Open architecture as part of wider picture

For many individuals with assets to invest, their existing savings bank will be the first port of call. In this way, banks often have an opportunity to offer fund selection and asset allocation as part of a wider range of banking services.

According to Philippe Couvrecelle, head of Natexis Asset Square, Natexis’ parent company Groupe Banque Populaire takes a two-step approach: “To design a risk ratio for all types of investment solution from savings accounts to more complex funds, and to educate the investor throughout the different steps of the constitution of his or her wealth.”

The customer’s overall financial portfolio can be seen, Mr Couvrecelle illustrates, as a pyramid, beginning with the most basic savings accounts and reaching its summit with specialised products for diversification of an investment portfolio.

Investment advice begins, he told the Open Architecture Forum, with the drawing up of a customer profile based on personal financial characteristics (age, income and wealth, existing savings and asset allocation, and investment period) and on one key psychological characteristic – risk aversion.

This is then converted into an appropriate asset allocation, tailored to the risk profile. All funds available are rated on a risk/return scale from 1 (lowest) to 10 (highest), providing “a functional tool to guide customers through a range of products”.