Waking up to the sound of pouring rain on the window yesterday morning was a stark reminder that summer is nearing its end. Even the most optimistic forecasters predict a difficult autumn and winter ahead. The cost of living crisis is set to take hold and many will find themselves in a vulnerable situation.
When advising high net worth and ultra high net worth clients, the cost of living crisis may not seem particularly relevant. However, given the devastating effect it will have on so many, it should be on everyone’s radar.
Impact has become a key part of wealth managers’ discourse. So why not encourage clients to direct some of this impact towards addressing the cost of living crisis?
The industry has the ability to deploy significant capital to companies making positive movements and to use its shareholder positions to lobby for further changes. For example, British Gas has said it will donate 10 percent of its profits to help customers cope with soaring bills for the "duration of the energy crisis".
Of course, certain factors contributing to the cost of living crisis cannot be solved by investing in public markets. Wider macro factors are responsible for a lot of the inflationary pressures. Government action is likely the only way soaring energy bills will be curbed in the near future.
While we await to see if this happens, society’s most vulnerable are already suffering. For clients who want to help, philanthropy could be a good option.
Facilitating these conversations and providing suitable solutions for clients interested should be a key part of a wealth manager’s offering.
As we approach winter and bills continue to rise, it will not just be the most vulnerable that will suffer. If energy bills do increase as predicted, a lot more people will be hit.
Employees will also be impacted by the cost of living crisis.
While their work days may be spent working with millionaires and billionaires, very few actually have this wealth themselves. Instead, like the majority of the population, a lot of employees will be worrying about rising energy, food and fuel costs.
Increased stress and anxiety will have a negative impact on productivity, morale, and overall company culture. There is a clear business case for firms to support employees and to take meaningful action to address the crisis.
In the absence of an effective government, it is up to companies with the influence and capital available to enact positive change.
Editor’s corner will be taking a brief hiatus next week as I am away on holiday. In my absence, please contact news@thewealthnet.com with any stories and/or news.
