Navigating the 'new normal'

In a guest feature this week, Stuart Parkinson, Group CEO, Lombard International, examines some of the issues facing HNW families when considering wealth and succession planning in these uncertain times. 

The pandemic may have temporarily limited freedom of travel, but even in the 'new normal', HNWIs remain 'world citizens', says Parkinson. As a result, they require their wealth managers to help identify asset management and investment strategies that are both fully compliant across multiple jurisdictions, and provide security and accessibility.

"Wealth advisers have an important role to play – they are the confidants, the solution finders, and the match makers, ensuring the wealth of today continues to help fund innovation, entrepreneurship, philanthropy, employment and the communities of tomorrow," writes Parkinson.

Two different studies out this week look at how the coronavirus crisis has brought about changes to the way financial advisers work as they look to adapt to the 'new normal'.

New research by wealth manager Charles Stanley reveals that more than half (52 per cent) of independent financial advisers have seen a marked increase in out of hours contact with clients, while almost half (47 per cent) say that clients are requesting higher levels of detail on their investments and the performance of their portfolios.

The sixth biennial FlexShares study of the adoption of external investment management services by financial advisers meanwhile, suggests that while the overall percentage of who outsource investment management has remained consistent over the past decade, since the start of the pandemic, the way that advisers leverage external services is changing.

"We’ve seen a clear shift in the perceived benefits of third-party outsourcing – whether that’s utilising external investment managers or other non-investment related service providers – as Advisers’ expected role continues to evolve from investment manager to holistic financial planner,” says Laura Hanichak Gregg, Director of Practice Management and Advisor Research at FlexShares.

Investors too, have changed tactics during the pandemic with new research by Oxford Risk revealing that stock market volatility in the early days of the Covid-19 crisis prompted 1.38 million UK retail investors to sell GBP10,000 or more of their investments, while 531,900 people sold GBP100,000 or more of their holdings. Stock markets have since recovered, much of their losses, but the research also highlights that of those investors who cashed in some of their investments, 29 per cent have not reinvested any of this money back into the markets.

“Those investors who pulled money out of the markets in March will already have lost much more… they lost when the markets dropped, and many have missed out on the rebound since," says Greg B Davies, Head of Behavioural Finance at Oxford Risk.

And another section of the population – those wealthier individuals who have managed to save more money than usual during the pandemic – also have additional  cash to invest to according to Quilter Cheviot, whose latest study has found that 18 per cent of those with GBP250k or more in investable assets are holding between 40-60 per cent in cash, which equates to a minimum of GBP100,000.

“Historically, cash has not been a good store of value for individuals due to the corrosive nature of inflation eating into its purchasing power over time," says Jonathan Raymond, Investment Manager at Quilter Cheviot. "Individuals with excess cash balances should strongly consider investing to help protect and grow their capital."

Wealth Adviser

 

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