Harris: UK private banking industry 2011 outlook

UK investors will continue to seek trust and scrutinise their advisors in 2011, while tax planning will grow in importance in response to fiscal pressures, says RBC Wealth Management’s head of UK private client wealth management

Over two years on from the credit crisis, the UK private banking industry is still coming to terms with its fall-out.

We expect that 2011 will see a continued re-evaluation by clients of their adviser relationships.

Low frequency contact has done much to undermine the trust felt by clients for their advisers during the last year.

The principal beneficiaries will be those advisers who maintained consistently high interaction with their clients throughout the crisis.

2011 will see clients focus more than ever on controlling their tax burden, brought into sharp focus given the current state of public finances in the UK.

Tax efficiency and planning will clearly be a key driver of client activity next year.

With interest rates at historically low levels, credit still not that readily available and a resurgent inflation risk, the appetite for meaningful real returns will be of paramount importance.

These opposing dynamics will prove an unfamiliar and challenging market backdrop for investment advisers.

We see the continuation of strategies such as core-satellite investing during 2011.

Gold will still be seen as an inflation hedge, following an insatiable appetite for it in 2010.

Our view continues to be that gold can be good punt, but that it is volatile and offers zero real return over the longest time periods.

Meanwhile, a key driver for banks next year will be a focus on controlling operating costs as they look to improve their internal efficiencies.

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