Taking the bull by the horns

How the coronavirus pandemic has impacted the attitude of retail investors is the theme this week, on the back of several surveys suggesting there has been a real shift in focus, with many people becoming more actively involved in their investment decisions.

Research by both Mintos and Nutmeg suggests that it's younger investors who are leading the charge in the UK and Europe, and that they are more open to risk than older generations. 

James McManus, Chief Investment Officer at Nutmeg, has welcomed the shift, but is keen that investors get the right advice. "Our recent research has shown that younger investors feel most bullish about investing, with 60 per cent of 25-34-year-old UK investors having moved more money into investments since the start of the pandemic," he says. "With younger investors feeling better off and more financially confident now than pre-pandemic, it’s vital this increased appetite translates into the right kind of investment activity."

Professional financial advice may not be a top priority though, according to new research from My Pension Expert, which suggests that less than two in five of UK adults have sought independent financial advice at any point in their lives. And perhaps more worryingly for the industry, 57 per cent say they don't trust financial advisers, a figure that rises to 65 per cent among those aged 55 and over.

Andrew Megson, executive chairman of My Pension Expert, says: "The lack of trust in independent financial advisers is alarming – it is a wakeup call that the financial services industry cannot afford to ignore."

Research by Quilter, meanwhile, has found that over the past decade, the main UK tax allowances and thresholds have decreased by an average of 11 per cent. The 'headline' personal allowance – the amount Brits can earn before paying income tax – has increased by 93 per cent in the last decade, but it has come with huge cuts to pension allowances and a freezing of the inheritance tax nil rate band. 

"One could argue that these allowances and thresholds are never going to be as good again and will only get worse from here," says Rachael Griffin, tax and financial planning expert at Quilter. "The Chancellor recently outlined plans to freeze many of these tax allowances in order to start balancing the books to help pay for the pandemic response."

Those in North American and Europe looking to minimise their tax liabilities are looking more to overseas opportunities, according to a new report from GlobalData, with mainland China, attracting increasing attention from international investors. Structural changes, which mean China's financial markets are more open than before to non-resident investors, plus relatively attractive bond market rates, have piqued the interest of overseas investors, says the report.

And finally, in a guest article this week, David Simpson, Head of EMEA at GBST, examines how firms in the wealth management sector are working to modernise legacy systems to manage 21st century digital requirements, while controlling spending and reducing risk for the industry and its participants.

Wealth Adviser

 

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