Rapid changes in the investment and fiscal landscape are prompting the affluent to get proactive across their wealth management plans before things really heat up.
Economic uncertainty and far fewer opportunities to spend have caused a massive reining in of household expenditure – to the extent that 20% of UK disposable income is predicted to be saved in the second quarter, against 6% in 2019. Some £23bn in excess savings are expected over Q2.
Many enquiries are coming from savers looking for effective ways to deploy their cash and who are frustrated with mainstream interest rates. With many of the high street banks having cut current account rates to as little as 0.01% and inflation running at 1.5%, they see that their cash will be dramatically eroded in just a few years.
We have been discussing several options with our cash-heavy users, starting with them looking at deposits with private banks. For those with significant amounts to set aside, this can be a fantastic option. Private banks are able to offer superior rates and very flexible terms; you needn’t tie money up for excessively long periods at all.
The dramatic market falls caused by COVID-19 arguably make this is a once-in-a-generation buying opportunity for those with cash to put to work
That said, the dramatic market falls caused by COVID-19 arguably make this is a once-in-a-generation buying opportunity for those with cash to put to work. You certainly shouldn’t be buying indiscriminately, however, as the crisis has exposed understrength companies as well as causing otherwise healthy ones to tumble in price along with the rest. As the wealth managers on our panel have been emphasising, picking future winners depends on unpicking a highly complex knot of economic and market trends.
Cash is far from the safe haven it appears, but buying into the markets should be approached with great care. Make sure to take advice before deploying important funds.
The media has really been shining a light on responsible investing in recent weeks, and this has clearly got our users thinking as they ponder their investment and broader financial strategies more broadly.
Attention has naturally focused on the impact that Environmental, Social and Governance (ESG) factors have on companies’ performance, and the thorny question of whether the challenges of the investment environment warrant a watering down of investors’ convictions.
Proponents can make a strong case that companies which are well run – and seen to be well run — on ESG lines are much better positioned to succeed after the crisis. Companies which have treated the environment, customers or staff poorly may well be severely punished by consumers. There is evidence that ESG investing leads to better risk-adjusted returns over the long term in any case.
What this illustrates is that investing in a way that aligns with your values and your financial objectives is very much more nuanced than it appears; it is not necessarily just a case of screening out certain sectors or stocks (although it could be for you)
On the flipside, amid widespread dividends cuts and cancelations, income investors have noticed that companies still paying out well are often those in the so-called “sin sectors”. Ironically, given that the world is in the grip of a respiratory disease pandemic, British American Tobacco is high on this list. Perhaps even more noteworthy, and ironic, is that the firm’s health division, Kentucky BioProcessing, announced a significant breakthrough in developing a vaccine for COVID-19 at the beginning of April.
What this illustrates is that investing in a way that aligns with your values and your financial objectives is very much more nuanced than it appears; it is not necessarily just a case of screening out certain sectors or stocks (although it could be for you). Having a conversation with an adviser on how best to embed ESG considerations into your portfolio is likely to be a very illuminating exercise, and we can help you meet with a number of specialists in this area.
One of the best parts of my job is helping people who feel at a bit of a loss. Managing your wealth optimally is a complex business comprising many moving parts. At the same time, the wealth management market is crowded with many different types of firm. If you have a fairly clear idea of what you need, you can find your best wealth manager matches fast and free via our smart matching tool. But don’t be put off if you are less sure. Our expert team can readily explain key concepts and give you an objective view of the market via a quick call with no obligation at all.
Investors rightly recognise that we are experiencing a true “black swan” event that no-one could have predicted. But many people are nonetheless pondering whether their provider has really kept their promises.
As we have been highlighting, the best wealth managers have been working night and day to preserve their clients’ wealth and pulling out all the stops to keep investors informed and reassured. Unfortunately, others have been found seriously wanting, prompting dissatisfied clients to weigh up other options.
We have variously had calls from people who suspect that their risk-profile hasn’t been properly understood; investors who feel that they haven’t had certain investments sufficiently explained; and those who feel that their financial needs haven’t been baked into their investment strategy well enough. Particularly upset are those who weren’t left with enough liquidity to buffer them in challenging periods and who are now being forced to sell assets in unfavourable conditions.
Tough questions are being asked of some wealth managers and it seems that a minority aren’t giving good enough answers – or even not answering at all. Wealth managers are not fortune-tellers, and there are conditions where in the short term it is difficult to make money. But they should certainly be constructing portfolios that are precisely aligned with your goals, able to weather storms and communicating clearly how they work on your behalf. If this crisis has shown up poor practices and service, rest assured this is the exception and not the norm.
The growth in enquiries we have seen in recent weeks has surprised even us, although this time of year always prompts an uptick in people wishing to make a fresh start. First-time investors and those thinking about a change alike have been taking the opportunity to reconsider their financial roadmap.
Wealth managers can help with a huge range of issues over and above investment portfolios, including challenges around business ownership, tax, property and more. Simply tell us a little about your needs and you can discover your best wealth manager matches in as little as three minutes. Or, if you would like an informal discussion with our expert team, please don’t hesitate to get in touch.