Securities Firm Should Be Strong in Research
By Yoon Ja-young
Staff Reporter
Time is not good for the securities industry, but a bunch of rookies have joined the race. Yu Heung-su, president & CEO of LIG Investment & Securities, said strong research is the very basis for a securities company.
LIG Group, which has LIG Insurance, launched the securities company in June. In an interview with The Korea Times, Yu said the group had strong motivation to start a securities business.
``Changes are going on in the financial industry. The interest rate has risen recently, but it is still historically low compared with the past. The aging of the society also has changed customer needs ― they preferred deposits and bonds in the past, but now prefer investment assets. Asset management is more important than ever,'' he said.
The CEO added that the implementation of the capital market consolidation act next February would infinitely expand the concept of securities. ``Various investment products will be launched to satisfy the diverse needs of customers. There will be a huge market for this.''
``Here is another, the third reason. Let me talk in the perspective of LIG Group. The financial industry is turning comprehensive ― they do bank, securities business, insurance, and asset management. LIG, however, wasn't so. LIG Insurance thus invested to set up the securities business, to create a synergy through the comprehensive financial business. The group wants to make it a new growth engine,'' Yu said.
A Head Start
Lucky for LIG, it could make a head start thanks to other group subsidiaries. Yu said he would maximize the synergetic effects.
``LIG Group has around 7,000 employees in around 20 subsidiaries. Many are either opening accounts or moving accounts to LIG, in stages. LIG Insurance, our mother company, has around 3.5 million individual customers and 16,000 corporate customers. We sent invitation notes to some, explaining that LIG Investment & Securities could be their good advisor in asset management. I am not saying that all of them will be our customers, but we are having better access compared with other rookies,'' he said.
LIG also plans to educate the insurer's financial planners to get a license in fund sales. ``They will be talking about securities as well while selling insurance. There will be a synergetic effect, and the customers will also be catching two birds with one stone,'' Yu added. He said LIG plans to make comprehensive financial products, fusing securities' asset management with insurance's risk management.
LIG also opened a comprehensive financial plaza in September, which provides a one-stop service in insurance and securities.
``Project financing for LIG Engineering & Construction is another business, and LIG Insurance, which manages 2.5 to 3 trillion won in securities and bonds, could do it through us.''
He pointed out that LIG is the only securities company in the former LG Group family such as GS. ``We are seeking cooperation from LG and GS as well. We met with CFOs of the groups, and there is expected to be cooperation.''
The CEO, however, made it clear that it wouldn't be fully depending on these. ``We don't mean to solely depend on the relationship with LG and GS. We will focus on searching for our own customers.''
Competitive Edge in Research
He said LIG is building up a competitive edge in research to survive in the market. ``As a newcomer in the market, corporations and institution customers will be easier to access than retail. Corporate sales should be backed up by research and I am sure we are strong at this,'' Yu said. ``We have ten research sectors ― shipbuilding, automobile, semiconductor, pharmaceutical, steel, media, finance, utility, education and construction. We are scheduled to increase manpower, covering 14 sectors which the National Pension Fund requires by the end of this year.''
The CEO said that LIG analysts are different. ``All our analysts have experience in the field they cover. The automobile industry analyst worked at an automobile company, the pharmaceutical analyst worked at a pharmaceutical company with a pharmacist license, and another worked in a shipbuilding company after majoring in engineering. Even if you have a degree, field experience determines the depth of the report. Our analysts make paper with depth.'' He said that LIG's morning brief is distributed to 1,400 people, including analysts, fund managers, press, and institutional investors. ``As far as I know, even old securities firms have only around 1,000 subscribers. The figure is amazing for a rookie. We plan to further bolster research.''
Capital Market Consolidation Act
Yu expected the capital market consolidation act to offer a lot of opportunity. ``But at the same time, there will be infinite competition,'' he said. Yu expected increasing market fluctuation ― thus, one will need risk management capability.
``It is the matter of risk management, and giving back investment return for investors. The securities business is a manpower business. We will invest more in human resources.'' The CEO said some 1,100 people applied for 10 posts at the company. ``We didn't even put out an ad. It was hard to pick from so many qualified candidates,'' he said, adding that they seem to have focused on the potential in LIG.
``We do have excellent people, but from next year, we will start recruiting rookies. The securities industry doesn't have a good training program, and are only trying to scout the few excellent people among themselves. We will recruit rookies and educate and train them in the mid to long term perspective.''
He said he would focus on building up a solid income basis. ``We won't obsess on market share. Making money constantly is more important.''
Experience as Financial Regulator
Yu spent most of his career as a ranking official at the Financial Supervisory Service. Some wonder whether a ranking official and former regulator can be comfortable in the shoes of a financial company, which is under supervision of the regulator. Yu, however, said the experience was a plus. ``At the regulator, I set up securities industry related policies, and regulated and supervised them for 30 years. I know how the market works, and have a blueprint where the industry should head.''
Yu emphasized the two years and two months that he had spent unemployed ― the law bans ranking officials from working in related private sectors right after quitting a government job. Yu, who retired from FSS as the top assistant governor, couldn't work in the financial industry. He said he had a reflection about life during that time, having fallen from the top post.
Yu later worked as a commissioner for LIG Insurance for two years. He said he learned that money talks in the capital market. ``At the regulatory body, I didn't have to think about how to make money. In the private sector, they were always brainstorming about how to make money and how to cut down cost.''
He said he has now only to practice what he has learned through his experiences at the government, the private sector, and his days spent unemployed. He said he would continue to push himself. He makes it a rule to visit a business partner or a customer everyday.
CEO Should Make Money
Yu said the first priority for any CEO should be making money. ``That's what businesses stand for in the capitalist society. Also, the customers' benefit is the company's benefit. We will be a good advisor in their asset management and investment.''
He added that LIG wants to be a respectable company. ``We want to be remembered as a business that is trustworthy.''
Regarding the relationship with employees, he said he wants LIG to be a workplace where employees are happy to come every morning. ``We spend over half of our life at work. One should be happy to come here.'' Yu is organizing a meeting with a group of employees in the evening, carefully listening to their suggestions. ``We want to satisfy shareholders, customers and employees. That's what our logo, the hopeful cloud, stands for.''
Yu is one of the very few people in the securities industry who has experience as a financial regulator. Born in Goheung, South Jeolla Province in 1949, Yu majored in economics at Korea University. He spent most of his career at the Securities Supervisory Board, which was later merged into the Financial Supervisory Service (FSS), and as a ranking official there, once served as the first director of the external communications office. After quitting the FSS as a top assistant governor, he had a hard time due to the law that bans ranking officials from working in the private sector after retirement. After two years spent jobless, Yu joined LIG Group, working as a commissioner for LIG Insurance. He made a glorious comeback to the world of finance, not as a regulator, but as head of a newly launched securities company, being appointed as president & CEO of LIG Investment & Securities in June.