Wednesday, April 1, 2009

Low-beta Canada

OK, April Fools is over for another year. Back to business.

Canada gloats
I have lived in both Canada and the U.S. for considerable amounts of time and some of the cultural differences continue to fascinate me. For example, a major Canadian newspaper is trumpeting how Canadian banks have largely escaped the worst effects the global financial tsunami.

Before Canadian continue on their victory lap, I would just like to point out that Canadian financial institutions escaped because Canada has a low-beta culture.

Consider the following employment ad that recently came across my desk for a CFO of a NY based broker-dealer [emphasis mine]:

Principal Responsibilities:
* Comprehensive financial responsibility for firm's regulatory compliance. Serve as Licensed NASD Series 27 Financial and Operations Principal...
* Establish financial controls and accounting procedures...
* Serve as principal financial liaison with legal counsel to ensure all contracts and agreements are prepared in accordance with financial goals and standards.
* Design and implementation of all systems and reports used in developing financial strategies.
* Develop methods of cost allocation for management reporting on product line and geographical basis.
* Ensure consistency of data in internal and external reporting...
* Present recommended solutions and alternatives to client management based on analysis of trends, profitability, and growth opportunities.
* Evaluate industry developments, market conditions, and economic news to determine financial and business impact. Conduct in-depth industry benchmarking, company and market trend research, peer analysis, and market penetration modeling. Coordinate ad hoc analysis and management reports.
* Liaise with tax department to ensure integrity of transfer pricing methodology and license and service agreements...
* Assess viability of new business ventures for early stage investment potential...
* Establish organizational structure, employee-related policies, procedures and roles...
* Establish operating budgets and financial projections in-line with corporate objectives...

* Bachelors in Accounting or Finance required. MBA/CPA or Masters Degree in Finance preferred.
* Minimum 15 years experience with at least eight years in a finance role supporting a business unit with full P&L responsibility.
* Prior brokerage industry experience required. NASD Series 27 licensing required.
* Must have experience partnering with business unit leaders, developing strategic plans and leading the business and finance activities of a high revenue growth business in its early stages including new products.
* Strong leadership presence and negotiation skills required.
* Excellent quantitative, financial and analytical skills.
* Strong written and interpersonal communication skills are essential.
* Strong organizational skills and ability to prioritize multiple tasks are required.
In other words, they want someone well versed in finance, legal and regulatory matters who is able to be entrepreneurial at the same time. Consider this similar position for a VP Finance in Canada. Admittedly, it is not in the same industry, but the first sentence in the job requirements is:
A professional accounting designation (CA, CMA, CGA, CIA) is required and post secondary degree would be an asset

Low beta vs. high beta culture
Canadians like order. An accounting designation is a form of order.

The Canadian consensus was built on Peace, Order and Good Government, which are low-beta activities. America was built on Life, Liberty and the Pursuit of Happiness, which are higher beta activities.

Neither is right or wrong. We just happen to be in a period where low beta is dominant.

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