2020 was a year that almost made predictions obsolete. The amount of twists and turns in global markets, and the world at large, were incalculable. However, things are calming down and it is time to prepare private banking for 2021. Patrick Brusnahan and Hannah Wright asked the industry what they are preparing for and what they are excited for.

So what is private banking in 2021 going to look like?

Ross Jennings, Head, Sales & Relationship Management, RBC Wealth Management UK

Nobody saw 2020 coming, but the wealth management industry has shown its resilience and ability to quickly identify solutions to maintain operations and strengthen client relationships. We see a number of the themes brought about by COVID-19 as here to stay.

Client engagement

During lockdown, and as a consequence of spending more time at home, we’ve seen far more engagement in wealth management discussions. Clients are scrutinising their wealth manager’s response to the pandemic, its treatment of employees, and support for the wider community; conversations have become more personal and relationships have deepened for good.

In many virtual conversations, we find that clients either want to have their spouse present, or at least state their spouse or family’s priorities and objectives as equally important in decision making. While there are huge benefits to being able to sit down with clients in person, meetings would often have been with only one family member pre 2020, and relationship managers would have had to delve much deeper for this sort of information. This openness is also resulting in greater demand from clients, particularly women, for support in building their financial literacy and boosting confidence to make financial decisions. We see this continuing as restrictions are eased and ‘normality’ prevails.


In recent times, technology has significantly disrupted where and how wealth is made. It’s now quicker, cheaper, and easier to set up a business online from the home office or kitchen table. This has given rise to a new era of working mums setting up successful businesses by virtue of being at home and providing the flexibility to fit around their family, personal life, and aspirations. Going forward, this will no doubt be exacerbated by COVID-19 and the blurring of traditional work and home time, for both women and men.

The pandemic has accelerated a common acceptance that you should be able to balance a career with your own interests and lifestyle and going forward. It may no longer be prevalent to have a corporate career that doesn’t mesh with one’s family and home life. This is particularly the case with younger generations who are rejecting career options that don’t marry up with their own moral compass and lifestyle.

Wealth planning and private banking in 2021

For many, the pandemic has provoked a far greater sense of their own mortality which has escalated conversations around wealth transfer, succession planning, wills, and life assurance. Our wealth planning team is frequently engaged with clients on these topics and this looks set to continue. When conversations turn to succession or wealth transfer, wealth managers are increasingly playing a role in facilitating conversations between the generations – which we know define wealth very differently.

Finally, the looming potential of a UK tax overhaul to fund the response to COVID-19 is likely to influence wealth planning discussions for the coming months.

Investments and social good

The ESG investment theme isn’t new. Even before the virus hit, sustainable investing was a hot topic with investors across the board, particularly among younger generations. While some investment fads come and go, the trends driving the need for sustainable business practices are here for the long term. Embracing investments in forthcoming ESG trends is a way of readying a portfolio for the coming changes in the global economy.

Similarly, we are having more conversations than ever with socially conscious investors around philanthropy and impact investing, both for tax efficiency, and social and economic good.

Victor Allende, Executive Director, CaixaBank Private Banking

In a health crisis like the one we are currently experiencing; the private banking business model has been affected like many other sectors.

Therefore, the challenge is not only to remain fully operational at all times, but to be able to maintain continuous and open communication with our clients, despite the restrictions affecting our ability to interact with clients face to face. What our clients value is that we are by their side via a range of channels, staying in close contact with them, explaining the situation from our perspective as an adviser, providing insights into market movements and updating information in real time.

In this particular crisis, clients valued the ability to access all services online so they can continue operating without restrictions, as well as accessing a range of secure communication channels with their managers such as our Wall service or video calls. All this allows them to continue interacting with us as normal. As we continue to monitor and react to the effects of the pandemic, further innovation in omnichannel communications and digital management services will surely continue.

Furthermore, the growing demand from customers for greater digital capabilities is paving the way to entry for new competitors with value propositions focused on online advisory services. For incumbents, it will therefore be key to be able to continue to innovate in not only products and service models, but also in the way we interact with clients, especially in terms of transparency.

For example, CaixaBank Private Banking has a value proposition adapted to suit the needs of each customer through a range of physical and digital services, from independent advisory – CaixaBank Wealth – that seeks efficiency and transparency in costs explicitly charging for the service, to services rendered for operations at the customer’s initiative, and to non-independent advisory with a specialised adviser that accompanies customers throughout the majority of their investment decisions.

Looking ahead in terms of technology, big data and artificial intelligence will continue to play a key role in the evolution of wealth management, as algorithms and sophisticated models become further integrated into our services allowing for greater service customisation for each individual client. Currently, this is used in tailoring investment solutions to match clients’ risk appetite, but as the tools we use become more advanced and their potential applications more widespread, AI and data will contribute to the value-add of more traditional services that rely on a deep understanding of individual circumstances and needs, such as inter-generational wealth transfers, succession planning, and other life events.

For example, in client segmentation and to pre-test client selection, we are moving from a process in which you ask the client about his knowledge and risk appetite, to a model in which you infer what the answers will be based on the information you have. It is more efficient from a commercial point of view and much better from a reputational point of view. Also, as the technology behind robo-advisory solutions becomes more advanced the tailored investment solutions that take into account clients’ evolving personal and financial needs will also continue to become more sophisticated and help increase the size of the wealth management industry.

In terms of value generation, we are also seeing a shift from seeing a majority of clients who typically demand financial returns on their investments, towards investments in products or funds that are closely linked to ESG objectives and generate non-financial value, as investors come to realise that green or socially responsible investing doesn’t necessarily mean sacrificing a solid return. This growing interest could be partly related to the ongoing pandemic, as investors may be looking to make an impact beyond their own bottom line, which has in itself led to an increased interest in philanthropic investing.

We believe that technology will not replace the value-adding role of an advisor but will continue to complement it by giving the wealth managers of the future new tools to support and inform their advisory function. It is also contributing to a further professionalisation of the wealth management function, allowing the performance of more sophisticated tasks with the added benefit of delivering a more bespoke feel.

Josh Matthews, co-founder, managing partner, senior wealth manager, Maseco

The year is almost over and most people will be grateful to put the past 12 months behind them.  2020 will be remembered for generations due to the COVID pandemic, which led to multiple lockdowns globally that wreaked havoc on government purses and caused the most severe (but hopefully short lived) recession since the Great Depression.

Evaluating the investment outlook for 2021 needs to take into consideration the New Normal we are in and global interest rates that are near or at lifetime lows.

Following the March stock market crash, markets rebounded led by large cap growth equities in the US with the mega technology companies leading the surge and reaching new all-time highs in September.  Most other stocks globally were left behind as the FAANG ‘Story Stocks’ became investor favourites.  Value stocks have not fully recovered and for the 12 months to September 30, 2020 Value stocks had one of their worst relative performances on record:

Asset ClassPerformance Relative to GrowthPercentile
US Large Cap Value1-42.3%0th
US Small Cap Value2-30.6%1st
Non-US Large Cap Value3-24.4%0th
Non-US Small Cap Value4-24.4%1st
Emerging Market Value5-33.5%0th


Source: FTSE Russell Indices, MSCI Indices @ 30 September 2020

1: Russell 1000 Value

2: Russell 2000 Value

3: EAFE Value

4: EAFE Small Value

5: MSCI Emerging Value


Small Cap stocks also substantially underperformed Large Cap stocks as investors feared that small companies wouldn’t be able to weather the COVID storm.

Starting in September and all through November, after the US election and the announcement of a vaccine by Pfizer on 9 November, investors rotated out of Large Cap US Growth stocks into foreign, Small Cap companies and Value companies which rallied as these cheaper asset classes started to outperform.

As we head into 2021, we believe that the heightened risk perception accompanied by COVID may continue to fall as the end of the COVID pandemic draws near.  If so, this should continue to push Small Cap and Value stocks higher which tend to be riskier and are higher beta stocks.  We also believe that risk perception surrounding Brexit may fall after the end of the transition period on 31 December which could push U.K. and European stocks higher.  At the moment, European stocks are cheaper than US stocks on most valuation measures.  Finally, if risk perception continues to fall, the dollar, yen and gold may also fall as due to their ‘safe haven’ status.

In early January, however, we may see significant portfolio rebalancing as large investors may be ‘overweight’ equities due to the Q3 rally.  If they rebalance back to their target equity weights in January, this could result in selling equities and buying bonds in the short term.

Keep in mind that when investing in equities, it’s all about your ‘Time in the Market, not Timing the Market’ and long-term investors usually outperform investors who are short-term traders.  So, consider your outlook for the next five years; invest strategically by looking to overweight the regions or asset classes you anticipate will outperform over the long run; and invest in a diversified manner.   It is not possible to predict the future and unexpected events do happen from time to time, as we experienced in 2020.  However, we believe that as long as we don’t have many new negative surprises in 2021, we should be in for a good year for investors.

Katherine Baird, strategic client partnerships, Investec

At the start of 2020, we conducted an extensive analysis of the trends due to define the new decade – from the changing shape of cities to sustainable technologies and digital innovation. The trends are defined by a new world disorder, and are likely to change financial markets for everyone involved.

Looking at these trends, it’s clear that wealthy clients will need to deal with increasingly complex financial and social challenges, whilst banks and financial institutions must tailor their products to address rapidly changing client priorities in order to stay relevant and useful.

The widening wealth gap in the UK, for example, could see the poorest 10% of households accrue debts three times greater than their assets. This experience will be compared with that of the richest 10% and polarise opinion, creating the potential for regional rifts. But it also sets the stage for philanthropic HNW individuals to pool resources and work together to achieve impact at scale.

We’re also seeing the importance of ESG setting the stage for a more sustainable approach to investment and business. PwC forecasts that sustainable investment products in Europe will reach €7.6trn ($9.2trn) over the next five years, meaning we can expect to see more investors and entrepreneurs prioritise purpose as well as profit, and record amounts of capital channelled into more sustainable funds.

Furthermore, flexible working – which has been catalysed by COVID-19 – will increasingly see entrepreneurs required to find new ways to operate and innovate their approach. According to Regus, this will see flexible working contribute an extra £148bn ($195bn) to the UK economy by 2030.

2021 will also be the year that trust is tested. Businesses will need to place trust in their employees demanding flexible working, who will also be looking to their employers for support and reassurance. An onus of trust will also be placed on brands to uphold their values while delivering experiences that prioritise their customers’ social and ethical demands.

For private banks and financial institutions, this will mean strengthening their client relationships and being a stalwart of trust. In this respect, the New Year will see demand for flexible, personalised financial products as clients seek investment opportunities, and financial stability in face of these emerging developments.