Foto: Armada Española. Los activos de los RIAs alcanzarán el 28% de la cuota de mercado en EE.UU. en 2018
New research from global analytics firm Cerulli Associates predicts registered investment advisor (RIA) and dually registered advisor assets will reach 28% marketshare by year-end 2018.
“As of year-end 2013, the RIA and dually registered segment account for 20% of total intermediated retail investor assets, and we expect that number to reach 28% by 2018,” states Kenton Shirk, associate director at Cerulli.
“The asset marketshare of the RIA channel exceeds headcount marketshare, reinforcing the fact that RIA advisors manage more assets than advisors outside of the channel, on average,” Shirk explains. “When you combine this data with our projected growth of the channel, it would seem that the RIA channel would be a high priority for asset managers. However, the channel presents unique challenges for product providers, which can reduce the appeal.”
“Ongoing growth of RIA practices with more than $1 billion in assets has occurred, and while these practices are certainly attractive on a standalone basis, they become less so when compared to wirehouse branch offices, which represent equal or larger opportunities,” Shirk continues. “The reality is that strategic partnerships with large broker/dealers ensure branch office access and consideration for inclusion in the portfolios recommended by home-office teams, which can result in millions of dollars of flows based on a single decision.”
Cerulli cautions that while the RIA and dually registered segments represent a flourishing distribution opportunity, product providers must make every effort to ensure they are creating an efficient and sustainable process to address this dispersed market.
More than 62 percent of pre-retirees now say they are “terrified” of what health care costs may do to their retirement plans, according to an annual Nationwide Retirement Institute survey. The survey reveals concern about out-of-control health care costs and the Affordable Care Act (ACA) increasing those costs.
According to the online survey conducted from Oct. 6 – 14, 2014, by Harris Poll of 801 Americans age 50 or older with at least $150,000 in household income (“affluent boomers”), 72 percent say one of their top fears in retirement is their health care costs going out of control. More than half (55 percent) believe the ACA will increase those costs and more than one-quarter of employed affluent boomers (26 percent) now believe they will never retire.
“Even America’s affluent workers don’t know how they will fund their health care costs in retirement and they don’t expect ObamaCare will help them,” said John Carter, president of Nationwide’s retirement plans business, which provides defined contribution and defined benefit plans to more than two million participants, representing nearly $100 billion in assets under management. “The attention the ACA has received in the past year has increased awareness of health care costs in retirement. We think that’s a step in the right direction, and what Americans need now is a plan to adequately prepare for those costs. It is possible. However instead of making a plan, too often the ‘plan’ is to just continue working.”
The attention the ACA has received in the past year has increased the percent of pre-retirees who feel very confident to confident that they know their personal benefits and consequences of the ACA (32 percent vs. 24 percent). Yet, pre-retirees are also more likely than last year to say they expect their biggest expense in retirement to be the cost of health care (51 percent vs. 43 percent).
Many Americans like aspects of the ACA, such as guaranteed coverage and access to multiple insurers. However, most affluent boomers (64 percent) believe the ACA will be a significant drain on the U.S. economy and will do more harm than good to their employer (63 percent). More than two in five affluent boomers (45 percent) say they would delay their retirement if they had to buy their own health insurance. Over one-quarter of parents (27 percent) say they would delay their retirement in order to keep their children on their employer-based health insurance plan.
Understanding Medicare
Over three in five affluent pre-retirees (61 percent) wish they understood Medicare coverage better, and 73 percent of those who discussed their retirement plans with a financial advisor say it is important or very important their financial advisor discusses health care costs during retirement with them when planning for retirement. Nearly two-thirds of affluent pre-retirees enrolled in Medicare did not know that Medicare does not cover long-term care costs.
Solutions available
However, 77 percent say they have not discussed their health care costs during retirement with a professional financial advisor. Of those who have talked with an advisor, three-quarters (75 percent) discussed health care costs in retirement not covered by Medicare.
To help simplify this complicated issue and encourage these discussions, Nationwide’s Personalized Health Care Assessment uses proprietary health risk analysis and up-to-date actuarial cost data such as personal health and lifestyle information, health care costs, and medical coverage to provide a meaningful, personalized cost estimate that will help clients plan for medical expenses. For those under 65, it bases its calculations on the average cost of a Silver Plan in the Affordable Care Act exchanges in their state.
“It’s much easier for advisors to have these difficult conversations when they can use a tool to provide a fact-based cost estimate based on their clients’ health risk and lifestyle,” said Kevin McGarry, director of the Nationwide Retirement Institute. “They now can break down and simplify a complex topic to take clients from terrified to confident.”
Opportunity International, the premier global financial services organization for the poor, announced Credit Suisse will help support a new education initiative to improve the quality, availability and affordability of education in impoverished areas of Latin America, Africa and Asia.
“Investing in education is one of the most decisive ways to help people work their way out of poverty,” said Vicki Escarra, Global CEO of Opportunity International. “Research has shown that education raises a student’s future economic status and can even extend life expectancy. We look forward to continuing our important partnership with Credit Suisse to expand educational opportunities for thousands of youth through access to financial services.”
Building on a successful six-year partnership with Credit Suisse, this new three-year program will launch education finance initiatives in Colombia and Tanzania and expand existing programs in the Dominican Republic, Ghana, Kenya, Malawi, Rwanda, Uganda, India and the Philippines to help more than 530,000 children and youth through a combination of innovative savings, lending, insurance and financial education products and services. Specifically, the initiative will provide school improvement loans to help build and expand schools, hire and train teachers, provide lunches and help pay for other activities to increase the number of students in school and improve the quality of education they receive. The initiative will also provide school fee loans to help parents pay tuition and buy books and other school supplies to ensure their children stay in school regardless of family income fluctuations.
“More than 67 million children worldwide are not enrolled in schools, often because their family simply cannot afford the costs of school fees, tuition or supplies, or because quality education isn’t available where they live,” said Manuel Rybach, Global Head Corporate Citizenship and Foundations for Credit Suisse. “Credit Suisse and Opportunity International understand that investing in education is an investment in the future. That’s why we’ve partnered— to ensure that children around the world have opportunities to learn and grow.”
An estimated 7.1 million people have already benefited from the partnership between Opportunity International and Credit Suisse’s Microfinance Capacity Building Initiative through support of electronic-banking transactions, training for microfinance staff and financial services for people in impoverished areas. The new “Empowering Generational Change through Education” initiative aims to achieve the following goals:
Provide 2,200 school improvement loans to private school proprietors, impacting the access and quality of education for approximately 484,000 students.
Provide 52,000 school-fee loans to parents and students to help parents to pay tuition and fees, impacting the education of approximately 161,000 students.
Pilot and expand additional educational services to provide young people with a formal education and the skills they need to get a job. Services provided will include child savings accounts and youth financial education in Africa; and the EduSave program—an innovative, free insurance program to cover a child’s school costs in the event of a parent or guardian’s death or permanent disability.
Provide education finance bank staff with training and development opportunities to help them service Opportunity’s growing educational programs.
Increased investor exposure to alternative assets is being led by private equity, with two in five Limited Partners (LPs) planning an increased target allocation to the asset class in the next twelve months, according to CollerCapital’s latest Global Private Equity Barometer. However, although one third of investors say they will also increase their allocation to real estate, the same proportion will reduce their allocation to hedge funds. (Separately, almost two thirds of LPs say they expect large private equity investors to review their hedge fund exposure in the wake of CalPERS’ decision to stop investing in the asset class.)
Still-strengthening return expectations explain private equity’s popularity with investors. Almost all (93% of) LPs are now forecasting annual net returns greater than 11% from their private equity portfolios over a 3-5 year horizon (up from 81% of LPs two years ago). A quarter of LPs are forecasting net returns of over 16%.
“In today’s low-yield world it’s hugely impressive to see such a high proportion of private equity investors expecting annual net returns of more than 11%,” said Jeremy Coller, CIO of Coller Capital, “and Limited Partners are telling us there is more to play for. They believe private equity returns could get even stronger with further enhancements to General Partners’ operational skills and more specialised funds.”
Areas of LP interest
Investors give several indications where they see attractive opportunities in this edition of the Barometer.
Emerging economies remain a strategic imperative – with 15-20% of LPs planning to begin or increase PE commitments to China, Hong Kong, Taiwan and South East Asia.Another popular region is Latin America, where one in seven LPs expect to begin or increase commitments. India is the area over which investors betray most uncertainty: the same proportion of LPs (8%) plan to increase and to reduce their commitments in the subcontinent.
LP backing for funds taking minority positions in private companies looks to remain strong. Half of investors are already committed to such funds, and an additional 13% of LPs said they are likely to seek this kind of exposure in the future. Investors will also be interested in GPs with strong buy-and-build credentials – two thirds of LPs believe buy-and-build investments will outperform other buyout investments in the next 3-5 years.
Private equity investment in ‘real assets’ is another increasingly popular area. Two thirds of LPs already have private equity exposure to energy-focused funds; half have private equity exposure to real estate; and between a quarter and a third of LPs have investments in funds focused on mining, shipping, timber and farmland. The Barometer shows that all these areas will attract new investors over the next three years.
Credit investment is another focus for investors – one third of LPs say they plan to scale up their exposure to credit over the next 12 months. Banks’ relatively weaker position in credit markets is illustrated by LPs’ views on future sources of debt funding for buyouts: just over a third of investors expect banks to take a bigger share of buyout debt in the next three years, compared with almost two thirds expecting a higher share for CLOs and high-yield bonds.
The Barometer confirms that the trend toward more direct investing by LPs (i.e., proprietary investments into private companies and co-investments alongside GPs) will continue. Approaching half (45%) of today’s LPs do no direct private equity investing or have less than a tenth of their exposure to ‘directs’, but only one in five LPs expects to be in the same position in five years’ time.
Gender diversity in private equity firms
The majority (88%) of private equity investors (most of whom are male) believe that a higher proportion of women in senior positions at GPs would have little direct impact on private equity returns. However, three in five LPs also believe that PE firms benefit more broadly from gender diversity. Around 70% of these investors say that greater gender diversity at senior levels results in better team quality and team dynamics in private equity firms; and around 40% see benefits to GPs’ governance, investor relations, and risk management.
DC pension funds
Attempts are currently being made to solve the problems associated with defined contribution (DC) pension plans investing in private equity. The Barometer shows that a large majority (88%) of Limited Partners expect these initiatives to succeed, and that DC plans will make private equity commitments over the next five years. However, most (70% of) investors believe DC pension schemes will remain a minor source of capital for the industry.
Additional Barometer findings
The Winter 2014-15 edition of the Barometer also charts investors’ views and opinions on:
The economic cycle and the risk of deflation in the eurozone
Backed by its longstanding experience developed around its four core business activities, La Française has finalized its new visual identity after more than three years of intensive development. The Group is thereby donning a new image symbolising its new strategy which is resolutely international and firmly grounded in its four core businesses.
It also represents the relationship of trust which it fosters with its affiliates.
More modern, unifying, dynamic and visible, this new identity expresses the Group’s values, namely cohesion and responsibility, audacity and creativity, elegance and finesse, all combined with experience and expertise.
On this occasion, the Group is redesigning its fourth core business, which is to become La Française Global Direct Financing, and its Asset Management business is renamed La Française Global Asset Management. Within this business activity, La Française des Placements is taking the name La Française Asset Management.
This approach reflects the highly cohesive organization between the Group’s different areas of expertise, focused on four core businesses:
La Française Global AM (Asset Management);
La Française Global IS (Investment Solutions);
La Française Global REIM (Real Estate Investment Management);
La Française Global Direct Financing.
Xavier Lépine, Chairman of the Board of La Française, said: “It was essential to symbolise the Group’s new profile through our visual identity, to be perfectly aligned with our positioning, our values and our ambitions. The Group’s strength is based on these four core businesses and our capacity to connect and share our areas of expertise to provide our clients with even more innovation: these four loops are the perfect symbol of this, representing the links we have been forging with our clients for many years.”
SWIFT announces that The KYC Registry is now available to banks seeking to increase efficiency and reduce risk related to their correspondent banking Know Your Customer (KYC) compliance activities. More than 20 global and regional banks have joined The KYC Registry, demonstrating clear momentum and support for this community-driven financial crime compliance initiative.
“Regulatory compliance imposes an enormous cost burden on banks and they are actively looking for common platforms to help mutualise that cost and reduce risk,” says Gottfried Leibbrandt, CEO, SWIFT. “The KYC Registry is our next flagship in financial crime compliance, delivering on our commitment to provide community-wide solutions for the industry.”
The KYC Registry provides a simple, secure way to exchange a standardised set of information for correspondent banking due diligence. Banks contribute an agreed ‘baseline’ set of data and documentation for validation by SWIFT, which the contributors can then share with their counterparties. Each bank retains ownership of its own information, as well as control over which other institutions can view it.
“The KYC Registry from SWIFT will make it much easier for us to on-board new counterparties,” says Francesco Rescigno, Head of Operational Risk, Compliance and AML, ICCREA Banca. “It will enable us to receive and share KYC information simply and securely, eliminating costly and redundant document exchanges.”
“Correspondent banking relationships are critical to trade and economic development in emerging markets,” says Steven Beck, Head of trade finance, Asian Development Bank. “We welcome The KYC Registry as a way for banks in these markets to demonstrate transparency and manage their counterparties’ information requests accurately and efficiently.”
The KYC Registry is operated by SWIFT, the industry-owned cooperative, as a neutral information provider. Banks are not charged for data contribution, or for using the Registry to share their KYC information with other banks. To maximise the Registry’s benefits, SWIFT will make data consumption free in 2015 for banks that contribute their own KYC information to the Registry and promote it to their correspondents.
SWIFT is also introducing the SWIFT Profile, a report which increases KYC transparency and addresses Know Your Customer’s Customer (KYCC) requirements. The SWIFT Profile is the first in a series of value-added KYC and customer due diligence services that SWIFT will offer in connection with The KYC Registry.
Wunderlich, a leading full-service investment firm headquartered in Memphis, has announced that Stacy M. Hodges has been named Chief Financial Officer of Wunderlich Investment Company, the holding company for Wunderlich Securities. Ms. Hodges has 20 years of financial services industry experience, primarily with Dallas-based Southwest Securities, in addition to a background in public accounting.
“We are extremely pleased to have someone of Stacy’s caliber join our executive management team,” said Gary Wunderlich, CEO of Wunderlich Securities. “Her experience leading the finance areas of larger, publicly traded financial services firms will be tremendously valuable to support our firm’s strategic growth objectives over the next few years.”
Hodges joined Southwest Securities in 1994 as controller, following nine years in public accounting with KMPG LLP. In 2002, she became Executive Vice President and Chief Accounting Officer of Southwest, a position she held for eight years before being promoted to CFO. As CFO, Hodges was responsible for financial and regulatory accounting, investor relations, credit and financial analysis. She also implemented an enterprise risk management function and was involved in corporate strategic planning. Hodges left Southwest in late 2013 when she was named Executive Vice President and Chief Accounting Officer for Nationstar Mortgage, a publicly traded, non-bank mortgage servicer with 6,000 employees and $12 billion in assets.
Hodges is a Certified Public Accountant and a member of the Texas Society of CPAs and AICPA. She is a graduate of Baylor University and served on the Baylor Accounting Advisory Council.
Foto: Matt Shalvatis, Flickr, Creative Commons. RBC GAM anuncia cambios en la dirección de su gestora, que contará con dos cabezas
RBC Global Asset Management (RBC GAM), the asset management division of Royal Bank of Canada, has announced a leadership transition, with Damon Williams and Alex Khein appointed as co-CEOs, reporting to George Lewis, group head, RBC Wealth Management & RBC Insurance, effective May 1, 2015. Also effective May 1, 2015, John Montalbano, CEO of RBC GAM, will assume a new role as vice-chairman of RBC Wealth Management, continuing to report to Lewis.
“RBC’s asset management business is among the fastest growing in the world, and the continued development of this successful, leverageable business is central to RBC’s global growth plans,” said Lewis. “John’s decision to initiate this leadership succession reflects the strength of RBC GAM and the talented global management team he has built. Damon and Alex are accomplished leaders with extensive experience, and this transition will be seamless for our employees and our clients.”
Both Williams and Khein have extensive tenures with RBC GAM:
Damon Williams joined Phillips, Hager & North Investment Management (PH&N IM) in 2005; the company was acquired by RBC in 2008. He has served since 2009 as head of RBC GAM’s institutional business globally and president of PH&N IM.
Alex Khein joined BlueBay Asset Management in 2004 and was appointed chief operating officer in 2005. BlueBay was acquired by RBC in 2010. Khein will remain as partner and CEO of BlueBay, a position he has held since January 1, 2014.
“I am humbled and privileged to have had the opportunity to serve the employees and clients of RBC GAM as CEO over the past six years,” said Montalbano. “I have full confidence that Damon, Alex and RBC GAM’s management team will effectively guide the organization as it continues to grow, compete and further enhance its investment capabilities. I am honoured to be asked by George Lewis to help guide this transition over the coming year and to take on additional responsibilities to contribute to RBC’s future growth.”
“John has had an exceptional tenure as CEO,” said Lewis. “He has led RBC GAM from its foundation in 2008 – via the amalgamation of RBC Asset Management, Phillips, Hager & North Investment Management and Voyageur Asset Management – to the acquisition of BlueBay Asset Management in 2010 and beyond. RBC GAM has had a consistent trajectory through this timeframe, even within challenging market conditions, with strong growth in assets under management, investment performance and capabilities, and international expansion. Today, RBC GAM is a leading global asset manager with over C$350 billion in assets under management and 23 investment teams across North America, Europe and Asia.”
As vice-chairman of RBC Wealth Management, Montalbano will support business development and special projects for RBC Wealth Management and other RBC businesses, as well as provide advice and counsel to the co-CEOs of RBC GAM and to Mr. Lewis, especially with respect to merger and acquisition opportunities for RBC GAM.
BlackRock has expanded its suite of Environmental, Social and Corporate Governance (ESG)-related products with the launch of iShares MSCI ACWI Low Carbon Target ETF. The new fund which seeks to track the results of the MSCI ACWI Low Carbon Target Index and addresses two dimensions of carbon exposure – carbon emissions and fossil fuel reserves – started trading on the New York Stock Exchange on December 9, 2014.
CRBN is designed for individuals and institutions interested in environmental sustainability without divestment and provides transparency to the carbon footprint of their investments. By overweighting companies with low carbon emissions relative to sales and those with low potential carbon emissions per dollar of market capitalization, it aims to maintain exposure to global equity, while accounting for carbon exposure. Relative to the standard ACWI index, the underlying holdings to the CRBN index produce 81% less carbon emissions and 97% less potential carbon emissions from fossil fuel reserves.
Daniel Gamba, head of BlackRock’s iShares Americas Institutional Business, said, “We see a growing demand from global investors who are seeking to invest in way that can have a positive impact on the broader economy without potentially sacrificing returns and to be able to do so with the ease, access and efficiency of an ETF. With iShares MSCI ACWI Low Carbon Target ETF, we are helping investors to look at socially responsible investing through the lens of long-term investment returns and in the process helping them to take action with their portfolios. This is particularly relevant for official institutions, pensions, foundations and endowments who are interested in pursuing environmental sustainability strategies without divestment.”
Carol Boykin, CFA, Representative of the Secretary-General for the investment of the assets of the United Nations Joint Staff Pension Fund, said, “As we consider the impact of climate change worldwide, as highlighted by the UN Secretary-General at his Climate Summit on 23 September, it is clear that investors are now paying close attention to the risk posed to their investments by climate change. The United Nations Joint Staff Pension Fund welcomes the creation of a new lower carbon index and related ETFs as a responsible approach to environmentally sustainable investing and a positive response to the Secretary-General’s call for action.”
Sam Gallo, Chief Investment Officer of the University System of Maryland Foundation, said, “Being able to address socially responsible concerns while maintaining our fiduciary standards is critical to our investment approach. The iShares MSCI ACWI Low Carbon Target ETF is a low-cost, investment solution that allows us to maintain full exposure to global equities while incorporating a carbon exposure reduction strategy.”
Baer Pettit, Managing Director and Head of the Index Business at MSCI, said “Socially responsible investing increasingly influences many of our clients’ investment strategies. We are pleased that iShares has again selected MSCI to meet its need for an innovative index.”
The MSCI Global Low Carbon Target Index re-weights stocks based on their carbon exposure in the form of carbon emissions and fossil fuel reserves. The index is designed to achieve maximum carbon exposure reduction given a specific tracking error target. The MSCI Global Low Carbon Target Index is based on the MSCI ACWI Index, the global policy benchmark covering developed and emerging markets, and utilizes MSCI ESG CarbonMetrics data from MSCI ESG Research Inc.
BlackRock’s commitment to social investing spans asset classes and enables investors to access investment strategies that target a reasonable risk-adjusted rate of return in addition to positive and measureable social or environmental outcomes. The firm managed $257 billion in social investing products as of the end of June 2014, up from $215 billion as of June 30, 2012.
Clarien Bank Limited has announced te appointment of Clare Spearing as Head of Private Banking.
“Ms Spearing will be responsible for leading the new business efforts for private banking, providing overall strategic direction for the division, maintaining the Bank’s high level of client service and overseeing operational excellence for the group,” the bank said.
“Ms Spearing’s appointment reflects Clarien’s aim to become the pre-eminent financial institution for local Bermudian banking clients, while strengthening its international offering of sophisticated products and services, combined with top level investment advice to wealth management and private banking clients. She will report to Mr. Paul Finn, Head of Global Wealth Management for Clarien.”
Ms Spearing brings over 10 years of Bermuda based banking experience. She began her career in corporate banking at Butterfield Bank, Bermuda where she worked for seven years, ending in the role of Assistant Vice President of Relationship Management and Sales.
Following this, Ms Spearing spent two years with HSBC Bank Bermuda, where she was Vice President, Senior Relationship Manager of the commercial banking unit.
Most recently, Ms Spearing was Head of Operations at the Bermuda Business Development Agency [BDA] where she acted as the primary liaison between various Government Ministries, the Bermuda Monetary Authority and other international industry leaders.
Ian Truran, CEO of Clarien Bank Limited, said: “Miss Spearing brings over a decade of Bermudian banking experience, and holds strong relationships with not only local and international clients but many important key organisations across the island.
“At Clarien, while we have international ambitions, we remain firmly committed to the island of Bermuda and the talent we have here. Miss Spearing brings an expert knowledge and experience of the local banking environment and we look forward to welcoming her.”
Ross Webber, CEO of the Bermuda Business Development Agency [BDA] commented: “Clare has dedicated the last 18 months to laying the foundation for the BDA to thrive and flourish; her tireless work has provided us with the platform to help Bermuda succeed in the international business arena.
“She has been a loyal and tenacious stalwart for the BDA, and handled with aplomb the myriad changes that come with building a business from scratch. While we will miss her expertise, we are delighted she will join one of Bermuda’s leading financial institutions. We wish her all the best and look forward to continuing our relationship”.
