The year in review: 2020 – a year like no other
14 December 2020 | Portfolio construction
By Tania Allerton, Head of intermediary adviser sales, Vanguard UK
As the curtain falls on 2020, a year like no other, many of us might be keen to draw a line under it and look forward to rosier times. It would be remiss, however, not to take a moment to reflect on what has been an extraordinary period and consider the lessons we take into 2021 – and beyond.
Financial advisers faced an almighty challenge this year. The fastest bear market in history was followed by the fastest ever bull market1, taking investors on an almighty rollercoaster ride. Meanwhile, policymakers around the world implemented aggressive monetary stimulus to prop up local economies through the pandemic.
Throughout the volatility, advisers were unable to meet their clients in person. However, we saw many advisers cope admirably with maintaining their existing client relationships and learning new ways of nurturing fresh ones.
That’s not to say it hasn’t been a learning curve for all of us – working remotely without face-to-face interactions with colleagues and clients has been challenging. Our business development managers were quick to adopt video call technology to continue engaging with advisers and we adapted our usual CPD events and workshops programme to deliver a higher number of webinars with the aim of keeping you informed. As we gradually emerge from the pandemic (touch wood), the increased adoption of technology is likely to continue as investors become accustomed to the ease of digital communications.
Advisers shift their focus
To that end, we are seeing advisers embed digital technology within their business proposition at a much faster rate, forming a core part of client relationship management. We’re seeing more advisers realise the benefits of digital delivery to their businesses, with online meetings saving time on travel and costs, permitting more interactions day-to-day with prospective and existing clients around the country. At the same time, automated processes are helping advisers spend more energy on client interactions. That doesn’t mean the technical parts of advice are diminishing in importance, but it is clear that areas like asset allocation, risk profiling and rebalancing are increasingly being automated within firms2.
We touched on this in our webinar last month, ‘The future of advice’, where we explained how we see the advice market evolving. We believe that the demand for advice will continue to grow in 2021 and beyond and the underlying principles of a successful practice won’t change – goals, balance, cost and discipline. However, the weight of each, in terms of their importance to a successful practice, may well shift. The more data-driven side of the equation will increasingly be automated, while the human factors are increasingly where advisers will add value through direct personal interaction.
Our Adviser’s Alpha research suggests behavioural coaching is where advisers can add most value, ensuring that clients have a robust, achievable plan and then keeping them on course through good and bad times.
Another observation we made this year was that the pandemic amplified many of the biases and concentrations in our clients’ portfolios. Our Portfolio Analytics & Consulting (PAC) team, which has been reviewing advisers’ portfolios since 2019, produced a portfolio trends report to highlight the key themes we saw this year, including a broad underweighting of US stocks, a significant home bias and reduced exposure to government debt in favour of corporate bonds. These biases may be intentional and consistent with clients’ risk profiles and financial plans, so may not warrant a portfolio construction change – but understanding the implications can help advisers make better informed decisions.
The PAC team sits within Vanguard Portfolio Services, which aims to support the technical side of the advice equation. Advisers can leverage the talent behind our multi-asset funds to perform a quality check on their proposition and free up time to focus on where they can add most value. Read more about the type of work our PAC team can do here.
Vanguard Portfolio Services forms part of our newly launched Vanguard Advantage Adviser Support programme. The service is made up of four pillars designed to equip you with the tools and skills needed to drive down costs, improve investment propositions and enhance client relationships.
The four pillars include, Vanguard Portfolio Services, research & commentary, professional development and marketing resources. Visit the Vanguard Advantage hub to access our latest white papers and practical insights on behavioural coaching; our CPD-accredited webinars, events and workshops; and client-facing tools, including conversation starters, educational aids and product support materials.
Thank you and happy holidays
After an eventful year, to put it mildly, we want to thank all the advisers that have engaged with us in 2020 – our digital events this year posted record attendance figures and we are delighted to continue the programme in 2021, bringing you two topical webinars every month. All of our webinars in 2020 are available on demand here.
At a difficult time for our industry, Vanguard has weathered the storm and come out stronger, thanks in no small part to the ongoing support we continue to receive from our adviser partners. Our success depends on your support for which we are very appreciative and determined to reciprocate through our Vanguard Advantage Adviser Support programme.
Despite the challenges faced this year, we think the long-term future of advice is in a good place and there are exciting times ahead for advisers. So on behalf of everyone at Vanguard, we hope you enjoy the festive holidays and we can’t wait to get back to work in the New Year.
1 Calculations by Vanguard Investment Strategy Group.
2 Vanguard 2018 adviser-client survey.
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