Career management strategies

It is bonus time again. By now, most of us would be either be looking to upgrade your car, looking for the next condominium or reviewing your CVs and preparing to send to the next available headhunter who calls you.

For those who are dead set on moving on, don't jump the ship prematurely. It is always easy to throw in the towel and call it quits. There are couple of simple steps to assess whether it is time for you to move:

1) Take stock of what you have accomplished;
2) What are your strengths and weaknesses;
3) Review your career objectives. Every company perform some form "strategic review" exercise every few years. We should also perform some form of strategic review as well. Look at the soft factors such as "do you enjoy predictable tasks or variety of tasks", "are you a team player or an independent team member". These questions will help you in assessing your next career move.

(Part 2) : Post Financial Crisis - A review of the business model of wealth management industry in Asia

Apologise for the late posting of my reviews. Over the past few months, I have been tied down with customer engagements and I had a major surgery. Finally, I have some breather to continue my article.

Like the 1997 financial crisis that happened in Asia, clients experienced sharp declines in AUM (Asset under Management).

Consequently, many clients were either asked to top-up their account to meet the minimum AUM size or risk getting downgraded to a lower-tier service within the Bank. We are seeing the same happening in this crisis.

How should private banks manage clients who fall below the minimum AUM criteria as a result of depreciated market values of their clients' assets without permanently damaging relationship?

This crisis has created an opportunity need for Bank's to review their relationship with their clients. However, should private banks conveniently downgrade the relationship whenever AUMs fall below the minimum threshold? Are there other options available?

On one hand, clients are complaining that they were ill-advised by their relationship managers. On the other hand, Banks are defending vigorously that the clients understood the risk of the products and "choose" to invest in these products.

The underlying argument is whether private banks owe a fiduciary duty to their clients when they offer an advise to them. Of course, ultimately the Client "chooses and decides" whether to invest in the product. However, if the Bank can offer a quality advice, would the AUMs be reduced significantly?

Despite the number of benefits presented by many private banks, the present model of offering an open-architecture product platform does not seems to bring about benefits in terms of wealth preservation and portfolio diversification.

Secondly, the client-driven advise model are not catching up fast in Asia. In this case, asian clients are partly responsible. Most asian clients are very hands-on in their investments. Most discretionary-driven models do not cater well with asian investors. It is not surprising that discretionary business contributes less than 30% to the bottom-line of most private banks.

(Part 1) : Post Financial Crisis - A review of the business model of wealth management industry in Asia

It's been more than 18 months since the world witnessed the financial meltdown that started in the United States. Many studies have been conducted to understand the impact on the wealth management industry and the possible lessons that can be learned. However, not many studies have been done on the impact to the wealth management industry in Asia. I shall share my views and observations how the various wealth management models have evolved in Asia.

Despite the diverse markets in Asia, it is surprisingly easy to categories the different types of wealth management business models here.

1. Independent Financial Advisors, eg First Principal
2. Standalone private banks, eg Julius Baer
   
3. Large private banks that exist as a separate business unit under a larger banking group, eg Citi Private Bank
4. Wealth management arm of investment banks, eg Morgan Stanley Smith Barney
   
5. Wealth management arm of brokerage companies, Sun Hung Kai Financial
   
6. Private banking arm of asset management companies, eg Schroders Private Banking
7. Private banking arm of local banks, eg, OCBC Private Bank (a.k.a. BOS or Banking of Singapore)
   

The financial crisis was essentially a crisis of declining in confidence and lost of trust. The consequences of these 2 factors can be summarized below:

1. Reduced AUMs (Asset Under Management) - Clients have to be downgraded to a lower tier service offerings, or even terminated relationship as a result of steep declines in AUMs.
   
2. Flight to Safety - Clients prefer to move into Deposits or capital-protected products
3. Flight to Quality - Clients move out of foreign institutions and into local banks
4. Tightening of regulation - Financial regulatory and enforcement reforms are expected to govern how financial institutions sell investment products to clients
   
5. Aligning compensation and rewards schemes with good risk management practices

Such consequences have far-reaching implications for all the wealth management players in Asia. Costs of operating a wealth management business in Asia are expected to significantly increase. The pre-crisis business models of operating a wealth management business needs to change.

In the next part, I will elaborate on the individual consequences and provide arguments on the current deficiencies of some of the business models.

Understanding your business model

I was reading an old article written by 2 Accenture consultants (May 24, 2000, Jane Linder and Susan Cantrell) from the Institute of Strategic Change on "Changing Business Models: Surveying the Landscape".

The article was written to highlight the following key points:
1) How to define a business model
2) Business models will change over time
3) How to constantly evolve the business models in order to keep pace in time

Although the article was written back in year 2000, I find that it is still very relevant today. According to the article, a business model is the organization's core logic for creating value. Whereas a change model is the core logic for how a firm will change over time in order to remain profitable. This is a very important concept to understand in view that the competitive landscape changes rapidly.

Applying to the context of the wealth management industry that I am working in, I find that many financial institutions have been quick to jump into the wealth management space to get a share of the rising affluence without a proper change model framework and a roadmap.

Many of the financial institutions are actively recruiting relationship managers as method to build their assets under management. With booming stock markets in Asia coupled with a low unemployment rate, the barriers to entry seems low at the moment.

However, there must be a caution here. Financial institutions need to prepare for the eventuality that when markets turn bearish, and the clients' asset values fall below the minimum threshold, how will they able to operate in such an environment.

The importance of having the right business model to support the change in environment only solve half of the equation. The other half of the equation is to evolve the business model to maintain profitability. This is distinction between a serious player versus a marginal player in the wealth management industry.

My learnings from this article are the following :-
a) Know what your value proposition to the client, ie trusted advisor, depth and breath of your product offerings..etc
b) Define and understand your business processes. When business environment change, business processes are the fastest way to change and meet the new challenge
c) Align all stakeholders to the same business model. It helps on the execution.

Transformation Strategies

Many companies have invested much in replacing their legacy platforms or enhancing their existing platforms. However, the impetus decision to put more investments in platforms are mainly due to the following :-
a) Existing system reaching its capacity
b) Existing system not able to cater for new products
c) Forced vendor upgrades

Instinctly, most companies will review their business processes as part of their project management requirements when changing or enhancing their system platforms. As a result of tight schedules, user and business impacts are not thoroughly reviewed. Users of new/enhanced platforms are to accomodate and change to redundant steps to complete a task.

There is a strong need now to develop a culture of continuous improvement in business processes. It is through a culture of continuous business process improvement where end-users and management are able to identify critical platform enhancements to meet the business needs.

Global versus Regional priorities

If you are working for a company with a global headquarters not in your country or region, chances are that you will face some dilemma in prioritising between global and regional strategies. Your regional CEO wants you to help drive the business performances while your functional manager sitting comfortably in HQ wants you to execute his instructions asap. One good example is rolling out a strategic system to your region or country driven out from the global headquarters.



The benefits are clear. Senior management buy-ins have been obtained. They want to roll the system out in 6 months time. Yet, resources have not been freed up by other projects.; business in this region are demanding something else.



On the surface, it looks like a classic project management failure. However, it is usually a failure in the execution of a business strategy. The strategic priorities in a country and region needs to be aligned together with both business and the support functions.



One of the main causes of the strategic dilemmas faced by management is the organization structure. The organization structure holds the key to unlocking the conflicting priorities. In a typical regional organization structure, the regional CEO is in-charge of the support and the business functions. All the support department heads report directly to the regional CEO while having a dotted reporting line to their global functional bosses.

I noticed in some organizations, the direct reporting lines of the support department heads are to their global functional bosses while having a dotted line to the regional CEO. Only the business heads have a direct reporting line to the regional CEO.

Consequently, from a project priority perspective, the regional CEO priorities will be second fiddle because the delivery of global project has been accorded a higher one.

These competing priorities result in low staff morale and average turnover.

It is critical that management identifies the root cause and not address the symptons of staff morale and turnover.

New Beginning - Blogging

I have been hearing from news, magazines about people blogging. Politicians do it for their own propaganda. Entrepreneurs blog to gain visibility. My friends blog to share their personal life happenings with me and I post my comments to them. What a wonderful invention!


So here I am, creating a blog for myself thinking what should I do in this blog. I do not think I have so many life stories to share with everyone but I know I am passionate about helping companies to solve their business problems. Many of them, especially in Asia, cannot afford the expensive consultancy fees charged by the likes of the BCGs, the Bains or the Mckinseys to strategise and grow their businesses.


Therefore, I decide to create a blog where I can share my views on topics that matters to business and exchange ideas with anyone who share the same passion as me.


I shall keep my first posting short. Stay tune for more!