Editorial Board Spotlight: Candid Q&A with Richard Chan
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This year marks Richard Chan’s 20th year in Hong Kong’s insurance industry.
The actuary-turned-investment leader’s career spans major multinational life insurers in the city in various roles includiing portfolio management, risk management, and asset liability management (ALM) roles.
Chan joined Chow Tai Fook Life Insurance Company (CTF Life) about two years ago, the insurance arm of local conglomerate Chow Tai Fook Group, where he leads both investment and ALM functions.
He now manages almost $10 billion in assets and a team of 20 professionals.
He is also a member of AsianInvestor's Editorial Advisory Board.
In the first of a two-part series, the investment executive opens up about his hobbies, leadership style, and industry insights.
What does a typical morning look like for you? What’s the first thing you do? Do you have any rituals?
I am not a morning person when it comes to my own activities, so my day usually starts directly at the office.
My workday typically begins around 8 am when I arrive at the office. I focus on time-sensitive tasks first, such as discussing market conditions and potential trades with my team.
This is followed by answering emails from other departments to ensure that I am not holding up any projects.
Afterwards comes the more enjoyable part of my work.
Depending on my calendar, I can usually arrange a few timeslots to meet with different people, either within the company or with external partners like banks and asset managers.
These meetings provide me with insights into the latest market development and help me identify opportunities to generate greater value and enhance benefits for our customers.
Do you have any hobbies?
Besides spending time with my family, most of my hobbies happen around the mountains, such as trekking, hiking, trail running, and nature photography.
This is one of the aspects I love about living in Hong Kong. There are numerous countryside areas with varying levels of technical difficulty within 1-2 hours of travel, perfect for weekend visits.
Additionally, as an air transportation hub, Hong Kong offers direct flights to many starting points of renowned trekking trips across Asia.
This passion for the outdoors also fuels my commitment to promoting ESG principles, and preserving the world’s natural beauty for future generations.
If you could have lunch with any historical figure, who would it be and what would you ask them?
I would like to converse with leaders or rulers who ultimately failed. History is often highly simplified and written by the victors, typically blaming the downfall of a state or dynasty on its last few leaders.
This perspective significantly underestimates the challenges they faced, the efforts they made to address these challenges, and the complex interactions among all the players involved.
I believe that hearing directly from these leaders could provide us with a different perspective on history and offer valuable insights for our day-to-day decision-making.
What do you think will be the biggest challenge for asset managers in the next decade?
Fees and profit margin compression will continue to be the biggest challenges for asset managers, particularly due to the wider spread of index-tracking investments and advancements in technology that may narrow the knowledge gap between asset managers and asset owners.
The same challenges apply to insurers in Asia. When the fees from asset managers are compressed, the implied fees of the saving insurance products are under pressure as well.
As fees and profit margins are compressed, it will become increasingly important for us to reduce costs, both operational expenditures and the cost of capital, and to innovate in order to drive new sources of business and profit.
What new financial instrument or investment vehicle are you keeping a close eye on?
While not completely new, there are two classes of financial instruments that I believe warrant more attention.
The first is a broad category known as “alternative investment grade credit”.
This includes the more traditional assets like public collateralised loan obligations (CLOs) and mortgage-backed securities, infrastructure debt, and US private placement bonds.
It also encompasses more recent innovations such as net asset value (NAV) financing, commitment-backed financing, and bank synthetic risk transfers (SRT).
Investment grade credit typically represents the largest allocation for insurers, which means the amount that can be invested into alternative investment grade credit is also big enough to justify the effort.
The second class is derivatives. They can provide the final piece of the puzzle if a company already has a strong investment portfolio.
Many investors start with currency and interest rate hedging, to enable them to diversify and invest in fixed income assets that might not otherwise meet their desired characteristics.
What is the most significant way in which your leadership style has evolved over your career?
My first leadership role began around 10 years ago when I was the chief risk officer in a Hong Kong subsidiary of a global insurer, managing a small team of just two people.
Over the past decade, I have transitioned through several roles and now manage a team of nearly 20 people.
As my responsibilities have evolved, so has my working style, with a greater focus on delegation.
Ten years ago, even as a C-suite executive, I tended to handle much of the work myself. Over time, my role shifted to instructing and teaching others.
Now, with a team of experts who excel in their respective areas, my focus is on creating an environment where the team feels empowered to align, make decisions, and implement those decisions.
I now measure my success by how much work the team can deliver without my involvement.
One thing that hasn’t changed is my strong belief in the 80/20 rule.
I always prioritise the few essential deliverables that generate the largest positive impact, while avoiding tasks that are merely box-ticking exercises without contributing to final investments or business decisions.
What personal attributes do you look for when hiring for your team?
Collaboration is more important than any other skill or knowledge.
At CTF Life, we have a comprehensive investment team divided into areas such as ALM, operations, portfolio management (fixed income, listed equities, and alternatives), and research (macro and fundamental).
Each area is helmed by experts with diverse backgrounds and specialised expertise.
Recognising that no single individual possesses all the necessary knowledge or skills, we prioritise a collaborative mindset and spirit of teamwork that empowers us to navigate complex challenges and achieve the best possible outcomes for our stakeholders.
How do you stay informed and adapt to rapidly evolving financial regulations?
I actively engage with our legal, compliance, and actuarial teams to gain insights into any regulatory updates and the implications they may have on our operations.
I also make it a priority to attend external conferences and seminars, which not only provide in-depth knowledge on current regulatory trends but also foster valuable networking opportunities with industry leaders.
These interactions often lead to enlightening discussions and diverse perspectives that enrich my understanding.
Social media platforms have become a powerful tool for real-time information. I follow thought leaders, regulatory and standard setting bodies, and financial news channels to stay updated on breaking news and emerging trends.
On some common topics like ESG, I regularly exchange insights with the experts across our diverse conglomerate of the Chow Tai Fook Group.
If you could instantly become an expert in one random skill, what would it be?
If I could be greedy, I would wish to instantly learn every language in the world.
While technology can facilitate quicker and more accurate translations, it cannot replace the connection formed when two people communicate directly in the same language. This is essential in building relationships both at work and in daily life.
In the context of our organisation, being multilingual would enable me to connect more effectively with our diverse clientele and stakeholders, ultimately helping to create even greater value beyond insurance.