But what of equities? Those who invested in the FTSE 100 a decade ago (data to 21 September), would have achieved around 70% total return, according to FE Analytics.
During the same period, the MSCI World delivered 130%. Since the nadir of 3 March 2009, the return is even more impressive: 158% from the FTSE 100 and 210% for the MSCI World.
Amid the fashion for ‘capital protection’ and ‘volatility dampeners’, it is still hard to pin down the raging bulls of risk assets.
For Mark Dampier, head of research at Hargreaves Lansdown, we are in the throes of the “most hated bull market” of a lifetime.
He says: “The past 10 years has been unbelievable. I have never seen clients so non-euphoric. They are suffering from a ‘macro disease’ in that they are worried about every event. No one is revelling in the bull market and making more money, and half of investors have more money in cash.
“They were scared out in 2012 because of the eurozone crisis but the FTSE 100 market has gone from the low point of 3,600 to 7,000, and the FTSE 250 has done way better. But lots of people have missed out on this because they spent too much time worrying about asset allocation, led by the passives.”
Still, Dampier acknowledges asset allocation today is harder than it has ever been because most assets are “overpriced”.
“There has been massive central bank manipulation with financial repression on a scale never seen. But is it likely to end well? I would be bearish on that because, at some stage, there will be problems that will make 1929 look like a tea party – but not just yet.”
Bliss and burden
He says: “I would love to see euphoria from the clients as that is the warning sign that we are six months from a major fall. I could, of course, be wrong this time; history rhymes but it doesn’t always repeat itself.”
In considering the past 10 years, and more so our future as an industry, there must be a mention of the bliss and burden of regulatory change.
While some legislation has been met with outrage – Fatca, anyone? – changes brought about by the Retail Distribution Review have been met largely with open arms since 1 January 2013.
From a chief executive officer’s perspective, Mike Webb of Rathbone Unit Trust Management says the past decade has been defined by a shift from selling products to an environment influenced by RDR and the suitability regime.
According to Webb, this has led to greater professionalism in portfolio construction to meet investor outcomes.
He says: “The same influence has resulted in the rise of holistic financial planning to accommodate the emphasis on individual responsibility for financial welfare.”
Referring to the issue of costs, Webb says greater transparency and the concentration of buying power has driven down pricing in the asset management arena, though he adds this “is yet to generate similar pricing pressure in the advice market”.
Looking to the next 10 years, he says: “We should continue to see these trends play out, with continued pricing pressures and emphasis on outcome-orientated investing, particularly as the new pensions freedoms really take hold.
“There is likely to be a greater use of passives to reduce the total cost of investing, with active management providing alpha around core portfolios. We will see far greater use of digital strategies to improve the customer journey.
Meanwhile, one can only hope the industry finds a solution to the advice gap.”
Catering for clients in the wake of pension freedoms and making advice more attractive and accessible to a larger part of the population are the two greatest opportunities, and steepest challenges, now facing our industry. Here’s to 2026.
