Impact matters to Jonathan Thomas, President and Chief Executive Officer of American Century Investments. As head of an investment-led, client-centric asset management company uniquely structured to direct 40 percent of profits to medical research, Jonathan can point daily to the positive impact American Century employees are having on issues that affect humankind. This mission-minded thinking is pushing innovation at American Century, including a partnership with Lincoln Financial, Nationwide, and SS&C to roll out a first-of-its-kind in-plan guaranteed income product that is gaining traction in the market. It’s an incredible example of the way that a culture prioritizing mission uses that orientation to drive new ways of thinking and solving big problems.
Read on to learn more about American Century’s unique structure as well as Jonathan’s perspective on how sustainable investing fits into the company’s commitment to clients.
American Century has an incredibly unique structure, set up by its original founders, wherein 40 percent of profits go to medical research. How do you see this aspect of the business’s culture impact how employees approach their jobs?
Our founders Jim Stowers Jr. and his wife, Virginia, did something nearly no one ever does—they gave away their wealth while they were still alive to fund biomedical research dedicated to defeating life-threatening diseases. They also created a unique structure through American Century Investments to ensure funding for this crucial research going forward.
Since 2000, as a direct result of the ownership structure our founders put in place, we have directed nearly $2 billion to the Stowers Institute for Medical Research. As you can imagine, it’s extremely powerful, motivating, and inspiring for both our clients and our employees.
I like to call us a “universe of one,” and we continually hear from employees how our relationship with the Stowers Institute makes a positive impact on what they do every single day. The head of the Stowers Institute just spoke at our last Town Hall, and I was overwhelmed afterwards by the feedback from employees about the pride they have in playing a role in supporting the Stowers Institute’s incredible mission. There are many great things about our firm, but this structure and relationship is something truly unique and special.
There’s been no shortage of talk lately about the advantages of and concerns around ESG investing. But when we delve deeper, we often find that the term “ESG” means different things depending on who is talking and what position they are taking. What does sustainability mean to you and what do you see as American Century’s role in advancing sustainability?
We’re a global firm with an investment-led and client-centric approach. We focus on delivering results and building long-term relationships with clients while also supporting research that can improve human health and save lives. Incorporating sustainability principles into our investment practices is a natural extension of the positive impact our firm creates for humankind.
It’s also important to note that, for us, sustainable investing is about value creation for our clients, not imposing our values on others. We believe that integrating sustainability factors into the investment process allows us to better assess an issuer’s ability to create value and generate durable cash flows over the long-term, helping us to deliver better risk-adjusted returns for our clients.
While many of our strategies integrate sustainability considerations into their investment process, we recognize clients have different investment objectives, and one size doesn’t fit all when it comes to sustainable investing. We take a client-centric approach to sustainable investing and partner with clients to deliver solutions that help them achieve their financial and sustainability-related goals.
Our industry thrives on competition, but we also find opportunities for robust collaboration. Where have you seen that spirit of collaboration provide outsized benefit for America’s retirement savers and retirees?
The defined contribution industry has struggled to provide the average 401(k) plan participant with adequate investment choices to provide a secure retirement. In fact, less than five percent of plans offer guaranteed in-plan retirement income, and one reason is the lack of consensus on how these products should be offered.
This situation inspired and motivated us to help jump start the industry by partnering with two of the largest insurance companies in the U.S., who also happen to be large 401(k) recordkeepers (Nationwide and Lincoln Financial) and build the first of its kind in-plan guaranteed income product. Income America is a collaboration of insurance companies, an asset manager (American Century Investments), and a technology partner (SS&C), that together provide the infrastructure for us and our competitors to move the industry forward and benefit all retirement savers.
The concept is simple. For example, if you retire with $500,000 in your 401(k), the Income America “5ForLife” product guarantees you five percent every single year for the rest of your life. It also includes an annual step-up feature with high water marks to protect you from adverse market downturns in retirement and the years leading up to it.
Income America has created a conversation around retirement income that never really existed before. It’s made inroads into the retirement marketplace in its first year, selected by over 5,000 defined contributions, and has been a tremendous example of how industry partnerships can provide truly innovative solutions that give clients more confidence in their financial futures.
I understand that American Century currently uses a hybrid work model with the option for some work-from-home days for most employees. Why was that the optimal strategy for the organization, and what were the investments needed to make it successful?
Coming out of the pandemic, organizations had to make some tough decisions to determine what was really important and vital for the long-term health and vibrancy of the company. Many businesses took an expense reduction approach, downsizing their physical footprints and focusing on how much they could save through a fully remote workforce.
At American Century Investments, we firmly believe our culture is a genuine competitive advantage, and we have strategically invested in our places and our spaces to help continue to cultivate and enhance this advantage. We’ve taken what we call a Connected Workplace approach, which is a hybrid model that puts the primary focus on being better together in person.
We’re also not blind to the impact the pandemic has had on hybrid work. As we’ve remodeled and updated many of our offices over the last few years, we’ve intentionally made sure we provide not only vibrant, modern and inspiring places to come together and collaborate, we’ve also provided employees with new technology and created spaces to step away to conduct business virtually as needed.
If you weren’t a CEO, what line of work or job would you have wanted to pursue outside of our industry? How does your interest in that profession inform how you approach your responsibilities as a CEO?
Through our close affiliation with the Stowers Institute for Medical Research, I’ve had the unique opportunity to see these amazing scientists in action. I’ve been tremendously inspired by the incredible work they’re doing to improve the quality of life for others through their medical research dedicated to finding cures for cancer, Alzheimer’s, diabetes, and other gene-based diseases.
All of us at American Century Investments are proud to play a role in supporting their crucial mission, and for me personally, our relationship with the Stowers Institute has brought great meaning and motivation to what I do daily. But if I did have to pick a different career, I think I’d definitely explore a path in health care or similar field that brings others joy, makes them smile and benefits humankind, and that’s all due to the deep respect and admiration I have for the amazing people of the Stowers Institute.