As the dividing line between technology and finance continues to blur, players in the finance industry are challenged to adapt to new realities. In this interview with Mr. Tristán González del Valle Chavarri, Institutional Business Director at Renta 4 Banco and Chairman at Renta 4 Luxembourg, we tackle the challenges facing the finance industry, the investment climate in the MILA Market and Renta 4’s innovative investment strategies and services which are greatly tailored to the needs and requirements of their customers.
In today’s fast-paced business environment, what do successful directors like you have in mind every single day?
In my opinion today the important thing is to understand the customers better each day and to identify what their needs and expectations are. It is essential that clients feel confident, secure and see that there is transparency. Our job is to provide added value and confidence in the management of the client’s assets.
Specifically in the MILA market, our proposal is to transfer our successful Spanish business model to these countries, adapting it to the social and economic idiosyncrasy that each of them lives.
With your professional career mainly developed in the finance industry, you’re a witness of the drastic changes within this sector. What do you think are those developments that have the greatest impact on the present and future landscape of this industry?
After the 2008 financial crisis, it has become clear that the market has shifted towards greater transparency and risk control. The accessibility of information by clients has to be one of the basic pillars of the industry and all these changes have led to a general decline (which has not yet ended) of the costs for the final customer.
What you stated above proves that the finance industry has indeed evolved. Being the Institutional Business Director at Renta4 Banco, how do you and your team approach the aforementioned developments?
Renta 4 is always very active in terms of training and we have been making a very significant effort in the last six months – training directors and sales representatives about the implications of MFID2 (Markets in Financial Instruments Directive II) and the consequences and effects for the clients.
From the institutional department we have adapted all the documentation material, presentations, etc. so that the investors have maximum access to the information with complete transparency.
Renta 4 Banco is one of the top financial institutions that offer investment products and services. What makes your investment strategies and services unique and first-rate?
When someone gets inside a Renta 4 branch he’s talking only about financial services and products and never about other banking commercial products. Also one of our main goals is to educate our clients and prospects on the financial industry, regulations and other relevant issues.
In relation to your products and services, can you give us a succinct idea about Renta 4 Banco’s investment platforms?
Renta 4 Banco stands out among its competitors for its high in-house technological development in the late 90s. One example of our continuous development is our Fondotop platform, considered one of the best distribution platforms in the market, in which the client can search, analyse, choose, buy and manage the funds that he wants among more than 4,100 funds. In Fondotop the client can find a qualitative and quantitative analysis to build up his portfolio. On the web the client can also find online seminars on funds to be trained, because we believe that customer education is fundamental.
How efficient are your platforms in addressing the investment needs of your retail, institutional and international clients? How do you make sure they have comprehensive investment portfolio/profile?
In our platform clients (retail and HNWI) find updated information on regulations, investor profile, products and analysis. Seventy percent of the income on intermediation from private clients comes from the platform. Institutional clients don’t use the platform.
Let’s talk about the MILA Market. In 2016, you launched the MILA Fund. What’s significant about the investment climate of the countries of the Pacific Alliance that you pioneered an investment fund therein?
In Renta 4 Luxembourg we launched this vehicle convinced of the high growth potential of the MILA region for the coming years and the attractiveness for European and also South American investors to invest in countries that are showing stability in economic terms and political maturity. In this way, making our MILA fund available to all investors is a clear sign of our confidence in the region’s integration project. For example, Chile, Colombia, Perú and México have better investment grades by the qualifying agencies than many Eurozone countries.
Since then, what are the significant developments/events that transpired both for your company and the market itself?
Supported by the research local Renta 4 teams in Chile, Peru and Colombia, during these two years we have focussed on positioning the fund in undervalued companies and those with the best future prospects and visibility. We maintain our investment style of investment process (own analysis) and fundamental value.
It has been two complex years for the region due to the involution that has brought about the return of trade protectionism on the part of the United States, and that has impacted the confidence of investors, especially in Mexico. In our experience, this type of setback is only circumstantial and becomes a great opportunity when viewed with more perspective towards the future.
The continuous growth of these markets in the last 10 years is creating an emerging middle class that is consolidating consumption in these countries.
What’s the difference between investing in the MILA market and in the Eurozone?
Markets are increasingly global and the differences tend to be reduced more and more, however, there is still a clear divergence between the perception that investors have of what represent developed and emerging markets. Despite this greater convergence, the view remains that markets like MILA enjoy higher expected returns in exchange for being more exposed to the oscillations of the cycle. The stability of the middle classes and the huge potential of their private consumption represent a big opportunity for companies.
However, we must not forget that the average age of these countries is much lower than that of the countries of the Eurozone and the labour market shows increasing employment rates.
With the increasing complexity of the playing field, how do you make your company resilient? What helps you counterbalance the degree of risk?
Renta 4 is an independent bank, offering exclusively financial services, without risk to the Spanish market and is formed by a network of 61 domestic offices and four international branches in which there are teams of experienced professionals listening to the client and that leads the client to feel safe.
Our investment team (research and fund managers) is highly qualified and experienced – a result of this is the significant number of awards obtained.
To achieve resilience, how do you make sure that your approach toward your customer relations and innovation is holistic?
Without excesses we try to have an as wide and complete range of products as possible. In our Luxembourger range of funds we have classes available for different types of clients (retail or institutional) and in the two main world currencies (euro and dollar). Specifically customers of MILA countries still prefer to have their investments in USD.
We are constantly listening to the needs of our customers in order to tailor made our offer to their requirements.
Do you think there will still be major shifts within the industry in the coming years? In what aspects?
Yes, clearly there would be continuous change. The industry is always subject to move – shifts that may come from regulators, technology or customers. It is clear that these changes should always be based on good understanding but what will be the next one I don’t know, unfortunately I don’t have the crystal ball.
Many believe that at this moment there is an excess of changes due to regulators but I believe that if it is for the benefit of all parties, the industry will always be open to changes for the better.
As Renta 4 already has exposure in various markets, what are your future undertakings/projects?
Our goal is to consolidate the international expansion that started in 2012 and finished last year with the launch of the “Fiduciaria” in Colombia. Our main objective is to integrate the business models of those three countries to become a Regional structure for South America.
Luxembourg has a significant role in the consolidation of these projects. Today we’re a UCITS Man Co1 with different strategies and we plan to develop the Man Co to a “Super Man Co” (UCITS + AIFMD2) to be agile and dynamic in developing alternative strategies for our Institutional South American client.
Within the span of your professional career, what are the most significant things you have discovered/learned? What would be your advice for those aspiring to succeed in this industry?
What I have learned in these years is that one cannot remain seated in his achievements, as the world in which we live and work changes more and more quickly. For the one that does not change, does not evolve, quickly the market drop him off.
So first of all my advice to those who aspire to succeed in this industry is that I recommend maximum honesty and transparency, have a strong spirit of flexibility, be curious to try to have total information. It’s “much more important to sleep well than to eat well”.
There could be people out there who are wondering about the status quo of the investment industry, what message do you want to get across to them?
The client has entrusted us to manage their savings. As such my only responsibility to them is to manage risk and not to buy risk.
Thank you, Mr. Gonzalez del Valle Chavarri.
About the Interviewee
Mr. Tristán González del Valle Chavarri is currently the Director of the Institutional Business Development of Renta 4 Banco Group in Spain, Latin America (Chile, Colombia, Perú) and Luxembourg. In the past he has been Partner in Belgravia Capital and had other important experience in Latin America and in Southern Europe (Italy, Portugal). Mr. Gonzalez del Valle speaks fluently English and Italian.