Client trends November 2020:
Wealth worries swirl amid complex risks

Investors are increasingly aware how easy it is to fall into self-defeating decisions, but are showing admirable resolve when it comes to balancing the risk and reward equation during these unprecedented times.

Behavioural issues become talking point

We recently highlighted the costs of emotion-driven investing. Several other news stories on this topic have also caught our users’ eyes and are coming up in conversations.

As behavioural finance experts point out, people often sell at the wrong point just to feel they are “doing something”. But new research has shown that those staying the course ended up significantly better off than those who dumped poor performing funds for seeming winners during the dark days early months of the pandemic[i]. Outperformers are often already “past their best” and the underperformers set to recover.

In another analysis, Oxford Risk has calculated that the “Behaviour Gap” – buying high and selling low – costs 1.5%-2% a year over time – and that emotional investing generally costs 3% in returns and a reluctance to invest 4%-5%. Those are huge amounts compounded over time.

Very often now, a growing awareness of how investment biases are harming their returns is what is driving DIY investors to seek advice

Very often now, a growing awareness of how investment biases are harming their returns is what is driving DIY investors to seek advice. We’d be delighted to arrange for an expert to examine your portfolio in a no-obligation initial consultation to see how your returns could be improved.

Facing multi-faceted risks

Our matching service has broken records month after month this year as unprecedented investment conditions have become the norm due to COVID-19. November is proving no different.

The coronavirus crisis rumbles on (although, of course vaccine breakthroughs are creating hope). Add in all the ramifications for trade, regulation and corporate profits inherent in the outcomes of the US Election and Brexit, and it is little wonder more and more people are seeing that now is time to call in the professionals.

Constantly thinking about the variety of variables that need to be weighed currently is proving something a growing number of investors would rather do without

Many DIY investors pride themselves on their ability to monitor the markets continuously (or have bought passive investments which simply track their supposedly endless upward march). However, constantly thinking about the myriad variables that need to be weighed currently is proving something a growing number of investors would rather do without.

There could still be extreme volatility ahead, and investors know they must be safely positioned for it.

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Top Tip

There is no let-up in the pace of change even at this late stage in the year, and enquiries to our matching service show no sign of slowing down either. Part of this trend are undoubtedly the manifold risks investors know they need to account for. Yet we often hear from investors keen not to miss out on investment opportunities amid the gloom either. Let us set up a discussion with an expert fast and free of charge now to make sure you are sufficiently addressing both sides of the equation.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Opportunities ahead?

Simultaneously, we’re hearing from a significant proportion of users who are keen to maximise the investment opportunities the current environment presents. As investment commentators have liked to point out, buying the market at the height of 1918’s Spanish Flu epidemic would have generated stellar returns.

But where to seek opportunities in such an uncertain world? It will be difficult, particularly as investors have to be at the forefront of incredibly fast-moving trends – not chasing growth from stocks that have already delivered their best.

Tech stocks may have had a fantastic year, but many experts are now rather advocating retail companies able to tap into prevailing lifestyle trends

Tech stocks may have had a fantastic year, but many experts are now rather advocating retail companies able to tap into prevailing lifestyle trends (indeed, the Covid vaccine news rocked the share prices of several tech giants). Elsewhere, the threat of negative interest rates perhaps augurs well for gold, although the question of how to best access the precious metal is nuanced.

There are some really interesting conversations to be had by those seeking growth. Why not speak to an expert in whatever area of investments interests you to see which opportunities they can highlight?

Lifegoals come under threat

As is now becoming apparent, the effects of COVID-19 are incredibly wide-ranging and interlinked. Sadly, recent research[ii] has shown that 26% of Britons (rising to 33% of 35-54 year olds) now do not feel confident about their financial situation. These worries can be very serious even for those of quite significant wealth.

We have heard from countless people who have seen their investments plunge in value at a crucial point or who are now unsure that they will be able to retire at their desired age and lifestyle standard any more, for instance. Lots have also had their confidence in their wealth manager shaken this year, and suspect that now is a good time for a change.

We have heard from countless people who have seen their investments plunge in value at a crucial point or who are now unsure that they will be able to retire at their desired age and lifestyle standard any more

Many people will feel that their risk-profile needs to be revised or that they need to completely reconfigure their plans. Carrying out a thorough review of your finances and wealth management provision periodically is best practice at the best of times. Now it is essential.

Do these concerns chime with you?

A great many risks and opportunities are worthy of wealthy individuals’ attention currently, and we are delighted to see so many people talking to us deeply about portfolio strategy and financial planning issues in response. They stand to make and/or save substantial amounts by taking the initiative.

If you are clear about the areas where you need expert guidance, then use our smart matching tool to find your best-matched advisers in minutes. Alternatively, for an informal, exploratory discussion, get in touch with our expert team to discover all the ways the leading wealth managers on our panel could help. 

[i] Quilter Cheviot
[ii] CISI

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