In the latest in our regular series, Portfolio Adviser hears from Heather Christie, head of UK advisor and platform sales at BlackRock (pictured below)
Which particular asset classes and strategies do you anticipate your intermediary clients focusing on in 2025?
We expect multi-asset strategies and model portfolio solutions (MPS) to remain popular going into 2025, as these form the bedrock of how advisers help clients to achieve their financial goals.
The make-up of these portfolios is also evolving. Whether this means providing access to better diversifiers and/or improved sustainability credentials, increasingly advisers look to offer clients greater choice within ready-made fund ranges.
Additionally, a new market regime of protracted and greater volatility has led to a search for investment managers who take a risk-first approach. These approaches are built to achieve more consistent outcomes, providing end-clients with greater assurance they can achieve their financial goals. In this context, we expect appetite for risk-targeted multi-asset funds to grow.
Should end-investors – and, by association, asset managers – be thinking beyond equity and bond investments? Towards what?
There are three key areas of portfolio evolution that we see – getting more granular in diversification, the inclusion of private markets, and sustainability and transition strategies.
Against the more volatile investing backdrop that we’re seeing, advisers — alongside the asset managers they work with — need to think about portfolio diversification in a more granular way to better manage portfolios and deliver on investors’ goals. A great example is looking at a broader spectrum of fixed income and currency investments than traditional portfolios do.
Secondly, while equity and bond investments will always form the core of a multi-asset portfolio, depending on an individual investor’s risk appetite and liquidity requirements, some exposure to private markets may be appropriate to achieve the outcomes they seek.
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Likewise, while sustainable and transition strategies have yet to garner broad-based support across UK wealth and advice portfolios, the transition to a low-carbon economy is among a handful of major structural shifts that we see rewiring economies, sectors and businesses. Their effects create complexity, risk and opportunity for companies and investors. As a firm, we are committed to offering clients choice and developing the right products to address clients’ sustainable investing needs.
Portfolio management has undoubtedly become more challenging amid recent market volatility, underscoring the imperative of investors holding portfolios that are able to position for an ever- changing market environment. The risk of falling short to advisers and their clients is too big to take; that is why choosing asset managers who place risk management at the core of what they do is of paramount importance.
To what extent do private assets and markets fit into your thinking? What are the currents pros and cons for investors?
Private assets can play an important role in building robust portfolios aimed at generating better outcomes for customers. The three major benefits we see are: 1) less exposure to near-term volatility; 2) their differentiated, diversifying return stream and 3) their tangible nature (think wheat, wind, and data farms) bring an end-client’s portfolio to life for them.
We believe private markets will become a key portfolio allocation to help UK savers achieve their long-term goals, but it will be essential that we engage advisers and their clients on the suitability of private markets and the trade-offs involved (for instance around liquidity).
However, a significant hurdle to greater uptake of private markets is that the UK platform players which support advice firms so brilliantly with execution, tax wrappers, custody reporting and so on, have not been designed to easily handle the structures through which access to these assets are best provided, such as Long-Term Asset Funds and Investment Trusts.
We are engaging with key ecosystem players to improve client access to private assets and drive better outcomes for end investors.
Given client and regulatory pressure on charges, how is your business delivering value for money to intermediaries and end-clients?
There are two key levers when it comes to delivering value – price and everything (performance, service and features) that clients get for it. At BlackRock, we relentlessly focus on delivering both components.
As the industry leader in ETFs and indexing, we are at the forefront of democratising access to investments for end-customers and helping portfolio managers to build better-priced funds. Equally, differentiated, high-quality, durable alpha will always have a role to play in portfolios, and that is worth paying for.
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Finally, service is increasingly important. One of the biggest changes across the wealth market is that advisers and other partners want more from fewer partners. If you cannot offer more, it’s going to be harder to be a good partner. At BlackRock, we continually think about additional ways to support advisers and end clients, for example via technology or insightful content to support their investment committees or simply their team meetings.
How much of your distribution is currently oriented towards climate change, net zero, biodiversity and other segments of sustainable investing? How do you see this approach to investing evolving?
The transition to a low-carbon economy is one of the biggest secular investment changes of our lifetimes and it’s underway right now. Its impact will not be linear. Clients also have different preferences when it comes to determining what role they want sustainability, net zero, and/or biodiversity to play in their portfolios.
We are there to offer choice and our flagship UK multi-asset range already includes three funds enabling investors to align their sustainability preferences with their investment goals.
As some £5trn of wealth transfers to the next generation within the next decade, we expect to see demand for such products increase.
How are you now balancing face-to-face and virtual distribution? In a similar vein, how are you balancing working from home and in the office?
I love working in a vibrant, in-person environment and firmly believe we are better together. Financial services is at its core a people industry.
Connecting in-person with colleagues, clients and contacts is so valuable. While the pandemic taught us that much information, activity, and box sets can be delivered virtually, Taylor Swift has taught us that inspiration only truly happens in person (stay with me here!).
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Post–pandemic, the bar for content and events is higher. People now either vote with their money (the Taylor Swift effect) or their feet (attendance levels at in-person industry events) – but only if it’s worth their precious time or money.
For advisers to attend our events, it is incumbent on the industry to offer them compelling content, at an incredible location, with opportunities to connect with relevant people. This is achievable but requires a shift in philosophy compared to what these events used to look like. Fund pitches are gone. Now, it’s about demonstrating how we can add value, offer more insight, and make an event worth an adviser’s time.
What do you do outside of work?
As the mother of two young and energetic boys, much of my time outside work involves soft play, football, and cooking and crafting with them. It’s great fun.
Exercise also keeps me sane, so I prioritise that, as well as making time for my husband and friends.
What is the most extraordinary thing you have seen in your life?
During my early 20s, I led canoeing trips in the Canadian wilderness where you can find some of the most incredible scenery and nature. Once, I was lucky enough to see a family of six moose galloping through the far side of an island before dashing into the water to take a swim!
Looking a little further ahead, in what ways do you see the asset management sector evolving over the next few years?
Our industry is amid a dramatic shift, which will ultimately see us provide an enhanced service for more customers at a better price.
Much of this shift will be driven by making high-quality financial planning available to more people – particularly in the UK, where so few currently access advice. By forming the bedrock of those plans, asset managers have a crucial role to play. We can help end customers achieve their goals through high-quality investment solutions that offer terrific value.
