Over 86% of German wealth managers working with high net worth (HNW) individuals believe that they will lose market share to automated investment services over the next two years, according to financial services research and insight firm Verdict Financial.
The company’s latest report states that, of developed markets, HNW clients in Germany show the greatest interest in automated advice platforms. In global terms, however, robo-advisors are still struggling to attract the assets of the wealthiest, and consequently grow their businesses and turn them profitable.
Bartosz Golba, Verdict Financial’s Senior Analyst covering Wealth Management, notes that the HNW segment’s uptake of digital platforms is lowest in markets where robo-advice has been present for a while, such as the UK and the US.
Golba explains: “The initial emergence of robo-advice platforms in these two highly developed regions was generally expected, and attracted the attention of young high-earners making their first investments. However, the wealthiest in mature economies have longstanding relationships with private bankers, and are not prone to switching to digital-only propositions.
“Robo-advisors in the US and the UK appeal mostly to HNW investors who are price-sensitive and self-direct a share of their portfolios to save on fees. German millionaires, however, are slightly different. The main factor attracting them to automated services is the appeal of a hassle-free means of rebalancing their portfolios.”
However, this single positive function will not prompt HNW individuals to transfer significant amounts of money to simple investment platforms provided by robo-advisors 1.0, so Verdict Financial forecasts the rise of more sophisticated digital propositions, not only in Germany.
Golba continues: “HNW individuals feel that their portfolios are complex and require advanced solutions that must be managed by humans. Indeed, the main challenge for every new entrant to the robo-advice space is client acquisition. Without HNW clients’ assets, digital platforms will struggle to become profitable in the long term, and their business models must therefore evolve to meet HNW individuals’ needs.
“Traditional wealth managers can actually help to bring robo-advice to the next level. With their huge budgets, incumbents can invest more in developing new technologies, and do this in partnership with robo-advice platforms provided by financial technology start-ups. In this way, we will see a growing number of deals between traditional players and challengers being signed across the globe.”
Foto: Richard Leeming
. Pasarán años hasta que los tipos estadounidenses vuelvan al 2%
US short-term interest rates may not rise back to 2% until 2019 or 2021, given weak domestic growth and protracted international headwinds such as China’s slowdown, Legg Mason Western Asset Chief Investment Officer, Ken Leech, says.
The 38,000 jobs added by the US economy in May, the lowest number in almost six years, is a sign that the US economy is not growing as fast as many observers believed. The data, however, confirms an economic backdrop more aligned with the firms´ moderate view of the US economy.
“I think it could still take 3 to 5 years for short-term rates to go back to 2%,” says Leech. “That’s a long time, but remember people also said 3 to 5 years in 2009. Given global fragility, I think that a rate hike now would be a misjudgement of the situation; it’s not just that global inflation hasn’t stabilized yet; it’s that it is still coming down. Japan and Europe are still fighting deflation. This is going to be a very long process.”
Pasadena, California-based Western Asset believes the US Federal Reserve won’t raise rates unless and until:
Economic growth is in line with the Fed’s forecast – and it is still below.
Inflation expectations rise.
In this scenario, global monetary policy is likely to stay accommodative, supporting sectors such as corporate and certain Emerging Market bonds. Ken Leech says: “We believe U.S. investment-grade has very compelling valuations, as current spreads are very high when compared with recent recession levels. There are also opportunities in high-yield, where the implied cumulative default rate is a staggering 37%, well above the current 2%. The most controversial area may be emerging markets, which have a terrible storyline: slow growth, low commodity prices and political challenges. All this has created a stampede out of the asset class that has brought EM spreads back to 2008–09 levels. While we may agree, we ask ourselves: what’s the price?”
Football, a term, a sport, which unites billions of people across the globe irrespective of ethnicity, race or religion. It can be played anywhere, anytime, with anybody, and almost with anything (as long as the object that represents the ball has a spherical shape). These attributes made it to be the world’s most popular sport, and while not only does it unite billions of people across the planet, but it is also one of the most powerful advertising mechanism thanks to its reach. The UEFA European Championship, along with the FIFA World Cup and Olympics Games, is one of the top three sporting events of the world. Furthermore, it is one of the most-followed sporting events in Europe, attracting the interest of both football fans and the business world alike. While for many it is pure enjoyment and even a way of life, for others it is a pure business opportunity. According to some estimates, the UEFA Euro 2012 co-hosted by Poland and Ukraine had a cumulated audience of about 1.9 billion, which is around one-quarter of the global population, and the final match between Spain and Italy was watched by nearly 300 million viewers worldwide vs. 237 million in 2008. The very same phenomenon can be observed when we look at the stadium attendance and its evolution over time (see chart 1).
These figures clearly illustrate the opportunity embedded in these events, and no wonder companies stand in line, outbidding themselves just to have their names as the official sponsors (see chart 2).
“There is a school of thought that argues that watching top-flight football these days is a middle-class pastime, available only to those who can pay in advance for expensive season tickets.” And this really seems to be the case, unlike what it used to be twenty years ago. As previously explored in an earlier study entitled “Affordable Luxury” published on 7 April 2016, the global middle class is growing rapidly, and while football is everybody’s sport, the middle class is in the sweet spot.
Then there is globalization, and technological advances (online streaming), and all of a sudden we are at a point where billions of potential customers are watching the same event, seeing brands appearing, convincing them about their values and attributes, and for the first time in their lives they have the disposable income if they decide to act on their desires.
Those that will score the goals
While there are 10 global sponsors 4 for this year’s Euro Cup, it does not necessarily mean that they would be the sole winners. Even though most if not all of them should see a surge in their sales and brand awareness, for most it would only be a one-time push. The companies that we would focus on and identify as real winners are those who will be able to generate lasting brand awareness, have a certain appeal to their brands, and hence are capable of capturing the desires of billions of people.
The high investment threshold of European long-term investment funds (ELTIFs) is being blamed for limiting take-up by investors, according to the latest research of Cerulli Associates.
The global analytics firm headquartered in Boston says this hurdle is hampering take-off, even as European regulators seek to encourage investment from mid-sized pension funds and insurers by easing the Solvency II capital requirements for insurers with ELTIF exposure.
ELTIF regulation was implemented across the European Union in December 2015, introducing a new type of collective investment vehicle allowing retail and professional investors to invest in companies and projects that need long-term capital.
“Given the various tax treatments in different countries across the EU, this may be a harder sell than envisaged,” says Barbara Wall, Europe managing director at Cerulli Associates. “There is greater optimism about the prospects for Luxembourg’s reserved alternative investment fund (RAIF) and Ireland’s collective asset management vehicle (ICAV), particularly if the latter is able to attract funds converting from other Irish investment funds structures.”
Noting that it is still early days for ELTIFs, Wall says there are signs of interest from managers already investing in the infrastructure space and those looking to target the mass affluent market.
“Demand will depend on liquidity, how investments are viewed for capital risk and the treatment of the fund over the long term,” says Wall.
The RAIF is the latest step in Luxembourg’s drive to become a hub for alternative investment funds. It has very similar features to Specialized Investment Funds and SICARs, but does not need to be approved and is not supervised by the Commission de Surveillance du Secteur Financier (CSSF). The ICAV has become the vehicle of choice for both UCITS and AIFs domiciled in Ireland.
Foto: Herman
. Janus Capital Lanza cuatro ETFs temáticos: atención a largo plazo, salud y bienestar, orgánicos y obesidad
Janus Capital Group announced the launch offour thematic ETFs that allow investors to target companies that may benefit from global demographic and consumer shifts.
These themes include long‐term care for the elderly, an increased focus on health and fitness, the treatment and care for obesity and an increased demand for organic products.
“Changes in demographics and lifestyle are altering the investment landscape,” said Nick Cherney, Senior Vice President and Head of Exchange Traded Products for Janus Capital Group. “These thematic Exchange Traded Funds are designed to capitalize on those shifts to give advisors new tools that can help clients achieve better financial outcomes.”
The ETFs are overseen by the Janus Exchange Traded Products Team and are not actively managed products.
The Long‐Term Care ETF seeks exposure to companies globally that are positioned to profit from owning or operating senior living facilities, specialty hospitals, providing nursing services and biotech companies for age‐related illnesses.
The Health and Fitness ETF seeks exposure to companies in nutrition, sports apparel and fitness technology and equipment, and the health club sector, which are poised to take advantage of the growing trend.
The Organics ETF which seeks exposure to companies that service, produce, distribute, market or sell organic food, beverages, cosmetics, supplements or packaging.
The Obesity ETF seeks exposure to companies that provide treatment and care for obesity and obesity‐related disease, including biotechnology and pharmaceutical, healthcare and medical device companies, other health care firms, the weight loss market and supplement companies.
Foto: ipurbeltz, Flickr, Creative Commons. Schroders nombra a Shigesuke Kashiwagi presidente y Country Head de Japón
Schroders announces the appointment of Shigesuke Kashiwagi to President and Country Head of Japan, effective 01 July 2016, bringing some 34 years of industry experience to the role.
Shigesuke Kashiwagi joins Schroders from Nomura Holdings, Inc. where he was Executive Managing Director, Chief Financial Officer since April 2013. During his distinguished career at the firm, he has held a number of senior management roles in Tokyo, New York and London. Prior to being CFO, Mr. Kashiwagi served as Senior Managing Director of Group Strategy and Executive Office with particular focus on regulatory strategy, as President and CEO of Nomura Holdings America, Inc. and as Head of Global Fixed Income.
Shigesuke Kashiwagi will be based in Tokyo and will report to Lieven Debruyne, Chief Executive Officer Asia Pacific. He succeeds Guy Henriques who has been in the President role since 2012 and will be returning to a role in the UK later this year.
Peter Harrison, Group Chief Executive at Schroders, said: “We welcome Shigesuke to Schroders as President of our Japanese business. The appointment of an executive with Shigesuke’s unrivalled experience and financial industry knowledge highlights our continued commitment to growth in Japan, Asia’s largest investment market, and a strategically important part of Schroders.”
Lieven Debruyne, Chief Executive Officer Asia Pacific at Schroders, said: “Shigesuke’s distinguished and varied career at Nomura reflects his global leadership skills and deep understanding of the country’s client needs. His unparalleled experience will help drive the next stage of growth of our successful Japanese business, not just in delivering investment solutions for major clients but also in the vital areas of governance and stewardship. His extensive industry knowledge means he is well-placed to strengthen our position as a leading asset manager in the region and we look forward to working with him.”
Shigesuke Kashiwagi, newly appointed President and Country Head of Japan at Schroders, said: “Schroders is an industry leader with a long history, a first class reputation and outstanding business performance. I am delighted to be joining the firm as the new Country Head of Japan.”
Foto: jlmaral
. La SEC premia con 17 millones a un informador
The Securities and Exchange Commission announced on June 9th a whistleblower award of more than $17 million to a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.
The award is the second-largest issued by the SEC since its whistleblower program began nearly five years ago. The SEC issued a $30 million award in September 2014 and a $14 million award in October 2013.
“Company insiders are uniquely positioned to protect investors and blow the whistle on a company’s wrongdoing by providing key information to the SEC so we can investigate the full extent of the violations,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “The information and assistance provided by this whistleblower enabled our enforcement staff to conserve time and resources and gather strong evidence supporting our case.”
Sean X. McKessy,Chief of the SEC’s Office of the Whistleblower, added, “In the past month, five whistleblowers have received a total of more than $26 million, and we hope these substantial awards encourage other individuals with knowledge of potential federal securities law violations to make the right choice to come forward and report the wrongdoing to the SEC.”
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
The SEC’s whistleblower program has now awarded more than $85 million to 32 whistleblowers since the program’s inception in 2011. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million. All payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.
FINRA designa a Robert Cook como presidente y CEO - foto cedida. FINRA designa a Robert Cook como presidente y CEO
The Financial Industry Regulatory Authority (FINRA) announced on Monday that its Board of Governors has appointed Robert W. Cook as President and Chief Executive Officer, effective the second half of 2016. Mr. Cook will succeed Richard G. Ketchum, who has served as Chairman and CEO since 2009. The Board intends to name a new Chairman in the coming months.
Mr. Cook will join FINRA from Cleary Gottlieb Steen & Hamilton LLP, where he has served as a partner in the firm’s Washington, DC, office since June 2013. Prior to joining Cleary Gottlieb, Mr. Cook served as the Director of the Division of Trading and Markets (Division) of the U.S. Securities and Exchange Commission (SEC) from 2010 to 2013. Under his direction, the Division’s 250 professionals were responsible for regulatory policy and oversight with respect to broker-dealers, securities exchanges and markets, clearing agencies and FINRA. He also directed the staff’s review of equity market structure and its analysis of the Flash Crash of May 6, 2010. Prior to joining the SEC, Mr. Cook served as a partner at Cleary Gottlieb since 2001, and joined the firm in 1992.
“Robert has a deep understanding of the securities markets, and investors will greatly benefit from his broad regulatory expertise developed as Director of the SEC’s Division of Trading and Markets, where he led the organization in establishing and maintaining standards for fair, orderly and efficient markets,” said FINRA Lead Governor Jack Brennan, former CEO of Vanguard Group. “We thank Rick for his terrific leadership as FINRA’s Chairman and CEO, and express our gratitude on behalf of all investors for his decades of service.”
“Having known and worked alongside Robert for several years, I know that he brings extensive expertise as one of the leading practitioners on broker-dealer and market regulation, as well as proven regulatory and leadership experience,” said Mr. Ketchum. “Robert’s appointment is the result of the Board’s careful and thorough search process to identify the right leader to carry on FINRA’s important role of educating and protecting investors in the years ahead. It has been my honor and privilege to lead this extraordinary organization.”
“I am honored to join FINRA as CEO, and to have the opportunity to work alongside FINRA’s talented and dedicated staff in the critical role of protecting investors, as well as ensuring fair and orderly financial markets,” said Mr. Cook. “I look forward to building on Rick’s many years of excellent work and collaborating with FINRA’s Board, members and other stakeholders to strengthen investor protections, promote market integrity and enhance FINRA’s core competencies of examinations, enforcement, rulemaking, market transparency and market surveillance.”
Foto: gags9999
. UBS Wealth Management Americas reduce la contratación de advisors en un 40%
UBS Wealth Management Americas (WMA) has announced it is introducing a new operating model designed to move decision-making and resources closer to clients and drive organic growth through an increased focus on advisor retention. Specifically, WMA is changing its field structure and its compensation plans for financial advisors and field management, as well as reducing advisor recruiting by 40 percent.
WMA initiated several changes as part of the new operating model, including:
Delayering the field structure:WMA will now be organized into four divisions, 43 markets and 208 branches. Previously, its structure included two divisions, eight regions, 63 complexes and 189 branches. By eliminating the regional layer and realigning into larger markets, WMA is giving field leaders broader spans of control and moving decision-making authority closer to clients.
Enhancing and simplifying FA compensation: As part of a shift in focus from recruiting to retaining and rewarding its best advisors, WMA has launched a simpler advisor compensation plan that is easier to understand and rewards productivity, growth and loyalty. The plan includes increased payouts for advisors with the largest books of business, incentives for advisors to form teams, which has been shown to benefit clients, and an enhanced program for advisors seeking to transition out of the business and transfer their practice to another UBS advisor.
Aligning Field Manager compensation: WMA is modifying its compensation plans for field leaders so that they are both rewarded and held accountable for the decisions they make.
Shifting home office resources to the field: WMA is streamlining management in its home office in order to reinvest in staff and resources that make a tangible difference for clients and advisors.
As part of the new field structure, Brian Hull will continue as Head of the Client Advisory Group, overseeing four divisions, led by: Jason Chandler (Northeast), Bill Carroll (Central), Brad Smithy (Southeast), and Lane Strumlauf (West). John Mathews will continue as Head of Private Wealth Management.
Generali Investments Deutschland Kapitalanlagegesellschaft mbH (GID) has been merged into Generali Investments Europe S.p.A. Società di gestione del risparmio (Generali Investments) effective from the beginning of June 2016. The transaction is part of the Generali Group’s strategic decision to streamline its global asset management operations and has been enabled by recent regulatory changes facilitating the passporting of funds across Europe.
Santo Borsellino, CEO of Generali Investments, has commented: “The merger of GID into Generali Investments is another step forward in the process aimed at creating the pan- European and borderless asset management hub of the Generali Group. We have now simplified our structures in Germany, aiming at achieving better coordination across the company and serving our internal and external German clients more efficiently.”
GID was an asset management company belonging to the Generali Group, operating in Germany and acting as the management company for third-party and Generali Group insurance portfolios. As of year-end 2015, GID counted on 47 professionals and approximately €33 bn of total AuM. For most of GID’s AuM Generali Investments acted as the delegated investment manager. Furthermore, most of GID’s AuM consisted of German Spezialfonds (AIF) and mandates set up for the benefit of the Generali Group insurance companies.
Generali Investments is one of the first players in the European asset management industry to apply, at the same time, the passporting procedures as per the recently introduced UCITS and AIFMD EU directives. As a result, Generali Investments will offer its German clients, and manage, a comprehensive range of investment solutions including UCITS and AIFMD- compliant Germany-domiciled investment funds, such as the Spezialfonds, previously administered by GID as a Germany-based asset management company.
