It is with a real sense of gratitude that I am writing this introduction to the summer edition of The Wire. As we tentatively seek to safely come out of lockdown and start seeing loved ones and colleagues again, we are fortunate that the HFMC Wealth family has been able to effectively sustain each other, and support you, whilst continuing to focus on quality service and advice.
Throughout these last tumultuous 15 months we have had to learn and adapt to the unexpected, be it with the use of technology, or seeking to enhance and bolster our investment proposition. You would expect no less of us, as we seek to plan with you to achieve similar resilience within your own affairs.
As we come out of lockdown, we suspect that the way that we will all work together will be more productive, mixing face-to-face meetings with the now established video conferencing and screen sharing facilities. We are confident that we will be able to work with you however you choose.
We will be looking to open up the London office again, initially on a limited basis, from early summer and we look forward to seeing you in person again when you are comfortable doing so. We have made some changes to the office, introducing new fresh air systems throughout the building to ensure that it is a safer place to be for you and your financial planning team. In doing so we have brought a little of the high-tech architectural style of Pompidou centre in Paris to Clerkenwell!
Our discretionary proposition has continued to grow in the face of the Covid challenge and we are delighted to now have over £0.5 billion of assets invested within our Quadrant service with another £170 million now following our managed portfolios on an advisory basis. Our positive impact portfolios continue to flourish, with clients considering them as a mainstream investment for their core assets.
We know that, in the UK, the savings ratio grew from 6.8% in 2019 to 16.3% in 2020. We are now seeing this latent build-up of savings (typically cash) being deployed, increasingly into the newer positive impact and passive portfolios that we added in 2019 and 2020. Altogether you have now entrusted us with almost £1.3 billion of assets under advice and management. Thank you.
With the growth in the portfolios, we have been able to continue to invest in the investment team and proposition, which we are confident will pay dividends for you. Hot on the heels of last edition’s announcements of the recent hires of Emma Clarke and Finlay Holland we have now additionally appointed Asset Risk Consultants (ARC) as a formal member of our investment committee.
For those of you not already familiar with ARC, they are passionate innovators in the private client investment management world, able to provide even more investment intelligence and additional governance to our investment offering. It is ARC that provide the leading ARC Private Client Indices and ARC Charity Indices for the private client and discretionary manager community.
The addition of ARC enhances our ability to understand the drivers behind past performance for you, provide indicators and analysis of where future performance may be delivered from, and help us to understand the personalities and the way each of the fund managers that we are researching actually deliver their investment performance.
Ultimately, we expect this to drive value through to the team when building your portfolios. We are excited to have them on board.
The last three months have been eventful too from a policy perspective as we received the government’s Budget back in March.
We continue to work with our clients to adapt our planning to take on board the changes necessary following the freezing of a number of allowances, including the Lifetime Allowance. This allowance is expected to impact many of our clients and so we have an article touching more on this in this edition.
Capital Gains Tax rates have been maintained at their current levels, as has pension tax relief, but it is still possible that changes may come as the government seeks ways to pay for the Covid support packages that were put in place.
As such, pension funding and Capital Gains Tax management strategies have begun earlier this tax year, just in case of policy changes later on.
The Bank of England forecast UK Gross Domestic Product to grow by 7.5% in 2021, compared to 5% in the February forecast, per Reuters, whilst unemployment forecast to be falling back towards the 5% level by the last quarter of 2021, against the backdrop of a February forecast of 6.4%.
Ultimately, these are shorter term policy changes that can have longer term impacts. With an eye on the longer term, this edition also looks at behavioural strategies to help the next generation in terms of building financial resilience and also fairness.
It is unfortunately obvious to us that there is a real gender gap in terms of financial planning, with men typically having retirement funding levels that are typically almost two-thirds more than those of women.
We would encourage you to get your children involved in the financial planning process early and have accordingly included an article on teaching your children to manage money. We recognise that this won’t fix the problem on its own but will do what we can and will continue to explore the theme of managing the gender gap in future editions.
We believe that the biggest mistake that most people make when it comes to achieving their financial goals and ambitions are that they do not plan for them, or that they do not understand the consequences of decisions when they are being made.
They take the same route as Alice in the story from Alice in Wonderland in which the cat tells Alice that surely, she will get somewhere as long as she walks long enough. It may not be exactly where you wanted to get to, but you certainly get somewhere.
We are proud to have been able to have helped you throughout the pandemic and to have been trusted counsel through this period of extreme volatility and uncertainty. We look forward to being able to continue to work to ensure that you not only get to where you want to get to, but to arrive when you wanted to get there.
Thank you for continuing to work with us – we do not take this for granted.