Hot Topics-Advisory Practice (Nov. 15)

By Josh Ludwig

            On November 15th, four financial services professionals visited Baruch to participate in a panel to address the growing practice of advisory services.  The subject was approached from both advisory and risk management perspectives, as the panelists came from different areas of several Big-4 accounting firms and a multinational banking institution.  Our panelists included: Daniela Boateng, Director in Risk Assurance at PwC; Molly Kohrs, Senior Associate in Regulatory Compliance at KPMG; Sakyi Oduro, Senior Consultant in Business Risk, Internal Audit Transformation (IAT) at Deloitte; Kim Persaud, Senior Vice President in Risk Architecture at Citigroup.  The panel discussion was moderated by ZGAS Executive Board member and Vice President of Marketing Kat Sobotka. 

             The four panelists discussed the nature of job responsibilities for advisory professionals in both an accounting firm and a bank.  Ms. Boateng emphasized that, as an advisory professional in a Process Assurance unit, she can only recommend solutions for the client and may not necessarily fix their problems.  Mr. Oduro expressed the idea that advisory professionals need to learn to think out-of-the-box in addition to having a purely rules or regulation-based perspective when approaching client issues; his goal at Deloitte is to identify key risk issues, and how they affect a business and the accounts involved.  As a Citigroup risk professional, Ms. Persaud agreed with Mr. Oduro that this notion also holds true in the banking industry; she also said that it is necessary to always “think about [a given] economic transaction and where the risk lies.”  In banking, advisory services often revolve around thinking about how to view credit.  The aim is to “know how to anticipate where the problem will be.  Often, there are a range of solutions.”

            Another primary topic discussed at the panel was how firm advisory services deal directly with the issue of risk.  Ms. Boateng underscored the difference between financial and audit risk classification at PwC; Ms. Persaud pointed out that she must always  consider a wide range of risk including that related to credit, the market, operations, politics, national sovereignty, reputation, and the franchise.  Ms. Persaud briefly touched upon stress testing as a measure that Citigroup (and other banks) have taken to control for risk. When conducting an assessment, Ms. Persaud emphasized that “You must [always] ask another question.”  At PwC, Ms. Boateng revealed that she and other advisory professionals also must take into account which regulator they are working under as well:  “Some regulators are more aggressive than others” in their enforcement and supervision.

            The four panelists also commented on how to be successful and get ahead in advisory services.  Mr. Oduro pointed out that communication skills are important.  Ms. Kohrs emphasized the “soft skills” valued by her firm; she said that advisory professionals are “open to doing new and different things.”  Ms. Boateng pointed out that one’s “background will not determine where you” end up in advisory services.  She said that, unlike in the role of auditing that involves working with specific rules and templates, “you learn as you go in advisory…the desire to be a subject-matter expert” is necessary.  Similarly, when asked about the potential for external auditors to move into advisory services, Ms. Kohrs advised that such individuals “know their industry” before attempting the switch.  When asked to distill her role as an advisory professional at Citigroup, Ms. Persaud also spoke of her experience as “becoming a subject-matter expert.”

            At the end of the panel discussion, the four professionals weighed in on the future of advisory services at their respective firms and industries.  Ms. Kohrs acknowledged that KPMG had spun off its advisory services under pressure from the SEC after the 2002 Sarbanes-Oxley Act, but was now “ramping up” these services again.  She highlighted the synergies between information technology advisory and audit services at KPMG with regard to the positive outlook for advisory services in general.  Ms. Persaud discussed how the regulatory uncertainty facing Citigroup provides an opportunity for advisory services.  Mr. Oduro identified the ongoing “huge growth” experienced by Deloitte’s advisory services, but acknowledged that increased regulatory scrutiny coupled with economic uncertainty creates both enormous opportunity as well as a “huge question mark.”  Ms. Boateng was also confident that PwC’s advisory practice would continue to grow in the years ahead.  She contrasted her firm’s advisory practice with top consulting firms like McKinsey and Oliver & Wyman, and demonstrated that these latter firms don’t “fill” the same “niche”: “clients need” PwC advisory services in order to “to understand and think like a regulator.”