The Natixis global survey of financial professionals 2022 revealed that despite turbulent market conditions in the first months of 2022, financial professionals remain upbeat about the potential for business growth.
European and UK asset managers expected assets under management (AUM) to grow by five percent in 2022, and to have an annualised growth of ten percent over the next three years.
Risks highlighted
The top three risks identified were geopolitics, inflation and volatility. The former was most keenly identified in Europe (78 percent of respondents) and the UK (72 percent), against a global average of 57 percent.
The inflation spike caused by the war in Ukraine, on-going supply chain issues and the after-effects of Covid-19 was identified as a key portfolio risk in both Europe (64 percent) and the UK (68 percent).
The market volatility in the early months of 2022, one of the most significant bouts since the global financial crisis, was identified as a key risk by a third in Europe (31 percent) and almost half in the UK (48 percent).
However, expectations for the second half of 2022 were positive, with respondents anticipating markets to make modest gains overall for the year.
On average the S&P 500 was expected to end the year up 4.1 percent amongst European respondents, with UK participants slightly less optimistic, expecting a gain of 2.2 percent.
Amongst UK respondents the FTSE 100 was anticipated to rise 4.7 percent.
Alternative investments
In response to sluggish equity and bond markets, which have become positively correlated during the downturn, alternatives were seen as an emerging area of focus and diversification.
More than three fifths of those surveyed (68 percent in Europe and 64 percent in the UK) say the current market conditions make alternative investments – such as infrastructure, private assets and commodities – more attractive.
Particularly in a higher inflation environment, commodities were seen as increasingly appealing (73 percent of participants in Europe and 61 percent in the UK), despite the ESG preferences of some investors.
Optimistic outlook for the rest of 2022
Despite the current environment, financial advisers believe they can grow their businesses over the next three years, with 10 percent annualized growth in AUM expected by European and UK respondents.
With the market performance challenging, advisers identified the need to focus on securing new clients and assets, and those surveyed in Europe anticipated adding 25 new clients to their book of business per year, while financial professionals in the UK have a more modest expectation of 16.
Other strategies that are being deployed are age segmentation – targeting offerings at specific age cohorts – and pressing for client referrals. The latter is seen as key to 77 percent of European advisers and a full 91 percent in the UK.
Another focus is boosting access to technology, such as client-facing apps and customer relationship management tools, but here implementation cost was identified as a hurdle (47 percent Europe; 45 percent UK).
Client value proposition
Half of all respondents (48 percent Europe; 50 percent UK) identified demonstrating how they delivered value to clients beyond portfolio construction as an important factor in attracting and retaining clients.
Amongst the additional offerings identified were: model portfolios, to demonstrate possible strategies to clients; tax management, especially cross-border; and estate planning, which the pandemic brought to the fore for many clients.
The survey of financial professionals, including wealth managers, registered investment advisors, financial planners and independent broker dealers, was conducted in March and April 2022. Included were 2,700 respondents in 16 countries globally, with 1,050 based in Europe and the UK.
