Welcome to our asset management marketing focus
This week’s edition brings you the new year for wealth management, MiFID II’s problems, Orwellian fintech, and the identity of Bitcoin’s creator.
Movers & Shakers
Is now ➜ Digital Marketing Manager – ETFs at Legal & General Investment Management (LGIM)
Was: Associate Director – Digital Marketing at Hermes Investment Management
Kurtosys expresses their best wishes to all starting in their new positions.
Fund in Focus: Polar Capital
Happy New Year! It’s 2019, and a return from an asset manager we’ve covered before here at AMMF: Polar Capital. The boutique is kicking off 2019 instantaneously with the announcement of a new fund.
This time ‘round, it’s a long/short global absolute return fund from the London-based firm, targeting returns of 5-8% annually with return volatility of around 6%. It will be managed in both their Connecticut and London offices by Steve McCormick and David Keetley respectively, with further support from David Sugarman and Jake Collins (London) and Uttkarsh Lal (Connecticut) also.
The fund will invest in debt and equity, and most investments will be hedged, and have an annual charge of 1% with no minimum investment. It is to be registered in Ireland.
Commenting on the reasoning for the launch of such a product, global head of distribution at Polar Capital Iain Evans had this to say:
“Ten years since the financial crisis and industry commentators suggest we are near the end of the current cycle.
“Before making the final decision to launch the fund, we conducted a round of pre-marketing, all of which reaffirmed our view that investors are actively looking for liquid, alternative strategies that can navigate and benefit from a more volatile environment, there is strong interest in absolute return strategies at the moment.”
With that in mind, it’ll be interesting to see what 2019, and the firms within, have to offer in terms of products to best benefit investors across many markets and opportunities.
Now that we’ve crossed the 2018 threshold into annals new, the roundup reports are also becoming slightly more of a thing of the past. Instead, taking their place is a look to what is to come.
That’s certainly the case in a recent report from McKinsey & Company, entitled What’s new and what’s not in US wealth management. That pretty much explains what you get on the tin, but it’s a report that has far more depth. Outlined straight off the bat are these two questions – ‘What’s the same?’ and ‘What’s different?’ within the wealth management industry. It covers a wide range of topics, but shows how one thing follows the other. For instance, whilst the stress on client and advisor relations/personalisation is already an established pro in the financial space, what has now changed is the fact that remote advice via digital means is becoming more efficient and cost-effective, hence the growing competition to adhere to this customer need.
Other areas of consideration include the roles of middle and back offices, competition between incumbents and disruptive financial services companies, and changes in performance due to interest rate.
As is common to reports from McKinsey, it’s wholly holistic and explains these changes going forward using thorough graphs, which are results taken from this year’s North American Wealth Management Survey by the company itself. That’s not to say that the results are centred on the US & Canada; the global wealth management industry is covered here, with results divided by region to identify the similarities that occur worldwide and, indeed, the differences.
You can check out a full PDF version of the report right here, read away!
Regulatory Matters: The Saga Continues
It’s now been exactly one year since the release of the Markets in Financial Instruments Directive (MiFID) II, the EU regulation which sought to require asset management to separate payments for analyst research from trading fees. Guess what?! It’s still raking up issues for the asset management industry a year along the line. Happy anniversary.
The Financial Times has compiled an article about exactly why, all mainly hinging on the most fragmented relationship between fund managers and analysts due to restrictions. These are the main changes that have occurred, summarised in short:
Forcing actions – “research unbundling” necessity has meant that fund managers and analysts alike have had to meticulously track all calls, emails, meeting and chat boxes and there’s a conflict in interest from brokers amplifying efforts to engage, whilst asset managers are afraid of receiving something that may incur costs.
Effect on smaller research providers – changes to legislation have had a dramatic effect on boutique research firms that have had to adapt by cutting jobs or having to consolidate resources.
Culling research providers – these types of firms have also been cut out completely in some cases. Large fund managers have been content with bearing research costs on their own, thus removing their continuation with other providers. According to a survey by Liquidnet, 61% of a surveyed 55 asset managers cut their research lists, some up to 70% of their brokers. The price war has made it more difficult for smaller players in the market.
Merging and selling – this is a practice that many are looking to, selling or merging to rivals, with acquirers assumed to be mid-cap US brokers.
Pricing repercussions – there were different pricing strategies at the start of last year. Some asset managers found that they were charged extortionately for one-to-one interactions, but negotiated down from there. Others paid low fees to brokers initially before raising them to avoid being ignored by analysts. A research pricing strategy still remains contentious, even a year along the line.
Content distribution – the way that written reports research is distributed has changed, with online research portals being a popular choice for fund managers to access content. The management of digital content is gaining more traction and investment from firms.
Brexit – what will happen to the rules for the UK once it leaves the EU? Who knows for now…
Check out the full article for further information. If you’d like to find out more about MiFID II’s rules, our video is below!
Fintech News: What’s coming next?
Orwell famously wrote “who controls the past controls the future”, and it’s evident from this reflective article over at Forbes that in the realm of fintech, what comes before will affect what’s coming.
It’s also a review of how political (as well as technological) events are so intrinsically linked with the future of money, covering: the Cambridge Analytica scandal; the Visa outage and the journey towards a cashless society; Australia’s New Payments Platform (NPP); immigration and mobile financing; biometric technology; Brexit and citizenship; London’s status as a financial centre; brand name changes; ‘hot coral’ colour scheme preference; and even more.
It’s certainly a detailed look into an instrumental year for financial technology and its effect from, and on, the world around us – certainly one of the most exciting industries in the influence of our future.
In other news, two technological titans are looking to expand into finserv, seeking its potential…
First is Facebook-owned WhatsApp, who the FT has reported has gained significant advances in the trial of a new payments system which began testing in February 2018. WhatsApp Pay in India, which it is facilitated by the Indian government’s secure UPI payments systems, has become an ideal way for smaller businesses to gain money, such as in the success story of Dipti Vartak, a home baker who accepts orders and payments through the messaging service. There are 1 billion mobile users in India alone, and 210 million users a month are on WhatsApp, although there are still disputes between the company’s CEO and India’s central bank governor as to where the payments data is processed: California (currently), or India itself.
While Google has also launched its own similar product, Facebook is hoping to leverage operations in Brazil, the second-largest market for WhatsApp, becoming much like China’s successful cashless services AliPay or WePay.
Considering the vast amounts of data that can be transferred through the services, payments are just one service that will be amplified in years to come.
Just when you expected social media conglomerates and banking institutions to take hold of financial technology, be aware that other industries are also getting involved. As reported by the Telegraph, China’s Didi Chuxing – a ride-hailing, bike-sharing, food-delivery giant – is looking to offer wealth management, and protection insurance as a way to deviate from its core business operations, which have been under pressure. Intrigued? See here.
More hangover from the turn of the year: the global economy. There have been multiple events in 2018 which have changed the markets, many from political unrest. That’s the main argument from Neil Dwane, Global Strategist at Allianz Global Investors.
Looking forward to the year ahead, Dwane looks at four themes that can define the investment landscape for the 12 months to come, particularly long-term themes. Looking into tech ecosystems and trade, “quantitative tightening” from central banks, the much-hyped and offered strategy of ESG factors for screening companies, and economic differences in societies worldwide, this is a short-and-sweet rundown of what investors can expect from a new annum.
What are you talking about?
Even though we’re in 2019, do consumers understand what the financial world is all about? Apparently not…
The Financial Brand has called on research by VisibleThread to outline the disparity between financial marketing and the average consumer. In an industry-wide problem, apparently only 58% of 5,000 public pages from financial websites tested did not suit the readability of the average user in the US, which is eighth-grade level.
The research goes on to suggest that there are 5 pitfalls that financial institutions come a cropper to consistently: talking at too high a grade level; poor readability; use of passive voice; long sentences; and complexity and jargon. Using Moby Dick as a standard to which difficult reading becomes a reality, it seems many financial marketers aren’t communicating properly still.
…this week marked 10 years since the Bitcoin network was created by Satoshi Nakamoto, an enigmatic miner who we are unaware the true identity of still to this day.
In celebration of this, Coin Telegraph has put together a list of potential candidates for the role of Bitcoin creator, including a Finnish professor, an ex-US military intelligence man, a financial writer, a government agency, and even Elon Musk.
An interesting concept, perhaps we’ll never know…
That’s all for this week, but be sure to check back soon for more asset management marketing highlights and fintech snippets from Kurtosys.
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- AMMF #67: Fintech in 2019, MiFID II backlash, Bitcoin’s creator - January 4, 2019