Formerly BlackRock’s Head of Client Business for Asia-Pacific, based in Hong Kong for five years, Andrew Landman has returned to Australia during an exceptionally interesting time for the financial services sector. We asked Andrew to comment on some of today’s key industry activities.
On Hong Kong and China:
I am a huge advocate for Hong Kong, the way the financial system is structured, and also the investment and capital flow going through Hong Kong. Interestingly we're seeing enormous amount of IPO activity going through there even now.
I think by living there I got to understand how people think and how people interact. It's a wonderful financial services hub, and (BlackRock) as a firm will continue to grow there.
When it comes to China, we have offices in Shanghai and Beijing, and we have just announced that we have received regulatory approval for our funds management license there. It's a burgeoning economy with a huge population. They've got growth back. China has enabled enormous manufacturing capabilities. They have done a wonderful job at building manufacturing capabilities.
If the world has a long-term investment horizon, if we all work together, then I think we'll end up in a better place.
On returning to Australia after five years and reflecting on financial services here:
I’m a BT alumni and I love financial services. I keep close connections with some of the mentors in my career, including Rob Coombes and Geoff Lloyd who have both had a big impact and remain involved in very significant changes in the industry.
The market movements we are seeing in the retail sector is huge, every day we see a different merger or discussion of sale or break up. You know, I think integration in these mergers will be key, and transparency on their technology is key. New owners will provide innovation.
So, this is part of the reason if I go back to why I came back to Australia - it's incredible what's going on at the moment. Nothing is standing still.
On the importance of focusing on the client:
I’m very focused on always ensuring that we think about the end client. When I started my career, you couldn't get every single stock market updated instantly on your phone. We didn't have that capability.
Now people have transparency and access to a lot of information, so we need to think about how they use that information. For the retail sector, we need to ensure that education keeps getting pushed out. What does it mean to buy an exchange traded fund? What does it mean to buy exposures in emerging markets? Content delivery and financial literacy are incredibly important.
You know, we have a superannuation industry here that is a similar age to BlackRock, so how do you ensure that you maintain good processes, good governance? I think a lot of people talk about ESG. We focus on the G(overnance) very heavily, not to say E and S is not important, but G should always be there. So, through all this regulatory change we need to be able to still provide an efficient, achievable service to the end clients. You don't want a whole group of orphaned clients in your country where accessibility to financial advice is not available.
We see a lot of people invest in a personal trainer because physical health is very important but financial health is also very important. We want to make sure the advice component is achievable and accessible to the many.
Overall super funds are becoming large pots of capital. They have an incredibly close connection to their end members, and I think they are doing the right thing by their members. They understand their member base, they also understand the long-term investment thesis.
When the lockdown started, early access to super was OK because there has been a short-term need for many people going through very tough times. But let's just make sure we don't sacrifice too much and still be talking about COVID in 30 years’ time when our nest eggs are not big enough. I would love to see the opportunity over the next year or two, as we're coming out of it, to employ ideas on how we can put money back into super that may have been taken out, once people have employment again.
When it comes to super funds taking stronger positions on ESG in the companies they invest in, I think there is a shift going on – but that’s not just super funds, all shareholders are elevating their expectation of some transparency from corporates. And that’s not a bad thing. If corporates are run well, run for the future and they have good delivery mechanisms and transparency on their practices, there should be nothing to fear.
ESG investing is where capital is flowing – it’s a good investment. We don’t take it as a fad, or something good to do, a tick the box exercise – it’s actually a great investment. Capital flow is going there, the outcomes are better for our end clients. There’s no denying that.
On ETF growth and transparency:
We are seeing the growth of other listed vehicles, a lot more exchange traded vehicles, huge growth – and that’s across the globe. Australia has additional innovation in there that we’re not seeing in other countries, such as active management.
I think in March/April those volatile periods of the markets really tested exchange traded vehicles and the naysayers were probably proven wrong. They delivered to their liquidity requirements, they delivered on their promise to their end clients. I think one thing that we would like to see, as an industry grows, is naming conventions which will be very important. You don’t want to create a whole industry with, dare I call it, an analogy of a fruit salad – where you have apples, oranges, bananas etc all in the fruit salad. You want to name them clearly and transparently, so the end client understands what they’re buying. It’s no different to going to a supermarket or a retail shop – and knowing what’s in that box?
Here, Andrew shares a broad range of insights on topics including ESG, Australia's superannuation system and the FSC's Fund Management Board Committee.