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Uncertain Times Call For More Certain Wealth Strategies

Wealth Management

By Greg King, CFA  |  September 27, 2017

If 2016 taught us anything, it was that sudden and unprecedented events can cause market reactions that catch investors off guard. From the Brexit vote to the U.S. presidential election, unexpected outcomes seemed the rule rather than the exception, adding volatility and uncertainty on a global scale. In wealth management especially, events like this have created an atmosphere where high net worth investors (HNWI) need further reassurance that their overall plans can withstand future movements. But how top of mind are the challenges of volatility with the average high net worth individual (HNWI)?

According to a survey of over a 1,100 HNWIs recently conducted by FactSet and Scorpio, more than 60% of wealthy investors assert that unforeseen market events are a major threat to their wealth creation strategy. In the U.S., where HNWIs witness daily partisan bickering, two-thirds of investors fear the impact of sustained political uncertainty on their wealth plans. This uncertainty was echoed by HNWIs based in the U.K. (59%), who are shaken by the uncertainty surrounding the nation’s relationship with the European Union. Investors in Hong Kong (59%) also reported unease surrounding the management of their wealth, possibly because of their changing relationship with the Chinese mainland.

More than 60 of wealthy investors assert that unforeseen market events are a major threat to their wealth creation strategy

While political turmoil might appear isolated to the countries it immediately impacts, the survey also suggests that the interconnectivity of today’s markets amplifies the echo of such events. Systemic risk was identified as a major threat by the majority of respondents in Canada, the U.S., the U.K., Hong Kong, and Singapore, highlighting the universal requirement for a clear framework to guide investors through times of market stress.

Although investors sense threats to their wealth creation, many remain unsure of how to counter these risks, leaving HNWIs immobilized and vulnerable when market swings do occur. For example, while 59% of HNWIs acknowledge that changes to political leadership could detrimentally affect their portfolios, almost 70% have not yet taken steps to protect their investments. Similarly, HNWIs understandably perceive international conflict as a cause for concern, but again the investor response remains muted.

Approaches for the Wealth Manager

Our survey results indicate that wealth managers need to prepare beyond their normal communication strategy to be able to  guide their clients in the face of emerging uncertainties. Approximately a third of respondents say they want to hear from their relationship managers during market crises irrespective of the impact on their investments. An even larger share—nearly 40%— expects to be contacted prior to any action taken.

Therefore, it is imperative that advisors open up communication channels to build trust. Their clients clearly demand reassurance that their wealth is shock resistant. Moreover, because so many HNWIs expect immediate analysis, wealth managers need to invest in technology that empowers decisive action. For example, financial systems that can quickly deliver the “house view” from the investment committee to advisors are paramount, allowing advisors to relay guidance to clients when signs of a shock emerge.

While dramatic shifts are unavoidable and change is the only certainty, the industry can brace itself and its clients for shocks and volatility with the help of technology. Advanced data systems that provide sophisticated communications channels and an intelligent approach to data management for both advisors and clients offer the best possible chance of making quick, informed decisions and limiting a negative impact.

For more on how HNWIs view market shocks, tips for understanding how to engage HNWIs, and a breakdown of the full survey results, download our eBook: The Resilience Agenda: The Wealth Manager’s Guide to the New Era of Volatility


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Greg King, CFA

Senior VP, Senior Director, Wealth Management and Digital Solutions Strategy and Product Development

Mr. Greg King is Senior Director, Wealth Management and Digital Solutions Strategy and Product Development at FactSet. In this role, he focuses on the allocation of resources for all areas of the Wealth Management business; from market research and product development to implementation of a parallel sales and marketing plan. Mr. King moved to London from the U.S. in 1999. Prior to leading FactSet’s Wealth Management Strategy, he spent eight years as Director of Workstation Solutions for the EMEA and APAC regions, and before that, was Vice President, Institutional Sales in FactSet's UK Investment Management region. Mr. King earned a degree in Economics from Boston College and is a CFA charterholder.


The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.