Market conditions rattle UK investment firms

However, up to 72% of UK wealth managers, investment advisers, planners and brokers are concerned about the impacts of geopolitical risk on investments, while 68% fear inflation will hurt returns.

Natixis Investment Managers 2022 Financial Professionals Survey spoke to 1050 finance professionals across the UK and Europe. In an interview with Investment WeekExecutive Director of the Natixis Center for Investor Insight and author of the report, Dave Goodsell, said: “There is a lot going on that is redefining reality for finance professionals around the world.

“We had an incredible market rally and now things have changed. Financial professionals need to think differently about how investments should be structured and how their market assumptions impact decisions.”

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Market volatility was a top concern for nearly half of UK finance professionals surveyed, although few believed market declines would continue throughout the year, with many anticipating gains of 4.7% for the FTSE 100.

The use of alternatives was also on the rise, according to Natixis, with 64% of UK respondents revealing that current market conditions would make investing in infrastructure, private assets and commodities more attractive.

“You need more than markets to grow your business,” Goodsell said. “Our research points to pretty substantial growth targets from finance professionals around the world. In Europe and the UK, advisers are looking at 10% annualized growth over the next three years, and they’re cutting it on a one-year basis.

“They have to look to catch up with that, bringing in new assets and customers.”

According to director Darren Pilbeam, head of UK sales at Natixis IM, when it comes to inflation and expected returns, there is a mismatch between advisor expectations and end client expectations.

“Over the long term, UK advisors’ return expectations are just over 6% above inflation. This is an important figure to start with. Client expectations were even higher, at 7.3% above inflation, and they were low relative to the rest of the world, where in many cases there were double-digit expectations above inflation.”

Goodsell says companies will need to look beyond asset allocation to add value, focusing on helping clients achieve broader goals.

To recruit customers, more than half of respondents revealed that they segment prospects by age, with 93% of UK businesses targeting 50-60 year olds and 86% focusing on 60-65 year olds.

References were a must in this process, Natixis found, with 91% of UK respondents mentioning it in their processes.