Newton signals 'all change' as a key theme for the private wealth investment industry

Capital preservation, a focus on income and a 'back to basics' approach have emerged as the key priorities for private client investors in this new financial era, says Mark Rayward, Managing Director of Newton's Private Investment Management division.

Rayward believes that the last decade was an era of product proliferation, zealous sales teams and unrealistic return expectations. But today's market environment signals considerable change, with a greater focus on risk mitigation, transparency and absolute returns. According to him, the challenge for the industry is in how firms adapt their business models to this new environment:

"The experience of 2008 has left many investors bruised and considerably more risk averse. Clients new to financial markets over the past decade have been disappointed with their experience, not only the lack of liquidity and return from their investments, but the unexpected volatility."

As we enter this new era of 'all change', Rayward focuses on five key elements that investors should consider:

1. Don't be afraid to ask basic questions of your fund manager or financial adviser - How secure is my cash? Where are my assets invested and what are the risks?
2. Understand the fees - excessive fees can be a major impediment to capital growth.
3. Be diligent in fund manager selection - look for managers with proven processes and transparency. Don't rely on big brand names alone.
4. Define realistic return expectations in the context of risk appetite. Perhaps lower one's return expectations.
5. Consider diversifying your portfolio into income generating assets. Some studies suggest income growth over time is the ultimate way to preserve capital and guard against inflation.

Rayward concludes: "We are recommending clients do not lose confidence and abandon the financial markets altogether, but reevaluate their risk/return expectations and adopt a back to basics approach to investing."