As the path opened for securities firms to participate in the pension fund investment pool that had been monopolized by large asset management companies, NH Investment & Securities is strengthening its capabilities in the Outsourced Chief Investment Officer (OCIO) division through organizational restructuring. CEO Yun Byung-woon of NH Investment & Securities instructed the OCIO division to develop a competitive edge by adopting the identity of an asset management company, rather than a securities firm.
On the 26th, according to industry sources, NH Investment & Securities carried out a partial organizational restructuring by transferring the Institutional Coverage Division, which was previously part of the OCIO division, to the Wholesale Division. This decision was made because it was deemed inappropriate for the OCIO division, which needs to manage institutional funds over a long term, to have the Institutional Coverage Division.
The Institutional Coverage Division is a sales organization that sells financial products to institutions. In 2021, when former Head of the Institutional Sales Division Kwon Soon-ho became the representative of the OCIO division, it naturally became part of the OCIO division.
People inside and outside the company interpret this restructuring as having significance beyond merely transferring the division's headquarters in line with the nature of the divisions. It is focused on empowering the OCIO organization rather than just a simple organizational adjustment. By separating the Institutional Coverage Division from the OCIO division, CEO Yun instructed the division, "Don't think about sales performance; focus on enhancing revenue from outsourced management and concentrate on the core duties of the OCIO division."
The reason NH Investment & Securities is strengthening its OCIO capabilities is that securities firms can now participate as lead managers in the pension fund investment pool, which had been dominated by Samsung and Mirae Asset Global Investments. The government opened the way for securities firms to participate as lead managers in the 62 trillion won pension fund investment pool through the 'reform plan for the pension fund investment pool system' announced in February.
Trust management of funds typically has low fees, which has made it an area of little interest to many securities firms. Other securities firms have reduced their business and organizational presence due to the perceived low profitability of OCIO. Shinhan Investment & Securities, for example, has a private collective investment scheme license that allows direct participation as a lead manager in the pension fund investment pool, but they disbanded their OCIO center following a financial loss incident involving around 130 billion won last year.
However, NH Investment & Securities sees the expansion of participants in the pension fund investment pool market as a natural progression and has been strengthening its OCIO organization since last year. It was the first among securities firms to establish an OCIO division, and at the end of last year, they moved Executive Director Lee Chang-mok, who previously led the research center and was verified for his abilities, to lead the division.
In the industry, it is anticipated that if the lead managers of the pension fund investment pool are expanded to include securities firms, NH Investment & Securities and other large securities firms like KB Securities will demonstrate their competitiveness.
Not only is the lead management business for the pension fund investment pool expected to grow, but as the size of funds managed by various funds and corporations increases, the entire OCIO market is expected to significantly expand with the long-term introduction of a fund-type retirement pension system. Early this year, CEO Yun mentioned in his New Year's message that it is necessary to develop new institutions to increase OCIO managed assets.