Advisor | September 2021

Turning lead into gold was one of most sought goal of alchemists. This transmutation shall be achieved through a mythical substance, the philosopher’s stone.

The two metals, lead and gold, differ in the number of protons in their nuclei. In order to turn one metal into the other, the number of their protons needs to be altered producing a nuclear reaction.

In 1941, Kenneth Bainbridge managed to produce one atom of gold by bombarding an atom of mercury with neutrons. In 1980, the American chemist Glenn Seaborg, who won the Nobel prize in 1951, managed to turn a small amount of lead into gold by removing three protons from the lead’s nuclei.

However, the amount of energy necessary to turn one element into another is so large as to make the operation unprofitable from an economic point of view.

Similarly, being able to turn the 1.700 billion euros currently on the checking accounts of Italian businesses and families into gold, that is in high value-added products such as assets under management, requires, with all probability, a superhuman effort.

Financial advisors are among the best at this task, which for others is almost impossible. Figures suggest that they have been the champions of asset management for years.

The reason of their success is inherent to their profession, which requires them to be proactive, and to get in touch and listen to their clients in a systematic manner.

Today financial advisors are less than four million, that is 15% of the market. How to motivate the other 23 million people (85% of the market) who could invest their savings?

Banks – some more, some less – are currently attempting to perform the same miracle. Therefore, it is only reasonable to expect that, over the next few years, the amount of assets under management will double and that the market share shall reach 30%.

100% would be quite an unattainable goal for two reasons. First of all, it would be unhealthy for a market that lives off of a competition based on the opposition and coexistence of complementary, yet different models, in which clients are free to pick what suits them best.

The second reason is more challenging. Turning 1.700 billion of lead into gold requires a superhuman effort. And we are well aware of this: we have invented the wheel, then the car, the computer and now Apps based on algorithms of artificial intelligence which are soon going to capitalize the results of years of study on the phenomena of behavioral finance.

And yes, innovation is going to help making the miracle.  

It is objectively and humanly impossible for all Italian bank clients to be contacted by a professional capable of listening to them and to motivate them to carry out their life projects through the ideal management of their savings.

Therefore, the digitalization of client management is the only necessary condition to turn the huge amount of liquid assets into assets under management.

A financial professional – whether financial advisor or bank manager – should not merely fear digitalization, more than our forefathers feared the car as a substitute for the horse, but ride its wave. 

Only those able to choose the winning horse will succeed in the market; that is, the bank or financial network with the best digital platforms able to optimize the relationship with clients, while keeping the focus on the person.

Nicola Ronchetti