Calling for a rebranding campaign of `𝙋𝙧𝙞𝙫𝙖𝙩𝙚 𝘽𝙖𝙣𝙠𝙞𝙣𝙜 & 𝘼𝙡𝙩𝙚𝙧𝙣𝙖𝙩𝙞𝙫𝙚𝙨`
Private markets have always been huge compared to public markets.
According to CAIA Association estimates, private markets were around $18 Trillion in 2020!
The size of Private equity (one of the main private market subsectors) has tripled in the last decade.
Private credit is expected to grow 11% per year to $1.46 trillion by 2025.
Blackrock`s Private market portfolios with private market allocations for 2022 reflect the Big Asset manager`s thematic convictions. Allocations to Private Equity, Private Debt, Real estate, and Infrastructure are typically overweight Private Equity but at the same time diversification is the focus.
Historically, private markets have also been called Alternatives to distinguish them from the traditional assets that banks offer, public equities, bonds, etc.
Alternatives have been mainly accessible to HNW, family offices, and institutional investors for several reasons and mainly through the so-called Private Banking divisions of financial services providers.
Private Banking is a term that historically proceeds Alternatives.
It originates in the 1600s, when wealthy royal and noble families in Europe and England feared revolutions and confiscation of their assets and titles. The British royal family entrusted their wealth to Coutts (founded in 1692; the 8th oldest bank globally) and the Dutch royal family to today`s MeesPierson (part of ABN AMRO).
`Private` emphasized that it referred to private assets of royals and nobles and not to country assets. It was also needed to differentiate from Regular Banking focused on borrowing and lending to merchants and businesses at the time.
Nowadays, Private Banking and Wealth Management go hand in hand or are used interchangeably. Investopedia sums it up for us in a way that fits the 20th and 21st centuries:
Private banking consists of personalized financial services and products offered to the high-net-worth individual (HNWI) clients of a retail bank or other financial institution. It includes a wide range of wealth management services, and all provided under one roof. Services include investing and portfolio management, tax services, insurance, and trust and estate planning.
We clearly need to rename Private Banking as Fintech is all about personalized financial services to enable retail and businesses of any size to reach their respective financial goals.
Schwab was the first large incumbent to launch a subscription service ($300 flat fee and $30 a month advisory) with Schwab Intelligent portfolios and democratize access to advisory.
Zero commission trading of most publicly traded stocks is nearly normal, thanks to Robinhood.
Wealth-as-a-service is growing and soon it will start being embedded too.
Recently the Financial brand profiled a unique US wealth app for HENRYs (I don’t think of it as Private Banking as it feels so anachronistic and belongs to a society that still values casts) called Marygold & Co.
I am a big fan of ADDX out of Singapore and MAS regulated (ex-client) which is democratizing access to private markets (private equity, hedge funds, private debt, etc) by offering fully compliant access to accredited investors for now, for as a low as $10,000. They have even collaborated with Partners Group to offer the opportunity to invest in one of their flagship Private equity funds for as little as $10k (more on this partnership on WealthTech Talks — The Democratisation of Private Markets).
KKR, the other big private equity shop, has been testing the tokenization of its private equity funds on a PUBLIC blockchain (in partnership with Securitize). This is another milestone in the tokenization of private markets that will lead to getting rid of another anachronistic term, the so-called Alternative assets.
Time to throw away these names: No more talk about Private Banking and the Alternative investment category!
Who will dare to rebrand them and launch a campaign that conveys the unstoppable transformation that is underway?
Alternative investments will be more and more accessible and we should use their corresponding names. They are large enough to merit being called by their name as access to them is shyly improving. Just yesterday, Spiros Margaris joined the advisory board of a US Fintech, CARL App, democratizing access to the hedge fund industry for US accredited investors for as little as $20k. This trend is unstoppable.
Much like robo-advisory that was leapfrogged by incumbents when the tipping point arrived in time, the same will happen with Private Banking and Alternatives.
Our world is moving towards a revised version of the Investopedia Private Banking and Alternatives:
Personalized financial services and products offered to clients that includes a wide range of wealth management services, and all provided under one roof.
Services include investing and portfolio management, tax services, insurance, and trust and estate planning.
The only financial assets that could have remained under the allocations of `Alternatives` if you don’t want to get rid of it, are cryptocurrencies because they are young and not widely understood. Of course, cryptocurrencies for the most part are fairly liquid (between traditional exchanges and DEXs and with the exception of the ultra small cap cryptos). And ironically, all incumbents are looking to offer cryptocurrencies to their clients (custody, trading, lending etc.).
Who will dare to rebrand `𝙋𝙧𝙞𝙫𝙖𝙩𝙚 𝘽𝙖𝙣𝙠𝙞𝙣𝙜 & 𝘼𝙡𝙩𝙚𝙧𝙣𝙖𝙩𝙞𝙫𝙚𝙨` by launching a campaign that conveys the unstoppable transformation underway?
Will it be BoFa, Goldman Sachs, UBS, DBS, Revolut,…?
Revolut`s recent, 1st brand campaign titled ‘Your Way In’ aims to send a message of a world of banking that was previously closed-off. A world that Revolut empowers anyone to break in and get the same services as `the elite`.
Honestly, I didn’t get that message when I first watched the video campaign. Maybe because I am biased from Revolut`s compliance missteps and it seemed to me that it was about `Go fast and break things` or selling insurance for any type of unforeseen event.
Who will dare to rebrand `Private Banking & Alternatives`?
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