Legg Mason Inc. CEO Joseph Sullivan told shareholders Tuesday that he was disappointed in the Baltimore money management firm's performance in its 2016 fiscal year, but that he has "greater conviction than ever" about the firm's long-term strategy.
Legg reported a loss of $25 million in its fiscal 2016, which ended March 31, down from a profit of $237.1 million the year before. The firm will release the results of its first quarter of fiscal 2017 on Wednesday.
In his remarks to shareholders during the annual meeting Tuesday, Sullivan described Legg as a legacy business whose success in the future depends on its ability to evolve with the market.
"Trying to preserve the status quo is not an option," Sullivan said.
The financial management industry is changing quickly, as technology and big data play a bigger role in investment strategy; global political events, such as Brexit, inject uncertainty; and new regulatory requirements complicate daily business operations. Legg must not only overcome these challenges, he said, but use them to grow business strategically.
"The other side of this disruption is opportunity," Sullivan added.
For example, as financial advisers prepare for stricter Department of Labor regulations for giving out retirement investment advice, Legg earlier this month acquired an 82 percent stake in Financial Guard LLC, an online investment advisory platform that will help advisers meet the new requirements.
The Department of Labor's new fiduciary standard, which takes effect in 2017, requires financial advisers to base their retirement investment recommendations on their clients' best interest. Financial Guard's automated financial advice will help Legg's nine affiliates be sure their recommendations meet federal standards, and also will help them maintain proper record keeping.
Legg also wants to expand the investment options it offers to investors, for example by bringing in more global investments, Sullivan said.
"Being global has never been more important than it is today," he said.
Legg shareholders approved all routine business at the annual meeting, including re-electing the firm's 11 board members and renewing its executive compensation plan.
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