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Getting to know your client’s investment aspirations

Ying Tan | Dynamo
|
5th May 2021
Ying Tan
"It’s important for advisers to really get to know their clients and understand where the new generation of landlords may emerge from."

Here at Dynamo we have many relationships with a variety of investors. From those who have been building their property portfolios for decades through to those who are taking their first steps onto the property ladder. Each have different short, medium and longer-term goals which will inevitably be affected by changes in circumstance, finances and future aspirations. As such, an integral role in this advice process is understanding the motivations behind these investments, the risks involved and potential exit strategies along the way.

The past year has taught us that scenarios and attitudes to money can change quickly and, from a landlord perspective, it’s important for advisers to really get to know their clients and understand where the new generation of landlords may emerge from.

Investment is a big word that covers many different types of commodity. As a disclaimer, I do have a background in investment banking having worked for UBS, Deutsche Bank and Goldman Sachs in the past, so this a familiar area for me. However, the markets move at such pace that fingers really do need to remain on the pulse to maintain any degree of success. Now mortgage intermediaries are not expected to be investment gurus, far from it, but it’s beneficial to follow trends and keep up to date on property-related perceptions whether for investment, rental or ownership purposes where possible.

As such, it was interesting to read a report from Nationwide Building Society which outlined that younger generations are less likely to consider investing in property, despite a higher proportion investing in a variety of other things. This showed that an estimated 39% of younger generations are likely to consider investing in property, compared to the average of 42%. However, 86% of those aged between 16-24 with at least £1,000 in savings are said to have invested, while 79% of the general population have invested. Over a third (38%) of those in Gen-Z are prepared to take high risks to increase the chance of rewards, a factor which significantly tapers with age.

Across all age groups, 12% of the population class their investment risk appetite as high. Looking at portfolio splits, the most popular investments are stocks and shares ISA (48%), property (42%) and other ISAs (40%). Investments in gold (26%), crypto-currency (22%), and alternative investments such as wine (10%) and antiques (9%) fell down the list.

Of course, the vast majority of mortgage advisers don’t have relevant permissions for investment advice and this does need to be left to the specialists. Although getting to know your client’s full financial picture and investment aspirations can certainly help during any property-related advice process. This recent pandemic has allowed a certain proportion of people who have remained able to work throughout this period with a larger savings pot than they are used to. Many of these have invested in their first property, homeowners have invested in home improvements and others have managed to take a step up the property ladder. From a buy-to-let perspective, the purchase market has been highly robust and remortgage business has also started to pick up.

The importance and value attached to the advice process over this period has also grown and, with more people in need of financial advice for a variety of reasons, this certainly bodes well for sustained levels of activity across the intermediary market. And successfully investing time and energy into clients now will certainly pay dividends in the future.

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