“Strategic Axis 2: Propose new models of asset management and economic / social utility
Propose new models of asset management and economic / social utility
Stakes: Will the independent manager evolve into an “independent banker”? Should we set up and invest in proposals for investment advice algorithms? What service offer?
In the context of Private Banking, the appearance of external Managers has been a growing trend in recent years. Until recently, external managers were not necessarily a source of competition / competition for private banks specializing in wealth management. A cohabitation had taken place, not always in the interest of the end customer, which had the consequence of adding a layer of fees and retrocessions between the different players. The External Manager, often small, relied more or less heavily on the infrastructure made available by the custodian bank, particularly in terms of reporting or transactions.
The implementation of MIFID 2 introduced greater transparency and prohibited a number of practices. It introduces in a more legally binding way the notion of independent Manager and more strictly governs the obligations of Producers of financial products as well as of their distributor. It thus appears clearly the distinction between the one who produces the financial product and the one who distributes it, independently or by agreement of distribution. In addition, changes in regulations require the manager to strengthen his control procedures and lead to a strengthening of operational processes.
So far, few models have emerged that will revolutionize the sector (a few robo advisors). However, needs are changing: external managers must offer a more interesting and competitive Value Proposition for their clients. We believe that the model will evolve towards a more open architecture integrating different banking services.
While there is no strict definition, we can consider that basically, a robo-advisor is an automated management system that allows the management of a portfolio of financial products online. The robo-advisor could alone arbitrate the allocation of assets (management under mandate) or propose arbitrations to the client (free management recommended). In both cases, the robot aims to optimize the risk / return ratio of the portfolio according to the client’s profile and the evolution of the market. In the main markets, very few Robo-advisors are 100% automated and all have chosen to combine algorithmic models and a human investment committee.
4 key features Profiling:
- Robo-advisors offer online customer profiling systems.
- Allocation: the robot offers a preliminary allocation of a client portfolio.
- Arbitrations: Depending on the evolution of the markets, the robot can propose or carry out arbitrage on the portfolio on its own.
- Reporting: All players offer online interfaces for subscription and portfolio monitoring.