Expert: Roger Skeldon, TIME Investments Facilitator: Don Wild, Wild Ochre Consulting
Headlines:
- In response to the question ‘how investment allocations had changed in light of the rapidly changed investment environment’:
- 70% of the attendees reported that they had increased exposure to Alternative investments
- 78% stated that they were already responding to the changed environment, and felt this was now going to be a ‘new norm’
- There was an equal split on firms allocating money to ‘property’ portfolio’s, suggesting there was still some reticence here 64% back a bigger move to ‘infrastructure’ in all its forms
- On whether ESG an active consideration, 64% responded that they sometimes considered it and was an area worthy of more in-depth discussion
Discussion points:
The economic environment has changed considerably. Interest rates still climbing and inflation was seen as being more ‘stubborn’ than some analysts predict. This is leading to market volatility, and whilst a recession is not predicted this year, it could emerge next year.
The core message coming out from historic trends is that increased diversification performs better over the longer term, allied to a dampening down effect of market volatility.
The depression of ‘real estate values’ when set against the longer-term investment themes suggests, both in terms of yield and growth, that alternative investments look a more attractive bet.
Short term volatility is likely, however some core fundamentals regarding key markets are likely to prevail.
The group discussed the current relevant themes and whether they were actively discussed and documented in Financial Planning reports:
The major themes identified are: digitisation; positive social impact; energy transition and decarbonisation; healthcare with an aging population. Taking medium- and long-term views on these core themes helps navigate a way through some of the shorter-term stormier waters.
The delegates varied in their feedback on how much was provided in their reports when it came to some of the key themes. One firm preferring to use additional means of communication.
ESG and the relevant themes was discussed at length. The consensus view was that ESG concerns had declined in the recent past.
A number of factors for this are mediocre performance, some confusion on what is truly ‘Green’ and a preference by many clients to value returns over ESG principles. Nevertheless, ESG is here to stay and likely to regain more popularity in the years ahead as technology, education and social attitudes continue to evolve.
Regarding the relationship between Paraplanners and Planners - it was clear at all firms that there is a cohesive, respected, professional relationship where ideas are exchanged and, in many cases, challenged by one party or the other.
However, there did appear to be scope for more active involvement of Paraplanners, in the investment and marketing committees.
Key takeaways:
- Seek to understand the longer-term themes and adeptly study and manage the shorter-term trends and fashions
- Most client horizons are in 5-25-year periods so the ‘long view’ is quite fundamental
- The attendees went away with further insight into what ‘diversification’ means, what is included in ‘infrastructure’ and confirmation, given all firms face the same challenging economic environment
- Confident firms are rising to the challenge
