Investment Outlook - Issue 3

Investment Outlook - Issue 3

Issue 3 / Summer 2021

Investment Outlook The Latest Provider Support Offering insight into market conditions and adviser opportunities

Regulatory initiatives grid J pages 4 & 5

Other Features

Special Features

Exploding retirement income myths J pages 18 & 19 Volatility - friend or foe J page 23 Price and value: what you pay versus what you get J page 31

Understanding ESG J pages 6 & 7 Communication package J pages 8 & 9

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Editor’s Forew0rd

Hello and welcome to our summer edition of Investment Outlook magazine. Aimed at all areas of the marketplace with contributions from internal departments keeping you abreast of activities within Tenet and showcasing our provider partners who deliver thought leadership, support, ideas and opportunities. We open this issue with an article from Chris McGreavey, Policy Manager at Tenet, who writes, with the amount of regulatory and legislative changes taking place at any one time it can sometimes be hard to keep on track. The Regulatory Initiatives Grid is a joint publication from various regulatory bodies that details current developments to help you plan for the coming months. ESG investing is a growing area of advice that many clients are now turning to. This article aims to explain: what ESG investing is; the importance of client conversations and how to choose the most suitable solutions. Full article pages 6&7. Prudential highlight some interesting statistics from their consumer research which could help identify opportunities for intergenerational planning conversations with your clients. Research from Canada Life reveals a growing wave of ‘Late Financial Bloomers’ is changing the face of retirement. Full article on page 21. While market volatility may be unsettling for many investors, on page 23 Randy Dishmon, Senior Portfolio Manager at Invesco, discusses its

importance for active investors and how it might represent opportunity rather than risk. Schroders’ Fund Managers Liam Nunn and Simon Adler on why they believe that value should have a long term place in every client portfolio. Read full article on page 24. On page 25, Simon Morris, Premier Miton’s National Business Development Manager, introduces the Premier Miton Diversified Growth Fund, an actively managed, directly invested multi-asset fund, with a highly successful long-term performance track record. The notion of delivering change is central to impact investing. After all, we are looking to achieve a positive impact for global society, as well as a long- term financial return, through our impact funds. On page 26 M&G review the current and predicted future state of impact investing and identify some of the methods investors can use to measure impact. On page 31, Liontrust’s John Husselbee examines the age-old relationship between price and value, and the role it plays in managing multi-asset funds. I’d like to take this opportunity to thank Tenet’s key contributors and provider partners for their varied and excellent content which I’m sure you’ll find an informative and enjoyable read.

Best wishes Cristina Giovanelli Marketing Consultant

4 | Investment Outlook - Issue 3

Regulatory Initiatives Grid What’s on our regulators’ radar? The publication of the Regulatory Initiatives Grid provides us with a useful summary of the areas of focus for the coming year.

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for the future. The FCA is leading on a review of firms’ duty of care, and Consultation Paper 21/13 ‘A new Consumer Duty’ was published in May with high level proposals. The PRA will lead an evaluation of the effectiveness of the Senior Managers and Certification Regime (SM&CR); it may be expected that findings will transpose to a reasonable degree to FCA solo-regulated firms. There are initiatives relating to the regulation and promotion of cryptoassets, and to prevent phoenixing by claims management companies. Banking, credit and lending With 31 initiatives this is the second largest section of the Grid. There are numerous programmes in relation to financial resilience. There are various reviews looking at the lending market and how borrowers in financial difficulty should be treated, particularly as the environment moves away from being driven by short-term pandemic related impacts. Investment management This section contains six initiatives, two of which have been the subject of recent publications. These are FCA led projects looking at liquidity mismatch in open ended daily dealt property funds, and a consultation paper on the creation of a new open-ended structure for Long Term Asset Funds (LTAF). The introduction of the new prudential regime for MiFID investment firms (IFPR) is a major undertaking with an implementation date of 1 January 2022. Pensions and retirement income There are only three certainties in life. Death, taxes and changes to pension legislation. The Grid does not disappoint in this respect, with 14 initiatives for pensions and retirement income. They include a continuing thematic review into DB to DC pension transfer advice. This will address supervisory and enforcement action aimed at redressing previous unsuitable advice, and will run until at least spring 2022. It’s impossible to overstate the level of scrutiny that applies to DB advice. There are initiatives looking at value for money in workplace pension schemes, and

measures to protect consumers and promote competition in non-workplace schemes. The Pensions Regulator (TPR) is leading on numerous initiatives including a code of practice to make its expectations easier to understand, on DB scheme funding and for combating pensions scams. Retail investments There are only four initiatives in this section, which are particularly related to helping consumers make more effective investment decisions. They include the FCA’s Call for Input on the consumer investments market, which is looking at tackling bad actors, ways to improve mass market engagement and how polluters can pay for misconduct. A feedback statement and strategy document are expected in summer 2021. The FCA has previously noted concerns regarding the Packaged Retail and Insurance Based Investment Products (PRIIPs) Regulation, and requirements to provide Key Information Documents (KIDs). It will be consulting further on proposed changes although no timescale is indicated in the Grid. Initiatives completed or stopped The Grid also details initiatives that have either been completed or stopped since the last publication in September 2020. These include:- • New pension transfer rules and finalised guidance; • Vulnerability guidance; • The extension of the SM&CR implementation period; • The replacement of Gabriel for >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36

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