The Coronavirus pandemic has seen a resurgence in the purchase of luxury goods by high-net-worth individuals (HNWI), motivated by nostalgia, family values and sustainability. Simon Wittenberg speaks to Barclays Private Bank’s Gerald Moser to find out about the latest investment trends.
Luxurious Magazine: How long have you worked at Barclays Private Bank, and what have been your career highlights to date?
Gerald Moser: I joined Barclays Private Bank (BPB) in February 2019, having spent 15 years working in banking. During my interview process, I was told: “Barclays Private Bank is a start-up within a multi-centenary bank”.
I thought it was an exaggeration, but it was really the case! From day one, I could feel an energy which you would only typically associate with a start-up. And compared to previous institutions I had been working at, the hierarchy was extremely flat.
The motivation of my colleagues was second to none, which made it easy for me to adjust to my new environment and contribute my fair share of work.
In terms of career highlights, it is difficult to single out one particular moment. I would say that each new challenge provides the opportunities to reach a new milestone in a career, and 2020 was not short of challenges!
LM: What impact has COVID-19 had on the profitability and key activities of Barclays Private Bank?
GM: COVID-19 has clearly changed everyone’s daily routine. We had to adjust to virtual meetings, disruptions in the way we work and uncertainties regarding what the new normal will be. But when it comes to investment, periods which generate markets turbulence are opportunities to strengthen the link with our clients. It is during challenging periods that you can differentiate yourself and rise to meet this challenge.
We organised weekly calls to keep our clients informed about our investment views and opportunities in the market. We reached out to make sure they understand that our investment process is built to deal with such turbulent periods and reassure them about their investments. In the end, while most of our lives have been somewhat affected by the pandemic, COVID-19 has changed very little from an investment perspective. At BPB, we were fully prepared for such market reactions.
LM: How essential is individuality, and investing in something that nobody else has?
GM: When buying goods and services, a consumer will have any of a multitude of drivers, and individuality and expressing it can be a factor, particularly with luxury goods.
Similarly, investors aren’t one homogenous group, and they can and do have a wide variety of motivations for investing. This could range from the traditional aim of protecting and growing wealth, to leaving a specific legacy for the next generation through impact investing.
Back to individuality, it’s possible that investing in something new, and that others don’t have access to could be a driver for an investor. This could be access to investment asset classes or investment vehicles that are not accessible to all investors, or wanting to invest in new and emerging trends or themes.
LM: When nostalgia is a key motivator in a purchasing decision, what would the individual typically buy to incorporate this important element?
GM: Nostalgia can be a strong motivator in a purchasing decision, as the positive memories of a time or an experience can influence that decision. I can think of recent re-releases of retro gaming consoles and games and imagine many people re-living childhood experiences with them.
Our experience in Behavioural Finance tells us that investing can be as much an emotional decision, as well as a financial decision. Simple and compelling narratives that elicit an emotional reaction can be strong drivers of investment decisions. For example, a particularly strong nostalgia towards a product or a brand could have some influence on investors´ views when they’re thinking about individual companies.
LM: With the importance of reducing our environmental impact making more headlines in the media, how much does the “green factor” influence today’s investment decisions?
GM: Environmental considerations are definitely coming up more and more during discussions with our clients. There is a growing appetite to find investments contributing positively towards building a more sustainable world. But this is not only a “feel good” factor, you actually find some of the best investment opportunities trying to tackle the climate change issue.
Also, it is worth highlighting that other factors around social impact and governance concerns are now becoming very important items for clients when assessing investment opportunities. The so-called “ESG” factors are increasingly as relevant as valuations or growth factors when making an investment decision.
LM: With many people now based at home, have online auctions become a more popular method of acquiring unique pieces from around the world?
GM: Absolutely. Like everything else, the auction world has been affected by the COVID-19 crisis. We have seen many segments of the economy move to online trading, to meet the restrictions put in place to fight the global pandemic.
Online auctions have enabled people to overcome limitations such as geographical constraints, need for physical presence, space requirements, and limits on audience numbers. With travel restrictions put in place, higher internet penetration, longer time spent online, and better videoconference setup as people adjust to work from home, there was a perfect setup for online auctions to thrive in 2020.
LM: As we emerge from the pandemic, do you think investment strategies and the make-up of portfolios will change?
GM: The pandemic has been a “once in a generation” event. It has impacted financial markets in a way which is likely to have long-lasting consequences. For example, in order to support national economies during lockdown, governments around the world have injected large amounts of money into the economy.
In the process, they have increased their debt levels to a point which has not been witnessed in decades. At the same time, central banks around the world had to inject more liquidity into the economy through lower rates and assets purchases.
Those developments have structural implications for portfolio construction. For example, a typical portfolio combining equities and government bonds was often described as an all-weather portfolio. But with yields from government bonds close to or below zero, the combination of equity and government bonds might not be the best combination anymore. We are currently seeing a need for additional diversification, a task that alternative assets could fulfil.
LM: How would you personally define luxury, and what are your biggest luxuries?
GM: I think luxury is a holistic concept. It is about owning something that seems hard to reach or obtain. Right now, travelling and being able to meet friends seems like luxury!
LM: Thank you for your time Gerald, and it has been a pleasure talking to you.
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