As another unique year with plenty of ups and downs comes to a close, we reflect on the trends the Private Wealth team have seen throughout the year.
The increase in alternative investments
This year has seen a continued increase in alternative investments with investors looking for different ways to build their wealth with continued record low interest rates. We are now seeing more and more people investing in virtual assets, such as Bitcoin. The great wealth transfer continues with many high net worth individuals (HNWIs) passing wealth into trusts and many establishing Family Investment Company's (FICs). A FIC uses a corporate vehicle to provide wealth to the next generation and can often be used to create greater flexibility within a family structure.
The diversion from standard investment opportunities shows that many people are now being more creative with their investments and are willing to try alternative methods to protect their wealth.
Preparation and agility are key
One overarching theme that has appeared consistently throughout the year is the need for adequate preparation for the family business. This was highlighted in our agility research, demonstrating that the ability to make fast and arcuate decision making within a business is key. In some cases, the planning involved was as simple as updating a will or agreeing to a post-nuptial agreement to make sure the wealth and decision-making capabilities are transferred as desired. This shift in mentality has been driven in part by the pandemic. Individuals and businesses are now taking precautionary steps rather than taking the sometimes-risky reactive approach to prevent disruption.
Environmental, Social, and Governance is top of the agenda
It is no surprise that throughout 2021 ESG has been a common theme in much of our content. The growing expectations of ESG principles to be adhered to in the commercial world, along with COP26 being held in November, has ensured that the issue has remained high on the agenda. Businesses must continue take the necessary steps to prioritise their impact. Those who do not embrace the required changes are likely to be left behind in the search for work, growth and attracting future talent. The transfer of wealth from the older to younger generations has encouraged this idea even further as younger generations are still seen to prioritise ESG when deciding what to do with their wealth.
It will be interesting to see how these themes develop into 2022 and how much of the above will be the focus or if we will see other topics and themes take precedence.