Welcome to your May edition of the DFP Newsletter, which this month is exclusively live on our website for the very first time. In this update, we’ll take a look at pensions; consider the relationship between finance and sustainability; and we’ll also have a nosey at the recent rich list - and the trends it shares with investments and the UK stock market. But first, as always, we’ll start with a message from our director, Liam Winstanley.
A message from our Director…
It’s occurred to me over the past few months that many of us (knowingly or not…) are perhaps looking at our lives and our finances differently than pre-pandemic.
I seem to be having deeper conversations with people around what they want their finances to do for them - rather than what the money is actually doing in itself. In other words, there’s been a shift from concentrating on nominal financial returns (solid though those returns have been in recent years) to the actual utility of the money itself, in terms of happiness, family, memories and wellbeing.
The great thing about this is that it allows us to focus on genuine personal objectives that can better inform how we invest, how we view debt, how hard we work, and what we actually spend our money on. So, if you haven’t previously thought about money this way - give it a try!
In the news this month…
This month, eight new tech figures entered the Sunday Times Rich List. And, as is evidenced by the swelling of Jeff Bezos and Elon Musk’s personal fortunes, investment in technology companies shows no sign of abating. Reliance on technology, from video calling and streaming services to the manufacturing of essential items, has only increased during the pandemic. Undoubtedly the most important technological advancement since the turn of the decade has been the production of the COVID-19 vaccines. And, as stocks in vaccine-producing pharmaceutical companies rise, so too does the personal wealth of the people at the top of those organisations; in some cases, to ten figure sums.
According to a study from the People's Vaccines Alliance, nine people have become new billionaires since the outbreak of the pandemic, thanks to vaccine-related sales and profits. The nine so-called ‘vaccine billionaires’ include the Moderna CEO, Stéphane Bancel; BioNTech’s co-founder, Ugur Sahin; and Zhu Tao, the co-founder and chief scientific officer at CanSino Biologics.
Unsurprisingly, investors have taken an interest too. Shares in Moderna have risen by almost 125% in the last 12 months. Meanwhile, in the first quarter of the year, ‘UK drug makers, diagnostics, medical equipment and other life sciences companies’ made ‘£10.6bn’ from private funding rounds and stock market flotations.
A study, which featured in the Guardian this month, predicted that investments in ‘life sciences’ would reach ‘record’ levels, with many investors taking an interest in the sector for the very first time. One of the biggest recent deals was the £1bn purchase of UK biotech company ‘Kymab’ by French pharmaceutical firm, Sanofi.
The vaccine itself has also had an impact on investors’ confidence more broadly. According to research by ‘HYCM’, over 40% of UK investors are ‘confident the vaccine rollout will benefit their investment portfolios’.
As you’ll know from our recent updates, the sustainability market has been a focus over the last few editions - with the sector receiving landmark levels of investment. And as more people invest in ‘green’ companies, sensitivities surrounding environmental protection continue to increase. Last month, we featured a report which suggested that most people believe that ‘environmentally-damaging behaviours should be made more expensive’.
Just a few weeks on and a study commissioned by Greenpeace and the WWF has revealed that UK financial institutions are responsible for ‘almost double Britain’s net total emissions’. In 2019, the UK’s net emissions were 455 million tonnes of CO2. In the same year, the country’s finance sector emitted over 800 million tonnes. According to WWF UK’s Chief Executive, Tanya Steele, many Brits would be ‘alarmed to learn that their money was all too often used in ways that damaged the environment, driving fossil fuel extraction, deforestation and other destructive activities’. In fact, ‘if the UK's biggest banks and investors were a country, they'd rank 9th in the world for the carbon emissions they're responsible for’. For more information on sustainable investments and ESG, talk to our team today.
This month’s featured article…
You may have seen in the news earlier this month that flat fees are to be axed on pensions’ worth up to £100. The government’s intention is to avoid a scenario where people who’ve acquired multiple small pension pots (such as those who’ve regularly moved between jobs) come to retire and discover that their pots have - thanks to charges - been eroded over the course of their working lives.
Auto enrolment has been hugely successful in recent years, but that could suffer if savers come to realise that their pension money has evaporated as a result of fees. That said, the amount of people who are unaware of their pension status is alarming. Research conducted by ‘My Pension Expert’, and published by Yahoo Finance UK, has found that almost half of Brits have not checked their retirement savings amount during the last year. In the same period, nearly 80% have not undertaken a thorough review of their retirement finance strategy. Find out more below.
Yahoo Finance UK: ‘Almost half of Britons haven't checked their pension despite COVID crisis’
On a lighter note…
Since the start of the pandemic, over a third of Britons are actually better off financially, with their savings increasing by an average of £4,500.
With large parts of the economy now reopen and restrictions (we hope!) finally set to end next month, peoples’ saving - and spending - habits are set to change dramatically. So, what better time to give your finances a ‘spring clean’?