Annual Report 2018
Boldly Looking Forward
The keys to future success are a proactive approach and far-sighted decision-making. We face the future head-on to ensure we can go the extra mile for our clients. In a rapidly changing world, we trust in our abilities and look optimistically to the future – a future which we are proud to be boldly shaping.
Striking the balance between taking new paths and developing existing approaches is vital for our business success.
Striking the balance for a successful future
Although 2018 was a difficult year, Union Investment’s assets under management held steady at the high level of €323.4 billion, contrary to the market trend, and the company recorded an extremely good operating income of €502 million. To maintain this strong position and continue to grow profitably, we must invest in the most important areas of activity. We need to strike a balance between opening up new growth areas and developing existing lines of business.
Once again in 2018, Union Investment’s business performance was characterised by growth. At the same time, our environment posed more of a challenge than in previous years. Changes to the rulebook in geopolitics, in monetary policy and in the global economy are combining with the challenges of low interest rates, digitalisation and regulation which we have already been facing for some time. This situation was to be expected, but we were surprised by how fast it developed, particularly in the final quarter of last year, which was reflected in the performance of many Union Investment funds.
The pace of change in our environment will continue to increase. As an asset manager, we see this as both an opportunity and a risk. In order to continue to grow profitably in the coming years, we need to ensure stability, soundness and structure in our core business activities. But we can’t afford to stand still. We have to be dynamic, flexible and proactive in some areas, we have to anticipate changes at an early stage, assess them, and react quickly and boldly. Striking the balance between taking new paths and developing existing approaches is vital for our business success.
The growth areas of tomorrow
Our business is built on two pillars: institutional business and long-term relationships with 4.5 million private savers.
With institutional investors, it is clear that the topic of sustainability will dominate business in the coming years, likely becoming one of the major drivers of growth. The portfolio of sustainable investments at Union Investment rose from €5.9 billion in 2013 to €41.4 billion last year. This alone demonstrates the momentum in this business area. Furthermore, we are committed to our role as an active shareholder – to actively promoting good company management using the funds which are entrusted to us. We already hold over 4,000 conversations with companies each year. And our appearances at the Annual General Meetings of important DAX companies are well-known. This will continue in the future.
While asset managers are operating in an increasingly challenging environment, the opportunities still outweigh the risks.
In the private banking segment, despite the low interest rates we’re seeing, we can still win over people who have little experience with securities by offering them diversified fund investment opportunities. We have focused on three particular areas for a number of years: asset accumulation, asset structuring and pension provision. We have seen rapid growth in recent years in asset accumulation in particular. Relatively few institutions make this the focus of their market development strategies, as many of our competitors find the business too fragmented. Due to our bold decision to focus on asset accumulation, among other factors, the number of conventional investment savings plans at Union Investment has almost doubled within three years to around 2.3 million. In other words, we have provided over 1 million new investment savings plans in the last three years. Together with Riester pension schemes and capital-forming payment plans, the total number of plans had grown to 4.8 million by the end of 2018. This shows that what we call “the evolution of saving” is on the right track.
While asset managers are operating in an increasingly challenging environment, the opportunities still outweigh the risks. In this company report, you will find numerous examples to demonstrate that Union Investment is well equipped for the challenges of the future and is optimally positioned to take advantage of the many opportunities the market still offers.
As the market leader in sustainable investments, we were well placed to benefit from the rise of sustainability.
Building a sustainable future
Sustainability has been one of the most important societal issues of recent years — and it looks set to remain so in the future. For us as asset managers, sustainability has long gone from being an abstract concept to an economic necessity.
The importance of sustainability is becoming ever more apparent in all areas of society. At the moment, the focus of public debate is on climate change. And this is understandable. The Global Risks Report published by the World Economic Forum at the start of the year shows that four of the five greatest threats to our society are closely linked to changes in the climate. This emphasises the need for a transition towards a more sustainable economy. As this transition unfolds, we consider it crucial to take into account all of the dimensions of sustainability: the environment, social responsibility, and corporate governance.
Politicians are also holding the financial sector accountable as a driver of a more sustainable economy. The EU’s action plan on sustainable finance, published in March 2018, calls for all investment funds — including those which are not classified as “sustainable” — to be subject to minimum requirements regarding the environment, social responsibility and corporate governance.
As the market leader in sustainable investments, we were well placed to benefit from the rise of sustainability.
The transition is in full swing. Of all the invitations to tender for investment mandates which we observed in the institutional sector in 2018, a quarter included sustainability considerations. The proportion is even higher among foreign investors, in particular in invitations to tender for shares.
As the market leader in sustainable investments in Germany, we were well placed to benefit financially from this rise in the importance of sustainability. Over the last four years, the assets under management which we hold in sustainable mandates and funds have increased five-fold to around €42 billion. In 2018 alone, Union Investment recorded growth of €7.9 billion in this field.
The sustainable transformation of the economy creates opportunities and minimises risks
The opportunities offered by a sustainable transformation lie in an overhaul of industries as well as in innovative technologies. Old business models are being replaced by new business ideas, products and services. Alternative energies, high-performance storage technologies, efficient energy carriers and innovative mobility concepts are just some of the areas in which emerging companies require capital and in which additional opportunities for investment arise.
Sustainability standards can also be used to significantly improve the analysis of investment risks. Acting as a sort of advance warning system, environmental, social and governance criteria can make a tangible contribution to performance by evaluating factors which go over and above the conventional investment analysis.
Union Investment is in a strong position and continuing to invest
As a pioneer of sustainable investment, we set ourselves on the right course at an early stage. We are investing in the expansion of our sustainability competences and systems, with a focus on interlinking conventional investment analysis and ESG research. This does not mean that in the future all Union Investment funds will have specific filters, like our sustainability funds, which have a correspondingly limited investment universe. But it does mean that, alongside the conventional valuation figures for a company, the analysis will also include the ESG criteria in order to thoroughly integrate sustainability factors into the investment processes. Systems such as our own sustainability platform SIRIS, which we have used since 2013, form the basis for this.
We are also playing a leading role in real estate management. In the autumn of 2018, we launched a comprehensive energy monitoring system for our 375 commercial properties. This provides the foundation for establishing concrete potential for savings along the entire value chain. Through our Manage to Green initiative, we have also set ourselves the target of reducing the carbon emissions of our property portfolio by 80–95% by 2050.
We are convinced that we can actively support the much-needed sustainable transformation of the economy on the basis of these and many other measures. All for the benefit of our customers.
As an active, fundamental asset manager, we have to find the right answers to the questions arising in rapidly changing market conditions in order to stand out from the competition and perpetuate our current success.
Transformation: an undeniable asset
The developments which shaped our activities in 2018 and will continue to play a role in 2019 are the late-cycle economic situation worldwide and the societal megatrends of digitalisation and sustainability. How are we securing our position of strength against this background?
Disruptive technologies, changing customer behaviour, new regulatory conditions and increasingly volatile capital markets – the changes we’re seeing in asset management are tremendous. Maintaining a competitive edge in these market conditions means keeping pace with change. So the capacity of internal processes to undergo transformation is one key to success for asset managers.
The key in times of change is connecting expertise
After a turbulent 2018, investment markets are facing even more challenges. Across the globe, growth dynamics have eased up. Real-time calculations confirm what our early indicators predicted – economic activity has become extremely subdued. Added to this are political uncertainties, such as the consequences of Brexit and the US trade dispute, leading to significant fluctuations within the capital markets.
Therefore, potential will remain limited this year in most asset classes. In the current environment, the key factors for future investment success are activity and selection. We manage both of these successfully by ensuring close collaboration between our experts. This allows us to consistently develop our positioning in portfolio management. Last year, we initiated an internal research department which monitors the latest trends and enables quick action where necessary. We also strengthened communication between this department and the managers responsible for individual asset classes and sectors. This has laid the groundwork for successful knowledge transfer from our researchers to our active portfolio managers.
Intelligently linking megatrends to make the most of their potential
Speed and knowledge sharing are also crucial for digitalisation. In order to stay competitive as asset managers in a digital world, we need to be capable, flexible, cutting-edge and absolutely dependable in our work. That is why our current goal is to optimise our infrastructure. We drew up a strategy last year and will be continuing our efforts in 2019. A fundamental part of our value chain today is the IT department, which supports business activities, works on digital transformation and offers highly secure, efficient and stable solutions.
In order to stay competitive as asset managers in a digital world, we need to be capable, flexible, cutting-edge and absolutely dependable in our work.
In addition to digitalisation, sustainability will also have a great impact on our lives and work in the coming years as the dreaded effects of climate change, which until now often seemed abstract, become more and more visible. This means there is increasing pressure to make changes – both in portfolio management, where sustainable investment criteria and the need to project an image as an active investor are becoming ever more important, and in our work as real estate investors and managers. Here, we need to consider a range of factors, from a building’s energy efficiency upon acquisition to the emissions values of entire real estate portfolios.
We are ready for both of these megatrends and have the capacity needed to make the most of their multifaceted potential. What’s more, we don’t see the two trends as parallel processes; rather, we are looking at intelligent ways to interlink them. By collecting and consolidating vast amounts of data and using analyses of this data, we can open up entirely new opportunities. For instance in portfolio management – our Sustainable Investment Research Information System (SIRIS) brings together vast amounts of data on ESG scores from external research providers as well as our own analysts’ data. This intelligent software allows our portfolio managers to implement institutional clients’ individual sustainability requirements – both for individual securities and entire portfolios.
Flexibility ensures growth
For us as asset managers, too, continuous development is key, since our field is characterised by megatrends and very dynamic change in investment markets. We have already proven our flexibility in recent years. Now, in 2019, we need to remain as agile and fast-acting as ever and take a bold, proactive approach to ensure growth.
We have already proven our flexibility in recent years. Now, in 2019, we need to remain as agile and fast-acting as ever and take a bold, proactive approach to ensure growth.
Our sustainability platform SIRIS offers a unique combination of research data and insights from conversations with investors.
The rise of sustainability
As a leading multiple award-winning German asset manager for sustainable investment, Union Investment has a clear stance: taking sustainability criteria into account during the investment process reduces risks and, in the long term, creates added value over and above the investment yield.
One important tool is the company’s own sustainability platform SIRIS, which offers portfolio management staff entirely new possibilities for sustainability analysis. “Since 2013, SIRIS has been fed large quantities of data from external research institutes and from our analysts,” says Jennifer Paffen, a sustainability analyst in portfolio management at Union Investment who is also responsible for the ongoing development of the platform.
Custom definitions of sustainability
“We successfully implemented a great many innovations in 2018.” One of these innovations responds to a very concrete issue: What does sustainability mean and how does it affect the investment process? “There’s no uniform definition of what investors understand by ‘sustainability’. As a result, we introduced new features to SIRIS this year which — among other things — allow users to create customised filters and track their effects on the investable universe live. This means that the users can set up their investment universe on the basis of specific criteria and make an informed decision on the sustainability filter that they want. SIRIS offers a unique combination of research data and insights from conversations with investors as part of our engagement approach.”
Effective and efficient ongoing development
To ensure that SIRIS is a lasting success, Paffen works with an agile solutions team. “As more and more staff from different areas begin to use SIRIS, we’re receiving a growing range of ideas and requests. We try to take up as many suggestions as possible and integrate them into the system. The software needs to be constantly updated to remain state of the art. So the fact that our IT staff are extremely familiar with the requirements of our operational staff is a major advantage.”
Enabling fast and accurate decision-making
According to Paffen, in the age of smart data, a modern sustainability platform must do much more than just collecting and compiling data. “One of our aims is to process the data that’s entered in such a way that it can help users to make fast, accurate decisions. This is why it’s important for SIRIS to do more than simply collect data — it also needs to combine this data to give meaningful indicators and scores, and process it to create user-friendly graphics, charts and other visuals. We made major progress with these features, too, once again last year thanks to the close dialogue between developers and users.”
But, she says, there is still a great deal more untapped potential for innovative ideas and possibilities, in terms of both the system’s content and the technology. “Our mission is still the same. We want to keep developing and growing so that we can reinforce our leading position in the field of sustainable investment,” says Paffen of the work that remains to be done.
Climate-neutral real estate portfolio by 2050
New Manage to Green strategy points the way forward
By 2050, Union Investment wants to present a nearly climate-neutral real estate portfolio which covers all its real estate funds focusing on commercial usage. The steps it will take to achieve this have been laid down in an integrated “Manage to Green” strategy.
The Paris Agreement aims to limit the increase in global temperatures to well below 2°C. National strategies, such as the German Climate Action Plan, also set ambitious objectives. This led Union Investment to ask itself the question: How can we achieve a nearly climate-neutral real estate portfolio by 2050?
There is no doubt that meeting the targets set by the Paris Agreement is a major challenge. The Climate Action Plan which Germany drew up on the basis of those targets sets clear individual goals. For example, CO2 emissions caused by real estate must decrease by 80-95% by 2050 and final energy consumption must fall by 50% – both compared with the reference year 1990. The entire real estate industry finds itself faced with the question of how to use an integrated strategy to achieve these goals while maintaining cost efficiency.
The redesigned SI Check is having a significant impact on the strategic direction of our portfolio, which shows that we are taking the aims of the German Climate Action Plan very seriously.
Laying the foundations for the new Manage to Green strategy
The real estate team at Union Investment spent six months laying the foundations for the new Manage to Green strategy, with two all-day future workshops leading into subsequent project work. A key component of the strategy is the revision of the Sustainable Investment Check (SI Check), first introduced in 2009. The SI Check measures the sustainability of the portfolio’s newly purchased and existing commercial properties on the basis of seven categories: energy, economy, resources, user comfort, operational measures, location and building automation. Assessing building automation serves primarily to reflect the extent of digitalisation within a property. The new SI Check also forms the basis for articulating sustainability thresholds which must be met by properties and project developments if they are to be purchased. In addition, the SI Check will be repeated on an annual basis to demonstrate a continuous improvement in the sustainability performance of office, retail, hotel and logistics properties. Properties can achieve a score of between 1.0 and 5.0. Examples of sustainable buildings in the Union Investment real estate portfolio which score highly in the SI Check are featured below:
The Manage to Green strategy will run until 2030, and sets quantifiable interim targets to be achieved by that year in addition to the long-term objective for 2050:
- A comprehensive energy monitoring system should be implemented in the entire Union Investment real estate portfolio by 2025. An initial pilot project for this was launched in 2018.
- A concrete CO2 savings target for a partial portfolio should be set in 2020 and met by 2030 on the basis of property-specific asset management strategies. Looking to the future, this savings target will then be applied to the entire international real estate portfolio.
- Sustainability threshold values should apply to the purchase of real estate from 2019.
- Communication with institutional clients and tenants around sustainability should be significantly improved. A separate sustainability report oriented towards the interests of both target groups, among other measures, will form the basis for this.
The 360º perspective of the Manage to Green strategy is a pioneering approach which will enable us to implement our company goals. In addition to this, it will help us anticipate and adapt to the increasingly stringent political requirements for climate action.
Companies in our supply chain benefit from our advice on potential for greater sustainability. This mostly targets improvements in the core business - which of course bring a return on investment for our partners.
Step by step towards greater sustainability
They are a real success story - from entry-level employees to the executives of major corporations, everyone is wearing these trainers. At Union Investment Privatfonds GmbH, a limited-edition design is now set to bring joy to new customers. What better reason to take a closer look at the manufacturer?
“When a colleague from the private customer segment told me there would be a limited-edition trainer, I knew straight away that we also needed to think about a sustainable supply chain when considering the manufacturers,” recalls Inga Tipp from the Strategic Purchasing Department at Union Investment. The textile industry comes with considerable reputational risks. Ensuring that Union Investment’s supply chain has no negative consequences for the environment or society is one of the tasks entrusted to Inga Tipp and her colleagues from the Strategic Purchasing Department.
When planning a collaboration where sustainability played such a major role as with the trainer, it was clear that the contract negotiations with the manufacturer adidas would need to cover more than just economic aspects. Ecological and social issues such as working conditions in the supply chain, the upholding of human rights and the ecological safety of processed materials were also matters of importance for Inga Tipp.
Step 1: The sustainable supply chain
“We have incorporated sustainability criteria into our purchasing guidelines since 2010, which has enabled us to establish processes for evaluating our suppliers,” explains Tipp. When she reaches out to suppliers, she asks for concrete evidence relating to the sustainability criteria. In her evaluation, she also draws on publicly accessible documents such as sustainability reports, a company’s internet presence and external reporting, as well as swapping information with other strategic purchasers from companies in the Genossenschaftliche FinanzGruppe.
If a company is taken on as a supplier and its activities involve sustainability considerations, it is important to maintain regular contact with the supplier itself. This also includes visiting the supplier’s premises. “The aim of this dialogue is to work together to formulate concrete suggestions for improvement — for example, working towards suitable certifications — and to monitor progress in annual supplier development meetings,” says Tipp.
Step 2: Supply chain meets core business
In the case of large-scale suppliers such as adidas, Tipp additionally draws on the expertise of her colleagues from portfolio management, who also screen companies. Together with Janne Werning, an ESG Analyst at Union Investment, she uses the in-house Sustainable Investment Research Information System (SIRIS) to look into the reputation of new partners.
Werning was also familiar with adidas from personal discussions with company representatives. As an active shareholder, Union Investment seeks to esta direct contact between its portfolio managers and the management of the companies it invests in. “We cultivate this dialogue as part of our UnionVoice activities because we want to increase awareness of the importance of sustainable business models and promote stronger corporate governance structures in companies,” explains Werning. “We aim to minimise event risks, regulatory risks and reputational risks.” The pursuit of these aims takes us beyond the adidas headquarters in Herzogenaurach and out into the rest of the world:
Finishing line — sustainability on every level
Inga Tipp and Janne Werning view a company’s sustainability from a range of perspectives. In the case of adidas, they agree: “The company has made enormous progress in corporate governance and sustainability since we first entered talks with them in 2005,” says Werning. In 2014, portfolio managers from Union Investment even travelled to Jakarta to see the working conditions for themselves. “There has been a marked improvement since the start of our conversations,” he confirms.
They both agree that the dialogue facilitated by supplier contact or engagement activities is a positive: “Companies are keen to take on board the points we raise, because these highlight ways to improve their core business — which of course brings a return on investment,” says Tipp.
Two questions for Mr Sebastian Steffen, Head of Investor Relations for adidas
Mr Steffen, how has adidas benefitted from the dialogue with Union Investment as part of its engagement activities?
adidas has long been committed to sustainability along the entire value chain. For example, we have successfully converted recyclable materials into yarn to use in millions of our products. Here, we are doing the right thing for the environment and generating added financial value for our company at the same time. Ensuring transparency around sustainability is a crucial part of our work in investor relations. As there are no universally accepted guidelines for sustainability reporting, we value our dialogue with Union Investment — a pioneer in the field of sustainable investment — very highly. It helps us pinpoint the content factors and key figures which play a role in investment decisions. And ultimately, this enables us to work together on best practice solutions in the highly unregulated field of reporting.
Combining our financial and non-financial content into one single company report was not easy, and we recently received praise and recognition from Union Investment for how we handled this. But we are still grappling with topics such as the optimisation of monitoring in our complex procurement chain, or scalability in the manufacturing of shoes from recycled materials.
We have to work together to improve financial education in Germany.
Financial education — achieving more together
The topic of financial education is a tricky one for many people. It’s not just that they are reluctant to engage with the issue. The requisite knowledge is often lacking too. So it’s all the more important to put financial education on the agenda and get people thinking about it.
Union Investment has already been actively promoting financial education for a number of years. A financial education conference in Berlin in 2018 brought together bank advisors from the group Genossenschaftliche FinanzGruppe — to which Union Investment belongs — and researchers, teachers, pupils, journalists, consumer protection experts, politicians and industry representatives. It was the first time that so many different interest groups had come together on the premises of thenGenossenschaftliche FinanzGruppe to address an issue that they had previously all approached from different perspectives.
They discussed the current status of financial education and took the opportunity for some more networking. Because this much is clear: “We have to work together to improve financial education in Germany. That’s why dialogue is at the heart of our approach,” says Martin Reimund, who oversees Union Investment’s work on the issue.
Turning words into action
Some of the attendees had already initiated their own projects to support financial education in their region. For others, the conference provided the impetus they needed to take action.
“We’ve been supporting the foundation Braunschweiger Bürgerstiftung with various projects for years. We used the findings of a study commissioned by Union Investment to start a discussion with the foundation around financial education,” says Carsten Graf, board spokesman of PSD Bank Braunschweig eG. The foundation was so enthusiastic about the topic that it is now set to develop an expert database in collaboration with the Haus der Wissenschaft (House of Science) at the university TU Braunschweig. This will give teachers the opportunity to invite experts in areas such as financial education, consumer protection or the economy to speak at their schools. “The foundation and PSD Bank are in active contact with many local schools. We’ll also be making a financial contribution to the database,” adds Graf.
This contact with local schools is the result of PSD Bank’s years of commitment. It has been supporting work at local schools for many years as part of two projects: “Ideen machen Schule” (Ideas Make School) and the MediaCampus of the Braunschweiger Zeitung, a local newspaper. “Ideen machen Schule” rewards creative school projects that help to integrate digital media into teaching and to use modern communication tools such as blogs, online communities, instant messaging and video conferences. Graf says: “These projects show that there are a lot of ideas just waiting to be discovered in our schools. When pupils, parents and teachers work together, a lot can happen. Schools need committed people to help them thrive. The pupils demonstrate impressive soft skills in the way that they implement their ideas. That’s why we like to support projects that it wouldn’t be possible to do justice to in the course of a normal school day.”
With the MediaCampus project, PSD Bank supports school staff in teaching media skills — across different media and in almost all school subjects. The pupils are given research tasks to complete using print and online media. How does a cash machine work? Why do we need money? How will we pay for things in the future? These are just a few of the questions that have been put to the pupils. “For us, digitalisation is both a challenge and an opportunity. That’s why we support engagement with digital media. Financial education plays a role here, too. It’s not just about giving pupils a first experience of the issue. Ideally, they’ll also remember later on how and where they can find reliable information.”
At the Felix Nussbaum secondary school in Walsrode, northern Germany, economic topics are not limited to theory classes. Pupils also live them out in projects that involve running their own school-based companies. The association GENOWA has brought together a number of these student-run companies since 2013.
The association is notable for its strong sense of community. This made it an obvious choice for GENOWA to step up its work on sustainability issues. Since the 2018/2019 financial year, the association has been selling sustainable products from Burkina Faso. But the pupils don’t compromise on cost efficiency here either. “The pupils act as business managers, meaning they have to compare income and expenditure, check invoices and take stock,” says Sabine Knittl, a teacher at the Felix Nussbaum secondary school. “This means that they experience and learn in a very practical way how the economy works.” Alongside this practical experience, the pupils attend events and seminars to gain a solid theoretical financial education. Sabine Knittl says: “Since the pupils are able to directly apply this knowledge to running their companies, even topics like accounting or writing annual reports are exciting. This connection to their everyday lives is the key to getting pupils interested.”
A particular highlight of 2018 was the visit of the former German President Christian Wulff to the Felix Nussbaum secondary school. He met members of the association GENOWA and became its most prominent new member.
“Our mission is in our name. At Raiffeisen Campus, we encourage our learners to discover what they are capable of. As well as personal development, for example, this includes education in economics. We offer economics as a separate subject from the eighth grade onwards. And the association of student-run companies gives learners hands-on experience of what it means to be economical. When Union Investment approached us to talk about financial education, we were immediately inspired and began to think about how we could do even more to prepare our pupils for the financial challenges of adult life. We eventually developed two initiatives. On the next project day, we’ll be offering the workshop “Fit for Finance — Preparing for Financial Issues After Leaving School”. We also took our eighth-graders to visit Union Investment’s exhibit, where they were able to gain first-hand experience of issues such as risk and compound interest.”
Looking to the future
“We plan to keep working closely with Union Investment on this topic and continue our involvement with additional studies and networking, and with initiatives that we will implement in partnership with the banks in the Genossenschaftliche FinanzGruppe,” says Martin Reimund. Because promoting financial education for the general public won’t happen overnight.
One crucial element in this process will be a pupil competition. To further promote the issue of financial education, Union Investment is planning to develop teaching units on selected financial topics for teachers and school classes, together with partners from the Genossenschaftliche FinanzGruppe.
Putting savings plans on the agenda
Investment savings plans for asset building and structuring offer our clients solutions to help them save successfully and achieve their life goals. So we’re putting these plans on the agenda.
At some point, everyone needs some money – and then it’s good to have something there”, says Peter Schehl, head of the department for private clients at VR Bank Südliche Weinstraße-Wasgau eG. VR Bank believes in taking on the responsibility for making sure clients ‘have something there’. This conviction led it to run a marketing campaign focused on investment savings plans.
“Many clients who come to meet with our advisors don’t have a specific savings goal in mind – it’s more of a feeling. They feel insecure. They have a lot of questions about their finances. What’s going to happen with inflation, how can I save for university or retirement, how can I build up an emergency fund? They need answers to all of these questions. And our advisors offer a financial health check to help clients find the answers they seek”, says Peter Schehl, describing the situation of many of the clients at VR Bank Südliche Weinstraße-Wasgau. Savings plans in particular are a good solution, as they enable clients to build assets in small steps – with monthly contributions starting from just 25 euros. “So investment savings plans played a crucial role in our market approach last year”, explains Stephan Zepp, head of department for sales management at VR Bank. “We developed a strategy together with our branches and regional markets and promoted this to our clients proactively”, he continues.
This was a great success and the bank was able to increase its number of savings plan by over 30 percent in 2018. Young people proved particularly interested in the option. The bank’s advisors managed to achieve a 49 percent increase in the number of investment savings plans associated with clients aged 18 or under and a 37 percent increase among clients aged 18 to 29 measured against the previous year. But it wasn’t just the number of plans that increased – the average monthly savings rate rose from 145 euros to 200 euros in 2018.
Marketing success across all regional markets
“After the 2017 merger that created the current bank, this was one of the first shared marketing successes which we achieved as a team”, says sales expert Zepp. “And the dynamism in our individual branches and regional markets was incredible – sales were through the roof”, says Schehl, who is responsible for private customers, with delight. The two experts agree that there were a number of factors behind this success. “Our advisors certainly do have a particular affinity for securities, investment funds and savings plans. However, it is the reinforcement of this intrinsic motivation with relevant coaching and training programmes that’s definitely the key to improving sales”, they say. “Also, tools such as Union Investment’s exhibit on investing help to make our advisors aware of certain issues that clients come to the bank to ask us about”, Schehl adds.
Investment savings plans are a reliable source of revenue
Bernd Lehmann, a member of the Executive Board, also sees investment savings plans as a central pillar of the bank’s income since they allow the bank to rely on a fixed percentage from existing and new savings plans. “But the steady stream of revenue from investment savings plans is only part of it. It’s also about the ability to present ourselves to our clients as active, expert financial advisors who they can rely on at any time”, says Lehmann. “Because we know that clients who are well advised, who make use of our advisory services, are more loyal and less likely to change banks”, he adds. He also says that it is crucial to provide high-quality, comprehensive advice and to actively approach customers as soon as a need is identified.
Investor survey shows a need for active promotion of investment savings plans
Surveys carried out by Union Investment confirm the necessity of actively approaching customers. The good news is that more than eight in ten savers (84%) acknowledge investment savings plans as a way to build assets. However, only around one in three have already considered paying a fixed monthly sum into an investment fund. Most people want to stick to tried and tested saving options, such as a traditional savings account or day-to-day money. “Although the figures show that people are gradually beginning to consider more modern savings solutions, many still opt for the old methods. This means they’re missing out on a lot of potential, but they could surely take the leap to more efficient savings with an advisor by their side encouraging them to explore new options”, confirms Giovanni Gay, a managing director at Union Investment.
VermögenPlus: a cooperative bank solution for fund asset management
The new asset management service offers an all-in-one solution for financial investments.
Private assets guarantee valuable personal freedom for investors. From 2019, banks can offer investors state-of-the-art asset management with VermögenPlus.
The financial assets of households in Germany are continuing to grow. They are now estimated to have risen to around €6.2 trillion – in spite of low interest rates and weak stock markets. This trend clearly shows that German households are continuing to put considerable amounts of money aside. However, the Deutsche Bundesbank has reported that over 40% of these assets consist of cash or are sitting in traditional or instant-access savings accounts with negligible interest rates. If we introduce inflation into the equation, the returns are often negative. It is therefore the ideal time to support investors in structuring their assets with a suitable and simple asset management service. The Volksbanken Raiffeisenbanken cooperative banks are set to start offering this service in 2019 with their own asset management solution: VermögenPlus. Developed by Union Investment, it enables banks to expand their product portfolios for the high-end customer segment.
“VermögenPlus isn’t a robo-advisory product like MeinInvest, though it is based on the same platform. It is conventional asset management based on investment funds for the high-end customer segment – and at the moment, it can only be concluded on-site at one of the cooperative banks”, explains Gabriel Placentra, Head of the Online Retail and Advisory Solutions Group in the Department for Digital Distribution Channels at Union Investment. As the specialist project manager, he has supervised the development of the asset management platform for a number of years. “For the Volksbanken Raiffeisenbanken, Union Investment is the strong partner they need working behind the scenes to provide all the necessary services – from securities account management and the actual financial portfolio management to archiving documents, creating reports and much more. The Union Investment asset management platform takes care of all of this for the bank, leaving it free to focus its full attention on advisory services”, he explains.
VermögenPlus is built around three different portfolios available to clients according to their appetite for risk. The portfolios contain actively managed multi-asset funds, which benefit from the expertise of the Union Investment Committee, and exchange-traded funds (ETFs). The carefully balanced range of securities is actively managed by experts from Union Investment.
As VermögenPlus is a white-label product, the bank is free to establish the framework itself. From the minimum investment to the price, everything is at the discretion of the bank. “This is why VermögenPlus is a solution for banks of any size and any level of profitability”, emphasises Placentra. Of course, it’s important to make sure the right conditions are in place before going ahead with implementation: “Alongside technical considerations, it is primarily strategic questions which have to be clarified”, says the expert. “First and foremost, this includes the positioning of the product in the bank’s sales channels.”
We offer our partner bank a comprehensive package which leaves them free to focus on their main task as a cooperative bank – advising customers.
Furthermore, advisors should be trained in VermögenPlus. “But for all of these challenges, Union Investment is on hand with concrete, extensive support services for the Volksbanken Raiffeisenbanken. From implementation workshops run by our representatives to a wide range of marketing materials, we provide tailored service packages”, emphasises Placentra. This allows the cooperative banks to focus on supporting clients and their assets in the long term. And everything is done in accordance with the principles of a cooperative bank – collaborative, professional and integrated.
VermögenPlus supports clients and advisors with cutting-edge digital services. The dashboard displays the financial assets as well as showing the investor the portfolio’s activities. Advisors can also use the service portal, with its extensive range of functions, to offer their clients the best possible advice and customer service.
This leaves us to focus on value-adding work and make full use of the strengths and talents of our employees!
The times when each workspace was equipped with a typewriter and telephone are long gone. Not only workspaces look different now – the nature of work has also changed.
Hardly any other area of life is evolving as quickly as the world of work. Digitalisation, most notably, has had an accelerating effect. Workspace concepts reflect the new nature of work, and the increasing automation of processes is changing the range of tasks handled by employees. At Union Investment, digitalisation is being used to ensure that the transformation of work is efficient and effective. A key element of this is robotic process automation.
Robotic process automation (RPA):
RPA is a software solution for cross-system process automation. In contrast to existing automation solutions, RPA only involves the user interface of systems, which it allows to be operated automatically. The greatest advantages of RPA include rapid implementation, simple operation and high flexibility, as it is system-independent. RPA is particularly well suited to structured and highly standardised processes with high processing volumes, and typical tasks include searching, collecting, collating and updating data.
Successfully handling an increased workload
Over four million clients have put their trust in Union Investment. This trust comes accompanied by an increasing investment volume. “We are only able to maintain this continuous upward trend through our high performance standards, which we meet despite increasing external and internal requirements”, says Patrick Roll, Department Manager for Controlling in the Fund Services Segment. Regulations and new technologies are just two factors which play a role here.
“At an employee level, all these requirements lead to an increased workload”, says Patrick Roll. To ensure lasting competitiveness, efficiency and process quality against this backdrop, while also relieving employees of selected tasks, Union Investment is utilising RPA among other solutions. Roll: “Using RPA should accelerate business processes, reduce the potential for errors and free up resources which can then be dedicated to complex tasks that provide substantial customer benefit. In addition to relieving staff of inherently monotonous tasks, we hope this will deliver an improved customer experience.”
RPA has been used in a pilot project in the Fund Services Segment since 2017. Following the end of the project in January 2019 and the conclusion of works council agreements, the way is now clear for further RPA use in the company.
Where the automation of processes involves a reduction in the workload of employees, it is naturally accompanied by concerns that it will result in job losses. Roll: “Alongside the numerous benefits, some concerns have been raised that core business activities will be automated. This is why it was so important to introduce the topic to the organisation and discuss it in depth with the works council. We are not trying to replace employees with RPA, we are trying to manage their workload. This leaves us to focus on value-adding work and make full use of the strengths and talents of our employees.”
In some cases, RPA will impact the nature of the work handled by employees – moving away from monotonous tasks towards more challenging ones where their specialist knowledge can be put to good use. “The transformation of work calls for a certain flexibility from employees and entails responsibility for us as a company to make sure nobody gets left behind along the way, for example by offering opportunities for further training”, emphasises Roll.
Requirements for the workplace
Not only the employees, but also the working environment must adapt to the changed conditions. This has led Union Investment to explore the topic of “new working environments” in great detail. Employees’ tasks and ways of working vary from unit to unit, and even from employee to employee within a unit. A modern office design must cater for this variation. In addition to standard workstations, it must provide places for concentrated working as well as for conceptual and creative work, including space for team collaboration. “We have taken all of this into consideration in designing the new workspaces to make sure we create the ideal working environment for our employees”, says Juan-Axel Meyermann, General Administration.
The transformation of work is taking place on several levels at Union Investment, but there is one overarching aim – putting the company in a strong position to guarantee the best possible service for clients. Now and in the future.
I always relish a challenge.
The drive to keep advancing
With a great deal of personal initiative as well as the company’s support, Oksana Zeqiri has built a successful career at Union Investment, where she now leads a 13-person customer service team.
“I relish a challenge,” says Oksana Zeqiri, and a glance at her CV shows just how true this is. She started out thirteen years ago, after completing a banking internship, as a complaints handler in Union Investment’s customer service department. A year later, an advertisement on the noticeboard caught her eye — for a qualification as an investment specialist offered by Frankfurt School of Finance & Management. She asked her line manager if the offer was open to her too. He gave her the green light and she began the course alongside her job, attending university every Saturday and studying during the week in her free time. On top of all this, she became pregnant and she and her husband began working to fulfil their dream of building their own house. A lot for anyone to take on. But Zeqiri had the necessary drive and successfully juggled work, study, parenting and building.
Support and trust
“I was clear from the beginning that I wanted to use my studies to advance my career.” She went on to achieve internal and external qualifications as a quality manager, systemic coach, business facilitator, and professional trainer. “I took on all these courses of my own accord. I’m not the kind of person who waits to be asked. My innate motivation is too strong,” says Zeqiri. “But my managers and the company always supported and trusted me wholeheartedly. I wouldn’t have been able to do things the same way otherwise.”
Four years ago, Zeqiri was then able to begin managing a group of her own. She and her team handle telephone inquiries from end investors and partner banks relating to the company’s UnionDepot account and to Germany’s state-subsidised Riester pensions. While she was already very knowledgeable when it came to Riester pensions, she had previously only been responsible for the quality of written customer service correspondence. So, while finding her feet in her first management role, she also had to familiarise herself with working in telephone services. “My thirst for knowledge really helped. I’m always interested in taking on new tasks and I find it easy to quickly get to grips with unfamiliar topics.” How does that work? Zeqiri explains: “I throw myself into learning about new topics independently, I observe a lot, and I actively ask my colleagues if they can give me advice for specific situations.”
Reconciling family and career
Two years ago, Zeqiri won a grant for the SYNK Group’s Young Women Leadership programme. This was an impressive achievement, since she was competing against women from many different industries in the selection process. “The programme’s workshops gave me a lot of valuable ideas for myself and my work,” says Zeqiri. And the next challenge was just around the corner. Last year saw a new addition to the Zeqiri family. “It’s not always easy to reconcile family and career, but it is possible.” With her family’s support and the ability to work remotely, Zeqiri was able to return to her position full time.
Getting the best out of people
As a group leader, Zeqiri takes the time to understand the values and motivations of each individual employee. “I’m driven by the desire to encourage my staff as much as possible and get the best out of the team.” Zeqiri is convinced that motivated and committed staff are essential for providing excellent service to clients and partner banks, and for continuously improving processes and other aspects of customer service. “Reinforcing our team’s collaborative spirit and creating value — that’s my goal and something I’m happy to pour my energy into.”
Collaborative, far-sighted, boldly looking forward
We draw on our experience and expertise to shape the future for our clients. Download the 2018 annual report here: