The new man at the head of First Global Financial Services, Robert Drummond has set his sights on staking out a bigger market share of the wealth management pie, signalling major changes in the operations of the financial services division of the GraceKennedy conglomerate are on the horizon.
Drummond, the Harvard MBA, who first honed his skills in finance in a small firm on Wall Street at the time of the 'Black Monday' stock market crash of 1987, was parachuted into the top job following the departure of Sandra Shirley at the end of October last year.
He told the Financial Gleaner that he intends to go for growth with a lighter, more nimble operation capable of navigating the choppy economic seas resulting from the global recession and the collapse of major finance houses worldwide.
Consolidation, the rationalisation of back office functions between FGFS and GraceKennedy's banking operation, First Global Bank, a realignment of staff and management team members, joint marketing within the FG group and a sharpening of its marketing focus are among the changes already underway at the company.
Will the company be cutting staff in the process? Drummond is making no promises. "Our focus is not on fewer people, but on putting people in the right places to do the right things and to do those things effectively," said the FGFS president during an interview with the Financial Gleaner.
FGFS has six per cent share of industry funds under management. At the $720 billion value the Financial Services Commission placed on FUMs in March 2008, that translates to $43 billion. Courtney Campbell of First Global Holdings says of the total market FGFS has a 10 per cent share.
Details expected
Sources say the FGFS boss was expected to outline details of the restructuring exercise to staff at a meeting Thursday (January 15).
Up to press time details of the news to be taken to staff were not known, but Drummond himself pointed out that in these times of uncertainly in business generally, frequent and sustained communi-cation with staff was vital whether the news is good or bad.
With Drummond having had wide ranging experience in various facets of business, GraceKennedy's chairman, Douglas Orange, believes that the new FGFS president's practical business approach will be of immense benefit to investors.
"He is also a tremendous team player and his humble, civil management style encourages others to work with him and enhances the overall teamwork that is part of the culture of the GraceKennedy group," Orane told the Financial Gleaner.
Drummond, who since 2005, has functioned as GraceKennedy's main troubleshooter on new ventures for its non-food business, now enters line management within the group.
Management consultant
He comes to the job after some six years as a management consultant in Jamaica and the United States. He was for years general manager for athletic footwear company Nike's Latin American operations, headed the Delroy Lindsay-led Friends International Resorts in the mid 1990s, and worked in research and standards monitoring for the ITT Sheraton Corporation while helping to run the 700-room Sheraton Manhattan Hotel in New York City.
He also worked in the 1980s as corporate treasury manager with American Express, managing the credit card company's multi-million dollar investment and deposit exposure with the 400 largest US commercial banks and thrift institutions.
As principal of GK Investments from 2006 and business development manager for the GraceKennedy group between 2005 and 2006, Drummond was responsible for driving new business and the execution of mergers, acquisitions and otherstrategic initiatives in the domestic, regional and international markets to expand GraceKennedy's portfolio of non-food businesses.
In 2007 he completed the acquisition and integration of ONE1 Financial Ltd, an investment banking company in Trinidad and Tobago, which now forms part of the First Global Group and has been rebranded as First Global Trinidad and Tobago (FGTT).
Expert
The new FGFS boss, who now reports to Courtney Campbell, head of First Global Holding Company and CEO of GK Investments as of next month, is considered an expert in business systems re-engineering, strategic planning and performance management.
He also has significant experience in mergers and acquisitions under his belt. Does this impressive résumé provide a peek into the business plan of the funds management and securities dealer? The answer is that the GraceKennedy group is definitely on the hunt for profitable financial services businesses in the Caribbean region, its chairman said.
"We will include in our growth strategy the taking of equity stakes and controlling interests where those opportunities present themselves," Drummond added, noting that GraceKennedy has its eyes firmly set on deepening its foothold in the Caribbean marketplace. FGTT, which is 90 per cent owned by GraceKennedy and the conglomerate's 40 per cent stake in Signia Merchant Bank, a profitable Barbados investment house, in which it invested some four years ago, are expected to be significant planks in this aggressive Caribbean roll out.
GraceKennedy already owns First Global Insurance Agency (Turks & Caicos), partners with the Bank of St Lucia in its 30 per cent stake in Saint Lucia's EC GlobalInsurance and last year acquired a 30 per cent interest in the very profitable Trident Insurance Company, a general insurance underwriting operation controlled by the Leacock Group of Barbados.
Jamaica International Insurance Company (JIIC), GraceKennedy's general insurance outfit, recently started doing business in Dominica through an agent, Orane has disclosed.
GraceKennedy's Caribbean push is also part of its risk mitigation strategy, and as a player the general insurance industry operating in a hurricane prone zone, geographic diversification is at the top of its strategic agenda.
For Drummond, the current global financial meltdown, which seems set to continue spreading across international borders in coming months, if not years, is a crisis worth using.
He believes the crisis is laden with opportunities for growth for his company, if it becomes a leaner, more efficient operation that zeroes in on the needs of its sophisticated customers. "It's really about finding the right products for the right markets," he said confidently.
Rather than trying to be all things to all people, FGFS is gunning to pull in more institutional investors, corporate clients, high net worth private investors and the emerging affluent.
Small entity
"On the regional landscape we are a small entity, but small growth is important to us," according to Drummond. He declined to disclose the company's precise size in terms of asset base, client numbers, funds under management or staff complement.
In terms of its pension funds management business, FGFS is reporting that funds under management, a big chunk of it coming from institutional investors, have held up well in these times.
Vice-president for Funds Administration, Janice Robinson Longmore believes however, that the market requires greater options, noting that no new retirement schemes have been registered in recent times.
The company is, therefore, anxious that pending regulations and administrative action by the Financial Services Commission will result in more pension fund products.
But while targeted growth will occupy much of the discussions in the boardroom of FGFS in the immediate future, the company will be hunkering down to protect current business.
Calming the fears of investors and boosting shaken confidence in financial products and markets inevitably constitutes a major part of the job.
Calm hand
"I think I am seen as a confident, calm hand that settles the ship in times of turmoil," Drummond offered.
Despite its core business being challenged, the company is said to be weathering the economic downturn with its assets, believed to be significant, showing good performance and trading profits doing well despite commissions on equity trades remaining flat.
The company has had no exposure to toxic investments that have infected financial markets particularly in the United States since last year, with publicly listed GraceKennedy, having declared to the Jamaica Stock Exchange that the conglomerate and none of its subsidiaries were exposed.
How does a firm like FGFS dispense investment advice in the current environment? Noting that the present situation is characterised by a tightening of credit and not an absence of it, Drummond believes there is still a significant amount of money available for investing.
The approach now is focused on meeting the objectives of investors who are adopting shorter positions than in the past to reduce their exposure and steer clear of long-term risks.
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