28th June 2023

In years gone by, I feel advising clients on their investments was infinitely easier than it is today.

Previously, we agreed the clients risk profile and then advised accordingly with the best asset classes that suited them, from UK Equity Income Funds, European Funds, US Funds, some Corporate Bond funds, and Commercial Property. You weren’t putting their eggs in one basket, all very relaxed and the gains came rolling in over time.

So, what’s changed? Well, for starters we have huge Technological Change and with AI around the corner who knows what could happen next in the tech zone, and are you over invested or under invested. Money moves faster than ever, and in ways you could not have imagined even just ten years ago.

Next comes Climate Change and Global Warming. If you think this is not going to affect your investments going forward, then you are still in denial. Even the kids in nursery school know more about climate change than the retired population and will be savvy enough to take advantage of the investment opportunities sooner than you think.

We didn’t need to take account of the Impact of War when building portfolios in the past. Now the World Economic Forum (WEF) place it at the top of their list in terms of impact on your investments.

Here is a great one, The Political Economy. The past ’social responsibility’ of business was just to make profits and the intervention of governments to disrupt the free market was a bad idea. How things have changed; we now have responsible investment to consider and the advent of Environmental Social Governance (ESG) new ways of thinking and investing. Clients have a choice to avoid tobacco, oil and arms and a whole range of other unsavoury investments. One client asked recently if there was an LGBT investment fund they could invest in, and I thought he/she was kidding!

Health Risk is another area we did not have to manoeuvre around in the past but since Covid life has become that little bit more complicated.

A curved ball you never expected is the ‘groping fund manager’ who gets sacked under a cloud, e.g. Crispin Odey last week (allegedly!), leaving the funds in disarray along with client losses. You couldn’t make it up!

So, what is the answer for the discerning new investor? You guessed it, find a savvy financial advisor who know how to diversify.

Philip Vaughan is a Director at Abacus Assurance Financial Services Ltd Porthcawl 01656 772222