Adequity: 20 years of expertise in structured products for wealth management advisors
Created in 2001 by Societe Generale Corporate & Investment Banking’s (SG CIB) Equity and Index Derivatives Department, Adequity is now the leader in France thanks to a range of structured products aimed exclusively at wealth management advisors (WMAs).
Serving affluent individual investor clients in search of the best wealth and financial solutions, wealth management advisors (WMAs) and independent wealth management advisors (IWMAs) have greatly expanded their business in recent years. Between 1998 and 2018, French people's wealth doubled from a median gross wealth of 79,000 to 163,000 euros (Source: Insee). The health crisis has reinforced this progression through an increase in the levels of savings.
In 2020, equities and structured products were the most popular asset classes for asset managers who sought to take advantage of the opportunities offered by these asset classes: boost portfolios in line with risk profiles.
On the ground, Adequity’s teams have been assisting asset managers since 2001, presenting and explaining the products, their structures, their referencing, etc. – all key information for offering the best investment solutions to their clients. “Societe Generale was a pioneer in positioning itself on this market", explains Jean-Charles Crucis, Deputy Head of Adequity. “Over the years, structured products have aroused growing interest from asset managers and their clients that search for increased diversification and high-performance investment solutions. Today, some twenty players occupy the WMA market, which represented in 2018 approximately 10% of the French savings market (source: CNCIF). In terms of asset classes, structured products represent an increasingly important part of their allocation”.
WMAs also assist their clients in their administrative procedures. Their skill sets include taxation and portfolio management and they rely on Adequity’s expertise to introduce clients to financial products adapted to their needs. “Adequity supports us with services such as regulatory monitoring, distribution of reports, continuous training on products – including their construction and valuation. In short, Adequity makes our job easier and saves us time”, confides one IWMA.
Since 2010, the interest rates drop to low levels has made it difficult to create capital-guaranteed structured products, which were a large part of Adequity's initial offering. As a result, clients' needs have shifted towards products that offer diversification, protection and recurring returns across several asset classes. At the same time, the Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) have tightened the regulations on structured products to simplify their understanding and standardize them.
Adequity has been offering since 2010 a range of products based on two different Autocall type products that have become its trademark:
- The "Yield" offer which provides security thanks to a mechanism that pays a conditional recurring yield even in the event of a market downturn.
- The "Target" offer which proposes larger coupons, but capitalized and paid only at the effective maturity of the product.
"The AMF and the ACPR have pushed for a standardization of structured products and thus favored the use of the Yield and Target offers, which are both easy to understand and available year-round. Following the decline in returns on certain asset classes, WMAs, in search of solutions, have increased the share for structured products, both for asset management or for corporate cash flow optimizing", adds Jean-Charles Crucis.
The increasing sophistication of the needs of asset managers and their clients has led Adequity to develop a dedicated asset management service through innovative, tailor-made solutions that meet clients' specifications and requirements in terms of amount, investment horizon, price target and performance. This management is based on the bank's recognized expertise in derivatives and structured products, as illustrated by the Structured Retail Products (SRP) awards of the best European bank in 2021, best bank in structured products and derivatives and in the Autocall category in particular.
In 2020, Adequity recorded assets under management of 3.5 billion euros as of January 1, 2021 and inflows of 1 billion euros: a nice way to celebrate 20 years of serving its clients.