May Ngai Seeman: Innovation and Globalization on Wall Street

CEO of MEAG New York Navigates a New World of Finance

May Ngai Seeman
On Wall Street, May Ngai Seeman, president and CEO of MEAG New York

Alumna May Ngai Seeman MAD 89 has navigated the vagaries of Wall Street for over 25 years. As president and CEO of MEAG New York, Seeman has stewarded her company through booms and busts, sea changes in regulation and shifts in the zeitgeists of asset management. Through it all she has resiliently embraced the ever changing environment of global finance.

Seeman began her career at MEAG New York in 1995 as a portfolio manager. MEAG is the internal asset manager of Munich Re Group, a large international reinsurer.

Born and raised in Hong Kong, Seeman earned her BA in economics from the University of Calgary and her master of administration in 1989 from the then UC Davis Graduate School of Administration, the precursor to the UC Davis Graduate School of Management. She started her foray into finance in 1989 at Prudential where she worked in bond quantitative analytics following the collapse of the junk bond market.

A mother of two, Seeman says she is fortunate in that her husband, also a former finance manager, chose to stay home full-time with their children.

In June, Seeman’s peer alumni recognized her with the Distinguished Achievement Award from the Graduate School of Management’s Alumni Association.

Seeman recently spoke at length with Innovator about changes in the financial world since the economic crisis, trends in asset management and efforts to hire more women on Wall Street. She spoke in general terms, not in reference to operations at MEAG New York. Below are excerpts of the conversation:

What are some of the changes in the asset management field since the financial crisis? Where is the industry going and what are some key areas for growth potential?

The biggest change is the increase in regulation.

The regulatory demands have just exploded and it covers the whole array of what we would term the broker-dealer and the traditional banks as well.

These institutions are faced with much higher capital requirements so they have much more limitations in terms of business opportunities. That means on our side right now asset managers are seeing quite a bit less in liquidity, which is a huge challenge for us.

If you ask me what other changes there are, not necessarily as a result of the financial crisis, but evolution in the industry, I would say the biggest thing would be the globalization. Asset management used to be rather regional…Historically people would put money into the domestic stock markets or maybe you would have a little bit of local bonds or municipal bonds to have the tax advantage, but now everyone is thinking ‘Huh. Should I put money in Asia? Should I think about emerging markets?’

The globalization is happening in the asset management field, not just the consumption level. Everyone is carrying an iPhone wherever you go in the world. The same is happening in asset management, we as asset managers are seeing tremendous globalization.

How has the industry adapted and what are some examples of innovations?

You have more non-traditional channels coming in. You see more peer-to-peer lending. People don’t necessarily go through the traditional banks, which would go through the larger capital markets. Now you have a lot of peer-to-peer lending, including crowdsourcing.

Because of the changes in technology you have a lot of disruptive technologies and so asset managers have to respond.

Traditionally, you would have a financial planner walking you through options. Now you have Baby Boomers who say, ‘Okay. Just give me a website and I can just look online and I can find out and make my own decision.’ In terms of growth, you continue to focus on demographics. You have the baby boomers and their retirement needs definitely need to be addressed.

When it comes to innovations, during the financial crisis a lot of the problems stemmed from the use of derivatives. All of these instruments that are difficult to understand. What is funny is when you ask a lot of asset managers how they face the challenge of liquidity, they would say, ‘Well, I turned to the use of derivatives.’ It’s almost ironic honestly.

An example is Microsoft bonds. They have steady cash flows and you know the company will be there for a long time. Now the regulators have made the capital charge so high and the capital requirements to trade the corporate bonds for the broker-dealer. So you, the investor, say, ‘If you can’t buy the bond anymore, what will you do?’ There will be a derivative that is made by someone that is benchmarked and tied to the performance of the Microsoft bond. The use of derivatives is an answer to overcome some of the challenges, even though in a way they have a bad reputation.

Then of course you have things like ETFs – exchange traded funds – which tend to be products that convert things that are not very tradable into something much more trading oriented. …ETFs are not just priced at the end of the day. ETFs can be bought and sold during the day with live prices….Theoretically speaking, ETFs are much more liquid and tradable and underlying assets within ETFs are not traded very frequently.

There are a lot of innovations that seek to provide liquidity even when they themselves are not the most liquid.

Is there a gender gap on Wall Street and how have you pushed for change?

Yes, the general impression is that Wall Street is full of men and in finance, generally, you have more males than females. I would say that up and down the line that is true…I would say that generally speaking it is more of a male trait than a female trait to take a lot of risk, so the industry does attract more men than women. And we all like to hang out with people who are like us, so you do have a tendency to see more networking and sponsorships among men, because you just have more of them because they have their own support network.

Personally, what I have done is I have tried to gather women together to support each other because that is how you really make a difference…. I am living it. I am proud of my group in the sense that we are rather gender balanced. …It’s not just gender, it’s the notion of diversity.

You have people who are very different from you who bring something else to the table…I have a very small team and yet I have a lot of really talented women. We value diversity. We value the perspective and the differences between men and women.

Since the financial crisis, the concept of risk is much more recognized. So people now are much more thoughtful in terms of assessing risk. They are not just thinking about one idea, one concept and one path. In this environment, generally speaking, women are valued.

Generally speaking, the environment is changing for the better and most organizations have explicit diversity programs. I can’t think of a firm without an executive management mentoring program that targets women.

What advice do you have for Graduate School of Management students and is there a special memory that you have of your years at the School?

Students at the business school should think not just about what he or she wants to do now, but think about how to use what you are doing now in a fashion that would lead to the next thing you want to do.

For example, I had a class where we worked on a project for a real company…We worked on a team that tackled the pre-payment of mortgages…We worked on what are the drivers for borrowers to pre-pay their mortgages. It could be someone gets a divorce and they have to sell the house…or interest rates comes down and they re-finance. My team built a prepayment model. We identified the variables that drive pre-payment. Through this I found out that banks don’t necessarily keep the mortgages in their portfolios. I eventually went to a firm that analyzed these mortgage-backed securities.

Find something that you are interested in. If you see you have deeper and deeper interests in it, see where it leads you. And in the meantime, enjoy it.

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