In the world of wealth management, the classic investment split of 60/40 – that is, 60 per cent in equities, and 40 per cent in bonds – is coming under scrutiny. This split has historically been regarded as the foundational investment portfolio, but even optimistic analysis suggests that annual returns for the next decade will amount to just over half that earned over the past 10 years. The reality here is that relying on public market equities and bonds to deliver the risk-adjusted performance investors seek, is no longer sustainable. 

A competitive investment split for wealth managers in the future, will focus more on private markets and alternatives. Recent data from Natixis shows that the number of institutional investors who plan to add to positions in alternative investments, exceeds those who plan to trim in virtually every flavour except one: cryptocurrencies.

UK vs Europe
UK wealth managers have historically taken a more cautious approach to private market investing. Their European peers, particularly in the DACH region, allocate a higher portion of clients' assets to the private markets. In the UK, wealth managers typically have a narrower offering when it comes to the private markets, providing limited access for their clients, typically through the few listed vehicles or their in-house curated vehicle. With companies increasingly choosing to remain private for longer, thereby mitigating the onerous public reporting and compliance requirements of listing, wealth managers will need to update their approach to strategic asset allocation.

When it comes to investing in private markets, private equity still stands out as the favourite flavour. According to , claims to bank every second billionaire and it is a leading country when it comes to wealth management. With a new Labour government in place in the UK, there are already discussions about how tax increases will impact the wealthy, and an increased interest in the countries offering more favourable terms. The UK is predicted to see an exodus of almost 10,000 millionaires this year alone, with Switzerland, Portugal, Greece and Italy, all predicted to see significant increases in millionaires, due to their favourable tax systems.

One can be rest assured that the wealth managers will follow the money; they will be quicker to adopt the technology that allows those who move to these countries quick and easy access to the private markets, because this is where the future of wealth creation will be. With companies remaining private for longer, a younger generation of stock market sceptics, and a more challenging outlook for the UK’s mass affluent under a new government, now is the time for UK wealth managers to shake off some of their more traditional approaches and look at what European wealth managers are doing, in order to remain competitive.

The author
Mark Woolhouse is CEO of Treble Peak. The firm is a technology platform expanding access for investors, wealth managers, family offices and private banks to European venture capital and private equity investment opportunities. He has over 30 years’ experience in financial and professional services, specialising in capital raising, corporate strategy, M&A, financing and accounting.

In 2000, he became finance director of EO plc, a pan-European retail distribution platform for new European IPOs, including Carphone Warehouse, Orange, and Deutsche Post. He was also CFO of HFC Bank and Household International Europe, HSBC’s European consumer finance division, from 2002 until 2007, where he completed acquisitions (including M&S Money) totalling over £1 billion ($1.3 billion). Between 2007 and 2017, he was the CFO and COO of Dexion Capital,, leading it through to acquisition by Fidante Partners in 2015. In 2022, having joined CoInvestor, Woolhouse helped establish Treble Peak.