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EXCLUSIVE: Volatile Times Put Greater Value On Wealth Advice – Barclays Private Bank

Amanda Cheesley

23 January 2024

The COVID-19 pandemic and the rise of inflation have been two "hiccups" for the world economy after more than a decade of almost uninterrupted rising equities since the 2008 financial crash. This turbulence emphasises the need for wealth advice,  says.

“Covid was the first hiccup and what we’re seeing now is a second hiccup with the emergence of inflation which we hadn’t seen for quite a while. Also there have been a lot of geopolitical problems with Ukraine which has impacted inflation due to rising energy prices,” Annabelle Bryde, managing director and head of UK Private Bank and Crown Dependencies at Barclays Private Bank, told WealthBriefing in an exclusive interview. “The world looks different now and there are winners and losers. High net worth individuals and family offices need more advice as a result, and we help clients navigate through the sea of information to find where the opportunities lie."

“In the UK, we’re also seeing high interest rates. Cheap credit is a thing of the past for now. It wasn’t difficult to make money work for you back then but this has become more challenging now,” she continued. 

As noted by this news service in recent months, wealth managers and private banks have had to adjust to rising interest rates hitting the model of "60/40" portfolios (equities/bonds) last year. However, the rise in rates has at last given bonds some of their old role as ballast in a portfolio. Greater volatility also appears to have put a premium back on active asset management.

Bryde, who comes to the role with plenty of experience, has has been at Barclays for just over a year – with plenty to manage given the state of the UK economy over the past 12 months, impacting both business leaders and high net worth individuals. Previously, she was at UBS for almost 23 years.

Fixed income attractive
Bryde highlighted how fixed income, which was previously unattractive, has come back as an asset class that is now very attractive. “There have been a lot of changes. Where there was no inflation, there is inflation. Where there were zero rates, there are high rates. Asset classes that didn’t do well are now doing well,” Bryde said.

“UK gilts have been doing very well, with some good returns there, and at quite a low risk,” she said. High grade corporate is also important and she is quite positive on that. “When rates come down, it’s also important to be correctly invested at that point, in order not to miss that changeover.” 

Growing ESG trend
Despite the difficult environment, Bryde believes that there will be a stronger focus on climate-related matters in the future, with investors placing more emphasis on ESG-focused investments.

Although some managers believe that ESG has taken a back seat, she sees it as an increasing trend. “It continues to grow,” she said. Bryde thinks there are good opportunities and returns to be had from ESG-focused investments, and believes that regulation is necessary to prevent greenwashing. She favours, for instance, the EU’s Sustainable Financial Disclosure Regulation. Other firms have also concentrated more on ESG-focused funds. See here and here

Succession planning
In the next couple of years, Bryde said there will be the largest-ever transition of wealth globally. “We will see female wealth increasing, the age profile will decline and also what is important for asset owners will change. They will have different ideas on what wealth is important for and the responsibilities it brings with it,” she said.

“What was important for the last generation is different for the next. There will be a stronger focus on what they can achieve with their wealth. If there’s a cause, for instance, that they are wedded to, they will donate to that, and she’s seen that happening a lot. Some people also think that maybe giving £50 million to a child may not be in their best interests,” Bryde said.

The biggest change she has seen in her 20-year career is the rise in people giving back wealth. “Twenty years ago, the only reason to have a foundation was to save on taxes, but now it’s really to support a cause. A lot of tech billionaires are giving money back, helping under privileged children or the climate, for instance. They believe that with their power and wealth, they can make the world a better place,” she continued.

Artificial intelligence
Bryde highlighted how there has been a lot of new wealth in the tech sector. “The rate of advancement in artificial intelligence is something people are struggling to imagine,” she said. But she thinks that AI will play an important role in wealth management. “There are a lot of opportunities to take advantage of it in wealth management,” she said.

Bryde sees AI as complementing the banker's role, rather than replacing it, helping them to become more targeted. She thinks human-driven advice from wealth managers is here to stay. Benefits of AI range from automating repetitive tasks, providing data-driven advice in specific areas such as portfolio optimisation, risk management and tax analysis. But Bryde thinks AI must be regulated, and this should start sooner rather than later. “Things that are not regulated tend not to end well. There are lots of opportunities out there and we do need regulation to stop people doing the wrong thing,” she said.