In the future, the financial supervision should monitor the approximately 38,000 financial asset brokers.
Berlin Bank associations and consumer advocates tend to have different opinions on regulatory issues. Now they have decided to take an unusual step: In a joint letter to parliamentarians from the government factions, the central association of the German banking industry and the consumer association Bundesverband (vzbv) are calling for a certain legislative process to be pushed ahead.
It is about the planned transfer of supervision of the 38,000 financial asset brokers to the financial supervision Bafin. The cabinet passed the legislative proposal on March 11. The associations are obviously concerned that the transfer of supervision of financial intermediaries to Bafin could be watered down in parliament in the further legislative process. Depending on the federal state, financial intermediaries are currently supervised by trade offices or chambers of industry and commerce (IHK).
Shortly before the parliamentary deliberations on the proposed law began, they wrote: “The concern pursued by the government bill with regard to uniform financial supervision in the sale of financial instruments is of particular importance, particularly in times of crisis.” applicable supervisory law.
In the opinion of the banking associations and consumer protection groups, the previous dual role of the Chamber of Industry and Commerce as a supervisory body and as a representative of the interests of commercial professions questions independent supervision and creates space for conflicts of interest. The level of investor protection should not depend on who the customer is contacting, the associations write.
Vzbv board member Klaus Müller confirmed at the request of the Handelsblatt: “Bundling supervision of financial sales at Bafin has been overdue for years. It is important that compliance with the obligation to behave will in future be checked directly by the Bafin. ”The Corona state of emergency should not lead to important and overdue legislative proposals now being stopped.
Industry resists expensive proposal
The intermediary industry itself has always vehemently opposed the cabinet proposal, which will also entail higher costs. She pointed out that no financial scandals had happened under the previous supervision. So far, the supervision of financial investment brokers and fee brokers in nine federal states has been with the IHK, in the other federal states the trade offices are responsible. Over 80 percent of brokers have a license to broker insurance, the supervision of which is nationwide with the Chamber of Industry and Commerce.
After the Federal Cabinet’s draft was passed, the Union has already indicated that it takes the criticism of the legislative proposal “very seriously”. For the CDU financial expert Carsten Brodesser, the draft goes beyond the coalition agreement. “We now have to prevent the worst in parliamentary proceedings.”
Brodesser outlines possible compromises as follows: If the goal is to have more uniform control, “we could imagine, in coordination with the federal states, to standardize responsibility for, for example, expertise and the supervision of financial investment brokers at the Chamber of Industry and Commerce”. The Bafin’s powers could be strengthened in such a way that it sets uniform standards for supervision by the IHK and monitors them. But the SPD would have to play for that. At least the vzbv and the banking associations have clearly positioned themselves with the letter.
More:Financial investment brokers defend themselves against Bafin supervision.
Asset managers face severe losses from the consequences of the corona crisis.
Frankfurt In the past decade, the framework conditions for asset management have been downright paradisiacal. In the “Goldilocks” scenario – where the conditions are fairytale-like – the stock markets hurried to new records, wealth continued to grow, and interest rates close to zero fueled the boom. With the corona pandemic, the brakes came on.
As a bond house, Pimco has benefited greatly from the boom in this asset class in recent years.
Frankfurt A cartel of silence dominates the European fund market. None of the big asset managers want to talk about the massive escape of investors from the products. In March, customers in Europe withdrew a total of 232 billion euros from funds because of the corona panic in the markets – more than ever before.
The number is based on the latest estimates from the rating agency Morningstar for the Handelsblatt. It is significantly higher than the data published a little more than a week ago. “The number should also continue to rise because we still lack information from some funds,” says Morningstar analyst Ali Masarwah.
Banks and hedge funds in financial centers are under pressure.
Frankfurt The corona crisis sent stock markets around the world on an up and down ride. In most other asset classes, the minus signs often outweigh the performance; on many trading days, investors experience extreme price fluctuations. But even in these times there are still investments in the financial markets that are relatively robust.
The most popular are, among others, ETFs on classic equity staves such as Euro Stoxx50, S&P 500 or MSCI Welt.
Frankfurt The financial industry stands for crises. There were three in this millennium alone. But if there is a success story in the investment world, then index funds are part of it. On the Deutsche Börse, the two ETF products that existed just two decades ago have now grown to more than 1,500. This includes EUR 673 billion in investor funds. The word boom comes to mind – and is not an exaggeration.
At first, the rush may surprise you. After all, there is no flesh-and-blood fund manager with exchange-traded index funds. Instead, a computer autonomously controls the system based on an index.
Frankfurt The Deutsche Bank subsidiary DWS fears the corona crisis. The fund company could be significantly affected by the economic conditions, DWS warned in its annual report on Friday.
However, it was too early to be able to quantify the consequences for the business or the financial goals. With the slump in stock prices, the entire industry is suffering from the decline in assets under management and fee income.
After the adjusted pre-tax profit increased by 24 percent to 774 million euros in 2019, DWS wants to pay its shareholders a dividend of 1.67 euros per share, 30 cents more than in the previous year, as the asset manager confirmed.
The main beneficiary is the Deutsche Bank, which still holds around 80 percent of DWS after the IPO in March 2018.
More: The head of Deutsche Börse is to become the supervisory board of Deutsche Bank.
Frankfurt It was a black Thursday: investors fled the stock markets worldwide. The Dax for example, lost 12.2 percent. It is a crash. Such an extreme discount is often accompanied by a selling panic with very high stock exchange turnover if investors want to sell under all circumstances because they expect further losses. However, that was not the case on Thursday.
Industry experts have been waiting for such a difficult situation on the capital markets for years: will the so-called robo-advisors run away from customers? Is your new business now on hold? A survey by the Handelsblatt shows: Existing customers are surprisingly nerve-wracking, and new investors are added. In terms of short-term performance, however, the picture is wide apart.
Robo-advisors have been in Germany for seven years. According to analysts from Deutsche Bank, German providers currently manage four billion euros from private customers. There are now around 30 such providers on the German market. They all have one thing in common: prospective customers click through the Internet via a questionnaire, provide answers to the wealth situation, risk appetite, experience on the capital markets and then receive a proposal for a portfolio.
Everything digital? No personal contact? “Then the customers are quickly gone when there is a crash on the markets”, some traditional asset managers and bankers have forged in the past. But the robos are not that unapproachable. Many have expanded their customer service by phone, email or chat in recent years. That obviously pays off now, because all providers report increased customer inquiries. According to Erik Podzuweit, co-founder of the German market leader Scalable Capital, ten percent of his customers have made inquiries in the past two weeks. At Moneyfarm, calls for Germany’s Thomas Völker have roughly doubled. The recently integrated chat is also used noticeably more frequently by customers. And since the beginning of February, Ginmon has recorded around a third more customer inquiries than usual.
In some cases, customers have already overcome the first shock: “In the last week of February, when the issue of coronavirus caused turbulence on the stock exchanges for the first time, we definitely had increased calls from unsettled customers,” reports Salome Preiswerk of Whitebox. However, interest had already declined significantly in the past week and the corona virus had become a marginal topic in inquiries.
The bottom line is that relatively few investors have changed their strategy, as the providers state: Since February 20, 1.1 percent of customers have reduced the equity quota, while 0.7 percent increased it, says Liqid boss Christian Schneider-Sickert. The situation is similar at Moneyfarm: Germany boss Völker has observed a change in strategy in around one percent of customers in the past four weeks. “Two thirds of them switch to less risky strategies, one third to riskier ones,” he says.
Panic sales seem to be missing from the Robos. According to Schneider-Sickert, “more than eight percent” of Liqid customers have recently increased their portfolio. In contrast, only a total of around one percent would have reduced it or withdrawn the money entirely.
Whitebox’s pricing work is similar: According to their statements, inflows of funds there were many times higher than outflows. She speaks of “many large tickets” of up to seven-digit sums. At Scalable, “about seven percent reduced risk or took money,” says Podzuweit. Here, too, the inflows exceeded the outflows.
Ginmon boss Lars Reiner reports that 1.5 percent of customers have withdrawn their money completely since the beginning of February, but 17 percent of customers have deposited new money in the same period. A Quirion spokeswoman also notes: “Of course there were sales, but significantly more increases.”
According to the providers, new customer business sometimes suffers slightly. Sebastian Hasenack, Head of Sales at Solidvest, sees somewhat less demand. “Most recently, we received an average of two million euros per week from new customers, less in the past week.
At Weltinvest, the fund offering from Weltsparen, it is “expected to be behind our planning under the current market conditions,” says investment manager Kim Felix Fomm. However, there were already above-average order volumes on the days after strong slumps.
Performance varies widely
So far, the equity markets have reacted most strongly to the corona crisis between February 20 and March 9. There are clear differences in the performance of the robos during this period, but they cannot be attributed solely to the passive or active strategy factor.
For example, a medium-risk portfolio at Robin, Deutsche Bank’s digital asset manager, only yielded 7.5 percent in the comparative period. Due to the currently increased market fluctuations, portfolios have been reallocated by around 20 percent of customers, it says.
Sales of ETFs that track stock indices have occurred broadly. The proportion of ETFs invested in bonds or commodities and the liquidity ratio were increased. The equity ratio in the medium risk portfolio is currently still 35 percent.
Cominvest, the Robo of Comdirect, is just a little worse. The middle portfolio lost 8.1 percent. Cominvest has adjusted the equity quota since autumn 2019, as a spokeswoman says: “Now hardly any adjustments were necessary.” The equity quota in a medium-risk portfolio is currently 20 percent.
For comparison: An investor who wants to take a medium risk could – in a very simplified representation – fill his portfolio half with the MSCI World and half with European government bonds, for example with the FTSE Euro Broad Investment-Grade Bond Index. Then there would be a loss of 10.6 percent in the period under review.
Solidvest, the robo of the asset manager DJE Kapital, has also actively redeployed recently. “We already started in January to position customer deposits more defensively in view of the foreseeable effects, by selling stocks from sectors that are currently particularly affected by the downturn, such as the tourism industry,” says Head of Sales Hasenack.
With the announcement of the high number of cases in Italy, the till position was also further expanded. DJE temporarily lowered the equity ratios to 28 percent in the medium risk strategy and did not invest 25 percent of the capital – “as a tactical risk buffer for more flexibility”.
Solidvest’s loss is 10.5 percent. Whitebox did almost the same (minus 10.6 percent). However, there were no sales here. Only in the context of regular rebalancing, in order to restore desired quotas from stocks and bonds, did there be shifts, says Head of Price. “Just because there is panic, we will definitely not be active,” she says.
According to Podzuweit, scalable capital has “not yet made any major shifts”. “The system deliberately waits first, because the very quick, sharp corrections are usually not permanent,” he explains. Shares would only be reduced sharply if the risk remained high for several weeks and months. The most popular portfolios, each with 32 percent and 59 percent equity quota, would have fallen by 9.8 and 14.5 percent, respectively.
Growney (minus 9.8 percent), Ginmon (minus 12.2 percent) and Quirion (minus 11.3 percent) are among those providers who only manage ETF portfolios through rebalancing. Liqid, which offers different strategies, also included a passive deposit in the comparison (minus 9.3 percent). Moneyfarm is still too young on the German market, so it does not yet publish any performance figures.
It is clear that the performance comparisons only relate to a short period of time. Podzuweit also says: “We are still right in the middle of it – you really won’t know how the corona crisis will be mastered until a few months from now.” In the long term, it will be important for Robo-Advisors’ customers that the providers not only reduce losses, but also those Do not miss the following course increases at some point.
In addition: For a detailed comparison, investors must also compare the fees of the offers. Here, too, the range is wide: it ranges from 0.4 to more than one percent of the assets under management, fluctuates depending on the amount invested – and there are usually additional product costs for the funds.
More: Epidemics like Corona are temporary, as are losses in the capital markets.
Despite numerous measures to protect against infection, banks in Asia are being avoided.
Hong Kong / Singapore The coronavirus epidemic is slowing banks’ growth in the key Asian market. For fear of infection, rich customers from the region are currently avoiding personal contact with bank advisors. For example, in January and February the institutes could have won ten to 20 percent fewer new customers than in the same period last year, bankers said to two European asset managers from the Reuters news agency.
This trend is likely to continue for the time being. Strict travel restrictions and the avoidance of social contacts make it difficult for banks like Credit Suisse. UBS or the British HSBCBringing new wealthy customers on board said six bankers. So far, Asia has been the region with the strongest growth in wealth.
The market for banks serving rich private customers is correspondingly important. These include the Deutsche Bank or Julius Baer. Much of the money the industry manages comes from rich Chinese. Banks have set up trusts or family offices for them in recent years.
“These things are currently not happening because customers are unwilling to get involved with our employees for fear of infection,” said the head of a European private bank for the Greater China area. This affects new business.
GlobalData, an analyst firm, said last week that China’s private wealth growth could slow to 2.6 percent this year due to measures to curb the epidemic. That would be the smallest increase since the financial crisis.
However, fear of the effects of the disease does not only have negative consequences for banks’ business. The trading income generated with wealthy private customers in the region increased in the first two months of 2020 compared to the previous year, employees at five asset management institutes said.
The recent market turmoil would have prompted customers to invest more in derivatives in order to protect themselves against price losses. “Our bankers were pretty busy,” said a senior banker at a Swiss institution based in Singapore.
More: The Dax goes down again – and major banks fear the effects of the corona virus.