Last week, several asset and wealth managers met in Lyon for the Patrimonia convention. This was an opportunity for all the players to present their latest products and innovations, and to meet and discuss the hot topics of the day.

There is no shortage of issues for discussion in the current climate, to put it mildly. Of course, inflation was at the centre of the debates and of the solutions presented. Faced with rising prices, particularly in Europe, financial advisors are looking for ways to make money for their clients. This situation is exacerbated by the fall in returns of euro funds, which had long been the key to the French savings market.

Omnipresent private equity

In response to this quest for yield, one of the big trends in the French market is the tidal wave of investment solutions in unlisted companies. Funds previously reserved for institutional investors – in private equity, private debt, real estate and infrastructure – are now partly accessible to retail investors. Altaroc, Moonfare, Arch, AirFund… not a week goes by without a platform or a new player launching on the French market to ‘democratise access to unlisted funds’.

The demand for this asset class is massive among wealth managers, private bankers and family offices, according to several recent studies (AFFO, Kantar, Aprédia, etc).

‘Individuals are looking for yield and diversification but also want to make their savings work. The unlisted sector offers them this possibility because it helps local companies to develop,’ said Frédéric Zablocki, president of Entrepreneur Invest – a company specialising in the management of unlisted funds – during a round table at Patrimonia.

But private equity is not the only asset class that is attracting the attention of the French financial market.

Time for crypto?

Melanion Capital, Just Mining, Arquant Capital and Coinhouse were among the many cryptocurrency players at the Patrimonia event, evidence of how important digital assets have become in the French financial landscape.

‘French crypto companies are in pole position to serve European demand,’ said Faustine Fleuret, president of the Association for the Development of Digital Assets, during the closing session of the Lyon event.

This feeling is shared among the French crypto-sphere, which believes France has long been ahead of the game in its regulations, enabling the development of many players.

Even the traditional finance industry has changed its perception of crypto. There are still some doubters, most notably independent financial advisors or networks, but institutional interest is proving to be a game-changer.

Recently, ‘the merge’ has accentuated this trend. This is the name given to the transition by Ethereum, the world’s second-largest blockchain, from proof-of-work to proof-of-stake – regarded as more secure and, crucially, less environmentally intensive.

For Benjamin Dean, head of digital assets at WisdomTree, it could be ‘a game-changer for institutional investors’. The increasing number of French asset management companies showing interest in these investments reinforces his view.

ESG still in focus

It’s impossible to talk about the French asset management industry without talking about ESG. It is at the heart of many new products launched in recent months. Asset managers have to take non-financial criteria into account, and Europe intends to be the leader on this issue.

In France, the much-criticised SRI label is being overhauled. But Citywire France understands that progress is not good. A source said: ‘We are moving towards a label with a rating system that risks being even more incomprehensible. And the level of requirement targeted does not seem ambitious enough.’

This opinion is shared by almost all of the key players we met. They raised the question of how useful this label is.

But time is running out. The Mifid II review came into force for banks and insurers last August, and from 1 January next year, it will be the turn of independent financial advisors. This review requires advisors to ask clients about their sustainable and responsible investment preferences. They will then have to propose investment solutions compatible with these preferences.

Behind the scenes, most say they are not ready and that the regulator has unofficially assured them there will be some wiggle room in the coming months. However, off the record, many say they are unprepared to comply, as it is of no interest to their clients. Will this argument hold weight when the regulator comes calling?