EVOLUTION OF FINANCE
gained from talking to a diverse group of interviewees, we will look at how these areas may evolve over the next three decades, with a particular focus on the skills required. We will also talk to the people who
head up the various related CISI forums and special interest groups. CISI Professional Forums provide, through regular in-person and hybrid events, an environment in which learning and networking activities are facilitated, and CISI members can discuss and develop ideas relating to their work, technical knowledge, professional and behavioural expertise, and skills.
Wealth management, bonds and fixed income From manual investment processes to streamlined participation In 1992, potential investors pretty much had two options – they could seek out a stockbroker to invest directly and exclusively in shares, or they could work with an adviser who might focus mainly on selling life policies, occasionally using funds directly from fund managers. Where stock trading was once regarded
as an activity largely reserved for professionals and the financial elite, increasingly easy access to financial markets via apps and online brokers has resulted in a surge in retail investing. According to Thomas Gehlen, market
strategist at Kleinwort Hambros, this evolution is encapsulated in the exchange- traded fund (ETF). State Street Global Investors, for example, launched the first US-listed ETF in 1993, providing straightforward exposure to key asset classes for institutional and retail investors alike. It “gave investors a convenient way to streamline their participation in such markets”, he says. We have come a long way from the
retail investor’s manual process of the early 90s – scouring newspapers for market-moving stories or hot stock picks, calling up brokers and working out order quantities, says Thomas. “Market access has largely been commoditised. Modern wealth managers do not sell portfolio management, they sell peace of mind.” A similar evolution has been playing
out in Africa, where in June 1996, ‘open outcry’ trading at the Johannesburg Stock Exchange – the largest stock exchange on the African continent – was replaced by an automated trading platform, says Idowu
CISI.ORG/REVIEW
Thompson, Chartered MCSI, group head for private banking at FirstBank Nigeria. Technology has played a significant
role in the growth of wealth management in Africa, with the rapid adoption of app-based investing platforms providing retail access to stocks and bonds, and a significant percentage of the population in Africa embracing digital assets, such as Kenya (8.5%), South Africa (7.1%) and Nigeria (6.3%), according to a June 2022 policy document by the United Nations Conference on Trade and Development. Idowu identifies the need for effective
regulation to ensure minimum competency standards where only suitably qualified individuals can use the designations ‘wealth manager’ or ‘wealth adviser’. He believes that the future of wealth management in Africa will be driven both by self-regulation and the “collaboration of securities regulators, central banks, and wealth management practitioners” to ensure that clients and their funds are protected. The adoption of common reporting standards and cross-border disclosures is also expected to further shape the future of wealth management in Africa as more countries sign up.
Bonds and fixed income Further afield, a review of the international bond market in Asia since the mid-2000s, produced by the International Capital Markets Association (ICMA), which liaises with regulatory and governmental authorities to help ensure that regulation “promotes the efficiency and cost effectiveness of capital markets”, says that “annual issuance of cross-border bonds from Asia has increased more than fivefold from US$107bn in 2006 to US$575bn in 2020”. It explains that this expansion “has been supported by an increasing and more diverse investor base as well as the established professional services provided by lead managers and listing venues”. Asian financial centres have also played
a larger role and gained market share. According to the report, “Concurrent with the significant growth of the Chinese bond markets, Hong Kong has overtaken non-Asian financial centres to become the most common location for Asian international bonds to be arranged.” ICMA notes that, pre-2010, mandates
were mostly granted to UK- and US- based banks. But by the start of this decade, Hong Kong banks arranged 34% >>
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