TRAP: The Real Adviser Podcast
Four business-owning entrepreneurial knuckleheads chew the fat on the sometimes murky, always quirky, world of UK and Irish personal finance.
TRAP: The Real Adviser Podcast
38 - Investment Fundamentals 101
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TRAP LIVE IS HAPPENING ON 9th MAY 2024. REGISTER YOUR INTEREST HERE: www.therealadviserpodcast.com
In this latest pile of TRAP, the Trap Pack discuss
- Topical issues, including Transact price reductions, disastrous Lifestyling consequences, Métis Annual Planning Day, US$6TN in cash, Financial Planning Week, Irish IX set for launch, Hargreaves Lansdown pension complainant, Capital is recruiting, HUM London speaker suggestions please, TRAP Live update
- Meat and Potatoes: Investment Fundamentals 101
- Questions posted by our beloved TRAPists Chris Bowers: https://www.linkedin.com/in/chris-bowers-043190174/
- Culture Corner
Links referred to in the show:
- NL Investment Philosophy: https://www.dropbox.com/scl/fi/ow70abae5od6a52tymvan/V2V-Investment-and-Asset-Allocation-Philosophy-2024.pdf?rlkey=w2yg7mbt3eyoznckdcm1hje3s&dl=0
- AH - Transact price reductions - https://www.transact-online.co.uk/introduction-january-2024/
- AH - Lifestying revisited - FT Podcast - high return to low return - missed returns now capital destruction - https://www.ft.com/content/ab059105-b9f5-4e7e-8896-dbdede87c3af
https://henrytapper.com/2024/01/27/no-one-cares-as-much-about-your-pension-as-you-do-but-claer-barrett-comes-close
Lifestyling your way to poverty - Maven Money - https://www.mavenadviser.com/podcast-9/lifestyle-poverty - CW - Metis Annual Planning Day https://www.linkedin.com/feed/update/urn:li:activity:7153120249381376001/
- NL: Record amount sitting in cash in the US ($6TN): https://apolloacademy.com/6-trillion-on-the-sidelines-in-money-market-funds/
- AH - Financial Planning Week 2024 - Jan 22-28th - https://www.cisi.org/cisiweb2/wayfinder/tips-and-tools
- AS - New HMRC app https://apps.apple.com/gb/app/hmrc/id514561561
- AS/NL: lunatic gambles away pension pot and then runs to Mummy crying: https://www.ftadviser.com/sipp/2024/01/22/pensioner-urges-hargreaves-to-create-safeguards-after-he-gambled-away-sipp/
- AS - Finimize App https://apps.apple.com/gb/app/finimize-market-investing-news/id1335577505
- AS: Man on the Run https://www.netflix.com/gb/title/81735368?s=i&trkid=0&vlang=en&clip=81742592
- AH -Email newsletter service, pricing free for under 1k email subscribers https://convertkit.com/ been using is circa 6-7 years.
- CW: Diary of a CEO by Steven Bartlett
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yes indeed a trap is welcome back to what many people are calling episode 38 of the real advisor podcast to our AP track. My name is listening Ken I'm already having a tech nerd joining me in the pretty crappy studio of doom digital studio doing what the three other horsemen of the apocalypse call the voice with Alan the storyteller Smith and and the Optra heart Now gentlemen We have a show pack full of salutely nothing so let's start unpacking it straightaway with some more high energy review reads whenever my good friend the Right Honourable Mr. Andrew halt. Thank
Andy Hart:you very much Nick two reviews today. The first one is from good one to four It's entitled would have been six stars however, excellent podcasts are very insightful for someone coming into the industry. I've been a financial advisor planet for one year now and this podcast is gold dust would have left a six six stars rather than five however, Episode 24 maybe walk around my house checking all my smoke alarms, which I then later discovered while listening in the car, the noise was on the podcast and not in my house. Next review for a rally
Alan Smith:that was That was mean to summer in my little New
Andy Hart:Lodge or whatever it was. Yeah, anyway, final review from Jonathan Rowley entitled trap feedback. Thanks five stars, new listener and catching up on back episodes. I've been an IFA advising for 32 years and the podcast resonates with myself and my team. Keep up the good work enjoying the banter, proper financial planning, clear values and proposition cost of funds crucial focus on the important stuff the client relationship, keen to hear more interestingly, from that one is from an advisor who's been in the business one year and one is from an advisory in the business 32 And they're both getting a lot of value, which is superb. So please do keep leaving the reviews are a bit light on 2024. But hopefully that will change very shortly. Back to you, boss.
Nick Lincoln:Thanks, John. Thanks for that. Thanks for the reviews beeps do please keep them coming in. As Andy said, We need them. We need some for this year. Okay, let's just go straight on to the tropical tidbits we've got loads to get through today. And that'll put a timestamp on this episode. I'm going to quickly lead off in the last episode I mentioned the list a trapeze question, more of a statement posed by a nun advisor guy called Mark who's a telecoms engineer from memory. And we were talking about his experiences of working for or dealing with a very old school kind of dinosaur IFA firm who will resonate who will remain anonymous, but I got a reply from Mark. Because I asked him Is he still a client of this particular firm? He said, No, I'm doing on my own. I'm going 100% Into the great countries of the world. He's transferring existing funds from standard life and it's been a disaster. Mark tells me he's doing it in species I could fill a couple of episodes of track on this initial transfer forms were completed and accepted in June 2023. Welcome to our world mark. The human species transfer is finally in progress. Now, but about two thirds of the funds have moved over. But to say it's painful is an understatement. I agree with your philosophy of not tinkering. Unlike ABC wealth management and their managed pension where the logic doesn't work and creates the customer trading fees and not even the best returns their fund choices were ridiculous, full of bonds and money market funds well word on mark on you on leaving them and well done a new on trying to go out on your own. And I hope the introduce you transfer happens sometime. Soon. We're going to come I think on to the woes of Aberdeen or whatever they're called in later topical tidbit. Okay, Mr. Hart Transact.
Andy Hart:Yeah, this is Transact announcing that their fees are again, continuing to come down. The big news is their BI Commission, which has actually come down quite a bit in recent years, there's going to be abolished from the first of March. And also they're removing some of the other rapper fee. So it's just a good news story. Really, the only two providers that I can clearly remember from being in this business of reduce their fees consistently is Vanguard and Transact. So yeah, more good news. I think fund management fees are coming down. I think platform fees are coming down. You know, the jury's still out on advisor fees that they're going to come down or sort of plateau. So yeah, that's just it really Transact a good news story. Their fees are reducing on the first of March.
Nick Lincoln:Okay, good stuff. That's a good news platform story, but test storyteller.
Alan Smith:Just a couple of items which were in the news last week. First one was widely reported. Aberdeen, that Aberdeen obviously are a large player in our marketplace. They're an asset manager. They're a platform for Wajda, and they've even got an advisory business, they hit the news for all the wrong reasons recently in that they've laid off 500 People made them redundant or getting rid of people in the next couple of months. The key reason that they're not the only ones who have done this a key reason is it's the asset management business, Aberdeen, our four to 500 billion of assets under management, the vast majority of which is active management. And clearly, there is obviously a global shift away from Sony away from underperforming active managers, when people are slowly but surely seeing the light and saying that perhaps it's not worth paying these huge fees for continued underperformance against an inner benchmark or an index. And so yeah, the Vetterli of staff, I'm advised that the platform is unaffected because they are platform provider, as I say, but but they're not the only one. Bailey Gifford also announced layoffs, staff cuts, etc. Recently, and our old friends, St. James's place, were also in the news recently for again, similar reasons share price fell 9% in one day. So there's a lot of change going on. There is this huge global shift in the way personal finance is marketed is operated. There's a focus on reducing costs for the ultimate beneficiary being the client and the investor. It's a good thing in the short term, there is however, going to be some pain, undoubtedly, Nick.
Nick Lincoln:Yeah, this is a forum Google group that I'm that I kind of run was quite a thing last week about the actual words people are having with the sort of elevate, elevate Standard Life platform scenario, apparently the service standard has just fallen off a cliff. Yeah, yeah, I'm
Alan Smith:not trying to be. I think people know that we do use Aberdeen platform, we were an early adopter, we're one of the first companies to adopt it way back in the day. A lot of these organizations will go through significant challenges and changes. They are kind of, I think, transfer camo exactly what the phrase is, but you sort of removed the technology onto a new or better platform. So they've got something about to be rolled out called advisor OS operating system, which apparently is going to be the state of the art, all singing, all dancing. However, there's a lot of pain people are currently going through. And we can vouch for that. In the last few months, there's a lot of challenges, challenges, when you've got active clients already on the platform, they've got income payments going out, and all these sort of things. And then you move off the one platform to the other. And I don't know any sort of massive, there are tech projects that just run smoothly, no issues, no problems whatsoever. Again, I suppose that's a benefit for Transact. They've got their own technology. They've built their own technology, and presumably they're improving it on a day by day, month by month basis. Without having to rely on third parties. Most other platform providers use third parties like fn Zed, and others. Yeah, that's
Nick Lincoln:why platforms like Transact and fundament are so so, so worth looking at Annie.
Andy Hart:Yeah, I'm just a bit confused what's going on with Dan life at the moment? I know the standard life brand is still there. I know the Aberdeen brand is still there. I know a chunk got bought by Phoenix. Yeah, we're, you know,
Alan Smith:we're pretty close to them. You don't know what's going on either. I don't know. And I'm not sure some of the people who work there No, it is a sort of a just a complex Byzantines mystery of Phoenix bought the brand called standard I thought Standard Life was sort of effectively closed down as a brand and then I saw on some bus stop recently a massive advert for get your standard life pension
Andy Hart:yeah those still operate and I was some switches recently mixed messages.
Alan Smith:Phoenix brand that's there is that's a Phoenix bought the brand bought the name. So that's still promoting the brand. Yeah, I think Phoenix use this kind of they've got the Phoenix brand for the kind of legacy they bought a bunch of companies didn't they bought a bunch of sort of old fashioned businesses, package them together. But I think it says a proactive, going out to market they're now using the standard like brands. So I can tell you it is confusing. For us. It's confusing for customers and clients as it sounds like it's quite confusing for the company themselves. It's a mystery, but maybe it will be unraveled and revealed during the course of the year.
Nick Lincoln:Okay, thank you. Mr. We've got to call on the second oops, sorry, cardio a bit down unlisted, Mr. Hart life styling.
Andy Hart:I think a couple of us are covered this but I believe I think her name is Claire. She reports for the FT she runs the FT podcast she Claire Barrett. Yes, she did a podcast recently and obviously an article about lifestyle and pension lifestyle and when moving to your, you know, a nominated retirement age you move from high returning assets to low returning assets on the assumption that you may or may not be buying an annuity. We've covered this before but there's two LM To this, there's missed returns from moving from high returning assets to low returning assets, Mr. Returns is one issue, you know, opportunity cost, etc. The other issue is now outright capital destruction. You know, she was reporting like people in low risk portfolios, low risk investors, you know, cautious retirees getting hit by a 32% decline in capital value. So, this sort of bygone way of managing, you know, pension funds, you know, front advisor needs on the front foot for a long, long story short, pretty much telling your clients to turn it off, if that makes sense for the overall financial plan, etc, etc. So, again, it's read its ugly head again, the FDA has popularized it, me and Alan, they've been banging on about it for you know, a few years and hopefully you've been on the front foot with your clients, you know, I call this a six to six figure tick box, if you tick the wrong box. Oh, yeah, I'm okay with lifestyle bent or a donut, I don't want it on. It's a six figure tick box, if you have no certain values, certain value in your pension over to Ireland,
Alan Smith:six figure tick box in that you tick the box without thinking because because the phrase lifestyle sounds positive, and it's cost you six figures of capital loss, which is unlikely to be replaced, just at the time that the last thing you need, which is with a few years before retirement works against you? Yeah,
Andy Hart:clearly no recourse though. There'll be no recourse for it, we'll
Alan Smith:see. So here's the thing. And there was a lot of kind of back and forth. This was in the Financial Times at the weekend and article, sad case, there was somebody who had contacted the ft 200,000 pounds of his pension fund. And it's a went to look at it again, sort of a year or so before his retirement and he's lost a third of it, because he moved into long data guilts. And of course, we all knew know what happened last year. And of course, though, just to be clear, the purpose for these lifestyle and funds is to protect the income that you're expected to take. So you're buying long dated gilts, which move in line with the move in line with annuity rates. So in theory, this person, should they if they fund fell by a third, the income that they could have purchase, with the rising gilt yields would have still been roughly the same. So in theory, it kind of works and these works historically. Okay. When everyone was buying annuities, it did it did it the aim was to protect the purchasing power of your fund. Now, I don't I was looking recently, there isn't I can't find any up to date information about the percentage of people who actually buy annuities that retirement. Last data was a couple of years ago, it's about 20%. I think it's probably a little bit higher than that. Now, with, with with rates, interest rates having lower gilt yields have been going up annuity rates having improved quite significantly in recent times, but 20 25%, which by default means that the vast majority of people approaching retirement are going to be hit negatively by if they're in a lifestyle fund. The other thing that happens regardless is that your pension commencement lump sum is a is a factor of your fund. So that is going to go down regardless whether you're buying an annuity or not. And the whole thing here, I there's a guy called Henry tapper that if you know is an actuary or he works for an actuarial firm, he's always talking about pension related issues. And this is a wide scale secret problem that not many people know about. There are hundreds of 1000s Millions of people in workplace pensions across the country who are impacted by this and they don't really know about it. They'll just have a look at their pension fund think wow, what happened there? Oh, the markets must be rubbish in pensions are terrible. I've lost a third of my fund. This is dictated by
Andy Hart:aliens wiped off billions of real people's pull
Alan Smith:that language to be recovered within the time they've got to retirement. And you know, it's really no one's really a ticket. There's no there's no accountability for this was
Nick Lincoln:that devil's advocate on this, I agree with you devil's advocate on this. We live in a highly litigious environment, you've got people with 100% equity funds, no lifestyle and lifestyle in place, and just before they retire, the equity markets go through one of their 30 to 40%. Very typical declines. There'll be all over their pension companies slash HR functions, whatever, looking for redress, it's a really difficult thing. To you know, the the mass unadvised GPP market. These people will be livid. Wouldn't they say? What it's hard? It's a hard thing, which we're trying to square a circle with. It
Alan Smith:is correct. But there's we're talking about predominantly workplace pensions here. I believe it is. There's a significant responsibility that employers must take employers in turn are advised by we've got trustees, they've got external consultants go Employee Benefit consultants. There has to be an education process here. It's hard to give everyone independent advice. You know, if anyone if everyone had people like
Nick Lincoln:read impossible, not
Alan Smith:information, education, lots of reasons that you would stick to the plan. The other thing that came out you saw our friend friend of the podcast, Dan Weston posted something at the weekend as well about his wife had just been enrolled her banks pension scheme, that that asset as an
Andy Hart:absolute bagger spanners financial crash point is overcomplicated. Like, I mean, it was
Alan Smith:it was ridiculous beyond ridiculous what she's got 0.5% in some tiny funds 0.15% You know, an absolute rounding error, it makes zero impact and, and she's, I think she's 39 and the retirement age is 65. And she's got all this nonsense. And of course, you know, again, who's responsible? Somebody has made that decision. Again, I'm going to say an external third party pension consultants advise the employer in this case, yeah, okay. And it's utter nonsense. And the
Andy Hart:only asset class allowed in pensions for people under 50. should be, should be global equities. Every other asset class should be banned from anyone's portfolio. That's under 50. That's my bold statement. Anyway, back to you, boss. Okay.
Nick Lincoln:Well, just just just just to summarize, how about them? And we know that with with Nest, I think it is or certainly was the case that young people enrolling in nest, you know, 1819 20 year olds, 21 year olds, were going into guilt initially in the early years, because because the culture said, well, we can't show them statements with a bunch of their funds fall in the early years, because they might they're knocked out. It's just like, Oh, my God, pandering and just arc. Right. So there are links to various things about the lifestyle of
Unknown:guilt. Re Yeah, yeah.
Nick Lincoln:Which actually, what that's good for them, actually. Because they're buying unless that's actually it's going to work out for them. But it shouldn't work out for them. You know what I mean? Because they're gonna be there. They're saving on a regular basis into into an asset class has collapsed with the floor. Car. Sorry, voice just to wake you up. It's your Go.
Carl Widger:Yes, indeed. Yeah. I just on that point, Nick, it's not as straightforward as lifestyle funds are terrible, because of everything you pointed out. So that's why I stayed quiet on that, because there's intricacies in that for absolute sure. Anyway, we had the Metis, Ireland, team planning day for 2024. In January, I did a kind of LinkedIn posts on it got a good engagement. And just I wanted to mention it for two reasons. Number one, we did a great exercise where we paired everybody off because we've got a few new people. And we kind of had a three pages where I had to interview Nick, say and ask him, you know, what are you? What are the three most important moments in your life? What are your values, that kind of stuff? It was bloody brilliant, and everybody really, really, really engaged with it. So yeah, it was it was really good. And then the second thing we did we we have done an employee survey. We did it kind of towards the end of last year. And we brought in Tommy Geary, to kind of present the results of us warts and all, which is really, really good. Our net promoter score is 59, which apparently is really fantastic. So I was delighted with that, but work to do for sure. And there are things we need to do for the team. And, you know, getting this feedback is you can't ask for the feedback. And then when it comes in, kind of ignore it or be pissed off with it. You got to act, you know. So you're you really do so look, anybody who's building a team or has a team kind of more than 10 people, I think these are really valuable things to do. Just wanted to mention,
Andy Hart:just a couple of one point on that. We know firms in the UK that do anonymous staff surveys and have two staff members.
Alan Smith:Well, that went out True story. Okay, three, three staff members to be
Nick Lincoln:okay. But you're right. Good point. Right. So moving on. Thanks for that call. Yes, just to comment on it. But just it's worth noting for the for the record that in the US there's a record amount of retail investor money sitting in cash around $6 trillion. And that's that's a record amount. So the markets went in the US went on a bit of a tear last year, as we know. So there must have been institutional investors going in and driving up the prices, while retail investors sit on the sidelines and miss out on those gains. What to infer from that I'm not too sure. But it's very hard to think that when that money leaves cash, when interest rates do start coming down again, they're gonna go into back into equities, which will give them a boost, but 6 trillion sat in cash waiting to be invested in the USA,
Alan Smith:in the UK,
Nick Lincoln:in the USA. That's why Mr. Hart?
Andy Hart:Yeah, that just plays into the hands of the banks, isn't it? They that they're just going to make a margin on that. And also the investment platforms, they're gonna make a margin on it. But yeah, that sort of makes sense because the markets are at a high, which means people are most fearful. So
Nick Lincoln:yeah, sorry, I'm gonna share with you what was a point you're trying to make.
Alan Smith:Thank you, Nick. I'll forgive you in the UK. I tweeted this last week, because I saw some data that the FCA had published. Let me just quote it 37% of all investments slash savings are 100% in cash. This is retail customers, according to the FCA 37% One are 100% in cash, and an additional 18% of all their investments and savings 75% in cash Cash. The average cash rate currently in the UK is 1.99%. I know you can get more with a sort of fixed term bond or something and you can sort of, but most people don't bother. Again, data quoted, the average person doesn't bother. They get whatever their bank or building society gives them. And there are some billions in accounts with 0%. Interest rate. Large scale wealth destruction going on in slow motion in front of our eyes happening all the time.
Nick Lincoln:Yeah, good point. Good point. Well, mate, okay, very quickly, Mr. Hart financial planning week. Yeah,
Andy Hart:just put it in the topical tip, its financial planning week is this week, January 22. To the 28th, though, just sort of finished, I believe it's run by the ci si and various firms do sort of various sort of awareness, sort of projects around this. I haven't seen much about it, we've just loosely come across it. So that's it, really, I'm just mentioning because if there's sort of younger advisors listening that want to sort of get involved and do things around this, then maybe check out the CIA si financial planning week. And a new report on this. Just
Alan Smith:one comment on it. To quote our learned friend, Mr. Andrew Hart, words, a weapons, I've always felt that that week, that phrase, that description, is uninspiring financial planning week, as most of the public don't really want a financial plan. If you redesign that renamed, it called it's something like design your ideal life week, or some sort of future focus something that was interesting, engaging. No one wants the input. I don't want a financial plan. Yeah. Confidence I want identify my future. And I just because as I understand it, this is something people advertise and members of the public can get can walk in, can phone up and get a financial plan, but I think you could, I think they could sort of freshen up the branding, around financial planning, and we
Nick Lincoln:financial success, financial success,
Andy Hart:the website page is not very good. Okay, we can't really find much on it. So it's a bit of a bit of a weak topic. Right. Next
Nick Lincoln:thing on the topical tip bits, storyteller, again, new HMRC app, make this exciting and make it short.
Alan Smith:You're really moving as a long, fastest week I like it. I think it's new new to me or a certain has been refreshed. HMRC have got an app, which you can download to your phone. And it's really good, surprisingly good. You know, all the stuff that you can go online and find your you've kind of where you are with your tax and you can pay your tax, you can get your pension forecast, all available at the click of a button. It's very nice.
Nick Lincoln:app on my phone for like two three years. So they've
Alan Smith:they've upgraded it refreshed it there's a lot of information, a lot of data on it. It's worked out
Nick Lincoln:good stuff. Thank you. Thank you. Watch.
Carl Widger:Yes. What's the next thing on the agenda there? I'm not gonna take
Nick Lincoln:your Irish ideas
Andy Hart:no notes, Master.
Carl Widger:And then also, they'll also see that I was deeply uncomfortable with the content of some who today's owing to the Irish versus UK cultural differences. I was still mesmerized by the gilts talk, anyway. And yeah, the Irish ideas exchange is finally happening on the 22nd of February. And the reason I wanted to say is, is for a number of reasons. Number one, David Quinn has been very kind to give us up his office. But that comes with a little bit of a small problem in that there is only 12 spots available. Amon to me from stepchange, has agreed to come in and facilitate it. So that's brilliant. And thank you so much Amon, for doing that, that the problem is that more than 12 people wanted to go. And there are now you know, when you try and do something that's supposed to be you know, I'm doing this for Goodwill, and to sort everything out. And now I'll have to base people off. So I'm really, really, really sorry,
Nick Lincoln:classic, classic watch.
Carl Widger:For the beaver who didn't make it onto the first list, I'm sure there's a couple of people will drop out the ones who are close to the date. And I'm also sure if there's an appetite for this to go further. Of course, we can find a different venue with more people. But I thought the most important thing was getting off the ground. So looking forward to the 22nd of February and see where we go with that.
Alan Smith:Well done. At some point you're just chucking the liquid in and you know, book somewhere book, a nice private room or a breakfast place or whatever. True and
Carl Widger:I think look, we learned from the way you guys have done it. And what we've said is Amon is going to do is facilitate the first session and if we go forward it has already been flagged to everybody that amens is a paid role going forward and And so we've flagged all that so look, let's just see how it goes. It might be something that's absolutely brilliant and it also might go nowhere I have no idea which might be the case but looking forward to it nonetheless.
Andy Hart:Well good luck with it. Yeah. Okay.
Nick Lincoln:Moving on to the next topical tip bit myself and Mr. Smith are down for this one and this kind of leads in again to the life styling thing and you know, where there's a where there's blame there's a claim a story in in ft advisor and there's a link to in the show notes. This guy who effectively had a Hargreaves Lansdown sit, I think, and the guy was a compulsive gambler, you know, diagnosed psych psych psych Khaleeji. Why psychiatrically wise as a compulsive gambler he's basically gambled away his pension fund. I didn't It's gone into some bloody awful derivatives or something, you know, ultra ultra volatile make a zillion lose a gazillion. And now he's complaining to Hargreaves Lansdown that he shouldn't have been allowed to go into those things that someone at Hargreaves Lansdown and should have been looking out for him and this is a very difficult moral conundrum as you might guess I'm on one side I'm very heavily about this is completely this guy's fault, and it's not Hargreaves Lansdown, his role to police people who want to piss away their pots, it's up to them. There'll be other people who say there's a duty of statutory care to these people, but you don't know Hargreaves Lansdown, he said in quote, light touch execution only, not quite advice thing. You know, we started with our own clients with IFA clients with are the kind of real financial advisors where we have deep relationships with clients that we would know where they would if clients were behaving in a way that was detrimental to their long term wealth and if they suddenly started acting out of character. But I don't know I don't know if you guys saw that story and have any views. I think it's this guy now complaining the you know, said that he wants to he wants Hargreaves to put him back where he would have been if you hadn't gambled his pension fund. I think that's a bit rich. Any thoughts?
Alan Smith:Yeah. So he doesn't have a leg to stand on. Because you're very clearly Hargreaves. Lansdown are not an advisory business. They don't give advice. There's no, I think it went to false. They kicked it out. They said, Yeah, the onus is upon us. So first of all, big warning sign for anyone who's a DIY, you know, thoughtful financial planners do provide an additional role of counseling of care of trying to make sure that there's price protection, all those things, if people start doing those sort of things, they'll do your very level best to explain why it's not in their best interest. And which of course you don't get on are just going by your own stuff. And by buying your own funds and trading them. I raised this exact point on the last track because as a exactly customer of a couple of including hl. I'm bombarded with stuff this is this is the this is the duty of care. It's the point of having misaligned incentives as as they want, they want action. Charlie Munger said this, you know, incentives drive all human behavior. It is in the interest of Hargreaves and AJ Bell and all these other platforms to get people to actively trade they made a lot of more a lot more money off this unfortunate gentleman than they've ever made of me. Because I don't I wouldn't be trading in and out so you know, I'm a good customer to them. And so or anyone else who buys and sells, which is one of the reasons that they send all this guff on a literally weekly or every few days basis, which encourages so the guy unfortunate doesn't have a leg to stand on legally. But I do believe that these platforms who manage billions and billions of retail customers assets do have, you know, how are they signing off their kind of corporate governance and they're sort of all those other things by
Nick Lincoln:you know, in conflict as you said they've got a duty to their shareholders, that's their primary duty is to maximize profits.
Alan Smith:Okay, so you know, buyer beware, it's a really bad story. grow
Nick Lincoln:up grow up, stop relying on someone else, wipe your own ass. This bloody somebody
Andy Hart:decided that was poetic. This is the way their own pot this is the way their pot
Nick Lincoln:and I've got asked as well, and it's a list. Okay? Now Smithy. You are Yeah, this has been a topical tip for like seven months you're recruiting apparently.
Alan Smith:It hasn't. I think I've ever mentioned it that you've forgotten. I just wanted to put it briefly we are coming into the new year we're recruiting financial planner, financial planners. I think we've probably got enough we were recruiting for one plan that will probably recruit again later this year. What's quite interesting is there's a huge demand I literally have no story to any recruitment consultants listening to this. We don't need recruitment consultants paying them 20% plus VAT of salaries we haven't even I this I suppose is the impact of social media frankly and having a trap trap trap helps. I posted two posts on LinkedIn a week apart. had about 35 really good quality Wow against which is pretty good. To say the least the hardest thing As identified, there's only one right now thank you, we'll need more we remain as a business we remain very ambitious, I can see that this sort of the whole world is kind of beginning to wake up to the art kind of the philosophy that the four of us have embraced for many, many years, which is creating more opportunity which means we will embrace technology as much as we can, but we do need more high quality you know, humans in the business and that the the summary position is there's a lot of really really good financial planners out there looking for a home that just sort of embraces all the best
Nick Lincoln:way for people to get make contact with you.
Alan Smith:Alan at Capital dot code at UK comm I
Carl Widger:think that was raised. Yeah, can I just say myself and Ireland have had a number of discussions, kind of one or two longer discussions about this and he's got some great ideas that were kind of aligned to the way I was thinking and we've teased them out and about how to structure it going forward and especially as the business matures a little bit and that kind of stuff. So look my my overall point is number one, if you're a financial planner in the UK, go join Allen and his team they're absolutely phenomenal but secondly it's so important to have people to bounce ideas off so people who you deem have the same mission values in business perhaps life but definitely in business that you can actually pick up the phone because I was kicking things around in my head and I've teased these things out without and we've had one zoom call a couple of texts and one call and you know it does really really help so having your kind of tribe around you that you can bounce ideas off really so important and just wanted to make that point now.
Nick Lincoln:Very good well said okay, Smithy again quickly minimize app
Alan Smith:Yeah, just come across this minimized been around for a while they are effectively content creators that create a lot of content some of it is a bit busy about what
Andy Hart:the dynamite buddy no Ireland or standard just FYI Yeah. The art
Alan Smith:which I see is a good that's one of the smartest moves of the Aberdeen have made recent scientists recognize the importance of high quality content because people consume it, you create it you're a content creator Andrew and this is done at scale, they have got an advisor section as well where you can sort of tap into a pin or a subscription you can share some of their it's pretty good quality actually, but it's not it's now an app this is had a website for a while it's quite a useful interesting app. That's all worth checking out thinner Mize but
Andy Hart:they do fall into against the bracket of they just want noise and actions. They were big promoters of crypto big promoters of NF T's anything that's fine for the month you know that their millennial readers want to know about so you're not to be
Alan Smith:they've got everything that yeah that included in that because there's a market for that much more
Andy Hart:to people more distraction but yeah, they are.
Nick Lincoln:Okay, sort of the ultra you have the your watch you have a conference right? Did you ever talk about it so
Andy Hart:very briefly on this so humans on the management none that is on the seventh of November, I've decided to keep it the same venue because switching venues are just too high risk too much hassle too much effort. So we're back that we'll call it an answer sessions a limited number of spaces. I'm looking for speakers so if you know any world class speakers that you think will fit well with humans on the management London, please do email me and the humans on the management.com. Please don't see see a speaker in just email me with the speaker idea and maybe obviously a link to their website and I'll take it from there. That's it,
Alan Smith:but your boss is hassled. Yeah, both canceled. Yeah, both. Thank God.
Nick Lincoln:We're both random. Yeah, that's done. That's the fight. Okay. We're talking. You're talking. You have superb live events. The live event that everyone's talking about in the world of financial services. The is trap live happening on May the ninth I think that's a Thursday, but it was May the ninth from about four ish, it's going to be around three hours. I'm talking a bit about conjecture here because after we've recorded this dear TRAPPIST, the four knuckleheads here the trap pack are gonna have a discussion about it in more detail, but some stuff I can confirm to you as May the ninth is going to be at a place called Lolas, which is at the Hippodrome London. Basically, you come out of Leicester Square One of the exits and it's there the entrance is there, it's so easy to get to lolis is a fantastic place. I've seen a podcast there that was recorded, the sound is brilliant, the the lighting is brilliant. There's a bar there, actually within within the auditorium. And we'll we'll include a couple of free drinks in your ticket price and there will be a ticket price because this is not inexpensive to hire. This whole with the AV and everything else that goes with it. So details will start coming up on May the ninth that is definitely happening. We've got the venue Lola's at the Hippodrome. I don't think we need to add anything to that guy. So we we launched
Andy Hart:tickets on the next trap episode. So listen out for it. Yeah.
Nick Lincoln:Okay, that's, that's great. And that's yeah. Thank you very much, Andy for that. Okay, so we are at 35 minutes in, I'm going to see if my potato peeler was working. Oh, the joy of hearing that. I've been so happy, we can move on to the meat and potatoes of episode 38 and Trappists. This is a bit of a back to basics. But if I just let's just remember the important stuff that we kind of build things from the fundamentals because sometimes we can get lost on esoteric things. And this is about the fundamentals of investing. And I think, certainly for our younger TRAPPIST members, you'll get some value for this because I can only imagine that your heads are spinning at the moment, there's always something shiny new on the block. And we know that crypto for whatever reason seems to be comes in waves, isn't it crypto and crypto seems to be the the sort of the current the current hot thing does your and we want to push back against it. And I'm going to start off about on this I think I think it's what we agreed at the start of the show. It's not an asset class, if it doesn't produce an income. That's that's that's the end of if it doesn't produce an income. It is not an asset class. In my opinion, there are three asset classes. equities, property, and bonds slash cash, they all produce income. Okay, when you buy a share in a company, you're buying a future income stream. That's what you're paying for. When you buy a commercial premises or a bike let you're buying it really for the rent. And if you get property appreciation on top, that's a bonus. And if you buy a fixed income assets, you're gonna get a fixed income, you may get some gain on the price of it, depending on what cycle in the interest rate cycle, you bought the fixed income. If it doesn't produce an income, it's not an asset class. Gold is not an asset class. Crypto is a current, if it's anything, it's a currency, but it doesn't produce an income. I can imagine that the pressure on advisers, certainly advisors coming into this thing of ours is immense to show clients the new shiny thing on the block where they're getting badgered by clients to say, why aren't you putting us into this new, shiny thing on the block, we talked in the last episode about how crypto is now available in the US through an ETF. And you know, sure as sunshine follow showers that's going to come over here in some form or the other and we are going to get clients saying we want some of this. And I think we just have to remember, we stick with what's always working on what's just working now. And by the way, if you think Kryptos working, you know I've got a you know, Allen's bulletproof entrepreneur, an episode or so back with Rachel parney. Just that lifted a little, just a little bit of the sewer lid came up and you saw a little peek into the sewer and little peek where that sewer is gushing all the time. And there are rats in that sewer. And we don't want to be involved in it. And I'm just putting a clarion call out to our trappers to the advice community, you know what's right, you know what's worked, have faith in yourselves. Just take the vitamin C yourself and stick with what's always worked and do not be distracted by this Tosh because it's disastrous. And I haven't really got myself set up often that I can see and it's going to come in next to think I do have an investment philosophy and I share it with my clients, I put a link to it in the show so called shownotes. And it is exactly what you'd expect me to be telling my clients that we think it's very hard to outguess the market, we don't want to buy the needle, we want to buy the haystack. And we don't time the market and we invest in asset classes that produce income because they're the only asset classes that are genuine asset classes. Right. That's my soapbox. Mr. Hart.
Andy Hart:That was great, Nick, thanks very much mate. You know, if you don't believe in something, you fall for anything. So you clearly do believe in that I got three points and we're briefly sort of go through them. The first one, I'm sort of taking this from the advisors point of views, hopefully someone else will maybe look at it from sort of client's point of view. The first one is peer pressure. This is mainly through older advisors who work within your businesses. You know, a brief story for me when I first came into this business, my first role within three, six months as a financial advisor. One client came along with a few quid and I thought brilliant This is my first client to get my teeth into I spoke to an older adviser who at the time must have been about 55 I said what do I do with this? Like what are the options and he grabbed this brochure on his desk and he said well this is doing really well if you ever look at the monthly performance here all its earnings just go up and up and up and up. And I looked at it and I read it was arch crew. Thankfully, thankfully, I didn't pull the trigger on it and I was a little bit more
Nick Lincoln:John McGuire, who then went to work in a fish and chip shop somewhere outside
Andy Hart:bath, anyway, so I ended Luckily in my naivete, I decided to not pursue that on a whim was actually a fund that was set up by 7am. They were the first to sort of do multi asset funds anyway, so I sort of dodged a bullet there but why would me has been in the business three months ended up putting this client in a better fund than this advisor that's been in the business 30 years. It's insane. So there will be peer pressure from older advisors who say, you know, who the hell have you been in the business two years listen to this crap called trap. No, we do think differently here. And these are the shiny things that we want you to invest our clients your clients golden coins into. So peer pressure is a huge one. Next up is I'm going to call media pressure. This comes from two angles. The first angle from an advisor is trade press. So this is you know, magazines written by, you know, nonpracticing financial advisors for financial advisor to consume. They obviously cover adverts of everything. And usually the worst investment is the loudest when it comes to marketing. So you'll be bombarded by this financial trash Again, be very aware of it. And you're there to protect your clients from all that guff from all that guff. And finally, it's mainstream media money sections, you know, the ones that report the weekends mainly, again, these articles are generally written by young broke investing illiterate journalists. And they frequently show their cards on social media when they ask ridiculous questions about money and investing. And then the next weekend, they put an article out about some thing that they claimed to have authority on. Yeah, and the other thing is, well, trade press and the mainstream, allow all this financial traps that's been created to advertise on their platforms, everything that's blown up. In hindsight, I'm guessing I'm almost certain they've had exposure on these mainstream platforms. But there's no recourse at the moment, these mainstream platforms are advertising or allowing to be advertised on their platforms, whiskey, cask investing, sounds great. Everyone wants to get involved in it, all of this stuff. excuse the pun is the flavor of the month at the moment. And all of it all planned in the future. Again, there'll be no recourse. Here's the crazy thing about it. They'll report about whiskey cask investing blowing up after allowing all the companies that are selling this crap on their platforms. It's a little bit like channel for exposing Russell Brand for being a monster when he was a monster. If he was inside their towers, you know, so they allow it to happen for 15 years. And then on the 18th year, they do an expose a about it. It's insane. So that's what's going on. And the third thing I'm going to mention is new ideas, pressure. So there's constantly new ideas being thrown at you as a young adviser. It's always what's working now. And you might feel a little bit silly, why do I not understand about whiskey cask investigates, it seems like a good thing and FOMO kicks in, people want faster returns. And the longer you're in this business, you should just shrink your circle of competence, you need to unlearn a load of crap. And you just get to the point where you realize that the returns all come from global equities. So the best portfolio is the one that clients gonna stick to it the highest, the highest allocation to equities. Don't ever call them high risk, the higher returning portfolios, asset, Miss allocation is pervasive in this business. So that's my third point. So just to recap, yeah, it's peer pressure. Usually older advisors in your firm, media pressure is dangerous for advisors and clients. And then the third thing is new ideas, and they're always going to be coming along. So that's my point. I think it's called next level. Yeah.
Carl Widger:Great stuff. Andy, I had some kind of similar points. I love the peer pressure one, it reminded me of when I set up on my own back in 2010. And you know, the broker consultant stroke fund managers been sent down and one of them was standard life coming in and telling me that gars was where it was at and I was like, I don't understand it. So I'm not going to put put any money any recommend any times go into it. And they're like, we've put our whole pension fund into this but what you rough but you rock on dude, and you decide, you know, better you know, and so, sometimes it's harder to resist that peer pressure, because you might feel a little bit silly. So just that that's kind of a point worth noting, I got a share to you guys the first line of from some crowd called bitpanda partnership who wanted me to unlock new revenue streams. They also they also opened the email with wishing that I the email found me well, it's
Nick Lincoln:it makes my skin crawl just you just outlining it without having to read,
Carl Widger:but it's like, we want you to sell Bitcoin and NF T's and all this. It's just my goodness, right? But if you're starting out, and you need to get a few quid into your into your firm, I could see how it might be attractive, especially when, you know if you're a younger advisor, a lot of your clients might be your mates and they're all down the pub and they're all talking about Bitcoin and blah, blah, blah. So, look, forego the instant rewards that may or may not come from that. And as as Nick says, you know, there are three asset classes, make sure that your clients, you are doing them the best favor ever by making sure that they invest in those kinds of assets, asset classes did what's driving me mad and Andy, and I put it into our own group during the week. And Andy said, Kyle, it's not going away, because it's marketing departments justifying their existence, but also fund managers justifying their existence, these weekly and monthly newsletters now. The the, it seems to be, you know, if if we're a big firm, we absolutely have to do it right now. So I've gone in, and I've looked at a couple of them, and they're largely history lessons. So they tell you what happened in the last year, but it's very recent history lessons. Here's what happened in the last week, to try and find a reason the market went up or down in the last week, and then some fudge as to what may or may not happen going forward. They are absolutely and utterly pointless. But it seems you see, this is the point, this is why things are not black and white. It seems the clients want it seems the clients like it. And this is why you got to so we never i I've said this before, we never used to do an investment update. But our clients started saying, I'd really like to hear what you think, even if it's only a couple of times a year. So what we try and do is give some figures as to you know, the types of funds that we're recommending to our clients, and how are they doing and then give kind of an overview as to what our investment philosophy is. And it might just be saying the same thing, but in different language. So so I can I can go and get over my hobbyhorse, we'll be talking about how pissed off I am that these people how dare they and they're adding no value and they're making it up and blah, blah. But if the clients wanted, I couldn't understand why these firms are doing. So look, it's just one of those things. Nearly done. But one other point that we need to be aware of as more mature advisors is because I've had this where we just seem like dinosaurs by saying Bitcoin is a load of BS, right? So you need to have a little bit more in your armory. around why and what I've been using is the volatility. So I spoken about the violent to volatile price over the last while and that my story is being suited nicely at the moment because everything is is is kind of slipping. Yes. Nick,
Nick Lincoln:just to quickly on that. Just to clarify, I mean, I am aggressively against Bitcoin as an investment. I do think there's a case maybe because as the fiat currency system in the West kind of gets devalued by the printing of money. And one day, you know, we will these bills will have to be paid that maybe there is a call for something that's decentralized, and a way of exchanging value and paying for things. That doesn't mean it's an investment. Just want to get that out there. I'm not you know, the concept is interesting to me, but it doesn't mean look,
Andy Hart:I hear you. I can't see you. First listeners. Yeah, I
Carl Widger:can't sit down anytime soon. And yeah, until I can see that this thing is mainstream. And I just can't I can't I can't get this thing to someone decided we're going to issue a number of things. And that's it. And Rachel brawny on Ireland's bulletproof entrepreneur podcast mentioned that they felt that although there was a load of choose my words carefully, allegedly fraudulent activity going on. He was fairly sure they were actually common good and that they were going to have a real coin and available, like, so why don't the four of us just decide to have the TrackPoint let's do it. Because this is what the thing is. This is this is.
Alan Smith:Okay, we've talked a lot and can I just clear? Yeah, I'll do just a couple of quick points. Big difference between Bitcoin and shit coins. And my close personal friend Rachel pani created just a coin out of nothing. And it as you say, Andy, you heard it here first, Nick leakin gets behind bitcoin. As we use concepts as a concept. Just just to clear that away in terms of my thinking on Bitcoin, you're right. One of the reasons that people support bitcoin is is a hedge against inflation. That's what they say when you got a limited supply of something to hedge against inflation. My answer to that is my hedge against inflation is the great companies of the world that has got a 200 year track record of being a solid, reliable hedge against inflation with real organization real companies, not a kind of newly made up currency. Undoubtedly, there is an application for it, but I'm not quite sure exactly what what it is yet. And your point call, we all get a lot of these emails and messages all the time. But bit Panda, that's a new one on me. I can't imagine just the very name, Who the hell's gonna get their money into bit panda Taiho Can I just take this overtake this in a slightly different route in terms of what I think is really important for anyone, any listener here any advisor anyone at all is to have a very clear philosophy and a documented thoughtful, well researched philosophy Now, if your philosophy is bitcoin is crypto is active managers is whatever it is, then that's fine. As a starting point, however, that philosophy needs to be built upon a lot of research, a lot of analysis, rigorous empirical data and facts, not speculation. We know that investment, I always think it's a bit like religion, politics, sport, everyone's got an opinion, everyone believes that their thing is better than everyone else's. So starting point is build a philosophy but build on facts and data not I think there's so this is a good fund or so let me just tell you a bit of a short story about my own journey to a philosophy, a core investment philosophy.
Unknown:Grab yourself a drink, a very long drink, it's story time with Alan Smith.
Alan Smith:Keep drinking Nicholas. My, my business is 20 years old this year. So clearly, we've got a lot of history and you come into this business, you know, 2004, it was a very different environment to what it is today, obviously. So when we started, I knew no better. And of course, I came from a large institutional asset manager and you know, better than, you know, active funds, they work, it makes sense. And we just got to choose the best ones. Over time, as we got a little bit more sophisticated, we started and when platforms first came along, we were able to embrace a sort of a step by step process that worked really well for clients. And you look back at it now and you'll forgive me, but this The times have changed. And we do things quite differently now to say the least. But we'd meet an initial prospective client or an existing client. And we do a risk profile questionnaire. And they would come out at whatever six out of 10, or eight out of 10, or whatever. And then through the through the platform that we use, we were able to populate the risk profile with particular funds. So let's say it came out as 50% equities, 80% equities, and then it was divided amongst geographies, UK, global, etc. And then the platform facilitated the fund choice. So we'd be you know, whatever the old mutual blardy blar fund, the MMG x y Zed fund, and it looked pretty good. It looked quite sophisticated. The underlying fund research was and I can't think they're even around anymore. But the fund research was an organization called OBS our old Broad Street research. Yeah. So. So there are three parts. So that's a good story. And I, you know, I honestly believed in it, because I thought, there's no financial advisor firm, we're a micro business, and even when he was a couple of us, there's no one has got the resources, the budget to do deep fund research to the level that you'd expect it to do it. So having a third party, full time analysts, professionals, etc, who were meeting with the fund managers engaging with them, asking them questions, you know, drilling them down in terms of their fund performance. You know, it seemed a very compelling proposition. And we sold it and you know, it went fine. Until it didn't. And when it didn't, was 2008, that Andy was still wearing a polyester suit and smelling of desperation. But those of us who are who are sort of advising in those days,
Andy Hart:I don't really work did you have heard about,
Alan Smith:so I just gotta let that go. And we saw it. So we were recommending these various funds on the back of old Broad Street research and their analysis. And every quarter, they would do an update to the email us and say, Read these funds. We've been reviewing this fund and because we don't have the discretionary permissions, we have to see clients permission every time we make a fun switch. I would always dread when he came in. It was a great report when he said we've been reviewing the market no funds switches this quarter. Every now and again, they'd say oh no, this fund. We've done some
Andy Hart:research. We got nine this quarter.
Alan Smith:So it's nice to have to Yeah, to see this fund is gonna change and we do Email all the clients don't end. But the time you've got your last client approval bank,
Andy Hart:post, you know, getting wet signatures and must be the blog.
Alan Smith:We did have emails in those days. Anyway. So markets absolutely cratered. As we know, 2007 2008 markets collapsed. And we were getting these emails saying, we think this particular one, and I just remember it so well, there was I don't know if even again, the fund is around anymore. But that was a pretty focused aggressive UK equity fund, it was called Scottish Value Trust. And it collapsed, right? It fallen about 60%, or something in that period of time. Or bro straight research males and say, right, we've been analyzing this fund, we feel that the manager was taking more risk than he should have done. So our recommendation is to sell at and replace it with the MMG. UK it was a much more sort of mainstream UK equity fund, this is the right place to be even then I knew that's just intuitively wrong, because why would you sell a kind of punchy aggressive fund, after the market is bloody collapsed, you move into a sort of mainstream pedestrian type of fund. And that's a scandalous result, we've signed up for this. So we can't just we can't override it. We've told our clients, this is what we do, we've got these experts. So we thought through gritted teeth at the time, I thought we were gonna have to do it. But I made sure that I tracked so we brought out to the clients, we moved it from this aggressive fund into the pedestrian fund. But I thought only attract what happens to these funds. After we've moved out. We can only imagine what happened. Scottish Value Trust bounces right back. It's the highest performing top performing UK equity fund the following year, it up it was up 100%. But we're not in it anymore, or our clients not in it anymore. And I just thought they're in this is a load of bollocks to use the polite word. It does not make sense. We didn't know quite what to do. But I knew this, wasn't it. A version of this incidentally, is still going on.
Andy Hart:By the way, Ireland, you have to pay for that service, by the way. Yeah,
Alan Smith:you have to pay for that service, third party independent research. And I was just looking at this. And I thought this is nonsense. It's embarrassing. It's shameful, really, we've done this because we've subscribed to it because theoretically, it makes sense. And there's versions of this still going on to this day with third party discretionary managers, you name it, there's people still doing exactly this. I didn't know what the answer was. But I knew it wasn't this. So we have talked about this in the past. I looked around the marketplace. And I found an independent third party investment consulting business called Albion strategic consulting. We hired them, we got them in. And from then on, we built our investment philosophy from the ground up, we literally myself and two colleagues here, we're still here, got round a table with album. And we literally literally started with a blank piece of paper. First question we were asked is, do you believe markets are efficient? Yes, no. The important point here was whenever we said just an opinion, so you could say any answer you wanted wherever you thought you had to find the empirical data to back it up. So the question is, do you think markets are efficient? So the answer the immediate answer is, well, in developed large, developed markets, like the US, Europe, UK, etc, the probably very efficient and prices are reflected immediately. But my initial thought was, well, in certain markets and less, you know, smaller companies, emerging markets, the problem is inefficiencies that active managers can exploit. So the answer was fine. That's, that's fair. That's reasonable. Let's check the data. Let's see if this actually happens. And bit by bit now this process, it took us a year actually to build it from the ground, but you can do much faster now. And we went through everything like your point earlier on, Nick, do you think gold is a useful place to, to hold assets, and again, intuitively, there's data to say what a certain times gold can be a protection against inflation that could potentially protect the downside when markets collapse? Go, okay, let's check the data. Again, let's check the facts. And bit by bit by bit, you arrive at an investment philosophy. And the important point of doing this and not just buying an off the peg, just say I just gotta go buy this fund, because the trap packs a index funds or, or factor till funds are the place to go. You need to do your work, you need to learn this stuff, because we're not going to be there. When an advisor or listener to this is sitting in a room with a client or a prospective client. And the client says to him, Yes, but I think I should have some gold I think commodities is a good place or read an article in the paper saying that Terry Smith of funds Smith is an outstanding investment manager by the way, he's completely underperformed the market the last three years, and he's close personal friend. So in other words, you've got to own your philosophy. You've got to do your homework, you've got to do your research, because you will be challenged by it continually by the by all the people that Andy pointed out by your peers, by your bosses, by the media by my clients and prospective clients, do your homework, do your research and build your philosophy from the ground up. I rest my case Europe it
Andy Hart:is all but it is also about confidence and also experience talent. So yeah, some really good points. So yeah, competence experience. And the more you know, as the years roll on, you just become, as I say, you just shrink your circle of competence, and you're more confident and competent. What you're telling your client families to do, in an extreme example of it.
Alan Smith:Confidence comes with knowledge, you need to Sure, sure, in other words, what I'm saying is you need to internalize this, there's no point of just saying, I'm going to buy some Vanguard funds or something like that, because they're cheap. Why are you going to do and more importantly, why what why are you not going to recommend, whether it's Bitcoin, whether it's whatever it is matter, there's there needs to be a very clearly articulated philosophy, and you have to believe it yourself, when you come across convincing to a client. So this is where my, my own family's money is invested 100% I've spent hours, years, months, whatever researching this, this is what I fundamentally believe. And if you, Mr. Client want to do something else, then you know, I wish you all the best luck.
Carl Widger:But isn't that isn't that the key? Exactly what you just said they're out? And that through the, through the research shoot through doing the groundwork that you believe in it? Yeah. But and that's why, if you go all the way back to and sorry about this Bitcoin thing, but I'm just being bombarded with it. Right. But if your investment philosophy is I'm going to it's Bitcoin, right? You have to have something that you can believe in. And that will endure, right? So that that, you know, oh, shit, that's way too volatile or whatever, right. And I'll give you a perfect example, right? I still believe that bonds should be part of investment portfolios, I know that probably all you guys firmly disagree with me. And I've listened to all those arguments over the last couple of years or probably more. But especially last year, when it was not going great, I still believe in it, I have not changed any views on that. And for me, what has always worked is what will work into the future. And looking at one year performance or two year performance is is not what would serve our clients the best. So I have built as exactly what Alan said, I've built it, I believe in it. And I'm going to stick with the plan.
Nick Lincoln:Just to clarify, again, clarity on this, from my point of view, my antipathy to bonds was existed before the meltdown in the bond market last year, it just happened to coincide nicely with it that my message was more resonant. But I just think you want to be an owner of the companies, you don't want to be a lender, you want to own a future income stream, you don't want to lend rising income that and just and in case we come across as holier than thou and perhaps I do sometimes, I have made every investment mistake under this under the sun to get where I am today. So when people sit down with me with their, with their little pots of money, and they're, they're sort of they're, they're figuratively holding me by the hand and say, Nick, don't screw this up. Because this is all we've got. What I bring to the table is over 20 years of knowledge of knowing how not to do things, it's the stuff you don't do with your money that will determine successful outcomes more than what you will do with avoiding with all the crowd. And having learned all these and having sort of got this thick skin from the mistakes haven't got the calluses on my hand from all the mistakes I made at the coalface that's given me this anchor that I can drop into the ocean so when the waves come I'm not buffeted from this way to that way that and this is you know, we all believe in in the great companies of the world, there'll be times when the great comes to the world I'll just absolutely temporarily going through the floor. And these waves will be coming over you've the pressure from clients, the media, and we'd have this anchor that's in the C's keeping us there because we have a belief system and we don't let it get rocked by our peers or whatever the new shiny object is on the street. I think Andy would you'd want to say something
Andy Hart:I think that it was next Okay, thanks.
Alan Smith:I was again just making the point that a huge part of an advisors role is protecting clients from all these other things so I always am always reminded yeah too young to remember to remember that advert John wish John John West fish it's it's the fish that John West rejects that makes John West salmon the best or rejects the rejected so rejecting things. And when you mentioned the the fund that your your senior advisor was recommending arch crew. Oh my god, the amount of junk that I said we had an episode in fact, that was one of our better episodes. When we had all the the most obscure funds we had the shipwreck fund. But the one that I remember a lot was a one called that it was a life settlements fund. That and it we got there they just you know, unsolicited mail in the post every month. We received this thing and again, this is going through 2000 789 this chart, all it did was go up every single night. Everything else was crashing around us and it went up inevitably. You get people you get and you get peers, people that have I knew satisfied loot keeps going up every every month, going into because we had a philosophy. You can't you just can't embrace it. And I think this is the key thing. It's like one decision removes 1000 Instead of having all these, everything is attractive, everything sounds good. You know, we've talked about it before, even if you're an advisor, you see something you think, you know what that is, yeah, whatever, there's always a store, remember the water funds, there's gonna be a global shortage of water. So invest in companies that create, you know, disseminated blah, blah, blah, whiskey, they all sound good. So if you are able to create this core philosophy, it also then leads to healthy conversations with clients. And back to the framing for event words or weapons frame things correctly. This my friend, my client, now a prospective client, this is your family fortress, we will protect this and look after it makes sense. It's worked for hundreds of years, if you really want to go and have have some fun and gambling money. That's, that's your sort of speculation fund that should go and have fun for that show casino money, do what you want with, but it's not going to impact your family's financial security. And I think once you've got that framing, and you stick to it, and your client says no, but I want to put a percent into it. You don't do it, you ignore that and engage.
Andy Hart:My final point on this, we're talking about investing. And I believe we are behavioral investment advisors, we need to be careful that our guns are not facing the wrong direction too much here in getting investment returns is important in the funds. But the crucial factor, certainly in the early stages, your contributions need to be doing the heavy lifting. So you need to get really good at getting clients to invest. Their current self is constantly trying to wriggle out of doing anything good for their future self until you've come into their lives. So you've got to try and get your clients to invest and contribute a just an uncomfortable amount every single month to build this wealth in the first place. If you've got someone who's aggressively contributing, and they're in a crap fund, versus someone who's in the best fund and is not contributing hardly anything, there returns are going to be night and day the person that's heavily contributing will end up having a rockstar retirement, the person that's contributing nothing in a great fund will end up with nothing. So the contributions are important. That's my final point.
Nick Lincoln:Okay, great. That was a really good meat and potatoes. I think we're at 7067 minutes. So maybe just just to tie a bow on this younger, younger Trappists. If you subscribe to the physical version of new model advisor if it still exists. If there's ever a fund manager wrap around that particular edition, that is the thing to avoid. Now, without any further ado, I can see at our front door. Please can I sit at the front door? Can I see at the front door? Here we go. Here we go. Okay. It'll probably start halfway through my blurb. Now it's time for the crappiest questions. Thank you the the letter opening might work actually. Oh, sorry. Yeah, trapeze questions as well. I can that way so it's time to unpeel open up some of these envelopes we get from our beloved TRAPPIST if you want to pose the trap, pack a question. There's a linked pin on XR, Twitter, whatever it's called at the top of our timeline. Submit your question there. We will get around to it. We got to we got a hopper full of questions. We're still going through from late last year. We will come to you we're doing it sequentially. Just bear with us. And this first one, I've just opened it up, as you heard. It's from Chris Bowers. And Chris has given us a LinkedIn address. So I will put that in the show notes. Chris Bowers asks, thanks for the great insights into the industry. from you all and for the ongoing commitment to the podcast. Do you think financial firms would benefit from working together with other lifestyle services, psychologists, health practitioners, etc. To help create a one stop shop for people to live their best lives financially, mentally and physically? The low valachi lead off?
Carl Widger:Yeah, I loved the question because I firmly believe that yes, is the answer. And that's what future you which I've spoken about before, has is all about and will be all about now. We're trying to so basically future you just quick reminder, two day event and we brought in not only financial planning people we brought in say estate planning people put them we also had psychologists with nutritionists with fitness coaches that kind of stuff. Went down and bomb your one did we make any money out of it? Not at all. You're too absolutely packed, sold it out, couldn't believe it ourselves, and did have at least half of the people there were not clients of ours, our newest, so people, so all I can say is people want this. And the tricky part is not everybody will want it and do remember when everybody comes to see us first as who said it earlier on, nobody comes in to for financial planning. You know, so that you know that you got to be careful if you go down the we're gonna have a psychologist and a fitness coach and a nutritionist talking to you because you come in to talk about your pension. I don't think you're gonna do your business. So, so it's it's a little bit true Key how to introduce it. I do have an idea as to how we might elaborate on this discussion how these things might work. And but, you know, I would start as opposed to hiring these people into your business. I do maybe you could do a dinner and have we have a guest speaker talking about this, which has nothing to do with funds or financial planning. So great question go for it
Alan Smith:is what I would say Smithy. I think I've talked on this podcast in the past, about the idea of having your advisors black book, it's your blood, but it's sort of a range of third party professionals that you just know, you've vetted, you've spoken to etc. This is where this comes in. I'm not a fan of having psychologists on the payroll or in part of our team or referring them to clients, but you will know because we work closely with our clients, when they're when there are situations that they could probably benefit from spending some time with somebody else be that an executive coach, personal coach. I don't know about nutritionist, but But generally speaking, and there have been times in the past where I've just had a conversation with somebody I said, you know, you might benefit just have a call with this, this guy that I know, he's been really good, I've done you know, I've had some plenty of coaching myself over the years. So I've got a in my sort of business black book, a range of people that can really add value. So I would be doing it more on a reactive basis, based upon the relationship we've got with the clients some of the things they raise some of the challenges they may be going through. And think it's an important thing for advisor firms to build up a good network of not just accountants or lawyers or others that could be beneficial to support the client relationship.
Nick Lincoln:Okay, I don't really have anything to add to that. Mr. Hart, you're looking as if you're comfortable to
Andy Hart:move on to the next thing, we can move on, we can move on.
Nick Lincoln:Okay, let's do it. Okay, let's go on to culture corner. And let's see if this drop works. It's to anyone. This is a temperamental piece of software. Okay, culture corner. We've all got contributions this week, and I'm not gonna tell you what they are or who's going first.
Alan Smith:Over to me. I don't know Have we missed it? We quite we quite like. I think they've been raised many times in the past these kind of Netflix shows or Amazon shows where there's been as large scale frauds and all sorts of crazy stuff that you have you missed this one, this one called a man on the run, which is on Netflix came out last year, and I just watched it recently. Oh, my God, it is just a complete and incredible real life story. It starts in Malaysia and Malaysia decided to raise a sovereign wealth fund because everyone else has got one. We thought we'll have a bit of this. The race is fun. They raise money by issuing a bond us leisure sovereign country, obviously, they're not investment grade, so they have to be more interest than others on this bond. But it was just a complete and utter fraud is a guy called Joe Lowe is a Chinese dude who's never been caught incidentally. But the Malaysian prime minister is up to his neck in this. He's banked hundreds of millions of pounds. It's just a mess, and open. But the interesting thing is a copy of London, the UK is involved with this, of course Coots bank of firmly involved the Royal Bank of Scotland. And of course, who else copes with Sachs, Goldman Sachs, they are, they were big sides. I mean, that's just another thing as well how these completely guilty and they just paid I can't remember a $10 billion fine or something in Krakow made about 50 billion from it, it's well worth watching just you just shaking your head and sort of wondering how the hell these things can happen. But it did. And it's entertaining. And it's a true story, Man on the Run. Great
Nick Lincoln:stuff. Next person go
Andy Hart:over to me. This is I suppose a bit in the weeds tech sort of recommendation, but it's a great company. So I'm going to mention, I've been using a company called ConvertKit to sort of build my email list for the last six or seven years, I think I've switched from MailChimp. It's an awesome bit of kit. If you don't have an email sort of newsletter service at the moment added to your website and I recommend checking out I think they've even got a service or an offering of a freemium offering where if you've got less than 1000 email subscribers, you don't pay for the product. So they're really really keen to build it out to do check it out. It's called convertkit.com That's it oh two car book recommendation.
Nick Lincoln:Nice just for call comes in on his and a you've got numerous brands, I mean, your your your your GDP is about the equivalent of Malaysia, which I understand you're funneling into some sort of sovereign wealth fund. Which of your brands do you use that piece of software with you?
Andy Hart:The good thing is you sign up one account with ConvertKit and then you can send emails from different brands and use different reply files. The only other email newsletter service I use is the built in one to Squarespace So yeah, ConvertKit allows you to sort of operate via multiple brands, which most companies don't. So yeah, he's I'll do a question, Nick. Yep,
Nick Lincoln:that's thank you for that. Okay. Now, Carl, do you want me to lead you in on the other side? Are you on top of it? I
Carl Widger:put it beside me. So I wouldn't forget. Stephen Bartlett, the Dyer was co Ed is bloody brilliant. Loads of people have actually recommended it to me. So I think loads of people got it for Christmas. It is an outstanding book. I can't recommend this more highly. It really is good. And Roland Quealy, who works at Metis told me to follow Stephen Barton at about two years ago. And I was like, Yeah, okay, I've started rolling. And my apologies, the content is fantastic.
Andy Hart:About Carl, I've got it on Audible. what's it really about?
Carl Widger:So this the 33 laws of business and life, so he goes through the book, The chapters are really short and sweet. So and it kind of goes through segments of kind of four main areas. So brilliant, really, really good. But I've seen loads of people promoting it on LinkedIn saying, you know, you should, everyone should should look at this. For me, like for the team and Mattis, it's like, you know, guys, everyone has to read this. It's really, really good. And so a very strong recommendation for me to everyone, get that book and get it read. Okay.
Nick Lincoln:I will do that. Thank you, Carl, for that. Okay, I'll close off the culture corner. And this is just a coincidence. But my thing is not dissimilar to Andy. So I, I do this quarterly newsletter downtime, and I'm not sure how many people actually read it, because it goes on and on and on. And you have to scroll down and down. So I'm going to change it to a monthly essay, which I send out to my clients. But I'm not going to do it from within my company website, I'm going to use substack, I'm not sure if you've heard of sub stack. It's making massive waves in the online publishing world as a way of easily just producing very nice looking emails and getting subscribers and so forth. And you can be one too you can add paid paid content on there read simple easy says it sounds very similar to ConvertKit. And I'm going to start using that to communicate with my with my clients, anyone who subscribes to my my formula quarterly newsletter, and everything will be in the inbox. There's no clicking through because you want to minimize the friction and substack is just a really nice thing. So if you're thinking about that, I've got to get this mental thing that clients are getting emails from me that aren't from my domain name. But I think it's probably more in my head than then than anything else. And I'm going to send out my first one today just just telling everybody that the quarterly newsletters no more so both readers will be apoplectic about that. But I'll be doing a monthly shorter five minute punchy read around personal finance. So if we're using substack. So do look at some stats and really good. I mean, it's, you know, so our friend Rory Sutherland has assumption. Everybody's got a sub stack. Now, I think it's kind of taken over from maybe WordPress and Google had their own blogging platform, which they never been typical Google, they kind of set up and then just never did anything with substack is really nice, free sort of kit.
Carl Widger:Some of these definitely want to have one by the end of next week. So yeah. Sorry, I
Andy Hart:switched to ConvertKit, three months ago.
Alan Smith:We've been using for a long time, but that's more designed for marketing email sequences and trying to sell stuff really, really substack is ESA that's designed just for newsletters just
Nick Lincoln:Oh, yeah. was creating a blog within Squarespace, I'm sure with other sort of, you know, third party web building sites, it's a bit it's clunky, and you can even drag and drop images, and you've got to save them and then upload them. Yeah. Oh, God. Okie dokie. That's brilliant. So what are we at? I don't know, because I had to refresh the browser to get the media board going. But I'm guessing we're probably about the hour 2025 marker typically seems to be where we Yeah. I guess the TRAPPIST that will be a wrap for this episode. We've been well.
Carl Widger:Do you mind if I just have one just mentioned one thing? No, well, well, you've you've there's something very big coming up tomorrow. Because after all, this is Thursday, the first of February. So the Six Nations starts tomorrow, doesn't it? And it's and it's always brilliant because I I saw something on Twitter during the week that three out of five businesses fail in the first couple of years. And here we all are. So first of all, everyone should congratulate themselves that they got through January. And obviously February means the Six Nations it's just such a pity that the competition decider is the first game out on Friday night. It's just a shame for the minnows involved. But I'm looking forward to it. I just love it. I just love it. Love it. Love. Have
Alan Smith:you started Netflix. Not yet. Scotland one which when when we when Scott the mighty Scots defeated the English when I was there in the pub with these two jokers. It was the best day of last year.
Nick Lincoln:I don't remember it happened and I'll probably
Carl Widger:get to that but I'm gonna watch the series for the winners when I'm going to jump ahead and go
Nick Lincoln:right boys are gonna beat the Scots this year I haven't had it failed. Okay, are we done you want to talk about anything else? No more if you want right now and I'm sure I'm sure when this actually happened or the champs. Okay to do trapeze thanks for your precious time and your input to the show. You know what to do like and subscribe. Check us out on YouTube but until the next time from the trap pack, it's at EOS and take care out there folks. Goodbye. Goodbye.
Carl Widger:Goodbye
Nick Lincoln:that was all right. I'm just about
Alan Smith:squeaked through the media. Just about a couple of things didn't work. Did it the post it doesn't matter.
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