Insurance Daily | July 2022
Italy’s backbone are notably small and medium-sized businesses. Today, they are confronted with the current sky-high prices of raw materials, an incoming recession together with some congenital weaknesses.
Among them is the average age of entrepreneurs. Currently, the average age of entrepreneurs is 68 years old and increases every year. In fact, over the past 10 years, the number of entrepreneurs under 40 has decreased by 3%, while the number of entrepreneurs over 70 has increased by 2%.
Italy is not a country for young entrepreneurs. In fact, while there are areas enjoying a discreet success, Italy is far from having its own Silicon Valley where thousands of young potential start uppers are born and bred.
On that note, wealth is firmly in the hands of entrepreneurs. Indeed, entrepreneurs represent three quarters of the most affluent client segment, with assets (investments and liquid assets) worth around five million euros and real estate assets worth over ten million euros. The source of their fortune is a company that they manage or have sold.
For several years, networks of financial advisors and banks have been focusing on entrepreneurs. They engage in a contest where financial networks hold 40% of private assets under management.
On their part, banks have been holding their position in the field of property management, if with a slight erosion of their shares. However, due to the decrease in net banking incomes and the volatility of the markets, banks have been betting on other services as well.
Activities ensuring higher income include succession management, corporate finance operations, mergers, acquisitions, share transfer, stock market listing, club deals and investments in private equity and debt.
Of course, loans intended for companies also represent a key activity, especially ahead of the increase in interest rates. For now, however, financial networks tend to keep their distance: too much risk and too much capital absorption; moreover, loans management requires specific skills which cannot be improvised.
What about protection? Agents and insurance companies have allegedly relinquished the direct management of their clients who are also entrepreneurs, albeit with some exceptions.
On the other hand, companies and entrepreneurs (that is, owners of both small and medium-sized businesses) represent the target of brokers and financial professionals capable of identifying the solutions that best suit each individual entrepreneur.
The potential is huge and still undiscovered. Just like agents, brokers seem to be, to put it mildly, rather decent salesmen and women.
The amount of wealth held by Italian entrepreneurs is about half of the over 1.700 billion euros currently kept on checking accounts.
Over the next twenty years, in Italy seven hundred billion euros in movable assets, real estate and corporate assets will be transferred from one generation to the next; and yet, according to Associazione Italiana Private Banking, only one person out of four has actively planned the steps of the handover.
But, the generational handover affects the family, the assets, and the company. Therefore, it should not be envisaged as one single event, but rather as a gradual process which entails a series of steps. The first is the strategic planning of the handover and requires the assistance of a professional.
However, there are no brokers queuing outside of Italian companies. Instead, the queue of private bankers and final advisors is getting longer with each passing day.
Nicola Ronchetti