In a statement today (16 January), it said Germany, with its sophisticated financial ecosystem, is a key market for Allfunds, offering vast potential for growth and innovation in WealthTech solutions, and additional scope to roll out platform and digital services in line with growing demand for these types of solutions.

Henrichs “will play a pivotal role in delivering against these goals, strengthening the company’s positioning and accelerating its growth in Germany. With an extensive track record of successfully growing and scaling businesses in the asset and wealth management sector, he brings deep market insights and a robust network of industry relationships”.

Previously serving as CEO of FNZ in Germany and Fondsdepot Bank, he also has extensive experience with banking regulators in Germany and Europe. His background as a CFO and various board roles in Software, Cloud, and Finance businesses across Germany, Luxembourg, and the UK further underscore his ability to drive Allfunds’ success in this key market.

Juan Alcaraz, CEO and Founder of Allfunds, said: “Understanding the unique needs of our clients in Germany is key to keep building on our success. With Sebastian’s deep knowledge of the market and extensive expertise, we are well-positioned to deliver our value proposition effectively and strengthen our position in this critical region.”

Henrichs said: “I am thrilled to advise Allfunds and contribute to their growth strategy in Germany. Leveraging Allfunds’ leading technology, expertise, and industry know-how, I look forward to collaborating with Allfunds to deliver innovative solutions that meet client’s needs and drive success in this exciting market.”

These influences have sharpened the industry’s focus on what the future holds, and how firms can continue attracting and engaging their clients amid such transformative changes.

As the industry continues to grapple with shifting dynamics and a turbulent market environment, we see three critical influences that firms should be prepared for in 2024: ongoing industry consolidation, a continued shift towards outsourcing, and evolving (and increasingly complex) client demands.

A shrinking landscape

Earlier this year, a survey by PwC found that by 2027 16% of existing asset and wealth management (AWM) organisations will have been subject to consolidation in one form or another. For this to be the case, consolidatory activity would need to unfold at twice the pace we’ve seen up to now.

Firms are increasingly recognising the benefits of consolidation, in terms of the opportunity it presents to capture assets from a broader range of portfolios, and to deepen existing relationships with clients and intermediary partners.

In 2024, we expect vertical integration to remain a key driver for consolidation, as firms look to capture the entire investment lifecycle from initial client engagement through to provision of investment products and assets administration. Such tie ups allow firms to cement relationships with end investor clients (and their intermediaries) from initial assets accumulation through to more sophisticated bespoke portfolio management and decumulation solutions.

See also: Have interest rates impacted M&A deals in the advice market?

Consolidatory trends should be understood as responses to the need to achieve greater scale efficiencies in a competitive market. With underlying industry influences – such as fee compression and client demand for more sophisticated products – not fading, we can expect the pace of consolidation to persistent in kind.

For firms not pursuing consolidation for scale, partnerships with third party providers that can combine scale, technological dexterity and access to a wide set of investment products may have similar influence on industry activity in the coming year.

Other key imperatives will be access to data-driven insights and analytics into portfolio performance, plus the availability of client dealing, assets administration and custody.

Easing the burden

We’ve seen how volatile market conditions give rise to equally complex client demands and consolidation. This also translates into greater appetite to offload certain operational functions to external providers.

Outsourcing is not a new concept, but some of the practicalities have become more nuanced in an increasingly data and tech-enabled industry.

Data and insights into investment activity and fund flows have become central to firms’ competitiveness. Outsourcing these requirements to a single strategic partner means firms can effectively leverage the more technical elements of client servicing while focusing on delivering best-in-class advice.

See also: The shoehorning ghost that could haunt consolidators

In 2023, we began to see indications of firms embracing such outsourcing more proactively and we expect this to accelerate in 2024, as providers’ ability to harness data becomes more advanced. Firms that integrate white-labelled tech interfaces into client portals, to generate data-led functionalities and enhance end-clients’ experience, will see this become an important differentiator in their efforts to retain clients. In turn, firms themselves can benefit from the enhanced insights into financial performance, improved transparency and better reporting that outsourcing can deliver.

Throughout 2023 we have seen demand from clients who are looking to work with a single, strategic partner in outsourcing value-generative investment lifecycle functions, as they seek to unlock even greater efficiencies for their end customers.

Appetite to evolve

Clients continue to prioritise performance, coupled with service differentiation, and are clear in their expectations of their advisers when it comes to catering to these interests.

This is exemplified through a concerted shift in client appetite for private market assets – something which has been supported by the FCA’s recent authorisation of the first UK LTAF. With clients focused on diversifying their portfolios to provide protection in the face of economic volatility, demand for alternatives will only strengthen.

The second, relating to the adherence of UK-based funds and assets to stricter ESG guidelines, is set to be driven by regulatory change in the form of SDR. Products marketed as “sustainable” must do as intended, be appropriate for end clients and ultimately generate returns to mitigate the risk of greenwashing while also ticking certain boxes relating to Consumer Duty.

In both instances, it is clear that advisers and their platforms will need to remain agile and able to innovate rapidly to meet changing market demands that are now receiving local UK regulatory support.  Bringing together previous themes where the twin demands placed by regulatory and technological evolution coalesce, another eye-catching development in 2023 was the announcement of the UK Treasury and FCA’s support for UK fund providers to offer tokenised fund vehicles.

We don’t anticipate this market evolution to slow in 2024 and as such, firms’ ability to provide access to new investment products while also offering more insightful data analytics vis a vis relative market performance and ESG impacts will be key to attracting and retaining new clients throughout their investment lifecycle.

Known as the Allfunds Private Partners Programme (APP), Allfunds has already onboarded firms including Apollo, Blackstone, Carlyle, Franklin Templeton and Morgan Stanley Investment Management.

The initiative comes after Allfunds launched its Allfunds Alternative Solutions team earlier this year, which is focused on helping distributors access alternative investments.

“We are excited about this project and unlocking the full potential of APP and believe that this form of collaboration with our partners is key in developing solid relationships and effective solutions,” said Juan Alcaraz, chief executive of Allfunds.

“We are eager to prove our disposition and put our expertise to work for this ambitious project that will surely bring new business opportunities for all those involved. We would also like to thank our initial members for joining us in this enterprise, as well as for their continued trust and support in Allfunds.”

“Allfunds has a deep commitment to quality and client care and the Private Partners programme is a natural evolution of that purpose. We want to set our clients up for success and our team will be dedicated to ensuring their needs are met with utmost care and attention to detail,” said Borja Largo, chief fund groups officer and head of Allfunds Alternative Solutions.

“Allfunds’ initiatives, whether building a totally new department or an innovative partnership programme, are just the natural evolution of Allfunds’ ability to navigate disrupted and fragmented markets, with the goal of providing easy access to alternative products, that historically never been available to distributors.”

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This is following demand among its clients for better access to alternative assets and private markets.

Although Allfunds already has experience in this area and assets under administration in specialised vehicles, it was a service performed only on an on-demand basis.

Borja Largo, chief fund groups officer at Allfunds, will lead a team composed of a combination of new hires and existing Allfunds employees, who will drive the company’s growth in services related to illiquid strategies.

Allfunds Alternative Solutions will initially focus on improving operational efficiency for all investment vehicles.

Juan Alcaraz, chief executive of Allfunds, said: “This is another step in our ongoing effort to have the best value proposition in the market and to enhance our one-stop shop model, covering all our customers’ needs in a single point of access. We have been developing our alternative offering for some time and believe that with the combination of our experience, human capital and technology, we are perfectly positioned to capitalise on these opportunities”.

This comes weeks after European investment company Euronext withdrew its €5.5bn (£4.84bn, $5.82bn) offer to acquire a 100% share capital of Allfunds.

This comes days after the firm said it was in talks with Allfunds over a deal.

But on 28 February 2023, Euronext confirmed in a statement that it had informed the board of Allfunds that it had withdrawn its indicative offer.

Allfunds also said in a statement on 28 February: The Allfunds board considered that the terms of the proposal were inadequate.

“Allfunds subsequently entered into discussions on terms with Euronext but no agreement was reached and discussions have been terminated.”

Acquisition spree

Allfunds has been busy with acquisitions in the global wealth and investment market.

In August 2022, it bought a majority stake in the share capital of MainStreet Partners, a platform that offers a range of ESG products including ESG investment portfolios as well as scoring and reporting.

Then in April 2022, the firm acquired Madrid-based fintech firm Web Financial Group for a total consideration of €145m.