Schroders Appoints Richard Oldfield as Group CEO

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Schroders has announced the appointment of Richard Oldfield as Group CEO, succeeding Peter Harrison, effective November 8, 2024, subject to regulatory approval. According to the firm, this announcement follows an orderly and thorough succession process that began in April and included a global search, with both internal and external candidates. The process was led by the Chair of the Board, supported by a Board Subcommittee, our Senior Independent Director, and a leading search firm. Peter Harrison will remain Group CEO until November 8, 2024, after which he will step down from the Board and continue working with Richard until the end of the year.

Until now, Oldfield served as Chief Financial Officer at Schroders, bringing with him extensive experience. He spent 30 years at PwC, where he held senior roles, including Vice Chairman of the firm and Global Markets Leader. Reporting to the Global Chairman, he was responsible for increasing profitability across PwC’s business lines while advising global clients on their most complex matters. “Since joining Schroders, Richard’s contribution has been significant, bringing a fresh perspective on capital management, driving new initiatives such as the inaugural bond issuance earlier this year, and integrating commercial discipline across the Group,” the company noted.

Dame Elizabeth Corley, Chair of Schroders’ Board, stated: “Richard has demonstrated his natural ability to lead client- and people-focused businesses. He has a global outlook, a strategic growth mindset, and a proven track record of leadership. The Board unanimously determined that Richard was the most suitable candidate.”

Corley explained, “It was clear that his strong business vision would drive decisive transformation at an accelerated pace, and we are confident that he will advance our strategic priorities, enabling Schroders to continue growing and serving clients. His personal values are closely aligned with Schroders’ culture; he is authentic, sincere in his approach, passionate about clients, and committed to nurturing talent.”

Meanwhile, Peter has shown strong leadership and unwavering commitment, leading the business through a remarkable transformation over the past eight years. He has successfully expanded our capabilities in both private and public markets, overseeing sustained growth in our Wealth business and more than doubling assets under management to a record £773.7 billion. It has been a true pleasure working with Peter, and I would like to thank him, both personally and on behalf of the Board, for his exceptional service.”

For his part, Richard Oldfield said, “It is an honor to have been chosen as the next Group CEO of Schroders. Since joining, I have seen what a great company Schroders is. We are known for our long-term approach, meeting client needs, and delivering excellent investment returns. Despite the challenges facing the industry, I know we have the capabilities and the people to seize the right opportunities to grow our business and be one of the world’s leading wealth creators. I am eager to get started.”

“Schroders will always hold a central place in my life as I began my career here straight out of university. I am very proud of what we have achieved, and I feel a great affinity with the wonderful people working at the firm. When we hired Richard, I was impressed by his vast experience in managing and growing businesses, as well as his client-centric approach. He has brought fresh ideas during his first year, and I am confident he will continue to drive the business forward,” concluded Peter Harrison, the current CEO.

The Pursuit of Scale Continues to Drive Consolidation Among Wealth Managers

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Consolidation remains a highly active trend across the financial industry. According to the latest report from Cerulli Associates on this sector, titled “Wealth Management Consolidation: Analyzing the Drivers Behind a M&A Deal Environment”, the pursuit of scale and the goal of capturing a larger share of the advisory value chain are fueling merger and acquisition (M&A) activity throughout the industry. The consulting firm believes this trend will create a more competitive environment for wealth managers.

The imperative to grow larger and more profitable has driven much of the intensified M&A activity that has been underway in the asset and wealth management industry for over a decade, resulting in an environment dominated by key players. According to Cerulli, the top five wealth management firms control 57% of the assets under management (AUM) of broker-dealers (B/D) and 32% of B/D advisors, while the top 25 B/D firms and their various affiliates control 92% of the AUM and 79% of the advisors.

Wealth managers are increasingly focused on providing truly comprehensive wealth management services, pursuing M&A to strengthen capabilities and capture more of the value chain. Although increasing share of the client’s portfolio has been an elusive goal in the industry for decades, Cerulli sees significant consolidation opportunities among wealthy investors. According to the research, 57% of advised households would prefer to consolidate their financial assets with a single institution; however, only 32% currently use the same provider for both cash management and investment services.

“Following a merger or acquisition, companies rarely emerge as well-oiled machines offering top-tier capabilities and services. The vertical integration of technology systems, client account migration, and changes in workplace culture are all potential pain points when an organization restructures. As wealth management firms enter new segments through acquisition, they must have a plan to transition clients to service models that meet their needs,” says Bing Waldert, Managing Director of Cerulli.

According to the firm, now more than ever, due diligence is a step that must be fully developed. “Deals that make sense on paper can turn into cautionary tales when acquirers miscalculate the impact of merging operations,” says Waldert. “In a wealth management environment where advisors and assets are more mobile than ever, there is an increased potential for a deal to have negative ramifications for advisor retention,” Waldert concludes.

The Asset Regularization Regime in Argentina: What We Know So Far

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As September progresses, the month in which the first tax information exchanges between Argentina and the United States are expected, initial data from the Asset Regularization Regime points to the domestic market, a phenomenon the local press has dubbed the “mattress whitening.”

“Up to now, the greatest impact on new accounts is primarily being seen in banks, which have already opened 23,000 accounts. Since this regularization is focused on small investors and strengthening reserves, it would be natural for a good portion of the nearly $14 billion in private sector dollar deposits that left after the 2019 PASO elections (internal primaries) to return to the financial system,” say sources from Adcap Grupo Financiero.

“There are many people and little money,” say accounting experts consulted by the newspaper La Nación. However, there is anticipation for the possible influx of up to $40 billion.

According to Infobae, “as adherence to capital regularization advanced, private sector dollar cash deposits increased to $19.643 billion as of September 3rd, a record high since October 25, 2019, when they totaled $19.867 billion.”

Adcap Grupo Financiero notes that, based on conservative estimates, Argentines have at least $100 billion within the country in 850,000 safety deposit boxes.

This figure rises if foreign accounts are included. According to the latest report from Indec on the “Balance of Payments, International Investment Position, and External Debt,” with data from the first quarter of 2024, it is estimated that Argentines held $238.233 billion in cash outside the Argentine financial system—excluding deposits in local banks. These savings may be deposited in sight accounts abroad—even declared and subject to local tax payments—or they could consist of cash in safety deposit boxes in Argentine banks, private safes, or, as is colloquially said, stashed “under the mattress,” beyond official oversight and fueling the free market.

According to official data, the regularization carried out during Mauricio Macri’s administration (2015-2019) brought a record $116.7 billion into the system.

The Madison Group Joins UBS International in New York

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UBS has added The Madison Group to its international office in New York, coming from Morgan Stanley.

“We are pleased to announce that The Madison Group has joined UBS at our flagship international office in New York, located at 1285 Avenue of the Americas,” reads the statement posted on LinkedIn by Michael Sarlanis, Managing Director of UBS’s New York International office.

As a top-tier global wealth manager, The Madison Group is particularly well-prepared to serve UHNW (Ultra High Net Worth) families, both in the U.S. and abroad, adds the information from the Swiss bank.

The group, consisting of nine members, is led by Marcos Douer, Managing Director and Senior Portfolio Manager; Seema Khanna, Executive Director; David Heffez, Senior Portfolio Manager, and Cristina Alvarado as Financial Advisor.

Additionally, the team includes Jessica Santiago, Senior Wealth Strategist; Gabriel Lasry, Director; Sophia Newman, Senior Registered Client Associate; Angelina Torres, Senior Client Associate, and Amanda Silva, Client Service Associate.

“The Madison Group offers insightful strategies and innovative solutions tailored to all aspects of your financial life. With a rich legacy of experience, the team is dedicated to providing comprehensive financial advice, from the simplest to the most complex, exploring possibilities and finding the solutions you need to achieve your goals,” concludes the statement.

The Employment Data Provides Certainty of a Rate Cut; the Question Is No Longer When but by How Much

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Elecciones en EE.UU. y mercados

U.S. employment figures showed a slowdown in the economy, paving the way for the much-anticipated interest rate cuts in September.

However, with an economy losing momentum in job creation but maintaining strong budgets for wages, the question is now how much the Fed will cut rates next week.

According to an analysis by alternative asset manager KKR, while the August nonfarm payroll data reflected a clear weakening of the U.S. economy, “the report did not unequivocally confirm that the Fed must ease its monetary policy by 50 basis points.”

The Global Macro team’s report, led by Henry H. McVey, acknowledges that although attention is focused on the 142,000 jobs added in August—slightly below the consensus of 165,000 but above July’s revised 89,000—the key point is that, despite downward revisions, the year-over-year growth rate was higher than in July.

Experts note that with previous months’ revisions, job growth has fallen below 125,000 every month except one since April. They add that a stagnant labor market (i.e., where hiring, layoffs, and turnover are low) means that the slowdown in labor demand will increasingly show up in weaker overall data.

The KKR report estimates that August’s employment data will not be “perceived as negatively as some had expected.”

“Although the negative revisions are notable, our overall message remains that the Fed must act aggressively, but we are not convinced that this will include 50 basis points initially, especially since financial conditions remain quite favorable. In the past, 50-basis-point cuts to start a cycle often included higher credit spreads and higher unemployment rates,” the report adds.

Employment growth in August came in slightly below expectations (142,000 versus 165,000), but the most notable elements of the report were the substantial downward revisions from previous months (-85,000 net).

From the independent advisory platform Sanctuary, an analysis by Mary Ann Bartels, shared with the firm’s clients, anticipates a 25-basis-point rate cut by the Fed.

“With employment data pointing to a slowdown in the labor market, the likelihood of a rate cut is almost assured. Mary Ann continues to expect a 25-basis-point cut by the end of this month, and this week’s inflation data—the Consumer Price Index and Producer Price Index—should confirm the direction of interest rates,” reads a summary posted by Sanctuary on LinkedIn.

Payrolls Decline, but Wages Increase

Wage budgets are growing at near-record rates, according to a new corporate survey in the U.S. conducted by The Conference Board.

The report reveals that projected salary budget increases for 2025 are expected at the fastest pace in two decades. Salary increase budgets are a good indicator of the average raise a worker receives in a given year.

On average, employers report planned wage increase budgets of 3.9%, a slight uptick from the actual 3.8% growth in 2024, according to The Conference Board’s US Salary Increase Budgets 2024-2025 report.

“Despite slower hiring and a slight rise in unemployment, elevated wages are expected to persist in 2025. A decline in labor supply is leading companies to focus on retaining their current workforce, resulting in sustained wage increases and higher real wage growth as inflation moderates,” said Dana M. Peterson, Chief Economist at The Conference Board.

The report presents comprehensive survey data from 300 compensation leaders on what companies across the economy are budgeting for annual wage increases.

Important Things I Learned in 18 Months at a Climate Finance NGO

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This is what I learned about our sustainable financial ecosystem, after working for 18 months at In / Flow, a climate finance NGO.

  • Climate finance doesn’t work without relentless collaboration and innovation. Science, academia, industry, markets, and governments must continue to work together. All knowledge and skills are needed to tackle the challenges we face. The more diverse the set of minds, the greater the chances of leveraging all necessary perspectives and minimizing blind spots. It is at the intersection of these spheres that the abundance of edge effects emerges.
  • Projects, assets, and emission reduction activities abound, and the demand for green, social, and sustainable bonds and loans shows no signs of slowing down, with new investment vehicles being launched at an accelerated pace. The challenge lies in moving capital from the project to the investment. The bottleneck is at the top of the investment value chain, where project identification, due diligence, activation, and obtaining permits represent the biggest obstacle to capital deployment.
  • Financial players overwhelmingly demand the harmonization of standards and frameworks. From a global perspective, the interoperability of taxonomies at the country level—i.e., the classification of activities by industrial sector for establishing criteria—is a condition to enable ambitious and credible sustainable trade on an international scale.
  • The redistributive powers of fiscal policy and subsidies must continue to support the global transition. Policy and regulations are the cornerstone of sustainable finance. We can’t live with them, and we can’t live without them. The more adept we are at adapting our financial ecosystem to new rules of the game, the better the chances of thriving in a new world order. Policies have fallen behind lately and remain vulnerable to shifting political cycles. We must create policy frameworks that can stand the test of time.
  • Market participants who are willing to embrace the challenge must also be rewarded and see that their commitment to sustainable investment leads to growth and superior returns. A good example of this is performance-linked instruments with a step-up coupon mechanism through which issuers can access lower capital costs by meeting a target. More advantageous financing for sovereign Debt Management Offices, stronger balance sheets for corporate issuers. Everyone may need to give something up in the short term. Investors may need to grit their teeth and adopt a long-term view (as they traditionally should) and will see lower long-term embedded risk. There are trade-offs, but everyone can win from this.
  • Investment banks can play a key role in advising companies on how to balance their growth and sustainability agendas and guide the financing of ambitious and credible transition plans when needed. Debt capital markets (DCM) and corporate advisory expertise in structuring and pricing all labeled debt are essential to ensuring that credit spreads fully reflect both the financial and non-financial risks and opportunities of the projects, assets, and activities to which revenues are allocated. Banks and lenders that align will attract more business, see higher issuance volumes flowing through their DCM desks, and enable the liquidity depth sought by investors.
  • There are data challenges for standardized metrics, integrated reporting, and risk assessments. Independently verified market data are critical to the credibility of sustainable capital markets. Science-based evaluation aligned with the goal of avoiding 1.5°C exposure from the use of funds and, indeed, transition plans is the only assurance investors can rely on to ensure that the sustainability fundamentals of a bond are anchored in authentically well-informed and reliable expertise. ISO certification and accreditation provide even greater assurance for the grayest types of investments. Retroactive and programmatic certification of bonds, assets, and entities is available to support and minimize issuer efforts.
  • Index providers have stepped up by offering powerful benchmarks that define investment opportunity sets (pre-selected) for the investor community. Whether labeled as use-of-proceeds debt or thematic transition financing, index providers have designed ready-to-use indices for reference mutual fund products and active management and segregated mandates, as well as for passive replication of exposures in ETPs (exchange-traded products). Sustainable investments are now widely accessible to both retail and institutional investors.
  • Stock exchanges provide ideal venues for the launch and marketing of new sustainable issuances. The fierce competition to attract sustainable debt listings has led them to up their game by expanding the scope of their capabilities and playing a significant role in advancing the issuer-investor interaction agenda on a case-by-case basis.
  • Asset owners have the power to drive significant improvements in sustainable finance market techniques. Greening large institutional mandates held by public and corporate pension funds, insurance companies, endowments, and foundations is likely the greatest incentive we can give to other market players—including, but not limited to, asset managers—to execute their sustainable strategy. Greening institutional investment portfolios could be the fastest lever for meaningful greening. Most importantly, plan members have a duty to invest in the transition of their economy and society.
  • Environmental and social issues are deeply intertwined, and we must adopt community-based, place-based, and resilience-inducing approaches for climate solutions to be fully effective. Indigenous community participation in the issuance of social and sustainable debt (a hybrid between green and social) is key to the resilience agenda, ensuring that in the event of disaster, economies and societies can recover quickly. Investors, demand a just transition.
  • Similarly, capital must be attracted to and within emerging and frontier markets through sustainable investments in private assets, while ensuring the experience is local and community-based. Sustainable debt from emerging markets carries the same country-level risk as its conventional emerging market debt counterpart. Do not expect a price premium or risk discount to avoid disappointment. However, the Global South is home to countless green and sustainable investment opportunities that will ultimately lead to a reduction in the debt burden of emerging market sovereign and corporate issuers, driving an improvement in fundamentals and the stabilization—perhaps even the reduction—of emerging market credit spreads in the long term.
  • Concessional financing from multilateral development banks (MDBs) and development finance institutions (DFIs) plays a key role in aggregating project financing, especially in highly fragmented and opaque loan markets. Their expertise in implementing climate and social development programs is critical to a successful transition of our global economy. Inspiring institutional investors to invest in these programs will also make a difference. Supranationals are experts in infrastructure investments, and while in the past they lagged in investments, since 2008 they have multiplied sixfold, and pension funds consider them a source of returns and protection against market volatility.
  • The use of artificial intelligence (AI) is already contributing enormously to the fight against climate change and the incorporation of climate resilience into our ecosystem. Existing AI systems offer tools that predict weather, track icebergs, identify oil spills, methane leaks, and other types of pollution. In the insurance sector, AI already helps the risk assessment framework refine the calibration of the impact of natural hazards on the real economy. Private capital is especially suited to seed these early-stage climate technology solutions, as many sectors in transition require patient, determined capital.
  • Trust that markets will create a new financial instrument for every problem we face. Despite initial scrutiny over sustainability-linked bonds, it is now clear that forward-looking performance-linked structured products not only constitute a powerful tool for enabling the transition of high-emission and hard-to-abate sectors of our global economy, but they also help monitor issuers’ progress on their path to net-zero. KPI selection, scientifically proven threshold setting, and target and coupon calibration depend entirely on the sector and thus require sector-specific scientific expertise.
  • Governments and companies demonstrating leadership by phasing out fossil fuels and phasing in emission-reducing activities and projects will eventually see a favorable impact on their borrowing costs. Issuers’ ability to skillfully communicate strategically aligned transition plans to investors, as well as execute and report on their progress on the path to net-zero by 2050, could be key to weathering the transformation of our economies and societies. Securing financing through sustainability-linked and impact financial instruments can and will embed their strategies with greater credibility and help them build trust among financial market participants and other stakeholders.
  • Whether you support this trend or not, the truth is that carbon markets are developing, and banks and exchanges are arming themselves with some of the brightest minds in the field. On the Voluntary Carbon Market (VCM) front, safely structured and vetted, biodiversity impact credit (in the form of Verified Carbon Units or VCUs) could play a significant role, provided that any offsets genuinely support biodiversity conservation or nature-based solutions.

Kushal Kshirsagar Joins Chicago Atlantic From BlackRock

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Chicago Atlantic has announced the appointment of Kushal Kshirsagar as Managing Partner of Private Wealth Solutions.

Kshirsagar joins from BlackRock and will be responsible for bringing Chicago Atlantic’s private market strategies to individual investors and their advisors, according to company information.

Previously, Kshirsagar held various roles within BlackRock’s Multi-Asset Strategies, U.S. Wealth Advisory, and iShares divisions, including portfolio manager for BlackRock’s U.S. Income Models, lead portfolio strategist for UHNW Wealth Advisory, and Head of Strategy and Business Development for iShares in Asia. Prior to BlackRock, Kshirsagar worked at UBS, Credit Suisse, and Vanguard, and earned a PhD in Finance from UNC – Chapel Hill.

“I was drawn to Chicago Atlantic’s unique combination of underwriting expertise, analytical rigor, proven track record, and entrepreneurial spirit. In a crowded market of undifferentiated private credit strategies competing in the same sponsor-backed club deals, Chicago Atlantic stands out for its sector expertise and focus on markets where there are structural reasons for capital supply shortages,” said Kshirsagar.

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.