a 5.4 percent stake.

“It’s flattering,” Herrmann said at the time, acknowledging he was “a little surprised” to learn American Century had become his largest shareholder.

This story was originally published May 23, 2016 at 3:35 PM with the headline "Hank Herrmann, CEO at Waddell & Reed, to retire after 45 years."