The 2022 regime shift did more than lift yields. It forced a quieter reckoning: after a decade of nominal thinking, clients want their plans re-expressed in real terms.
For most of the last decade, inflation was quiet enough that plans could be built in nominal terms without anyone getting badly hurt. That era is over, and the change runs deeper than a spell of higher prices.
A portfolio that returns 5% in a year feels like progress. If prices rose 4% over the same year, the real gain is 1%, and a plan that only ever showed the nominal figure was quietly flattering itself. The reckoning of the last few years is that clients now want to see their wealth expressed in what it can actually buy, not in headline pounds.
Two things, mostly. Cashflow modelling has to run in real terms, so that a thirty-year plan is not undone by the slow compounding of inflation on a fixed spending assumption. And the liquidity part of the 3Ls, the money that must be there for the shocks, deserves a harder look, because cash left idle is where inflation does its clearest damage.
The temptation is to conclude that everything should move up the risk scale to outrun inflation. That is the wrong lesson. The right one is to plan honestly in real terms, hold the shock-absorber deliberately rather than by accident, and use the tools that exist for the job, including index-linked instruments where they fit. Inflation is a planning problem before it is an investment one.