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The outgoing chief of the largest US university endowment said it was beholden on ageing executives to retire in order to “move out of the way” for the next generation.
Britt Harris, who will step down as chief executive of Utimco, the $68bn University of Texas and Texas A&M endowment system, at the end of this month, said: “You have to move out of the way for the next generation or people won’t get senior positions until they’re 75 or 80.”
Harris, who is 65, joined Utimco as chief executive and chief investment officer in 2017, and helped grow the endowment’s assets by nearly 65 per cent in six years. The fund has outperformed under his watch, beating 98 per cent of other endowments over three years to 2022, according to company reports.
Harris said retirement for many at his level may feel counterintuitive. “You get to a place where you have more knowledge and wisdom than at any point in your life.
“People ask me: ‘Why not just ride the magic carpet?’”
Harris’s decision to retire contradicts a broader trend on Wall Street, where ageing company executives are holding on longer and groups are giving incentives to top bosses to press pause on retirement plans. JPMorgan offered its 67-year-old chief executive Jamie Dimon $50mn as a “retention bonus” in the hopes that he will stay at the helm until at least 2026. He has run the bank since 2006.
Brian Moynihan, the 63-year-old chief executive of Bank of America, last year told The New York Times he had no plans to retire. Seventy-year-old Larry Fink told The Wall Street Journal in May he also had no plans to step away from BlackRock, the asset manager he founded. Likewise, America’s oldest chief executive, Berkshire Hathaway’s Warren Buffett, 92, has yet to announce his departure.
The expected age of retirement, Harris noted, was settled when most jobs were more physically demanding. The 1935 Social Security Act in the US set the retirement age at 65. By 1998, the average age of retirement was 64, according to the department of social security.
But as lifespans increase, Americans are staying in the workforce longer to ensure they can afford the length of their retirement. The retirement age has been nudging upwards: by 2022 the formal age of retirement — the age at which individuals can collect their government pensions — reached 67 for those born after 1960.
But today, more than half of US workers do not plan to retire before age 65 if at all, according to a 2022 survey by the Transamerica Center for Retirement Studies. Yet half of US companies still expect their employees to retire before age 65.
It is easy for companies to become over-reliant on one hyper-successful chief executive, experts said, which can damage succession planning for when they depart. Catherine Collinson, president of the Transamerica Center, pointed to several high-powered executives who returned to run the companies they retired from, such as Bob Iger at Disney and Howard Schultz at Starbucks.
“It begs the question, if these companies had activated their succession plans sooner with guardrails and more support, could it have gone more smoothly when that CEO stepped back and retired?”
Harris has worked as an investment manager for 43 years and was previously the chief investment officer of the Texas Teacher Retirement System, a pension fund. He said that years of experience provides institutional knowledge that can help make “stable” decisions.
But allowing more space for younger employees is also vital for investment firms, he added, as demographic and generational shifts increasingly make markets unrecognisable. “We had The Brady Bunch, they had the Kardashians. We’re in a new era,” he said.
“People are having a hard time trying to assess what’s going on in the economy and make adjustments because they’re focused on the era that’s passed.”
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