2016 has not been smooth sailing for the financial services industry, much less the investors who rely on it. Not long ago the FTSE was crossing the 7,000-point threshold and there was a general sense of cautious optimism, but these gains in the market have not only faded in the UK, but across the world.
Many events have contributed to this situation, including but not limited to: concerns over monetary policy, worries about Chinese growth rates, emerging markets, geopolitical instability and the rise of populist politics.
Investors, for the most part, have always been nervous and irrational in the face of uncertainty and this time is no different. The issue facing financial advisers and wealth managers is the threat of alternative routes to advice, this means demonstrating the value of advice has never been more critical.
Beforehand, the greatest concern a wealth manager or financial adviser could have was that a client would leave for a competitor. But now with the rise of automated advice and more convenient ways to invest directly in the market, the industry is facing an added challenge – new entrants to the market that have disrupted a business model which was virtually unchanged for the past century.
Hoping markets will return to normality is no longer a viable strategy as investor emotions combined with vast amount of choice means they are on constant lookout for new ways to protect their assets without having to sit out market ebbs and flows. Many are taking to heart an old quote of John Maynard Keynes; “the market can remain irrational longer than you can remain solvent”.
The industry must pay attention now more than ever to the needs and whims of investors and understand both their short and long term attitudes and opinions with how they intend to react to this market volatility.
This report seeks to investigate these perceptions by focusing on the upper echelon of the investor spectrum, high net worth (HNW) investors who have net investable wealth exceeding £1 million.