For a little performance pressure, nothing beats having your business unit identified as a key global growth engine by your bosses during the worst financial crisis the banking industry has seen in a generation. That’s exactly what Kathleen Murphy, CEO of ING US Wealth Management, has faced since she took the reins of the reorganized group in January 2007.
So far so good. As of year end, 2007, the ING Wealth Management unit had posted over $1 billion in pre-tax profits, for a compounded annual growth rate of 23 percent from 2004 to 2007. The rolling twelve month figures ended June 30 were also strong under some tough economic conditions. While profits after tax were down 30 percent compared to the year before given the pressure on fees tied to assets under management, sales jumped 28 percent.
To position her unit for growth, Murphy is investing carefully in three growth areas today: defined contribution programs such as 401(k)s and 403(b)s, annuities and their guaranteed benefit provisions, and retirement income and retirement needs. “You’ve got to be agile in response to customers. Product preferences change quickly,” she says. “Baby Boomers are marching to retirement.” That, combined with the uncertain economy, has made fixed income and guaranteed benefits suddenly popular.
One way to grow organically and evolve with the Baby Boomers’ financial needs is through ING’s Center for Strategic Innovation, which Murphy spearheaded. The idea is to capture the staggering amount of “money in motion” over the next 20 years. By 2020, she notes, there will be 100 million people in retirement. The idea of the Innovation Center is to create “breakthrough business models,” she says, not only for Boomers but Gen X and Gen Y as well.
While organic growth at ING US Wealth Management has continued in the down market, ING took advantage of its relatively strong financial position to snap up CitiStreet earlier this year, doubling assets under management and assets under administration to slightly more than $400 billion. That makes ING the largest defined contribution business in the U.S. based on the number of plans, the second largest based on the number of participants and the third largest based on combined AUM and AUA.
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