The Latest Headlines From Across The Wealth & Asset Management Sector - September

2023-10-03 |  Prince Naruka & Natalija Reeves

Welcome to our latest newsletter, we'll be exploring the top headlines impacting the world of wealth and asset management. Before we get started, PEN are holding a Consumer Duty roundtable closed door discussion with Asset Managers on 26th October, focused on embedding and continuously improving Consumer Duty compliance across open products. If you would like to participate, please reach out to Asha Sanderson.

In this month's newsletter, we dive deep into the latest regulatory news from the FCA on Private Assets, Consumer Duty and Diversity. We will also explore recent industry movements from AssetCo and Monzo whilst diving into a conversation of the importance of Data in this environment.

Here are our top stories…

FCA set to launch private markets review

The FCA is seeking to launch a review into valuations in private markets, according to a Financial Times report that cites sources familiar with its plans. The review, which will begin by the end of the year, is a result of growing fears over the impact of higher interest rates on private markets and the SEC adopting new rules last month. Valuations have been a constant source of debate amongst the critics of private markets, with many concerned that they are too high despite significant corrections in public market equivalents. However, private markets managers have argued that valuations are not inflated, even though they have not repriced as aggressively as companies in public markets. The scrutiny over private markets funds comes as the FCA confirmed in June that it will broaden the long-term asset fund (LTAF) structure to allow greater access to retail and pension investors.

Data, Data, Data

Anne Richards, Fidelity International CEO and Hanneke Smits, Global Head of Investment Management for BNY Mellon discussed the importance of data in a short film, they described the necessity to understand client behaviours better to generate a proactive approach to client’s data. Understanding who your customers are, what they are buying and selling, and what they are likely to do, can be used to measure the level of engagement from clients and curate more effective communication and relationship management.

PEN has guided numerous organisations through different stages of the data journey, our approach is tailored for each organisation to ensure a more effective and swift adoption of data management principles to meet the organisations’ strategy and objectives. If you would like to learn more, please click here or reply to this email to be put in touch with our data experts!

AssetCo sells Rize ETF to Cathie Wood and reveals Parmenion bids

AssetCo, the AIM-listed asset and wealth management consolidator, announced that it has sold its 70% stake in thematic ETF business Rize to Cathie Wood’s ARK Invest for £5.3m, comprised of an initial £2.6m, with further deferred considerations. As part of its deal for Rize, ARK will partner with AssetCo “to support the launch… of a number of ETF products for the River and Mercantile business”, according to the statement. The deal will allow ARK to offer its actively managed ETFs to European investors via a Ucits framework, something it plans to do before the end of the year. Rize ETF will be rebranded to “ARK Invest Europe”, Citywire held a discussion with Cathie Wood and representatives from Rize ETF and ARK Invest to understand the details behind the deal and what it means for the company’s future.

Furthermore, Parmenion's co-owner AssetCo revelaved Parmenion has been the subject of a number of approaches to buy the business. AssetCo said it has now conducted an independent valuation which has valued its equity stake at £75m-£90m – which would give Parmenion a total valuation of £250m-£300m – and represent a 3x profit on AssetCo’s investment if it sold for this amount. Earlier this month Parmenion competitor 7IM was sold to Ontario Teachers’ Pension Plan, which bought a majority stake for £255m.

FCA gets tough on diversity in misconduct crackdown

The FCA has published a consultation paper which set out proposals to boost diversity and inclusion within financial services. Included in the proposals are new rules and guidance to ‘make clear’ that bullying and sexual harassment pose a risk to healthy work culture. The guidance aims to ensure firms are able to take appropriate action against employees in such cases. The latest proposals include requirements to develop diversity and inclusion strategies, collect and report data on characteristics such as disability and ethnicity of staff, with an option to go further by reporting on socio-economic background and gender identity.

Monzo launches D2C investing service with FNZ platform

Monzo, the UK-based digital challenger bank with eight million customers, is entering the direct-to-consumer (D2C) investment market by launching Monzo Investments. This new service will provide customers with access to three multi-asset funds from BlackRock's MyMap range, with options for different risk profiles. The platform, using FNZ as its technology provider and custodian, will be integrated into Monzo's banking app, which also offers budgeting and money management services. Customers can use the service for ISAs and general investment accounts, paying a fee of 0.59%, which includes platform and fund fees. Monzo negotiated a fee discount with BlackRock, as the funds typically cost 0.17%.

Hargreaves Lansdown profits jump on £269m cash boost

Hargreaves Lansdown (HL) has reported robust financial results for the year ending in June, driven by substantial revenue from cash holdings on its platform, totalling £268.7 million out of £735.1 million in turnover, resulting in a 50% increase in pre-tax profits to £402.7 million. The company’s online brokerage also announced a 4.5% increase in its dividend. New chief executive Dan Olley noted HL’s commitment to the FCA's consumer duty regulations through actively mailing clients on aspects such as ‘appropriate levels of cash, portfolio diversification, the importance of regular investing and the power of compounding’. While platform growth was softer than last year, overall assets under administration grew by 8%.

FCA takes first consumer duty action with bank value review

The FCA has taken its first public action following the implementation of the consumer duty regulation. The regulator expressed concerns that banks and building societies were not passing on interest rate rises to savings accounts. As a result, they have instructed nine financial institutions to provide assessments of the value offered by their savings products. The FCA plans to review these assessments and will release an update in the autumn, potentially taking further action if concerns persist.

Whilst this article is aimed at banks and building societies, the FCA has made it clear that there is still much work to do across all financial services sectors. PEN are holding a roundtable closed door discussion with Asset Managers on 26th October, focused on embedding and continuously improving Consumer Duty compliance across open products. Please click here if you would like to participate in this roundtable or stay up to date with upcoming roundtables.

Thanks for reading. If you’d like to discuss any issues relating to the newsletter that are specific to you or your company, do get in touch.

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