So, the pubs are opening next week, and it appears we may be able to take that European vacation after all. As we start getting back to normal, I am sure we are all wondering what the “new” normal will look like? Most businesses are more concerned with simply surviving. Government support has been vital in protecting jobs and businesses. As this support is withdrawn consumer demand will need to return to safeguard livelihoods. We are already being urged to get out and support our high street, our pubs and restaurants, and spend the money we have saved doing very little over the past three months. Yet we are also urged to wear face masks, continue social distancing and not congregate in large crowds. Professional sport continues to be played behind closed doors. This dual messaging will see the young act positively and the mature generation remain cautious. It is the latter that has the spending power that our businesses so desperately need.
It is the return to normality that most businesses fear. They are now able to open their doors, but few are queuing to enter. It is at this point we could see a sharp rise in unemployment and business failures. With businesses facing such an uncertain future, hospitality is unlikely to recover any time soon. It is still not clear how the airline industry will manage the resumption of services with social distancing needs. Construction has one of the highest infection rates to date, yet the government are fast tracking infrastructure projects. How do we avoid a second spike?
On the positive side, technology continues to thrive as we all upgrade our home systems. The housing market is also showing signs of recovery. Apparently three months at home has heightened our ambitions. Logistics firms are also doing well as larger firms furlough staff to reduce their employee liability; an outsourcing arrangement which may prove to be permanent.
From an investment perspective, RHIM models have recovered well from their lows in March. Our two main portfolios have returned 15.3% and 17.7% since the March low against benchmarks of 10.5% and 15.2%. This has highlighted the benefits of the “don’t panic” message. The uncertain future for business has also attracted investment from those who hadn’t previously grasped the benefits of using a discretionary manager. If you have friends or relatives concerned about their investments, we would be delighted to receive an introduction.
We have also seen increased interest around inheritance tax mitigation. It is something clients often take a long time to cogitate over and it seems the current crises has focussed a few minds on the issue.
From a service perspective, there are particular issues we need to balance. We are a people business and our staff are our most precious resource. We have a duty to protect them as best we can. Equally, we need to continue careful stewardship of client investments and assist them in their financial planning. During lockdown we have enabled staff to work securely from home. We have seen some positives from this, although the learning experiences of an office environment are missed. Going forward, I would expect us to adopt a more flexible approach, retaining the benefits of both home and office working. I would also expect more client meetings to be held via zoom, and for business to be transacted remotely, with electronic signatures. However, our business is a very personal service and client relationships are key to embedding trust. We must ensure this is not compromised by the use of modern technology. There is a fine balance to be struck.
I would welcome your views on video meetings so please give your advisor your feedback.
In conclusion, we remain agile to changing conditions and are able to respond accordingly. We want to ease our staff back to the office but are mindful of a second spike. Either way, we will continue to provide a complete service to our clients. Please feel free to contact us as normal should you need to. If you have money to invest but are nervous of markets, talk to us. Remember that investing is for the medium to long term so short term volatility should be of little significance. Timing is always difficult which is why we can drip capital in over several months if appropriate.
Enjoy the new found freedoms, they are very precious. And if you venture to your local next week, enjoy your tipple, whatever it may be.
Paul Beasley ACII
Chief Executive Officer
Richmond House Wealth Management