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Keith Evins, ex J.P. Morgan Asset Management Chief Marketing Officer, has partnered with Research in Finance to create a new subsidiary of the business, a financial consultancy that will support and assist investment management market participants in the development of distribution, client and product strategies.
The new consultancy, named Elevate Financial Consulting, will be powered by the market leading research and intelligence capability of Research in Finance, which was established in 2013 by experienced industry professionals Toby Finden-Crofts and Richard Ley.
The increasingly complex and demanding market in the distribution of financial products is putting pressure on both manufacturers and distributors to refine and adapt their service, product and business strategies in order to remain competitive and resource themselves appropriately.
Alongside the comprehensive empirical output from Research in Finance, Elevate Financial Consulting and Evins, who has more than 30 years experience in Sales, Marketing and Strategy roles, will provide clients with the tools and skills needed to navigate the evolving distribution landscape for financial products.
Evins, Elevate’s founder and Managing Director, commented: “Just as a new phase of online and tech-based client solutions are opening up, the traditional distributors are streamlining their business models in order to stay competitive, differentiate themselves and to strengthen their client offerings . This can be a challenge for providers who need to engage with and understand the new opportunities, whilst also remaining relevant to their existing relationships. All this comes at a time when margins for many are being well and truly squeezed.
“At Elevate, we aim to offer an objective service that will assist clients in setting their strategic goals and then helping them to structure and focus accordingly. We can be totally objective basing our advice both on robust research and also many years of experience working with emerging and developed brands.
Richard Ley, founding partner and Managing Director of Research In Finance added “Through our research we clearly see how evolving trends are challenging the status quo and for both new and existing participants it’s increasingly important to stay informed and relevant in what is an incredibly dynamic market place. These days there is no such thing as a one size fits all solution and it’s important for all participants to understand where to prioritise and how to apply their resources. We believe Elevate will offer a unique service to investment groups looking to retain a competitive edge and be among the winning firms in years to come.”
Caution, caution and more caution have been the watchwords of insurance company investment departments over the last decade
It is easy to see why.
Hard on the heels of the Global Financial Crisis came wave after wave of new regulation, with Solvency II at the centre. Which brings strict new regimes of matching adjustments and capital charges to the already delicate tasks of asset-liability management (ALM). With the era of low interest rates and unconventional central bank intervention now looking to stretch into a second decade, insurance company boards are starting to ask how they can produce a better return from all their capital.
Against this background, the excessive caution of static strategic asset allocation, narrowly focussed on maximising yield, no longer seems appropriate. Long-term insurers have started to explore a wider range of alternative assets such as private credit and infrastructure but general insurers still seem hidebound by caution. They worry about the liquidity of some of the new asset classes, fearing that they will not be able to pay catastrophe claims when they hit the portfolio.
But boards are also watching underwriting margins being squeezed and so are looking to their investments to help support the balance sheet and boost profitability. They are starting to question the risk-adverse approach of their investment departments. This is being felt keenly in the London Market where Lloyd’s determination to weed out unprofitable business and the wider focus on cutting the cost of doing business with London is exposing business models to harsher examination.
Insurers are also finding that their investment portfolios are coming under greater external and political scrutiny, especially as environmental issues gain prominence. The demands from international organisations and influential campaign groups that insurers back away from supporting fossil fuels is having repercussions for investment strategies. Some major insurance groups are already disinvesting from coal but where do they put that money and how can they invest in renewable energy without jeopardising liquidity and returns?
Just some of the many questions general insurance chief investment officers (CIO) find themselves being confronted with.
As these pressures mount there is some welcome news as regulators have been reviewing and relaxing some of the penal capital charges. This should open up new opportunities for diversifying portfolios. Many asset managers have worked hard to come up with creative strategies, blending familiar asset classes with new opportunities but all too often find the willingness of life insurers to explore them is not matched by their general insurance colleagues.
The challenge is obvious: what do CIOs and investment managers in general insurers need to help them shake off the excessive caution and risk-adverse strategies that no longer seem an appropriate response to the pressures they are under?
Many will say it is lack of expertise, others will cite lack of understanding among investment committees and blockages in their internal processes. Understanding these concerns and how to address them will be crucial if asset managers are going to build a productive dialogue with general insurers. It is fairly clear that that engagement is not delivering for anybody at the moment
At the heart of this challenge is the need to build confidence that diversified investment portfolios can deliver.
In early 2020, Research in Finance is teaming up with sister company, Research in Insurance to launch The UK Insurance Investment Study.
This project will provide a deeper understanding of the investment strategies within the asset side of UK general insurance companies. How asset managers can effectively communicate, influence and engage with this audience.