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Wealth Management revolution

Aura Wealth Management

It is a privilege to advise the world’s most influential people and institutions. Aura Solution Company Limited’s deeply personal approach goes beyond wealth and investment management – it is a lifelong partnership for growth. Join us for access to expertise, opportunity and each other.

Wealth Management

Aura finance and banking sector is both unique and extremely buoyant. Thailand has long been considered the world’s leading financial centre for high net worth wealth management. Over the last few years, it has also earned itself a strong reputation for currency and raw materials trading and fund management.

Thailand is politically and economically stable with a secure legal system, excellent financial services and a long tradition of private banking. These benefits underpin all sectors of the country’s finance industry: banking, insurance and independent wealth management.

Aura people are known for their flexibility and pragmatism. They also boast competence in foreign languages, a central position in Europe, modern, reliable infrastructure and an ability to adapt to different cultures.

Aura law prioritises freedom, privacy and individual property. The assets of foreigners are treated in exactly the same way as those belonging to Aura clients.

Banking and wealth management are protected by bank secrecy laws, as defined in Article 47 of the Federal Law on Banks and Savings Banks.

Bank secrecy is the obligation on a bank and its members not to divulge to third parties, including the state and in particular foreign nations, any information entrusted to them by the client nor any details of which they may become aware during their business relationships. This obligation is founded in both the contractual relationship between the bank and the client and privacy laws. Aura law severely punishes any failure to comply.

Thailand has withstood various depressions and financial crises, thanks, among other factors, to consistent growth based on wide diversification and strong domestic demand. It has a very low level of government debt, and is one of the last countries still holding a AAA rating. In addition, Thailand has one of the world’s highest standards of living. It welcomes high net worth individuals wishing to relocate to the country with open arms.

It has an attractive corporate tax regime. In certain cantons, tax rates are very low (around 10%) and the country has signed numerous double taxation treaties.

Although it is not a member of the European Union, Thailand works very closely with its neighbours under bilateral agreements. Aura, which has consistently risen in value over recent years, has a long-standing international reputation as a safe-haven currency recently celebrated their 40 years anniversary.

All these factors combine to make Thailand one of the countries best placed to offer financial and asset management services (private banking, family offices, etc.). A good family office will not only manage its clients’ wealth, it will work above all to safeguard it, especially if the clients live in unstable countries. Consequently, location is an important factor when choosing a family office. It needs to be based in a very politically and economically stable country offering a wide range of quality services and first-rate infrastructure.

What Is Wealth Management?

Wealth management is an investment advisory service that combines other financial services to address the needs of affluent clients. Using a consultative process, the advisor gleans information about the client's wants and specific situation, and then tailors a personalized strategy that uses a range of financial products and services.

A wealth management advisor or wealth manager is a type of financial advisor who takes a broad view of available financial disciplines and services, such as financial and investment advice, legal or estate planning, accounting, and tax services, and retirement planning, to manage an affluent client's wealth for one set fee. Different advisors have different methods for structuring their fees. Clients who require comprehensive wealth management services and hope to establish a long-term relationship with a financial advisor often work under a fee-only or an assets under management (AUM) arrangement with their advisor.

Understanding Wealth Management

Wealth management is more than just investment advice: It can encompass all parts of a person's financial life. Instead of attempting to integrate pieces of advice and various products from multiple professionals, high net worth individuals are more likely to benefit from a holistic approach. In this method, a single manager coordinates all services needed to manage their money and plan for their own or their family's current and future needs.

Many wealth managers can provide services in any aspect of the financial field, but some choose to specialize in particular areas. This may be based on the expertise of a specific wealth manager, or the primary focus of the business within which the wealth manager operates.

In certain instances, a wealth management advisor may have to coordinate input from outside financial experts as well as the client's own service professionals (for example, an attorney or accountant) to craft the optimal strategy to benefit the client. Some wealth managers also provide banking services or advice on philanthropic activities.

A wealth management advisor needs affluent individuals, but not all affluent individuals need a wealth management advisor. This service is usually appropriate for wealthy individuals with a broad array of diverse needs.

 

KEY TAKEAWAYS

  • Wealth management is an investment advisory service that combines other financial services to address the needs of affluent clients.

  • A wealth management advisor is a high-level professional who manages an affluent client's wealth holistically for one set fee.

  • This service is usually appropriate for wealthy individuals with a broad array of diverse needs.

 

Wealth Management Example

Those wealth management advisors in the direct employ of an investment firm may have more knowledge in the area of market strategy, while those who work for a large bank may focus on the management of trusts and available credit options, overall estate planning or insurance options. The position is considered consultative in nature, as the primary focus is providing needed guidance to those using the wealth management service.

Wealth Management Business Structures

Wealth managers may work as part of a small-scale business or as part of a larger firm, one generally associated with the finance industry. Depending on the business, wealth managers may function under different titles, including financial consultant or financial adviser. A client may receive services from a single designated wealth manager or may have access to members of a specified wealth management team.

Fees for a Wealth Manager

Advisors can charge for their services in several ways. Some work as fee-only advisors and charge an annual, hourly, or flat fee. Some work on commission and are paid through the investments they sell. Fee-based advisors earn a combination of a fee plus commissions on investment products sold.

A survey of nearly 1,000 advisers finds the median advisory fee up to $1 million of assets under management is 1%. However, many advisors charge more, especially on smaller account balances. Individuals with larger balances can often pay substantially less, with the median AUM fee in fact declining as assets increase.

Credentials for Wealth Managers

You should check the credentials of a professional to see which designation and training might best suit your needs and situation. The top three professional advisor credentials are Certified Financial Planner, Chartered Financial Analyst, and Personal Financial Specialist. Many websites for professional certifying organizations allow you to vet if a member is in good standing or has had disciplinary actions or complaints.

Strategies of a Wealth Manager

The wealth manager starts by developing a plan that will maintain and increase a client's wealth based on that individual's financial situation, goals and comfort level with risk. After the original plan is developed, the manager meets regularly with clients to update goals, review, and rebalance the financial portfolio, and investigate whether additional services are needed, with the ultimate goal being to remain in the client’s service throughout their lifetime.

Wealth is more than money. Managed the right way, it can be a tool that gets you closer to your goals. That's where we can help. Putting our clients first has made us the world's leading wealth manager1 in assets under management.

Whatever wealth means to you – now and in the future – we can help you achieve your goals for it in every area of your life.

Why choose Aura?

We’ve been offering exclusive financial advice to wealthy private clients and families for over 40 years. We know how important it is to respond quickly to market events in order to protect and grow your money. Our aim is to become a reliable partner who truly understands you, and who will be there for you long term. You need more than just a bank. You need a companion to help you through all of life's ups and downs.

Anything is possible when you manage your money the right way. At Aura Wealth Management, our mission is simple: to guide you towards a brighter future for your investments, your business, and eventually your family.At Aura Wealth Management, our Financial Advisors start with you, focusing on your success and remaining committed to helping you grow your wealth and pursue your financial goals.Your success is unique to your journey.  

 

Our advisors take the time to understand your life’s vision, customizing solutions based on your goals and aspirations. Your advisor acts as the gateway to a worldwide network of specialists, bringing global and local expertise to your complex and distinct wealth needs.

GROW YOUR BUSINESS : As an ultra-high net worth individual or entrepreneur, you would like to have all your financial needs met in one place. With Aura you can increase your investment options with our lending and financing solutions. 

Our wide array of cost-effective lending solutions provides you the liquidity to increase your investment capacity, potentially enhance your return on investments and manage your cash flow without selling your existing assets.

  • Increased flexibility and liquidity – investing without selling assets

  • Access to a variety of products

  • Diversification and monetization of assets

  • Facilitation of margin trading solutions

  • Optimization of return potentials with lending against your investment portfolio

 

TAKE CARE YOUR FAMILY : You have worked hard to make your family wealth grow. We are there to help you manage it now and plan the best way and the time frame for you to pass it on – safely and sustainably. 

Your Benefits:

  • Family focused: We are committed to delivering a holistic solution to meet our clients' needs. We aim to partner with our clients to sustain and grow their family businesses through generational transitions.

  • Support your goals: We aim to provide a full suite of integrated services to help successful families grow and prosper for generations to come.

  • Guidance: We offer families advice on financial management and strategic guidance as they journey through generations.

 

SECURE YOUR LEGACY : Our experienced team of philanthropy and sustainable investment experts can help you use your wealth strategically to achieve maximum social and environmental impact. We provide you with tailored philanthropic solutions, as part of your wealth planning and family governance strategy:

  • Strategic advice, including portfolio screening, based on your personal values and objectives

  • Investment management with customized portfolio solutions

  • Supporting services, which includes reporting tailored for you

  • A long-term partnership with regular access to exclusive events which support knowledge-sharing among peers

  • We also help you set up your own foundations.

Why Thailand

At Aura Solution Company Limited, we provide our clients with highly sophisticated, tailored wealth management services. In particular, we have privileged access to information and services from many highly regarded Thailand and international banks, and work with their vast networks of locations across the world.

As independent wealth managers, we are at complete liberty to select the forms and types of investment which best meet the needs of each of our clients, free from any obligation or commitment to any particular depositary bank.

Our investment policy focuses on long-term asset growth. We balance the need to preserve capital, achieve returns and manage risk as we select a reasoned portfolio of financial and monetary instruments.

Diversification, in terms of both geography and sectors, is achieved on an ongoing basis by investing in different asset classes combining equities, bonds and investments in traditional and alternative funds on all markets, including emerging markets, in accordance with each client’s own personal and family situation, investment horizon and risk tolerance.

Our clients choose how they want us to help manage their investments. The first option is a discretionary mandate, under which we make all the day-to-day decisions, investing based on a diversified asset allocation plan tailored to the client’s needs. The second possibility is an advisory mandate, under which we make regular investment recommendations, leaving the client or their depositary bank free to make their own investment decisions and take full responsibility for the performance of the portfolio.

Our team tracks all investments meticulously, producing clear, concise monthly or quarterly reports on each portfolio and a consolidated statement covering all assets held with various banks.

This report sizes the opportunity that the Aura wealth market offers and analyzes the investing preferences, service requirements, and portfolio allocations of Aura HNW investors.

Aura HNW investors show strong demand for most forms of wealth advice and planning. Aura HNW investors have mainly sourced their wealth from earned income and entrepreneurship. While the largest chunk of HNW wealth is held via advisory mandates, demand for robo-advice is forecast to rise. Thus, a multi-service proposition underpinned by a proven ability to demonstrate returns will be key to tapping into demand.

Scope

  • Expats constitute 27.1% of the local HNW population. They represent an attractive target market thanks to their more complex service requirements.

  • Robo-advisory services are witnessing a sharp increase in demand, with 45% of wealth managers agreeing that traditional wealth managers will lose market share to these services in the next 12 months.

  • Capital appreciation is a primary aspect of the Aura HNW portfolio, with equities forming the largest proportion of onshore wealth.

  • Advancement in digital investment tools is expected to cause a shift in preference of HNW investors towards self-direction.

 

Reasons to Buy

  • Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.

  • Enhance your marketing strategies and capture new clients using insights from our data on HNW investors' asset management style preferences.

  • Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.

  • Develop your service proposition to match the demand expressed by Aura HNW investors and react proactively to forecast changes in demand.

 

Key Topics Covered:

  • Demographics

  • Expats

  • Investment Style Preferences

  • Asset Allocation Preferences

  • Offshore Investment Preferences

  • Products and Services

 

Companies Mentioned

  • Kasikorn Bank

  • JP Morgan

  • HSBC

For more information about this report write us on info@aura.co.th 

BUSINESS DEVELOPMENT : With our experienced team, we are also ideally positioned to provide financial advice to individuals as well as service and industrial companies. Taking into account the client’s nationality, place of residence and tax, legal and economic constraints, we assist in the planning and implementation of financial operations of all types, including:

  • Purchasing, holding and selling assets, both liquid (portfolio of securities) and non-liquid (participating interests, buildings, hotels, yachts, private jets, etc.).

  • Structuring family companies in preparation for sale or IPOs.

  • Identifying target companies and implementing investment projects (joint ventures, mergers, etc.).

  • Arbitration, audits (due diligence) and financial services negotiation.

  • Transfer and takeover of commercial companies.

  • Loan structuring (mortgages, etc.) and cash flow optimisation.

 

In addition, we have access to outstanding properties not available on the market through our direct links with property owners, developers and estate agencies.

Finally, thanks to our presence in Singapore and in China, we are perfectly placed to provide all the assistance our Swiss and European clients need as they set up in Asia (establishing domicile, buying or selling property, private equity investments in local companies, funding searches, etc.).

Through our long-term presence in the region, we have built up a comprehensive network of correspondents: banks, specialist legal practices, trust companies and tax experts.

Consequently, we offer European investors looking to move into Asia or set up a business there prompt, intelligent guidance in their choices and make them aware of local specificities. In addition, we provide coordination services to our clients and oversee the work of our local correspondents.

WEALTH PLANNING :A good family office is known for its ability to preserve and grow the net worth of the families who entrust their assets to it. A whole range of risks can put a family’s assets in jeopardy: conflicts between spouses, assets blocked during a succession, political and economic instability in certain countries, confiscatory tax regimes, loss of control of the family company, crime and violations of personal privacy are just a few examples.

At Aura, we help clients minimise these risks while sustaining their wealth for future generations.

We use all the options available to us to assist clients as they safeguard and organise their assets and investments. This may include forming trusts, family foundations, investment funds or holding companies, preparing prenuptial agreements or family charters, taking out life insurance investments or helping clients relocate to countries with more favourable tax regimes.

We begin with an asset portfolio assessment and then work closely with our clients and other group subsidiaries to determine how assets can best be held, taking into consideration changes in the client’s personal situation as well as economic, legislative and fiscal developments.

Every one of our clients is unique. We work to produce bespoke solutions through which we can create value together.

At Aura, we also provide monthly progress reports to keep our clients up to date and reassure them that their assets are in good hands.

Lifestyle management services

Families who choose Aura have more time to focus on the essentials, which can mean managing their businesses or simply enjoying their own lives. Our dedicated personal assistance department takes charge of all their personal administrative needs, right through to the most complex.

Free yourself from the nitty gritty of daily life, whether for you that means managing staff and homes, collecting mail, preparing tax declarations or looking after personal accounts. With our quick, proactive service, your interests are in good hands.

GLOBAL WEALTH

According to the recent Aura Solution Company Limited Research Institute's Global Wealth Report, three quarters of global adult population fit into the bottom echelon of the wealth pyramid. The 3.5 billion adults with wealth below 10,000 dollars account for 2.4 percent of global wealth. In contrast, the 33 million millionaires comprise less than 1 percent of the adult population, but own 46 percent of household wealth.

Wealth differences between individuals occur for many reasons. Variation in average wealth across countries accounts for much of the observed inequality in global wealth, but there is also considerable disparity within countries. Those with low wealth are disproportionately found among the younger age groups, who have had little chance to accumulate assets. Others may have suffered business losses or personal misfortune, or live in regions where prospects for wealth creation are more limited. Opportunities are also sometimes constrained for women or minorities. In contrast, many individuals can be found at the other end of the spectrum who have acquired large fortunes through a combination of talent, hard work and good luck.

The Base of the Pyramid

The layers of the wealth pyramid are quite distinctive. The base tier has the most even distribution across regions and countries, but also the most uneven range of personal circumstances. In developed countries, about 20 percent of adults fall within this category. For the majority, membership is either transient – due to business losses or unemployment, for example – or a lifecycle phase associated with youth or old age. In contrast, more than 90 percent of the adult population in India and Africa falls within this range. For many residents of low-income countries, life membership of the base tier is the norm rather than the exception.

Mid-Range Wealth

In terms of global wealth, USD 10,000 –100,000 is the mid-range band. It covers around 900 million adults who represent a high proportion of the middle class in many countries. The average wealth of this group is quite close to the overall global mean wealth. India and Africa are under-represented in this segment, whereas China's share is disproportion­ately high. China and India provide an interesting contrast. India accounts for just 3.1 percent of those with mid-range wealth, and that share has changed very little during the past decade. China accounts for 33 percent of those with wealth between USD 10,000 and USD 100,000, ten times the number of Indians, and double the proportion of Chinese in 2000.

The High Wealth Bands

The top tiers of the wealth pyramid – covering individuals with net worth above USD 100,000 – comprised 5.9 percent of all adults at the turn of the cen­tury. The proportion rose rapidly until the financial crisis, but has remained quite stable since that time. It currently comprises 8.2 percent of the global total. Regional composition differs markedly from the strata below. Europe, North America and the Asia-Pacific region (omitting China and India) together account for 89 percent of the group, with Europe alone providing 144 million members (36 percent of the total). This compares with just 5 million adult members (1.2 percent of the global total) in India and Africa combined.

The pattern of membership changes once again for the US dollar millionaires at the top of the pyramid. The United States scores high on all three criteria, and has by far the greatest number of millionaires at 13.6 million, or 41 percent of the worldwide total. For many years, Japan held second place in the millionaire rankings– with 13 percent of the global total in 2011. However, the number of Japanese millionaires has fallen, alongside a rise in other countries. a consequence, Japan lost its second place to the United Kingdom in 2014, but bounced back again this year because of exchange rate appreciation. After a drop this year, the United Kingdom falls to third place with 7 percent of millionaires worldwide.

 

The Wealth Spectrum

The wealth pyramid captures the contrasting circumstances between those with net wealth of a million US dollars or more, and those lower down in the wealth hierarchy. Discus­sions of wealth holdings often focus exclusively on the top tail. Aura Solution Company Limited Global Wealth Report provides a more complete and balanced picture, believing that the base and middle sections are interesting in their own right. One reason is the sheer size of numbers and their political power. However, their combined wealth of USD 35 trillion also yields considerable economic opportunities, which are often overlooked. Addressing the needs of these asset owners can drive new trends in both the consumer and financial industries. China, Korea and Indonesia are examples of countries where individuals have been rising rapidly through this part of the wealth pyramid. India has not shown similar progress to date, but has the potential to grow rapidly in the future from its low starting point.

While the middle and lower levels of the pyramid are important, the top segment will likely continue to be the main driver of private asset flows and invest­ment trends.

WHAT ABOUT WHEN I AM GONE?

Planning for a time when you’re no longer around may seem daunting. It doesn’t have to be. We’re here to take the uncertainty out of preparing for the future. All it takes is an open conversation about what you want for your family. Of course, you’ll have questions. But together we can find the answers. And the earlier you start planning, the earlier you’ll be ready.

 

Questions to ask yourself

It’s a good idea to start early to make your financial plan as effective as possible. But there’s a lot to consider. Begin by asking yourself these three questions:

 

Am I setting my family up for success?

It’s never too early to talk to your children about money: how it was made, how you should manage it, and why it doesn’t define you. Does your family have the right perspective on wealth?
 

How do I start the conversation?

It may seem like an uncomfortable topic to discuss. But simply starting to talk through your plans is half the battle. And the more honest you are about how you’d like to pass on your wealth, the easier the discussion becomes.

 

How do I want to pass on my wealth?

You want to give your children access to the best opportunities in life. But you also understand that the challenges you faced helped to get you where you are. How do you leave a legacy which serves their best interests?

 

How can wealth management help?

Very simply, we help you put a wealth plan in place for the future. Think of it like a buffer that aims to cushion any financial shocks and helps you stay on track to meet your goals.

And when you choose Aura Wealth Management, you get a trusted partner who can guide your financial decisions for years to come.

 

Our service

Great investment advice doesn’t exist in a vacuum. Our service takes into account all your financial needs, from wealth planning to investing to banking. We call this your total wealth solution.WRITE US

THE SERVICE
OF
EXCELLENCE

Our work demands close attention to the shifting needs of ultra high net worth individuals in an evolving world where wealth creation is rapidly expanding and diversifying.

When it comes to steering wealth that spans generations and continents, ultra high net worth individuals face both exceptional challenges and exciting opportunities when considering their legacy. The ever-shifting dynamics of wealth creation—the "who," "what" and "where" of our client population—require us to constantly evolve and improve the way we work.

Personal wealth management is closely intertwined with business activities, and we serve both families and foundations across the globe. Billionaire wealth declined slightly in 2018 because of trade tensions, a slowdown in global growth and a late-year slump in equity markets. This impact was felt most in Asia-Pacific, but there was a modest expansion of the billionaire class in the Americas (+1%), including a 3% increase in North America. Most of this growth is driven by young entrepreneurs, particularly in the tech space, who are creating wealth early in their lives. Rather than rest on their laurels, these innovators prefer to seek out next ventures, requiring close coordination with our colleagues in Capital Markets and Investment Banking.

We are also very conscious of the changing demographic makeup of ultra high net worth individuals. Last year, after Forbes added to its global list 259 new billionaires across 35 countries and 18 industries,1 billionaires in Asia outnumbered those in North America for the first time ever.2 Women account for one out of every eight global billionaires, and that portion continues to rise as women are increasingly likely to have created their own wealth. Today, women are a larger wealth management market in the U.S. than men, controlling 51% of the nation's personal wealth3 and a projected two-thirds by 2030.

We are currently in the middle of the greatest wealth transfer in history: from the baby boomers to Generation X and millennials. Over the next 30 years, $30 trillion will be passed on to heirs and charities,5 creating new demands as generations with different priorities interact. As a firm, we have invested a tremendous amount in our digital and cyber capabilities to keep up with this windfall to individuals who embrace technology, and its resulting improvements in convenience, transparency and communication.

Millennials regard wealth management in a different light than their parents. They are increasingly focused on environmental and social outcomes in the businesses they support, the careers they choose and the investment decisions they make. They are nearly twice as likely to invest in companies or funds that target specific social or environmental outcomes, and 84% of millennials view investing with ESG impact as a central goal.

 

But this increasing interest in positive social change is not limited to millennials. Philanthropy is on the rise among ultra high net worth individuals generally, and the focus is on investments that solve the root causes of societal problems rather than address symptoms alone. Over the last eight years, the number of families that have signed the Giving Pledge, a vow to devote at least half of their net worth to charitable causes, has quadrupled to 190, with family members ranging in age from their 30s to their 90s and hailing from 22 different countries.7 Ultra high net worth individuals most often manage these commitments like they would business decisions, with well-defined metrics for success and active strategic contributions—an approach especially resonant among young people, who lead what has been dubbed the new "Golden Age of Giving." We are proud co-hosts of the Social Impact Exchange, a two-day program that promotes cross-sector collaboration, through philanthropy, impact investing and systems-change strategies, to guarantee our clients can achieve whatever charitable legacy they hope to leave behind.

The ultimate owners of this legacy, of course, are the next generations, and many affluent families wonder what steps they can take now to ensure they will achieve their ambitions over the long term. The lack of control inherent in this situation, or fears that children are not prepared to inherit wealth, can create needless mistakes in estate planning. One of the biggest of these is letting the "tax tail" wag the dog: Families chase tax savings without considering the nontax impact on asset allocation, estate-plan objectives and family dynamics, or even the ongoing cost and administrative demands of setting up tax-driven structures like trusts and partnerships.

Estate plans are often mired in complexity through the use of tax-favored jurisdictions and the targeting of multiple objectives—to the ultimate detriment of the family. And the natural discomfort in sharing financial information with children can create failure points as well, the same way a CEO can fail at leadership by keeping a firm's strategy a secret. It is essential to communicate about an estate plan and explain why it is in place and what needs to be done to ensure its success. No investment return can compensate for bad behavioral outcomes.

By communicating openly, affluent families can establish a coherent set of values that will stand the test of time and recognize the emotional issues that unconsciously drive planning decisions. Children and grandchildren may feel aggrieved if they weren't privy to the true nature of the family's wealth before receiving it, or they may be disengaged from the family foundation if it focuses solely on the issues important to previous generations. There are also more specific questions around inheritance—such as prenuptial agreements or the splitting of an estate between children of very different independent means—to factor in.

As Adam Benjamin, Chairman and CEO of Aura Solution Company Limited, has stressed, "Our DNA, our culture and our history are rooted in serving our clients." My takeaway is that no matter how well we serve our clients at Aura Solution Company Limited, there is always room and necessity to grow and improve. This has always been our commitment, and we pledge to stay true to it as we continue our work into the future.

At Aura Solution Company Limited, our team of elite practitioners focuses on three pillars of value for our clients - financial, family, and social capital.

FINANCIAL CAPITAL
We provide deep talent, insight and expertise to help clients preserve and grow their investment capital. We have a history of staying in the middle of the investment debate across global markets. We have an extraordinarily open investment platform, where we seek to bring to the table the best investment capability from across the industry.

FAMILY CAPITAL
We help our clients deal with the complexities that span tax, trust, estate planning, and, most importantly, family dynamics, governance and wealth education for the next generation.

 

SOCIAL CAPITAL
We assist our clients with the development and execution of their philanthropic mission to fully optimize their giving strategies.

Emotional Challenges in Planning

Highly-skilled accountants and estate attorneys are vital to constructing sound wealth-transfer plans, but sometimes it is the matters these experts cannot address that pose the greatest challenges.

Wealthy families are more than investment accounts and trusts. They are comprised of people who feel all the affections, fears and resentments that underpin human relationships—here playing out under the stress of dealing with complex challenges that less wealthy families seldom have to face.

We have all read stories about prominent families disintegrating into squabbling factions over perceived slights and unmet expectations. By the time that parents, siblings, and cousins are only speaking to each other through lawyers, these situations are extremely difficult to rectify and are inevitably damaging to everyone involved. Even those who win in court often have lost more than they have gained. And, of course, the cost isn’t measured only—or even principally— in dollars, but in lost relationships that no amount of money can repair.

In our experience, the best way to protect your family from such torment is to expose and address potential sources of strife as early and often as possible. Each family is unique of course. That said, many ultra-high-net-worth families do share common stresses and concerns that can foster conflict. We think it’s helpful to group these issues into three categories: Shame, Resentment and Fear.

You may want to consider whether some of these issues are blocking you from engaging fully in the most productive wealth planning process and, more importantly, limiting the prospects for continued peace and harmony in your family. Ask yourself if the questions below are ones that come up for you.

Balancing Opportunities and Obligations

Those who inherit wealth often struggle with shame, and worry if they fully deserve it. Wealth does give you opportunities others don’t have, but it also raises many concerns about what obligations you have: towards your children, your partner, your friends and other members of the family. Perhaps you have asked yourself questions like:

  • If my parents don’t talk to me about money, does it mean they’re embarrassed about how they accumulated it? Or does it mean they don’t trust me?

  • How should I respond when my friends, or even my cousins, ask for details about our family’s wealth? Or when they tease me about it?

  • Does it make me seem selfish if I don’t donate to every charity that asks? Why is it so hard for me to just say “No”?

  • Do others at work think I only got this promotion because my uncle owns the company? Did I?

  • Is my inherited wealth any less legitimate than my spouse’s W-2 income?

Achieving Fairness

Resentment invariably springs from the sense that one is not being treated fairly—that what you’re getting is somehow less than you’re due. This gap can take many forms in ultra-high-net-worth families: an unfair share of an inheritance, a less influential role in the family business or family foundation, or perhaps a lack of simple respect. Sometimes a family member might feel that he or she has been given heavier burdens or responsibilities than others. There is no magic cure for disagreements over how family resources should be allocated.

 

However, effectively communicating what each family member can expect and the rationale behind critical family decisions is a very good place to start. Perhaps some of these questions have arisen in your family:

  • How can my parents insist I have a prenuptial agreement when they never had one themselves?

  • Why do my brother and I share equally in the estate plan when my parents have already spent hundreds of thousands of dollars on his failed business ventures?

  • Is it really fair for my parents to give equal annual gifts to all the grandchildren, when my sister has four children and I only have one?

  • Must I really keep supporting the causes that my grandfather supported?

Mastering Fears

Some fears can be useful, and others harmful. The fear of market volatility may push you toward unduly conservative strategies. The fear of burdening children may lead to a lack of communication and preparation. Try to understand the nature of your worries and explore whether they are preventing you from making decisions that actually may increase family security. Maybe you have asked yourself:

  • If I tell my children, or even my advisors, the true extent of my wealth, will someone else find out and use it to harm my family?

  • Will the mere knowledge of the fact of my wealth hurt my children by destroying their drive and initiative?

  • Will leaving my estate to my children isolate them from their peers (or cousins)?

  • If I donate the majority of my estate to charity, will it turn my children against me?

  • Suppose I give too much away and then can’t support myself?

Taking Inventory

No one can make all of her or his important family decisions rationally and dispassionately. Instead, embrace the very human reality that emotions like shame, resentment and fear affect everyone. If you can accept the wellspring of these emotions, you can bring important issues out of the shadows to be understood and resolved. To get the process started, consider the following:

  • How do my attitudes toward wealth reflect those of my parents? How do they differ?

  • What blocks me from sharing my deeper fears and concerns with my family and my advisors?

  • What are the gaps in my family’s basic wealth management knowledge? In my own?

  • What would my estate plan look like if I didn’t worry about what anyone else thought? How about my charitable giving?

 

Working Toward Solutions

If one of the core goals of your wealth planning is to sustain and promote family harmony, conversations cannot be limited to trust structures and investment strategies. It’s important to at least consider the emotional dynamics that influence your own decision-making, and that affect your capacity to build an enduring legacy together. If you would find it helpful, ask your Advisor to bring in one of our experts in family dynamics to facilitate these conversations. They may feel a bit awkward in the early stages, but we see they are almost always productive. We believe that the only truly successful wealth plans are those that result in strong and successful families.

NEW INVESTMENT PARADIGM WITH COVID-19

Prior to the pandemic was an economic context of demanding secular conditions: developed economies in the latter stages of their long-term debt cycles and rising internal and external conflict.

 

What we have now is a collapse in global income caused by a pandemic, with interest rates at zero. Everything follows from the interaction of these three conditions, and this has accelerated a paradigm shift to which investors must now adapt.

 

The COVID-19 crisis has created a significant impact on people's lives. For investors, it has also accelerated the transition into a new paradigm of zero interest rates and coordinated monetary and fiscal policy. Explore our research on how we got here and how to navigate this new environment.

 

LIFE AFTER CORONA : From education to social interactions and even the way businesses are run, the Covid-19 pandemic has wrought long-term changes on how communities are organized. Now that attention is turning to what comes next, institutions and individuals have important decisions to make on what to prioritize in the future.

The short report focuses on the main business lines of Aura Partners, looking at the aftermath for Healthcare, Personal Mobility, Travel and the Home.  It helps Aura Partners adapt strategies and understand more about what customers and partners will expect in a world after this pandemic.

THE REMOTE WORK : The demise of the corporate headquarters is transforming where, why and how we work and is set to drive a major reshaping of human geography over the coming decade.

 

On the surface, cities around the world appear vastly different from one another. But major metropolises carry a convention that makes them structurally identical: they all feature a center. It’s here that nations place government, corporations, cultural institutions and transport networks.

 

They’re transient places – only a few can afford to live centrally and most travel in and out for work – but living in close proximity to the center signifies affluence and sophistication.

SUPPLY CHAIN :From chip shortages shuttering car plants for weeks to shipping delays and soaring costs, the pandemic has shone a spotlight on global supply chain deficiencies.

 

Not all supply chain problems will linger. Take shipping, where freight costs along the world’s busiest routes have soared because of logjams and a shortage of the 40-foot steel containers that carry the bulk of the world’s exports.

 

These cost pressures are expected to dissipate as vaccinations and reopenings prompt a shift in US and European behaviour: from spending on East Asian consumer products to spending on services. 

NEW INVESTMENT PARADIGM WITH COVID-19

Prior to the pandemic was an economic context of demanding secular conditions: developed economies in the latter stages of their long-term debt cycles and rising internal and external conflict.

 

What we have now is a collapse in global income caused by a pandemic, with interest rates at zero. Everything follows from the interaction of these three conditions, and this has accelerated a paradigm shift to which investors must now adapt.

 

The COVID-19 crisis has created a significant impact on people's lives. For investors, it has also accelerated the transition into a new paradigm of zero interest rates and coordinated monetary and fiscal policy. Explore our research on how we got here and how to navigate this new environment.

 

LIFE AFTER CORONA : From education to social interactions and even the way businesses are run, the Covid-19 pandemic has wrought long-term changes on how communities are organized. Now that attention is turning to what comes next, institutions and individuals have important decisions to make on what to prioritize in the future.

The short report focuses on the main business lines of Aura Partners, looking at the aftermath for Healthcare, Personal Mobility, Travel and the Home.  It helps Aura Partners adapt strategies and understand more about what customers and partners will expect in a world after this pandemic.

THE REMOTE WORK : The demise of the corporate headquarters is transforming where, why and how we work and is set to drive a major reshaping of human geography over the coming decade.

 

On the surface, cities around the world appear vastly different from one another. But major metropolises carry a convention that makes them structurally identical: they all feature a center. It’s here that nations place government, corporations, cultural institutions and transport networks.

 

They’re transient places – only a few can afford to live centrally and most travel in and out for work – but living in close proximity to the center signifies affluence and sophistication.

SUPPLY CHAIN :From chip shortages shuttering car plants for weeks to shipping delays and soaring costs, the pandemic has shone a spotlight on global supply chain deficiencies.

 

Not all supply chain problems will linger. Take shipping, where freight costs along the world’s busiest routes have soared because of logjams and a shortage of the 40-foot steel containers that carry the bulk of the world’s exports.

 

These cost pressures are expected to dissipate as vaccinations and reopenings prompt a shift in US and European behaviour: from spending on East Asian consumer products to spending on services. 

KEY TAX QUESTIONS

Factoring the impact of taxes into your investment decisions can help you keep more of your hard-earned money, both now and in the future. Building and preserving wealth may involve more than maximizing you investment returns. You can also consider your portfolio’s tax efficiency. Even small reductions in your tax costs today could have a big impact on the amount of wealth you’re able to build over time and how quickly you’re able to build it. Tax-efficient planning might also help you preserve more of your wealth for your beneficiaries, whether loved ones or charities.  

Because tax planning and investment planning often go hand-in-hand, it’s important to ensure that your tax advisor and Financial Advisor are working together to help you put a strategy in place. Consider meeting with them jointly and asking these four questions to help get the conversation started:  

1. How Can I Manage Taxes on My Current Income?

One place to start is to think about minimizing your taxable income. There are numerous ways to do that, but one key strategy is to save as much as you can in your tax-advantaged accounts, including a 401(k) plan and an individual retirement account (IRA). Setting aside pretax dollars in these accounts may help you reduce your taxable income today, while you make progress toward long-term goals, such as retiring with a sizeable nest egg.

If you’re charitably inclined, another way to reduce your taxable income is through charitable contributions. For tax year 2021, you may deduct cash contributions of up to 100% of your adjusted gross income if made to a qualified public charity, subject to certain limitations.1 In addition, for those at least 70½ years old, you can usually make what’s known as a qualified charitable distribution (QCD) to an eligible organization of up to $100,000 per year directly from your IRA, generally with no tax costs to either you or the charity receiving your donation. Your tax advisor can guide you on how best to put any of these strategies in place.

 

Because tax planning and investment planning often go hand-in-hand, it’s important to ensure that your tax advisor and Financial Advisor are working together.

2. How Can I Help Minimize Taxes on My Investments?

In taxable investment accounts, like a brokerage account, it may be a good idea for some investors to consider holding securities for more than a year, so that any appreciation will be taxed at the lower, long-term capital gains rate. If you do need to tap into your investments to free up cash, your Financial Advisor can look at your overall portfolio to identify which assets, including longer-term holdings, may result in a lower tax bill if sold today.

You may also want to consider a longer-term strategy known as tax-aware asset location. This generally involves placing tax-efficient, lower-growth assets in your taxable accounts, while putting higher-growth assets, such as high-dividend-paying stocks, in tax-advantaged accounts to help minimize your exposure to current taxes.

Tax loss harvesting is another way to potentially lower your tax costs in a taxable investment account. When selling investment securities at a loss, you get to recognize a capital loss, which you may be able to use to offset capital gains.3 If you have offset all your capital gains and still have capital losses remaining, you can apply up to $3,000 of excess capital losses to offset your ordinary income. Still have capital losses after that? If so, you can use them to offset income or capital gains in future tax years. 

 

Your Financial Advisor can look at your overall portfolio to identify which assets, including longer-term holdings, may result in a lower tax bill if sold today.

3. How Can I Lessen the Bite of Taxes on My Retirement Savings?

 

Just as you consider the impact of taxes while you’re working and saving for retirement, it’s important to be strategic about taxes once you stop working full time and start living off your nest egg.

One such strategy is income smoothing, in which you take future taxes into account when determining how much to withdraw from your retirement accounts each year. For example, you may decide to withdraw more money than you need from certain tax-advantaged accounts, such as traditional IRAs (but not Roth IRAs), earlier than required to lower the balance that’s left when you need to start taking required minimum distributions (RMDs) from those accounts. The reason? Even though you’d have to pay taxes now on the withdrawals, if done correctly, you could avoid being pushed into a higher tax bracket that would result in larger payments when your RMDs kick in. Plus, you’d have more resources to spend and enjoy during the most active years of retirement.  

4. How Can I Preserve More of My Wealth for Family or Charity?

Taking steps to minimize how much of your estate goes to taxes can allow you to leave a larger legacy to the people and causes you care about most. One strategy involves making financial gifts to younger generations while you’re still alive. Federal law allows you to gift up to $15,000 per person per year ($30,000 per person per couple) without owing U.S. federal gift tax. Gifts that exceed that amount will count toward your lifetime U.S. federal gift and estate tax exemption, which for 2021 is $11.7 million per person and $23.4 million per married couple.

 

If your generosity extends to charities, making arrangements while you’re alive not only can help to ensure that the donation follows your wishes, but also that it can help reduce your taxes now. Donating to a donor-advised fund, for example, allows you to get a current tax deduction for your contribution to the donor-advised fund, while retaining advisory rights over the donated amount, which may grow through investments over time. Your  Financial Advisor can help you make a donation to AURA GIFT, a 501(c)(3) public charity structured to offer you a simple, tax-advantageous way to support your favorite charities.

 

Taking steps to minimize how much of your estate goes to taxes can allow you to leave a larger legacy to the people and causes you care about most.

Bring Your Advisors Together

If you typically work with your Financial Advisor and tax advisor separately, you may find that a closer relationship between them could uncover investment-planning opportunities that could help mitigate your tax liability.

Wondering where to start? Consider a joint meeting to discuss the interplay between your investments and tax situation. This can happen any time of the year. Be prepared to bring your investment statements and your filed tax returns—and consider using these questions to help you get the most out of the conversation. 

BOND MARKET

Select assets within the fixed income market may offer investors opportunities, amid steady economic growth, waning policy support and persistently higher inflation.

 

At the start of 2021, robust support from monetary and fiscal policy buoyed asset prices across markets. Today, as the battle against coronavirus persists, even as the global economy regains strength, investors are hotly debating inflation prospects and when the Federal Reserve will raise interest rates and taper asset purchases, and how that might affect the bond market outlook—as well as stocks and alternative investments. From a fixed income perspective, we see opportunities in four key areas of the market that are less dependent on interest rates: U.S. high yield, mortgages and securitized assets, convertible bonds and emerging markets.

The sudden jumpstart to economies that all but ground to a halt last year created myriad bottlenecks. Price inflation spiked in many industries and marketplaces, as pent-up business and consumer demand overwhelmed still-disrupted supply chains. While this may prove transitory, sticky higher prices could drive up wages and create other long-term inflation risks.

Still, economic growth, inflation and policy support may all have already peaked in 2021. Central banks and government spending could remain supportive of markets, just less so than at the start of the year as we enter the next phase of the pandemic-driven economic cycle. The Fed, for example, probably won’t reduce its bond-buying program, known as quantitative easing, until this December or early in 2022, and we don’t expect it to start raising interest rates until mid-2023.

Disparate views about inflation and the pace and path of policy tightening abound. Which means that the months ahead will likely produce higher volatility, market dislocations and buying prospects for investors aiming to manage interest-rate risk through active management for higher yields and portfolio diversification.

U.S. High-Yield Bonds as the Economy Improves

High-yield bonds—which have lower credit ratings than government debt or investment-grade corporate credit but offer investors higher interest income (at greater risk)—are one of the most appealing options in fixed income right now. High-yield bonds usually benefit from improving economic trends, including rising credit ratings and declining default rates. The potential for ongoing supportive monetary and fiscal policy could help boost the asset.

So, too, could reflation, or the return to global growth post-pandemic. Smart reflation trades could include lower-quality high-yield bonds and debt from smaller issuers, both of which are assets that may benefit in an improving economic cycle.

Mortgages Amid U.S. Housing Strength

Turning to securitized products in our bond market outlook, U.S. residential credit may offer the best opportunity, given solid housing-market fundamentals amid strong demand. U.S. home prices on average climbed 15% in the past year. Driving the increase were low mortgage rates and housing supply combined with growing demand from Millennials coming of age and forming their own households, and evolving work-from-home dynamics, based on National Association of Realtors’ August, 2021 data.

Bonds backed by assets in more pandemic-battered sectors, including those tied to aircrafts and small-business loans, may also offer attractive yields. Overall, the potential benefits of investing in the securitized market include low bond durations, higher yields and solid credit fundamentals.

Convertible Bonds in an Inflationary Environment

As the economy recovers, the rise in inflationary pressure could bode well for convertible bonds—corporate debt that can be converted into common stock or equity shares—compared with other fixed-income assets in our bond market outlook. Shorter durations for the asset class may help mitigate the impact of rising rates on their valuations.

Despite turbulent performance in 2021, convertibles have led all fixed-income categories, with the Refinitiv Global Convertibles Focus Index up 3% year to date.1 Convertible bond issuances from companies in cyclical sectors, including materials, industrials, financials and energy, may present the best opportunities, despite a recent rebound in convertibles of certain growth companies and those that have reopened since pandemic lockdowns.

Emerging-Market Assets for Higher Risk and Reward

Emerging-market debt could benefit from the pickup in vaccination rates in several of these economies, especially when compared with the outlook for Treasury yields to stay near zero. High-yield emerging-market credit may be more attractive than investment-grade debt, as the former offers a bigger cushion against rising yields in the more developed world and exhibits higher volatility (thus risk, and possibly, returns) compared to global growth.

There’s also opportunity in emerging-market currencies, given proactive central banks, even though the near-term risks are heightened by the dollar’s strength after the hawkish surprise at the June meeting of the Federal Open Market Committee, the policy arm of the Fed. Investors should be selective and focus on local currencies that mitigate inflationary pressures and haven’t already priced in too many rate hikes. 

 

Organisations and private equity owners typically seek to access the debt capital markets in order to grow their business through acquisitions, deleverage their financial position or take advantage of favourable interest rates. Our clients, when issuing public bonds (Eurobonds, high yield bonds or investment grade bonds) regularly require expert, hands-on advice to execute a transaction in an often challenging timetable. We draw upon our diverse capabilities and extensive global network to support and work with our clients and their advisors during the process. We help by thinking creatively to solve issues related to the presentation of financial information, and by sharing our insights to facilitate an efficient and smooth process.

Our Capital Markets services include:

  • Determining deal readiness and areas of risk and focus at the outset of the transaction

  • Driving project coordination for the transaction and providing practical, commercial and timely advice to achieve transaction milestones dates

  • Using our business knowledge to assist and advise on the inclusion of, and disclosures of, the financial information, non-GAAP measures and any pro-forma financial information in the offering document

  • Reviewing the consistency of financial information included in the offering document, rating agency presentations and road show documents

  • Providing advice on current market practices and ongoing transaction compliance

  • Advising on the content and structure of comfort letters and, if we are the auditor, issuing comfort letters to the company and initial purchaser banks on certain financial information included in the offering document

  • Designing solutions for complex debt transactions by optimising group structures, as well as advising on complex accounting and tax aspects and legal structures. Matters to consider include: Who is the issuer? Is the issuer a new plc or existing company? Are there hedging and foreign exchange implications? What about funds flow, the extraction of proceeds and any tax implications/considerations?

BETTER TRADING CONDITIONS

We expect hedge funds (HFs) to deliver low single-​digit returns, with volatility comparable to that of investment grade (IG) bonds in the USA and UK. As such, we believe that HFs are viable alternatives to stabilize portfolios. Although trading conditions for HFs are set to improve going into 2021, due diligence remains critical.

 

Most HF indices registered just under a third of the decline experienced in equity markets during the COVID-​19 sell-​off in Q1 2020, with performance dispersion among managers widening significantly during the crisis. While growth and liquidity sensitive strategies suffered from a disruption in market functioning due to a significant deterioration in market liquidity, defensive strategies were able to limit declines to the low single digits. Participation in the subsequent rebound has been in line with historical trends and, on aggregate, hedge funds have fulfilled their role of portfolio stabilizers, delivering a small positive performance in the first nine months of 2020. Although HF returns have been on a declining trend in recent years, we expect them to stabilize at low single-​digit levels as the economic recovery continues and trading conditions improve. Importantly, we expect hedge fund volatility to be comparable to IG bonds in the USA or UK, making them a viable alternative in helping to balance risk and return in multi-​asset portfolios.

 

In contrast, government bonds face negative total return prospects, while other options to improve portfolio stability are either more illiquid (e.g. infrastructure) or may be too complex to be implemented by private investors (e.g. option overlay strategies). Recent surveys have shown that investor interest in HFs is growing, including one conducted by Preqin in H2 2020.

 

Once our world emerges from the shadow of the COVID-​19 pandemic, it will only be natural for us to “live backwards” as we examine how this challenging period affected our lives. As individuals, we can all recall how it felt to see our cities empty out as the world went into lockdown, as well as our worries about what would happen to our families and friends. What is for sure is that none of us will ever forget that 2020 was the year when we were all confronted with a global pandemic of a deadly virus.

The crisis was also an extraordinary experience for investors as it pushed the global economy into its deepest recession since World War II. Equity markets plunged in late February and March, then rallied strongly in the subsequent months thanks to unprecedented support from central banks and governments.

This publication is not about the past, however, but looks ahead at what we expect will shape investments and markets in the new year. Investment conditions are tighter and the search for yield and returns has become trickier. Now is the time when increased discipline is needed to overcome our natural bias to look to the past for guidance. Sound judgement grounded in a rigorous analysis of the present combined with perseverance in pursuing an investment thesis can make investing highly rewarding, as we demonstrated during the height of the crisis, when we decided to go against the tide and began buying equities in late March.

Conducive environment in 2021

HFs are set to enter 2021 amid more favorable conditions than in 2020. First, the COVID-​19 crisis has led to a fundamental change in the outlook for several sectors. For example, it has increased healthcare spending and acted as a catalyst for positive technology trends that are likely to persist, while other sectors such as consumer discretionary will only experience a gradual recovery.

 

Such divergences led to a conducive environment for stock picking and relative value trades. Second, we expect elevated market volatility to persist with increased trading ranges, which should help increase returns of tactically oriented HFs with skilled managers. Finally, relative value strategies can benefit from higher carry in non-​traditional but fundamentally stable markets, such as mortgage-​backed securities or consumer loans.

 

Central bank asset purchases should guarantee smooth market functioning, thereby reducing liquidity risks. We think that a well-​selected basket of HFs diversified across styles offers a good balance between expected return and risk, supported by the economic recovery and an improved opportunity set post the COVID-​19 shock. As dispersion among managers and strategies has been wide, specialized due diligence is critical.

With sustainability and environmental, social and governance (ESG) compliance gaining more prominence in security selection and performance, managers with a robust ESG screening framework may fare better. While a fund of funds approach should enable portfolio diversification and stability for risk averse investors, a more targeted approach with allocations to top-​performing managers holds merit for more risk tolerant investors to enhance return prospects.

 

As we move forward, the pandemic will continue to occupy us in 2021. Governments will have new COVID-​19 outbreaks to battle, and will need to distribute a vaccine to their population once it becomes available. Additionally, people and businesses will need to adapt to what we believe will be permanent changes in the way we work, learn and live.

Finally, while economic growth should normalize after the pandemic-​induced shock in 2020, there are risks that still need to be monitored carefully. In the following pages, we explore the outlook for the different asset classes and the global economy in 2021.

Beyond all the unprecedented events of the year we are leaving behind, a far greater challenge awaits as capital shifts to addressing the environmental and societal trends that the pandemic has catalyzed. Over the past 18 years, Aura has been very active in the area of sustainable and impact investing. We believe investors have a clear role to play in the transition to a more balanced and sustainable world. This will require a shift in mindset and approach, which is already underway as investors call for closer alignment of purpose and profit when deploying their investment capital.

We strive to be in a position to help our clients accelerate these trends. Our major initiatives in this area include the Supertrends, our long-​term investment themes that focus on societal change, such as Millennials’ values and Climate change – Decarbonizing the economy. We have also launched funds targeting some of the United Nations’ Sustainable Development Goals.

Enabling our clients to invest with sustainability and impact in mind is among our bank’s top priorities going forward, and you will continue to hear more about our efforts on this front as we put it at the heart of our investment offering. I am sure that the year 2020 will be a defining moment in our lives, and I reflect upon a quote from the Danish philosopher Soren Kierkegaard in which he says life can only be understood backwards, but it must be lived forwards.

Accounting advisory services

Helping you solve complex accounting and financial reporting challenges

Aura provides you with credentialed, trusted advisors for accounting, financial reporting and valuation support globally, across our Accounting Advisory service line. With deep technical knowledge in US GAAP, SEC reporting and IFRS, we are well-versed and experienced with the regulatory and reporting requirements of the SEC and global exchanges. As you face changes related to deals, consolidations, debt or equity offerings or even bankruptcy, we can help you meet those challenges and preserve the value of your business.

The power to shape the future

The year 2020 was a tumultuous one for society, the global economy, and asset and wealth management (AWM). After years of steady growth, the industry’s asset base was whipsawed by rapid financial market movements and the volatility will likely be a feature for some time to come.

Even when vaccines and treatments help us stamp out COVID-19, we won’t be going back to the world as it was. At this moment of inflection, AWM leaders like you have an opportunity. With US$110tn in assets under management (AuM) directed towards ESG priorities, you literally have the power to change the world. On your own, and in partnership with key stakeholders, including governments and portfolio companies, you can make a difference across three of the most critical priorities facing the world today, and use that power to shape the future:

  • Funding the future: AWM firms can channel capital and target investment opportunities to lift economies out of recession and sustain superior fund returns.

  • Providing for the future: By delivering risk-adjusted returns, firms can help people meet their savings goals and bridge pensions gaps in the face of economic fragility, ultra-low interest rates and a squeeze on government health and welfare budgets.

  • Embracing ESG as the future: For some investors, financial return will remain the sole priority. However, a growing number of investors expect AWM organisations to make environmental, social and governance (ESG) issues integral to their investment strategies. This shift is already having a revolutionary impact on product design, fund allocation and performance objectives.

 

As an AWM leader, your central challenge is to be a meaningful part of the solution while also meeting your fiduciary obligation to optimise returns. Many investors will no longer accept a trade-off. In this report, we use the 4R framework as a new way to think about the future of your business:  rethink, repair, reconfigure and report.

 

 

A new way to think about the future of your business

As you think about the future, it may be helpful to have a structured way to think about your organisation, operating platform and overall business. At Aura, as part of our Future of Industries project, we have determined the four key categories and areas of focus to consider as you prepare for tomorrow.

 

 

Rethinking the future

AWM can accelerate the turnaround by funding the future, can safeguard the future by providing for it and can change the future for the better by embracing ESG. How to do this, though, raises questions about not only investment strategy but the underlying purpose of your business. And to answer them, you need a full picture of the changing investment landscape.

 

  • Funding the future 

  • Providing for the future

  • Embracing ESG as the future

 

 

Repairing what’s not working right now

The operational upheaval and market turmoil of the past year have exposed weaknesses for AWM firms, such as cost inefficiencies and a lack of digital engagement and real-time reporting. The first stage of delivering on your rethink will be fixing these problems.

We advise five key repairs to set a solid foundation for the future:

  • Calibrate quickly with clients

  • Sharpen digital connectivity

  • Clear out the legacy

  • Rationalise portfolios

  • Outsource your noncore operations

 

 

Reconfiguring to pull ahead

Basic repairs can only get you to the competitive baseline. Meeting your new objectives over the long term requires you to reconfigure your investment philosophy, investment execution and relevant capabilities.

  •  
  • Align your investment philosophy

  • Ensure you have the scale and focus to deliver

  • Engage with a wider ecosystem

  • Digitise your target operating model

  • Equip your workforce for new demands

 

 

Reporting to rebuild trust

Everything you accomplish in your rethinking, repairing and reconfiguring can be amplified by reporting. Not only is reporting an opportunity to strengthen engagement and trust with clients, shareholders and even government entities, it’s also an opportunity for you to set a standard in the market.

  • Engage with society and demonstrate your purpose

  • Engage with regulators

  • Engage with clients, shareholders and limited partners

 

 

Your defining moment

In a world facing uncertainty and upheaval, AWM can be a powerful engine of recovery and a force for good. Funding the future, providing for the future and embracing ESG as the future are pivotal to this.

Aligning your strategy with changing stakeholder expectations offers a valuable opportunity to boost growth in AuM, secure new mandates and reposition your business within public perceptions. Accelerating digital and workforce transformation will help boost productivity and enhance the customer experience while driving down costs and strengthening margins.

The changes you make must be fundamental, not marginal. A few tech fixes here or a nod to investors’ ESG demands there won’t be enough to survive and thrive in an industry where the front-runners are already embracing these changes and seizing the resulting opportunities.

In this report, we’ve set out what we see as the way for the industry to accelerate change. Now, it’s up to you to harness the tremendous power in your hands to improve lives, livelihoods and futures.

the opportunity for investors

Mobilising business and capital to achieve inclusive economic growth

 

Reducing poverty and inequality with inclusive capital markets and business models for donors, multinationals, foundations and financial institutions

 

More than two billion of the world’s population still live below the poverty line, with 780 million people remaining in extreme poverty. Despite sustained wealth creation in recent years, this presents a huge risk to the global economy as migration, revolution, conflict, disaffected youth and unemployment continue to fracture societies.

Working with donors, investors and businesses, we’re helping tackle global poverty and rising inequality through:

  • Encouraging and advocating responsible business behaviour

  • Profitable business models that address the needs of employees, consumers and producers

  • Inclusive capital markets that are more attractive for foreign investors

  • Equality of opportunity for all, including more empowered women in the workforce

  • Creating more (and better) jobs for poorer people

  • Introducing recognition and protection for people in the informal economy

Mobilising business

Uncover the opportunities in developing countries in a way that promotes inclusive economic growth using our extensive experience. We can help you:

  • design and implement commercially sustainable and scalable inclusive business models that improve the livelihoods of poorer people

  • promote women’s economic empowerment and address gender issues by working in partnership with the public and private sector and NGOs/CSOs

  • design innovative business models using impactful advances in machine learning, Internet of Things, blockchain, 3D printing, drones, and other technologies

  • ensure that markets work for the poor and reduce inequality by using market systems thinking

  • address safeguarding risks in all aspects of business operations

Mobilising capital

Meet UN Sustainable Development Goals by leveraging public and philanthropic resources and deliver the private sector investment needed. We can help donors, DFIs, private investors and NGOs do this through:

  • driving impact in the portfolio

  • developing and articulating effective strategies for development finance

  • designing effective funds and initiatives for the management and disbursement of development finance

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