Insurance Daily | October 2023

Long-term treasury bonds, deposit accounts and bank bonds have been putting a strain on the level of satisfaction of financial advisors with asset management products, in particular with mutual funds.

2022 performance, deemed below expectations and unsatisfactory by financial professionals themselves, is currently a cause for concern among the clients of financial advisors and private bankers.  

Data on the net inflows of financial networks, the bastion of asset management, speak for themselves: €45 billion referable to assets under management (mostly BTPs) between the last semester of 2022 and the first semester of 2023.

2021 ended with €57,3 billion worth of assets under management; the first semester of 2023 the amount of assets under management reached €25,1.

Over the past twelve months, net fees and commissions have decreased by 91 billion. In the short term, the shrinking revenues are going to be compensated for by the rising revenues resulting from the interest margins.

In a market high from elevated interest rates, leaving money on checking accounts might seem convenient.

However, this is a short-sighted choice which will reveal its many limits when the interest rates return to their normal levels.

Meanwhile, the world of financial consultancy has been affirming its ability to react not by demonizing BTPs, but rather by explaining the value of diversification and including BTPs in the offer of advanced consultancy.

This transitional situation includes two surprising elements that concern financial advisors.

Firstly, the rising level of satisfaction with new forms of alternative investment. These are mostly direct investments in unlisted businesses; if well oriented and managed, such investments can help both single investors and the entrepreneurial fabric, generating a virtuous circle.

For now, very few financial networks offer this kind of investment, as evidenced by their marginal penetration in their clients’ portfolios (below 2%).

Secondly, the rising level of satisfaction with insurance products and, in general, with the security industry.

However, the rising interest in non-life insurance products is counterbalanced by a declining level of satisfaction with life insurance products.

Lately, illiquid investments and casualty policies have been growing, at least in terms of level of satisfaction among financial advisors.

This seems a paradox – financial advisors and private bankers seem to appreciate and ask more than in the past two very different categories of products.

On second thought, this is only an apparent paradox: in fact, the right mix of investments characterized by good return prospects and an inherent dose of risk goes well with insurance, which protects against casualties.

Once again, financial advisors and private bankers surprise for their foresight and adaptability.

Nicola Ronchetti