Franklin Templeton Establishes a Strategic Partnership with Power Corporation of Canada and Great-West Lifeco

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Franklin Resources, a global investment management organization operating as Franklin Templeton, announced a strategic partnership with Power Corporation of Canada and Great-West Lifeco.

The Power Group of Companies including Great-West and IGM Financial are leaders in the global insurance, retirement, asset management and wealth management sectors and have collective assets under management and/or administration of approximately $2.1 trillion.

Great-West includes Empower in the US as well as Canada Life in Canada and Irish Life in Europe. IGM encompasses subsidiaries Mackenzie Financial and IG Wealth Management and also has investments in Rockefeller Capital Management and China Asset Management Co.

As a foundation of the partnership, Franklin Templeton has entered into a definitive agreement to acquire Putnam Investments (“Putnam”) from Great-West for approximately $925 million of primarily equity consideration. Great-West will become a long-term strategic shareholder in Franklin Resources, Inc., with an approximate 6.2% stake, consistent with Great-West’s continuing commitment to asset management.

Great-West will provide an initial long-term asset allocation of $25 billion to Franklin Templeton’s specialist investment managers within 12 months of closing with that amount expected to increase over the next several years. The strategic partnership aligns with Franklin Templeton’s focus to further grow insurance client assets, and significantly broadens the relationship between Franklin Templeton and the Power Group of Companies in key areas of retirement, asset management and wealth management.

Founded in 1937, Putnam is a global asset management firm with $136 billion in AUM as of April 2023. Putnam has offices in Boston, London, Munich, Tokyo, Singapore and Sydney. Putnam’s complementary capabilities and track record of strong investment performance accelerates Franklin Templeton’s growth in the retirement markets by increasing its defined contribution AUM and expanding its insurance assets, while adding further scale and efficiency to Franklin Templeton’s mutual fund platform.

Consistent with Franklin Templeton’s previous acquisitions, the execution plan is designed to minimize disruption to Putnam’s investment teams and client relationships.

“This is a compelling transaction for Franklin Templeton, and we are excited about the numerous opportunities that will be unlocked by this long-term strategic partnership with the Power Group of Companies including Great-West,” said Jenny Johnson, President and CEO of Franklin Templeton. “Power and Great-West are global leaders across financial services, particularly in the wealth, insurance and retirement channels. With outstanding investment performance, Putnam will add complementary capabilities to our existing specialist investment managers to meet the varied needs of our clients and will increase Franklin Templeton’s defined contribution AUM. We are pleased to welcome Great-West as a strategic investor, along with the impressive team at Putnam.”

“Franklin Templeton is a leading global asset management firm, whose business model is well-positioned to build upon the investment and distribution strengths of Putnam,” said R. Jeffrey Orr, Chair of Great-West, and President and CEO of Power. “We are pleased to enter a partnership with Franklin Templeton that will be mutually beneficial to clients and our respective businesses.”

“This transaction furthers Great-West’s strategy of building strategic partnerships with best-in-class asset managers to support our client’s retirement, insurance, and wealth management needs,” said Paul Mahon, President and CEO of Great-West. “Franklin Templeton’s scale and breadth, together with Putnam’s capabilities, will drive positive outcomes for our companies, our clients, and our investors.”

“Critical to this transaction is the strong alignment between our organizations. We share a client-centric culture, a core belief in active management, a collaborative and research-based investment approach, and a long-held commitment to fundamental investment principles,” said Robert Reynolds, President and CEO of Putnam. “We look forward to joining Franklin Templeton in this next phase of our growth, as we come together to serve our clients, upholding our commitment to them and their needs.”

Recruiting, Support, and Succession Planning Are Top Priorities for Banks as They Look to Fend Off Increased Advisor Attrition

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As banks and credit unions face increased market uncertainty, many are placing greater importance on wealth management to generate diversified fee-based revenue and broaden client relationships beyond core banking services.

As such, banks need to better attract, develop, and retain financial advisors throughout their lifecycles, according to a new Cerulli/BISA white paper, Improving Recruitment and Retention Throughout Advisors’ Lifecycles.

Over the last five years, the bank broker/dealer (B/D) channel has grown AUMs at a compound annual growth rate (CAGR) of 11.7%, while relative advisor headcount has only grown 0.7% annually. While advisor headcount in the bank channel has remained relatively stable, as the average advisor continues to age, banks and credit unions need to prepare for potential challenges.

“Shifting market dynamics and competing advisory business models are putting significant pressure on banks’ and credit unions’ ability to attract and retain advisors,” says Chayce Horton, research analyst. “Banks need to be able to compete with other advisory channels, such as the registered investment advisor (RIA) channel, which has outpaced the broader wealth management industry in terms of AUM and advisor headcount growth,” he adds.

The paper finds that attrition risk presented by aging advisors is considered one of the greatest threats to bank wealth programs today. Bank advisors, on average, expect to retire at the age of 64 (four years earlier than peers in other channels); yet nearly one-third (29%) of bank advisors transitioning into retirement within the next 10 years are unsure of their succession plans.

Considering this reality, banks will need to develop a two-pronged approach to retain advisors at the later stages of their career while also finding and developing rookie talent. “Wealth and investment programs at banks and credit unions are at a critical juncture relative to growth and expansion,” says John Olerio, senior managing director, head of Webster Investments, and Chair of BISA Research Committee. “Establishing career-pathing options for advisors in the later stages of their career is crucial for banks, as it fosters greater satisfaction, retention, and long-term growth for both the advisor and firm,” says Horton.

Cerulli analyst Matthew Zampariolo adds that, “On the other hand, given that the process of hiring, licensing, and training junior advisors is costly, it is critical that banks investing in young talent retain them.”

In tandem with developing strategic hiring and retention plans, investments in technology and firm culture will pay dividends. According to the research, 52% of bank executives and advisors are dissatisfied with their firm’s technology. “Not only do outdated legacy systems make advisors’ jobs more onerous, but often these pain points are passed through to the clients,” says Horton. Worries about prioritization and culture at banks’ wealth management divisions are also top-of-mind among advisors and an area where improvement could lead to better retention and recruiting outcomes.
“Banks and credit unions must act proactively to stay ahead in an increasingly competitive environment. By focusing on attracting and developing young and mid-level talent and retaining senior advisors, banks can better navigate the many challenges they face and remain competitive in the wealth management industry,” concludes Horton.

Asset Managers Forge Ahead with ESG Product Development Despite Skepticism

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Asset owners and managers remain focused on ESG initiatives, despite heightened regulatory scrutiny surrounding “greenwashing” and negative investor perception, according to Cerulli’s latest white paper, Global State of ESG. Even as firms acknowledge and take measures to quell cynicism, few show signs of being deterred by skeptics or deviating from the courses that have been set.

Increased criticism over ESG has led governmental bodies around the globe to step up efforts to more clearly define and better regulate the ESG investment market. Investment funds that purport to be “green” or offer sustainability benefits without meeting any set categorization standards are rightfully being met with increasing scrutiny as the industry aims to sort out greenwashing.

Cerulli’s data shows both U.S. and international asset managers welcome the opportunity for clarity. The majority of U.S. asset managers polled by Cerulli believe the SEC should be responsible for setting standards around both public companies’ ESG disclosures (73%) and asset managers’ ESG standards and product definitions (58%). Meanwhile, 85% of European institutional investors are in favor of fining asset managers that engage in greenwashing practices and only 7% are not.

Additionally, fears of negative returns and the perception that performance may be sacrificed in the name of ESG/sustainability continue to be a major challenge to firms when it comes to marketing their strategies. Despite this, Cerulli observes managers forging ahead with product development, sales, and marketing of ESG products. In Europe, nearly half (49%) of asset managers consider ESG marketing a very important feature of their overall marketing efforts, and in the U.S., 58% of managers consider ESG a top product development initiative.

“Overall, Cerulli’s research reflects an industry largely unswayed by negative rhetoric surrounding the topics and concepts related to ESG investment,” says David Fletcher, associate director. “By and large, sustainability and the overarching themes of ESG investment are already ingrained in the asset management industry. The challenges firms face in implementing ESG investment initiatives are pain points that will likely be viewed in retrospect as necessary steps in the legitimization and long-term success of these goals.”

BNY Mellon Investment Management Launches the BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF

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BNY Mellon Investment Management announced the launch of BNY Mellon Women’s Opportunities ETF and BNY Mellon Innovators ETF. Listed on Nasdaq, both ETFs are sub-advised by Newton Investment Management North America, LLC (Newton), a BNY Mellon investment firm and a leading equity and multi-asset manager.

“This addition to our growing suite of ETFs provides investors with access to Newton’s deep experience in thematic investing,” said David DiPetrillo, Head of North America Distribution at BNY Mellon Investment Management. “Through Newton’s multi-dimensional research platform combined with fundamental research and analysis, these ETFs will enable investors to potentially benefit from themes we believe will drive economic and societal growth and progression.”

BNY Mellon Women’s Opportunities ETF
The BNY Mellon Women’s Opportunities ETF invests principally in companies that incorporate gender equitable practices in the workplace or provide products or services that enhance the ability of women to meet their work or other personal life responsibilities and needs, such as those relating to household responsibilities, dependent and elder care responsibilities, and gender-specific healthcare. The Fund is co-managed by Newton’s Julianne McHugh and Miki Behr.

As part of BNY Mellon Investment Management‘s ongoing commitment to gender equality, the firm has partnered with Girls Inc., the non-profit organization that inspires all girls to be strong, smart, and bold through direct service and advocacy. In addition, BNY Mellon ETF Investment Adviser, LLC, the Fund’s investment adviser, will contribute at least 10% of the management fee to Girls Inc. The BNY Mellon Foundation will also provide grant funding to Girls Inc. and its New York affiliate, Girls Inc. of New York City, in recognition of their impactful work that equips girls and young women to reach their full potential.

“Gender gaps have economic impacts—if women and men participated equally in the economy a further US$28 trillion could be added to global annual gross domestic product by 20256,” said Ms. McHugh. “We believe that companies that support women, cultivate strong cultures, offer attractive benefit policies in the workplace, as well as deliver offerings which empower women, are positioned to better perform over time.”

BNY Mellon Innovators ETF
The BNY Mellon Innovators ETF invests in innovation-driven companies whose products and services seek to transform or disrupt the way we live and work. The Fund invests across all market capitalizations through a wide range of industries and sectors in seeking to capture transformational growth opportunities over a long-term horizon. The Fund is co-managed by Newton’s chief investment officer and head of equity, John Porter, and Edward Walter.

“Average company life spans have dropped sharply, with 52% of Fortune 500 companies having disappeared in the last 15 years7. Paired with COVID, which spurred innovation and disruption at an unprecedented rate, this provides many attractive investment possibilities in every corner of the economy,” said Mr. Porter. “Our broad interpretation of innovation, coupled with our institutional capabilities and deep experience of thematic investing, means we can look at emerging opportunities in the healthcare, information technology and consumer discretionary sectors among others.”

Alternative Fund Managers Optimistic About Fund Launches and Capital Raising, Research Shows

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New research from Ocorian, a specialist provider of alternative fund services, shows alternative fund managers are optimistic about launches and fund raising over the next 18 months.

More than eight in ten (81%) say levels of fund raising will be higher over the next 18 months compared to the previous 18-month period. 69% of fund managers are cautiously optimistic stating they are expecting to see a slightly higher level of fundraising, whereas 12% believe it will be dramatically higher. Just 18% say it will be about the same and 1% say it will be lower.

These results are reflected in the confidence of fund managers to launch new funds.  Almost all (98%) are confident in the ability of alternative fund managers to successfully launch new funds in the next 18 months, with 52% being very confident and 46% being quite confident.

The research from the team at Ocorian Fund Services, which specialises in administrating alternative asset funds globally shows that 91% of alternative fund managers predict there will be more alternative asset fund launches this year compared to 2022. Of these, 28% predict there will be significantly more alternative asset fund launches while 63% predict launches will be slightly higher. Around one in 12 (8%) predict it will be about the same, and just 1% think it will be lower.

And it’s not just about a rise in confidence to successfully launch new funds, the statistics are reflected in the ability to raise capital with 96% predicting that more capital will be raised in 2023 compared to last year. Around two out of five (40%) of those surveyed think there will be over 25% more capital raised this year compared to last year, and a further 39% think there will be between 10% and 25% more.  Around 17% believe there will be up to 10% more.

When asked to pick the top five asset classes that alternative fund managers expect to benefit the most from fundraising over the next 18 months, 73% selected private equity, followed by infrastructure (68%), real estate (65%), private debt (59%), and hedge funds (49%).

When specifically asked how fund raising will change in the next 18 months for certain alternative asset classes when compared to the last 18 months, real estate, private equity and private debt are expected to increase the most.

Paul Spendiff, Head of Business Development, Fund Services at Ocorian, said: “2022 was a tough year for the fund management industry, with the number of funds launched and amount of capital raised hitting the lowest levels we’ve seen for many years. While it’s still a challenging economic environment and with a number of geopolitical issues making fund raising more difficult in some markets, it’s encouraging to see how positive alternative fund managers are feeling about the year ahead, predicting both higher levels of fund launches and more capital being raised overall. Despite not being out of the woods yet, we expect to see high performing fund managers with the right strategy, good governance and a transparent approach around ESG will benefit from the improving sentiment in the market.”

About Ocorian Fund Services

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. Its team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

US Public Sector Pension Plans Intend to Build on Inflation Hedging Succes

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US public sector pension plan managers are confident that their plans are well hedged against inflation but still have worries about possible risk scenarios, new research from Ortec Finance.

The study with senior US public sector pension plan professionals who collectively help manage over $1.315 trillion, found 86% say their plan is well hedged against inflation, more than a quarter (26%) believe their plan is ‘very well’ hedged.

The research from Ortec Finance, which has clients with over $15 trillion in assets under management and offices around the world including in New York, found just 12% believe the hedging at their plan is average. 

The confidence in inflation hedging is not leading to complacency – managers are still active in changing asset allocations to hedge against inflation. Around two in three (66%) think they will increase allocations to commodities to help with this, while 50% will boost allocation to infrastructure investing. Some 32% will increase allocations to inflation linked bonds and 38% will increase allocations to gold to hedge against inflation.

The survey shows public sector pension fund managers still have concerns about the risk of stagflation – the combination of low growth and high inflation – for their investment strategies.

Some 48% of those surveyed say they are very concerned while 50% say they are quite concerned. All those surveyed expect to see a change in actuarial assumptions on the expected inflation or discount rate.

Marnix Engels, Managing Director, Pension Strategy Ortec Finance said: “While public sector pension plan managers are generally confident that they have addressed inflation hedging on their funds, they aren’t getting complacent.  More work is being done in terms of asset allocations with commodities emerging as the clear favorite for increased exposure in the year ahead and there are some lingering worries that the US economy will not achieve the soft landing of lower inflation and rising growth.”

Ortec Finance models and maps the relevant uncertainties in order to help pension funds monitor their goals and decisions. It designs, builds, and delivers high-quality software models for asset-liability management, risk management, impact investment, portfolio construction, performance measurement and attribution and financial planning, he added. 

Private Equity’s Resilience

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According toTom Franco, Partner at CD&R, Private Equity (PE) has always thrived in challenging environments. Amid market turmoil and economic downturns, the robustness and long-term investment approach of PE firms shine through. This competitive advantage is attributed to their ability to make calculated moves, unfazed by the short-term influences that often sway other asset classes.

He believes that market turmoil tends to be favorable for generating strong returns. “The reason for this is relatively straightforward” he tells Funds Society. “For PE firms, I believe that economic downturns spell opportunity. I believe the best PE managers invest over the long-term and in disrupted periods, deploy capital at more attractive terms, and make bold, calculated moves without being inhibited by the short-termism that frequently influences so many public and family companies. I believe this ability to take a long view creates important competitive advantages”.

In his opinion, while the near-term macroeconomic environment cannot be ignored, it does not necessarily change the PE investment approach. 

“The long-term view usually assumes the need to hold an investment through both good times and tougher times.” He adds. 

Franco reminds us that, across portfolio companies, macros often offset in ways that are hard to predict.

As he notes, “there are portfolio businesses where inflation has been a significant headwind in 2022 because PE firms have not been able to pass on inflationary costs due to long-term contracts that typically represent an investment positive when they are making an investment decision. But there are also businesses where inflation has been a significant benefit, due to positive net price realization with largely fixed cost structures. And interestingly, these businesses with opposite reactions to the macro also exist within the same industry.” 

Even within those businesses that are economically sensitive, he believes a depressed economy can create opportunities for consolidation or to take share, reset dynamics with suppliers and customers, recruit exceptional talent or reinvest at attractive levels.

“PE is focused on being a strategic partner to sellers, and I believe this fundamental approach is even more demand in tough times. In a tougher environment, there are more problems, and therefore more problems available for managers to solve.”

The PE specialist believes that the era when PE was associated with mere financial engineering is a distant memory. “After several cycles and events ranging from extraordinarily cheap capital to the credit crunch, many today argue that private equity creates value through underlying business and operational improvements.” 

In his opinion, the challenge going forward is the appropriate form of operational value creation and how PE firms should evolve their skillsets. 

“In the future, I believe PE will require increased industry and capability specialization to drive fundamental value creation, such as digital, supply chain and talent management. I believe it will also require much earlier operational interventions in the PE ownership life cycle. Today, PE operations teams are often brought in well after the transaction closes. I believe the rule in the future will be early engagement to ask questions, assess management talent, and ensure the capital structure will support the transformation envisioned for the business being acquired.”

Looking at the future

Environmental, Social, and Governance (ESG) factors are becoming a significant part of the PE playbook. Companies that efficiently use resources tend to be more valuable at exit. “Looking ahead, I believe we’ll see GPs transition from narratives about their ESG ambition to clear reporting frameworks with dedicated teams. I also believe that more GPs will make environmental, social and governance matters more prominent in their processes, from diligence through the holding period.”

As the PE industry continues to grow, with over 20,000 firms globally, Franco considers that the industry has to be vigilant to prevent being defined by a single bad actor, at a time when it becomes increasingly important for participants to engage on public policy issues. “Firms must proactively defend their license to operate as media, regulators, and lawmakers focus on PE’s role in stakeholder capitalism, ESG, employment, and the healthcare system.”

In conclusion, 2023 promises to be a year of opportunity for PE firms, with a focus on operational value creation, ESG excellence, and active engagement in public policy issues. Amidst the market turmoil, PE firms have the potential to thrive, leveraging their long-term investment approach, strategic partnerships, and operational improvements to generate strong returns.

Insigneo Incorporates Alfredo Maldonado to Lead Its Expansion in New York City

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Photo courtesyAlfredo Maldonado, Managing Director & Market Head in New York

Insigneo is delighted to announce the appointment of Alfredo Maldonado as Managing Director and Market Head for New York and US Northeast Region.

Maldonado will be based at Insigneo’s expanding office located on Madison Avenue and 41st Street reporting to Rodolfo Castilla, Insigneo’s Head of Sales. 

With this important incorporation, Insigneo reaffirms its commitment to delivering exceptional financial services to clients across the globe. The company’s decision to hire Maldonado underscores its focus on hiring the best talent and reinforces its position as a leading player in the global wealth management sector. New York is an important hub for the firm to continue its expansion plans while providing an integrated platform for Investment Professionals and their clients globally. 

In his new role, Maldonado will oversee Insigneo’s existing business in New York, driving the company’s growth by focusing on top line revenue and assets for its existing business, while expanding its footprint in the Northeast.

“Alfredo’s appointment reflects Insigneo’s aspiration to be recognized as the best value proposition for all independent advisors focused on international clients. We are thrilled to welcome such a distinguished professional, and particularly somebody that shares our values, which is critical to all of us,” said Rodolfo Castilla, Head of Sales for Insigneo.

Maldonado brings 25 years of international wealth management experience, having worked in New York, California, and Florida, expanding his network and knowledge across these regions. The senior hire brings a deep understanding of the New York market, which will be crucial in growing Insigneo’s presence in the city.

“Insigneo’s commitment to providing a pro-business approach for financial advisors, enabling them to provide exemplary service to their clients is unmatched in the industry,” said Maldonado. 

“I am happy to welcome a leader of Alfredo’s caliber and culture to our growing Insigneo family. New York and the Northeast are very important markets for us to grow and we are excited he will lead those efforts to make us a powerhouse,” said Javier Rivero, Insigneo’s President & COO.

Advisors’ Front-Office Technology Is Here to Stay

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Driven by the need to facilitate a digital work environment, advisor use of front-office technology has evolved significantly over the past three years. New research from Cerulli, State of U.S. Wealth Management Technology 2023, finds front-office technology has made a lasting impact on both client satisfaction and advisor productivity.

Between 2019 and 2022, the greatest rates of growth in advisor adoption occurred with technologies that facilitate a digital work environment, such as e-signature, client portals, and video conferencing, driven largely by the needs imposed by the pandemic.

Advisors tell Cerulli that these technologies were critical to their ability to operate effectively during the pandemic, but that the benefits experienced go well beyond that. Thus, many patterns of technology use that emerged during the pandemic are likely to continue into the post-pandemic world.

The technologies that are most frequently cited as positively impacting the client experience include e-signature (77%), video conferencing (75%), and client portal (64%). Likewise, the technologies that are most frequently cited as positively impacting advisor productivity include video conferencing (75%), e-signature (73%), and CRM (70%).

“This data aligns with the many conversations Cerulli has had with financial advisors who share how e-signature technology has drastically reduced the time and effort required for clients to open accounts, and create linkages between accounts, for example, obviating the need for papering and re-papering of accounts,” says Michael Rose, associate director.

The same applies to virtual meetings, which were rare prior to the pandemic, and are now often a preferred meeting option for clients and advisors. “The precipitous rise in advisors’ use of these applications over the last three years underscores the importance of creative, outside-the-box thinking when it comes to the ways in which they do business altogether,” he says.

Overall, the ways in which advisors source technology varies between affiliation models. For instance, 88% of advisor practices affiliated with captive broker/dealers (B/Ds) source their suite of technology from their home offices with relatively little control over product selection. Independent registered investment advisors (RIAs) represent the other end of the spectrum, with 50% building custom technology stacks sourced entirely from third parties.

“The diverse ways in which advisor practices source their technology are testament to the varying approaches for operating a wealth management practice in the modern day,” concludes Rose.

Ostrum Asset Management Announces the Appointment of Axel Botte as Head of Markets Strategy

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Photo courtesy

Ostrum Asset Management (Ostrum AM), an affiliate of Natixis Investment Managers, announces the appointment of Axel Botte as Head of Markets Strategy. He was previously the global strategist in the same team.

Axel Botte will head the markets strategy team, which is composed of: Zouhoure Bousbih, Emerging countries Strategist and Aline Goupil-Raguénès, Developed Countries Strategist, both members of the team since 2018. The recruitment of a new global strategist is underway. Axel Botte reports directly to Ibrahima Kobar, CIO Fixed Income, Structuring and Research, and member of Ostrum AM’s Executive Committee.

Within Ostrum AM, the main missions of the Markets Strategy team are to establish a macroeconomic, economic and financial scenario to support the active fundamental management teams in their strategy and asset allocation recommendations, as well as to provide top-down internal research to support the managers’ convictions.

Ibrahima Kobar, CIO Fixed Income, Structuring and Research at Ostrum AM, said: “We are delighted that Axel has taken on this new role at Ostrum AM. His experience in asset management and his expertise in international markets strategy are major assets to meet the requirements of our institutional clients”.

Axel Botte started his career in 2000 at Axa IM as an economist, then became an equity strategist between 2002 and 2006. In 2007, he was appointed head of fixed income strategy in the Investment Strategy department of the management company. In 2010, Axel Botte joined Ostrum AM, as an Global Strategist, where he works closely with the fixed income teams on specific themes, such as interest rates, developed market government bonds, inflation-linked bonds and credit. 

Axel Botte holds a DEA in Industrial and Financial Strategies and Econometrics from the University of Cergy-Pontoise.