This Week in Finance 2018–05–27
“ The 32 biggest wealth managers in the world have a collective market share of just 50 per cent, making the industry one of the most fragmented in global finance and ripe for consolidation, a new report from JPMorgan has found. The proliferation of wealth managers in some countries, particularly Switzerland’s 100-plus players, has been well-documented.
The JPMorgan report highlighted the global dynamic of a business that is central to Credit Suisse and UBS and of importance to other big name banks including Citi, Morgan Stanley and HSBC. The wealth management landscape contrasts starkly with other banking areas such as fixed income, currencies and commodities, where JPMorgan estimated the top six global participants had more than 60 per cent of all revenues.
“I could easily see some of the outstanding pure-play private banks being consolidated with another bank [in the next five years],” said Kian Abouhossein, head of European banking research at JPMorgan. “Private banking is the best business of all the banking businesses. It has stable cash flows, high return on equity, there’s no additional regulation that we know of … and it has relatively high growth rates.”
JPMorgan predicted assets under management (AUM) in the world’s private banks would grow at a compounded rate of 4 per cent a year between 2017 and 2020, a forecast Mr Abouhossein described as “conservative”.”
“Andy Newman, head of personal finance, said that offering loans and savings products would be a logical next step for Debenhams’ financial services.
Any branded savings and loan products that it offers would be done through a third party provider.
However Newman said that the firm’s immediate priority is to grow its foreign exchange business.
The department store group has bureaux de change in more than 110 of its stores and last month it teamed up with Western union to provide global money transfer services to its customers.”
“For 25 years, Unifin has been providing its clients with high-quality financial services. By offering a broad spectrum of loan and leasing options, the company has established itself as one of the leading independent companies within Mexico’s financial services sector. Unifin’s rise hasn’t always been plain sailing, however.
Unifin supports good governance practices by having an experienced management team, as well as the mechanisms and structures to support its operation
With the company having only been in existence for a year at the time, the Mexican financial crisis of late 1994 threatened to undermine Unifin’s early successes. With debt spiralling, company founder Rodrigo Lebois Mateos refused to let standards slip, prioritising quality service as a way of surviving in a challenging economic landscape.
While many financial services companies in Mexico declared bankruptcy or ceased to exist altogether, Unifin paid back every penny of its debt, turning adversity into a vital lesson for future success. World Finance spoke to Sergio Camacho, CFO at Unifin, about how the company ensures it delivers excellence at all times, especially when the going gets tough.”
“Imagine that a pharmaceutical company develops 1000 drugs and tests these on 1000 groups of volunteer patients. When a few dozen of the tests prove “significant” at the .05 level of chance, those medications are marketed as proven remedies. Believing the “scientific tests”, patients flock to the new wonder drugs, only to find that their conditions become worse as the medications don’t deliver the expected benefit. Some consumers become quite ill and several die.
Clearly, there would be a public outcry over such deceptive practice. Indeed, that is precisely the reason we have a regulatory agency and laws to help ensure that medications have been properly tested before they are offered to the public. According to Marcos Lopez de Prado, no such protections are offered to financial consumers, leaving them vulnerable to unproven investment strategies. Indeed, he and several co-authors contend that the majority of investment strategies promoted by academics and quantitative practitioners are false. As Lopez de Prado explains in his recent book, Advances in Financial Machine Learning, these strategies look at so many combinations of so many variables that they are likely to find models that seemingly work both in- and out-of-sample, only to fail dismally in the real world. These false positives are particularly misleading, as they are promoted by researchers with seemingly impeccable research backgrounds — and who do not employ the scientific tools needed to detect such false findings.
Nor is this crisis limited to the world of quantitative finance. David H. Bailey, in a post to the Mathematical Investor site, points to a wide range of financial providers, from banks to brokerages, that promote untested, unproven technical analysis strategies. These encourage traders and investors to put their money to work, while offering guidance with no objective information value. Indeed, Bailey and Lopez de Prado note that the most important plot in finance is not a technical analysis pattern, but a statistical distribution of Sharpe Ratios as a function of the number of backtests conducted. If one looks at enough combinations, it is quite possible to find technical patterns that will achieve seemingly astronomical risk-adjusted returns. The great majority of these are spurious.”
(Updated September 28, 2016)
Scott Douglas Jacobsen founded In-Sight: Independent Interview-Based Journal and In-Sight Publishing. He authored/co-authored some e-books, free or low-cost. If you want to contact Scott: Scott.D.Jacobsen@Gmail.com, Scott.Jacobsen@TrustedClothes.Com, Scott@ConatusNews.Com, firstname.lastname@example.org, Scott@Karmik.Ca.
He is a Moral Courage Webmaster and Outreach Specialist (Fall, 2016) at the UCI Interdisciplinary Center for the Scientific Study of Ethics and Morality (Ethics Center), Interview Columnist for Conatus News, Writer and Executive Administrator for Trusted Clothes, Interview Columnist for Basic Income Earth Network (BIEN), Councillor for the Athabasca University Student Union, Member of the Learning Analytics Research Group, writer for The Voice Magazine, Your Political Party of BC, ProBC, Marijuana Party of Canada, Fresh Start Recovery Centre, Harvest House Ministries, and Little Footprints Big Steps International Development Organization, Editor and Proofreader for Alfred Yi Zhang Photography, Community Journalist/Blogger for Gordon Neighbourhood House, Member-at-Large, Member of the Outreach Committee, the Finance & Fundraising Committee, and the Special Projects & Political Advocacy Committee, and Writer for Canadian Students for Sensible Drug Policy, Member of the Lifespan Cognition Psychology Lab and IMAGe Psychology Lab, Collaborator with Dr. Farhad Dastur in creation of the CriticalThinkingWiki, Board Member, and Foundation Volunteer Committee Member for the Fraser Valley Health Care Foundation, and Independent Landscaper.
He was a Francisco Ayala Scholar at the UCI Ethics Center, Member of the Psychometric Society Graduate Student Committee, Special Advisor and Writer for ECOSOC at NWMUN, Writer for TransplantFirstAcademy and ProActive Path, Member of AT-CURA Psychology Lab, Contributor for a student policy review, Vice President of Outreach for the Almas Jiwani Foundation, worked with Manahel Thabet on numerous initiatives, Student Member of the Ad–Hoc Executive Compensation Review Committee for the Athabasca University Student Union, Volunteer and Writer for British Columbia Psychological Association, Community Member of the KPU Choir (even performed with them alongside the Vancouver Symphony Orchestra), Delegate at Harvard World MUN, NWMUN, UBC MUN, and Long Beach Intercollegiate MUN, and Writer and Member of the Communications Committee for The PIPE UP Network.
He published in American Enterprise Institute, Annaborgia, Conatus News, Earth Skin & Eden, Fresh Start Recovery Centre, Gordon Neighbourhood House, Huffington Post, In-Sight: Independent Interview-Based Journal, Jolly Dragons, Kwantlen Polytechnic University Psychology Department, La Petite Mort, Learning Analytics Research Group, Lifespan Cognition Psychology Lab, Lost in Samara, Marijuana Party of Canada, MomMandy, Noesis: The Journal of the Mega Society, Piece of Mind, Production Mode, Synapse, TeenFinancial, The Peak, The Ubyssey, The Voice Magazine, Transformative Dialogues, Treasure Box Kids, Trusted Clothes.