Alger Lost Its CEO on 9/11. Dan Chung Stepped Up.

Defying assumptions, Dan Chung, chief executive officer of Fred Alger Management, rebuilt the investment team and, indeed, the entire money management firm after it lost 35 people in the attacks on the World Trade Center on Sept. 11, 2001.

CEO David Alger had perished in the North Tower, and Chung, who had just turned 39, immediately became the firm’s leader. Founder Fred Alger, David’s brother, was retired and living in Switzerland.

“If you want to talk about which firms had the best business recovery after 9/11, I think Alger would be among the Top 10 of any industry,” Chung says in an interview with ThinkAdvisor. “In the investment world, I think we’re No. 1.”    

Chung, who recently received a 2023 ThinkAdvisor LUMINARIES award for community impact, discusses leadership lessons he learned at the helm of the growth-investing boutique as well as recent trends capitalized on, such as actively managed ETFs.

Chung, now 61, who became CEO in 2006 after his appointment as president three years earlier, brings up a few of his leadership “weaknesses,” as he calls them, and advises hiring talented people to “complement” any shortcomings.

“I know that I’m not a natural sales [and marketing] executive …,” he says. “Perhaps if I had been [one] with lots of that experience, instead of the firm [managing assets of] $22 billion today, we would be at $60 billion.”

Chung joined Alger in 1994, after four years as a lawyer. Before taking over, he served as a senior analyst on the investment team, portfolio manager and head of technology. 

In the phone interview with Chung, who was speaking from his office at Alger headquarters in New York, he notes his high hopes for artificial intelligence, “a megatrend,” which, he says, will help advisors “where used correctly.”

Here are excerpts from our conversation:

THINKADVISOR: When Fred Alger Management lost 35 people on 9/11, among them David Alger, the firm’s leader, you immediately became chief investment officer and head of the firm. What was the industry saying about Alger’s future?

There was a lot of doubt on Wall Street whether we would survive. Most expected us to go out of business. 

Most consultants and advisors put us on hold or terminated us. They weren’t investing new money with us for several years, watching whether we could survive. 

In 2006, you were named CEO. What’s your biggest leadership success?

Rebuilding the investment team, generating investment performance, rebuilding the firm and ultimately winning back clients.

We were one of the hardest-hit firms [on 9/11] and, as a boutique, not one of the bigger ones.

But if you want to talk about which firms had the best business recovery after 9/11, I think Alger would be among the Top 10 of any industry. In the investment world, l think we’re No. 1.

Have you made any leadership mistakes?

Not a mistake — but perhaps if I had been a sales and marketing executive with lots of that experience, instead of the firm [managing assets of] $22 billion today, we would be at $60 billion.  

What recent trends have you aggressively capitalized on?

We try not to follow trends for the sake of trends. We try to listen to our clients, and when we see a demand for something, we want to meet it.

For example, starting in 2020, we introduced actively managed ETFs. That’s been giving investors who prefer the liquidity and tax efficiency of ETFs a way to invest in several of our strategies that had been in mutual funds.

We’re also seeing interest among investors in U.S. growth equities overseas, such as in Europe and Asia. So we’ve been investing in those and hired two senior vice presidents to head business development.

What trends do you see on the horizon?

I and the rest of the investment team are very focused on AI and how it’s going to trend for many industries, products and services. 

We see AI as a megatrend that’s driving investment opportunity on all levels and in all sectors.

How will it be used in business?

AI will have applications both internally for businesses to improve their marketing and sales, and production and logistics efficiency.

It’s also going to create a lot of opportunity for companies that provide the technology, whether it’s software, hardware or data analytics. 

We’re very interested in the AI trend and who will be the providers of technology and services that are powered by AI, as well as how it will be applied and what companies will benefit from it.

How will AI benefit financial advisors?

It could really help advisors, where used correctly, in servicing clients and keeping them better informed and in helping advisors become more efficient in the back office.

But it’s definitely going to be a challenge. Where you’re not able to compete on a technology basis, you can compete on a different basis, like personalized service and understanding your clients. I don’t think AI will be up for that job for a long time.

What leadership lessons can you share?

Recognizing that having a culture that rewards hard work and performance, a meritocracy, is very important.  We let talent rise through the ranks when they’re pretty young. 

We love younger talent because often they’re more in tune with the new trends.

A lot of our senior analysts who are focusing on things like digital advertising, e-commerce and social media are young.

It’s important to give opportunity and responsibility to those who earn it regardless of their age or background.

You mean work background?

Yes. We often hire and train people who are a little bit unusual for our industry — they’re engineers or former health care professionals. We even have someone who’s a graduate of Julliard.

Have you learned any other leadership lessons?

I’m the leader, but I recognize where I’m not particularly strong and have found senior executives in the industry who cover my weaknesses.

For example, I don’t know anything about regulatory, operational, accounting, back office [matters], which are pretty elaborate. But I hired someone, who came on as general counsel and who I knew could cover.

And I gave him the opportunity to help run the business. Today, he’s our chief operating officer.

You mentioned that sales and marketing aren’t your strong suits either. How have you dealt with those?

I know that I’m not a natural sales executive, and I try to have really talented people complement that weakness. 

Occasionally, I’ll have to say no to the head of sales but only if I feel very, very strongly.

You have to recognize that the people you hire to complement your own weaknesses are really talented and want to be given responsibility and control of the areas they have. 

So your job as a leader is not to second-guess them but to hold them accountable for their performance.

What’s the biggest challenge to financial services today?

Incredible consolidation of the assets management industry. Many firms are trying to get big by acquisition and grow that way. 

It’s a challenge because getting bigger and bigger doesn’t necessarily lead to better products and strategies. 

It’s challenging to serve more and more clients at different service levels depending on their investable wealth.

It’s very hard for any large firm to deliver performance across multiple asset classes and multiple styles of investing.

Where does Alger fit into that scenario?

We’ve succeeded by remaining focused on our investment philosophy and process.

We’re a boutique, a growth equities shop. We believe that boutiques that are specialists can continue to succeed even as the industry consolidates. 

Twenty years ago and even recently, a lot of consultants said boutiques are going the way of the dinosaur and that you have to [be a] giant to survive in our industry.

I just don’t believe that’s true, partly because the industry itself is very, very innovative and always responding to changes in the markets.

We’re well set up to do that.

Was there one person who helped you most in your career?

The people at Alger who would have been my mentors died [on 9/11]. My surviving partners on the investment team are at least 15 years younger than I.

So it was a very lonely job for me. I didn’t have anybody who was an experienced mentor to help me for the better part of 20 years.

Who influenced your work ethic?

I give credit to my parents. I grew up in a classic Asian American household: hard work, academic excellence, the idea of doing the best that you can at whatever you’re doing.

My dad was a mathematician, and I was lucky enough to inherit a small bit of his math/science-type skills. 

My mom was the opposite. She was [engrossed in] literature and history — understanding people and the world.