Although most companies have perfected the art of managing analysts’ expectations, the corporate earnings season is producing fewer surprises although the general trend of a slowdown in profits seems to be continuing. This is the view of Guy Wagner, and his team, published in their monthly analysis, ‘Highlights’.
After the rebound in February and March, equity markets saw little change in April. The S&P 500 in the United States, the Stoxx 600 in Europe, and the MSCI Emerging Markets (in USD) gained respectively during the month, while the Topix in Japan gave up a bit. “Since most companies have perfected the art of managing analysts’ expectations, the corporate earnings season is producing fewer surprises although the general trend of a slowdown in profits seems to be continuing. The main support for the equity markets is the lack of alternatives, even though the deterioration of economic fundamentals is of increasing concern”, says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and managing director of the asset management company BLI – Banque de Luxembourg Investments.
Stabilisation of China’s economy is due to the government’s stimulus measures Although the global economy is continuing to grow, there has been notable divergence in the different regions’ performance in recent weeks. While growth in US gross domestic product (GDP) slowed on the back of weak investment and exports, China’s GDP climbed. “However, the stabilisation of China’s economy is once again due to the government’s stimulus measures which are exacerbating the country’s excessive debt problem”, believes the Luxembourgish economist. In Europe, economic growth is stable despite a host of political crises. In Japan, the hoped-for economic recovery under the ‘Abenomics’ plan has not yet materialised.
Europe: no prospect of a change to the ECB’s accommodative monetary policy stance As expected, the US Federal Reserve kept its key interest rates unchanged at its April meeting. Fed Chairman Janet Yellen left the door open for a potential increase in interest rates during the year, although she remained very reticent about such a probability. In Europe, in response to a raft of criticism in recent weeks, European Central Bank’s (ECB) President Mario Draghi justified the rationale of the negative interest rate policy. Guy Wagner: “There is no prospect of a change to the ECB’s very accommodative monetary policy stance of recent years.”
European government bonds could despite weak or even negative yields gain Bond yields rose slightly in April. Over the month, the 10-year government bond yield inched up in Germany, in Italy, in Spain and in the United States. “In Europe, the main attraction of the bond markets, despite their weak yields, lies in the prospect of interest rates going deeper into negative territory and this being implemented on a greater scale by the ECB during 2016. In the United States, the higher yields on long bond issues give them some residual potential for appreciation without having to factor in negative yields to maturity”, concludes Guy Wagner.
According to the European Fund and Asset Management Association (EFAMA) the European investment fund industry during the first quarter of 2016 saw net sales of UCITS and AIF which reached EUR 37 billion, compared to EUR 171 billion in Q4 2015. The sharp drop in net sales was mostly due to lower net sales of UCITS.
EFAMA points out that UCITS net sales registered net outflows of EUR 6 billion, compared to net inflows of EUR 122 billion in Q4 2015. Long-term UCITS, i.e. UCITS excluding money market funds, recorded net outflows of 4 billion, compared to net inflows of EUR 83 billion in Q4 2015.
Equity funds recorded a turnaround in net sales, from net inflows of EUR 57 billion in Q4 2015 to net outflows of EUR 3 billion in Q1 2016. Net sales of multi-asset funds slowed down from EUR 31 billion in Q4 2015 to EUR 6 billion in Q1 2016. While Bond funds continued to record net outflows, i.e. EUR 9 billion, the same level as in Q4 2015.
UCITS money market funds also saw a turnaround in net sales, from net inflows of EUR 39 billion in Q1 2015 to net outflows of EUR 2 billion in Q1 2016. AIF net sales amounted to EUR 43 billion in Q1 2016, compared to EUR 48 billion in Q4 2015. The solid net sales performance of AIF reflected the good net sales level of equity funds (EUR 7 billion, compared to net outflows of EUR 5 billion in Q4 2015), and of multi-assets funds (EUR 20 billion, compared to EUR 15 billion in Q4 2015).
Given this, total European investment fund net assets decreased by 2.1% in Q1 2016 to EUR 13,039 billion. Net assets of UCITS fell by 3.4% in Q1 2016 to EUR 7,907 billion, and total net assets of AIFs only decreased by 0.1% to EUR.
Bernard Delbecque, Director of Economics and Research at EFAMA commented on these results: “The stock market sell-off in early 2016 and uncertainties about the future direction of interest rates had a negative impact on the net sales of UCITS during the first quarter of 2016. On a positive note, the net outflows remained very limited (0.07% of UCITS assets), and AIFs continued to show solid net sales level. This confirms that UCITS and AIF investors are resilient to market volatility”.
Foto: Michael Pardo
. El número de inversores institucionales activos en CTAs alcanza su record en 2015
The latest report from Preqin finds that increasing numbers of active investors and a positive general view of performance among existing investors have driven inflows into CTAs over recent quarters. The number of institutional investors actively investing in CTAs reached a record 1,067 in 2015, up from 1,017 in 2014. The total assets under management for CTAs is at $241bn as of the end of Q1, up from $204bn at the beginning of 2015.
Furthermore, 69% of investors interviewed at the end of 2015 reported that their CTA portfolios had met their performance expectations for the year, the second highest proportion of any leading hedge fund strategy. In the same survey, 29% of all hedge fund investors said they planned on increasing their exposure to CTAs in 2016, while only 5% intended to decrease it.
CTAs have seen four quarters of net inflows of capital since the start of 2015, with net asset flows of $38bn in new investor capital committed to the strategy. Although CTAs returned only -0.08% in 2015, 2016 began strongly with funds making gains of 1.52% in the first quarter. CTAs as a whole saw net inflows of $13.7bn in Q1 2016, the highest of any leading strategy.
New CTA launches peaked in 2013, with 153 funds launched in the year. Since then, the rate of launches has declined; there were just 73 new fund launches in 2015 and 12 so far in 2016, just 6% of all hedge fund inceptions.
“CTAs play an important role in a number of institutional investors’ portfolios. These vehicles, operating trading strategies across a wide range of commodity and financial markets, offer the possibility of returns with low correlation to other financial markets and can smooth returns in investor portfolios. With recent widespread turbulence, it is perhaps unsurprising that increasing numbers of investors have been attracted to CTAs’ potential for low correlation to other investments.
Partly as a result of this, so far in 2016 CTAs have seen the highest level of inflows across all leading hedge strategies. Despite a difficult performance year in 2015, CTAs have seen solid returns in the opening months of 2016, and if these gains persist we may yet see further inflows from investors,” said Amy Bensted, Head of Hedge Fund Products, Preqin.
Joël Reuland, manager of the BL-Global wealth management mixed funds, answers nine questions as he presents its fund BL-Global 50.
Joël, what type of assets does the fund invest in? Joël Reuland (JR): BL-Global 50 is invested between 35% and 65% in equities, the balance being in bonds, cash or precious metals. The fund’s equity portfolio is invested worldwide in high-quality companies with a sustainable competitive advantage. The bond portfolio only invests in government bonds. Exposure to precious metals is mainly an insurance against systemic risk.
What is the management strategy? JR: Pour In our view, the fund manager’s role is largely to avoid errors: an investment that loses 50% has to double before it can get back to square one. The asymmetrical pattern of losses and gains explains our aversion to risk, to which end we are prepared to sacrifice exceptional gains. We aim to achieve asset growth over the long term by avoiding losses. Accordingly, we only invest in things we understand and we steer clear of areas outside our expertise. We don’t invest in financial stocks because they are not transparent or in mining companies as their results are too dependent on commodity price trends which we can’t predict. We are reluctant to invest in highly cyclical companies given the difficulty of accurately anticipating periods of recession. We limit potential errors by not investing in products we don’t understand.
How else can you reduce the portfolio’s risk? JR: For each proposed investment, we calculate an intrinsic value. For equities, this is based on our forecast for the company’s recurrent cash flow. To reduce the probability of losses, we invest when the share price offers a discount to the company’s intrinsic value. Losses will be mitigated as long as our investment thesis is not mistaken.
Given such a prudent approach, at what point are you prepared to take more risk? JR: We take more risks when valuation discounts are favourable. Psychologically this is not always easy as the discounts can become significant during very stressful periods on the market. This is when opportunities open up, as they did at the end of 2008 and beginning of 2009. And since we select high quality stocks, their share price tends to recover after the crisis period. Once the stress has subsided, we become more cautious again. This may mean that we don’t extract every ounce from episodes of stock market euphoria but it’s the price we pay for avoiding substantial losses. And it’s a strategy that proves its worth over a full economic cycle. What we don’t lose in the downturn more than outweighs what we miss out on during the euphoric phases. Losses and gains are so very asymmetrical…
Do you put more into bonds when you have less investment in equities? JR: To some extent, yes. However, the fund is limited to government bonds. We don’t take any corporate risk in the bond portfolio, which should stabilise the portfolio during stock market stress periods. With high debt levels around the world, our credit risk is currently confined to Germany and the United States.
This is despite the fact that yields to maturity on German government bonds are negative, even for long maturities… JR: Obviously bonds aren’t as attractive now as they have been over the last 25 years. But having said that, even with negative yields to maturity, bonds could continue to appreciate if yields go deeper into negative territory. It may seem absurd, but that is a consequence of Mario Draghi‘s negative interest rate policy. And if the ECB cuts interest rates even further, to -2% or -3% to “force” consumers to spend their savings, government bond prices will continue to rise. Eventually, this type of monetary policy is likely to be inflationary, but bonds will go up in the meantime. This is why, despite negative YTMs, we are still invested in German government bonds. However, we have confined ourselves to maturities of 2017 to 2020 due to the longer-term inflation risks of such a policy.
In the United States, YTMs are still positive JR: In relative terms, US Treasury bonds continue to be attractive. This is why the US bonds in our portfolio have longer maturities than the German bonds. But we are keeping a close watch on the situation. With such high debt, it is increasingly likely that the central banks will deploy a deliberately inflationary monetary policy. We haven’t got to that point yet but it’s getting closer. This is why bonds with longer maturities are much more risky.
Given the low attraction of bonds, is there an alternative for diversification? JR: Gold is a definite option. The more disconnected the central banks’ monetary policies become, the greater the rationale for having gold in a portfolio. The main reason why gold has not gone up more so far despite the central banks’ quantitative easing policies is that these policies have not created inflation. But weak inflation is not surprising if the technique of quantitative easing is fully understood. On the other hand, if the central banks change tack and decide to deliberately create inflation, that is certainly achievable. And at that point, the gold price will pick up. But then you never can tell. If investors lose confidence in the central banks’ disconnected strategies, it could be useful to have exposure to the ultimate currency as, unlike paper currencies, it cannot be printed at will.
What performance can investors in BL-Global 50 expect? JR: Since the fund’s launch in October 1993, BL-Global 50 has generated a return of 4.5% per annum. However, this historic return cannot be considered representative for the future now that market conditions have totally changed. Due to the central banks’ unconventional monetary policies, money market and bond investments offer almost zero yield. So everything hangs on equities which, given the scale of the economic imbalances, are likely to trade at lower valuations. Protecting purchasing power without suffering excessive volatility has become the watchword for the future. This might seem like an ambitious target, but given the virtually zero or even negative yields on offer for bond and money market investments, protecting purchasing power takes on a totally new meaning.
Last month, the European Securities and Markets Authority (ESMA) announced the outcome of its first EU-wide stress testing exercise that covered 17 of the EU’s largest clearinghouses (central counterparties; CCPs). In a report titled ESMA Stress Tests Underscore The Likely Resilience Of EU Clearinghouses But Do Not Offer A Clean Bill Of Health that was published on the second half of May, S&P Global Ratings comments on the usefulness of this exercise, the assumptions used, and the implications of ESMA’s findings.
They mention that the test focused narrowly on each CCP’s ability to withstand the counterparty credit risk that it could face as a result of multiple clearing member defaults and simultaneous severe market price shocks. The publicly communicated results cited broad findings, on a no-names basis. Nevertheless, S&P Global Ratings recognizes that this is the first such multi-CCP exercise that, to their knowledge, any CCP regulator has conducted.
“We regard it as a thoughtful and useful exercise that aids transparency in the sector, in an area where external parties can sometimes struggle to make a comparative assessment,” said S&P Global Ratings analyst Giles Edwards. “It could also serve as a catalyst to further enhance risk management standards at some EU CCPs, and ensure better consistency and comparability of CCPs’ individual stress testing methodologies.”
For S&P Global Ratings, the results of these exercises add further information, on top of their other surveillance, on the likely adequacy of a CCP’s financial resources within the waterfall. Their views of CCP creditworthiness continue to take into account other inputs, such as a CCP’s ownership structure, liquidity in a member default scenario, profitability and leverage, and sustainability as a business.
“While it was a narrowly focused exercise and identified some weaknesses, overall the results confirm our view that EU CCP regulation and supervision generally ensure a satisfactory baseline standard of CCP risk management,” said Edwards. “Looking forward, we anticipate that these stress testing exercises will become a regular fixture of regulatory oversight of CCPs in the EU and, potentially, beyond.”
Foto: Sander van der Wel
. Franklin Templeton lanza su primera suite de ETFs de beta estratégico
Franklin Templeton Investments announced on Monday the launch of its first suite of strategic beta exchange traded funds (ETFs), within LibertyShares, a new line of business. The funds track the LibertyQ indices developed with the asset management company´s team of quantitative experts who have a broad experience developing quantitative active equity strategies. “We approached the creation of the LibertyQ indices in the same way we have approached quantitative stock selection, and we believe that, just as with discretionary stock picking, all factors are not created equal—some are more correlated to certain outcomes,” said Patrick O’Connor, head of Global Exchange Traded Funds for the company.
The suite includes three multi-factor core portfolio funds and one fund that focuses on stocks with high and persistent dividend income. The firm´s strategic beta ETFs use proprietary LibertyQ indices1, which have employed a research-driven approach in customizing their factor weightings – The indices are constructed with four factors.
“Many of our clients have embraced the ETF wrapper for its benefits, including liquidity, tax efficiency and transparency, and now they are looking for more than what a traditional market cap-weighted index can offer,” added O’Connor.
The three core multi-factor funds use indices that apply an approach of using custom factor weightings—quality (50%), value (30%), momentum (10%) and low volatility (10%)—in seeking to capture desirable, long-term performance attributes.
The new funds are:
Franklin LibertyQ Global Equity ETF offers global equity exposure.
Franklin LibertyQ Emerging Markets ETF offers broad emerging markets exposure.
Franklin LibertyQ International Equity Hedged ETF offers international developed markets exposure.
Franklin LibertyQ Global Dividend ETF offers global exposure to high-quality, dividend-oriented stocks to help meet investors’ needs for income and total return.
“The launch of LibertyShares, taking an active approach to ETFs, is a strong complement to our commitment to active management,” added Greg Johnson, chairman and CEO of Franklin Resources.
Foto: Angel Torres
. La inversión responsable, esa gran desconocida
Over three quarters (77 percent) of affluent US investors say that they want their assets to have a positive impact on society. Many may see investing as an extension of their focus on social issues, with 86 percent of respondents tending to recycle every day, 71 percent preferring reusable bags, and 61 percent shopping for brands that adhere to sustainable business practices.
Yet with interest in social impact growing, and the availability of more responsible investment options than ever before, greater than one in three investment advisors (36 percent) concede that they are not able to adequately evaluate performance of responsible investments, and two in five affluent investors (40 percent) report they are unsure if they currently own responsible investments within their portfolios. These findings, revealed in a new TIAA Global Asset Management survey of investors and advisors across the country, expose a fundamental challenge to the investing category: the lack of understanding among investors and advisors of what responsible investing really is.
“While interest in responsible investing continues to grow, a significant portion of individual investors and their advisors are still unsure about what it means to implement these strategies in today’s investment portfolio,” said Amy O’Brien, managing director and head of the firm´s Responsible Investment team. “Too many investors still question how to define responsible investing and whether they can produce competitive returns.”
“The fact is that responsible investing strategies vary widely in their intent and approach. As an industry, we need to do a better job of helping investors understand how these strategies work and what role they can play in a diversified portfolio.”
“Many people want their investments to reflect their values,” said Jill Popovich, managing director, Individual Advisory Services at the company. “We find that talking to clients about their personal values as well as their financial goals helps build deeper and lasting relationships. Often clients are pleased to learn that they can have a well-diversified portfolio with responsible investments.”
This knowledge gap also creates a missed opportunity for advisors to build client loyalty over time. According to the survey, almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them.
Meanwhile, just 45 percent of advisors believe this would be the case, and often choose not to address responsible investing options with their clients – over three in five investors (61 percent) indicated that their advisor had not brought up the topic of responsible investing in the past twelve months. This disconnect suggests that too many advisors forgo a chance to develop stronger relationships with their clients as a result of not communicating about these strategies.
The results of the survey suggest a need to develop a better understanding of responsible investing overall. Seventy-four percent of advisors reported an interest in learning more about responsible investing options to better serve their clients. Developing a shared understanding of responsible investing terminology and benchmarks may be particularly helpful for non-millennial investors who hold significantly less of their assets in ESG options than those between the ages of 18-34 (22 percent vs. 65 percent, respectively).
The survey also suggests that misperceptions about the role and benefits of responsible investing may be limiting adoption rates. While interest in responsible investments is strong, investors are doubtful of the availability of best-in-class products. In fact, more than one in four affluent investors and advisors responded that responsible investment options are very limited or that the category lacks quality choices. More notably, over half (51 percent) of financial advisors believe responsible investing does not provide the same rate of return as other investment strategies, while 57 percent of investors believe responsible investing offers a lower rate of return than other strategies.
“More investors are considering the balance between leveraging their assets to have a social or environmental outcome while seeking competitive performance. According to our recent socially responsible investing performance analysis, indexes that follow SRI guidelines delivered long-term performance returns comparable to the broad market benchmarks,” said O’Brien. “Incorporating environmental, social and governance criteria in individual security selection can in fact deliver market competitive returns.”
A week in the UK attending our annual client symposium which was this year focused on China and a long weekend in Berlin highlighted that a year on from the Shanghai stock market crash, investors in Europe are recognizing the need to become engaged with China, albeit they are in no great rush.
It was this week last year that the Shanghai Composite hit its peak as a speculative bubble built around the potential inclusion of the China A share index in the MSCI indices, which would mean, according to the narrative, that a wave of index tracking ‘dumb money’ would be forced to come in regardless of price and valuation. As is so often the case, those buying into a ‘bigger fool’ theory turned out to be the bigger fools themselves. As previously discussed the decision not to include the China A shares triggered a run for the exits, but this was turned into a stampede as the Chinese authorities unfortunately decided to further limit leverage by brokerages the following day. With so much of the Shanghai Composite held by ‘weak hands’ and with the added impact of forced de-leverage, the market followed the old adage of up the staircase but down the lift shaft and the Chinese authorities morphed in the eyes of the western press from arch manipulators to keystone cops almost overnight. A year on and the market has stabilised, albeit at around 40% below those levels.
However, one of the points I made at our China symposium in London two weeks ago was that international investors need to realise that the Chinese stock market, despite its apparent size, does not play the same role in the Chinese economy as the S&P 500 does in the US. It represents only around 7% of household assets and is only really held by around 5% of the population. As such the wealth effect in either direction is relatively minor, while the composition of the index, dominated by state owned enterprises in terms of its market cap weightings, gives us little insight into the dynamics of the Chinese economy. This is a classic case of an increasingly common phenomenon, a belief that because we can measure something it is therefore important and even more that because we can plot the data on a chart, we can therefore infer predictions from it. The same applies to aggregate data such as GDP and inflation. The reality is that half of China is growing too fast and the government is trying to hold back excess leverage and liquidity, while the other half is barely growing at all and the government is trying to keep it ticking over. Clearly we want to have a greater exposure to the former than the latter – although opportunities exist in both areas and as such, at both the equity and the credit level, we continue to believe that this is an environment for stock selection and credit research – the index contains too many of the companies and credits you do not want, particularly if you use market cap weights. After the capitulation from emerging markets and to some extent Asia earlier in the year, the panic has subsided as people take a more considered look at the economics, but flows are still on balance negative, which is leading to a feeling of treading water.
This gives us time to focus on the structural trends and the big story remains the build out of a proper financial services infrastructure and in that sense the development of the bond markets in China are almost certainly a more important first step than the equity market as China moves away from the dominance of the (inefficient) banking system. At our symposium, while many of the clients were interested in understanding more about the prospects for Chinese equities, the potential for infrastructure bonds, corporate bonds and muni-bonds was also of great interest, especially in a world where over $10 trillion of government debt is now yielding less than zero. The notion that China can produce the same product (or perhaps even better) for half the price is coming to financial products as well. Recent announcements have made it even easier for international investors to access Chinese onshore bonds, while Chinese companies continue to issue onshore and redeem offshore bonds. This is a phenomenon we have discussed on previous occasions, not least because it appears in the national accounts as a reduction in foreign exchange reserves, and has been a strong stabilising factor in the market for Asian fixed income.
Perhaps I am spoiled by now living in Asia where there is (generally) a very different approach to work in the service sector. I was interested to see a report out last week based on a study from UBS – commented on here – showing that on average people in Hong Kong work over 50 hours a week – 62% longer than those in Paris. (Note to my colleagues in Paris and HR – I am simply picking the top and bottom cities honestly!) This could be that the people of Hong Kong are keener to earn money to buy ‘stuff’ – the money earned for a 50 hours’ worth of work in Hong Kong is almost enough to buy an iPhone – a good measure of purchasing power given Apple’s pricing model. Whereas the Parisian would have to work a longer week – 42 hours on UBS’s calculation. However, the Hong Kong worker is probably more focussed on trying to pay the rent while generally the cost of living in terms of goods and services is about the same in both cities – this is not true for rent. A three bed apartment in Hong Kong is twice the price of one in Paris. This is changing however. Hong Kong rents are starting to fall, as they are in much of Asia due to excess supply. Although as my colleague Simon Weston pointed out after a trip to Singapore last week, many of the developers are concerned that prices are not clearing properly. It also raises an interesting point about one of the long term fears about robotics – the idea that nobody will have a job and thus there will be significant social unrest. Workers in Hong Kong could work 40% less hours than they do at the moment and still be full time workers on a western European model, not to mention 28-30 days holiday rather than the current average of 17.
Excerpt from AXA’s Market Thinking column by Mark Tinker, Head of Framlington Equities Asia
The International Capital Market Association’s (ICMA) Asset Management and Investors Council (AMIC) and the European Fund and Asset Management Association (EFAMA) have published a report on the legislative requirements and market-based tools available to manage liquidity risk in investment funds in Europe. The report also offers some recommendations to further improve the general liquidity management environment.
The report was written in response to public concerns that liquidity has become more fragmented, whether as a result of the reduced role of banks as market makers and liquidity providers or the prolonged accommodative monetary policy of the world’s most prominent central banks.
The main topics it covers include documents in detail for:
The current regulatory requirements of EU legislation (namely UCITS and AIFMD), emphasising inter alia risk management and reporting
Market based liquidity risk management tools, for example swing pricing or redemption gates.
Peter de Proft, EFAMA Director General, commented: “Our industry acknowledges the virtues of the EU regulatory regimes for funds. Indeed, existing regulatory requirements in EU legislation such as the UCITS and the AIFMD regimes form a very far-reaching, strict and sound regime. The legal requirements have proven their merits and ensure appropriate liquidity management for investment funds”.
Martin Scheck, ICMA Chief Executive, explains, “This report adds an important element to the discussion regarding liquidity fragmentation, and complements the IOSCO Report. It shows that there is a comprehensive framework already in place available to managers to manage liquidity in difficult market conditions, through a combination of regulatory requirements and market-based tools.”
The report also proposes three recommendations that could lead to improvements in the general liquidity management environment in Europe. Firstly, it encourages that all European jurisdictions make available the full range of market based tools. Secondly, it strongly encourages the European Securities Markets Authority (ESMA) and the European Systemic Risk Board (ESRB) to make use of the existing liquidity data already currently reported to national authorities in Europe. Finally, it supports the continuing efforts by European and national trade associations to develop further guidelines for best practices in liquidity risk management.
Foto: Thelittletx, Flickr, Creative Commons. La tecnología hace la selección de fondos de inversión más rentable, barata y transparente
According to the latest research from Cerulli Associates, a global analytics firm, technological advances are pushing providers to keep up with investor expectations, and, ultimately, be the center of their clients’ financial lives.
“Wealth management providers, in particular, feel pressure from technology solutions (such as digital advice), changing financial planning expectations, and the commoditization of investment management services,” states Shaun Quirk, senior analyst at Cerulli.
“The retail investor is demanding more, forcing these firms to offer a deeper client experience,” Quirk explains. “Many advice providers tout a ‘holistic’ planning model to bolster their perceived value. However, this overused term in wealth management is vague and heavily focused on investment management as opposed to true financial planning.”
“As financial planning opportunities become available to a broader investor demographic, providers will need to leverage technological advances to scale the solutions, and streamline everything from the onboarding and information-gathering stage to the recurring planning conversations,” Quirk continues. “The providers that can take the abstract nature of financial and retirement planning and make it an engaging, tangible process will win client assets.”
Digital platform improvements and technological advances allow firms to interact with investors in ways that were not available just a few years ago. Investors desire deeper online, goal-oriented resources, research, and content to satisfy their investment management and financial planning needs. However, at the same time, they lack the bandwidth or attention span to dedicate significant time toward their financial well-being and the multitude of investment services used.
Cerulli’s second quarter 2016 issue of The Cerulli Edge – U.S. Retail Investor Edition examines wealth management and the evolving landscape.
