Bolton Enters 2024 Attracting Quality Advisors, according to President Steve Preskenis

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Photo courtesySteve Preskenis, Bolton Global Capital President

Bolton Global is forecasting 15% to 20% growth in its US Offshore business this year going forward and are confident of achieving these goals through recruiting “top-tier” financial advisors, the firm’s president Steve Preskenis told Funds Society.

“We anticipate that we will grow our business by 15-20% and add at least 6 to 10 new affiliates, primarily from the wire house world,” Preskenis responded when asked what Bolton’s goals were for 2024 in the US Offshore market.

“Over the past decade, Bolton has invested significant resources and focused our efforts on raising our presence in Latin America and other parts of the world where investors seek access to the US financial markets.  We are honored to be the Broker-dealer of choice of leading international financial advisors and their clients, ” he added.

In addition, on a more general level, Bolton expects “continued profitable” growth by adding advisors for both domestic US and international business, expanding capabilities to meet market demand, and adopting the ever-evolving technologies required by top-tier advisors, he added.

“Bolton is a uniquely balanced firm with strong domestic and offshore advisory practices.  We have built brokerage and advisory platforms to accommodate a wide variety of client engagements for our advisors,” Preskenis noted.

Separately, Bolton will continue its existing management structure, enhanced by the addition of John Cataldo, who arrived from Integrated Partners, as Chief Administrative Officer & Chief Legal Officer. “John brings a wealth of legal, risk management and operational experience to our team.” Preskenis commented.

The firm is in the process of recruiting for the new position of Head of Business Development, following the announcement of Michael Avarett’s departure.

Market Forecasts

In reference to the trends that Bolton expects to resonate in 2024, “technology will continue to dominate the evolution of our space and lead the way in 2024,” summarized Bolton’s president.

He expects that as technology becomes more entrenched in financial services, advisors who learn how to leverage those resources while still providing personal white-glove service to investors, will gain the advantage over those who rely too heavily on technology or shun it altogether. “Technology is a resource.  Like any other tool, it requires skill and expertise to use it effectively to the client’s advantage.  Bolton provides its advisors with access to industry-leading technology and platforms that they can deploy at their discretion.  Independent advisors seek us out specifically for the flexibility that we provide them.”

In addition, Preskenis anticipates that “the ESG frenzy will continue to subside, interest rate fluctuations  will impact investment decisions, and markets will continue to look for signs of frothy, overvalued sectors.”

Election year

2024 will also be marked by national elections, and that has the industry on its toes.

“A lot of people make predictions about the impact of elections on the financial markets.  In fact, these predictions change faster than the polls,” observed the Bolton president who noted that “in general a republican administration tends to generate a more positive business climate.  It is too early to anticipate how the election will impact the US and global financial markets, but, as the Republican party coalesces around one candidate, a picture will come into focus on the strength of Biden against his competitor.  One thing that is certain is that it will be a hard-fought campaign.”

Insigneo Appoints Michael Averett as Chief Revenue Officer

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Photo courtesyMichael Averett, Chief Revenue Officer (CRO) at Insigneo

Insigneo announced the appointment of Michael Averett as Chief Revenue Officer (CRO). This newly created role, based in Miami, will be reporting to Javier Rivero, President & COO of Insigneo.

As CRO, Averett will be overseeing the firm’s revenue-generating facets and actively driving the company’s organic growth strategy, the firm said.

Averett brings to Insigneo more than two decades of experience in financial services, concentrated in the United States as well as in Latin America. He has held leadership roles at Citigroup and led teams that delivered annual revenues of more than $150 million and, most recently, as Head of Business Development for Bolton Global Capital.

His expertise spans all functional areas of Global Wealth Management, including Cross-Border Team Leadership, Securities Industry Regulatory Environment, Business Strategy and P&L Management, showcasing a robust and proven track record in the financial services space.

He holds a Master of International Management from the Thunderbird School of Global Management and has his Series 7, 9, 10, 24 and 66 investment licenses.

During his career at Citi, Averett, who is fluent in Spanish, lived in Mexico and Colombia, where he gained valuable insights and experiences that contribute to his global perspective.

“We are delighted to welcome Michael to our growing Insigneo family; we are confident that his experience and background will complement our senior management team to contribute greatly to the future development and success of the firm and our clients,” mentioned Rivero.

The addition of Michael Averett to Insigneo’s leadership team highlights the company’s continued momentum to attract top industry talent, reinforcing its commitment to growth and excellence. With this incorporation, the company is poised for continued success by providing an exceptional experience to its network of investment professionals and positioning Insigneo as a leader, concluded the statement.

ATL Appoints José Astorqui CEO of its New Miami-based firm ALT RE

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Photo courtesyJosé Astorqui, CEO at ATL RE

ATL, a broker of commercial insurance solutions, has expanded its global presence with the launch of ATL RE, an independent reinsurance broker serving the Latin America and the Caribbean markets via its new Miami office.

Through the new Miami hub, ATL RE will offer a comprehensive range of commercial reinsurance products including Financial Lines, Property and Energy, Construction, Accident and Health, Treaty and Marine, across a number of key Latin American markets, including Mexico, Ecuador, Argentina, Uruguay, Peru and Bolivia, the statement said.

To oversee ATL RE’s continued growth in this region, the company has appointed José Astorqui, former CEO and CCO of BMS Group Latin America and Caribbean, as Partner and CEO of ATL RE. Astorqui has a renowned track record of driving growth at some of the largest insurance brokers and providers in the world, having previously held the positions of CEO at Lions Gate Latin America and Caribbean, and Managing Director Latin America at Howden Insurance Brokers

Joining Astorqui as part of ATL RE’s leadership team will also be Andrew Hye in the role of Partner and Executive Director, who joins from Summa Brickell where he was Head of Treaty and Energy, heading up the development of the business’ local network in the region. With over 40 years of experience in the international insurance and reinsurance industry, Andrew has also held leadership roles at BMS, Guy Carpenter and Aon.

Astorqui & Hye appointments are the first of several to be announced in the coming months as ATL RE continues to add internationally-recognised expertise to its team.

Iñaki Bandres, CEO at ATL and Chairman at ATL RE, commented: “We are delighted to announce the launch of ATL RE in Latin America and the Caribbean, as well as the appointments of José and Andrew to the leadership team. By bringing together some of the most distinguished experts from across the global insurance and reinsurance industry, with specialist knowledge of Latin America and the Caribbean markets, we’re able to expand our footprint further and provide our clients with a first-class service wherever they trade.”

José Astorqui, CEO at ATL RE, added: “I’m excited to be joining ATL RE and to oversee its growth into Latin America and the Caribbean; markets I have grown to know very well throughout my career. With the expertise already within the business, as well as incoming appointments, I’m very confident that we will be able to provide an unbeatable service to customers in the region.”

Some Positive Takeaways from 2023 for 2024

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Crédito: Michael_Luenen
Pixabay CC0 Public DomainAuthor: Michael_Luenen

What a difference one quarter, let alone one year, can make.  Markets entered 2023 battered and bruised.  A war in Ukraine and a war on inflation threatened to wreck the global economy.  Cracks emerged as a succession of banks (Silicon Valley, Signature, First Republic, Credit Suisse) failed.  In keeping with recent history, Congress took us to the precipice before agreeing to more spending.  Tragically, another front has opened in the battle against the axis of Russia/Iran/China.  Yet, notwithstanding signs of economic deceleration, inflation appears headed south while employment remains steady.  Remarkably, the odds that the Federal Reserve pulls off a soft landing have grown; as Chair Powell noted in his most recent testimony: “so far, so good”.

Merger Arbitrage concluded the year on a strong note as Pfizer successfully completed its acquisition of Seagen (SGEN-NASDAQ) for $43 billion in cash. This followed a comprehensive second request process conducted by the U.S. Federal Trade Commission (FTC). Additionally, Bristol-Myers received U.S. antitrust approval in Phase 1 for its acquisition of the targeted oncology company, Mirati Therapeutics (MRTX-NASDAQ), contributing to a positive antitrust sentiment. Deal spreads, including those for Capri Holdings (CPRI-NYSE), Albertsons (ACI-NYSE), and Amedisys (AMED-NASDAQ) among others, firmed in response. Global M&A activity reached $2.9 trillion, marking a 17% decrease compared to 2022. However, the U.S. market remained robust with $1.4 trillion in announced deals, maintaining a level comparable to 2022.

Worldwide M&A totaled $2.9 trillion in 2023, a decrease of 17% compared to 2022 activity. However, fourth quarter deal making increased 23% sequentially compared to third quarter 2023, an encouraging sign that deal making may be recovering. The US remained a bright spot for deal activity with deal volume of $1.4 trillion, a decline of about 5% and accounting for 47% of worldwide M&A (compared to 42% in 2022.) Energy & Power was the most active sector with deal volume that totalled $502 billion and accounted for 17% of overall value. Industrials, Technology and Healthcare M&A each accounted for 13% of total M&A in 2023. Private Equity acquisitions totalled $566 billion and accounted for 20% of total deal activity. Despite PE deal volume declining 30% compared to 2022, it was still the sixth largest year on record for PE acquisitions.

Reflecting on a volatile year in the convertible market, we have some positive takeaways. Issuance returned to pre-pandemic levels at relatively attractive terms. We expect the pace of issuance to accelerate in 2024 as companies face a maturity wall that must be refinanced. We expect the allure of relatively lower interest rates in convertibles will bring many more companies to our market offering continued asymmetrical return opportunities. Additionally, convertibles that were issued at unattractive terms at market highs in 2021 have generally found bond floor and some offer a compelling yield to maturity. Companies that can have been repurchasing these bonds in an accretive transaction, or refinancing them by issuing converts with a more attractive profile. We expect this trend to continue in 2024 and continue to look for opportunities in this segment of the market.

 

 

Opinion article by Michael Gabelli, managing director at Gabelli & Partners 

UBS Group Announces Changes to its Executive Board

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Photo courtesyAleksandar Ivanovic, UBS’s Group Executive Board as President Asset Management

Following Suni Harford’s decision to retire from UBS, Aleksandar Ivanovic will join UBS’s Group Executive Board as President Asset Management and Beatriz Martin Jimenez will become the GEB Lead for Sustainability and Impact in addition to her existing responsibilities.

These changes are effective 1 March 2024.

As Head of Client Coverage and Head of the EMEA and Switzerland regions for Asset Management, Aleksandar Ivanovic has played a key role in developing and executing UBS’s Asset Management strategy and leading the engagement with institutional and wholesale clients. Since starting his UBS career in 1992 as an apprentice, Ivanovic has worked in all UBS business divisions and has additionally held various leadership roles at Credit Suisse and Morgan Stanley. He holds a Master of Science in Finance from the London Business School.

Beatriz Martin Jimenez will succeed Suni Harford as GEB lead for Sustainability & Impact, in addition to her existing responsibilities as Head Non-Core and Legacy and President EMEA and UK Chief Executive. Beatriz Martin Jimenez, who joined UBS in 2012, has held key business and finance roles during her 12 years at UBS, including Investment Bank Chief of Staff and COO, Group Treasurer, and Group Head Transformation and has been closely involved with the firm’s culture-building activities.

Suni Harford was appointed President Asset Management in 2019 after joining the firm in 2017. Under her leadership, UBS has continued to evolve and scale its Asset Management business to meet clients’ changing needs. Most recently, Suni has led the integration of Credit Suisse’s asset management activities, creating one of the largest global players with USD 1.6 trillion in assets under management and recognized strengths in areas including alternatives and sustainability. As the GEB Lead for Sustainability and Impact since 2021, Suni has spearheaded UBS’s efforts to align our activities across the entire firm and drive our transition to a low-carbon economy, including publication of our Climate Roadmap.

Group Chief Executive Officer Sergio P. Ermotti said: “I’m delighted to welcome Aleksandar Ivanovic to the UBS Group Executive Board. His extensive experience and broad network across the firm make him the ideal person to build on our strong foundation and progress our integration plans. At the same time, Beatriz Martin Jimenez’s many years of experience at UBS, as well as at other leading financial services firms, will be invaluable in her role as GEB lead for sustainability and impact. I’d also like to thank Suni Harford for her leadership and commitment to UBS and for the significant contribution she has made to our success. I wish her all the best for the future.”

 

Insigneo Welcomes Aventura Private Wealth and its Founder Shmuel Maya

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Photo courtesy

Insigneo announced the addition of Aventura Private Wealth LLC, and its founder Shmuel Maya, to their platform of global financial advisors. 

“Leveraging the sophisticated capabilities of Goldman Sachs Advisor Solutions for domestic clients, Shmuel Maya and his team at Aventura Private Wealth, which includes Ahmed Roshdy and Andrea Bruno, both formerly of JPMorgan Chase, bring over 20 years of combined experience in private wealth management to their new venture. They collectively managed over $430 million at their previous firm. The new firm will draw on extensive experience in global financial markets and cater to high-net-worth individuals, the press release said.

“Our decision to transition aligns with the evolving needs of our valued clients. The launch of Aventura Private Wealth empowers us to seamlessly serve our client base.  Our clientele spans a broad spectrum, encompassing business owners, individuals in the hotel industry, and multi-generational family wealth offices, for which we recognize the unique aspirations and objectives of such diverse groups. With this move, we unlock a realm of possibilities for our clients. The horizon is very bright, not just for our team but, most importantly, for our clients,” stated Shmuel Maya, owner of Aventura Private Wealth

Insigneo and Goldman Sachs Advisor Solutions have signed a custody agreement to support the domestic clients of Aventura Private Wealth.

Clients of Aventura Private Wealth will have access to Goldman Sachs Advisor Solutions’ institutional-grade investment capabilities, portfolio analytics, lending solutions, intellectual capital and research.

Shmuel and his team will focus on providing wealth management solutions to individuals, families, endowments, and retirement plans. This strategic move aims to capitalize on the growth and expansion opportunities in the Florida and Southeast markets, the statement added.

Jose Salazar, Market Head for Miami at Insigneo, expressed excitement about Shmuel’s addition to their wealth management platform stating, “We are thrilled to welcome Shmuel and Aventura Private Wealth to our team.  Their experience and proven success in the industry will be a valuable asset as we continue to expand our business model in key markets across the US.”

Prior to Aventura Private Wealth, Shmuel worked at JP Morgan Chase for twelve years. He attended Northeastern University in Boston, with a focus in finance and political science. A native of South Florida, Shmuel lives in Aventura with his wife and three young children. He enjoys playing pickleball and participating in Miami’s vibrant art community.

Generative AI Could Inject $1 Trillion Into U.S. Economy Over 10 Years

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Oxford Economics and Cognizant revealed findings from its new economic impact study New Work, New World, which predicted that 90% of jobs will be disrupted in some way by generative AI (gen AI), setting the stage for a profound shift in how we approach work, productivity and economic growth.

The study also found that the technology’s impact will be influenced by the rate of business adoption and how quickly individuals can adapt to new ways of working.

“Our study aims to lift the curtain on the effects generative AI may have on our global workforce,” said Adrian Cooper, CEO at Oxford Economics. “The research findings showcase just how quickly this technology might disrupt the trajectory of the U.S. economy, offering invaluable insights for leaders to harness its potential and adapt swiftly.”

Generative AI offers the potential to improve operational efficiency, create new revenue streams, innovate products and services, and ultimately redefine businesses.

To quantify generative AI’s potential impact on productivity and the future of work, Cognizant partnered with Oxford Economics to create an economic model that explores three scenarios of U.S. businesses’ generative AI adoption. This model considered 18,000 tasks that drive the U.S. economy, and carefully examines the impact Generative AI may have on the jobs that ladder up to these tasks. While focused on the U.S. workforce, the general themes that emerged from the findings can be applied globally. The research unveiled key insights, including:

  • AI adoption will skyrocket over the next decade before settling into maturityBusinesses are in the experimental phase of adoption for AI capabilities. However, the findings reveal that adoption could leap from 13% to 31% in just four to eight years. After the 15-year mark, the findings predict that adoption may slow but will continue to grow for at least 15 more years.
  • Economic advancement could soar: Generative AI technology could boost U.S. productivity by 1.7-3.5% and grow the U.S. GDP between $477 billion and $1 trillion in annual value over the next 10 years, based on business adoption rates.
  • Simultaneously, the job market could be disrupted: Half of all jobs (52%) are predicted to significantly change as generative AI is integrated to automate job tasks. As a result, approximately 9% of the current U.S. workforce may be displaced, with 1% potentially struggling to find new employment based on historical economic shifts.
  • Jobs with higher levels of knowledge work may be most affected: In the past, technology advances and automation have impacted mainly manual labor and process-centric knowledge work. Generative AI is poised to do the opposite, having a higher disruption on knowledge work. Additionally, jobs involving credit analysis, computer programming, web development, database administration, and graphic design already have a theoretical maximum exposure score of about 50%. By 2032, as technology advances, some jobs’ exposure scores may climb to 80%.
  • Even CEOs will feel an impact: The data found that C-Suite executives – even CEOs – could see a theoretical maximum exposure score (the degree to which a job’s tasks are prone to being automated by generative AI) of more than 25%, as they begin using gen AI for everything from competitive assessments to strategic decision-making.

“Generative AI has already astonished us with its capabilities across industries, but the true impact of its integration in our daily business operations has just scratched the surface,” said Ravi Kumar S, Chief Executive Officer, Cognizant. “To apply the technology’s potential to amplify our productivity, we must understand its full influence on the future of work and come together to create the best opportunities for people to grow alongside it.”

Reskilling The Workforce as AI Advances

While the timeline of this research spans more than a decade, Cognizant believes that leaders across all sectors of society should work together today to establish a new trust compact that will enable businesses, workers, and economies to thrive in the age of generative AI. As this technology becomes commonplace in the workforce, new employee skills will be in demand to support areas including business strategy and AI management. Reskilling programs, once seen as a tactical add-on to an employee’s career path, will become an essential part of the workday, with time allocated for training and education.

To view the complete study and learn more, please visit the following link.

 

Managing Legacy Wealth: Working with the Inheritors and Their Families

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We are currently witnessing one of the most significant transfers of wealth the US has ever experienced. According to Cerulli Associates, $84.4 trillion will transfer from the silent generation and baby boomers between now and 2045. Of that, $72.6 trillion will be transferred to heirs and $11.9 trillion will be donated to charities. In this environment, the winners will be the advisors who can showcase their knowledge and expertise in managing legacy wealth. The losers will be the advisors who fail to make a case for the value of advising the entire family. Thus, advisors must understand how is it working with people from different generations, as they have different needs and beliefs regarding their approach to money and legacy.

Let’s take the Gen X: 65.2 million Americans born between 1965 and 1980. They are independent, flexible, and adaptable, and they distrust the institutions, the government, and authority figures like their parents.

From a financial standpoint, members of the Gen X generation are a study in contrasts. Last year, they held about $100,000 more in wealth per capita of any generation, 18% more than baby boomers at the same life stage, while also carrying the most debt of any generation.

To assist Gen X clients, financial advisors should begin with a comprehensive financial plan that outlines their goals, financial resources, and the potential risks they may encounter along the way. Given that this generation often carries a significant amount of debt, implementing a strategy to pay off that debt can help alleviate financial stress and pave the way towards achieving their financial goals. This may involve creating a budget to allocate funds towards debt repayment that focuses first on paying off the highest interest debt using strategies such as debt consolidation or refinancing, then tackling the lower interest items.

Now let’s talk about the individuals born between 1981 and 1996. With an estimated population of 72.24 million people, on July 1, 2019 Millennials surpassed Baby Boomers as the largest generation of the US.

Millennials are often labelled as the “helmet generation” due to their perception of being pampered and privileged because their parent’s overprotectiveness and safety concerns involved the use of helmets for every activity. This heightened awareness of risks extends to the financial realm as well. Millennials witnessed the impact of events like the collapse of the dot-com bubble in the early 2000s and the 2008 financial crisis, which directly affected their parents’ finances and careers. Additionally, the burden of high student debt has further contributed to their skepticism and lack of trust in the financial services industry.

This generation is looking for a way to make a difference in the world. As digital natives, it’s likely that they will continue using computers and social media to influence others and effect change. The Millennial generation is leading the demand for environmental, social, and corporate governance (ESG) investments.

To attract Millennials, make sure you have a user-friendly website that’s tailored to their needs and interests. Optimizing the website for mobile devices is also essential, as Millennials rely heavily on their smartphones for information. Providing comprehensive information about financial planning, investment strategies and retirement planning is key to capturing Millennials’ attention. They appreciate educational resources like videos, webinars and interactive tools that enable them to model different financial scenarios and assess the potential outcomes of their decisions.  Millennials also have a significant debt problem, amounting to almost $4 trillion. Financial advisors need to be sensitive to the debt burden carried by this generation and offer solutions that help them manage and pay off the debt while making progress toward their financial goals.

So, to tap into this great transfer of wealth, you will need to expand your reach by thinking bigger and broader, moving beyond advising a single generation within a family to advising the entire family. This shift enables you to capture the opportunities presented by intergenerational wealth transfer and position yourself as a trusted advisor for multiple generations within your client families. 5Your expertise and guidance are instrumental in solving complex financial problems, employing effective wealth management strategies, and ensuring the preservation and growth of the family’s wealth for generations to come. Your role as a trusted advisor can make a significant difference in the long-term success and sustainability of the family’s financial legacy.

When your client expresses their intention to pass their financial legacy on to future generations, your task is to assist them in accomplishing this objective. To support you in this endeavor, here are some steps you can take:

  1. Foster open and transparent communication with heirs to discuss the family’s values, financial legacy, and long-term goals. Clients are often uncomfortable sharing the value of their financial legacy with their heirs due to concerns about how this information may affect the heirs’ behaviour. To assist in preparing heirs for this information, it can be highly advantageous for the client to create an ethical will. This document allows the client to share their life story, including the process of building their wealth or growing their inherited assets that now form their financial legacy. This personal narrative can provide valuable context into the family’s financial journey, fostering a deeper understanding and appreciation among the heirs.
  2. Establish regular family meetings where all beneficiaries can come together to discuss and align their visions for the family’s wealth. These meetings provide a platform for sharing ideas, addressing concerns, building trust, and fostering a sense of unity.
  3. While you play a critical role in guiding families through the process of successfully growing and transferring their wealth across multiple generations, it is important to acknowledge that addressing and resolving family relationship issues may require expertise beyond your scope. Collaborating with professionals specializing in family therapy or mediation can be beneficial in addressing and resolving any underlying family relationship issues that may impact the wealth transfer process.
  4. Collaboratively develop a family mission statement that encapsulates the shared values, goals, and aspirations of the family. This statement serves as a guiding principle for decision-making and reinforces a sense of purpose.
  5. The lack of financial knowledge is one of the most significant impediments to the successful growth of a family financial legacy as it passes from generation. To avoid this result, promote financial education among the heirs.
  6. Mentorship between generations, where older family members can pass on their knowledge and experiences to younger heirs is invaluable. Develop a clear succession plan that outlines roles, responsibilities, and expectations for each heir.
  7. Continuously review and adapt the family’s values, goals and strategies as circumstances change. Regularly assess progress, celebrate achievements, and address any conflicts or challenges that may arise.

 

By implementing these steps, your clients can achieve their goals of bringing their heirs together, sharing the intricate details of the family’s financial legacy, fostering a sense of unity, and shared purpose in working toward the family’s common goals. This process will ultimately lead to the successful transfer of family wealth to both current and future generations.

 

 

Opinion article by Jan Blakeley Holman, Director of Advisor Education at Thornburg Investment Management

 

 

Family Office Risk Appetite is Growing as Acquisitions Become More Attractive

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Family office risk appetite is set to expand over the next 12 months as companies focus on acquisition opportunities amid expectations that inflation and interest rates will fall, new research from Ocorian shows.

Ocorian’s international study among family office investment managers shows investment risk appetite this year is much higher than last year. Almost half (46%) senior executives questioned in the international study say their organisation’s investment risk appetite will increase in the year ahead. That compares with just 8% who said their investment risk appetite increased in the past 12 months.

The key reason for the rise in investment risk appetite in the year ahead is the belief that pricing around deals will become more attractive. One in ten (10%) selected that as one of their top three reasons for an increased investment risk appetite, followed by lower interest rates (10%) and developments around artificial intelligence and technology (8%).

However major concerns identified in the study are global political uncertainty, costs in general increasing and worries that inflation may not fall.

Around 36% of firms whose investment risk appetite is falling cited political uncertainty while 22% highlighted costs in general increasing and 18% highlighted inflation as the reason for their declining risk appetite.

Ocorian’s study found family offices worldwide maintained their focus on risk mitigation over the last 12 months with 48% having increased their overall budget for risk management and 46% expanded EIS schemes.  Around 44% have expanded their risk management budget. 

Family offices are still very much focused on risk mitigation. Half (50%) will invest more in new technology in order to mitigate risks while 44% plan to expand their risk management budget and 42% will increase their overall budget for risk management. 

Paul Spendiff, Head of Business Development – Fund Services, at Ocorian, said: “Investment risk appetite is clearly increasing with senior executives and major investors expecting a shift in global macroeconomic conditions as well as more opportunities for acquisitions at more attractive prices.

“The optimism about the year ahead and growing confidence is tempered by a focus on risk management and there is evidence from the study that companies have invested this year in new technology and risk management staff in order to expand in the year ahead.

“That focus is being maintained and we are seeing growing demand for our services as we help our clients solve these complex issues. In addition there are major concerns about the year ahead ranging from global political uncertainty and heightened global tensions in the Middle East and Ukraine as well as the risk of recession in major economies.”

Institutional Channel Assets Gain Slight Edge Over Retail

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Professionally managed assets in the U.S. stand at $60.4 trillion with the retail client channels comprising $30 trillion, while institutional channel assets climbed to $30.9 trillion, according to Cerulli’s research, The State of U.S. Retail and Institutional Asset Management 2023.

The marketshare split between retail and institutional grew closer to parity from 2013 to 2021, but after greater retail channel asset declines in 2022, the trend reversed.

Retail client channels that tend to have higher equity allocations, experienced a larger asset decline, reversing a longer-term trend where retail client channel assets had been growing faster than institutional client channel assets,” says Brendan Powers, director.

Cerulli expects this reversal to be temporary, as trends including retirement plan rollovers into advisor-managed individual retirement accounts (IRAs) and pension plans freezing and terminating should favor increased growth of retail channels.

Asset managers evaluating addressability in either channel should continue to foster relationships with professional buyers making investment decisions. Investment professionals building product shelves and model portfolios at broker/dealers (B/Ds), banks, or registered investment advisors (RIAs) should be a focus on the retail side.

On the institutional side, consultants and outsourced chief investment officers (OCIOs) as well as the RIA retirement plan aggregators and third-party fiduciaries that work with defined contribution (DC) plan sponsors should be a priority. “Asset managers cannot discount the role that intermediaries hold in distribution and should closely evaluate their sales and marketing resources to ensure coverage,” says Powers.

Additionally, asset managers’ focus on vehicle proliferation remains increasingly important as retail and institutional client segments continue to prefer a vehicle choice. On the retail side of the industry, there is heightened focus on exchange-traded funds (ETFs) and separate accounts. Additionally, firms are focused on optimizing the vehicle wrapper for retail alternative (e.g., private equity, private debt, hedge funds) exposures.

On the institutional side, there is a greater focus on collective investment trusts (CITs), especially among DC plans and their intermediaries.

“Despite the greater focus on other vehicle offerings, managers still need to be diligent about product management efforts for their existing mutual fund strategies, as the mutual fund is not going away. This includes share class/pricing analysis, rationalization exercises, and training/product position for distribution and marketing support,” concludes Powers.