Providers Seize Opportunities at the Intersection of Defined Contribution and Wealth Management

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Amid intense fee compression in the defined contribution (DC) market, financial planning and wealth management are becoming more attractive service offerings to recordkeepers, plan advisors, and other DC providers, according to The Cerulli Report—U.S. Retirement End-Investor 2022: Fostering Comprehensive Relationships.

DC providers are well positioned to nurture deeper, more comprehensive relationships with retirement investors that extend beyond their DC plan by helping them navigate complicated financial dilemmas, questions, and challenges over the course of their working lives.

One-third (34%) of active 401(k) participants name their 401(k) provider as their primary source of retirement planning and advice, followed by a financial professional (16%), according to the research. 

“Retirement investors’ financial priorities often shift from immediate saving and debt management concerns to longer-term, financial planning considerations as they progress through their careers and accumulate greater wealth,” states Shawn O’Brien, Cerulli associate director.

At a certain point, some participants will stand to benefit from a high-touch, comprehensive wealth management relationship where they gain access to more advanced financial planning services, a broader investment opportunity set, and more flexible distributions.

O’Brien adds, “Firms that establish and expand relationships with participants during their working years offer a simple, seamless transition from DC-focused asset accumulation to a more holistic, financial planning and advisory experience as they approach retirement.”  

The opportunity is ripe for retirement plan providers. Cerulli estimates more than $440 billion in DC assets were rolled into individual retirement accounts (IRAs) with the help of an advisor in 2021, illustrating the addressability for sourcing wealth management business from the DC market.

The vast majority (86%) of advisor-intermediated rollover assets are through an existing advisor relationship. “For wealth managers looking to capture rollovers from DC plans, this data underscores the importance of establishing and nurturing relationships with participants earlier in their careers, years prior to potential rollover events,” adds O’Brien. 

Cerulli anticipates DC recordkeeper and intermediary consolidation, along with ongoing legal and regulatory pressures, to continue to exert downward pressure on fees in the DC market, making financial planning and wealth management services increasingly attractive to providers from a financial standpoint. According to the research, the services are considerably more lucrative than pure-play recordkeeping relationships, in part because the wealth management industry has been largely insulated from the intense fee compression experienced in the asset management and recordkeeping industries.

Given the attractive economics of wealth management relative to recordkeeping and plan advisory, Cerulli anticipates more wealth managers and DC plan providers will create synergies between these two business units through mergers and acquisitions, and strategic partnerships.

O’Brien notes that, “By harmonizing their DC and wealth businesses, firms can manifest meaningful financial benefits for both franchises. Factoring in the expected ancillary revenue from converting DC participants to wealth management clients may allow firms to offer more competitive pricing on the DC side, helping them win additional mandates.” O’Brien also believes greater “coopetition” between recordkeepers and plan advisors could arise as the two parties work to serve the plan but simultaneously compete for participant rollovers. 

Credit Suisse Appoints Ulrich Körner New Group CEO

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Credit Suisse Group announced the appointment of Ulrich Körner as Group Chief Executive Officer (CEO) from August 1, 2022, replacing Thomas Gottstein, who is resigning.

“I am delighted to welcome Ueli as our new Group CEO, to oversee this comprehensive strategic review at a pivotal moment for Credit Suisse. With his profound industry knowledge and impressive track record, Ueli will drive our strategic and operational transformation, building on existing strengths and accelerating growth in key business areas,” said Axel P. Lehmann, Chairman of Credit Suisse.

Lehmann added: “Since becoming Chairman and reviewing the bank’s portfolio with our newly refreshed Board of Directors, I have come to appreciate the world-class quality of our businesses. But we need to be more flexible to ensure they have the necessary resources to compete. Our goal must be to become a stronger, simpler and more efficient Group with more sustainable returns.”

Thomas Gottstein, outgoing CEO of Credit Suisse after 23 years with the firm, said: “Credit Suisse has formidable client franchises in all four divisions globally and an immense talent pool of more than 50,000 colleagues around the world. Despite the challenges of the last two years, I am immensely proud of our achievements since I joined the Board seven years ago and, more recently, of having strengthened the bank, recruited a senior Board of Directors, reduced risk and fundamentally improved our risk culture.”

Following his appointment, Ulrich Körner, Chief Executive Officer of Credit Suisse, said: “I thank the Board of Directors for the trust they have placed in me as we embark on this fundamental transformation. I look forward to working with all colleagues in the bank and on the Board of Directors and to devoting all my energy to executing our transformation. It is a challenge, but at the same time it represents a great opportunity to position the bank for a successful future and to realize its full potential. I would also like to extend my heartfelt thanks to Thomas for his support and collaboration.”

Körner joined Credit Suisse in April 2021 as CEO Asset Management and joined from UBS, where he was a member of the Group Executive Board for eleven years, of which he spent six years heading the Asset Management division. Prior to this position, he was Chief Operating Officer. Since 2011 he also headed UBS’s Europe, Middle East and Africa region.

Prior to joining UBS, he was an executive at Credit Suisse and held various positions including CFO and COO of Credit Suisse Financial Services and CEO Switzerland. Ulrich Körner holds a doctorate in business administration from the University of St. Gallen.

This change in senior management comes on the heels of changes made during the first quarter of the year. In April 2022, the bank already announced the departure of David Mathers, the bank’s chief financial officer, as well as Helman Sitohang, managing director for Asia Pacific, and Romeo Cerutti, the bank’s general counsel, Romeo Cerutti. It has also appointed Francesca McDonagh to the position of CEO for EMEA (Europe, Middle East and Africa). 

At the same time, the bank has announced that it is conducting a comprehensive strategic review with key objectives.

First, to consider alternatives that go beyond the conclusions of last year’s strategic review, particularly given the changed economic and market environment. The goal of the appraisal will be to shape a more focused, agile Group with a significantly lower absolute cost base, capable of delivering sustainable returns for all stakeholders and first-class service to clients.

Second, strengthen its world-class global wealth management franchise, its leading universal bank in Switzerland and its multi-specialty asset management business.

Third, transform the Investment Bank into a capital-light, more market-focused banking business that complements the growth of the wealth management and Swiss Bank franchises.

Fourth, evaluate strategic options for the securitized products business, which may include attracting third-party capital into this market-leading, high-yielding platform to take advantage of untapped growth opportunities and free up additional resources for the bank’s growth areas.

And finally, to reduce the Group’s absolute cost base to below CHF 15.5 billion over the medium term, in part through an enterprise-wide digital transformation that prudently secures lasting savings while continuing to focus on improving risk management and risk culture.

Eli Butnaru joins Bolton Global Capital in Miami

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Bolton Global Capital announces that Eli Butnaru has joined the firm as a managing director.

Butnaru has more than 35 years of experience in directing various companies in the financial services industry with as many as 300 employees and annual revenues in excess of $2 billion, according the firm information.

His background includes managing companies in start-up, survival, turnaround, and growth modes for financial institutions such as Citicorp, UBS International, BNP Paribas and most recently, Boreal Capital.

“We are delighted to have such a well-respected financial professional affiliate with our company” stated Ray Grenier, Bolton’s CEO.

Among his previous positions, Butnaru served as Managing Director of Citibank for 18 years where he was a senior credit officer with an emphasis on petroleum, metals, and mining, the press release said.

He also served as global transaction head in Asia. During his tenure at Citibank, he was stationed in countries throughout Asia and the Americas.  He also acted as Market Head for the private bank of UBS International where he worked for 8 years.

Prior to joining Bolton Global, Butnaru was the CEO of Boreal Capital Management for 10 years where he was responsible for establishing and growing the firm’s securities brokerage and advisory businesses. He also managed client accounts worth approximately $250 million in market value.

His primary role at Bolton will be to manage and grow his securities and advisory business serving clients in the US, Latin America and Europe. He will be working at Bolton’s Miami office at the Four Seasons Tower on Brickell Avenue.

Butnaru is a graduate of Louisiana University and is a Chartered Financial Analyst or CFA.

 

Bolton Global Capital Expands South Florida Footprint with Opening of Weston Office

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Bolton Global Capital is expanding the firm’s presence in South Florida with the completion of its office complex in Weston.

This branch was developed to serve as a workplace for financial advisors who live in the suburban areas north of Miami. 

The new office is currently the workplace for five of the former Wells Fargo advisors who manage approximately $650 million in client assets together with their registered administrative associates.

These advisors include Jorge Aguerrevere, Ernesto Amengual, Felix Bosque, Andrei Santos and Leonardo Tedeschi. The group’s licensed support staff includes Carolina Castillo, Milton Ceotto, Maigualida Lanzetta and Adriana Perez.

This group primarily services high and ultra-high net worth clients located in the US and Latin America. Last year, Bolton recruited most of the financial advisors from the Weston branch office of Wells Fargo Advisors.

In addition to housing these advisors and their staff, this premium office space positions the firm to attract other professionals from the major banks and wirehouses who live in the suburb areas north of Miami such as Aventura, Hollywood, Pembroke Pines, Miami Lakes and Ft. Lauderdale.

Bolton’s main office in Florida is a 28,000 square foot complex at the Four Seasons Tower on Brickell Avenue in Miami. The new Weston office is located at 55 Weston Road. 

 

Global Law Firm Sidley to Open New Brickell Office

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Sidley Austin announced it has opened a Miami office, bringing its global office count to 21.

Sidley has been recruiting and hiring local lawyers since February and expects to announce the full roster of Sidley talent in August as various teams are released from their existing firms.

This is the firm’s first office in the southeast of the United States, a growing market for a wide variety of industries, including private equity, crypto, real estate, healthcare, finance, and sports/entertainment. In addition to attracting new lawyers to the firm, certain homegrown attorneys have relocated to Miami, according the company information.

“Miami is a dynamic international business hub that is attracting industries that we already serve, as well as incredibly talented attorneys,” said Yvette Ostolaza, Sidley’s Management Committee Chair, a Miami native and University of Miami graduate.

“This move into South Florida is a natural next step to continue serving our global clients, many of whom have moved their operations to Florida or are expanding to the region. We are also growing our talent pool to meet our clients’ needs by recruiting local teams who fit the Sidley platform as well as with our culture of hiring the best lawyers who believe in working in teams that are ‘built to win’ to deliver the best service to our clients. We also have Sidley lawyers who have been in Miami during the pandemic and are planning to make Miami their permanent home,” she added.

Sidley has leased swing space at 1001 Brickell Bay Drive.

It has over 40 lawyers and more to come.

Upon completion of construction, the firm will move to 830 Brickell in 2023, the new Class-A+ office tower nearing completion in Miami’s Brickell Financial District.  

 

For OCIO Providers, Fee Transparency Leads to Greater Client Satisfaction

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Outsourced chief investment officers (OCIOs) are keen to optimize the client experience with initiatives aimed at improving transparency amid rising competition and ongoing fee pressure, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.

With the growing use of OCIO search consultants, pressure to provide the most granular level of fees in the name of full transparency is a growing trend. However, how to quote a potential client for the overall fees they will incur in the OCIO relationship remains an area of debate among OCIO providers.

There is no widely accepted standard for precisely how fees should be presented. For instance, some providers believe fees should be displayed at a very granular level, showing how each component of the relationship contributes to the overall fee charged. “Whatever manner in which a provider chooses to display fees, full transparency is most associated with client satisfaction, potentially leading to stickier assets and longer client relationships,” states Laura Levesque, associate director. 

In addition to evaluating how much information to disclose to clients, providers are also evaluating how they communicate, looking at the mediums in which clients want to receive information. While service levels differ based on client, the research finds that “self-service” appeals to clients across the board, particularly amid the shift to remote work environments.  

Top-of-mind for providers is implementing a client portal—57% of OCIO providers are considering adding a portal to their lineup. “Clients’ desire to obtain information on demand is largely driving this trend and should be taken into consideration when deciding what to include in a portal,” says Levesque. 

Client portals can be simple report repositories or can offer clients highly sophisticated capabilities, ranging from prepared reports and documents to a full suite of on-demand services that can include access to proprietary analytics tools and risk management capabilities. Cerulli’s research finds a majority (57%) of providers include performance reporting on demand, access to recordkeepers (36%), and attribution tools (29%) as features. 

Capabilities offered through portals vary by provider based on resources, specialization, and client demand. For instance, while proprietary risk and analytics tools are seen as a value-add for many providers, some may not have the resources to provide these capabilities. “Regardless of the individual services an OCIO provider offers through its client portal, the goal is to provide clients with a level of reporting that cements a seamless experience for the client, founded on transparency,” concludes Levesque. 
 

After the Worst Half-Year in Half a Century, Only Improvements Can Be Expected

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Global markets closed out the most tumultuous first half of a year in decades driven by accelerating inflation, the war between Russia and Ukraine and a doubling of riskfree interest rates (including yields on riskier securities). However, the latter half of the year should be better, says BigSur Partners’ latest The Thinking Man publication.

The S&P 500 fell 21%, suffering its worst first half of a year since 1970. Investment-grade bonds, as measured by the iShares Core U.S. Aggregate Bond exchange-traded fund, lost 11%— posting their worst start to a year in history (or at least since 1842). Non-investmentgrade or “junk” bonds, as measured by the iShares iBoxx High Yield Bond exchangetraded fund, fell 15.4%. Also, both stocks and bonds posted a negative first and second quarter, consecutively.

This has been the result of a global phenomenon, not just a US one. Stocks and bonds in Europe, markets in EAFE, and emerging markets all tumbled, hurt by slowing growth and stickier than expected inflation.

On the other hand, cryptocurrencies came crashing down, burdening institutional and individual investors alike with steep losses. Anecdotal evidence does show that younger generations have been hit the hardest, as sectors like Crypto, IPOs, SPACs, and super-high growth areas like EVs, AI, Robotics and Cloud Computing are down over 70% from their all-time highs back in 2021.

About the only thing that rose in the first half was commodity prices. Oil prices surged above $100 a barrel, and U.S. gas prices hit records after the Russia-Ukraine war disrupted imports from Russia, the world’s third-largest oil producer. However, investors have been underweighted commodities after years of underperformance and under-investment in the sector.

“Volatility has increased dramatically in all markets,” comment BigSur experts, adding that “we see no reason for volatility to decrease in the second half of the year.”

On the flip side, the Fed and central banks plan to continue raising interest rates to try to curb inflation. “The moves will likely slow down growth, potentially tipping economies into recession and generating further tumult across markets,” the experts reflect.

The good news for investors is that markets have not always underperformed after suffering large losses in the first half of the year. In fact, history shows that they have often done the opposite. There have only been five instances in history in which both stocks and bonds posted negative returns for two consecutive quarters.

Recessions have been associated with three of the previous four periods, and the jury is still out on this latest case.

However, no one is talking about a deep or prolonged recession. There is general agreement and consensus on a shallow and short recession. When the S&P 500 has fallen at least 15% the first six months of the year, as it did in 1932, 1939, 1940, 1962 and 1970, it has risen an average of 24% in the second half, according to Dow Jones Market Data.

Fund managers currently have above-average cash positions, below-average equity positions and a marked degree of pessimism about the economy.

To read the full BigSur Partners report, please click on the following link.

 

Magnifi Announces International Expansion Through Acquisition and Integration of SharingAlpha’s Professional Investor Community

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TIFIN, a fintech platform using artificial intelligence (AI) and investment-driven personalization to shape the future of investor experiences, announced its initial launch into international markets through the acquisition on SharingAlpha, a community of over 15,000 professional fund investors and analysts located throughout the world, but with a high concentration in the UK and Western Europe.

Following the acquisition, SharingAlpha will be fully integrated into TIFIN’s Magnifi platform. The integration will offer both retail and professional investors from all over the globe unique digital tools to enhance their personal investment experience leveraging the AI-powered investment intelligence on Magnifi’s existing platform now augmented with SharingAlpha’s proprietary community intelligence insights. 

SharingAlpha offers professionals the opportunity to build their own personal track record in terms of both their fund selection and asset allocation capabilities. Investors can gain the community’s intelligence on funds’ chances of generating alpha in the future from the collective knowledge gathered on the platform from members of the SharingAlpha community. Co-founded six years ago by two Israeli brothers, Oren and Yuval Kaplan, has become the world’s largest community of professional fund buyers.

Oren Kaplan will also join Magnifi as a partner and work closely with TIFIN’s recently announced Head of International Jason O’Shaughnessy on the integration of the platforms.

“Being able to now offer Magnifi’s investment intelligence and capabilities to non-US investors is definitely an important step in our evolution.” said Dr. Vinay Nair, Founder, and CEO of TIFIN. “We are also excited about adding the unique community features developed by SharingAlpha which will enhance our offering to professional investors internationally”.

“I am looking forward to working with Magnifi’s team in expanding its reach internationally and in growing the community of professional investors even further.” said Oren Kaplan, Co-Founder and CEO of SharingAlpha, “We will continue to be committed to building innovative and useful digital tools to global investors”.

Snowden Lane Partners Hires Tom Hakala in New York

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Captura de Pantalla 2022-07-19 a la(s) 18

Snowden Lane Partners announced that veteran wealth advisor, Tom Hakala, has joined the firm as Partner and Managing Director in New York.

With 30 years of wealth management experience, Hakala serves high-net-worth families and individuals and oversees $180 million in client assets. 

“We are excited to welcome Tom to Snowden Lane, as he is a proven expert in the high-net-worth space and a world-class advisor,” said Lyle LaMothe, Chairman of Snowden Lane Partners. “I am continually humbled when high-quality advisors express interest in joining our team, and I know Tom will fit seamlessly into our firm’s culture.”

“I’ve been very fortunate to enjoy a 30-year career in financial services, and I’m looking forward to beginning the next phase of my professional journey at Snowden Lane,” said Tom Hakala. “I have the utmost confidence that the firm’s values and culture, coupled with its proven platform, will allow me to continue delivering top results for my clients.”

Prior to Snowden Lane, Hakala served as a Managing Director at Fieldpoint Private and Wilmington Trust. He is an attorney, CPA, and Personal Financial Specialist, with expertise in the design and implementation of sophisticated financial strategies for high-net-worth clientele. Over the course of his career, Hakala has also held positions with KPMG, UBS and PricewaterhouseCoopers.

“I know Tom will be a valuable addition to the Snowden Lane team, and I’m appreciative that our value proposition continues to resonate with advisors,” said Greg Franks, Snowden Lane’s Managing Partner, President & COO. “The interest we have received from the wealth management community is the ultimate testament to our culture and I’m proud of the momentum Snowden Lane has built this year amid the current recruiting landscape.”

Rob Mooney, Managing Partner & CEO of Snowden Lane Partners, added, “An advisor of Tom’s caliber is a natural fit at our firm and I’m excited to officially welcome him to the team. We have tremendous respect for Fieldpoint Private, and I was thrilled when Tom expressed interest in joining Snowden Lane for the next chapter of his career.”

Snowden Lane Partners Hires Tom Hakala in New York

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Captura de Pantalla 2022-07-19 a la(s) 18

Snowden Lane Partners announced that veteran wealth advisor, Tom Hakala, has joined the firm as Partner and Managing Director in New York.

With 30 years of wealth management experience, Hakala serves high-net-worth families and individuals and oversees $180 million in client assets.

“We are excited to welcome Tom to Snowden Lane, as he is a proven expert in the high-net-worth space and a world-class advisor,” said Lyle LaMothe, Chairman of Snowden Lane Partners. “I am continually humbled when high-quality advisors express interest in joining our team, and I know Tom will fit seamlessly into our firm’s culture.”

“I’ve been very fortunate to enjoy a 30-year career in financial services, and I’m looking forward to beginning the next phase of my professional journey at Snowden Lane,” said Tom Hakala. “I have the utmost confidence that the firm’s values and culture, coupled with its proven platform, will allow me to continue delivering top results for my clients.”

Prior to Snowden Lane, Hakala served as a Managing Director at Fieldpoint Private and Wilmington Trust. He is an attorney, CPA, and Personal Financial Specialist, with expertise in the design and implementation of sophisticated financial strategies for high-net-worth clientele. Over the course of his career, Hakala has also held positions with KPMG, UBS and PricewaterhouseCoopers.

“I know Tom will be a valuable addition to the Snowden Lane team, and I’m appreciative that our value proposition continues to resonate with advisors,” said Greg Franks, Snowden Lane’s Managing Partner, President & COO. “The interest we have received from the wealth management community is the ultimate testament to our culture and I’m proud of the momentum Snowden Lane has built this year amid the current recruiting landscape.”

Rob Mooney, Managing Partner & CEO of Snowden Lane Partners, added, “An advisor of Tom’s caliber is a natural fit at our firm and I’m excited to officially welcome him to the team. We have tremendous respect for Fieldpoint Private, and I was thrilled when Tom expressed interest in joining Snowden Lane for the next chapter of his career.”