Inflation fans fee concern flames
Inflation is trending towards more than 4% in official terms, but as High Net Worth Individuals will know only too well, the real rate can express itself as very much higher than that due to the price sensitivity of the good and services that make up their “basket”. Private school fees are particularly prone to inflation-busting increases, for instance, and luxury homes have risen by eye-watering amounts, particularly in sought-after areas.
Concerns over inflation and a recent media push focusing on what level of wealth management fees clients should accept has been really driving traffic to our site as investors seek to make sure they are not paying too much with their current provider.
But while the broadsheets have been focusing on absolute numbers, we always emphasise that it is relative value investors should be zero-ing in on. Of course, one should never pay even 0.5% over the odds for a “vanilla” service, since fees are such a powerful drag on returns over time. Yet there are instances where paying slightly higher fees is very well justified as a wealth manager is delivering far superior returns that more than offset that difference.
The key to working out this equation is to compare providers like for like, on similar portfolios over the same period of time. We can help you to carry out that exercise quickly and with minimal fuss by presenting a shortlist of best-matched wealth managers you can look at side by side. Our expert team will even help you to dig into the figures to make the right choice if you are new to all this, or to ensure the provider you have isn’t overcharging relative to peers. You won’t find independent, industry-wide expertise like ours anywhere else.
The spectre of “stagflation” looms large
It’s a term that many younger investors may not be familiar with, but the spectre of “stagflation” is now a regular feature of our conversations with users.
Stagflation is of course a low growth and high inflation trap which will be remembered only too well by those who experienced its pains in the 1970s. For many investors, this was a lost decade and we’re hearing of an uneasy sense of déjà vu as our users note today’s energy shortages, supply chain chaos and a tightening of the labour supply as thousands quit their jobs (with many laying the blame at the door of covid disillusionment as much as the pursuit of higher wages).
While we will hopefully dodge the stagflation bullet, it has to be recognised that governments and central banks are walking a dangerous tightrope here. The potential for policy errors which are meant to rein in inflation but could actually rapidly induce recession are plain to see.
While we will hopefully dodge the stagflation bullet, it has to be recognised that governments and central banks are walking a dangerous tightrope here
The flipside scenario is that the climate change-driven transformation of industry, energy and supply chains causing the opposite – high inflation and strong growth – which in turns fuels a boom era. It is worth remembering that after WWII massive, multi-year stock market growth was seen.
Investors are right to be seeking advice amid such uncertainty. Observing the Russian adage to “hope for the best, but plan for the worst” is always wise – and never more so than right now.
Women are thinking about the most important gift to themselves
Another theme that is coming up in our conversations with female users of our service is all the recent media coverage focusing on the gender wealth gap, particularly around pensions. We are delighted the message is getting through that women need to be saving and investing far more aggressively to prevent the huge disparity in final pension pots between women and men that is seen right across the wealth spectrum.
One eye-catching figure highlighted by the Scottish Widows’ 2021 “Women and Retirement Report” is that the average women will need to save £1,400 more a year into their pension to avoid ending up significantly worse off than a man when they retire. But the problem certainly affects even wealthy women too. The pay gap, the tendency for women to take more time out of their careers for caring responsibilities and, of course, maternity leave can all hit women’s long-term wealth prospects very hard.
We are delighted the message is getting through that women need to be saving and investing far more aggressively to prevent the huge disparity in final pension pots between women and men that is seen right across the wealth spectrum
This month we are also carrying a piece from one of the wealth managers on our panel about how women should tackle this issue, one key element being to sensibly increase investment risk in a bid to ramp up returns.
As the time for present-giving approaches, women should bear in mind that getting serious about their investments is likely to be the biggest gift they can ever give themselves. Please get in touch if the gender wealth gap is on your mind.
Gain clarity from complexity
As well as enhanced returns and risk management, much of what the wealth management proposition is about is peace of mind – having the assurance that your money is working as hard as it possibly can because it is being managed by a professional and not needing to monitor the markets all the time.
By taking up our offer of some free, no-obligation discussions with a shortlist of firms perfectly matched to you, you can quickly get that peace of mind. To get a flavour of what the wealth managers on our panel have achieved, read a few of our case studies. Better still, let the leading firms we work with explain their track records themselves!
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.