Despite this, financial consultancy firm McKinsey & Company report that there has been a steep decline in banking revenue, down to $275 billion in 2017 from $345 billion in 2007. Lower equity returns are a major factor in this, particularly for European banks, which, according to European Banking Federation figures, stood at 5.6% last year – around half the level recorded before the last global financial crash.
Likewise, property market returns are also another challenge to investors and their wealth managers, with construction and real estate returns down significantly on their pre-crash levels.
It would be easy to read declining banking and property returns as all bad news, but the reality is starkly different. We must remember that we were in the grip of both a banking and property investment bubble at the beginning of this century; it is far better to, as McKinsey puts it, be “stuck in neutral” than it is to be burning up petrol in top gear while hurtling headlong on the freeway to nowhere.
Hopefully, these more modest outlooks are good news for investors in the long-run. As long as their wealth managers consider the broader picture and all the opportunities for growth, there is lots of room for long-term gains. If history has taught us anything it is that diversifying investments across multiple asset classes is the surest way for most to achieve their investment and retirement goals; for many, banking and property investments will still remain an important part of this, but they are not the infallible golden goose of investing. In fact, the golden goose doesn’t exist and the more we are reminded of this, the more likely we are to avoid false dawns and their inevitable crashes.
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re happy with the interest rates accruing on their savings, with many adults saying their children now save more in bank accounts than they do. On average, people said they would need to be able to generate at least £120 in additional interest a year to be persuaded to move their money.