THE FINANCIAL ADVISOR AS CUPID

Advisor | June 2022

The large amount of liquid assets on Italian checking accounts is a highly debated topic. Moreover, Germany and France are currently experiencing the same issue.  

Among the causes, the most widely discussed are the poor financial education of Italian savers and the supply’s low level of proactivity.

However, there would be another rather complex issue to be discussed: making Italians fall in love with a life project and turning investing into a tool able to make such life project a reality.

When asked about their passions, Italians mention travelling, spending time with family and friends, shopping, enjoying food, doing sport and outdoor activities.

Asset management and, in general, managing money do not feature in the list. In fact, asset management is far from been considered a pleasurable activity.

All the more so, when the person in question owns more money than average. Indeed, 73% of people with assets worth over one million euros (private clients) or over five million euros (HNWIs) prefer delegating the management of their assets.

In fact, the activity of asset management is deemed of little interest (66%), complex (54%) or even heralding anguish and worry (34%).

Among private and HNW clients, the most widespread hobbies are collecting modern and contemporary art (71%), vintage cars (55%), vintage watches and jewelry (38%).

The love for art, which turns people into collectors, is founded on the choice of investing resources – time and money – in the acquisition of artworks depending on personal taste, often supported by the opinion of an insider, an art expert, an art dealer, or a curator.

Money for money’s sake can hardly arouse much interest. Therefore, the true challenge is giving a name, an objective, and an end to investments, thus making them more captivating.

Let’s consider individuals with assets worth between €250.000 and €500.000 (i.e., affluent clients): their projects pertain to very concrete needs, such as the wellbeing of the family, the health of elderly relatives, the education and real estate for their offspring.

All these projects that can be carried out through planning and asset management.

Savings plans, insurance policies, supplementary pension schemes become more enjoyable and less difficult to accept if they have a name and a face.

The acquisition of real estate through a loan makes the value of money infinitely stronger than liquid assets on checking accounts ever would.

Why then not discussing passions, projects, and objectives instead of profit, volatility, and guaranteed or non-guaranteed capital? Maybe because, when it comes to investing their money, the time horizon of Italian people is much too short, on average three years, as compared to a European average of almost five years.

Therefore, it is of crucial importance to understand how soon and in what way a family, an individual or an entrepreneur wish to carry out their projects.

And yet, some persist in offering products exclusively and in underlining their expected profit, costs and risks instead of inquiring about their clients’ projects and how soon they wish to develop them.

Perhaps the secret of the ideal financial advisor is being able to transform into a new Cupid who can make clients fall in love with their money by giving it a name and a face.

Nicola Ronchetti