As Managing Director of the Arlo Group, Finn Houlihan has more than two decades of experience in wealth management and private banking. He started his international career working as an analyst for Reuters in the Money and FX team and the Reuters Equity and Options team. We chose his brain on investment forecasts.
Over the past decade, what are the biggest changes that have taken place in the landscape of client-facing investment platforms?
It is important to consider why investment platforms were developed in the first place. Ten years ago, many clients had funds held directly with the institution, such as Invesco, JP Morgan or HSBC. From an administrative point of view, it was incredibly difficult to manage.
Platform technology was a game-changer by organizing clients’ investments in one place where they could become more involved in the investment process. Clients could see the performance of their portfolio collectively whenever they wanted and could drill down into the performance of each fund. This relieved advisors by providing updates to clients on performance.
Similarly, with regard to expatriate clients, the development of offshore platforms has been crucial. Traditionally, these clients would have offshore bond structures and life bonds, and over the last 10 years there has been a gradual shift to offshore platforms to help them manage their investments when in less financially developed jurisdictions. than the UK.
In addition, the implementation of Open Banking has been very important. Allowing people to have access to all their investments across all platforms and their bank account information in one place is an amazing development that makes people’s lives easier. This is something that will continue to grow in importance.
The development of robotic boards was also significant, with many suggesting that it would make human boards obsolete. However, the initial adoption was not as revolutionary as expected. There has been more demand for ‘do it yourself’ advice – as with Hargreaves Lansdown and AJ Bell – where the individual takes the risk on themselves using the research provided.
ESG is a big trend right now – is it something that will continue to worry investors for the foreseeable future?
ESG has and will continue to be on the minds of investors in the future. Traditionally, ESG was seen as a riskier investment option, but as larger blue chip companies have developed their ESG offering, the market has become more stable. This can only be a positive development – redirecting people’s money to have a positive impact on society and the planet.
Going forward, it would be good to see new government incentives for ESG investing, such as offering tax breaks to investors or government protection to develop new flows into these products. There would then be a clear incentive for investors, and advisors would be able to deliver better results to their clients by helping them earn better returns on their investments.
The current political and economic climate has posed considerable investment challenges. How does the industry deal with this in terms of protecting customers and delivering value?
By looking at any financial market tracking chart over the past 20-30 years, you can identify political and economic events and we are currently leading to one of these adjustments. However, it is disastrous where we are now with inflation at its highest level in 40 years – interest rates will have to rise further but this will clearly have a catastrophic impact – this could lead to a real recession, which commentators have recently predicted .
What is essential here is that financial advice is going to be increasingly important. Advisors should help educate their clients about the risks and work closely with them, in order to have full transparency. This is what the platforms contribute to.
What should clients look for in a new investment platform? Which elements are critical to success and which add the most value?
When looking for a new investment platform, clients should look for easy access to their account information. Ideally, they should receive as much information as possible. This could include comprehensive portfolio performance data, underlying investment performance data, investment tools such as tax tools, unused capital gains and confirmation of paid income. The more information the better, but it should be provided in a manageable and personalized way.
The initial setup process should also be as smooth as possible. With an aging population, many clients need a platform registration process that is transparent and does not deter them from investing.
If you could look a decade into the future, what would the investment space look like?
In the future, I expect development and continuation of what we are seeing now. Smartphone technology and apps linked to Open Banking will be essential – giving people access to all their investments, pensions, savings accounts and bank accounts so they can manage everything from one place.
One of the biggest unknowns will be whether AI and robo-advice will grow to the point that people will start to trust them and use them more willingly. However, there will always be a place for face-to-face human counselling. People love dealing with real people, especially when the financial outcome is critical to that person’s or their family’s future.