Your next CEO should be a product manager

Not a lot of product managers make it to the top of the wealth and asset management industry.  More often CEOs are taken from the ranks of investment professionals or heads of distribution.  But product managers should keep their eyes on the big prize, because the role of product manager is ideal training for leadership and top management in any industry, including wealth management.

Unsurprisingly, this is a topic which Tria is passionate about it.  I was reminded of it when I recently came across a short but excellent article “Good Product Manager / Bad Product Manager”.  It discusses the virtues of good product managers in the US technology industry, but it’s applicable to any industry – you can find it here.  Substitute “engineering” for “investments” and you have a great description of how the relationship between product and investment teams in wealth management firms should operate.

It’s not unusual to find technology industry CEOs with product development or management backgrounds – and even in insurance.  So why are there relatively few wealth CEOs with product backgrounds?

Partly this reflects that product (along with the other marketing disciplines) tend to be third in a wealth management business foodchain (at best) behind the glamour roles in investment management and sales.  There is sometimes an implicit view that product expertise is expendable at the end of the day.  So product often starts a long way behind – quite unfairly – in perception terms.

The lack of product background CEOs also reflects a lack of investment by many wealth management firms in their product management capabilities, and the careers of those in product.  How many “star” product managers come to mind?  More typically, the role of product manager is relatively junior with limited influence in the organization.  The big salary packages and investments in further training and education typically go elsewhere.  It is generally not a product manager who gets selected to go to the Harvard Advanced Management Program (AMP) course.

That’s a pity, because not only is the role of product manager one of the hardest in an organization, done well it has unique potential to add value.

It’s hard because of its cross-functional nature.  A good product manager cannot be excellent at just a single discipline, as an investment or sales professional can afford to be.  The good product manager has to be expert in multiple disciplines, as well as an expert negotiator who can get all their stakeholders on the bus and heading in the right direction.

It’s unique because of its location as a cross-roads of the firm.  A good product manager adds value through creating a robust product design for a well-targeted customer segment, with an attractive value proposition, and at a price which creates utility for the customer and value for the supplier.  A good product manager knows the customer and spends time in the field.

Ten years ago, we discussed in JASSA magazine the four different models of product management we saw in the Australian wealth industry, in order or increasing sophistication (and cost): 

– Project based: no full-time product managers; product issues managed on a project basis.  Still seen today.
– Technical: regulatory and / or PDS focus.  Frequently observed.
– Distribution support: focus on marketing and communication capabilities to support distribution efforts. Common. 
– Product champion: owns and drives the product line like a mini-CEO.  Rare then, still rare today. 

We lamented the rarity of the champion model and reflected that it is too often adopted only when a firm has encountered major product failures.  While incompetent investment management will certainly put a firm out of business, it usually takes years, and losses to customers are generally in terms of underperformance rather than absolute losses.Incompetent product management can destroy a firm in a day and wipe out customers’ investments entirely.  On the other hand, effective product management protects against catastrophic failures and sets a course towards improvement and development.

Not much has changed that we can see – either in terms of the importance of good product management, or the rarity of more sophisticated models.  Equally we can see from other industries just how much value can be derived from product management when done well.

As an industry if we put the same sort of investment into product as asset management and sales, not only would the investor likely have a much better experience, we would see our product professionals as the logical source for top management roles that they should be.