Investire | September 2022

Italians have been long ridiculed because very few of them could give a correct definition of inflation.

Today, the situation has hardly changed. However, the repercussions of inflation or rather the price increase currently eroding disposable incomes is hitting Italians where it hurts, their wallets.

Italians, or more accurately almost 75% of them, notoriously prefer keeping their assets liquid and on their current accounts rather than investing them in such way as to handle possible accidents or unforeseen situations.

Such as the one we are currently witnessing: the pandemic and its consequences, as well as a war in Europe – among its many ill-fated by-products is the return to austerity, a distant memory of the 70s.

Moreover, a cold autumn lies ahead, despite the drastic effects of climate change: we are called to make a cautious use of gas and energy sources to face the biting recession waiting just around the corner.

The lower class will undoubtedly pay the price; but also the middle and high-middle classes (i.e., the affluent segment), which hold the majority of the over 1.700 billion euros in liquid assets on current accounts.

Moreover, in times of recession, the level of trust in banks tends to decrease dramatically.

The reason lies in the cycle produced by inflation. In order to cope with it, central banks tens to raise the rates – and indeed, on 7 September, rates have increased by 0,75% and additional increases have been announced.

Banks seem grateful, at least in the short term; however, in the medium term the ensuing recession and rise in the cost of money will decrease the chances for businesses and families in need of credit to secure a loan; this, in turn, will expose banks to the risk of yet another decrease in the clients’ level of trust.

All in all, in this context, the job of financial advisors and financial professionals working in asset management becomes increasingly complex.

The figures provided by Assogestioni and ASSORETI prove this tendency: in fact, they show a healthy and ever-growing industry, albeit with clear signs of slowdown.

Insiders know very well that this would be the time to invest on the financial markets most affected by the geopolitical situation, by the increase in the price of raw materials and by the downsizing of big techs. However, theory frequently clashes with practice.

In addition, many of the Italians who did invest their savings (25%) face possible double-digit losses on their investments. Therefore, maintaining their positions and preventing them from walking away from the financial market is quite a difficult task.

Yet another crucial element is the ability of asset managers to create value not only for themselves, but also for their clients, the so-called end investors. 

The advent of ETFs and passive investments characterized by lower costs and often higher performance than active management says a lot about what lies ahead: few skillful managers will survive; the others will be replaced by an algorithm.

Who, then, still refuses to understand why Italians keep their money on their current accounts?

Nicola Ronchetti