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 Vania Franceschelli
Chairperson
Patrimonia 2024: what does this French trade fair tell us about the health of financial advice in Europe?
As rain poured outside, we held the Board Meeting of FECIF at the end of an exhibition hall in Lyon, France. In the hall behind us, some 8,000 participants (financial advisors, brokers and others) had gathered for two days in the annual Patrimonia trade fair – was this crowded hall a good sign for financial advice in Europe, or was it completely disconnected?
Strong display of French financial advice industry
Patrimonia is a vibrant beehive of a place, with thousands of financial advisors gathered for two days in Lyon. Part trade fair, part congress, it is the largest such professional gathering in France. It is the place where everybody meets everybody, and a good place to gauge the heath of the market.
Financial advice is apparently booming in France (as elsewhere on the Continent), which is not surprising: European households are saving more and more, as they worry about the impact of an ageing population on their financial security; and they are not getting the advice they need on such complex matters from high street banks – and not ready to take advice from the Internet either.
The French financial advice landscape has been consolidating rapidly in the past five or six years, as Private Equity firms have financed a wave of mergers, building a dozen or so consolidation platforms, firms with up to €20bn in assets under management. With over 6,000 firms registered in France, and new creations outnumbering the mergers, there is no shortage of consolidation targets. And if we compare with the UK market, which is home to over 30 consolidation platforms, the largest of which gather over €150bn AuM, there is still considerable room for growth in France.
PE firms as providers as well as shareholders
As a matter of fact, Private Equity firms were very visible in Lyon, with over 50 booths in the exhibition halls: they were as numerous as Real Estate investment firms and Life insurers, the staple of French household savings for a generation.
PE firms were in selling rather than buying mode, as affluent households advised by Financial Advisors constitute a growing part of these firms’ funding sources – and PE is a growing, dynamic and highly profitable part of Financial Advisors’ activity. PE investments have become a cornerstone of the investment strategy of affluent households, together with real estate-based funds and structured products.
The strong success of PER pension savings product
Another key element that contributed to the recent growth in the French market is the launch of a new form of pension savings product, the PER (Plan d’Epargne Retraite). PER was created by the “loi PACTE” in 2019 and brought together under a unified tax regime a number of existing vehicles, collective and individual, insurance-based and banking products.
PER was initially fed by transfers from previously existing pension products (PERCO, Madelin, Article 39, Article 83, etc.), as is often the case. But it rapidly took a different dimension, reaching €100bn quicker than planned, less than half from transfers. And one of the driving forces behind this success was the activity of financial advice firms with their clients (Groupe Premium in particular), and this was also behind the very successful recent LBO of employee savings and pensions specialist ERES Group.
In summary, the combination of household demand, a clear (and tax-efficient) product and the activity of financial advisors created a success story for the PER, benefiting all parties involved and helping to shore up households funding for their future retirement.
Could it show the way for progress across Europe?
As the new commission takes its place and considers its priorities for the five years to come, and as EIOPA seems determined to push for the development of pension savings across Europe, is there an opportunity for a successful reform? This would be a welcome ray of sunshine after the rain…
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