We’ve just published the key findings from our annual Financial Planning Survey in the latest edition of Financial Planning Today magazine.
This week one of our best read stories on Financial Planning Today website was about a firm based in the United Arab Emirates reportedly targeting UK clients by offering a Financial Planning / wealth management-style service.
At Financial Planning Today we receive a large number of press releases each day, sometimes 100 or more. This morning we received one about a firm recommending a fund which it described as “an attractive offering for investors.”
As June passes into July we not only have the peak of summer to look forward to, but Amazon Prime Day – so big it’s 2 days long!
I would vouch that the UK has some of the most complex retirement savings options in the world, with a myriad of choices and options - and of course risks.
This week I attended the CISI Paraplanning Conference #paraconf19 held in the swish surroundings of the Crowne Plaza Hotel in Stratford-Upon-Avon (don’t worry I’m not about to fill this column with Shakespearean puns).
We’re currently working on how we can demonstrate and track the value we add for our clients – although we know we add value, it’s difficult to put numbers to without some serious spreadsheet activity.
I’ve been spending a fair amount of time recently considering the subject of investment due diligence. Last month an ex-colleague Chris Jones and I gave a talk on the subject at the AMPS (SIPP and SSAS providers) conference. In preparing for that talk we undertook some substantive research into the subject primarily in the context of due diligence on investments made within a SIPP wrapper.
Somewhat predictably a group of MPs have this week called on FCA chief executive Andrew Bailey to resign over the £236m London Capital and Finance mini-bond mess.
This week has not been a good week for fund manager Neil Woodford.
Whether his eponymous fund management business Woodford Investment Management will survive I do not know. I do know Neil Woodford is a very talented fund manager. He was three years ago and he still is today even if one of his funds has hit the buffers.
The harsh fact is that no fund manager can outperform all the time; they all have bad patches. All Financial Planners know this. Explaining this fact to clients is a different story.
I’m not going to dwell on what blunders were made, whether some investment providers - such as Hargreaves Lansdown - were tenacious cheerleaders for Woodford despite the recent evidence and whether some investors were wise to get out immediately and crystallise their losses. Only time will tell.
As those will longer memories than me (and yes there are a few) will know, fund managers can run out of luck and a run on a fund can be a precursor to oblivion. I suspect Mr Woodford will fight tenaciously to keep his firm going and he will have plenty of support. I hope he survives but that will be down to investors.
What I’m more interested in is what all this says about fund management and stock pickers.
About a decade of so ago I remember meeting up with the head of a large UK wealth management firm in central London. The chap I met was a huge fan of Neil Woodford, then at Invesco Perpetual, and put him only slightly lower than God in the pecking order. When I questioned whether this unbridled enthusiasm for one fund manager was such a good thing he was appalled. His words were something along the lines of “just look at his track record.”
As experienced planners know, there are of course dangers with ‘star’ fund managers and the cult of personality, however strong that personality is.
Readers with longer teeth will remember a firm called ‘New Star’ - also quite fancied by HL - and its demise.
In hindsight Mr Woodford may have regretted naming his own firm after his own surname. There’s just no place to hide even though investment decisions would not have been made exclusively by him. He is not the only person working at the firm.
I’ve often thought that some planners approach to investing, based on principles of heavy weighting towards passive, low cost funds, broad portfolio spreads, detailed fundamental research and balanced global asset allocation is a dull but worthy approach. Some have eschewed the more flamboyant world of active management.
I’m beginning to think this may not be just the right approach but perhaps the only approach to successful investing. All the rest is betting. Just the odds are different.
Personally I think there is still a major role for active management but it must be only a part of a bigger portfolio. Investors who have put only 1% or less of their portfolio with Woodford may not be too concerned by this week’s problems. For those will half their life savings in Woodford it may be a different story.
I wonder which sort of investor got advice first?
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with over 30 years of experience.
A new report out today suggests that 6 million people would seek financial advice if it were cheaper.
I’ve only been to a casino once in my life. Perhaps fittingly for this story, it was during a business trip to Barcelona with life assurance company NPI, at the very start of my career. I walked into the Casino de Barcelona with a colleague, watched a gentleman lose several thousand pesetas on a spin of the roulette wheel, and promptly walked back out again, feeling a little nauseous at the speed and scale of the loss. James Bond, I’m not.
I often smile when I read about ‘the next big thing’ in financial services -it’s a sure sign that the so-called experts have no idea.