Meet the Manager, Michael Davis

2024
Appointed of Head of Global Retirement Strategy

2016 – 2023
Head of Defined Contribution Plan Specialists for the Americas

2012 – 2016
Head of Stable Value Fixed Income, Prudential and Head of Institutional Relationships, Calvert Research and Management, a global leader in ESG investing

2009 – 2012
Joined the Obama Administration as Deputy Assistant Secretary of Labor, Retirement Oversight Division

1992 – 2009
Began career with J.P. Morgan Investment Banking, moving to J.P. Morgan Asset Management in 1998

Michael, please tell us about your background. What made you decide to pursue a career in asset management?

Starting at the beginning, for my undergraduate degree I majored in finance at the University of Texas. I came to choose finance really because of what was going on in South Africa at the time. While apartheid was still the law of the land, there were many companies and entities that were divesting from the South African government to convince them to end apartheid. It was an example of using economic channels and influence to achieve a political outcome. This made me to want to understand economics and finance more. The role that each could play in policy decisions was something that was fascinating to me.

After taking a master’s in public policy at Harvard, I became very interested in the intersection between urban economic development and finance and how one could encourage local businesses and commercial interests to create new development where development was needed. Consider the impact, for instance, of opening a grocery store or pharmacy store in an inner city area with few other options, where there was a ready supply of labor but not enough jobs. I was particularly inspired by the example of basketball star Magic Johnson, who in 1991 started a Foundation to support community- based organizations and development in ethnically diverse, urban communities, helping to address their education, environment, health, and social needs.

While I was at Harvard, I met some students who had worked in investment banking. Having grown up in an inner city area in Dallas, I didn’t know very much about investment banking as a career vocation. They opened my eyes and exposed me to a whole new field of work in finance. I saw how you could integrate investment banking with public finance, as every public hospital, power plant, transmission centre and airport needs to be financed efficiently. So I joined the public finance arm of investment banking at J. P. Morgan, working there for six years. At that point, I became very interested in asset management, so I moved from investment banking to the asset management business at J.P. Morgan.

I was intrigued by the notion of working in an investor’s best interests, being responsible for managing their retirement assets. I was inspired by the idea that while you’re obviously working for a commercial purpose, it is also for a greater good in that you are trying to preserve and protect the retirement savings that people have worked so hard to earn. I covered large institutions in the Midwest and ended up running the Western U.S. for J. P. Morgan’s Institutional Asset management business.

How did you come to work for T. Rowe Price?

In 2009 I joined the Obama Administration as Deputy Assistant Secretary of Labor in the division that oversees the private sector retirement system in the U.S. I found that my time in government helped to broaden my perspective, as you come to view and understand business as one of many different constituencies. But you also need to understand all the other influences that have an impact on policy outcomes, and this makes you more aware and more comprehensive in the way that you think about the world. I left the U.S. government in 2012 after President Obama’s re-election, having worked on his re-election campaign, and took a job as a head of stable value at Prudential, overseeing a core stable value team and related portfolios.

After that I moved to Calvert Research and Management for three years, an investment management company headquartered at the time in Bethesda, MD that is a global leader in ESG (environment, social and governance) investing. Through one of my policy networks, I heard about a new senior retirement position at T. Rowe Price, the acknowledged industry leader in areas like target date funds. So after several interviews with senior T. Rowe Price professionals, in 2016 I joined the firm as head of the DC (defined contribution) specialist team for the Americas division.

Can you tell us about your role as Head of Global Retirement Strategy?

My role in this new position is to accelerate and drive our retirement initiatives across the firm. There are several business initiatives that are in progress across T. Rowe Price business units that have retirement as a key component of what they do. The firm could benefit more from these retirement activities by giving them more leverage and connectivity across the enterprise.

We know, for example, that no less than two thirds of the firm’s total assets under management of USD1.59 trillion are retirement related. That fact is important as it provides an opportunity to leverage our business in a way that makes a difference for our clients. The benefit of a role like mine is to accelerate what we do from a product development standpoint, to amplify what we do in retirement by spurring more innovation, and most importantly, to deepen and focus the research capabilities that we have in a way that highlights the retirement insights that we have available to us across the enterprise.

The U.S. is a global leader in retirement schemes and target date funds. What lessons can Asian investors learn from the U.S. experience?

In America, T. Rowe Price has a long history of being at the forefront of retirement savings provision. Some of our retirement products and solutions will be new to plan sponsors in Asia, a region where developments in pension provision have been lagging the U.S. That means plenty of opportunities for T. Rowe Price’s retirement business in Asia, and so we have strong plans for the regions, with a number of strategic projects currently underway.

Longevity and aging is a global dynamic, with the ratio of working age individuals to those who are of retirement age falling in every major economy. What that means is that countries with pay-as-you-go pension systems are going to find themselves under a growing amount of pressure. Government supported DB (defined benefit) schemes in particular will be under more pressure as their sustainability becomes more challenged.

Levels of government and/or employer support is relatively low in some Asian countries compared with the U.S. or Europe. At the end of the day, individuals and households across Asia are going to have to accept greater responsibility for their retirement pensions, especially as Asians are living longer lives than in the past. I think we in the United States have an advantage in that we have been focused on DC (defined contribution) pension schemes for almost 50 years. So we have a lot of data, a lot of experience and knowledge that can be shared with those saving for retirement in Asia. We do believe that our rich U.S. retirement experience has value for individuals, businesses, and governments in Asia.

We are seeing this play out in the conversations that we’ve been having in 2024 with several key Asian institutions, ranging from superannuation firms in Australia to pension providers in China, Korea and Japan. They have each been very interested in our perspectives on retirement savings, covering both the accumulation and decumulation phases. T. Rowe Price’s global retirement team sees great value in building, maintaining, and deepening our relationships with Asian pension institutions in the years ahead, which we think will lead to greater commercial outcomes for the firm. This applies to Asian government bodies besides the private sector, as we have senior people who are former regulators. So I believe there’s a lot of insight that we can provide to Asian governments and institutions as they embark on their own retirement evolution journeys. It’s already making a difference in terms of our ability to engage with them as clients and offer solutions that help them to solve their pension problems.

What is your long term outlook for the global retirement savings industry. Should today’s savers in APAC be concerned about high initial equity valuations and lower future returns?

Well, as I have said, because of the longer lives that people are living, it just makes it really difficult for governments to provide the level of pension support that is going to give people a sufficient level of retirement income. So private savings are necessarily going to become a bigger, more important part of the pension equation. The math is simply universal. So providing good information about retirement savings to individual Asian savers is crucial. We need to encourage a high level of financial literacy that will help people to achieve good retirement outcomes. For younger workers just starting to save for their retirement today, higher initial equity valuations may offer a more secure retirement future despite the shorter risks inherent in equity markets. In the US, we have experienced the advantages of allocating a larger share of retirement savings to equity investments and starting to save for retirement sooner rather than later.

Lastly, can you please share with us some of your personal interests. How do you usually relax outside work?

With three kids, it’s hard to find time that is not already allocated to their activities, even though two of them are in college now. To be honest, spending time with them is my primary outlet and I celebrate the fact that they still enjoy having us involved in their activities. Outside of that, I love to travel, read and play golf when I can. On the travel front, I love the opportunity to learn about other cultures and I always try to visit local art and history museums in each country that I visit.