The investment world has certainly changed during the Covid-led lockdowns of 2020 and 2021. New trends have accelerated, with those normally taking years to develop becoming commonplace in weeks. But is this adoption of new trends generational and how much does this really matter anymore?
Back in the 1980s, it was generally accepted that at aged 80, investors should have 80 per cent of their portfolio in bonds and only 20 per cent in equities – equally aged 20 the reverse would apply, as you were perceived to be able to take a far higher degree of risk. The investment manager of yesteryear did not expect 10-year gilts to be yielding less than 1 per cent, while tech was only for the fearless. You never got fired for owning Glaxo.
Recent lockdowns have led many young people to think more about their money. Pension reforms and the growth of platforms that accommodate easy access to markets for the novice have driven these changes. However, in some quarters, this age group are reputed to be somewhat misguided, focused on speculative trading, cryptocurrencies and swapping memes about popular stocks like GameStop on investment chatrooms. Everyone looks clever in a rising market.
Meanwhile, older investors can be viewed as out of touch, reluctant to embrace new ideas such as sustainable investing or youth culture-driven trends. Even when they become mainstream, such as online shopping, there can be considerable mistrust.
Holistic view
Of course, different generations have different life experiences and priorities. For some, these differences are a challenge to overcome, but I believe we have this upside down. By embracing opposing world views of people in different stages of life, wealth managers and financial advisers can ultimately provide a more well-rounded service to all clients, whatever their age.
This is an issue I am particularly conscious of as one of my colleagues and business partners is a member of this ‘next gen’ cohort. We are both at different stages of our careers – I have been working since the late 1980s, while he is a rising star. My first day’s work was actually also the day of his birth.
If general perception is to be believed, our investment views should be at opposite ends of the spectrum and we would clash on every major decision. In fact, we make effective partners precisely because we have different experiences and outlooks and can challenge each other on a daily basis. He often brings new investment opportunities to the table which I simply would not have considered.
A recent example is music royalties. In 2019, Goldman Sachs forecast that 1.15 billion people will pay for music streaming by 2030 – making it set to become an extremely valuable asset class. My youthful colleague highlighted the potential of music royalties to me as a profitable and reliable investment opportunity back in 2018. While I could see the revenue stream from a business perspective, I did not see it as anything beyond a niche investment which might appeal to a segment of the client base and certainly not as a mainstream opportunity. But he persevered with detailed research and analysis and on this basis I was happy to proceed. Today, music royalties are an established part of our investments which we successfully run for a number of our high net worth clients.
Common cause
People in different age brackets are also perceived as having vastly different priorities, but this is less likely to be the case nowadays. While millennials have been noted as driving the growth of ESG and sustainable investing over the past decade, it can no longer be considered as a trend exclusively driven by younger people. We have conversations with clients across the age spectrum, who are genuinely interested in more sustainable investing.
The latest innovations in electric car technology, through to the explosion in windfarms and plant-based products, appeals to all ages in a way I could not have envisaged at the start of my career.
Stereotypes are always damaging, in investments and in life. Instead of pigeonholing generations we should all be more willing to listen and learn from one another, to be able to offer a more well-rounded view of opportunities to our clients.
Harry Burnham is branch principal and investment manager at Raymond James London CityPoint
