Bluerating | February 2022

Lately, networks of financial advisors have been walking a path paved with records. In the public imagination, they have transformed from Cinderella to the Princess of the banking sector and investments in a broad sense.

Networks of financial advisors landed in Italy over fifty years ago. Over the past two years, the digitalization process has been accelerating their development. One cannot help but wonder what their next goals might be.

The field of financial consultancy has reached maturity. This is evidenced by the current level of concentration: the first ten financial networks make 90% of the market; moreover, the barriers to entry for new players seems to be getting higher accompanied by the progressive erosion of the margins.

Average portfolios of financial advisors have grown by double-digit rates. Less so the number of assisted clients, which tends to grow less rapidly mainly owing to the financial advisors’ stronger focus on wealthy clients which increases the portfolio value.

There is a considerable number of savers who, for want of trust, prefers keeping their money safe in their checking accounts. Moreover, some of them prefer managing their assets themselves, aided by the higher level of accessibility granted by multi-channel digital tools.

Market leaders definitely do not lack entrepreneurial spirit. One need only think of the launch of digital platforms and cutting-edge Apps, the increasing number of investments in real assets, the focus on the issues of protection and credit.

The relationship with third-party AMCs has changed as well, turning from open architecture to a guided architecture that today seems certainly more closed than before.

The rise of a model of advanced consultancy based on a free-offset system, that is the transfer of brokerage fees in return for a consultancy fee linked to goals, is maybe the latest news.

The segmentation of clients by entity and origin of their assets, generational cohorts, profession, temporal horizon and risk profile and the consequent development of adaptable service models could certainly represent a step ahead.

These are, in any case, ventures and strategies that are already known to the more dynamic and successful businesses.

To be frank, this is nothing revolutionary.

The number of innovators, usually driven by primordial hunger and visionary folly, is decreasing drastically within mature sectors, and even within the successful and dynamic industry of financial consultancy.

Paving a new road is certainly more complex than walking an already beaten track. However, without the good (b)old innovators, there would be no industry of financial consultancy as we know it today.

Hence, the industry is in desperate need of innovators who can make us dream for the next fifty years.

Nicola Ronchetti