Saang, the Chief Investment Officer at Othis, is a former trader whose life and career has spanned three continents and multiple industries. He has worked for a central bank, a crypto startup, multiple investment banks and finally Othis. He heads up the Investment Division at Othis where he leads our investment team in frontier research into alternative assets to quantitatively determine how they work as diversifiers in a portfolio.
You are a Korean American who’s built a successful career in finance as a prop trader before joining a FinTech startup in Europe. It’s a unique path. What was your upbringing like?
I think I had a fairly distinctive childhood growing up. My parents are first generation immigrants who had moved to the US a few years before I was born. They toiled and struggled to give my brother and me the opportunities they didn’t have when they were in Korea.
In some ways, especially due to my parents’ efforts, my childhood was a typical American one. I played sports with my friends, participated in Boy Scouts (became an Eagle Scout), and played the violin for over a decade. I still keep in touch with several of my childhood friends and I will cherish those memories forever.
In other ways though, my childhood was anything but normal. We moved around quite a bit when I was younger, as my dad was getting his PhD and going through his first few jobs in the States, and we were the only Asian family in most of the places we lived.
You started your finance career amid the hiring freeze in finance in the US. How did you navigate this uncertainty?
I graduated from university in the years following the Great Financial Crisis and I realized quickly that financial companies were not hiring as much as they had been before the crisis. Having been in a bit of a bubble during my time at school, I didn’t realize how bad the job market and the economy was until I graduated.
Because I also had a Korean citizenship in addition to my US one, I had the option to work and live in Korea. I had never lived in Korea, but I was open to the challenge, and I decided that the opportunity was too great to pass up, as the Asian economies hadn’t been affected as much as the West.
As a Korean national, I was required to do military service before entering the work force, so I voluntarily enlisted into the Korean Army, where I spent two years fulfilling my military obligation. I then was fortunate enough to work at the Bank of Korea as a research assistant and Coinplug as a project manager and researcher before getting my first pure finance job as a trader at Daewoo Securities.
Later, you’ve built your expertise as a prop-trader at Mirae Asset and Hana Securities using risk factors to structure and execute multi-asset strategies. How do you see this experience aligning with the vision and culture of Othis?
I was very fortunate to end up on the multi-asset prop trading desk at Daewoo Securities and remain in that role after Daewoo’s merger with Mirae Asset. Later when I moved to Hana Securities, I had the opportunity to learn about, structure and trade countless different strategies over many asset classes. Over my career, I was held to a high standard for performance and research quality, and we have built a culture at Othis that demands the same from our Investment Team.
I also had the opportunity to see how the entire financial ecosystem works.
Internally, I worked with the treasury department to receive funds to trade, the settlements team to send funds externally before trade settlement deadlines and the risk department to make sure my trades were within risk limits. Externally, I was in contact with sales teams and brokers at counterparties, directly with structurers on QIS (quantitative investment strategies) desks, and analysts at sell-side and buy-side firms.
The financial ecosystem is extremely large, with some best practices that have been built up over decades, as well as many unresolved pain points. I hope to take my understanding of the financial ecosystem to build out the Investment Team in a way that incorporates best practices while planning on how we can solve the pain points that exist in traditional trading systems.
In your opinion, what are the crucial financial concepts that people don’t understand well but you think they should when it comes to professionally growing their portfolio?
I think that the concept of diversification is one that is not very well understood by most people, especially those without a professional financial background.
On paper, diversification is simple. You shouldn’t put all your eggs in one basket, so you buy multiple assets instead of one. If you want to diversify further, you can spread out your allocation into multiple asset classes and perhaps even allocate into private investments or physical assets.
In reality, diversification is much more difficult. Two distinctly different stocks in different countries can still move in tandem if the primary driver of the stocks is market risk. A private investment on paper may seem uncorrelated to a public market equivalent, but only because the private investment valuation is not constantly updated. Even assets that tend to move separately in normal market conditions can become correlated during times of market stress. Diversification is extremely important, but also difficult to accomplish. That is the primary pain point that the Investment Team is striving to solve for our clients.
Transitioning from the institutional side of finance to the dynamic FinTech space must have been enlightening. Could you share some revelations or surprises you encountered along the way?
Moving to a startup environment after spending my entire career at large financial institutions was eye-opening. There are some practices that I think traditional financial institutions can learn from the startup and FinTech world, but there are also areas where FinTech companies lag.
I have found the speed of innovation and development at startups to be extremely refreshing. Whereas at a large company a new project or development would require getting managerial approval, setting up of inter-departmental taskforces and committees and getting headcount and funding allocations, at a startup, you just dive in and start development. For better or for worse, there is no bureaucracy or office politics and rapid prototyping and iteration is a given.
Because many startups also focus on the client, I have found that the UI/UX of FinTech solutions far exceeds what you can get with the products of most traditional financial firms. Clients are happier with FinTech products because they are so intuitive and fast.
However, many FinTech startups do have their weaknesses. I was surprised at how many startups merely monetize one or two loopholes that could be quickly regulated in the future. There are also many startups that solve financial pain points, but pain points that are more suited to be an internal cost-center team or project at a large institution, not a stand-alone company. Sometimes companies will come up and build solutions that already exist, because they lack the domain knowledge to know about them.
I think that my unique mix of experience at large financial institutions and at startups can help our team Othis bring together the best of both worlds to quickly iterate and create innovative solutions when necessary, while using best practices that already exist in traditional financial firms.
In your 10+ years of experience, is there a particular project or initiative that you're most proud of? What makes it stand out for you?
The project I am most proud of is a project I worked on while I was at Coinplug in 2015. Coinplug was the second crypto company in Korea and focused mostly on blockchain solutions.
My boss gave me the opportunity to design, create and submit a new project for a competition being held by JB Financial group, the largest FinTech competition in Korea at the time. I came up with a on-blockchain identification system that could be used as an alternative to the ActiveX system that was being used in Korea at the time.
I had to brainstorm ideas for the competition and weigh out pros and cons before setting on an identification system. I then researched the current system and its pain-points and also did a deep-dive into commonly used encryption systems to understand how they worked and how to use them in my solution. I also reached out to industry experts during the process to make sure that I wasn’t missing any obvious issues.
After doing the full planning and the initial prototyping, I worked with the design and tech teams at Coinplug to create a fully functioning MVP app to submit to the competition. The entire process from idea generation to deployment took less than a month and a half.
The submission was one of several hundred entries, and the project won the grand prize at the competition. Though I am happy that the submission won, I am most proud that I was able to handle the full development cycle from idea generation to deployment while also managing the teams that supported me along the way.
What are the characteristics of strong financial firms that stand out in terms of innovation and business model design?
I truly believe that successful firms have a strong culture of intellectual curiosity. There is a multitude of ways that companies can innovate with countless different business models, but all the successful firms and teams I have seen have had extremely intelligent employees with the curiosity to come up with innovative solutions and ideas.
We have been building a similar culture at Othis, to not only solve immediate pain points for our clients, but to also design solutions for issues that may not be immediately apparent.
What are you most excited about in your work moving forward?
I am most excited about doing research into alternative assets and quantitatively determining how they work as diversifiers in a portfolio.
The investment team has spent the time and effort to build the analytical systems and infrastructure that I consider to be mandatory at any investment focused company. We have built the tools to generate and back-test risk factors internally and use proprietary risk factors to do diversification analysis and do return attribution analysis on portfolios and strategies. We have a pipeline of tools and systems that we plan to develop over the next several years.
While we will continue to do this analysis on traditional markets, we have also begun doing factor and return attribution analysis on private assets. This is a pain-point for any cross-asset investor and there aren’t any existing solutions that properly solve this issue. We hope to be able to break down returns for all assets, not only publicly traded ones, into the core drivers of returns and risks and be the first to properly offer diversified portfolios and cross-asset analysis to our clients.