Business Matters – Issue 9


Economy update:

Light at the end of the tunnel?

Investing responsibly:

A world of difference?

Improved investment decisions?

It’s all in the mind

Business bounceback:

3 key areas for a robust recovery

Drive to thrive:

Ensuring good business health.

Economy update: Light at the end of the tunnel?

Financial markets have certainly reflected the gravity of the pandemic over the last year ­– but do recent UK government figures indicate a glimmer of hope on the horizon?

Business owners and investors have understandably been keeping a keen eye on the economy as the government’s roadmap out of lockdown continues to play out. And they would have been particularly interested to see the impact of the loosening of lockdown restrictions after the third lockdown, with April economic figures being released at the start of June.

Arguably the first major step in the roadmap came on 29th March, so these April figures are one of the first major indicators as to how industries are recovering. There would have therefore been a collective sigh of relief on 11th June, with the government announcement that GDP is estimated to have grown by 2.3% in April 2021 – the fastest monthly growth since July 2020. It was still 3.7% below the levels seen in February 2020 (before COVID-19 made its presence felt in the UK); however, it is now 1.2% above its initial recovery peak in October 2020.1

What’s more, retail sales grew sharply in April 2021 with a monthly increase of 9.2%, and there was also positive news for the service sector, which grew by 3.4%, with consumer-facing services reopening and more schools restarting on-site lessons.2 Accommodation service activities grew by 68.6% as caravan parks and holiday lets opened up after Easter, while food and beverage service activities grew by 39.0% as pubs, restaurants and cafes were able to serve customers in outdoor seating areas.3

Business as normal?

Two further government announcements in June would have caught investors’ and entrepreneurs’ attention. Firstly, on 10th June, it was revealed that the proportion of UK workforce on furlough is at its lowest level since summer 2020, falling to 7% in the latest period (approximately 1.8 million people) – likely boosted by the opening of hospitality and retail venues.4

Furthermore, on 8th June, the government announced there was an upward trend in the number of mergers and acquisitions in early 2021. There were 383 mergers and acquisitions (M&A) in Quarter 1 (Jan to Mar) 2021.5 The number of M&As has been affected by the coronavirus (COVID-19) pandemic, but there has been an upsurge in total M&A deals in the early months of 2021. Although this is still below pre-pandemic levels, it’s certainly positive to see this upward trend!

The dividend delay

One area that many business owners are waiting to see a return to normality in is dividends. However, they might be waiting a while longer, says George Luckraft, Manager of the St. James’s Place Diversified Income Fund since 2007:

“I think it may take until 2022 or 2023 before dividends on the UK market recover to where they were before the pandemic. And I also think quite a lot of companies will operate under a different regime going forward – having seen the impact of the pandemic, they will model and plan for a similarly impactful event in the future. This means boards are going to be more conservative on balance sheets overall, and probably also more conservative on dividend cover.

“Ultimately, this will likely represent a slight negative for the yield of the market, but it will also be a positive in that dividend income will be a lot safer, resilient and perhaps more highly valued.”

Cautious optimism

To summarise, the world has made rapid progress against COVID-19 in 2021 and, naturally, this has been playing out in financial markets. The government’s April figures suggest that economic activity is heating up – and business owners and investors have been looking ahead and asking what this brighter future means for them.

And, as investors re-evaluate their positions, this is where financial advice comes into its own. It’s important that the level of investment risk is diligently managed, especially when there’s still uncertainty over new variants, such as the Delta variant, which is now the dominant strain in the UK. A Wellesley adviser can help you stay ahead of the curve.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.


1-5 ONS, UK economy latest, accessed 17 June 2021

Investing responsibly: A world of difference?

Our world is changing faster than anyone predicted, and responsible investing has a huge role to play in building a sustainable future. What’s more, there’s mounting evidence that considering environmental, social and governance (ESG) factors in your investment strategy will not only help shape a better world, but can lead to better returns, too. So, is responsible investing a ‘win, win’ scenario? We investigate.

The COVID-19 pandemic, and its impact on businesses, has been a stark reminder of the importance of looking beyond a company’s balance sheet when it comes to investing your money. It’s little wonder, then, that the world’s leading investors are increasingly zoning in on environmental, social and governance (ESG) factors when weighing up opportunities. These ESG factors are a set of measures that determine how a company behaves and manages its impact on people and the planet.

A climate of change

The pandemic hasn’t been the only recent event to have driven investors towards ESG factors, though. There’s been a huge shift towards awareness of climate change – in 2020, 82% of UK independent financial advisers reported an increase in enquiries from clients on climate change investment1, and 46% of prospective St. James’s Place clients said the environment was as important to them as returns.2

What’s more, a price war between oil producing regions, combined with renewable energy becoming more affordable, has led to increased investment in green energy production. Plus, the election of President Joe Biden in the US marked a new attitude to climate change – the US has already re-joined the Paris Agreement and pledged new emissions targets for 2030. In addition, a number of commentators expect the US to introduce mandatory ESG reporting in the near future.3

The UK government’s Spring Budget included a number of initiatives aimed at promoting the ‘Green Economy’, including an infrastructure bank and grants to fund research and development in areas such as carbon capture and offshore windfarms.

Shifting attitudes

At the same time, consumers are increasingly considering environmental and social factors in their decision-making processes. Companies seen to ‘give something back’ win more customers and, in turn, improve their bottom line. All this suggests the global economy is creating a more investor-friendly landscape for socially and environmentally conscious companies.

People are also making small changes to their lifestyle to help the environment, such as carrying a reusable water bottle or eating less meat. However, as one such person, you might be surprised to learn that your pension can have a bigger impact! According to Nordea, moving your pension to a sustainable fund is 27 times more effective than eating less meat, using trains instead of cars, flying less, and taking shorter showers.4

A world of difference?

While, in theory, this popularity of ESG should mean that investing in line with these principles should lead to better returns, is it the reality? Evidence suggests it does. First and foremost, this belief is shared by most fund managers – as shown in the graph above. Likewise, data from MSCI found that, in the seven years leading up to 2020, the top third of companies ranked by ESG ratings outperformed the bottom third by 2.56% per year.5

The pandemic is also accelerating trends that were already well underway, such as the move towards green energy and electric vehicles. These trends are part of the reason why studies also suggest that improved performance from ESG practices is more evident in the long run.6 Embedding ESG into the investment process is not a ‘quick win’. Instead, it requires extensive engagement between investors and company management.

The need for advice

As we’ve seen, promoting a sustainable, low-carbon economy brings many investment opportunities. And, when it comes to understanding exactly how responsible investing can help achieve long-term returns, a financial adviser can help.

One challenge is that research shows 58% of advisory clients are still unclear about whether they can invest their money to tackle environmental challenges.7

Another hurdle for individual investors is that companies have been known to exaggerate (or ‘greenwash’) their ESG credentials to appeal to investors. Furthermore, the process for disclosing ESG practice is not yet subject to the same reporting standards and external auditing as financial accounts. This can make it challenging for a fund manager to form a clear picture of a company, but also raises the question of the subjective nature of ESG integration in investment decisions.

When it comes to making the best choices and understanding exactly how responsible investing can help achieve long-term returns, you can speak to Wellesley Wealth Advisory.

All of St. James’s Place’s external fund managers are signatories to the Principles for Responsible Investment, and are required to integrate ESG factors into their investment process.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.


1 Federated Hermes, UK IFAs report major rise in ESG allocations since start of COVID-19 outbreak, May 2020
2,7 St. James’s Place and The Wisdom Council, Responsible Investment 2020, January 2021, total sample size: 2,067 adults
3 Harvard Law School Forum on Corporate Governance, Biden’s “Money Cop” to Shine a Light on ESG Disclosure, March 2021
4 Nordea, Use your savings to lower your carbon footprint, June 2018
5 MSCI ESG Research LLC, 2021 ESG Trends to Watch, December 2020
6 New York University Stern Center for Sustainable Business, ESG and Financial Performance, 2021

Improved investment decisions? It’s all in the mind

Even the most level-headed investor is prone to letting emotions guide their decision-making. Behavioural Finance Expert Daniel Crosby reveals how understanding the psychology behind investing can help you to make better investment decisions.


  • Stock market ups and downs are unavoidable, and even the most pragmatic investor can get caught up in them.
  • Human psychology tells us we’re predisposed to certain common mistakes – and once we know what these are, we can make better, more informed decisions in the future.
  • If you’d like to learn more about improving your investment decisions, contact your Wellesley financial adviser.

For many investors, it can be hard to separate emotion from the investment decision-making process, and even the most pragmatic investor can sometimes get caught up in the stock market ups and downs.

Therefore, as far as growing your wealth over the long term is concerned, one of the best ways of making effective decisions is to get behind the psychology of investing. Being able to identify the common mistakes that human psychology makes us prone to means you have a much better chance of improving your decisions in the future and managing your emotions more successfully.

According to Behavioural Finance Expert Dr Daniel Crosby, the influential factor is the evolution of the human brain. He explains that our brains are well-adapted to the threats that we had to manage hundreds of thousands of years ago. However, they can sometimes now lead us to make poor decisions in this very different era.

“Our brains were formed to protect us from a different time and place than the one we find ourselves in today. We’ve got 150,000-year-old brains, with which we are trying to navigate 400-year-old financial markets.”

He adds that the most common mistakes (known as ‘biases’) can be categorised in four ways: ego, emotion, attention and conservatism. Let’s take a look at these in more detail.

1. Over-confidence (‘Ego’)

Many people exaggerate their skillset – whether it’s being able to change a tyre or manage their finances. And when it comes to investing, overconfidence often leads to people overstating their understanding of the stock market or specific investments. This can result in misguided attempts to time the market or build concentrations in risky investments.

Professional fund managers are at a major advantage, given their training in understanding the impact of biases, and they can therefore seek to mitigate the risks. With this in mind, it’s advisable to spread your investments across a range of expertly managed funds.

2. Letting feelings cloud your judgement (‘Emotion’)

We’re all inclined to let our feelings affect our judgements of risk and reward, and to guide our decision-making process. Essentially, our mood has a huge bearing on the way that we see the world – someone in a good mood might not be aware of risk, whereas someone in a bad mood would be highly sensitive to it. Optimism and self-confidence are often boosted when markets rise, but fear and panic set in when they fall.

The key to long-term investment is to avoid the risk of overreacting. As an investor, the best thing you can do is to be self-aware and ready to manage your emotions when markets rise and fall. If you notice that you’re at the extreme end of the emotional spectrum – whether it be greed, fear or anything in between – it’s probably wise to avoid acting on those feelings. It goes without saying that seeking financial advice can help you to contextualise what you’re going through, while having an automatic regular monthly payment into a plan can help to eliminate emotion from the investing process.

 3. Reacting to short-term noise (‘Attention’)

“Nothing in life is as important as you think it is, while you are thinking about it,” wrote the psychologist and economist Daniel Kahneman.

It can be all too tempting for investors to try to react to events as they unfold. Why? Our brains are hard-wired to mistake how extraordinary an event is with how likely it is to happen.

Let’s take the example of shark attacks – while they capture the public imagination, thanks to films like Jaws, they’re extremely rare. However, more real and insidious risks, such as heart disease or diabetes, are harder to contemplate – and so we mentally downgrade them.

The answer for investors is to try and avoid reacting to short-term events. The most successful investors don’t try to time the market by predicting (or reacting to) short-term events – instead, they adopt principles for the long term, as they know that uncertainty is what they are being paid for. While this type of approach may lack the thrill of responding to every news headline and market turn, it will keep your eyes focused on the horizon. Regular meetings with your financial adviser can also help you stick to those goals.

 4. Playing it too safe (‘Conservatism’)

Our ancestors were able to survive in times when resources were scarce because the need for safety is intrinsic to human beings. Yet in current times, this conservatism could mean you avoid less familiar investment options and take less investment risk than you should. Over a lifetime, this could see you lose out on thousands of pounds.

‘Conservatism’ describes our skewed fear of loss, in contrast to our happiness about reward. Literature indicates that people are 2.5 times more affected by a loss than they are happy about a comparably sized gain. So, if you’re a gambler, a £100 win is no big deal, but if you lose £100, you’re notably upset. This can likewise be seen in the stock market too. Advisers receive substantially more angry calls when portfolios are down 20% than they do thank-you letters when portfolios are up.

Sticking with an investment, regardless of its performance, can end up doing you just as much damage as not investing at all. If you opt to stay put, make sure you’re doing so for the right reasons, and remain open to alternatives. Regular reviews of your portfolio with your financial adviser are also recommended.

Would you like to learn more about improving your investment decisions? Our team of professional advisers at Wellesley will empower you to understand yourself better and therefore make the right moves to ensure your long-term financial well-being.


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management or Wellesley Wealth Advisory.

Business bounceback: 3 key areas for a robust recovery

While most businesses will be accustomed to dealing with uncertainty, few will have been prepared for the complex challenges presented by a global pandemic. Your company’s survival has undoubtedly taken priority to date, but it’s now a critical time to consider the future and how you can plan for a robust recovery – and therefore the long-term success of your business.

The coronavirus crisis has infiltrated life on all levels, with businesses, communities and individuals all being affected. Most businesses now have a continuity plan in place or have ceased trading altogether, meaning it’s time to look ahead and plan for a robust recovery.

The world is still very much in the grip of COVID-19, and many businesses are having to take an agile approach, by both responding to the situation as it unravels and adjusting their working practices so they can still deliver for clients and act in the best interests of their people.

In times of crisis, good companies will look to quickly action three basic things:

  • Have visible leadership
  • Be proactive with decision-making, so as to protect staff and get continuity plans in place
  • Communicate frequently and clearly.

However, this is just the starting block. Survival throughout a crisis is only part of the challenge – there is also a need to plan for growth and recovery to truly have a chance of winning the race.

Each to their own

Over time, some organisations will revert to former processes and ways of working in the post-pandemic world. They will relish and prosper in regaining some sense of normality, consigning the provisional changes they needed in order to survive to the past. They will express their thanks to their people for helping the business to continue, and will move on.

On the other hand, high-performing businesses will take a different approach. They will do three critical things that will enable them to bounce back with a renewed speed and vigour.

  • Grow and inspire

Any successful business will use a crisis scenario as a means of learning, adapting, growing and evolving in order to move forward, rather than reverting to former ways of working. They will appraise what did and didn’t work well and, most importantly, decide which new practices should be retained and applied more broadly.

For example, before the pandemic, the chances of rapidly getting a new supplier of ventilators through the NHS’ exacting procurement and testing processes would have been highly unlikely, if not impossible. However, now this has been proven to be very much possible, you might hope that their COVID-19 procurement process would become the norm.

It’s often the case that people are able to think more creatively when faced with a crisis. Have you considered where you could apply a new way of thinking elsewhere in the business to stimulate change and drive better performance?

It could be helpful to hold aloft symbols of change to showcase the positives that have emerged from such a testing time. Find things that you’re doing differently – no matter how small – and share with others, starting with the people in your business. In the wake of a crisis, there are always real-life stories that are testament to the spirit of your business – so find them, celebrate them and use them to inspire others.

  • Engage and thrive

The COVID-19 crisis will affect your strategy and the way your brand is perceived for the foreseeable future, so now’s the time to invest for growth. Be prepared to change your approach, review your investment funds, or perhaps even completely pivot your business to survive.

If you discover that your overall strategy is not fit for purpose, use this as an opportunity to work with your people to define a new path, by capturing a clear vision for the future and building the journey you will go on to meet your goals together. Once your strategy is redefined, review your learning and development strategy too to ensure that it will allow for the growth of skills required to make you future-fit.

A crisis can reveal the true DNA of your business – but are they the same characteristics that will enable your growth and prosperity moving forwards? Making sure your culture is clear at every stage of your employee journey is certainly something worth investing in.

For example, Bacardi have spent years focusing on ensuring their employee experience reflects their DNA. ‘Fearless, Founders and Family’ are not just words, but they underpin how they work as colleagues and how they do business. In a crisis, this becomes apparent of its own accord, whether it’s changing production lines to make hand sanitiser or launching a new product to raise money for charity. For Bacardi, It happens because its people are empowered to truly activate the brand spirit in both the best and worst circumstances.

Take the time to reflect on your work culture – is it likely to drive customer loyalty and growth or does it need to be redefined to allow you to meet your goals?

  • Involve and challenge

It’s easier to find opportunities for continuous improvement once your strategy and vision are defined, your people understand how their role is helping you succeed, and your culture is evident in every step of your employee journey.

Talk with your people and find out what the blockers are – and then create the forum and process for them to problem-solve. Give a reminder about what your overall purpose is to help you drive productivity, effectiveness and problem-solving. Create moments and platforms for innovation for the whole team, not just the innovation function. Work in a transparent, interactive way to invite others to collaborate, connect and contribute – thus drawing on your entire talent pool, especially in times of crisis.

Remember that this is new territory for everyone, and that before the current global crisis broke out, very few leaders will have experienced managing a business during such unprecedented times. This is a critical time to reinforce who you are and what you represent. Many businesses will need to rebuild trust and re-engage people who they have furloughed during this period. Liberating, empowering and firing the imagination of your talent pool has never been more important, and this is not something we can be thrifty with.

It’s time to seize the moment and switch up our thinking. To bounce back quickly and with renewed vigour, we need to be enterprising – and we need to give our businesses the human touch again.

Drive to thrive: Ensuring good business health after the pandemic

The government’s roadmap out of lockdown may have been extended to 19th July, but the end is still in sight. What’s more, vaccinations appear to be working, and the business market is alive and kicking – so, now is therefore a great time to act to lead your business growth and enable your life goals! Here are six areas to focus on when looking to thrive after the pandemic.

Companies that have spent the last 14 months grappling with the challenges posed by the COVID-19 pandemic are now looking firmly to the future, with restrictions set to end on 19th July and the furlough scheme winding down. But how can businesses thrive as they resume normal (or near-normal) business activity?

Martin Brown, CEO of growth advisors Elephants Child, has identified six strategic areas for business recovery that make up the ‘THRIVE’ agenda: Team, Honesty, Revenues, Innovation, Velocity and the Environment. Here, we consider what entrepreneurs must do to take control of these areas.


Many office-based businesses adopted new ways of working during the pandemic, in order to protect their employees. In our last issue of Business Matters, we considered ways in which business directors could ensure a smooth return to the office, and also what could be learned from the past year of home-working. For instance, what’s the right blend with office and working from home?

Indeed, lessons learned through this difficult period could provide the ingredients of success as things get back to normal, providing the foundation for a new and more resilient operating model.


Leading a business through a pandemic is undeniably an impressive achievement. And, as we emerge from the latest lockdown, there’s further opportunity for you to demonstrate important leadership traits, starting with authenticity, when engaging with staff, clients and suppliers.

It’s also wise to show the foresight to pivot your business model as required to ensure your company prospers in the ‘new normal’. And don’t forget a good dose of pragmatism and humour!


It might sound obvious, but a key way of galvanising your businesses for the future is a quick return to revenues. But it’s important to stay true to your purpose and aims – balancing sensitivity with commercial reality.

While providing support in tough times may have built relationships and sentiment, this should not be confused with the need for a strong value proposition. Acting quickly will give you the ability to retain and grow client revenues, while having one eye on new client acquisition.


Innovation was undeniably key to the survival and stability of businesses during the pandemic, with many companies adapting their ways of working and stepping well outside of their usual remit (remember Formula One teams joining forces with open designs, to manufacturer ventilators, for example?).

Sticking with this mindset will also allow you to thrive after lockdown – look at current trends such as big data, artificial intelligence and automation for inspiration.


Think like the owner of a start-up – acting with urgency and returning to the fundamentals of running a business. Focus on the ‘marketing Ps’: product, price, promotion, place and people. What have been the positives of working during the pandemic, and how can you implement them full-time?

If daily and weekly video calls have brought a crispness and clarity to the way your team works, how can you best apply this going forward?


An economist might argue that macro-thinking and micro-action on sustainability go hand in hand, so what does your business do to improve our world? And what does it do to protect and create jobs and increase profit (and pay tax)? In the post-virus world, they are likely to be high on the agenda, so it’s important to factor them into your plans.

And what of the business-specific environment as pandemic (finally) recedes? What about the ongoing well-being of your team? How do these near-term issues drive organisational development now and for your future?

Thriving after lockdown

As we look ahead to the end of restrictions, use this period as a time to work on the business – to refine your purpose and take advantage of the lessons you’ve learned during the coronavirus crisis to inform your strategy for the future. Adopt the mindset of a start-up: commit, strategise and plan with velocity to thrive after lockdown, while ensuring your business plan can flex as new variants appear.

Business leaders are critical in returning the economy to a ‘new normal’. At Wellesley, we’re here to support you every step of the way!

The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management or Wellesley Wealth Advisory.