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Anya Zakharova, Managing Director of Stellar International Art Foundation

Covid-19 has created a year of uncertainty and drastic change in every echelon of society, with the art sector being no different.  The industry was heavily affected by lockdowns, travel bans and social distancing, all of this leading to a slowdown in sales, drought of fairs and closure of galleries. Yet at the same time, the industry has proved itself to be incredibly agile, with increasing online sales and art fairs and viewing rooms going digital, this allowing the industry to avoid a total standstill and enabling it to tap into new customers.

With galleries and exhibits forced to shut for the best part of a year, it is no surprise art sales fell quite dramatically during 2020, with a global drop of 22%. This is a substantial amount which cannot be overlooked, but it doesn’t mean the industry won’t eventually return to pre pandemic levels.

One reason I am confident the art sector will bounce back, is that art is typically bought by individuals with expendable incomes. In contrast to the 2007-2008 financial crisis, the super-rich have actually become richer during the pandemic as financial stimulus and volatile markets have served to increase their fortunes. After the global financial crisis, the industry fell by 40%, but managed to fully recover by 2010, indicating that the bounce back will likely be quicker after Covid. There is also an expectation that many people have been holding onto their money until they can view art in person again.

Along with the art industry being able to hold onto its normal clients, Covid has also led to the sector becoming more flexible and adapting its operations. This has allowed the industry to tap into a new group of customers, which is clear when you consider that despite overall sales having fallen, online sales have been on the rise.  The most influential auction houses like Sotheby’s and Christies managed to adapt quickly to lockdown restrictions, updating the way they market and display artwork. They produce videos with art experts talking about individual pieces while the piece rotated, allowing customers to see every inch of the work. Additionally, artists have used the impetus of lockdowns to set up their own websites, to curate their own shows and display their art on social media, this allowing them to display their art for potential buyers to see, without the extortionate fees of renting a gallery space.

With the limits on viewing artwork in person, condition reports have become an even more vital part of buying and selling art. These reports tell buyers everything they need to know about the work which they may not be able to see from an image online. They go into immense detail, telling of cracks and scratches on the piece, or even if the signature is at a slight angle. Having these reports gives customers the reassurance that what they are buying has been checked and allows them to be sure of the condition of the piece once it gets to them. This has helped tremendous amounts during Covid to allow the sale of art to continue.

Despite of these advancements, people do like to see art before they buy it, not only to consider their purchases, but also as auction houses are seen as a great way to learn about the industry. After Covid, naturally many people will be itching to get back to the auction houses and exhibits, but the digitalisation of art sales has also opened the industry up to a younger generation of customers. Sotheby’s even reported that over a third of online buyers were transacting with the auction house for the first time and that over a quarter were under the age of 40. Young people have always been more comfortable doing things online, including making big purchases, so the new digital sales of art is going to be more open and inclusive than ever before, especially for younger generations.

Not only has the art world become open to the digitalisation of sales, but also art in the form of NFTs (non-fungible tokens). Beeple’s Opus, which is a pioneering piece of work created over 5,000 days. This piece sold for $69,346,250 and is a fine example of the new acceptance of digital artwork.

The art world looks like it will make a swift recovery after the past year of uncertainty, yet it will not be without the loss of smaller galleries, female and emerging artists have been forced to step back from their art careers. This has led to the industry becoming even more exclusive, an issue which organisations like Stellar International Art Foundation look to tackle through their work. Since 2018, we have supported women and emerging artists by giving them a platform to display and promote their work, something we feel is incredibly important when the majority of artists displayed in major museums and galleries and the topmost profitable artists continue to be white and male.

There has been considerable noise about art market disruption forced by the pandemic. Yet the sector has also handled the pandemic with impressive versatility and adaptability and these new initiatives will keep the industry on trajectory for a strong recovery. For these reasons, I believe now is an appealing and exciting time to invest in art.

The Stellar International Art Foundation:

Established in 2008, The Collection has become internationally renowned for its content, coverage and activities around the globe and is a particular champion of female artists and feminist art. Currently the foundation comprises over 600 works dating from the late 19th Century to the present day, including international artists and ranging from sculptures to paintings. It distinguishes on individual talent rather than regions and gives an insight into the cultural viewpoint of individuals with diverse understandings of the world.  For more information, please visit: https://sia.foundation/

By Andy Baillie, RVP Financial Services, Seismic

According to recent estimations, Europe’s next generations are set to inherit around £2.3 trillion from Baby Boomers in the 2020s. Although some will be pledged to charities or siphoned off in taxes, the majority of this vast inheritance will flow straight into the pockets of Gen Xers and Millennials.

This shift is presenting a significant opportunity for wealth managers and financial advisors to build new relationships with these younger generations and capitalise on the biggest wealth transfer in history.

These relationships – and the required trust – can’t be built overnight. If wealth managers and financial advisors want to gain a competitive advantage, they must start speaking millennials’ language and engaging with them in a way that they understand and will respond to.

They will need to present themselves as strong, authentic and trustworthy voices across the media touch points favoured by younger clients, consistently and at scale. This means the winning firms will need to embrace younger clients’ technological and digital-first preferences, while also finding ways to stand out from the crowd. The race to engage the next generation is well and truly on.

Passing the mantle

Clearly, the numbers involved in this financial shift are staggering. But that doesn’t automatically mean financial services (FS) professionals will reap the rewards. The increasing level of competition in the industry is putting wealth managers and financial advisors under pressure to differentiate themselves and secure their place at the table.

For those that do, the opportunity is vast. Passing on the family wealth from one generation to the next doesn’t come without its challenges, and there are several important factors that FS professionals can use to their advantage. For example, it won’t be a fast process. It will likely last several years, presenting a long-term opportunity for wealth managers and financial advisors that are able to position themselves favourably with the future Millennial and Gen-X clients.

Effective wealth transfer is not a straightforward process, especially when a complex portfolio is involved. Similarly, inheriting a handsome sum is one thing, but knowing what to do with it is quite another. This all presents the need for a trusted, expert advisor. Wealth managers and financial advisors therefore have a vital role to play – and a significant business opportunity.

So, how should they build meaningful relationships with the generations of new customers without neglecting the needs of their existing clients? With the Great Wealth Transfer already gathering pace, the onus is on FS professionals to get a head start on the competition and best position themselves for future success before it’s too late.

Getting ahead of the game

First things first, it is imperative that FS professionals find ways to build real trust with Millennials and Gen Xers, who tend to be more sceptical of conventional organizations and very relationship-driven. They have grown up in the experience economy and the digital era where they expect to form closer connections to brands than previous generations regardless of the means of communication.

Building genuine trust with these new generation of customers requires an understanding of their financial preferences, priorities and attitudes – all of which will likely differ from their parents and grandparents. It requires FS professionals to fit their processes into Millennials’ lifestyle. Most importantly, it requires wealth managers and financial advisors to start speaking their language and engaging with Millennials and Gen X in ways that they understand and appreciate.

This is where social media is becoming increasingly prominent. FS professionals can use social media platforms to create and scale their personal brands online and build meaningful, authentic and long-lasting relationships that cut through the corporate noise. With access to the right digital tools and platforms, wealth managers and financial advisors will be empowered to interact with their networks, participate in organic conversations and share timely, relevant content with prospective clients – all in a compliant fashion without introducing undue risks to their firms.

For example, digital tools can automate parts of the communication process with pre-determined content. This enables the fast and efficient creation of personalised decks, presentations and other content that stands out from the crowd, with a centralised workflow that ensures consistency, control and compliance. This can then be supplemented with real-time data analysis to provide insight into how the content is being consumed, in turn guiding future interactions to deliver truly differentiated and engaging customer experiences.

Ultimately, FS professionals must embrace tools that help them effectively manage the digital environment at scale if they want to retain their existing clients and add new ones. Taking a digital-first approach is now essential to long-term success. Those that don’t, risk missing out on the opportunities of the Great Wealth Transfer in the years to come.

By Simon Crookall, Founder, InvestEngine 

The COVID-19 pandemic and lockdowns had many implications for investors. Arguably at the forefront was a boom in interest in the stock market, triggered by widespread increases in free time and disposable income and spikes in volatility. 

At the same time, online and app-based investment platforms, with their low costs and ease of access, are helping to overhaul the investment space. An area previously reserved for the wealthy or professionals is now open to even the most inexperienced user to access the potential of the stock market. 

A risky game 

As a result, trading apps have seen a huge surge in sign-ups. However, this surge has also brought with it a new wave of investors – many of whom are being drawn into the pitfalls of approaching investing like gambling, rather than taking a long-term, considered view.  

Entering the stock market without a plan or sufficient knowledge of investments, newbie investors are often unwittingly taking on too much risk, making investment decisions based on social popularity, and placing too much emphasis on individual shares. 

Regulatory concerns 

These concerns have been echoed by the Financial Conduct Authority (FCA) — highlighting the dangers of high-risk investments like cryptocurrencies and foreign exchange, which younger investors may be accessing with investment apps.  

A lack of understanding around such investments, means many young people find themselves making losses that they can simply not afford. In fact, 59% admitted that significant investment losses would impact their lifestyle. 

So what steps can investors take to ensure they are investing better? 

Invest on your terms 

Before parting with hard-earned cash, it is key for investors to understand what investments may be right for them. The level of risk they can afford to take, how long they can invest for, what their goals are and how much time they have to dedicate to investing can all influence how an investor should approach their portfolio. 

Plan to play the long game 

What’s more, this understanding will be critical in keeping investors motivated and disciplined to stay the course for the long term, even (and especially!) when stock markets get rocky. 

The reality is that, in the short term, stock markets are pretty much as likely to fall as to rise. But with a properly diversified portfolio, the longer you invest for, the more chance you have of making a profit – and beating cash returns. 

Avoid temptation 

It can be tempting to invest in stocks that are soaring in value – especially when everyone else is. But such investments are risky, especially if they don’t fit your plan, and can crash as quickly as they rise. 

GameStop, for instance, saw its share price skyrocket as a result of a Reddit thread, inviting a stampede of novice investors. The stock’s inevitable crash resulted in the destruction of US$30 billion of on-paper wealth – with many small-time investors at the heart of this loss. 

Investors should carefully consider their personal risk tolerance, which is different for everyone, and invest only at a risk level that feels comfortable to them. 

Diversification is key 

Having some money in volatile individual stocks may be desirable for some, depending on their risk tolerance. But it’s always a good idea to balance that with more traditional, stable investments. Similarly, diversifying investments across asset classes and sectors will help smooth returns and reduce risk, ensuring that investors aren’t overexposed if a single holding crashes, or too reliant on just one investment providing returns. 

Know when to leave it to the experts 

Some people prefer to be in control of their investments – but it’s not for everybody. 

For those that would like more guidance, the reassurance of knowing their money is in the hands of an experienced professional, might be the way to go. Thankfully, these days, professional management can be just as accessible and affordable as trading apps – so there is no need to compromise. 

By Sezer Sherif, Founder and CEO of investment group, Vector Capital

An exciting and resilient economy

Turkey can be an enigma to the casual investor. Steeped in history and holding strong religious sensibilities, this officially secular, multicultural, transcontinental country, is dynamic and outward looking, owing to its status as the gateway between the East and West. While the majority of its territory lies in Asia, its government is clear that its destiny lies within Europe as a member of the European Union, for which it is a key strategic partner on issues such as migration, security, and counterterrorism.

Defined by the World Bank as an upper-middle-income country, a status reserved for countries with a gross national income (GNI) per capita between $4,046 and $12,535, it is the 19th largest economy in the world and one of the fastest growing emerging markets. In fact its growth over the last two decades has been nothing short of remarkable, It grew 5.9% from a year earlier, in the final quarter of 2020, outpacing all G-20 nations except China.

Such has been the resilience of Turkey’s economy that rating agency Fitch revised Turkey’s outlook from “negative” to “stable” stating, “Turkey’s return to a more consistent and orthodox policy mix under a new economic team has helped ease near-term external financing risks derived from last year’s falling international reserves, a high current account deficit and deteriorating investor confidence,”

Sezer Sherif

Emerging markets promise new opportunities

With its young, fast-growing population and robust economic growth, Turkey offers a large consumer base and many trading opportunities. It is important to recognise that it aligns its regulatory and business environment with EU standards as an official EU membership candidate. Customs Union signed with the EU in 1995 offers further opportunities for European businesses and exporters across a broad range of sectors. This union is based on the free circulation of goods which are mainly textiles, machinery and chemical products, as well as plastics and transportation equipment between Turkey and the EU countries.

Foreign investors often choose Turkey to set-up a business because of its low taxes, developed markets and excellent infrastructure. Cities such as Ankara, Adana, Izmir, Bursa, and of course Istanbul, the country’s economic, cultural, and historic centre, are prime sourcing destinations for European businesses. Turkey is a globally recognised manufacturing hub for more than 250 international brands, across such industries as textile, automotive, electronics and construction. This is owing to its skilled labour force and lower costs of manufacturing, resulting from favourable exchange rates, as well as its locational proximity to Europe, which supports the acceleration of factory delivery times.

Investors and UK businesses should also take a close look at Turkey’s energy sector, which is a key area of development for the government, who are issuing a number of incentives to develop services and produces in such areas as geothermal, smart grid projects, nuclear, and renewables. For example the government is issuing green bonds to encourage investments into clean drinking water, and electric or hybrid vehicles that lower carbon emissions.,

Reward is rarely without risk

Investment in Turkey is not without its problems. High unemployment and a dependence on external financing have been ongoing concerns. Furthermore inflation levels for the last four years in the double digits can make it a tough sell for investors.

Fortunately, Recep Tayyip Erdoğan, Turkey’s President has made tackling these issues his immediate priority so as to achieve his government’s goal of making the country one of the ten biggest economies by 2030 through a reforms package that focuses on investment, production, jobs, and exports.

A good indication of the health and potential of Turkey’s economy can be gauged by what its business leaders are saying. Fortunately, the majority are confident that the future is a bright one for their companies, with 70% of CEOs interviewed for the PwC 24th Annual Global CEO Survey stating that they are confident in their own organisation’s growth prospects. Clearly, given its resilience, growth and hunger for inward investment, Turkey deserves a second look by any investor seeking to make strong returns.

By Victoria Ferguson, Partner and General Counsel at research-led VC MMC Ventures

The term B Corp may conjure up images of Ben and Jerry’s – a firm as well-known for its altruistic endeavours as its Phish Food. But beyond the ice cream manufacturer, there’s a community of 4,000 companies in 75 countries that wear B Corp certification like a badge of honour.

These firms operate in 150 industries globally, so it’s very much not just an initiative for B2C brands; there’s room for VCs to join too. When MMC became a B Corp in September 2020, just 2.5% of B Corp members were equity investors but we’ve since seen a growing number joining the community since then.

The intricate process of becoming a B Corp

For all the diversity in size, location and sector of those involved, all certified B Corp businesses have one common goal: that business can be a force for good. That really hit home at MMC Ventures, as founders Bruce Macfarlane and Alan Morgan saw an opportunity to build on the firm’s own vision, which is grounded in the notion of balancing profit with purpose and using venture capital as a force for good.

Starting the B Corp application process isn’t something to take on lightly. There are more than 200 questions to complete, including detail on governance structures, environmental impact, recruitment, compensation and beyond. This presents an opportunity to reflect and develop on existing processes while exploring how they can be improved.

An 80-point threshold is needed to achieve certification, so any investor or company considering B Corp would do well to bear this in mind. A lot of the information required is so extensive that smaller businesses may not have it neatly stored. Anything that can be done to ensure processes, systems and documentation is aligned with the questioning in advance will save time when it comes to collecting evidence and submitting it to the analyst for review.

Victoria Ferguson

Considerations when setting ESG performance targets

The very nature of B Corp makes it an excellent tool to complement internal environmental, social, and corporate governance (ESG) initiatives because it requires companies to uphold standards.

There are of course alternative movements available for investors interested in ethical investing, such as the UN-supported Principles for Responsible Investment (PRI) that looks to encourage sustainable investment. Unlike B Corp, the UN PRI is predominantly geared around an investor’s portfolio, rather than the investor and their strategy. As a tool for benchmarking, it’s valuable, but it all depends on what the investor wants to achieve.

Increasingly, governments worldwide are recognising the significance of sustainable investing in the race to net zero climate change, which has changed the game for businesses and, as a result, their investors. Certain regulations must be adhered to in some cases, like the EU’s Sustainability-Related Disclosures Regulation, which demands investment houses reveal any possibility of ESG risks in investments.

B Corp won’t be for everyone and neither will the PRI or the next alternative. It’s crucial that each company takes stock of the options available and how the components of each suit to their overall business strategies and long-term positioning.

What a responsible investing framework looks like and why it’s important

B Corp certification is an excellent, professional method of measuring company performance and ESG targets. We take that force for good stance seriously at MMC, but it was essential for us that arbitrary targets weren’t enforced upon the early-stage businesses in which we invest – this wouldn’t have felt very responsible if we had dictated their operational direction and perhaps slowed down growth. Instead, we hold ourselves accountable and hope to offer inspiration to the portfolio through our actions.

A responsible investing framework ultimately needs to be aligned with the investment strategy and company management must be on board to help with key decisions. Outside support to implement such frameworks is available, in our case the BVCA Responsible Investment Advisory Group materials assisted us with developing our own. We will continue to learn and develop the framework and how we use it.

During the initial due diligence stage, founders will recognise the added value of working with investors that have an ambitious vision around sustainability and ESG. Once a term sheet is on the table, the investor and portfolio company can make an action plan. Investors often play an active role in supporting portfolio companies to improve their sustainability credentials.

The framework should help investors determine whether there are any red flags, such as pollution or supply chain issues. At MMC, we developed a list of excluded sectors that we will not invest in and this is helpful in sparking internal debate as a team and encouraging engagement.

The B Corp process must be refreshed every three years, so there’s certainly no time to get complacent. So as B Corp companies are forced to keep moving and adapting, this can only improve the operational dynamics of a business and better support customers, so that profit is always balanced with purpose.

By Vaughan Lindsay, CEO of ClimateCare

In this piece, Vaughan Lindsay, CEO of ClimateCare, maintains that investment firms must take responsibility for their carbon emissions in a way that delivers real, measurable results for the environment, global consumers, and their business.

Larry Fink, the CEO of Blackrock recently commented, “coming out of the crisis, we have an opportunity to accelerate towards a more sustainable world. The pandemic we’re experiencing now is further highlighting the value of sustainable portfolios.” And I for one, couldn’t agree more.
Over the past two years there has been a substantial shift in how many corporations think about the impact they are having on the environment. An increasing public awareness of climate change and changing consumer behaviours has catalysed this shift, which when combined with pressures coming from investors and Governments, has driven increasing climate ambition and action in the investment space.
In addition to this, comprehensive analysis from ECIU and Oxford Net Zero has revealed how over two thirds of the global economy are covered by Net Zero goals. As such, companies that have previously engaged with climate change mitigation mainly due to corporate social responsibility (CSR) are now beginning to see it as a business-critical issue. Robust and transparent Environmental, Social, and Governance (ESG) policies that go beyond ‘do no harm’ are no longer a nice to have; they are now fundamental to business success.
Not only is there an increasing consumer awareness about the climate – resulting in customers actively choosing those brands that are more purposeful and active in the sustainable space – but there is also a greater awareness amongst employees too with regards to what their organisation is doing when it comes to sustainability and ESG, and indeed, who they choose to work for. Ultimately, if organisations aren’t thinking about how to make their products and services climate neutral, they may end up losing their best calibre talent to their competitors and struggle with employee acquisition too.

And certainly, we have been witnessing this in the investment space too. Many investment firms are also looking to a future in which they prioritise ESG and meet their Net Zero targets. However, while much needed, setting these long-term targets does little for the environmental damage that is being done right now and as such we need both longer-term plans for systemic change, as well as immediate action today. Ultimately, it is today’s emissions that are causing tomorrow’s climate change and we need organisations to take full responsibility for their carbon emissions right now.

We increasingly get inquiries from private equity houses, and asset managers, saying they’ve offset their business travel and office costs. Whilst this is a positive first step, it’s usually just a very small part of their carbon footprint. What we then need to ascertain is what more they can do to strengthen their climate action across their entire investment portfolio.
The next step for these investment companies is to become climate neutral investors. Doing so, involves a whole suite of actions that include screening to avoid highly carbonised sectors, understanding the carbon footprint and awareness of their investee companies, taking action to reduce this carbon footprint, and offsetting their residual emissions. But the value in doing this can be quite remarkable. Because taking a climate neutral approach can actually help private equity houses with raising funds too, as investors are increasingly selecting those with strong climate credentials. And frankly, failing to do so may mean they lose out to their competitors.

With more than $2 trillion in investments already committed to carbon-neutral investment portfolios by 2050, there is a real opportunity for some big changes ahead in the investment space. For those investment companies that accelerate their ambition today by compensating for residual emissions with a robust carbon offsetting programme, they can strengthen both their value and their brand. And certainly, this is just the scale of ambition that we need to tackle global climate change.

And Triton Partners is not alone in this mission. We are seeing many other investment companies taking full responsibility for their climate impact and proving that doing so is both good for the climate, as well as good business.

In short, the time to act is now. A robust and transparent climate strategy is no longer optional in the investment sector. It’s an essential element of a successful investment strategy to attract new capital, manage climate-related risks, and harnesses the opportunities of an economy transitioning to a low carbon state.