by Rosetta Taylor

Created on: January 22, 2012   Last Updated: April 15, 2012

A firm that has been successfully providing investment management and advice for three quarters of a century must be doing something right. From modest beginnings in Baltimore, Maryland, in 1937, T Rowe Price  (NASDAQ: TROW) has developed its subsidiaries into a global business employing 5,200 associates in 13 countries, and managing over $450 billion in assets. Tailored investment services, including a suite of targeted websites, are offered to three markets: individuals, financial intermediaries such as banks and retirement plan providers, and institutions including defined benefit funds and governmental entities. It also operates a large number and variety of mutual funds, the largest of which are Growth Stock, Equity Income and Mid-Cap Growth. The management  

leadership committee boasts more than 140 years combined experience with the firm.

Investment advisory fees are calculated based on either the daily or month-end value and composition of assets under management, so the group is exposed to fluctuations in financial markets and the resulting effect on stock prices. The standard form of contract with clients allows for the agreement to be terminated at any time without penalty, so the group clearly has faith in its ability to keep on performing to its customers’ satisfaction. Money market advisory fees have been waived since mid 2009 because of the low interest rate environment. Ancillary administrative services undertaken on behalf of clients, such as accounting and trust services, are operated on a cost recovery basis only and so have no impact on the bottom line.

Research, discipline and experience are the keystones that T. Row Price believes set it apart from its competition, plus a belief in teamwork without adhering to the collective malady it calls ‘groupthink’. Its recognized brand and reputation for integrity, service and investment performance are nevertheless vulnerable to rumors quickly disseminated in the information age. Clients can easily vote with their feet, taking their assets and associated revenue to any one of a number of multiple competitors, including brokerage and investment banking firms, insurance companies, asset management firms, mutual fund companies and other financial institutions. Specifically, competition comes from groups like BlackRock, AllianceBernstein, Affiliated Managers and Franklin Resources.

Latest TROW full year results are for the fiscal year ended December 31 2010, a year in

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