ALESSANDRO FOTI, Amministratore delegato FINECOBANK

Well, certainly the volatility of markets always plays an important role in online brokerage activity, because it's obvious that the more volatile the markets, the more active clients are. But in this case, first of all, I'm always sorry to see that the term used to define this type of activity is always 'online trading,' which is a bit of a diminutive, as if it were born as a playful, speculative activity. In reality, we are witnessing a profound change in the market. What we are seeing is that alongside a greater activity of perhaps more speculative clients, there is a clear trend of a large increase in direct participation in the markets by what we could more appropriately call active investors. The big new thing is that alongside a clientele that interacts with the market in a more traditional way, we are seeing a new type of investor who wants to interact more directly. So we are talking about clients who may make few transactions in a month or even a year. I think a signal of this direction was given by the recent issuance of the BTP Italia, where we had clients who subscribed about 600 million euros of BTP Italia, all directly done digitally, with average ticket sizes of around 24,000 euros. So it is evident that we are witnessing a phenomenon that is arriving in Italy now, but the same phenomenon we have seen in the United States or England. For example, look at an operator like Schwab in the United States, an extraordinarily successful operator that combines a large growth of what we call the more traditional activity, where there is interaction, more physical and direct participation, and also a more direct participation of the entire company. Because what needs to be debunked is the idea that the two situations are incompatible. Often the same client who has a very satisfactory relationship with a financial advisor does part of his activity directly. So it becomes a self-reinforcing model, where a extraordinary synergy is created between a physical channel and a digital channel. So a new market structure is emerging, and we are truly in a privileged position to see this change because we are the reference platform of the market, so we see changes in real time.

First of all, we have great gratitude and esteem for what was our parent company until last year, because UniCredit was an extremely attentive and respectful shareholder of our characteristics. If I said otherwise, I would not be an honest person. But it is undeniable that no longer being part of such a large and ramified group at the European level has further improved our efficiency, speed, time to market, ability to adapt. So we have less bureaucracy, we have become even more agile and flexible. The other very relevant aspect is that I believe, as a general principle, a corporate governance of a public company is by far the most efficient because it best satisfies the needs of the three stakeholders of the company: shareholders, those who work there (employees and consultants), and clients. The public company has the most efficient form of governance. Proof is that many of the world's great successful corporations are public. Because the market is a ruthless and ferocious master, but also very rational. It wants important and growing returns, but sustainable over time. If I increase my profits significantly this year by taking a shortcut, for example by treating my clients in a less transparent way, taking advantage of their lack of sophistication to charge excessive commissions, the market does not like that because it believes this activity will jeopardize future sustainability. So it is a very efficient model where there is no risk that a minority reference shareholder might pursue interests that are not necessarily those of the market itself. Coming to the specific point for financial advisors, what we are seeing is that attention and interest in our company is certainly growing a lot. For a very simple reason: it is another dividend of recent events. Many consultants in the banking industry have realized that when they decide to choose a new partner to work with, one of the fundamental elements to consider is the ability of this partner to offer modern, evolved services that are in line with the revolutions under way. For example, during these months of lockdown, the fact that we were able to offer service quality without any discontinuity is an extraordinary value. Because if I am a consultant who intends to do this job for a long time and wants to serve my clients adequately and efficiently, it is evident that a company like Fineco turns out to be the natural landing point. So we are finding that awareness of the importance of efficiency, capability, speed, and flexibility of a company like Fineco is growing a lot.

Well, clearly no, because these are the basic rules. No asset manager, when we talk about, I don't know, our main shareholder currently is BlackRock, which should be around 10% of the share, then Capital Management, etc... One of the cornerstones that governs the activity of all large asset managers is a total and absolute separation between their investment choices and their commercial activity. If this concept were to be questioned, I think the entire industry would be overwhelmed. So we are talking about a very clear separation: commercial activities go one way, investment policies go another. So we work in total and absolute independence. When we decide how to assemble choices for our clients, we do so based on objective, quantitative criteria that allow us to give our clients truly the best available on the market.

In facing this, one must be extremely lucid and pragmatic. On the one hand, the effort to channel savings towards the world of Italian SMEs is certainly meritorious. On the other hand, we must also be very careful to do it in a balanced way. What I mean is that when we talk about illiquid products, the word itself says it: illiquid product means it is a product that tends to remain in the client's portfolio for a very long period. It is necessary that the client is perfectly aware that he will not be able to have the availability of that liquidity. So this must represent a percentage of his wealth consistent with his financial equilibrium. In the placement process, we must absolutely avoid any risk of misselling. We must explain to the client exactly what the opportunities and risks are. Let's go back to the famous concept: if I propose to the client a solution of this kind, I must make it very clear that he must think that he cannot dispose of these funds, he must not need them for at least five to ten years. Second, as I said before, it must be a reasonable percentage of his portfolio. Third, we believe that the reference market is for clients with a minimum amount of wealth. So when you put all these components together, the so-called target market remains a relatively limited market. You cannot think that this is a market of tens of billions, because otherwise the concepts I mentioned would not be respected. Clearly, if I have an approach that is not particularly respectful of the rules, for example if I tell the client, 'Don't worry, I'll buy it, there's no liquidity because I guarantee you that there is a secondary market on this activity,' in our opinion, that is not a correct way to behave because we know very well that it is not true. One can try to make a secondary market on these things, but cannot guarantee it. So it is a very different thing. So it is certainly a meritorious direction, but it must be approached with the right responsibility, awareness, and respect for the client.

First of all, thank you for this question because it is really very important. I'll try to answer with facts and numbers, because in the end that's the best thing. Next Thursday, this week, there is an event organized by Borsa Italiana called 'Sustainability Day,' which is dedicated to investors with an ESG approach. They gather investors from all over the world to meet Italian companies analyzed from this profile. I remember that the first edition had a few investors, but not many. This year, what really surprised us is that there is an incredibly large participation of a very high qualitative level. So what does that mean? It means that now the ESG discourse has not only become a medal to pin on the chest, but it is becoming the main criterion through which large investors decide to invest. And for a very pragmatic reason: because in the end, if a company has responsible and sustainable behavior, it is ultimately a more profitable company. Today we return to the public company discourse: a public company has a governance system that is more efficient because the market forces you to be sustainable in what you do. If you engage in unfair commercial practices, the market will punish you. So what I think is that we have passed an inflection point, especially recent events have shown that companies that have set their activity with long-term objectives consistent with the great trends that move the world, and done in a respectful manner towards their clients and the context, are emerging as the winning companies. So we not only believe in it, we believe in it very much. In fact, tomorrow we will have a press conference on the topic: our Irish asset management company will hold a press conference explaining the guidelines it will follow on these issues. Because the concept of ESG will become more and more the North Star of our activity. And when we talk about our activity, it is not only how you select investments, but also, for example, when we talk about asset management, it's everything. In our view, the concept of sustainability is also very much linked to how you relate to clients. For example, an approach characterized by transparency: I can decide to take advantage of the lack of knowledge of my client by being not transparent. That, in my opinion, is not an ESG approach. Or the client must pay a fair price: I should not take advantage of the fact that the client does not yet have a proper level of financial literacy and charge a commission level that is not coherent with the service being provided. Also, there is the famous issue of performance fees that are completely disconnected from the actual performance the client has had. That is also absolutely unsustainable. So all of this falls under the ESG theme. So I would say it is something that is destined to deeply change the industry, as I said before, and this boom in registrations for Borsa Italiana's Sustainability Day demonstrates it, because if you look at the list of investors participating on Thursday, it is truly impressive.

When it is often said that we do two different jobs, we are talking about operators that are among the most sophisticated in the world. The success of their activity demonstrates it. So if you look at their forays into the world of credit, they are very careful not to take on all the more problematic aspects. They make agreements, for example, with JP Morgan, with Goldman Sachs. They know very well that becoming a bank directly, taking on the anxieties of the activity, involves a whole series of very complex issues, including relationships with regulators. So they are taking a very tactical approach. They interface with what interests them. Also, here, I don't want to enter the polemic of whether they are too big or too small. I will only make a more general, philosophical consideration. Experience shows that size and economies of scale are important, but ten times more important is the ability to offer high-quality services that truly meet the client's needs. In any industry, whoever can find the conditions to offer highly performing services that fully satisfy the client, retain them, will live peacefully even in a world populated by giants. The real problem is if I am an operator who has a less saintly relationship with the client. Warren Buffett used to distinguish companies into two categories: commodity companies and franchise companies. Commodity companies are those that offer a standardized product where the main competitive lever is price, so the client doesn't see a big difference. Franchise companies are those that offer something unique to their client. They can be in any industry. Clearly, when you are a franchise company, you are in a situation of great tranquility, as long as you can maintain this uniqueness over time. So it's not so much a point of external competition, but each one must do a self-examination to understand if their business has franchise characteristics, as Buffett said, or commodity characteristics. If it has franchise characteristics, work to maintain and expand it. If it has more commodity characteristics, it is certainly a cause for concern.

First of all, we didn't invent anything new, because if we look at the experience of markets that are certainly more advanced than ours, like the American market, team work is something that is now quite well established. Evidence shows that a team tends to have a level of profitability and productivity, and therefore profitability, that is on average almost 30% higher than the sum of individual advisors working on their own. Why is that? First of all, the team allows you to pool different professional skills. We know that financial advisors are not all the same; each has his own characteristics. One may be particularly expert in certain topics, another may be more skilled in dealing with generational transition issues, another may have great technological skills, and so on. That's the first point. Second, it allows you to further free yourself from spatial and temporal constraints. We are talking about teams that can be cross-cutting; there can be teams of advisors working in different regions. For example, the new dimension emerging is that clients are increasingly fluid. Just imagine that with the remote working discussion, we will have clients who may spend a couple of days a week in a place that is not necessarily their office or home. The team allows you to create, for example, an excellent generational relationship: advisors who are perhaps particularly experienced can work together with younger colleagues, who may have great skills in acquiring new clients but have structural limits in developing them. So it means unleashing extraordinary potential. Financial advisors are obviously efficient operators, able to adapt to any type of market or context. The team is something that allows their natural abilities to develop in a very, very effective way.