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Collins Consulting Group was honoured to have Shadow Treasurer, Joe Hockey, as guest speaker at our Insight Lunch. Joe was joined by six of Australia’s top MD’s and CEO’s from global and domestic Investment Banks and Fund Managers.

Questions and talking points included the regulation of executive pay, the superannuation industry under review and the GFC – is the crisis really over and what are the risks now.

The lunch provided an open forum to share ideas and challenges, and gave guests an opportunity to investigate these topics with someone of Joe’s calibre and political experience.

Joe Hockey is the Federal Member for North Sydney and the Shadow Treasurer. He was elected to the Australian Parliament in 1996 and following his re-election in 1998 was made Minister for Financial Services and Regulation, one of the youngest ministers in the history of the commonwealth. After the 2001 election, Joe was appointed Minister for Small Business and Tourism and in October 2004, Joe was appointed Minister for Human Services. In January 2007, Joe became Federal Minister for Employment and Workplace Relations and Minister assisting the Prime Minister for the Public Service. Following the 2007 Federal Election, Joe was appointed Shadow Minister for Health and Ageing and Manager of Opposition Business in the House of Representatives. In 2008, Joe was appointed Shadow Minister for Finance. In February 2009, he was appointed by Opposition Leader Malcolm Turnbull as Shadow Treasurer.

Guest comments:

“My thanks for a thoroughly enjoyable discussion over lunch. Well chosen guest of honour and a timely information conversation.” — MD Fixed Income, Global Investment Bank

“Many thanks for the invitation to attend the lunch with Joe Hockey. It really enforced how tough it must be in opposition, with no resources and the opinion polls in the wrong place. I would welcome him as a future Treasurer given his views on free markets.” — MD & Head Investment Banking, Global Investment Bank

For further information on our upcoming Insight Lunch events, please contact:

Sharon Mackie

Partner – TALENT SEARCH HAUS

Direct:  +61 29235 9806
Email:  sharon@talentsearchhaus.com

Collins Consulting Group’s Insight Lunch was an opportunity for special guest David Gonski, to join other prominent executives from renowned Australian and global businesses to share their thoughts and ideas on the chosen topic of “scrutinising the revolution in the financial services industry”. Discussion points included:

The Johnson Report: Should Australia become a regional centre? Should the ASX alter its role through new licensing arrangements and trading platforms?

Executive remuneration: Is executive remuneration really the problem it is perceived to be? What effect might the Productivity Commission’s recommendations have on the executive labour market in Australia?

Institutional investors: What is the role of institutional investors in establishing corporate accountability? Have Australia’s institutional investors been too cautious in using their powers to hold companies accountable?

The role of Boards: How should organisations and boards ensure that directors really have the skills, capacity and will to ensure rigout in decision-making?

Corporate social responsibility: What does corporate social responsibility mean to you? Has this changed since the Global Financial Crisis?

Guests were able to investigate their ideas and challenges with someone of the calibre and experience that David brings.

David is now the Chairman of ANZ.  Prior to this he became the Chairman of Investec Bank (Australia) after Investec acquired his corporate advisory firm Wentworth Associates. David established Wentworth Associates after leaving his role as Partner of Freehills. In addition to being the Chairman for ASX Ltd, Coca-Cola Amatil, National EHealth Transition Authority, UNSW Foundation, Sydney Grammar School and the Sydney Theatre Company, David is also a Director of Westfield Group and Singapore Airlines, and a Chancellor of the UNSW. Previously David was a member of the Takeovers Panel, President of NSW Art Gallery, Director of ANZ Bank and Chairman of the Australia Council for the Arts.

Guest comment:

“Many thanks for an enjoyable lunch. Appreciated the views and advice from an impressive and interesting group of guests.” — CEO, Global Investment Bank

For further information on our upcoming Insight Lunch events, please contact:

Sharon Mackie

Partner – TALENT SEARCH HAUS

Direct:  +61 29235 9806
Email:  sharon@talentsearchhaus.com

Collins Consulting engaged a external consultant to conduct qualitative research into talent retention in the Australian finance industry in the wake of the current global financial crisis. 23 indepth interviews were conducted in December 2008 and January 2009 with leaders and top talent in the finance industry.

To assess the state of the Australian equity markets, Collins Consulting Group engaged independent research specialists. The research focused on prospects for new entrants and assessed hiring strategies. 22 in-depth interviews were conducted in June 2010 with senior decision makers from investment banks, fund managers and broking firms. From this, we have developed a better understanding of current market conditions and, combined with our expertise in the sector, can make some recommendations.

Current Market Conditions

The Australian equity markets may superficially appear to be ripe for new entrants. Australia is a relatively strongly developed economy and it has a large government-mandated pension pool. However, it is very crowded and competition is fierce. Many attempts have been made to break into the market with varying degrees of success. Fund managers interviewed universally regarded the prospects for new entrants as extremely limited. They commented that it would be very tough to break in without a significant point of difference, and they felt that in such a saturated market any content or service gaps are quickly closed. Fund managers commented that the level of investment required, both in time and resources, would need to be significant and sustained over at least a five year period to establish trust and win market share.

Fund managers are well aware of their power in the market and are using it. They are driving new deal structures, such as tripartite deals between fund managers, boutique research providers and large corporate broking houses. This is making an already difficult market even tougher for lower ranked players. Other points of interest are:

Panel appointments are not the only means of establishing broker/fund manager relationships, and their prevalence may be diminishing.

Some aspects of the broking function are increasingly becoming commoditised and some fund managers look to the day when they can avoid dealing through brokers altogether.

Fund managers are driving new deal structures that have limited upside for brokers.

Recommendations

Prospective entrants to the Australian market must give careful consideration to the competitive landscape and make a realistic appraisal of likely levels of investment required for their entry strategy.

Poorly planned and executed entry strategies are difficult to recover from. Some recent entries to the market have been perceived as naïve and ill considered. These have done considerable, possibly irreparable, brand damage locally.

What might contribute to a successful entry?Unfortunately, very few fund managers made any positive comments about entries to the market that they have observed. However, from analysing their criticisms, some positive recommendations can be made.

Strategy, Investment and Pace

Many fund managers stressed the need to make a clear choice between a full service or a niche offering. It was felt that some recent entrants, while purporting to have a specialty focus, were in fact engaged in a half-hearted attempt to establish a full service house. There was also a negative perception of some past attempts to break into the market, with some organisations described as fickle – having a history of attempting market entry in growth cycles and withdrawing in downturns. While there is clearly some business logic to this, it has been hugely detrimental to the trust and engagement of the fund managers. Incremental development efforts, demonstrating a long-term commitment to local investment and establishment of a quality offering received more positive comment than alternative approaches.

Recommendations

Recent entries to the market have been underwhelming and there is a high degree of scepticism about the prospects for their success.

New entrants must have a clear strategy and/or point of difference to enter successfully. In particular, a clear choice between “full service” and “niche” style offerings need to be made, with associated levels of investment.

A niche strategy would have to be extensively and clearly communicated to the market and backed up with a clear ability to deliver quality results.

New entrants may need to be prepared to invest significantly for several years before realising any return, and to ride out market turbulence without withdrawing.

The People Factor

The hiring strategies of many recent new entrants – involving large-scale hiring drives with huge sign-on packages – were roundly criticised and seen as unlikely to assist in establishing a long-term presence.

Fund managers commented that some new entrants have ‘picked up one star’ at an exorbitant price and then surrounded that person with second-rate hires. A single “big name” was generally thought not sufficient to draw fund managers’ business across to a new player. When fund managers considered the relative importance of talented individuals, the whole was generally considered to be greater than the sum of the parts – that is, a cohesive team with reasonable levels of talent across the board was a better prospect than a team with one outstanding individual and not much else.

Slow, considered approaches to hiring were generally considered much more promising than “big splashes”. This was in part because the working pool of genuine talent was perceived to be very small; and therefore, the proportion of it that might be available at any given time was extremely limited. Large hiring drives were generally perceived to result in the stacking of desks with second- or third-rate talent.

In analysing changes to perceived rankings of established players, the importance of a cohesive, high quality team became apparent. Fund managers felt that drops in performance on all attributes of the broker/fund manager relationship often correlated closely with periods of upheaval, particularly in the research teams, and the ability to maintain relatively cohesive teams was seen as a key strength of top players such as UBS and GSJBW.

Recommendations

A functional, cohesive, quality team is more important to the fund managers than one or two stand out individuals (although having those people obviously helps). One strategy might therefore be to purchase an existing business that includes an established, well-respected and cohesive research team. A new entrant can then focus on gaining leverage from that team by backing their offering with a global structure and its associated benefits.

Quality research is the primary attribute fund managers consider important. Other significant attributes include corporate flows and execution, contacts and corporate access. No one attribute is definitive and the ideal mix varies according to the fund managers’ business model. That said, several business structures among successful boutiques involve essentially outsourcing all but the analysis.

Local weaknesses and skills gaps include capacity for cross-silo research and analysis (eg across asset classes or sectors), creativity, insight, and depth of research, as well as a willingness to provide services directly tailored to the fund managers’ needs and business models.

To obtain a full copy of this research paper, or to discuss the findings in more detail, please contact:

Sharon Mackie

Partner – TALENT SEARCH HAUS

Direct:  +61 29235 9806
Email:  sharon@talentsearchhaus.com

We’re well into the credit crisis, and yet, a multitude of questions remain largely unanswered.

For instance, what real impact has the credit crisis had on global investment banks in Australia? Will the banks be forced to reduce headcount? Will there be growth in numbers due to regional commitment by some U.S and European firms? What is likely to happen to salaries for year-end 2008?

Of course, there is also one important question on the lips of anyone working in banking or financial services: What will happen to my bonus?

Looking for answers to these questions, we performed a recent survey of several executives from the majority of Australia’s 12 global investment banks.

The survey included representatives from key divisions of the banks – including equities, global markets, financial markets and fixed income. In essence, participants were asked for their opinions on how their parent company (or head office) would be managing remuneration and bonus allocations for the coming financial year. Although discussions with offshore counterparts would be taking place late September, the following observations were made:

The survey revealed four predictions:

1.  There will be staff cuts. As the parents of the Australian subsidiaries continue to report global losses of billions of dollars, offshore banking operations have been forced to cut staff in areas where there is limited activity. This is due to a variety of factors – such as capital constraint, a subdued risk appetite for particular products, and lack of investor confidence. Locally, while the mood is subdued, there is a sense that some of the banks may look to cut staff numbers over the next few months, in areas such as back office, client services and sales. This could lead to possible head count replacement in the first quarter of FY09 – though this will be very cautiously exercised.

2. Banks will develop better retention strategies. As the banks become better managers of their human capital, senior management will undoubtedly look at ways in which they can more effectively retain their key talent.

3. There will be a re-allocation of the bonus pool. 
New retention strategies will translate into the majority of the bonus pool being allocated to high performing talent, whilst other employees could receive significantly lower bonuses or even none at all.

4. Reduced bonuses. 
The overall outlook is that the bonus pool will be down between 20-50% on last year as the parent companies strive to preserve capital. There is likely to be little movement on fixed costs, but (STI) bonuses will be down, and a greater proportion of equity/stock will be allocated to individuals.

Ironically, these predictions have been made against a backdrop of apparent local stability.

On the Australian front, many of the investment banks are performing better this year than their offshore counterparts, and some of the better-positioned banks are reporting increased revenues for the year, particularly in cash equities foreign exchange, financing and derivatives.

For further information, please contact:

Sharon Mackie

Partner – TALENT SEARCH HAUS

Direct:  +61 29235 9806
Email:  sharon@talentsearchhaus.com

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To assess the state of the Australian equity markets, Collins Consulting Group engaged independent research specialists, Kitsune Consulting. The research focused on prospects for new entrants and assessed hiring strategies. 22 in-depth interviews were conducted in June 2010 with senior decision makers from investment banks, fund managers and broking firms. From this, we have developed a better understanding of current market conditions and, combined with our expertise in the sector, can make some recommendations.

Current Market Conditions

The Australian equity markets may superficially appear to be ripe for new entrants. Australia is a relatively strongly developed economy and it has a large government-mandated pension pool. However, it is very crowded and competition is fierce. Many attempts have been made to break into the market with varying degrees of success. Fund managers interviewed universally regarded the prospects for new entrants as extremely limited. They commented that it would be very tough to break in without a significant point of difference, and they felt that in such a saturated market any content or service gaps are quickly closed. Fund managers commented that the level of investment required, both in time and resources, would need to be significant and sustained over at least a five year period to establish trust and win market share.

Fund managers are well aware of their power in the market and are using it. They are driving new deal structures, such as tripartite deals between fund managers, boutique research providers and large corporate broking houses. This is making an already difficult market even tougher for lower ranked players. Other points of interest are:

Panel appointments are not the only means of establishing broker/fund manager relationships, and their prevalence may be diminishing.

Some aspects of the broking function are increasingly becoming commoditised and some fund managers look to the day when they can avoid dealing through brokers altogether.

Fund managers are driving new deal structures that have limited upside for brokers.

Recommendations

Prospective entrants to the Australian market must give careful consideration to the competitive landscape and make a realistic appraisal of likely levels of investment required for their entry strategy.

Poorly planned and executed entry strategies are difficult to recover from. Some recent entries to the market have been perceived as naïve and ill considered. These have done considerable, possibly irreparable, brand damage locally.

What might contribute to a successful entry?

Unfortunately, very few fund managers made any positive comments about entries to the market that they have observed. However, from analysing their criticisms, some positive recommendations can be made.

Strategy, Investment and Pace

Many fund managers stressed the need to make a clear choice between a full service or a niche offering. It was felt that some recent entrants, while purporting to have a specialty focus, were in fact engaged in a half-hearted attempt to establish a full service house. There was also a negative perception of some past attempts to break into the market, with some organisations described as fickle – having a history of attempting market entry in growth cycles and withdrawing in downturns. While there is clearly some business logic to this, it has been hugely detrimental to the trust and engagement of the fund managers. Incremental development efforts, demonstrating a long-term commitment to local investment and establishment of a quality offering received more positive comment than alternative approaches.

Recommendations

Recent entries to the market have been underwhelming and there is a high degree of scepticism about the prospects for their success.

New entrants must have a clear strategy and/or point of difference to enter successfully. In particular, a clear choice between “full service” and “niche” style offerings need to be made, with associated levels of investment.

A niche strategy would have to be extensively and clearly communicated to the market and backed up with a clear ability to deliver quality results.

New entrants may need to be prepared to invest significantly for several years before realising any return, and to ride out market turbulence without withdrawing.

The People Factor

The hiring strategies of many recent new entrants – involving large-scale hiring drives with huge sign-on packages – were roundly criticised and seen as unlikely to assist in establishing a long-term presence.

Fund managers commented that some new entrants have ‘picked up one star’ at an exorbitant price and then surrounded that person with second-rate hires. A single “big name” was generally thought not sufficient to draw fund managers’ business across to a new player. When fund managers considered the relative importance of talented individuals, the whole was generally considered to be greater than the sum of the parts – that is, a cohesive team with reasonable levels of talent across the board was a better prospect than a team with one outstanding individual and not much else.

Slow, considered approaches to hiring were generally considered much more promising than “big splashes”. This was in part because the working pool of genuine talent was perceived to be very small; and therefore, the proportion of it that might be available at any given time was extremely limited. Large hiring drives were generally perceived to result in the stacking of desks with second- or third-rate talent.

In analysing changes to perceived rankings of established players, the importance of a cohesive, high quality team became apparent. Fund managers felt that drops in performance on all attributes of the broker/fund manager relationship often correlated closely with periods of upheaval, particularly in the research teams, and the ability to maintain relatively cohesive teams was seen as a key strength of top players such as UBS and GSJBW.

Recommendations

A functional, cohesive, quality team is more important to the fund managers than one or two stand out individuals (although having those people obviously helps). One strategy might therefore be to purchase an existing business that includes an established, well-respected and cohesive research team. A new entrant can then focus on gaining leverage from that team by backing their offering with a global structure and its associated benefits.

Quality research is the primary attribute fund managers consider important. Other significant attributes include corporate flows and execution, contacts and corporate access. No one attribute is definitive and the ideal mix varies according to the fund managers’ business model. That said, several business structures among successful boutiques involve essentially outsourcing all but the analysis.

Local weaknesses and skills gaps include capacity for cross-silo research and analysis (eg across asset classes or sectors), creativity, insight, and depth of research, as well as a willingness to provide services directly tailored to the fund managers’ needs and business models.

To obtain a full copy of this research paper, or to discuss the findings in more detail, please contact:

Sharon Mackie

Partner – TALENT SEARCH HAUS

Direct:  +61 29235 9806
Email:  sharon@talentsearchhaus.com

A recent Goldman Sachs report suggests that Australia would be $180m better off by closing the gap between female and male participation, and yet progress remains painfully slow.  Collins has invested over 100 hours in researching the current representation of female employees in the Global Investment Banks and Domestic Institutional Banks in Australia and how well these companies are implementing practices and policies regarding hiring, career development, and work-life balance which aim to reduce gender inequality.  Most conversations lasted around 30 minutes, and with over 100 hours of research undertaken during this process, we have amassed a significant insight into, not only the numbers, but the sentiment around the issues.  In total, we have spoken to well over 70 senior women in our market, representing around 30% of the less than 10% who currently work in front line, revenue generating roles in Australia.  Our network, tenure in the markets, skill at engaging them, and our guarantee of confidentiality, has allowed us to have frank conversations of a qualitative nature with senior women about the key obstacles they face.  From these conversations, we have been able to analyse the recurring themes around what works and what doesn’t in overcoming these obstacles.

The women we have spoken to have worked hard within the existing system to get where they are.  In the majority of cases, these are not conversations they would be prepared to have with their managers or HR, lest they appear to be the squeaky wheel.  They seek not to espouse a ‘cause’, but are often frustrated where any formation as a gender-specific group is met with raised eyebrows by their male colleagues.  Against this background, the opportunity to speak on a no-names basis was one that was almost universally taken up, and all but one contributor (who felt that she would never recommend a woman embark on a role in the dealing room based on her own experience) was keen to hear feedback at the end of the process.

The survey contained a range of questions proposed in a more informal way, and covered six relevant themes: representation, work-life balance, mentorship and training, barriers to leadership, initiatives that are seen to work, and perception of where their organisation sat in relation to its competitors.  All information was gathered on the basis of anonymity in order to increase participation.