Fulfilling real client motivations is key to investment success in changing fiduciary market

13 January 2021

7 minute read

2020 has undoubtedly been one to remember. For fiduciary clients 2021 will bring it’s own challenges. Many are expecting to grapple with low and negative interest rates, market volatility, the outcomes of Brexit and ongoing COVID pandemic, environmental, social and governance. High asset valuations and potentially damaging client/ manager behavioural bias may also create challenges.

In a volatile and fast-changing world, offshore investment management must evolve.

Simon Smith, Head of Offshore Investments for Barclays Channel Islands and Isle of Man, explains how today’s fiduciaries need to go beyond a narrow traditional focus of managing assets towards a broad and dynamic response that actually aligns to clients’ underlying motivations.

For a long time, offshore investment management has been about simple discretionary portfolio and fund services. Security picking and blending of asset classes, that subsequently delivered returns (or not) for the client, with the fiduciary focusing on fees and manager performance vs peers. The approach has always been firmly focused on the short-term ‘how’, rather than the long-term ‘why’. But, an evolution is taking place that asks questions about the underlying motivations for clients and what it is they really care about and are trying to achieve, before deciding on the best solution to get them there.

For fiduciaries, this is about establishing high conviction around what the client is trying to do, using skilled advisors that can help them build the relationship to deliver long-term outcomes.  Its an approach that benefits all.

Finding and addressing your client’s motivations

By way of example, one of our trust clients recently contacted the team to get advice on buying a single line bank stock that the settlor had an interest in. The trustee was concerned about the risk of a large single investment and the doubling down of risk - the trust also held all funds with the bank in question - and therefore asked for other stocks we would recommend to diversify. The team fulfilled the immediate ask, but the more important question asked was: what does the client actually want to achieve?

After a joint consultation it turned out that the trust was designed to leave an inheritance for the settlor’s children, along with a running income. Once we’d drilled down to understand this motivation - and underlying bias and preferences - we were able to talk about risk profile, income requirements and the wishes of the beneficiaries.

This led to a restructuring of the portfolio to build three different cells of well-diversified higher-risk assets for the ultimate beneficiaries  - one with a sustainable slant, one with a private markets slant -  and a structured solution with income and dividends for the shorter term needs.

Advising in a fast-moving world

Responsive, active management is critical in today’s volatile markets. Fiduciaries and their clients are facing the enormous uncertainty of the economic fallout of the global pandemic, whilst also managing Brexit outcomes and dealing with ongoing low interest rates - and persistent inflation!

There are multiple, shifting, complex consequences to each of these headwinds. The end of the Brexit transitionary period affects both imports and exports, underlying economies, and has huge consequences for asset managers in terms of regulation and European market access.

The low interest rate environment is clearly here to stay, as central banks dealing with recessionary pressures are in no hurry to raise rates. But there are signs that they will tolerate a period of carefully managed rising inflation in a difficult balancing act. All of this is taking place against the backdrop of the global pandemic, its associated recessionary pressures and hopes for recoveries.

Depth of expertise and a global network

For fiduciaries to build trust with clients in this environment, with the correct support they need to be able to talk about assets under their stewardship (and those not yet so!). This may be from performance reviews, including investment philosophy, drawdown analysis and valuations, to practical elements such as where and why people lose money when investing and how to address this (behavioural finance).

With their advisor, they need to be able to‘go around the wheel’ [see infographic] to consider - and discount as appropriate - each type of available investment. This shouldn’t be based on what the product is, rather what it has the potential to do and the objective it can solve.

For example, passive solutions such as exchange-traded funds for the cost conscious, to sector focussed assets such as real estate, through to de-correlated alternatives and broader based opportunities in private markets, hedging or taking positions in capital markets, income or return based fixed income and structured products, thematic single-line assets and more. Each solution delivers idiosyncratic returns that can be matched to client needs.

The aim here is not to ‘over-engineer’. In fact, the solution is often a blended delegated one. Rather it’s to use a process that builds trust, confidence, and credibility in a fiduciary provider. To do this alone is impossible however, and that’s where the right investment partner becomes invaluable.


The right partner

Barclays investment advisors access a full universe of products and services for high and ultra-high net-worth, family office and corporate clients. We recognise that the process of investing begins with understanding the client and their needs, before defining a strategy, managing risk on an ongoing basis and re-evaluating objects and investment strategies on-going.

In the past, investment management has been a somewhat opaque process to clients. Many saw investment advice as selling products, often with a geographical or sectoral bias for the advisor. The right investment partner today is very different. There’s a world of quality advice that exists to move clients to their goals, understand and manage their risk appetite and help them navigate the fast-changing markets of today.


Dedicated to helping you

To find out how Barclays can help you make your cash management and payments more efficient, contact your Relationship Manager.


Talk to us

If you have any questions or want to discuss your investment options, contact us.

Related articles

Investments can fall as well as rise in value. Your capital or the income generated from your investment may be at risk.

This communication:

  • Has been prepared by Barclays Private Bank and is provided for information purposes only
  • Is not research nor a product of the Barclays Research department. Any views expressed in this communication may differ from those of the Barclays Research department
  • All opinions and estimates are given as of the date of this communication and are subject to change. Barclays Private Bank is not obliged to inform recipients of this communication of any change to such opinions or estimates
  • Is general in nature and does not take into account any specific investment objectives, financial situation or particular needs of any particular person
  • Does not constitute an offer, an invitation or a recommendation to enter into any product or service and does not constitute investment advice, solicitation to buy or sell securities and/or a personal recommendation.  Any entry into any product or service requires Barclays’ subsequent formal agreement which will be subject to internal approvals and execution of binding documents
  • Is confidential and is for the benefit of the recipient. No part of it may be reproduced, distributed or transmitted without the prior written permission of Barclays Private Bank
  • Has not been reviewed or approved by any regulatory authority.

Any past or simulated past performance including back-testing, modelling or scenario analysis, or future projections contained in this communication is no indication as to future performance. No representation is made as to the accuracy of the assumptions made in this communication, or completeness of, any modelling, scenario analysis or back-testing. The value of any investment may also fluctuate as a result of market changes.

Barclays is a full service bank.  In the normal course of offering products and services, Barclays may act in several capacities and simultaneously, giving rise to potential conflicts of interest which may impact the performance of the products.

Where information in this communication has been obtained from third party sources, we believe those sources to be reliable but we do not guarantee the information’s accuracy and you should note that it may be incomplete or condensed.

Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation. Law or regulation in certain countries may restrict the manner of distribution of this communication and the availability of the products and services, and persons who come into possession of this publication are required to inform themselves of and observe such restrictions.

You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain independent tax and legal advice tailored to your individual circumstances.