iCapital Completes Acquisition of SIMON Markets

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iCapital announced it has completed the acquisition of SIMON Markets. The transaction meaningfully broadens iCapital’s investment menu, technical capabilities, education offerings and support services for advisors and their clients.

Through this acquisition, iCapital will create a single source of alternative investment strategies from nearly 300 asset managers and product manufacturers, adding SIMON’s structured investments, annuities, digital assets and risk-managed products offerings to iCapital’s extensive menu of private offerings including equity, credit, real estate, infrastructure, direct deals, hedge funds, and other alternative strategies.

The combination creates a powerful technology solution for the wealth management industry with on-demand education, an intuitive marketplace, real-time analytics, and lifecycle management of alternative investments. The integrated platform will also include tools for compliance, alternative allocation analytics and portfolio construction to support advisors in their efforts to optimize client portfolios.

“As advisors seek access to non-traditional investment structures to help clients meet long-term financial objectives, they can be best supported by a full-service platform offering a comprehensive set of strategies and tools to meet their needs,” said Lawrence Calcano, Chairman and Chief Executive Officer of iCapital. “Incorporating SIMON’s tremendous capabilities into our already robust offering is further demonstration of our commitment to provide the wealth management industry with an unparalleled alternative investing experience.”

Jason Broder, former Chief Executive Officer of SIMON, has joined iCapital as Managing Director, Head of iCapital Solutions. In this role, Jason will lead market development and sales of iCapital’s full suite of technology offerings. Additionally, nearly 200 SIMON team members have joined iCapital to ensure the continuity of quality support for clients.

Terms of the transaction were not disclosed.

Morgan Stanley & Co. LLC and UBS Investment Bank served as financial advisors to iCapital. Goldman Sachs & Co. LLC served as the exclusive financial advisor to SIMON.

Citi and Insigneo Complete Sale of Citi’s International Personal Bank Business in Puerto Rico and Uruguay

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By Funds Society, Miami

Citi and Insigneo closed the transaction under which the Miami-based independent broker-dealer and Registered Investment Advisor (RIA) acquired Puerto Rico-based broker-dealer Citi International Financial Services, LLC (CIFS) and Citi Asesores de Inversion Uruguay S.A. (Citi Asesores), an investment advisory firm in the country’s free-trade zone.

The transaction has received regulatory approval.

 

With the acquisition of CIFS and Citi Asesores, Insigneo will now exceed $17B in client assets and serve over 400 investment professionals. The acquired entities will continue to operate independently under the Insigneo brand.

“We’re prepared for a seamless transition of the businesses we are acquiring, and we welcome all incoming employees, investment professionals and their clients, to Insigneo’s growing independent platform,” added Raul Henriquez, Insigneo’s Chairman and CEO

Citi maintains all existing bank deposit relationships with wealth clients moving to Insigneo, which offers a broad spectrum of investment products and wealth management capabilities, according the firm information.

“Citi will continue to serve institutional clients through its Puerto Rico and Uruguay branches, as it has done so for the past 104 and 107 years; respectively. The U.S. Consumer Wealth team and the bank remain deeply committed to Latin America, where Citi has operated for more than a century and built an unmatched network across 20 countries. Citi’s U.S. Consumer Wealth business will continue to serve clients using the Citigroup Global Markets Inc. broker dealer”, the press release says. 

“The closing of the deal allows Citi to simplify its U.S. Consumer Wealth Management business model, focused on providing leading wealth management solutions through Citi Global Markets Inc. broker-dealer and investment advisor, while strengthening our banking relationships with our existing clients in Uruguay, Puerto Rico, and throughout Latin America.  In addition, it provides us an opportunity to expand banking services over time with Insigneo’s growing client base,” said Scott Schroeder, head of U.S. International Personal Bank at Citi.

The transaction is the latest in a series of ongoing strategic moves and acquisitions as Insigneo continues to execute on its business model, which received a boost with the recent $100M financing commitment by global investment firms Bain Capital Credit and J.C. Flowers & Co.


 

 

New Pilot Scheme in China Set to Boost Growth in Pension Target Funds

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Pension target funds (PTFs) stand to gain from the implementation of the pilot private pension scheme announced by the government in April, which encourages individuals to invest in a wide array of financial products.  

Under the voluntary scheme, participants can invest in deposits, bank wealth management products, mutual funds, and other financial products through individual accounts. Workers can contribute up to US$1,790 per year in the initial stage of the scheme flexibly ways, and enjoy tax incentives.  

PTFs, which are funds of funds (FoFs) using either target-date fund or target-risk fund strategies, were introduced in 2018 following regulatory initiatives. Following this, PTF assets under management posted stellar year-on-year growth, from 640 million dolar in 2018 to 3.84 billion in 2019 and increased 126.9% in 2020 and 91.8% in 2021 to reach 16.7 billion dolars.

As of May 2022, target-date and target-risk pension funds reached 192, with AUM of 15.66 billion, according to Eastmoney. Cerulli expects growth to accelerate under the new private pension scheme.  

As the pilot scheme is rolled out, Cerulli understands asset managers will speed up their participation in the PTF market, resulting in increased competition. Compared with the stable marketshares and rankings of fund management companies (FMCs) in the overall fund management industry, those of PTF players have been quite volatile in the last two years, given that this is a new segment.

The changes in marketshares and rankings show that even some mid-sized FMCs which had an early focus on PTFs can still demonstrate their competitive advantages. However, only time will tell if they can maintain their leading positions, as other FMCs attempt to catch up. 

The top 10 PTFs by AUM have a one-year duration, catering to investors’ preference. When asked about the key challenges in attracting retail interest to voluntary personal retirement schemes or retail retirement products, asset managers cited long lock-up periods, lack of understanding of the concept of retirement investing, and over-reliance on mandatory retirement schemes. Many investors still prefer comparatively high-liquidity financial products, while most pension products are invested in a long-term horizon.  

Cerulli believes that investor education will be a key factor determining the success of the private pension scheme. “Investors should understand the differences in investment horizons and methodologies between PTFs and more commonly used financial products. Distributors, including commercial banks and financial advisors, will shoulder some responsibility in educating investors and helping them choose suitable products, as well as providing post-sale advice,” said Pan Yanjun, analyst with Cerulli.  

She added, “Effective communication with investors is important to avoid the impact of market volatility on maintaining their fund holdings. Only by focusing on the steady income of long-term diversified allocations can investors realize value preservation and appreciate pension savings funds.” 

Bank of America, BNY Mellon and Citi Make Strategic Investment in Genesis Global

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Genesis Global announced $20 million in new investments from Bank of America, BNY Mellon and Citi.

These strategic investments follow the firm’s $200 million Series C funding announced in February.

“This strategic support from Bank of America, BNY Mellon and Citi demonstrates their confidence in low-code as an accelerator for the next wave of IT innovation,” said Stephen Murphy, CEO of Genesis. 

“Our clients and environment demand more innovation and productivity in terms of IT output,” said David Trepanier, Head of Structured Products, Global Credit and Special Situations at Bank of America. “The low-code solution provided by Genesis accelerates the development process and allow us to more quickly build out and launch new trading protocols and processes.”

“Our investment in and collaboration with Genesis allows us to create applications and solutions faster to meet the increasing demands of our clients,” said Avi Shua, CIO, Head of Investment Management, Wealth Management and Pershing Technology at BNY Mellon. 

He added: “The ability to develop, customize and integrate applications with speed is critical, and provides our developers a toolset to make robust and flexible platforms that can scale. We couldn’t be more excited for this opportunity to work alongside Genesis in expanding the development of low code technology.”

“The Genesis platform is built for financial markets,” said Nikhil Joshi, North America Head of Markets Technology at Citi. “The platform eliminates repetitive, non-differentiating work core to many financial industry applications, freeing developers to focus on innovative work and making Technology departments more productive and more strategic.” Citi first invested in Genesis in late 2020.

Speeding the application development process helps financial markets companies accelerate the pace of technology innovation in parallel to operating and upgrading complex legacy systems.

Digital transformation is a priority throughout financial services as firms seek to differentiate themselves, innovate, reduce the cost and complexity of existing systems and respond more nimbly to changing regulation.

Financial services firms use Genesis across the software value chain to automate spreadsheet processes, enhance existing systems, replace legacy technology and to build new, robust first-time applications.

In 2021, Genesis tripled its revenue and the size of its team. The growth is continuing in 2022, driven by increasing interest from clients in adopting the Genesis buy-to-build model for IT transformation. With buy-to-build, institutions accelerate the pace of IT transformation because building new applications and enhancing or replacing legacy systems is dramatically easier and faster through the Genesis platform.

About Genesis Global

Genesis provides freedom from legacy and replaces the buy versus build challenge with a buy-to-build solution. Purpose-built for financial markets organizations, the Genesis low-code platform powers application development with the speed, performance and flexibility these organizations need to gain a sustained competitive edge. With highly composable and customizable components, development teams can accelerate innovation today while scaling for tomorrow, according the firm information.

Genesis has global offices in Miami, New York, Charlotte, London, Leeds, São Paulo and Dublin.

Providers Seize Opportunities at the Intersection of Defined Contribution and Wealth Management

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Amid intense fee compression in the defined contribution (DC) market, financial planning and wealth management are becoming more attractive service offerings to recordkeepers, plan advisors, and other DC providers, according to The Cerulli Report—U.S. Retirement End-Investor 2022: Fostering Comprehensive Relationships.

DC providers are well positioned to nurture deeper, more comprehensive relationships with retirement investors that extend beyond their DC plan by helping them navigate complicated financial dilemmas, questions, and challenges over the course of their working lives.

One-third (34%) of active 401(k) participants name their 401(k) provider as their primary source of retirement planning and advice, followed by a financial professional (16%), according to the research. 

“Retirement investors’ financial priorities often shift from immediate saving and debt management concerns to longer-term, financial planning considerations as they progress through their careers and accumulate greater wealth,” states Shawn O’Brien, Cerulli associate director.

At a certain point, some participants will stand to benefit from a high-touch, comprehensive wealth management relationship where they gain access to more advanced financial planning services, a broader investment opportunity set, and more flexible distributions.

O’Brien adds, “Firms that establish and expand relationships with participants during their working years offer a simple, seamless transition from DC-focused asset accumulation to a more holistic, financial planning and advisory experience as they approach retirement.”  

The opportunity is ripe for retirement plan providers. Cerulli estimates more than $440 billion in DC assets were rolled into individual retirement accounts (IRAs) with the help of an advisor in 2021, illustrating the addressability for sourcing wealth management business from the DC market.

The vast majority (86%) of advisor-intermediated rollover assets are through an existing advisor relationship. “For wealth managers looking to capture rollovers from DC plans, this data underscores the importance of establishing and nurturing relationships with participants earlier in their careers, years prior to potential rollover events,” adds O’Brien. 

Cerulli anticipates DC recordkeeper and intermediary consolidation, along with ongoing legal and regulatory pressures, to continue to exert downward pressure on fees in the DC market, making financial planning and wealth management services increasingly attractive to providers from a financial standpoint. According to the research, the services are considerably more lucrative than pure-play recordkeeping relationships, in part because the wealth management industry has been largely insulated from the intense fee compression experienced in the asset management and recordkeeping industries.

Given the attractive economics of wealth management relative to recordkeeping and plan advisory, Cerulli anticipates more wealth managers and DC plan providers will create synergies between these two business units through mergers and acquisitions, and strategic partnerships.

O’Brien notes that, “By harmonizing their DC and wealth businesses, firms can manifest meaningful financial benefits for both franchises. Factoring in the expected ancillary revenue from converting DC participants to wealth management clients may allow firms to offer more competitive pricing on the DC side, helping them win additional mandates.” O’Brien also believes greater “coopetition” between recordkeepers and plan advisors could arise as the two parties work to serve the plan but simultaneously compete for participant rollovers. 

Credit Suisse Appoints Ulrich Körner New Group CEO

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credit suisse

Credit Suisse Group announced the appointment of Ulrich Körner as Group Chief Executive Officer (CEO) from August 1, 2022, replacing Thomas Gottstein, who is resigning.

“I am delighted to welcome Ueli as our new Group CEO, to oversee this comprehensive strategic review at a pivotal moment for Credit Suisse. With his profound industry knowledge and impressive track record, Ueli will drive our strategic and operational transformation, building on existing strengths and accelerating growth in key business areas,” said Axel P. Lehmann, Chairman of Credit Suisse.

Lehmann added: “Since becoming Chairman and reviewing the bank’s portfolio with our newly refreshed Board of Directors, I have come to appreciate the world-class quality of our businesses. But we need to be more flexible to ensure they have the necessary resources to compete. Our goal must be to become a stronger, simpler and more efficient Group with more sustainable returns.”

Thomas Gottstein, outgoing CEO of Credit Suisse after 23 years with the firm, said: “Credit Suisse has formidable client franchises in all four divisions globally and an immense talent pool of more than 50,000 colleagues around the world. Despite the challenges of the last two years, I am immensely proud of our achievements since I joined the Board seven years ago and, more recently, of having strengthened the bank, recruited a senior Board of Directors, reduced risk and fundamentally improved our risk culture.”

Following his appointment, Ulrich Körner, Chief Executive Officer of Credit Suisse, said: “I thank the Board of Directors for the trust they have placed in me as we embark on this fundamental transformation. I look forward to working with all colleagues in the bank and on the Board of Directors and to devoting all my energy to executing our transformation. It is a challenge, but at the same time it represents a great opportunity to position the bank for a successful future and to realize its full potential. I would also like to extend my heartfelt thanks to Thomas for his support and collaboration.”

Körner joined Credit Suisse in April 2021 as CEO Asset Management and joined from UBS, where he was a member of the Group Executive Board for eleven years, of which he spent six years heading the Asset Management division. Prior to this position, he was Chief Operating Officer. Since 2011 he also headed UBS’s Europe, Middle East and Africa region.

Prior to joining UBS, he was an executive at Credit Suisse and held various positions including CFO and COO of Credit Suisse Financial Services and CEO Switzerland. Ulrich Körner holds a doctorate in business administration from the University of St. Gallen.

This change in senior management comes on the heels of changes made during the first quarter of the year. In April 2022, the bank already announced the departure of David Mathers, the bank’s chief financial officer, as well as Helman Sitohang, managing director for Asia Pacific, and Romeo Cerutti, the bank’s general counsel, Romeo Cerutti. It has also appointed Francesca McDonagh to the position of CEO for EMEA (Europe, Middle East and Africa). 

At the same time, the bank has announced that it is conducting a comprehensive strategic review with key objectives.

First, to consider alternatives that go beyond the conclusions of last year’s strategic review, particularly given the changed economic and market environment. The goal of the appraisal will be to shape a more focused, agile Group with a significantly lower absolute cost base, capable of delivering sustainable returns for all stakeholders and first-class service to clients.

Second, strengthen its world-class global wealth management franchise, its leading universal bank in Switzerland and its multi-specialty asset management business.

Third, transform the Investment Bank into a capital-light, more market-focused banking business that complements the growth of the wealth management and Swiss Bank franchises.

Fourth, evaluate strategic options for the securitized products business, which may include attracting third-party capital into this market-leading, high-yielding platform to take advantage of untapped growth opportunities and free up additional resources for the bank’s growth areas.

And finally, to reduce the Group’s absolute cost base to below CHF 15.5 billion over the medium term, in part through an enterprise-wide digital transformation that prudently secures lasting savings while continuing to focus on improving risk management and risk culture.

Eli Butnaru joins Bolton Global Capital in Miami

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Bolton Global Capital announces that Eli Butnaru has joined the firm as a managing director.

Butnaru has more than 35 years of experience in directing various companies in the financial services industry with as many as 300 employees and annual revenues in excess of $2 billion, according the firm information.

His background includes managing companies in start-up, survival, turnaround, and growth modes for financial institutions such as Citicorp, UBS International, BNP Paribas and most recently, Boreal Capital.

“We are delighted to have such a well-respected financial professional affiliate with our company” stated Ray Grenier, Bolton’s CEO.

Among his previous positions, Butnaru served as Managing Director of Citibank for 18 years where he was a senior credit officer with an emphasis on petroleum, metals, and mining, the press release said.

He also served as global transaction head in Asia. During his tenure at Citibank, he was stationed in countries throughout Asia and the Americas.  He also acted as Market Head for the private bank of UBS International where he worked for 8 years.

Prior to joining Bolton Global, Butnaru was the CEO of Boreal Capital Management for 10 years where he was responsible for establishing and growing the firm’s securities brokerage and advisory businesses. He also managed client accounts worth approximately $250 million in market value.

His primary role at Bolton will be to manage and grow his securities and advisory business serving clients in the US, Latin America and Europe. He will be working at Bolton’s Miami office at the Four Seasons Tower on Brickell Avenue.

Butnaru is a graduate of Louisiana University and is a Chartered Financial Analyst or CFA.

 

Bolton Global Capital Expands South Florida Footprint with Opening of Weston Office

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Bolton Global Capital is expanding the firm’s presence in South Florida with the completion of its office complex in Weston.

This branch was developed to serve as a workplace for financial advisors who live in the suburban areas north of Miami. 

The new office is currently the workplace for five of the former Wells Fargo advisors who manage approximately $650 million in client assets together with their registered administrative associates.

These advisors include Jorge Aguerrevere, Ernesto Amengual, Felix Bosque, Andrei Santos and Leonardo Tedeschi. The group’s licensed support staff includes Carolina Castillo, Milton Ceotto, Maigualida Lanzetta and Adriana Perez.

This group primarily services high and ultra-high net worth clients located in the US and Latin America. Last year, Bolton recruited most of the financial advisors from the Weston branch office of Wells Fargo Advisors.

In addition to housing these advisors and their staff, this premium office space positions the firm to attract other professionals from the major banks and wirehouses who live in the suburb areas north of Miami such as Aventura, Hollywood, Pembroke Pines, Miami Lakes and Ft. Lauderdale.

Bolton’s main office in Florida is a 28,000 square foot complex at the Four Seasons Tower on Brickell Avenue in Miami. The new Weston office is located at 55 Weston Road. 

 

Global Law Firm Sidley to Open New Brickell Office

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Sidley Austin announced it has opened a Miami office, bringing its global office count to 21.

Sidley has been recruiting and hiring local lawyers since February and expects to announce the full roster of Sidley talent in August as various teams are released from their existing firms.

This is the firm’s first office in the southeast of the United States, a growing market for a wide variety of industries, including private equity, crypto, real estate, healthcare, finance, and sports/entertainment. In addition to attracting new lawyers to the firm, certain homegrown attorneys have relocated to Miami, according the company information.

“Miami is a dynamic international business hub that is attracting industries that we already serve, as well as incredibly talented attorneys,” said Yvette Ostolaza, Sidley’s Management Committee Chair, a Miami native and University of Miami graduate.

“This move into South Florida is a natural next step to continue serving our global clients, many of whom have moved their operations to Florida or are expanding to the region. We are also growing our talent pool to meet our clients’ needs by recruiting local teams who fit the Sidley platform as well as with our culture of hiring the best lawyers who believe in working in teams that are ‘built to win’ to deliver the best service to our clients. We also have Sidley lawyers who have been in Miami during the pandemic and are planning to make Miami their permanent home,” she added.

Sidley has leased swing space at 1001 Brickell Bay Drive.

It has over 40 lawyers and more to come.

Upon completion of construction, the firm will move to 830 Brickell in 2023, the new Class-A+ office tower nearing completion in Miami’s Brickell Financial District.  

 

For OCIO Providers, Fee Transparency Leads to Greater Client Satisfaction

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Outsourced chief investment officers (OCIOs) are keen to optimize the client experience with initiatives aimed at improving transparency amid rising competition and ongoing fee pressure, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.

With the growing use of OCIO search consultants, pressure to provide the most granular level of fees in the name of full transparency is a growing trend. However, how to quote a potential client for the overall fees they will incur in the OCIO relationship remains an area of debate among OCIO providers.

There is no widely accepted standard for precisely how fees should be presented. For instance, some providers believe fees should be displayed at a very granular level, showing how each component of the relationship contributes to the overall fee charged. “Whatever manner in which a provider chooses to display fees, full transparency is most associated with client satisfaction, potentially leading to stickier assets and longer client relationships,” states Laura Levesque, associate director. 

In addition to evaluating how much information to disclose to clients, providers are also evaluating how they communicate, looking at the mediums in which clients want to receive information. While service levels differ based on client, the research finds that “self-service” appeals to clients across the board, particularly amid the shift to remote work environments.  

Top-of-mind for providers is implementing a client portal—57% of OCIO providers are considering adding a portal to their lineup. “Clients’ desire to obtain information on demand is largely driving this trend and should be taken into consideration when deciding what to include in a portal,” says Levesque. 

Client portals can be simple report repositories or can offer clients highly sophisticated capabilities, ranging from prepared reports and documents to a full suite of on-demand services that can include access to proprietary analytics tools and risk management capabilities. Cerulli’s research finds a majority (57%) of providers include performance reporting on demand, access to recordkeepers (36%), and attribution tools (29%) as features. 

Capabilities offered through portals vary by provider based on resources, specialization, and client demand. For instance, while proprietary risk and analytics tools are seen as a value-add for many providers, some may not have the resources to provide these capabilities. “Regardless of the individual services an OCIO provider offers through its client portal, the goal is to provide clients with a level of reporting that cements a seamless experience for the client, founded on transparency,” concludes Levesque.