The 5 Priorities of Financial Advice


by Nicola Ronchetti

1. Securing the Savings of Italians

Italians need valuable advice to protect one of their most valuable assets: their savings. This need has become urgent for three main reasons. First: securing the acquisition value, holding cash at 8% annual inflation means losing money. Second, in finance, do-it-yourself isn’t for three: only 19% of Italians working as non-professional traders say they made money, so 81% lost money. Thirdly, investing means stimulating the real economy, activating a virtuous circle that stimulates the economy again and creates benefits for all.

2. Protection against risks

Only 10% of Italians are adequately protected against the most basic risks: home, health and life. It’s a widespread phenomenon, even among Italian curmudgeons. Over 20% of this universe, considered strategic for dozens of banks and networks of financial advisors, does not have adequate insurance to protect its assets and has not addressed the issue of generational renewal. The motivation is always the same for everyone: I keep cash for emergencies. By mitigating risk through adequate insurance coverage, some liquidity could be released and turned into managed savings.

4. Italian companies and entrepreneurs

In Italy, companies and entrepreneurs have many interfaces and many professionals, very few with a unified vision. One for money management, another for real estate assets, others for ordinary banking, another for access to credit, others for extraordinary financial operations, and finally a broker for insurance coverage. There are two schools of thought in this regard: 1) “holistic” advice that mixes protection, investment and credit; 2) Financial advice in “purity”. Both models record successful cases, there is no doubt that a lot depends on the type of client and the ability to manage different skills.

4. Financial literacy and confidence

All initiatives aimed at increasing knowledge and awareness of financial literacy are commendable: the better informed a person is, the more informed decisions they make and the more they become a satisfied and loyal customer. The work of the Edufin Committee, which also includes OCF, Consob, Ivass, Banca d’Italia and Mef, is commendable as, for example, initiatives promoted by private companies have increased tenfold during Financial Education Month. The future of banks, financial advisor networks and insurance companies will depend on their ability to face these challenges head on.

5. Proactivity and Communication

75% of Italians with an average current account balance of €200,000 have not heard from their investment advisor for more than 12 months. Together, the financial, banking and insurance sectors invest 10% in communicating what other sectors invest individually (automotive, FMCG, consumer durables, TLC). Communication and proactivity are not only of central importance economically, but also to strengthen the relationship of trust between supply and demand.

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