Oppenheimer 60th Anniversary - 32

Reprinting of From Opportunity to
Legacy: Celebrating the First Fifty Years

the books on its second decade, the report
to shareholders was a positive one. Each share
rose by 34.3% in 1979, compared with the 12%
inflation raging that year. And over the previous
five years, Leon Levy reported, the value of each
share had gained 70.3%. n

Nevertheless, OMC executives forged a groundbreaking partnership with A.G. Edwards & Sons
and Thomson McKinnon Securities (later joined by
Bateman Eichler & Co., Hill Richards, Sutro & Co., and
J.C. Bradford) - paving the way for the open architecture that defines the financial industry today. "It was a
really unusual arrangement for the time," said Swain.
"Most people said it would never work."
The partner firms created the Centennial Daily
Cash Accumulation Fund in 1978. It was an enormous

1980
Oppenheimer & Co. and subsidiaries move to offices at 2 Broadway.

32 * OppenheimerFunds: The First Fifty Years

success. Swain remembered the meeting at which
executives from Oppenheimer Management Corp.,
A.G. Edwards, and Thomson McKinnon agreed to
proceed with the new fund partnership. "They
finally agreed to just try it," he said. "We took a
bet around the table about how much the fund
would have in assets in a year, and the most ambitious
projection was $500 million. It grew to $5 billion
that year."
The fund industry's timeworn distribution
methods also began to change. Mounting investor
interest in mutual funds led to greater competition
among fund families, requiring new tactics. As
differentiation became more important, Oppenheimer Management Corp. sought to leverage new
technologies in order to empower its sales force. The
Firm created a video narrated by then little-known
TV personality Matt Lauer that extolled the benefits
of fund investing. Called The Time of Your Life, the
video was provided to members of the sales force,
along with then-revolutionary portable video
players, so the salespeople could enhance their
presentations by playing the tape.
Fund cost structures also had begun to change,
as rival firms began competing on price. Front-end
loads of 8.5% or more had been standard for years,
but the Vanguard Funds turned the industry on its
ear in 1977 by offering retail investors access to
no-load funds, including low-cost index funds.

Meanwhile, regulatory changes allowed new backend loads on redemptions, which took the name
12b-1 fees, after the section of the regulatory code
that governed them. Oppenheimer Management
Corp. increasingly moved toward these alternative
fee structures.

GROWTH GAINS MOMENTUM -
AND CREATES NEW CHALLENGES
By the turn of the decade, the changes that Oppenheimer Management Corp. implemented during the
1970s had led to rapid growth. The Company's assets
under management had climbed from $13 million in
1962 to $4.2 billion by 1981 - an annualized growth
rate of more than 33%. As the 1980s dawned, OMC
began taking steps to forge its own corporate identity.
The Firm, which through the 1970s had shared
offices with Oppenheimer & Co., moved to its own
offices at 2 Broadway in 1980.
Out in Denver, the degree of the Firm's success,
and the speed with which it was achieved, stressed
Oppenheimer Management Corp.'s data-processing
infrastructure. Oppenheimer Shareholder Services
simply couldn't keep up with the volume of business
it was being asked to process - creating a bottleneck
that stood in the way of future growth.
Swain and Spiro identified the problem, and also
identified the person they believed could develop a
solution. They began actively courting Sam Freedman, whom they saw as a leader and a problem solver
who could explain technology in plain English. And
once Freedman arrived in Denver, he built a methodology for reaching business goals through technology.
(For more on Freedman's role, see page 30.)
Meanwhile, growth during this period made the
Firm more valuable than ever - and the larger,
more complex organization required ever-greater
management responsibility from its leaders. The
directors decided to pursue a sale of the business.
In 1981 Levy, Nash, and the other directors entered
talks with Mercantile House, a publicly owned
British corporation that operated a number of
companies in the money brokerage, commodities

The Oppenheimer Fund reports net assets of $361,367,438.

IRAs become widely available, and Oppenheimer & Co. sells
$400 million in this immensely popular investment option.

1980

1982

LOWER LEFT: LISA SACCO

The 20th Annual Report
1979 As the Oppenheimer Fund closed

Oppenheimer 60th Anniversary

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