Business Day Wealth Management (Sept 22 2021)

INSIGHTS

Growing wealth after the pandemic

says

managers

plans. The pandemic affected people in different ways, from

constraints to emigration considerations. Wealth managers must ensure their investment strategy takes these changes into account.” According to Gumede, wealth managers should conduct a comprehensive suitability analysis to articulate the client s objectives and update their strategy accordingly to achieve the defined investment goals. It is also important to consider a client s reaction to the Covid-19 market correction when performing this analysis. With uncertainty set to characterise global markets going forward, wealth managers must prepare clients for volatility over the short and

medium terms, says

Regulations impact sector players

Doing good, while doing

WEALTH MANAGEMENT

Offshore portfolios offer diversification

Hcites the technology sector as another opportunity for upside growth. There are short-term risks regarding valuations, but investors need to look at these opportunities through a longterm lens, and current trends suggest the risk is worth taking. Outside of equities, offshore cash and bonds don t make sense due to the prevailing low interest rate environment, believes Kitching.

Next-gen segment wealth trends

Numerous demographic shifts currently under way across the wealth spectrum will alter the complexion of wealth management over the next decade. The last of the baby boomer generation, who hold the bulk of global wealth, are reaching retirement age, and the transfer of wealth from this generation to their children has begun. Dealing with a rapidly ageing population is creating a huge shift for the international financial institutions in the developed world. Life expectancy is growing and, therefore, client funds need to pay for their lifestyle and medical costs much longer,” explains Viviana Van Agtmaal, Chief Representative Officer at Banque SYZ SA. However, many wealth managers traditionally focus on offering wealth accumulation advice rather than income planning. Wealth managers will need to blend their advisory models to cater to both client objectives.

These requirements will also directly impact the wealth inherited by the next generation.

Blended engagement the way forward

Value-adding client engagement is a

in the advice-led wealth management value proposition. However, lockdown restrictions forced the wealth management sector to adapt its traditional high-touch client relationship model. Like other industries, wealth managers turned to digital technology to meet with clients and provide financial advice, which proved vital during the height of the pandemic-fuelled sell-off. Two years ago, online meetings were not the preferred choice with clients. Most preferred a face-to-face approach, especially older clients who were generally less tech-savvy, explains Gill van Gass, Wealth Associate at Alexander Forbes Wealth. Today, most clients no longer consider online engagements as an inferior low-touch interaction. However, that perception depends on the strength of the client relationships before the pandemic, in our experience.

Wealth managers and clients have embraced various digital platforms in response to the pandemic, with many relying on video conferencing tools such as Zoom or Microsoft Teams while others prefer mobile platforms such as WhatsApp. Dan Hugo, CEO of PSG Distribution, believes a hybrid advisory model that blends technology with face-to-face interactions will become the norm beyond the pandemic. Some clients will continue interacting digitally, while others will prefer face-to-face meetings. Tailoring the client experience to suit their circumstances and ensuring the client always feels heard and valued will deliver that vital human touch, regardless of the communication channel. Ultimately, it boils down to the quality of the engagement and its intent.” This blended engagement model gives wealth managers scope to deliver better value to clients through more focused and individualised advice and more frequent interactions. For example, providing ondemand access to wealth managers via online channels has made it possible to connect more regularly with C-suite execs, who typically have busy, inflexible schedules. Now they can connect whenever they get a gap, explains Van Gass, adding that using online interactions to deal with administrative tasks also creates opportunities to use face-to-face meetings to build rapport and deepen the client relationship with more personalised interactions Leveraging robo-advisors as part of HNWI financial planning strategies in SA will amplify this value-adding benefit: These tools allow wealth managers to scale their practices without adding administrative or compliance costs, explains Grant Locke, Head of OUTvest. These platforms empower clients to manage more of their wealth, from implementing goals-based savings strategies to accessing investment products via a cellphone, tablet or PC. This allows the advisor to focus more time on servicing the client and delivering advice.

JPMorgan’s digital retail bank takes on UK rivals

• Wall Street giant’s Chase enters

competitive market

turf with the launchonTuesday ofitslongawaited digital retail bank, Chase, aspart ofwhat theUS lender hopeswill bea global expansion. Thelaunch marksthefirst foray intoretail bankingoutside North America by one of the US smost dominantlenders, heapingpressure onBritish incumbents such as Lloyds, Barclays, NatWest and HSBC We have been watching in whichmarkets customersare reallyready todo theirbanking primarilythrough digitalchannels, andthe UKfrankly leads theway inthis respect said Sanoke Viswanathan, CEO of the new Chase bank venture. Theventure, ifsuccessful, could seethe USbank expand into continental Europe and then globally, he said.

“This is a business that we are building not just for the UK but hopefully forthe restof the

world,and thereisa greatconfluence of talenthere across the different productfunctions, so it sagreatplace tobuildaglobal headquarters forthis newbusiness, he said.

Universal’s market debut is music to investors’ ears

JPMorgan will tempt customers to sign up for the fee-free accounts with introductory offers, including 1% cashback on debit card spending and 5% intereston smallchange rounded up from their purchases and set asidein a separate savings pot. With astrong technology platform, significant financial resources anda globalbrand name, JPMorgan could be a serious player in the UK retail banking space, Nic Ziegelasch, analyst at broker Killik said. TheWall Streetgiant entersa competitive Britishmarket with razor-thin marginscaused by low central bankinterest rates and atradition offree current accounts, as opposed to most globalmarkets wherecustomers pay foreven basic services

“The market structure in the UKis suchthat youhave togenerate economies ofscale. There areprofits tobe madebut ifyou are sub-scale or have a high cost infrastructure you renot going to make itwork, Viswanathan said.

JPMorganis followingUS rival Goldman Sachs, which scooped upbillions ofpounds in depositswhen itlaunchedits Marcus digital bank in Britain in 2018 witha then-market-beating interest rate of 1.5% on savings. It will also compete with digital-only banks such as Monzo, which has attracted about5-million customerswith itssignature coralpinkcards and user-friendly app, but struggled to turn that into steady profits. /Reuters

Toby Sterling and Sudip Kar-Gupta Amsterdam Universal Music Group s share price leaptmore thana thirdin Tuesday s stock market debut as investorsbet themusic-streaming boom has a long way to run. The world sbiggest music label, whichrepresents musicians and songcatalogues such as Billie Eilish,the Beatles, the Rolling Stones andBob Dylan, sawitsmarket valueleapto €47bn in Europe’s biggest listing of the year. Thegroupwas spunoffby France sVivendi, whichhanded a60% stakeinUniversal toits shareholders. Vivendi s market valuedropped two-thirdsto about €12bn,according to RefinitivEikonfigures, asitrefocuses onother mediaassets such as pay TV brand Canal+. Bigwinners intheAmsterdam listinginclude UShedge fundbillionaire BillAckmanand China s Tencent,alongside Vivendi s controllingshareholderVincent Bollore,whichis retaining big slices of Universal. Universal chair and CEO Lucian Grainge will get bonuses linked to the listing that could be as much as $400m. Universalwas tradingat

€24.97 bymid-session, up about 35% from its reference price of €18.50. Theshareprice ofBollore,which holds27%of Vivendi, was up 2.4%. The share price ofAckman’s Amsterdamlisted Pershing was up 4%. Universal s strongdebut vindicates Ackman, who was forced into an embarrassing Uturn afterUS regulatorsblocked his plan to invest in Universal via his specialpurpose acquisition company in July. Ackman, whosegrandfather was a songwriter,opted instead to takea 10%stake viahis main PershingSquare hedgefund, whichis nowsittingon apaper gain of more than 30%.

BEATLES TO BIEBER Universalhopes

Uber wants ‘fully green’ food delivery but avoids setting a deadline

Ivan Levingston

Uber Technologiesaims to expand itszero-emissions pledge to fooddelivery and make the business environmentallysustainable, butCEODara Khosrowshahi stopped short of committing todo soby a2030 deadline for its ride-hailing arm.

Khosrowshahi said food

deliveries Uber makes in Europe aretypically carriedonscooters andbikes,so ithasprioritised cars for its green ambitions. Wewantedto startwithour mainline mobilitybusiness, and then based onour learnings there, we willapply them to delivery as well,” he said. “I don’t know ifit ll beincluded inthe 2030target, butwe re going to look to drive deliveryto be fully green as well.

Ahead of two weeks of climatetalks betweenworld leaders atCOP26, several transport-focused technology firms calledfor fastersustainability targetsand expanded urban mobility options. Ina manifestoorganisedby European city network Polis and

backed byUber, e-scooter operator Lime,air-taxi company Lilium andseveral others,they calledfor Europeto bringforward zero-emissionstargets for mobility to2035. TheEU has previouslysaidit aimstobe carbon neutral by 2050. William Todts, executive director of Transportand Environment,an advocacygroup,

INSIGHTS: WEALTH MANAGEMENT

Managers and their clients adopt innovative technology

managers will deliver more value to clients as the adoption and use of AI and other innovative data-driven tools accelerates Opportunities will abound, like using robo-advisors to perform individualised riskbased asset allocation for clients, or using machine learning for investment processes and research. Moreover, the ability to consolidate a client s personal, behavioural and investment information across the

apply across industry verticals, from e-commerce providers to wealth management firms. “Importantly, the pandemic precipitated digital technology adoption and usage among the various generations of wealth clients adds Van Zyl. High net worth individuals (HNWI) now demand hyperpersonalised service and advice, with easy, intuitive and seamless experiences across to financial services. They also want less friction when accessing investment products or moving wealth offshore. Furthermore, SAs dynamic regulatory environment is forcing wealth managers to transform traditional business models and overhaul legacy systems. Technology is playing a central role in realising these strategic imperatives. For instance, digitisation across the wealth management value chain streamlines operations and standardises processes to create cost and operational efficiencies that deliver better value to clients while helping to meet compliance requirements. Platform-based solutions also provide wealth and asset

managers with easier access to a wider investment universe across more asset classes, both locally and abroad, says Van Zyl. And wealth managers are leveraging technologies such as AI, machine learning and big data to analyse markets better, track investment performance and make the best investment decisions, explains Chetan Ramlall, Analyst at Stanlib Index Investment.

Accessing these capabilities requires significant investment in core areas like data management, including data architecture and data science, and cloud-based computing. Wealth managers who embrace a data-centric mindset and invest in the relevant infrastructure and skills-sets will differentiate themselves from the competition.” Ramlall believes that wealth

and business banking, often within the same organisation. However, the ability to seamlessly aggregate data on the back end and integrate systems will become an easier proposition as more systems migrate to the cloud, and more financial services providers adopt uniform data standards. Wealth managers who utilise these technologies best within their ecosystem will deliver the seamless experience across every touchpoint that clients expect and gain a competitive advantage as the rest of the

said themanifesto reflectsa good levelof ambition but added thathe thoughttransport in large cities should be emissions-free by 2025,and that regulatorsshould imposerules mandating food delivery be emissions free. Ifyou create new economicactivity you shouldn tbe addingmorepollution at this stage, Todts said.

There have beenissues for mobility companiespursuing greener businesses.Uber and Lyft s 2030 deadline to transition entirely to electric vehicles in NorthAmerica andEuropehas come with a tentative and incomplete approachthus far that trailed broader adoption of electric vehicles inthe US s passenger fleet.

In their manifesto, the companies saidcities should prioritise publictransport, embrace artificialintelligence to reduce crashes, and introduce regulation tohelp deployselfdriving vehicles. In 2020, Uberreported that itstotal emissionsstood atmore than 3-milliontonnes ofcarbon dioxide equivalent.

Wayne Ting,CEO forLime, said cities need to add more bike lanesand deprioritiseparking for carscompared withother forms of transport,to encourage people to leave behind their cars. Thesearetypes ofpoliciesthat are goingto makepeople think twicebeforedriving acarintoa city centre, Ting said. /Bloomberg