by
Elizabeth Moran | Dec 19, 2012
Last week, Mark Paton started as Chief Executive Officer of FIIG Securities after an extensive international search. In this article, Elizabeth Moran interviews Mark to get his views on the Australian fixed income market, FIIG’s role in the development of that market and how FIIG can help investors reach their goals.
A little background first
Mark has had an extensive 34 year career in financial services. He was most recently State General Manager Commercial Banking at Westpac where for the last five years he led the Victorian business. Prior to that he had an 18 year career at ANZ where his roles included Group Managing Director of the Corporate Division, Managing Director Global Transaction Services and Global Industry Head Food & Agribusiness. Outside of work, Mark is an active member of the community and has supported a number of charitable institutions over many years. He has two adult daughters and he and his wife Lynsey have a 5 year old son and 2 year old twin boys. He plays golf, skis, sails and is an enthusiastic follower of the Wallabies.
The interview
1. Congratulations on your new role as CEO of FIIG Securities. What attracted you about taking on the role at FIIG?
Two major factors attracted me to the role. Firstly, FIIG is a key player in the delivery of debt and cash securities and the opportunity to introduce the asset class to a broader investor base is compelling. In addition, the potential to lift the range of bond issuance for middle market corporates represents a major opportunity to make a positive impact on the Australian debt markets. Whilst FIIG won’t be the only organisation to issue debt on behalf of the middle market I can see there is an opportunity for FIG to take the lead on both of these agendas.
Secondly, FIIG is a company that has gone through tremendous growth and is still on that growth trajectory. I’m really excited about taking the company to the next level. My philosophy is about growing businesses and I believe FIIG has numerous opportunities to expand exponentially.
2. SMSF investors continue to improve their fixed income knowledge and are embracing the asset class. How do you envision FIIG contributing to the development of Fixed Income in Australia?
Wholesale investors such as superannuation funds, corporations and managed funds are already catered for in the current Australian fixed income market. They already represent an active clientele for us. The developments in superannuation over the last decade have brought about a generational change with individuals either in their own right or through their self managed superannuation funds having built their own wealth base to fund their retirement. The” baby boomers” are active managers of their own money and want to take control of their own investments. They have accumulated funds in a superannuation fund and as they near retirement; they increasingly want control of their investments.
The wealth creators (those in the accumulation phase of their life) want to grow their wealth, are more likely to leverage and trade their investments including their fixed income securities. The wealth preservers (those already in or nearing retirement) tend to focus on capital protection and income/yield. FIIGs team understands individual client need and is highly experienced in structuring portfolios to suit the investment objectives of clients wanting to invest in fixed income securities.
3. We’re a client focussed business, how will your past experience help to improve our service?
I think it’s important to remember that we’re only in business if our customers are growing or preserving their wealth and achieving their target investment returns. If not, they’ll go looking to other service providers or asset classes to meet their needs. FIIG is a customer based business and it is imperative that we constantly reference how we are able to benefit our customers and if it doesn’t ......... don’t do it.
4. Do you have a vision for fixed income and FIIG in ten years’ time?
Looking forward ten years we aspire for FIIG to have introduced the fixed income asset class to a far greater number of investors. Retiring baby boomers with the aim of wealth building and wealth preservation need look no further as fixed income is well-positioned to do that. The asset class offers dependable yield without equity risk and better rates of return than cash. Many investors are not yet getting the benefit of fixed income in their portfolios and we want to open the asset class by educating investors on the merits of fixed income securities. We also want to be one of the leaders in expanding the number of middle market corporations that issue bonds in the Australian market which of course means a greater range of securities in which to invest.
5. What do you think the best investment opportunities will be in 2013?
Personally, I’m aiming for a balanced portfolio allocation. I think there is some long term property upside especially in capital cities and the tax incentives are attractive. Equities also have upside potential capital growth if the price/earnings ratios are appropriate.
But, cash is king and maintaining a high cash income over the coming low growth/ low interest rate years is important. So, a reasonably healthy allocation will be to fixed income for its high cashflow – and of course I’ll be using FIIG to advise me on the portfolio!
Over the last 12 months, research showed that the top performing bonds achieved double digit yields, and while that may not be possible in coming years, an aggregate 7% yield on underlying coupon and capital growth will be my goal.
6. Finally, how will you spend the festive season?
While I’ve deep-dived into FIIG before Christmas, the break will give me time to reflect on the business and the opportunities and imperatives we need to drive early in 2013. I plan to be out meeting our people and our clients and look forward to hearing of their hopes and aspirations and how we can assist.
I have five children and am looking forward to spending Christmas and New Year with my family before we relocate to Sydney from Melbourne in January. I also have family in Sydney and I’m looking forward to reconnecting with them. I love sailing and golf, so also hope to enjoy Sydney’s harbour and great golf courses.