There's a disclaimer on virtually every securities product available today that reads something like this: "Past performance is no guarantee of future... fill in the blank... yield, return, success, etc." Perhaps they should create a similar disclaimer for candidates promoted into running the corporate and investment banking business of global banks.
All too often it seems the executives being chosen to hold these elite positions are those who ran successful product lines, but may have little or no experience in other unrelated products in the global markets business, and lack the analytic skills necessary to develop a client strategy that grows the portfolio of businesses.
"There's a real challenge in finding qualified candidates," says Heather Evans, president and chief strategist of True Color, a New York-based global markets consultancy, "and much of the problem lies in the fact that in order to succeed in today's complex financial world, you need a high degree of specialized knowledge in a certain financial product, service or sector. But that makes it almost impossible for managers to acquire the breadth of product, client and management expertise to run the global markets division of the bulge bracket banks."
Until recently, it has been almost impossible to tell how much of a business' success was due to good management or merely a strong market for a particular financial product. "Often managers are promoted because theirs is the product du jour," says Ms. Evans, "and has nothing to do with that person being a good manager."
There's a whole cadre of people assuming a relatively new role within the last five years two or three levels below the global markets head with titles like Head of Client Strategy or Head of Client Management or Client Analytics. These are generally not the people being considered for the top jobs, which are generally held by executives with little or no analytic backgrounds or the proclivity to acquire those skills, explained Ms. Evans.
"The client business will become more important to these firms as a result of the new regulatory environment," Ms. Evans told eFinancialCareers. "There needs to be a much better way of understanding how they're doing with clients in order to manage the process. Fortunately, firms have finally gotten their client data into good enough shape to run analytics on it. Things like profitability by client are much better than they used to be."
Skills to Succeed in Running Global Markets
A key skill needed to succeed in growing global markets business is the ability to analyze client data. "This," Ms. Evans said, "requires an analytics function that's business-driven as opposed to being reporting-oriented. In other words, instead of looking backwards and reporting how you've done, you're looking for ways to get more business."
"For example," adds Ms. Evans, "you may want to do a regression analysis, let's say, to identify how each client of a derivative product responds to volatility in the market. That will let you assess who's going to be doing more and who's going to be doing less in a given environment and to go after that incremental business of those who you think are going to be doing more."
During her 10 years as a senior global markets executive at Merrill Lynch and Morgan Stanley, Ms. Evans pioneered tools that add value at the business unit level while giving senior managers greater transparency into the businesses that report to them.
Today, she helps global markets managers looking to get a leg up on their competition by using these analytic tools, usually starting with custom client feedback programs.
"The global markets divisions that embrace client strategy and analytics, along with state-of-the-art risk analytics, will empower managers to understand businesses across products and regions, nurturing talent with the capabilities necessary to manage the complexity of today's global banks," says Ms. Evans.