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CAREERS IN WEALTH MANAGEMENT

Stephane Pardini, Managing Director, Banque J.Safra Sarasin

Baptiste Lambert, Founder Associate, Aptic Conseil en recrutement

Fabienne Konik, Partner, Business Consulting, Wealth and Asset Management, EY

Niki Kalogera, Private Banker, BNP Paribas Wealth Management

��Moderators:�Alexis Calla, CFA Society France Wealth Committee

Clément Phan, CFA, CFA Society France Wealth Committee�

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CFA Society France

Overview of the French Wealth Management sector

30/03/2023

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The place of Wealth & Asset Managers in our financial system

Local communities

Firms

Individual

Affluent to UHNWI

States

International level

(e.g. G20)

Corporate Banks

Retail Banks

Sovereign funds

Asset Managers

Funds LO | Alt & Hedge Funds | Private Equity | ETF | Funds Private debt & Mezz

Insurance companies

Asset servicers

Investment Banks

Private Banks

CGPI

Family Offices

UHNWI = Ultra High Net Worth Individual

CGPI = Conseiller en Gestion de Patrimoine Indépendant

Authorities ecosystem

Investors

Financial system

Supervision (e.g. Central banks)

Regulatory and legislative (e.g. European parliament)

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Wealth & Asset Management : 2 different industries…

	AM	WM
Product	“Prêt-à-porter”�collective investments	Tailor made solution
PM organization	1 PM for 1 to 5 funds typically cumulating 200 to 1000 Bln€ Expert on 1 investment style	1 PM for 20 to 100 clients cumulating 200 to 400 M€ Generalist on all investment styles
Distribution	B2B2C for Retail B2C for Institutional	B2C B2B2C occasionally
Pricing	From 50 to 150 bps mainly (average 45 bps)	From 50 to 250 bps (average 60-80 bps)
Client	Institutional�Mass Retail	HWNI (i.e. premium retail)
French regulator

Bps = Basis Point = 1% of 1% = 1/10 000^th

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A recap of FY22 and 4Q22 performance of Asset Managers & Wealth Managers worldwide

	FY22	Y-o-Y	Q-o-Q (4Q22 vs. 3Q22)	FY22	Y-o-Y	4Q22	Q-o-Q	FY22	Y-o-Y	4Q22	Q-o-Q
Asset Management	44.1	-13.8%	6.1%	150.6	-17.3%	36.7	6.7%	30.6	-6.0 pp	26.5	-2.5pp
Wealth Management	18.6	-11.6%	5.3%	154.7	4.8%	40.5	3.2%	26.7	1.2 pp	28.7	-0.1 pp

AUM ($t)

Revenues ($b)

Operating Margin (%)

Weak performance overall in FY22: The financial performance of WAM firms in FY22 was still weaker than FY21, as the firms struggled with poor investor sentiment, tightening fiscal policy, and underperforming capital markets
Market uncertainty: While the markets have still not recovered fully from the impact of inflation, high interest rates and weak investor sentiment, and major events, such as SVB crash in the US are likely to affect flows and profitability for the firms in 1Q23

Strong financial performance in 4Q22: With easing inflation, improved consumer sentiment and better capital markets performance, majority of global wealth and asset managers posted stronger growth in AUM and revenue in 4Q22, after witnessing three consecutive quarters of decline. However, operating margins still remain under pressure, particularly for AM firms
Growth in demand for alternative assets: Pure play alternative players were the best performers in Y-o-Y AUM growth. Asset managers like Blackstone, Apollo Global, KKR, Carlyle and Ares reported strong AUM growth, with rising democratization of private capital and increased investor confidence for alternative assets during volatile markets

Asset Managers and Wealth Managers in Europe and in France follow similar trends

Source: 4Q22 Earnings Press Releases, 10-Qs and Financial Supplements; WAM sector performance data is based on aggregated data from approximately 40 of the largest asset managers and 30 wealth and private banking firms. Note: aggregated key metrics are for illustrative purposes and may in occasional instances include double counting due to limited transparency in publicly available data

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Wealth Management distributors in France

Others

Insurers

CGP

Banks

5%

25%

5%*

Private Banks

Retail Banks

41

~15

CGP

Insurers

• Asset Managers

• Family offices

• Banquesen ligne

• Robo-conseillers

Distribution split

In % of Aum (deposits excluded)

Number of actors

3437

~30

Characteristics

HNW clients
High-end banking offer
High-end savings offer with, however, a limited investment universe favoring the "in-house" asset manager
Advisory services

Retail customers
Standard banking offer
Strong geographical coverage
Limited savings offer. Closed architecture
Limited financial advice

Mass affluent clientele
Asset management offer with open architecture
Strong financial expertise and high value-added advice

Retail customers
Strong geographical coverage
Limited savings offer. Closed architecture
Limited financial advice

65%

Sources : Aprédia, EY analysis

The majority of the AUM in France are concentrated in Banks (65%), with a limited number of actors
The CGP represent a large majority of the actors in France, yet with very limited AUM

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Wealth Management landscape in France

Source : EY Analysis

HNWI

Mass & Top Affluent

Mass Market

UHNWI

Wealth Managers

Private Banks

Brokers & CGP

Insurers and Retail Banks

Distributors

Positioning

<50k€

<10Mn€

<2Mn€

WM

PB

CGP

RB

The wealth management market is highly fragmented, with a range of different firm types offering products and services across the wealth spectrum. Firms tend to focus their offering on a particular wealth segment which is their ‘sweet spot’.

Key takeaways

UHNWI are covered by large wealth managers

Pure players in the Private Banking industry cover HNWI and a portion of UHNWI and Mass & Top Affluent clients

Brokers & CGP cover mainly Mass & Top Affluent clients but also a portion of HNWI

Insurers and Retail Banks cover largely the Mass Market but also a portion of Mass & Top Affluent clients

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Wealth Management Client journey

The client journey is a framework used to identify the different touch points and processes an individual goes through from the point they are identified as a prospect to when they are receiving an ongoing wealth management service

Client Acquisition/Setup

Ongoing Client Management

Prospecting

Onboarding

Proposal

Account set-up

Valuations
Performance
Tax

Fact Find
Risk Profile
Objectives
KYC

Service Proposition
Existing Holdings
Asset allocation

Transfers In
AML
Account opening

Client Reporting

Client Servicing

Suitability

Portfolio Management

Financial Planning

Fees/Payments
Client Portal
Terminations

Ongoing KYC
Client Reviews
MI/Monitoring

Investments
Asset Analysis/�Allocation
Research

Cashflow
Advice tools
Protection

Marketing
Campaigns
Prospect pipeline

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A strategic focus on service and engagement with a clear emphasis on purpose holds the key to elevating client experiences

1. Complexity

�Product complexity and market volatility are increasing client appetite for stability and guidance, putting firms under pressure to ‘do more for less’ and creating opportunities for those that can help clients to navigate complexity efficiently. �

Investors react to volatility and complexity in different ways, with a clear majority making changes in response
Seeking more advice – including from new providers – is a key investor response to market volatility
Wealth managers have a valuable opportunity to help clients navigate complexity, but will need innovative thinking to overcome the associated operational challenges

2. Empowerment

�For maximum effect, wealth managers should further enhance hybrid models, using innovative collaboration tools to leverage growing appetite to mix in-person advice with virtual interactions and self-service capabilities.�

Personalized engagement across all stages throughout wealth management journey is key to differentiation and client empowerment
Enhanced multi-channel models harnessing innovative digital collaboration tools can deliver frequent, flexible advisor interactions
Greater interactivity, along with enhanced expert support, can further improve client satisfaction and empowerment

3. Value

�Better product deployment and education and understanding of investors’ tenets and clarity over fees all have a role to play in delivering greater client satisfaction, trust and value.�

Clients are relatively satisfied with product access, but there is an opportunity to improve perceived levels of product value – especially for newer asset classes
Better investor education and greater client involvement will strengthen the links between products, performance and outcomes
Client trust remains relatively high, but growing concerns over hidden costs imply a need for better transparency

While investors have largely moved past the initial shock of the COVID-19 pandemic, they still face ongoing disruptions and complexities in the global market that make investment decisions more challenging, leaving them feeling less financially prepared and more receptive to advice and guidance.

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In a nutshell �Wealth managers are transforming themselves as a result of new industry challenges, client expectations and product evolution

Regulation / tax

Growing regulatory pressure, increased cost of compliance and stronger risk management.
Differences in AML-KYC standards, higher tax transparency or investor protection requirements impacting client servicing.

Innovation & Digital assets

Tokenization broadens access, allowing anyone to invest in previously restricted asset classes ranging from private companies and infrastructure to property and fine art.
Crypto-currency as a new but risky investment with potential high return and volatility.

Multi-domiciled households and wealth concentration

Households living among multiple locations with specific needs (Tax, currency, education, life-style).
Large pools of assets but few households to target (DE, UK, FR: 60% of HNWI in Europe).

People

New ways of working and behaviors derived by fostering experimentation & agile mindsets with more cooperation, collaboration & debate
Extensive change communication, education measures and early involvement at all levels to foster a common understanding of the new ways of working

ESG & Impact investing

Clients are now investing for purpose and looking beyond return on investment.
Clients with sustainability goals more likely to switch providers who share similar purpose.
ESG funds are the fastest growing category.

Multi-channel engagement

Clients expect flexible platforms that evolve around their needs, moving towards multi-channel engagement models mixing hybrid advisors, various tools, digital platforms, mobile apps and RMs for client interactions.

Industry

Tech is changing everything

Technology is changing how each individual WM and their clients think.
Participating in next generation technology adoption is now a competitive imperative.

1

Product

Alternative investments

Private markets showing stronger growth in capital than public markets
Retailisation of alternative investments with growing demand from private investors.

3

Customer

Next generation clients with $30tn in wealth to Millennials over next 20 yrs.
Catering to 80, 90, 100 cohorts who will be living off of their assets for far longer.

2

The 100 year life and new generations

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“It is part of the DNA of Private Banks to help their clients and their families to achieve their potential, and to support the local communities where they operate. Success no longer means prioritizing shareholders at the expense of everything else, success is now at balancing people, profits and the planet."

Peter Flavel, CE0, Coutts

“

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CAREERS IN WEALTH MANAGEMENT

Stephane Pardini, Managing Director, Banque J.Safra Sarasin

Baptiste Lambert, Founder Associate, Aptic Conseil en recrutement

Fabienne Konik, Partner, Business Consulting, Wealth and Asset Management, EY

Niki Kalogera, Private Banker, BNP Paribas Wealth Management

��Moderators:�Alexis Calla, CFA Society France Wealth Committee

Clément Phan, CFA, CFA Society France Wealth Committee�