The transformation of capital markets in the Asia Pacific region has had
a notable impact on the role of the modern day chief investment officer
(CIO). With increased transparency of information and a proliferation of
different investment products in the past few years, the role of the CIO in
Asia has changed not only in scale but also in scope. Today’s CIO must be
part philosopher, part mathematician and part historian. CIOs must also
be excellent leaders.
The role of the CIO has changed not only in scale but also in scope. Today’s CIO must be part philosopher, part mathematician and part historian. They must also be an excellent leader.
As market participants, intermediaries and beneficiaries have become more
sophisticated across the region, the performance expectations for CIOs
have intensified. A protracted low-yield environment coupled with cycles of
correlation across asset classes has increased the challenge. Adding to the
headwinds is the steady rise of increasingly complex regulations and the
escalating pressure on fee income. Deeper and more liquid markets,
together with cheaper computing power have dramatically improved the
decision-making abilities of all participants.
As these forces increase the complexity and breadth of the CIO role,
there has also been a notable shift toward specialization. The CIO
for an asset owner now has less in common with one at a private bank,
an insurer, a retail or institutional team. Adding to the contrast are
geography-specific factors that differentiate the role of the CIO in
Mumbai from the one in Melbourne.
Notwithstanding these differences, given the critical and
value-creating nature of the CIO role to a variety of organizations,
we are advising our clients that the following
are the essential capabilities and leadership skills that the
modern CIO in Asia must possess:
Strategic thinking and solutions orientation
Beyond the day-to-day running of a successful investment
function, CIOs are now expected to play a key role
in shaping the broader business strategy. Investmentrelated
decisions remain of utmost importance, but CIOs
across the region are also expected to think for the long
term, equip the business to adapt to unforeseen challenges
respond to emerging
It is no longer enough to
be a star portfolio
CIOs must contend with
a wider array of products
and strategies, a multitude
of providers and an
imperative to generate
returns on capital. This requires a profound understanding
of a broad range of investment strategies and their
strengths and weaknesses across a large number of
It is no longer enough to be a star portfolio manager. Successful CIOs must contend with a wider array of products and strategies, a multitude of providers, and an imperative to generate returns on capital.
The ability to develop new capabilities, and respond to
changing leadership demands and evolving business
conditions and priorities are other must-have strategic
attributes for successful CIOs.
Managing change and disruption
The high degree of volatility in the investment industry,
the disruption of both front- and back-office structures
and questions about the longevity of traditional business
models of investment management oblige CIOs to
embrace change and act as change leaders for their functions.
Given the many forces shaping the investment
industry, CIOs must be able to guide their teams through
a period of significant and unsettling change.
The robust M&A environment has placed an additional
demand on CIOs. In merger situations, CIOs must find
effective ways to intersperse colleagues from diverse
operating cultures, identify potential cultural barriers and
begin to build bridges between disparate teams. With a
growing appreciation of the importance of organizational
culture, CIOs are expected to lead by example and act as
an influencer. Managing colleagues through takeovers or
mergers may be a new challenge for many CIOs as a
majority of investment teams in the region have hitherto
enjoyed steady, organic growth and stability.
Apart from integrating new staff whose skills and investment
approach may differ from their experience, CIOs will
also have to integrate different
operating systems and
processes — all with the right
attitude towards change.
CIOs need to be able to
manage their external
profile with a variety of
investors and potential
candidates. CIOs are increasingly called on to engage
with a diverse audience ranging from sophisticated
institutions to retail investors. Winning and maintaining
the confidence of different types of investors
necessitates strong communication skills.
CIOs managing large teams of investors need to have
credibility and visibility with potential investment talent.
Their reputation and team-building skills are nearly as
important as the returns they generate. CIOs need to be
able to compete in attracting and retaining top-class
The prominence of social media and wide availability of
industry news sources have made the CIO profile more
public. While social media has assisted employers in
identifying and vetting of prospective employees, so
too is it easy for potential candidates to vet their
Originality and insight
As generating returns from traditional asset classes
remains a challenge, CIOs are expected to have a
profound understanding of alternative asset classes
such as private equity, real estate and infrastructure.
In the past, a passing familiarity with these would
be the acceptable norm.
Given the low-yield environment and the difficulty in
generating target returns, investors have been increasing
their allocations to alternatives. This has forced
several asset managers on the acquisition trail to be
able to offer a wider range of investment choices to
their existing clients.
There has been a rising level of professionalization of
asset allocation. Given the rapidly increasing range of
additional responsibilities of CIOs, their time to focus on
investment decision-making has reduced. Increasingly,
CIOs are relying on more sophisticated internal and
external economists and strategists to guide their asset
In a dynamic regulatory landscape across Asia, CIOs
are expected to keep a finger on the pulse of existing
and emerging policy shifts. The best CIOs position their
business in a manner that allows maximum flexibility to
capitalize on opportunities arising from modifications
in rules and regulations.
CIOs need to be capable of engaging with local regulators
on issues relevant to their businesses and industry.
Their ability to engage in constructive dialogue with
regulators has become a more prominent part of their
Varied career experience
Given the added importance of general management
skills and broader leadership capabilities, the career path
of the modern day chief investment officer is becoming
less orthodox. Several recently appointed CIOs have
entered the role through the “company management”
path in contrast to the more traditional progression
through the investment management hierarchy. For
example, we have seen CIOs coming through the finance
and strategy functions of asset managers and insurers.
Some asset management firms and insurers have been
prepared to overlook a significant track record in investing
if their CIO appointee brings familiarity rather than
deep investment expertise across asset classes.
A growing number of Asia-based CIOs have sell-side
backgrounds. Such CIOs bring a strong appreciation of
how to exploit tactical opportunities more quickly than
some of their less market-savvy peers. The critical differentiator
for CIOs with a background in financial markets,
is their ability to learn and acknowledge that they have
much to learn in regards to liability management.
Despite the changes that the role of the CIO is undergoing
in Asia, robust investment performance remains the
litmus test for CIOs. However, today’s environment presents
a new opportunity for the CIOs to make a broader
game-changing contribution to the fortunes of their firm.
Ultimately, the CIO of tomorrow has the same mandate
as that of the past: to safeguard and sufficiently grow the
assets under their remit in order to meet obligations to
their stakeholders. What is changing is the complexity
of the environment in which they function. Strategic
thought and original insight are becoming prerequisites
for success, as is the ability to challenge assumptions
and adapt to an evolving landscape.