PUTNAM RECOVERY: MARKET TIMING ALLEGATIONS
F I R S T F E W DAY S
-Criticize company culture and the movement to recognizing its historic brand of dependability and
-Refrain from interrupting regular business; show confidence in current investing practices.
-Vow to improve fund oversight.
-Admit to wrongdoings to clean the slate and set the foundation for recovery.
-Protect future plans: don’t release details too far in advance.
S T E P S TO R E C OV E RY
Putnam Investments is seriously crippled. There is a guaranteed level of outflow that will occur. We
should (1) minimize outflow and (2) recapture a level of sustained growth. Restructure through
means of one-on-one client/staff interaction, clear appearance of disclosure, and some definable
changes that drive demand and control. Redefine Putnam culture.
M I N I M I Z E O U T F L OW
Increase communication transparency to diminish fear of current and future clients. Implement
blogs to share in the ups and downs of the company. Give room to share information on a ‘Putnam
defined stage’, not one of the media. Also include consistent reports of employee performance,
emphasizing proactive control.
Personalize client service to emphasize that Putnam is in the business of customer service. Add
more direct lines of communication and evaluate managers on this caveat of controlling outflow.
Strongly consider hiring staff dedicated to engaging the decision to stay with or fire Putnam services.
Help in the transition in or out, retention as the formal goal.
Lower prices and rates to match integrity and image losses suffered by Putnam and the investment
division. A strong message to the commitment and confidence in investment packages that more
importantly helps the ‘money grabbing’ image of Putnam. Keep commission the same to maintain
Clear structural control to prevent market timing and possibly other uncovered industry issues. The
problem shouldn’t only be fixed but Putnam should emerge as a clear leader in cleaning up its market
share. Early redemption penalties offset market timing and still maintain client/manager elasticity.
Fresh advertising campaigns to continue as currently implemented. They show the old has already
transformed into new. Further advertisements should stress the innovation in restructuring investing
on top of the current focus on combining investment styles.
R E C A P T U R E S U S TA I N E D G ROW T H
Retain and attract talent in and outside of the company respectively. Top down communication
should increase to encourage confidence, to be implemented along side strong bonus incentives.
Remember correct ethical encouragement and the goal of preventing self-serving dealings by
Use media attention as an opportunity to focus inward. Focus image promotion inward to staff and
clients. Small changes in structure can give an exaggerated feeling of transformation. Consider
readjusting a few roles of analysts, managers, advisors, and other investment staff. Release key
elements that differentiate Putnam from other companies. The media will bite.
There is a guaranteed outflow. Keeping a tight grip on the situation can be accomplished through (1)
improving performance, (2) assurance of protection from further wrongdoing, and (3) clear change
in company culture. Stronger communication and clearer in-company definitions of market timing
could have prevented this disaster. A proactive response was needed.