Article published in the October issue of the monthly magazine Bluerating, edited by Matteo Chiamenti
“Once upon a time there was management”. Probably the genius of Sergio Leone would have used this title for a hypothetical film intended to tell the scenario that the world of Italian financial consultancy is experiencing in 2023. This time, however, there is no trace of Robert De Niro lying down and intoxicated by opium, but something still went up in smoke: we are talking about over 9 billion in curo, the negative difference in collections in managed savings products compared to 2022. A figure, the one mentioned above, which is not an indication of a systemic crisis, at least for now , but which reflects an unquestionable fact: considering that the overall volume of net inflows between January and July 2023 (28 billion euros) is essentially equivalent, although slightly decreasing, to that recorded the previous year in the corresponding period (28, 8 billion), there was a real upheaval in the composition of the contributions, all to the advantage of securities and liquidity (the person under management took home over 26.3 billion in 2023, compared to almost 28 in 2022).
Old love
The most accredited explanation among professionals in reference to this very clear difference in the composition of the portfolio sees the combination between poor performance of managed assets in 2022 and attractive returns for BTPs and deposit accounts as a key element: as a result, the consultants’ clients have abandoned the funds, preferring the old, all-Italian love for bonds and liquidity. This trend has involved a good part of the big names in the sector and the numbers relating to inflows between January and July 2023 are there to show us this: considering the eleven companies that communicate data to Assoreti on a monthly basis, four have a negative balance, including the main Italian group , Fideuram Intesa Sanpaolo Private Banking, which sees outflows exceeding 1.6 billion euros.
Only two companies, namely Banca Mediolanum and Allianz Bank FA, managed to exceed one billion in assets under management, in detail 1.6 billion for Massimo Doris’ team and 1.2 for the professionals led by Paola Pietrafesa. But what is the potential impact of this dynamic on the accounts of market players? An analysis offered to us exclusively by Excellence Consulting offers us various insights on this topic. According to the numbers highlighted by the research company, the strong growth in net assets under administration was recorded in particular in the last half of 2022 and, as we have seen, in the first half of 2023, for a total at market level of 45 billion of euros (equal to 6% of the aura) in the 12 months; these data led in the same period to a contraction in net commissions equal to 91 million euros for the market (considering the Assoreti perimeter), of which 72 million referable to the top four companies in the sector for assets under management, i.e. Fideuram ISPB, FinecoBank , Banca Mediolanum and Banca Generali. Fortunately, at least in the short term, this decline in revenues will be amply rewarded by the clear rise in revenues deriving from interest margin, but the prospective scenario cannot help but cause concern, especially considering how much these latest budget items are anchored to political of the ECB on rates.
Declining fees
According to the numbers highlighted by the research company, the strong growth in net collections under administration was recorded in particular in the last half of 2022 and, as we have seen, in the first half of 2023, for a total at market level of 45 billion euros (equal to 6% of the aura) in the 12 months; these data led in the same period to a contraction in net commissions equal to 91 million euros for the market (considering the Assoreti perimeter), of which 72 million referable to the top four companies in the sector for assets under management, i.e. Fideuram ISPB, FinecoBank , Banca Mediolanum and Banca Generali. Fortunately, at least in the short term, this decline in revenues will be amply rewarded by the clear rise in revenues deriving from interest margin, but the prospective scenario cannot help but cause concern, especially considering how much these latest budget items are anchored to political of the ECB on rates.
In short, a problem is emerging, but at least there is time to take action; the industry’s task, as always, is to be able to translate the obstacles of a decidedly liquid market and society into opportunities. In every sense, including Bauman’s vision. Back to the origins In order to give a further key to understanding the research of Excellence Consulting, BLUERATING contacted Maurizio Primanni, CEO of the company: “The collection developed by the banks belonging to Assoreti in the first half of this year is completely peculiar and is not reflected in what has happened in the last 13 years: in fact, since 2010 it has never happened that the net collection was made up almost entirely of government securities mostly and bonds for a smaller part. The administered collection is now equivalent to over 20% of the total of the financial wealth managed by the companies belonging to Assoreti, and its weight has increased by seven percentage points compared to the first half of last year. Continuing at this pace, by the end of 2025 we would have managed collections as the first asset class managed by financial consultants and consequently a portfolio of their clients on average riskier and strongly correlated to the economic and financial trends of our country. The data tells us that from the first half of 2022 to the first half of 2023, for every percentage point of increase in the asset class administered, net commission revenues decreased by 0.6%; this means that at the end of 2025 we would also have reduced industry revenues from net commissions by at least 15%, equal to over 350 million euros.”
Educating customers
At the moment this forecast, as we have seen, does not cause concern because banks can cope with the lower income from commissions with the greater income deriving from the interest margin, but what could happen the day in which rates were to fall? Primanni has a solution in mind: “Perhaps it is time for the industry and consultants to rediscover their basics, including the ability to make clients understand the value of investing in diversified products and the risk of putting all their eggs in the same basket, especially when we talk about government bonds. It will take a joint effort by principals and back to basics consultants; after all, this industry was born precisely by proposing investment funds as a valid and less risky alternative to investing in securities. I also believe that asset managers should also do their part by making products available to consultants that help them to make their clients think, American money market funds are a good example to look at”.
