This Is How M&G Is Transforming to Become a More Agile and Efficient Organization

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M&G continues to make progress on the three strategic priorities it has set: financial strength, simplification, and growth. This was highlighted during the presentation of its first-half results, where it acknowledged “significant advances in M&G’s transformation, focusing on our strategic priorities” over the past 18 months.

“Despite a challenging market environment in the first half of the year, we have delivered another strong financial performance, with adjusted operating profit and capital generation almost matching last year’s excellent results. Our simplification agenda is advancing well, achieving cost savings of £121 million so far. We have made substantial progress across all our financial goals, and reflecting our strong track record and commitment to solid results for shareholders, we are now announcing upgrades to our capital generation and cost-saving targets,” said Andrea Rossi, Group CEO.

According to Rossi, the firm continues to drive its strategic priorities, “combining the Life and Wealth operations to accelerate our growth plan in the UK retail market. We also see growth opportunities in our international presence and in expanding our product offering,” he noted.

The Transformation of M&G

In its review of the first half of the year, the firm highlighted the good momentum in its Transformation program and noted that they are at the “midpoint” of this three-year initiative to “create a more agile and efficient organization.” To achieve this, “we continue to enhance our ability to respond to customers, reduce costs, and lead growth,” they affirmed.

According to their results, in the first half of 2024, they reduced costs by 4% compared to the same period in 2023, “more than offsetting inflationary pressures and freeing up resources to support investment in growth initiatives, thanks to the £121 million in cost savings since the program’s launch in early 2023,” they clarified.

Following a strategic review and in line with its commitment to operational discipline, they explained that they have decided to focus and streamline their Wealth strategy by combining Life and Wealth operations under the leadership of Clive Bolton. “With this change, we will be better focused on serving the UK retail market, complementing PruFund with life insurance solutions, reducing duplication, and improving efficiency,” they commented.

Regarding their cost reduction plan, they explained that they have raised their target from £200 million to £220 million by 2025, thanks to the progress made so far. “This target increase excludes any additional benefits arising from the streamlining of our operating model announced as part of the half-year results presentation.”

Growth and Outlook

The firm believes it is “successfully navigating a challenging macroeconomic environment.” “We have delivered strong performance while positioning the Group for sustainable long-term growth, focusing on capital-light business models in Asset Management and Life Insurance,” they emphasized.

They argue that the firm is well-positioned to face the current uncertain economic climate due to its diversified business model, international presence, attractive products and services, investment capabilities, and expertise. “The progress made in the first six months of the year supports our continued confidence in meeting our strategic priorities and financial goals, as we remain focused on transforming M&G to deliver excellent outcomes for our clients and shareholders,” they noted.

In this context, the firm reiterated that its priorities are clear: “Maintaining our financial strength, building on the progress already made in simplifying the business, and achieving profitable growth in the UK and internationally.”

Chilean Pension Funds Remain 17% Below Their Pre-Withdrawal Levels

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A little more than four years after the constitutional reform that authorized the first partial withdrawal of pension funds in Chile, the impact is still evident in the pension savings portfolios. According to the Pension Fund Administrators Association (AAFP), pension funds remain below the levels they had in July 2020, when the constitutional change took effect.

At the end of that month, the AFPs managed assets amounting to 214 trillion Chilean pesos (227.3 billion dollars), as stated in a press release. Since then, the system has not been able to return to that figure in any month.

Moreover, by July 2024, the accumulated AUM stood at 177.5 trillion pesos (188.1 billion dollars), which is 17% below the level of pension portfolios held four years ago, according to a study by the Ciedess research center.

In this context, the entity—created by the Chilean Chamber of Construction (CChC), one of the controllers of AFP Habitat—highlighted that the current value of pension funds is equivalent to 82.8% of what was accumulated before the withdrawals.

The deterioration is also evident in relation to the broader economy. Ciedess figures show that the resources managed by the AFPs represented 83% of Chile’s GDP in July 2020, while four years later, that figure had fallen to 62%, marking a 21 percentage point drop in relation to the local GDP.

In total, the three pension fund withdrawals amounted to 44.256 billion dollars, according to the latest data from the Pension Superintendency, involving 28.8 million payment transactions.

Since the third withdrawal window opened in 2021, there have been several attempts to authorize another withdrawal. Last week, Chile’s Chamber of Deputies’ Constitution Commission rejected the latest parliamentary motions proposing new withdrawals, adding to three previous proposals that had already been turned down by the Chilean Congress.

“It is important to clarify that the only way to recover the withdrawn pension funds managed by the AFPs is by replenishing or reintegrating these resources and adding the returns they would have generated from the moment of each withdrawal until the present. As we know, this has not happened, and therefore, the recovery of the fund’s value has not occurred,” explained Rodrigo Gutiérrez, general manager of Ciedess, in the press release.

In this regard, the executive pointed out that “while the third withdrawal included an additional contribution option for this purpose, in practice, its implementation has been almost negligible, and therefore, its intended effect has not been realized.”

UBS to Merge its Wealth Management and Private Banking Divisions in Brazil

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UBS is creating a new business unit, to be called GWM Brazil, which will merge the bank’s Private and Wealth Management areas, according to Bloomberg sources.

GWM Brazil will be jointly led by Luiz Borges and Rafael Gross.

Borges founded Consenso, a multi-family office acquired by the Swiss bank in 2017, while Gross led the client coverage area at Credit Suisse Brazil before the banks’ merger.

According to the report, the internal statement signed by the bank’s Head of Global Wealth Management LatAm, Marcello Chilov, states that the operation aims to “capitalize on the region’s potential and leverage the complementarities” in the businesses.

Luis Bermúdez Appointed as the New CEO of Banco Santander International

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Banco Santander announced to its employees the appointment of Luis Bermúdez as the new CEO of Banco Santander International, the division of International Private Banking in the U.S.

According to an internal statement from the company, the change will be made official in the coming weeks.

Bermúdez has over 20 years of experience in private banking, asset management, brokerage, and investment banking.

He joined Santander in 2005 in Madrid as a Fund Manager, where he stayed until 2010, reaching the position of CIO, Chief of Staff in Madrid. In 2010, he moved to Brazil, where he spent a year before arriving in Miami, according to his LinkedIn profile.

Bermúdez currently holds the position of Global Head of Business Development for Santander Private Banking, based in Miami.

Vanguard Reduces the Minimum Amount Required to Access Its Investment Platform, Digital Advisor

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Vanguard has announced a reduction in the minimum investment amount for its automated investment platform, Digital Advisor, lowering it from $3,000 to $1,001. In doing so, the asset manager aims to expand access to its digital advisory service for investors interested in managing their financial goals online.

Vanguard Digital Advisor, launched in 2020, offers a fully digital financial planning and investment advisory service, providing “personalized, convenient, and low-cost” advice. According to the company, the platform helps clients identify their retirement and non-retirement goals, then designs and manages customized, diversified, and tax-efficient investment portfolios to achieve them. As of June 30, 2024, Digital Advisor manages more than $19 billion in assets.

“Lowering the investment minimum for Vanguard Digital Advisor is an important step in our effort to expand investor access to advice and empower them earlier in their financial journey. We believe that advice strengthens investors’ ability to manage their personal finance and investment needs and can lead to better investment outcomes,” explained Brian Concannon, Head of Vanguard Digital Advisor.

This decision follows a period of accelerated growth and innovation for Digital Advisor, as Vanguard has significantly invested in the customer experience on the platform. Specific improvements include personalized coaching to reach financial goals, a wider selection of portfolios, greater tax efficiency, and the ability to create financial plans as a couple.

“Advice is fundamental to our mission of giving investors the best chance of investment success. We understand that our investors’ needs are constantly changing, and we are committed to continuously evolving and innovating our advice offerings to ensure that clients have the tools, guidance, and most importantly, the access they need to achieve their financial goals,” added Doug Mento, Head of Vanguard Advice.

Adcap Grupo Financiero Appoints Ariel Rivero and Juan Martín Longhi as Co-Heads of International Sales & Trading

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Adcap Grupo Financiero has announced the appointment of Ariel Rivero and Juan Martín Longhi, with over 20 years of combined experience in the financial sector, as the new Co-Heads of International Sales & Trading. According to the firm, this new team will aim to boost Adcap’s growth in global markets, with a strong focus on customer service.

Both professionals have extensive careers. Ariel Rivero, who holds an Executive MBA from IAE, has worked at renowned financial institutions and brokerage firms (ALYCs), excelling on the international trading desk. Regarding his new role, he commented, “I’m pleased with this recognition and the opportunity to continue growing. We hope to take Adcap to the next level and guide the next generation. It’s a great pleasure to share this position with Juan, who is not only an excellent professional but also a friend for many years.”

On the other hand, Juan Martín Longhi has an outstanding track record at the PUENTE trading desk and served as Executive Director of the Sales & Trading area at TPCG Valores. “I’m excited about this new challenge and taking on this role with Ariel, who is an excellent professional. We will develop all the tools needed for Adcap’s Sales & Trading business to grow in volume and improve the service for our clients,” Longhi noted.

Regarding both appointments, Agustín Honig, Managing Partner of Adcap Grupo Financiero, highlighted their importance to the company: “We are very proud to announce the promotion of Ariel Rivero and Juan Martín Longhi as Co-Heads of International Sales & Trading. Both have demonstrated exceptional commitment and leadership over the years at Adcap. I am confident that under their joint leadership, we will continue to expand our presence in global markets and provide top-tier service to our international clients.”

The Tax Annual Summit Returns to Uruguay

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Registrations and the agenda for the 2024 Tax Annual Summit are now available.

Titled “Shaping the Future of Taxation and Privacy,” the conference, which will bring together tax experts, will take place on November 21 at the Celebra building in Zonamerica, Uruguay. The event is organized by The 1841 Foundation.

The agenda includes keynote speakers such as Axel Kaiser, lawyer and president of Fundación para el Progreso; Dan Mitchell, president of the Center for Freedom and Prosperity; and María Eugenia Talerico, former vice president of Argentina’s Financial Information Unit.

The link to purchase tickets is:https://www.eventbrite.com/e/2024-tax-annual-summit-by-the-1841-foundation-tickets-998572195317?aff=FundsSociety

The SEC Accuses Six Credit Rating Agencies of Significant Failures in Record-Keeping

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The Securities and Exchange Commission (SEC) has announced charges against six nationally recognized statistical rating organizations for significant failures by the firms and their staff in maintaining and preserving electronic communications. The firms involved in this action include Moody’s Investors Service, S&P Global Ratings, Fitch Ratings, HR Ratings de México, A.M. Best Rating Services, and Demotech, Inc.

According to the U.S. authority, the firms admitted to the facts outlined in the SEC’s respective orders, acknowledged that their conduct violated the record-keeping provisions of federal securities laws, and agreed to pay civil penalties totaling 49 million dollars. Additionally, all the firms have begun implementing improvements in their compliance policies and procedures to address these violations.

The SEC further clarified in its statement that, with the exception of A.M. Best and Demotech, each credit rating agency is also required to hire a compliance consultant. The SEC recognized that A.M. Best and Demotech made significant efforts to comply with record-keeping requirements early on as registered credit rating agencies and cooperated with the SEC’s investigations, thus they are not required to hire a compliance consultant under the terms of their settlements.

“We have repeatedly seen that failures to maintain and preserve required records can hinder staff’s ability to ensure firms meet their obligations and the Commission’s ability to hold those who fail to meet such obligations accountable, often to the detriment of investors. With these actions, the Commission once again makes it clear that there are tangible benefits for firms that make significant efforts to comply and cooperate with staff investigations,” explained Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement.

Political Discord in the U.S. Is the Primary Concern for Investors Over the Next Decade

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Janus Henderson Investors has published the results of its Investor Survey 2024: Insights for a Brighter Future, which reveals that uncertainty surrounding the upcoming presidential elections, the economic situation, and the interest rate environment has led some investors to reduce the risk in their portfolios.

In particular, only 42% of surveyed investors feel very satisfied with their current financial situation, down from 48% a year ago, and two out of three (67%) believe that the cost of living is rising faster than their income. “In times like these, all investors should bear in mind that changes to a portfolio designed to avoid short-term volatility can often jeopardize long-term goals. The news cycle moves at an incredible pace, and headlines can be disconcerting, but U.S. equities have remained remarkably resilient despite high levels of uncertainty,” says Matt Sommer, head of Specialist Consulting Group at Janus Henderson Investors.

According to the report, the presidential elections are a bigger concern than inflation and interest rates. In an election year marked by turmoil, it clearly weighs heavily on the minds of current investors, with 78% of respondents concerned about how the upcoming presidential elections might affect their financial situation in the next 12 months. In fact, more respondents are worried about the elections than about persistent inflation (70%), high interest rates (57%), poor stock market performance (57%), or a potential recession (55%).

Over a longer period, namely the next 10 years, investors’ concerns are related to broader national and global systemic issues. Specifically, in order of relevance, they are worried about the long-term impact of increasing political discord in the U.S. (77%); the rising cost of healthcare (67%); national debt (66%); and U.S.-China relations (64%).

Less equity and more active management

When evaluating the investment implications of this sentiment, the report notes that investors have reduced their exposure to equities. Over the last 12 months, 33% of respondents have moved assets from equities to cash or fixed-income investments, and almost the same number (32%) plan to move equity assets to cash or fixed income over the next 12 months.

“The main reasons for leaving equities or planning to do so include rising interest rates, following advice from their advisor, and feeling safer in cash or fixed income. Although nearly half of the respondents (54%) say they are preparing for a recession, this figure is lower than the 65% seen in 2023,” the asset manager explains.

On the other hand, a notable trend is that active management remains in demand. According to the report’s conclusions, amid high uncertainty, 43% of investors who hold mutual funds or ETFs prefer an even mix of active and passive funds in their portfolios, 26% favor active managers, 18% prefer passive ones, 10% have no preference, and 3% were unsure.

Additionally, the areas that investors consider to represent the best investment opportunities in the coming years are technology (73%), healthcare/biotechnology (62%), and real estate (38%).

The risk of AI

A striking finding is that investors view AI-related fraud as an established threat. Nearly three out of four investors (73%) believe that AI significantly increases the risk of financial exploitation, and 56% are very or somewhat concerned that they or a loved one might fall victim to financial exploitation. Millennials (66%) and Generation X members (63%) are more likely to be concerned about financial fraud than Baby Boomers (48%) or members of the Silent Generation (43%).

Across all generations, 45% of investors who use a financial advisor say their advisor has already provided them with resources to help avoid financial fraud, 29% would like their advisor to provide such resources, and the remaining 26% are not interested in these resources.

However, the sentiment around AI is not entirely negative. Among those who use a financial advisor or are considering hiring one in the next two years, most feel good or neutral about their advisor using AI technology for educational content (85%) or administrative tasks (83%). However, the report points out that 36% would oppose their advisor using AI to make investment recommendations, and 44% would be upset if they knew their advisor used AI to respond to their text or email messages.

Greater satisfaction with financial advisors

Finally, the survey highlights that among investors who work with a financial advisor, 67% are very satisfied and 31% somewhat satisfied with their relationship. Notably, when advisors address emotional needs, client satisfaction improves, as factors associated with higher levels of satisfaction include:

– The advisor gives me peace of mind that I am on the right track to achieve my goals (cited by 79% of “very satisfied” clients)
– They care about me as a person, beyond my financial situation (72%)
– They provide financial education (65%)

It is worth noting that 42% of advised investors say their advisor is 50 years or older, and within this group, 42% said their advisor had addressed succession planning, 25% were unaware of their advisor’s plans but were interested in learning more, and the remaining 32% did not see the need to address this issue.

“Growth-oriented financial advisors should view the challenges investors face in this era of high uncertainty as an opportunity to strengthen their value proposition. It is clear that client satisfaction rates are very high among advised investors. However, with many advisors nearing retirement, those able to build trust and differentiate themselves by offering better experiences to their clients will be rewarded,” says Sommer.

BBVA Mexico Inaugurated a Nearshoring Office in Houston

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BBVA Mexico opened its new Corporate and Government Banking representation office in Houston, Texas, a region of the United States known for its diverse industrial sectors, including aerospace, manufacturing, energy, biotechnology, digital technology, logistics, and transportation, the bank announced in a statement.

The new office offers investment advisory services, financial tools, and access to the supply chain of the financial institution, which has around one million business clients in Mexico.

Víctor Rojas Fernández, director of the Corporate and Government Banking office in Houston, who led the institution’s Automotive Banking division for five years, bringing it to the top position in market share among banks operating in the country, emphasized that “the strategy aims to attract around 65 foreign companies in the first year of the new office’s operations.”

“Our goal is to approach business owners looking to operate in Mexico directly at their place of origin, anticipate their needs, and not wait for them to come to the country. This will allow us to provide them with advice and support them with the procedures and requirements necessary for their operations, ensuring a smooth entry into the country,” he said.

The BBVA Mexico Regional Sectoral Situation report highlights that Texas stands out as the U.S. state with the largest imports from Mexico, reaching $142.7 billion in 2023. Mexico registers a higher annual exchange of goods and services with Texas than with Asia, making the region a significant commercial hub.

The same analysis indicates that from the U.S. perspective, annual imports of goods from Mexico in 2023 reached $475.6 billion, with manufacturing representing 88.7% of the total. The demand for Mexican goods follows a geographical pattern linked to U.S. industrial regions, with Houston as a leader.

Data from the Federal Reserve Economic Data (FRED) of St. Louis reveals that Texas has consolidated itself as one of the fastest-growing states in terms of Gross Domestic Product (GDP), which has grown 30% since 2010. Texas alone would be the eighth-largest economy in the world and is the leading exporting state in the U.S., according to the state’s government office.

“With this new office, BBVA Mexico reaffirms its commitment to promoting foreign investment and facilitating economic growth in both Mexico and the United States, leveraging the nearshoring phenomenon,” the statement concluded.