85 - What Real Advisers Actually Say

In this latest pile of TRAP, the Trap Pack discuss

• Topical Titbits
• Meat and Potatoes: What Real Advisers Say
• TRAPist question from Mark D (Dampier?!)
• Culture Corner

Show links: http://tiny.cc/traplinks

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Transcript

Nick Lincoln: 0:00

Yes indeed, dear TRAPPIST, welcome back to what many people are calling episode 85 of the real advisor podcast, T, R, A, P, trap my name is officially lick Lincoln, and joining me once again in the digital studio of doom are the four three, even other Horsemen of the Apocalypse. I stumbled there because Carl is back amongst us. Hi, Carl, nice to see you back. Hi guys. That, of course, is gala Voce. We've got Alan the storyteller Smith, and we have Andy Ultra heart. Gentlemen. Good to see you all. We have a packed show full of absolutely nothing. Let's start unpacking it straight away with some more high energy review reads, I believe, from the good friend of mine, my honorable Mr.

Andy Hart: 0:41

Sain Hart, thank you very much, Nicholas, and welcome back, Carl. We've got two short reviews today. The first is from Mr. Ed five stars on the Apple podcast platform, six out of five stars. Thank you, chaps. Thank you for taking the time to produce this podcast as a self employed IFA, this podcast is a must listen. Great, light hearted but informative discussions, final reviews from pomol entitled light bulb for financial advisors, essential listing for any one advisor out there who gives a trap about their clients, a gold mine resource of real CPD you can't get from any of the

Unknown: 1:18

ROS back to you. Nicholas,

Nick Lincoln: 1:22

great stuff. Thank you for the reviews. The text was so small on the slate, I thought it was porn, but it's POM Okay, that was bugging me. Okay. Topical tip is, let's put a timestamp on episode 85 of the real advisor podcast. Carl's back amongst us. So we got a full slate of interesting things to talk about from the UK and across the Irish Sea there. We'll start off with you. Storyteller, well, okay, let's not dwell on this overly. But obviously we've had a certain event happen in the last week or so. An event has been looming over us all in the UK for the three months. It feels like three months. It's been and gone. It's a mess. Lead us off.

Unknown: 1:56

That's it. Nick subject, it's a mess. Carl watches on with glee from the other side of the Irish Sea.

Alan Smith: 2:06

Your time will come. My friend, trust me, these things goes in cycles. We can't ignore the budget. I think you make a good point at the beginning. Nick I don't know whether this is it's more noticeable now, but the lead in time for budgets is now beyond comprehension. It is months and months. This was, I think, the latest ever of an autumn budget, just last week, kind of a few weeks before Christmas. So you could imagine, with the media hype and speculation and social media and so on, that having announced it, you know, three months ago, plus the speculation the back and forward that you know that this big, grand announcement a couple of weeks before, saying we're going to have to put up income tax. And which was, which was a highly unusual event, when Rachel Reeves effectively called a press conference to announce something which about a week later, she then said, No, on reflection, we're not going to do that. It was just the sense of like the lunatics have finally taken over the asylum. I mean, I don't think any of us are massive fans of absolute shambles. I think any of us are massive fans of politics in general, but it just seems that we've, we're plumbing new depths on a weekly basis right now, just the sense of lack of control, lack of clarity. You know, you can, you can make your have your views for or against particular you know, tax raising methods or the reasons behind it, but the I just think, I know that running a country is not the same as running a company. But if, if any organization was run with the kind of shambolic approach that the current administration the UK has done, you know, the share price would have collapsed. The CEO would have been fired. The whole thing would have just been the free markets would have found people out, but within a political environment, you don't, and we're locked into this for years to come. Look in terms of specifics around the budget, it was a little bit of a nothing burger. In some ways. There wasn't any significant dramatic there were, what the work were. It felt to me like death by 1000 cuts. There were actually lots of relatively smaller things which compounded together tend to make most people, most most business owners, most hard working people, makes their lives a bit harder, a bit more difficult. We can talk about some specifics, if you like, but things like dividend tax rates going up, which will impact three of us on the call again, it would pack as it impacts your clients, yep, as well business owner clients, mansion tax, as I exclusively predicted on the last episode, and salary sacrifice limits severely curtailed, also impacts, certainly me, colleagues And many, many of our clients and this thing, honestly, if you could make a pig Zero out of something, this is what's been done. The cash limits in isas, cash ISAs, which apply in cash ISAs, but not if you're over 65 they don't apply. So you're all right, you can now this. And I just immediately said, Well, you can hold cash in a stocks and shares ISA. Anyway, a money market fund. And the latest thing is, oh, no, we're going to look at that as well. How they're going to police that. I've no idea. It's the whole the ISIS should be really simple. There's a, there's a tax free savings vehicle that people could just chop money into. You, don't they were once they were, yeah, they were. But now you've got all these things. And by the way, just to add on, this the latest kind of complexity about Bitcoin etns, which is a whole other other mess of you can put these Bitcoin etns, etps, into an ISA, but only until April next year, when you can't put them in anymore. And if you've already got them in there, what do you do? Do you have to take it out? You sell to cash. You can transfer them to something they've almost never heard of innovative isas. I've seen these weird and wonderful things which were originally designed for crowdfunding investments that are tax efficient basis. I know we're going to come back to crowdfunding later. Anyway, it couldn't be more messy if it tried you and literally, for the sort of for the tax raising that a lot of these, method, these various

Unknown: 6:03

things, which have been

Alan Smith: 6:04

created by the last two budgets. The amount of tax they raise is relatively small overall for the level of administration monitoring. The cost of administration, the mansion tax, so called mansion tax, is another one. You know, properties valued over, I think 2 million pounds

Andy Hart: 6:19

kicks in at 2 million. At least, all the homes in Watford are safe, but, yeah,

Alan Smith: 6:23

right, where I live, that's just, that's an entry level apartment, isn't it? So it's gonna, you know, it's but, but, I think, but the administration of that you've got to get all these properties valued. Imagine the arguments of people saying, mine's only worth 1.9 because, you know, there's

Andy Hart: 6:37

going to be an absolute bottleneck of prices around the 2 million, even though it's only two and a half grand extra a year. But what they will do later on is they'll reduce the limit, and then it will keep over a million, and then then a few houses in Watford might be caught up. But yeah, yeah.

Alan Smith: 6:51

So for the level of administration complexity and what have you, it just seems just overkill. And the only other thing I would say in this when you look at all these measures, I do think, now that I pay more attention to this stuff, that they're always just keeping their eye on the bond markets because of the amount of debt we've got. And if you put interest rates up, you know, for every point one of a percent, you know, 10 basis points on an interest rate, you know, it costs us millions and millions and millions in servicing the debt. So they've got to appease the bond markets. Who want to, who view, you know their you know the UK, in every country, as a credit risk. And so they say all these things. But I've noticed that a lot of these new innovations are phased in, not coming in for years. I think one of them can't remember which one is, 2029 is that the mansion? Quite a few. Yeah, 2029 it's they're leaving a ticking time bomb for the next administration. Well, that's what I was thinking the next administration's should say, right now, we are going to repeal all this and get to

Nick Lincoln: 7:50

get the pain. Get the pain. I think Alan, what they say they reform all is that what they do. I think they capital are or Nicholas. I'm not saying anything about capital R. I'm using the

Alan Smith: 8:01

word to reform. Yeah. It just looks like the next few years, the next few years, are going to be tricky. The last thing I'm going to say in it, however, leaving with a positive for us, taking from the legendary humans under management conference and one of your speakers who thought was excellence, the gentleman whose name escapes me right now, we were, he's from Vanguard. Seb Lewis, yeah, Seb. And he effectively said, Well, what Rachel Reeves and the government have done, have just doubled the value of financial advice. Because all of a sudden, when things are super simple, to be fair, there's a lot of di wires thing. Well, how difficult can it be? I'll chuck money and I so I put money in my pension. There's no real complexity. I'll buy some index funds in the way we go, so that, I think the technical aspects of navigating your way around saving, accumulating, and then particularly into retirement planning, income generation, estate planning, there's a lot of complexity. Therefore the value of advice certainly is much, much greater than has been in the past.

Unknown: 8:57

Agreed. And come here,

Carl Widger: 9:00

the launching of the or the leaking of the budget before they stood up in Parliament. That was a that was a nice touch, wasn't it shambles, absolute shambles, like that. Just and these are the people who want to have digital so poorly, doesn't it

Nick Lincoln: 9:14

like they want us to have digital ID? Oh yeah, we'll trust you with our digital ID. No. Thanks. Not happening. Yeah, you're all right, all right, yeah, well, yeah,

Alan Smith: 9:23

okay, actually, it is Carl from an outsider's viewpoint, and trying to be as impartial as you are. I'm assuming that anyone looking on at the UK right now is just scratching their head and saying, what's going on in this once mighty nation? What do you think? What's the view from Ireland?

Carl Widger: 9:38

Yeah, no, look, it is. It's like, but we've, we've just lost our Minister for Finance, pascula Donahue is going to, he's moving to the World Bank, and he was absolute brilliant Minister finance. And we're a little bit nervous as to, well, who are we going to get next? Because imagine if we got someone like they have in the UK, you know. So it's

Alan Smith: 9:59

a you. US. Rachel Reeves might be looking for a job soon, so you never know.

Carl Widger: 10:02

Yeah, no, we're okay. Thanks. But look, these things do go in swings and roundabouts. It's the economy stupid, as they say. But it just seems, I think you've touched on it there, right? The everything is just getting more and more complex. And if it gets more and more complex that you know? Oh, well, I'll do this strategy here, because I'm a successful business owner, but geez, if I do that, I'm going to be caught over here. I just moved to a jurisdiction that's pro business, and that's just, you know, it will give me some tax breaks if I bring, you know, jobs, if I bring, if I add to the economy, and it's a little bit of a laugh and stock guys, and I'm slow to say that, because, God knows we were for a long, long, long time.

Unknown: 10:48

So having said that, you're,

Carl Widger: 10:52

it's, it's definitely a case of too big to fail, and it's definitely a case of, you're just, you're down in the depths of the moment. The only way is up, and I'm sure up is where you will go.

Nick Lincoln: 11:02

Okay, all right, good, good stuff, guys, it is what it is. Let's, let's try and stay upbeat. Now, Carl, you're back with us after the sad, the sad, I said, passing of your dad, and you can bring us up to date with what's going on, the archer, because you

Unknown: 11:14

normally have a scandal or two. Yeah, yeah.

Carl Widger: 11:17

Is this the Coinbase? Yes, yeah. So I the last time I was on, I was extolling the virtues of Coinbase, making cryptocurrency, bringing it into the mainstream. And it's not going to go away, right? And that was part of something I said in the topical tidbits. And then I said, and you got to go and look at this interview that the Coinbase CEO did with one of the Collison brothers. And then the next day, I caught this, this, this news broke. Coinbase were fined by the Central Bank of Ireland 21 point 5 million euro for their site of monitoring for money laundering and criminal and terror. Terrorist activities between 2021 and 2022

Unknown: 13:09

there were 30

Carl Widger: 13:10

million transactions that they missed, amounting to 176 billion, and they've had to subsequently report to the central bank 2700 suspicious transactions.

Unknown: 13:26

Now look, this is, there's a couple

Carl Widger: 13:30

of things saying this. This is 2021 and 2022 and obviously they're trying to bring themselves into the regulatory, regulatory environment. So obviously that work is ongoing, and they still have work to do. But the other thing I will say, if you remember, back a few years ago, Davey were fined by the central bank just under 5 million so this, this fine is more than four times. This was a news article that particular day, and I haven't read it anywhere else since, and yet, an entire group kind of fell because Bank of Ireland had to come in and buy them out in terms of Davey. So it's funny how the media can get hold of some things and then decide to leave other things go. And are we going to be much more forgiving of the cryptocurrency world or just accept that some shady things happen, I don't know, but look in in terms of being fair and balanced, I was kind of saying Coinbase is here to stay, and it's part of the mainstream financial system. It would only be right for me to bring this article up, so that's why I did bring it to your attention today. But it's significant 21

Unknown: 14:45

point 5 million,

Carl Widger: 14:47

but I guess a drop in the ocean for where Coinbase at least think they're going to go.

Unknown: 14:53

So just interesting, I think, okay, thank you for that

Alan Smith: 14:57

quick one. Thank you the podcast that Brian Armstrong, CEO of Coinbase, was on Collinson. Is that the one cheeky pint? Yeah, I just started watching that recently. He's because he's just who he's just had someone else on. Really interesting. It looks really good, like the pint of Guinness in front of them. Really good podcast. Cheeky pint.

Carl Widger: 15:17

Yeah, okay, it was in it was my culture corner Two episodes ago. And yeah, it is really good. Because not only do they talk about Coinbase or cryptocurrency, it's actually, it's a story of a startup too. And I love those stories. So it is really good, really

Nick Lincoln: 15:32

good, right? Smith, two job opportunities. Endorse it,

Unknown: 15:36

make it quick.

Alan Smith: 15:39

I want to give well, it won't be that quick. I am going to bundle. I am going to, as I said, before we hit the record, I'm going to put it back in the right order, before you messed up our slate, a couple of extraordinarily good job opportunities that we know that there's a lot of job movements. A lot of people contact us all directly. Trappists, people who tune into this. And people are looking at moving to places which might suit their style, their approach, and what. Have you. And by complete coincidence, the two that I'd like to share are people that have reached out, friends of all of us, friends of trap, friends of the podcast. The first one is a lady called Emily, Emily Turgoose. Emily runs a fabulous business down in Dorset called life matters, proper, full fat financial planning, sensible investment strategy, all that good stuff. I think this is an incredible opportunity for somebody. She's really looking for a right hand man or woman to help her really grow that business properly. There could be equity on the table. You could really be sort of part of the that business future growth. And she, yeah, she's recruiting right now. We will put a link to her website in the show notes. But if you are that person, and Dorset seems like a place that you want to operate from, and you really want to help a company grow and be part of the fabric, then get in touch with Emily. And just down the road from Emily, another friend of the podcast, Justin King, runs a similar boutique firm called, I think it's called MLP. Andrew MLP wealth, he's looking for more of a trade trainee financial planner. So if you fit that role, you're a trainee financial planner. You want to get into a really good firm, learn and be mentored by the likes of JK, who was an absolute legend. For those who don't know him, check out his podcast, check out his website. He's definitely one of the good ones. So that's a great opportunity, and just tying this, all this together. Nick, so I'm bringing forward something I was going to mention later. This is a we've touched on this in the past, but this is a huge thing for us in the trap community now. I think what's happened is, through our conversations, there's a lot of people, generally, quite younger financial planners up and down the country that find themselves working for companies that don't necessarily fully embrace the virtues that we espouse, full fat financial planning, Evidence Based Investing, or at least a thoughtful investment philosophy, and so on and so on. And so there's a lot of people looking to see what else is available. Maybe, you know, look at look to move to another company, or at least to have a conversation with other organizations. And similarly, there are some great financial planning firms out there that are looking to hire and recruit. I've just mentioned two of them, so we have partnered with a gentleman by the name of James Barden. I did mention him once before a few months ago, but James is a recruitment specialist. And the thing about and there's loads of recruitment people out there, and I think like, like financial advisors, there are mixed bag. There are some great ones. There are some not so great ones. I've dealt with many over the years. The thing about James, I think, is relevant to our community, is he pretty much only deals with boutique financial planning companies. He doesn't work with consolidators. He doesn't work with the big nationals. He doesn't really get them or understand them, but he works with firms that sort of between one to, let's say, 10, financial planners, good quality firms. And again, if you are in that world, and if you're whatever part of the country you're in, you're looking at your options, you're looking to see what else is available. Then check the link to his LinkedIn profile and his website, James Barden is the man he'd be happy to jump on a call with. You understand what you're trying to look for, both employer and potential employee. Have a chat. I've spoken with him several times, and he seems to be a good egg and really understand our market that Thus endeth the recruitment corner.

Nick Lincoln: 19:21

And also, if you do that, I'd mention you come via trap to James Shaw,

Alan Smith: 19:25

yeah, you see you've come by a trap, and that's where you've heard about him first all.

Nick Lincoln: 19:30

Right, Alan, have you got you got any more to talk about? Or can we move on to somebody else? Please move on. Okay, thank you Ultra.

Andy Hart: 19:36

And I'm sure we're gonna add a sort of link on the main trap website, but we'll talk about that another time. Okay, so my first topical tidbit is there's a company called curve that Nick and I both use. I'm a curve premium member or whatever. I pay a few quid every year and get a few extra perks. So I've been using curve maybe for about 10 years. When they first launched, when they first launched, it was only open to business users. Then they open it up to personal users and everyone they wanted to become the operating system for money. So they did a lot of good things along the way. And the founder, very smart dude, anyway. Long story short, they sold curve last week, or couple of weeks ago, to Lloyd's, the biggest bank in the UK, or one of the biggest banks in the UK, for 120 million, which he thought would be good news. I knew the founder. I think he set up four or five previous companies, successful exits. Very, very smart dude. I went for lunch with him soon after he launched curve.

Alan Smith: 20:37

Oh, anyway, his close personal friend, then close personal

Andy Hart: 20:41

friend of mine, yes, well, he was not anymore for it. So they sold curve for 120 million to Lloyd's, which I think was a low number. I thought it was, this was going to be, you know, a UK unicorn, certainly worth more than a billion dollars. But anyway, so they've obviously run into some strategical issues, and they sold last week for 120 million to Lloyd's, but in their early years, they did a crowdfund, and. Again, Nick might have more detail on this, but they've completely wiped out all of their early crowd funders, even though they've sold the business one 20 million. And the founder sent a letter via crowd cube, because that's the platform that they use to get all these early subscribers. He starts it off with, dear crowd cubers, I'm pleased to announce, etc, etc, etc. We sold this business. Paragraph four. Unfortunately, due to the anticipated price of the transaction, there will be no expected returns to several of our share classes, including ordinary blah, blah, blah, blah, blah, which crowd Cuba's own, these people have put up a lot of money. I think it was something like it was it 10 million? Nick 1100 Yeah, that's just me. The numbers were quite staggering. And these are early supporters of the product, early supporters of you, early promoters of the brand. You sell the company, your fifth company, someone's cleared a lot of money from this, and you just completely wipe out the people who I think you should be looking after. So over to Nicholas to shed some further details on this. Yes, and

Nick Lincoln: 22:56

this is not a sob story, because with any of these investments, especially this kind of thing, you go in with your eyes open. I thought my eyes were I thought my eyes were open. And annoyingly, like Andy, I'm a big fan of curb, and it's excellent, and I do use and I have recommended it for years, and in 2019 I made my first ever crowdfunding investment, my one and only to date, in October 2019 I dug out the chef's certificate today on Evernote, where all my life is stored. And there it is. I put 1000 pounds into curve back then, and didn't really think about it. I thought, okay, the chances are this goes T, i, t, s, up. I won't get my money back. That's perfectly fine. I understand that part of the deal. I then subsequently get that letter from the curve founder last week, and they said, Well, yeah, but shareholders who bought in afterwards get preferential treatment. These preferential shareholders, they get the dibby, when we get the proceeds of our sale to Lloyds, you don't get anything. Now, to me, that just sounds like a breach of contract. I was totally prepared to write this off if curve ran out of money, didn't get bought. I just failed. That's absolutely the risk I took. I did not understand, and I think anyone would understand that you can have a subsequent investment by shareholders who get preferential treatment. And it just apparently, there is some, there is some, there is some law group forming

Andy Hart: 24:05

around engineering to financial engineering. Yeah,

Nick Lincoln: 24:09

it just seems wrong. It just seems totally wrong. I don't get any wonder why people in this country don't invest right? They think the stock market is risky. There's a general culture of these things. Just don't touch them. And I'm kind of know my stuff on this to a degree, and I feel a bit stupid about it, but I feel just, it just seems wrong. And I just, I'll say, the final time I was totally prepared to have this money go whether it was 1000 or 10,000 100,000 it's not just the principle, if curve failed, that was the risk I took. Curve has been a success. I was an early investor in the company. I've been an advocate for the company, and I get nothing, and you

Andy Hart: 24:39

still use the product every single day. I mean, it's a great product, annoying me. I want to slag off the product. I can't. It is a great product. But the good news, it's bad news. That letter should have been. We've sold You're

Nick Lincoln: 24:52

safe. You're safe, you're

Alan Smith: 24:53

you're still thinking about the bad news. Otherwise,

Nick Lincoln: 24:57

you guys think about it.

Alan Smith: 24:59

We chatted about this. This is not the first one. This happened. Remember, famously, brew dog had their equity punks, as he called it. Did. It did a crowdfund raise early on, and they've also looks like they've been wiped out. There's a common reason for this, for all their successes, if you look at the history, because they obviously, you got a crowd fund to get you going early days. And then you go into like, institutional investments and raise money. You get your VC money come in, you get all these big ticket people writing big checks, preferential and yeah, and they come in. I don't know too much about curve, but I did know the brew dog story, because the founder of that was a guest on my award winning podcast, James watts, and we talked about this a bit. But they, when they too, they're like, the whatever is their C round, D round, the further, further round of fundraising, they get these big, you know, kind of, and this is where, you know, institutional investors are a lot different from retail punters. They know what they're doing with brew dog. The institutional investors demanded an 18% annualized return before anything else was going to get paid out. So until they got their first 18% compound, IRR, nothing else, and brew dog didn't do anything like that. The underlying business with curve just wasn't as successful great as I thought it was. What do they sell for? 120 million Yeah? 20 million? Yeah, right. They've raised two 50 million. They've raised way more. Yeah, exactly. They've raised way more. So basically, if it wasn't for the further raises which were done buying preference shares, so in other words, we're going to get first dibs on anything, then they wouldn't have raised it at all, and the company would have gone bust because their burn rate. It obviously wasn't particularly well managed, despite all their early successes, their rate.

Andy Hart: 26:34

Did you get your lawyers, Nicholas, to look at the T's and C's of your huge investment in 2019

Unknown: 26:41

Yeah, bungle shark and Bill Me are on it now. Let's hope you want to have, yeah, but, but if

Carl Widger: 26:47

I get that point, Alan. But if that is the case, that we sold for 120 but actually we raised 250 million. So we're underwater, really here. Yeah, that, that sentence I read the letter because you sent it over. That sentence would be very helpful in that letter. Yes, when I read badly framed, because when I read the letter, I went, Karma is a bitch, baby. You deserve whatever is coming to you, you know, but, but if the guy lost, if the if the company lost 130

Unknown: 27:13

million pounds, then, yeah,

Carl Widger: 27:17

I can get it. I get it. I get it now, more, way more than the conversation we had on WhatsApp with the Sure, but then he could have been a bit more. He should have scratched around. That's a PR disaster, yeah, well, it's also

Nick Lincoln: 27:29

a PR disaster for crowdfunding full so I'm never going to crowdfund again,

Andy Hart: 27:33

yeah, except that, sorry, the two of potentially, arguably the most successful crowd raises in terms of the initial numbers, they did curve and brew dog both have had successful outcomes, and the crowd funders have been wiped out. So yeah, even the success stories,

Nick Lincoln: 27:47

yeah, why would I ever invest in a crowdfund? Yeah?

Andy Hart: 27:50

Sorry, okay, very, final, final point on that the early crowd cube, sorry, not crowd cubers, early investors, via revolute, have been insanely successful again, yeah, not 100% sure about the detail, but it's something like 2000 pounds would now be worth over a million so there are obviously a few outlier success stories in there, just

Carl Widger: 28:12

to revolute buyers moved to the UAE. Is that correct?

Alan Smith: 28:14

Yes, correct. Yeah. First rounds. VC in that invested five limb, but he discounted it the early stage. VC in that invested 1.5 million pounds, and it's now worth 6.5 billion, billion. Yeah. So not very bad returns. Early investors did really thanks.

Nick Lincoln: 28:32

So thanks, right? This is move on. Mad smithy fab, not Thunderbirds fab, but fab with to

Alan Smith: 28:38

be, yeah, you know, I'm the poor sod or sap that keeps that reads all these industry surveys and things, and there's a couple come out in the last couple of weeks, and I just skim, skim through them. I've have got links in the show notes too, and they are quite interesting this, this most recent one is from a consulting firm that I think, you know, next, next wealth. I think they're called next well, Heather runs it. And they, you know, they go out, they survey advisors. They survey the market, the community. You know, they're they publish this stuff just to sort of get a sense test to see how our advisors are thinking. So it's just, there's just, I mean, I don't think anything in these surveys, because we're all pretty close to the action day to day. There's nothing that's dramatically surprising. But there's a couple of things worth mentioning from this most recent review and report they've produced, in terms of ifas cross country, that whereas there was, and we all know about this, there was a lot of M and A activity in the past driving growth. The vast majority of firms are now parking that are not participating, are not looking to acquire businesses. Maybe, you know, it's part of this cycle. Interest rates are high. It's not necessarily the best time to be buying businesses. So organic growth is the way that firms are going to grow their businesses over the next little while, quite a lot of firms actually have no plans to grow this for I always find this quite interesting. 26% of firms are saying, No, we're not necessarily, necessarily want to grow. But of those who are growing, organic growth is the driving force. Get this technology. Confidence is low. So despite high AI adoption, about 50% of advisors are now using AI, but predominantly just to record meeting notes. That's the kind of low hanging fruit that we've all seen. But not much more than that, everyone is still dissatisfied with the fact that the lack of joined up technology, nothing speaks to each other still, and people are working, you know, working through three or four different software systems and trying to re key things that still isn't quite fixed yet, which, and that is confirmed, bits about regulation, consumer duty, bits about client segmentation, consumer duty. But the last point, I'll mention what I did think was quite interesting, and again, we've touched on this in the past. And aging demands growth to maintain sustainability. Client bases. Client bases are aging. 34% of the average client base are 65 or over, and 9% are over 75 so what's that for nearly half of the clients of advisors in the UK who subscribe to the survey are effectively in retirement. So the demographic profile presents a material threat to long term business sustainability, with some firms calculating they need to run 15% net new revenue simply to offset withdrawals and expected client loss through death. Interesting, right? So 15% compound just to stand still because clients, because half your clients are now in retirement and drawing down, gifting, dying. It's worth a quick browse that review, that report, with all the data that sits behind it, and the people, number people they spoke to. But that's, again, nothing. None of that is hugely surprising. But it's interesting to see.

Carl Widger: 31:41

That's the it's very It's hugely surprising that 26% of firms said they're there. They don't want to grow

Alan Smith: 31:46

well, they have no plans. They have no specific they. The everyone gets a few referral calls a year, right? Stadiums? Well, sorry, actually more. It depends how you interpret this. 51% intended to grow, clients, assets under management, 51% intending to grow, whether you read that as 49% not intending to grow, or just saying 51% I've got your strategic plans to implement, and others are just but that

Carl Widger: 32:10

does tally up with the with the dimensional report, doesn't it that? You know, if you take out market growth, those firms aren't actually growing at all, which, which, maybe it's because there's decumulators in there, just for stories, I don't know. Like, if your firm isn't growing and it's gone backwards, that's the time to sell.

Alan Smith: 32:28

Well, here's here's here's where you get into the the weeds of this. It depends so firms, so your firm is growing, Carl, you've got strategic objectives. You've got goals, targets. You pay, you're investing in marketing and all sorts of things. There are. I've seen this a lot. There's a demographic of ifas, not looking at you mr. Lincoln, but who have got a healthy client? Bank, there's enough revenue to generate, to make, to make profit, to satisfy them, and the phone rings often enough every year to get half a dozen new prospects and clients pop them in, which replace the ones who die or move away or whatever. But there's no significant, you know, focused strategic growth plan in place. It just happens by default, just by being around. And I think that represents quite a high proportion of the marketplace. Actually established, mature businesses, they get a few referrals. Yeah, Alan,

Nick Lincoln: 33:19

can you lower your hand? Please call and then I'll come in.

Carl Widger: 33:23

Yeah, no, look, I know that. Like Nick is that's Nick's Nick's Nick does have a strategy, and the strategy is to as you were, and we'll pick off a few referrals as they come in. But 49% of firms, right. There's, I don't know how many solos there are, but, but like these are firms. These are people with, you know, more than one, just one solo advisor on his own to make

Alan Smith: 33:48

you know the data specifically, 50% of the regulated device business in the UK are solo advisor, 50% or 49% maybe that matches that maps across.

Nick Lincoln: 33:58

I mean, technically, I'm a firm, aren't I'm a limited company, I'm a company, so I think it will be a lot of solos in there.

Carl Widger: 34:04

Carl, okay, well, then that makes total sense. Yeah. I mean, yeah, there's

Andy Hart: 34:08

specific questions on what the specific options and answers were, obviously stating the obvious, maybe I checked the report out. Thanks, Alan. I do

Nick Lincoln: 34:15

find, with this, lot of these reports, they give, they do these findings, and you're thinking, Yeah, can you just qualify that a bit for me, because there's a lot left unsaid there, and it's, you can't really the solos.

Carl Widger: 34:26

I'd like to see the breakdown of the answers from the solos versus,

Nick Lincoln: 34:29

that's what I mean. Yeah, exactly. That's like a key, you know, I am, yeah, absolutely, absolutely I am. I am technically a firm, but I'm a solo advisor, and I'm not looking I have organic growth, as you alluded to Alan and then. But it's nothing beyond that. There's no business plan as such, you know, I just, it's a plan at all. It's a on the back of this handkerchief I have something. It's, you know, it's a lifestyle business, and it throws out enough cash that I can fund for my future self, and that's really as far as it goes. And one day it might have a sell value, maybe one day I'll just wind it down. The last client will toss her off this earth, and I will close the business. I just don't know, but for the moment, it's in a great place. But I know you and you and Carl especially, are different beasts. And you're you're growing something that you want to have, that is scalable, that's got various our eyes that where you can what you can exist outside of the business. You can do that, and you're looking to find to exit at some stage with a sale value which is which is all fine and great, but there's nothing about this church of ours. It is very broad. The important thing is you've got a viable business, whether you're looking to sell it, or you've got business that gives you enough now to fund for your future self and taking money out and sold to get away. That's the main thing. And as I saw my I saw my platform BDM today. He's a great guy. I'm Nick Payne. Got a great first name, big trap fan. And, yeah, he was just, we was talking about that. And just how many different ifas, their platform has on it, and it's just, you know, it's just, it's just a massive, it's a massive that our repelation is IFA, you know. But that covers such a, yeah, such a range. It's not like an accountant, which, you know, they're generally of a type, perhaps. But IFA covers so many different business models and types,

Alan Smith: 35:59

Nick, Nick, can I just move your scheduling around a little bit, just to follow on, because it just, it's neater, because the others, the other data or survey or report that I read last week as well, talking about your platform. Guy from transact, there's a company called fundscape, if you know them, or Andy would probably know or hear of them, but they just, they're just, I think they'd make merely a data aggregator for for the industry, so money flows in and out of all the various platforms. And they probably just, I don't normally pay attention to this sort of stuff, but it caught my eye. And I thought I wonder, where, you know, who are the most successful platforms in the UK in terms of new money coming in, or net new assets and all the rest of it. And I was quite surprised. That's why I'm raising it, because, and I'm going to ask you, certainly the UK advisors, to hazard a guess as to this is by gross sales. Sales or and or by net sales of the retail advisor channel, because they're different, actually gross and net sales for different but of the retail advisor channel, I you know firms that platforms that are used by advisors one description or another. So who was, who was the number one for 2025

Unknown: 37:08

quilter, well, you're right.

Andy Hart: 37:12

Quilter, I'm actually looking at the link though. Alan, so are you bastard

Nick Lincoln: 37:17

honesty, honest? Well, he's honest. He's being honest. Yeah.

Alan Smith: 37:20

I mean, just talking about Yeah, but nucleus, the second which surprised

Andy Hart: 37:26

nucleus. James hay though. Alan, yeah, yeah.

Alan Smith: 37:29

But even so, Aviva, surprise. Transact, way down in fourth. AJ Bell, fifth. Transact, still quite beautiful looking at net sales, because there's money in, money out. But hub wise, a fifth in net sales. I don't know if I've heard of them, yeah. And of course, I think immediately about my old alma mater, Standard Life, aka Aberdeen. They're not the top five, so I did a little bit of digging. I thought, Where the hell are they? Then, if they're not a huge platform, they've got net

Unknown: 37:58

outflows. Aberdeen, that's the state.

Alan Smith: 38:01

It's the money going out. This is new money coming in, either gross money or their money out, net flows.

Unknown: 38:07

Is that? Yeah, yeah, yeah, we're not

Alan Smith: 38:11

helping their numbers right now. But that's another story, not for public consumption, but yeah, it's quite interesting. You see quilter, obviously, quilter got this distribution thing because that's the old Scandia, plus they've got the massive direct sales force and tight agency. They've kind of got the whole market. And then Aviva. Aviva bought succession, which is a load of advisor firms. So it's just sometimes you live in a little bubble. You think everyone uses transact or fundment, even who not even don't appear in the list. The wonderful fundment, our business, they'll be there, but they'll be coming out. They'll be they'll be coming up that list, I'm sure, pretty soon. Absolutely interesting. Quota, Aviva, hub wise, yes, you've given us the whole

Nick Lincoln: 38:49

report release, and there's no point really clicking on the link. Can we link. Can we move on to the next thing on the is

Andy Hart: 38:54

interesting, Alan, though, I will take a deeper look at that link later on. Thank you very much. I think it's over to me now. So this is sort of following on from Carl's mentioned a couple of episodes ago about this is the real advisor podcast. It's great talking about topical tidbits and things happening in the news, but it's also better to because we are practicing financial advisors. Talk about, talk about real client issues that we are dealing with. So I've got a couple that I'm dealing with at the moment. The first one is when clients pass away. And obviously this is very topical for the track pack at the moment, but specifically talking about clients. So I've had maybe six or seven clients pass away, clients that I'm actively looking after. I've obviously been involved a lot of other times when people have passed away. Lucy in my business, obviously it's never nice. It's good if you've got their financial affairs in order. But obviously there's a lot of other stuff, a lot of other moving parts, and then the family has to go through what we call sad admin, sad men, and it never stops. But obviously they're trying to make things a little bit less painful for the family. So my process in my firm is always by default, unless there's a huge reason not to is switch all of the assets to cash. Usually they're in rapid so it's quite straightforward, and then I've just taken it upon myself to just turn my fees off, rightly or wrongly. So I just switch to cash and turn my fees off. There's a load of work that goes involved in it. So it's not as if I'm, you know, turning my fee off because I'm not doing anything that there's the stuff that crops up. I just don't want the spouse, the family, you know, the will to be contested or challenged. And there's a decline in the market. The markets decline 25% of the time go up 75% of the time. But they only run into a minus 25 sorry, a point where the markets are declining. So that's what I do in my tiny, little firm. And as I say, it's not a monthly, quarterly, you know, even you know, a yearly occurrence because of the numbers I'm dealing with. So I move all to cash, and this is a specific reason not to, and then I switch off my fees. Over to you, Alan, what do you guys do?

Alan Smith: 40:52

I was just you and I were talking about this last week. Andy offline and, and we do exactly the same. And, and I thought, Well, that's obvious. We know that the client who signed your terms of business fee agreement is no longer around, so that, by definition, the contract has come to an end. So we do exactly that. Turn off our fees, move to cash, because everything else is a variable. Now, in the unknown, generally, though, there will be, you know, administrators. Would you call the people that are pointed to executives? Executives as a word to deal with the will and all the transactions that go on. Sometimes we've subsequently been appointed by executives as trust gets set up all sorts of options. Fair enough. Fair enough. That's a brand new, brand new circumstances, yeah, but that's what we do. And we took a long time, I mean, years ago, to just to basically build that out document. It tell this is what happens here. The people we contact. We've got the data. We can give it to the appointed solicitors or whatever. It's just, it's the right thing to do, and it's the I think it's a legal thing to do. But I'm just surprised, because we've heard on the grapevine about. The firms who just don't do that, who just kind of carry on, wait for instructions, carry on receiving fees for the ongoing non advice effectively, which that's that must be some in some sort of breach of, certainly, consumer duty and treating customers fairly. But no, it's good to have a documented process.

Andy Hart: 42:04

Don't we know what the legal angle on it is? Alan, I'm sure we could probably, from a legal point of view, still charge a fee. I'm not sure what the big other players do, but yeah, that's another point.

Alan Smith: 42:14

People will say, Well, I'm still doing work. I'm still doing work for it,

Andy Hart: 42:17

so I get it, and if people want to continue their fees, it's absolutely fine. I've got a problem with it. You know, it's just the stance I've taken.

Carl Widger: 42:23

Carl, yeah, the I like the phrase the sad man. I'm in the middle of that at the moment, and I'm definitely not ready to talk about that, but I think it's worth talking about sometime down the line when I'm a little bit more ready. Couple of things, like, if, say, if you have a husband and wife, and the husband passes away, but you're both clients, that's what's happened. So do you still turn off the fees, even though, like, so just, just wondering, just putting it out there. And then the second thing, real life experience here boys deciding to switch to cash, and Trump tariffs come out, and you switch to cash just after it. And then markets go way up. And then you get a letter, because you've done it with the best will in the world. And then you go,

Andy Hart: 43:11

sorry, I have agreed it with a client, sorry, the the exec, the next person in the chain, and made it very clear, if the markets go up, you're not going to benefit. The markets go down, you're not going to be impacted. So it's not just a blanket switch to cash. Have a conversation, but then we agree to switch to cash, and I put it in an email. Yeah, I

Carl Widger: 43:30

don't know if anyone

Nick Lincoln: 43:31

you're damned if you do and damned if you don't, aren't it exactly. It's a horrible

Andy Hart: 43:35

Yes, the professional risk I'm

Unknown: 43:36

willing to take.

Carl Widger: 43:37

Well, can I just say, from personal experience, if anyone came to me with a fund switch form in the week after my dad passed away, I'd have probably boxed him in the head, yeah? Like, you got to be really careful with that.

Andy Hart: 43:49

I get it. It's, this is real life issues we deal with.

Alan Smith: 43:52

Well, here's perhaps we should. I don't know whether ours does actually cover this, but now that we're talking about, I'm thinking a lot should be in your terms of business. Terms of business, just say, in the event of you just passing away, you're gonna say that, Nick, yeah, that's

Nick Lincoln: 44:04

what my hand was raised. I do, yeah, you know, switch to cash and turn. Come back to cash and turn come back to your point. Carl, if a husband and wife are clients and Mr. Dies, I would turn off the fees on his isas and whatever else his pension pots, but hers were still going to be paid to me. She's still an ongoing client, and that's how you do it. And I need to put something in my terms of business and to clarify this, just to nail it down, because it's really difficult, right the right thing to do? As Andy said, most of the time, the markets are going up, but there's a chance they could go down. People feel the loss far more than they feel the benefit of any gain. I don't want to be having conversations with executives and beneficiaries about why has this fund gone down 30% because a month ago it was X amount, now it's Y amount. Lock it into cash, and I might just lay that out in my terms of business automatically, so I'm not sending the bereaved, you know, emails where you say Carl, they could trigger someone to pick up the phone and call you a variety of unpleasant things. So, but it's very difficult. And, you know, on the IFA forum, there's a long chain about this, and so many people have got different approaches

Carl Widger: 45:02

look like, like anything else as well. It's, it's important. We're going to be talking about, uh, you know, phrases that we use, and financial planning like, you know, we're going to be, hopefully, partners with our clients, you know, forever. And so talking about some of the not at your first meeting, but as you develop your relationship with your client over years and years, bringing this up when they're perfectly well and healthy and all that, that's that's the time to bring, to bring this stuff up. And we had a case year, maybe the end of the previous year, where the the husband passed away, and everything, pretty much, was in his name, and he was very wealthy guy, and there was a problem with the grant probate, and the wife, effectively was left with no cash at all. But on us, on paper, she was worth

Unknown: 45:49

many millions.

Carl Widger: 45:51

So there is, there is an element of catering for that, you know, too. Because we had a, we had a two times right, whereby, if the wife had a solo account with maybe 100 grand in it, right, just money to see her through the next year and a bit or whatever, because death, unfortunately, there's a there's a comment I'm going to make later on, when life goes in transition money moves. It's a very expensive time, actually. And I had been told that by clients before. I now know for sure it's very expensive. So having these separate accounts set up in each partner's own name, not joint accounts where, you know, some financial institution go, oh no, we need a we need your dad's signature on that car. And you're going, well, you can't have my dad's signature clearly on that but, but it's a joint account. Oh, yeah, so you, you wouldn't the sad men Andy, I'll come back to that in due course. Right? It's, it's just unbelievable. And yeah, there are a few things I could and I will advise people to do

Unknown: 46:48

for sure. Yeah. Okay, me first,

Nick Lincoln: 46:50

and then we'll close off with you Ultra on this. The other thing to bear in mind this is you say, when people die, this money is in transition, absolutely right, and oftentimes it's going to transit or transition to people who don't know you from Adam, who haven't been through the years of behavioral coaching, about markets, about long term returns. These could be nieces or nephews of the deceased who are promised 100,000 pounds, because that was the valuation When, when, when their uncle died, and now are getting 75,000 pounds via Nick What's this Nick Lincoln done? Why is it down? They weren't understanding. They don't even follow the stock market. You're suddenly getting all these people into play, into your orbit, and all they see is my inheritance has gone down. Where's the lawyers? So that's another reason that's a massive degree of ass covering in that but we live in an ass covering World. That's another reason I think you should be going to cash and just going to cash and just nailing down whatever the value is, because you're going to be dealing with people who are pissed off, who don't know you from Adam, and don't know the good you did for the deceased, and don't care they just had this figure they've anchored on it. That's going to clear the mortgage, and now you're coming in with something that's 25% lighter, 30% lighter. No, thanks, Ultra.

Andy Hart: 47:48

That is another logistical thing. Nick, because there needs to be a value on death. So again, I want that to not fluctuate as such. If my executives are listening, please never move my portfolio into cash. I'll be spinning. I'll be I'll be spinning.

Unknown: 48:01

Ignore my advisor. I'll be spinning up there.

Nick Lincoln: 48:05

Can you imagine? Can you imagine the thunder, the thunder,

Unknown: 48:09

push the cash box. I there's any

Andy Hart: 48:13

compliance people listening, compliance departments, functions that know this a little bit more inside out, be great. If you could maybe contact us, go to the real advisor podcast, COMM And leave a comment. Any comments will be greatly received. I think it's now to Carl or Nick. Are we move.

Nick Lincoln: 48:30

That's really good, that we could have been potato. That's a really good topic there often, yeah, but yeah, that'd be good to get compliances. But of course, the compliance we could have five responses that would all

Andy Hart: 48:40

be exactly, but, but surely, continuing fees, moving to cash. Surely, by definition, practice, they've seen the

Alan Smith: 48:46

definition, the contract has terminated, so therefore you're no longer providing services

Carl Widger: 48:52

if they're joined, if they're joined, contracts, not necessarily. I think this is worth exploring more guys

Andy Hart: 48:57

for sure. Okay, right? Listen, we are a 15 minute Bloody hell. This is race by 15 minutes. So far we haven't fallen out, which is a first. So what second point is my second? Sorry, mate. Sorry, mate. Yeah, go ahead. Nick, so this is, again, another real life issue I'm dealing with at the moment, I'm going to put this into the category of working with close family members, and again, how we straddle this. This is a case where this close family member clearly needs full fat financial planning. So it's not just a case of, I need to set up a small Isa. They need proper full fat financial planning, retirement income planning, full cash flow. Everything sorted, and I was trying my best not to get involved. I hoped they'll be able to find a full fat financial planner to help them on this journey. So I sort of pushed it aside for a while, and then the other week, they contacted me and said, I've been sent this report from a another financial advisor. You know, terrible whenever another professional looks another professional's job, you know, it's asking tradesmen, has this kitchen been fitted correctly? It's never going to turn out well. So I said, Okay, obviously, I'm happy to help you. There's quite a close connection here. Anyway, the report was sent to me. My God, is horrendous. It's it's all, of course, legal, and it's all, of course, insanely compliant. I'll focus on the low lights first. There's no highlights. They're charging 1% for financial planning. There's no financial planning going on. They're charging a separate 5% for discretionary fund management, plus that they're charging 1.6 for that. They're putting them on the platform to facilitate their advisor fees for no other reason. There's been no proper planning done. They've mentioned things like, you haven't disclosed your spouse's pension income, so there's no looking at the overall family just just zero integrity on the whole report, the whole thing is coming in at 2.53% I think, Oh, is that good news? What they're going to invest them in? Obviously, the clients in the balanced portfolio, 5050, so the returns are going to be limited. The fees are excessive. So I'm now in a position where I have to help a very close family member, which I do most of the time. But in this case, there's a few other circumstances that I'm not going to get into, but I'm now going to have to step up so they've been exposed to the sharks, and I've seen it with all of you, know, with my own eyes. And now I need to step in and assist. I work with, you know, friends, mums and dads. I unofficially advise family members. But in this case, I need to get involved take them on full fat financial planning, which is sort of a first. So that's my dilemma. And I've spoken, I've spoken about it to a couple of the boys on the. Podcast, so I've got their opinion on it, and they say, Andy, just you've got to get involved now and do it.

Nick Lincoln: 51:54

So who's up first? Well, no one's got the hammer. I'll quickly leap in. I think you can work with with with family members, but you've got to be really careful. And I think the danger is you think, Oh, well, they're friends slash family. I don't need to go through the whole process with them. I think actually, if you work with friends and family, you've got to be more Andy Hart than you are with any of your clients. We've all got to be more, more more of ourselves, more education, more laying down the law from day one. Because these people will think, Oh, well, they'll nickel just talk to me as normal. You know, blah, blah, blah way. I think you've just really got to nail it down that this is what we do. This is how we do it. This is what we tolerate. Is what we don't tolerate. And so you're making clear to them that they're not getting any better, or any, any, any sort of, in quotes, kinder treatment than, you know, clients that aren't linked to us by blood or friendship or what have you just got to if you go in and just, oh, yeah, I'll do that for you on the side. And, you know, mates rates, they won't buy in, there'll be a problem, and friends could soon become foes, but that's all. It's a case by case basis. You just got to, you know, and also just go with, as I say all the time, go with your gut. There's something about your gut instinct that is invariably right if you're getting a bad vibe about it. So I just don't think, I don't think I can help you. I like your mum. You know, you're my mother, but this is not going to work. And walk away

Carl Widger: 53:10

before she walks away. It's very tricky. It's very tricky. I have a funny story.

Unknown: 53:18

Yeah, the Okay, it's like, I won't

Carl Widger: 53:23

do a close family or friends myself when I'm not advising anymore, but I would, I didn't do them myself anytime over the last the firm did call, yeah, yeah, but the firm would, yeah, good. Now, what I do, like my sister was in recently, and one of our advisors, Ronan, clearly did a fantastic job, and he's probably gone over the top to make sure he does fantastic job fair. Yeah, boss's brother, not me, yeah.

Unknown: 53:50

Not me. No, no, no, no, you do it. You do it.

Carl Widger: 53:55

But, but I kind of separated a small bit, and that's that will be, you know, I will tell a funny story. So this is, this is the day of my father's funeral. A family member in his mid ease said, Can I have a word with you, please? And I went, Okay. And so this was after the lunch, after the burial and stuff, and we went outside, and he went to I had told him that raisin.ie remember the the online banks crowd that they were giving better rates. I should have said nothing, right? But I did. He was asking me I did a previous thing. And I said, yeah, go into reason he did. Then he was asking about setting up the account. I said, maybe get one of your daughters or something to help you with the online, because you have to do it all online. So all done. Delight with itself. And he went into the bank. Now there are only two pillar banks in Ireland. It is one of the pillar banks said, Hmm, raise some thought. I, if I was, you know, I'd be very careful with that. That's a bit of a scam and all that kind of

Unknown: 55:03

stuff, which is disgraceful

Carl Widger: 55:07

that one of the pillar banks would put because the client is an older client, would sow their seed of doubt that Jesus maybe. And then he mentioned my name and said bank said, Yeah, I don't know about them either.

Unknown: 55:22

And it's like, wow. And you're telling me this the day I've just buried my dad a few hours ago. So it was like,

Carl Widger: 55:29

yeah, so this is I wish at that moment, and since that moment that when he asked me about bank deposits, I keep it where it is, buddy, that's what

Andy Hart: 55:38

falls into no good deed goes unpunished. Yeah. Again, is a, is a, well, a life lesson.

Alan Smith: 55:46

The thing about it's great with family members and close friends and everything else, when everything's going great and every markets are going up and and we do. And I've had a big in the past, and a bit like you, I've some sometimes people don't need proper financial planning. Just need to know what I need to say, put money in an ice up. Simple. So you said, like, go and do a Vanguard DIY, do the 100% global equities. And away you go. And I remember I was taking a few calls in covid lockdown from people, just everyone was earning, everyone's having a bit more money. And, of course, markets race. They all bought the bottom of the market, and they were calling me up, oh, you're a genius. You're amazing. And I was very keen to make

Carl Widger: 56:23

sure that you were not. You were like,

Andy Hart: 56:24

I know. Yeah. Listen to this. Listen to this, darling.

Alan Smith: 56:29

You're amazing Alan fund manager, you are. You've made me rich. But yeah, everyone gives you the credit when it goes up and gives you the blame when it goes down. So you get to disassociate yourself from all that, because when it when things do go awry, and inevitably they do, there's nothing more complex than family or close friends and money and emotion and all that sort. Thing, and it can, you know, I've seen it. It can cause severe issues and challenges. But Nick's hit the nail on the head is each, you know, use your own judgment each case in its own merit. The standard default should be No, but I'll find somebody that could look after you. But occasionally it's like, Fine, I'll help you. But the kicker in your story just there. Andy was 2.56% a year for no financial planning and a 5050, equity bond portfolio. That's just a mess of just terribleness.

Carl Widger: 57:24

This, this, this is, this is the thing. Do you know that firm?

Alan Smith: 57:30

Because now I do now. Carl, yeah, no, of course I don't know them, because they're not, you know, one of the good ones? Well, this, this is what, this is what I've never come across. This is they've never gone to harm. They don't go to trap. They're doing this because that's the point, because we live in a bubble, and the people that do go to harm and trap, we talk about this and we all say, Yeah, isn't it terrible all these other firms? Because there's a we remain there's a doorbell. Is Amazon deliveries arrived, but we remain in this bubble because the people that we associate with are the good guys. Fundamentally, it's a self selecting audience. If you attend conferences or you're listening to part of the trap community, you're either there already or on your journey, and you realize quite quickly there's 1000s of firms out there that are just,

Carl Widger: 58:16

see, it's pretty showing, yeah, and it's when you hear stories like this, Alan, like, you know, there's, there's an argument to be made that the regulator should stand step in and say, right, here's your maximum fee for this. Here's your maximum fee for that. Because that client is like in a 5050, portfolio, and 2.56% that client is going to struggle to do well at all over 10 years and

Alan Smith: 58:40

no financial plan anyway, just chucking money into some discretionary portfolio.

Nick Lincoln: 58:45

Yeah, I what, whatever the problem is. Price capping is never the answer. I'm sorry, no, I

Unknown: 58:53

agree. Nick, but you could

Carl Widger: 58:56

make the argument when you hear stories like this, that that this may be something, that that might be the unintended consequence here the chat.

Alan Smith: 59:02

The challenge is, as Andy says, it's all beautifully compliant. It'll sail through some of the boxes to check Well,

Andy Hart: 59:09

the report is way more compliant than report I'm going to issue, but I'm going to do the right thing and focus on the outcomes.

Unknown: 59:15

And are you saying you you create. Okay, gents, gents, moving on before.

Nick Lincoln: 59:21

We're an app. We are. We are an app. We have

Alan Smith: 59:24

controversial subjects. What's next? Nick, well, well,

Nick Lincoln: 59:27

LinkedIn, some of us love it. Some of us like it less. I'm, I know Alan particularly. You're, you're very prolific. Yes, prolific, prolific. I kind of prolific. Thank you. Jesus Andy, he was trying to keep up with, with, with Alan, and he gave up. Didn't you on on LinkedIn? I kind of, I kind of dabble in years ago, before chat GPT got involved, I dabble on it. And there's an article in the model advisor about LinkedIn and the virtue signaling that goes on, especially in the financial advice community. A, there's lots of virtue signaling and B, there's lots of bitching and slagging off other brands, you know, but the virtue signal thing is now I was on my way to the orphanage in Mumbai to drop off my daily food parcel, and as I handed the packages of food to the dying children, it suddenly reminded me of financial planning and its role in our class lives.

Alan Smith: 1:00:13

You've read my post this morning,

Nick Lincoln: 1:00:17

LinkedIn is full of this article, nailed it. And I just thought, yeah, yeah, there was an awful lot of mess on also. And then I went through the comments, and I'm a quick point, but David Robertson, we talked about SJP in the past on tour episodes, and they were touring more content. More controversial episodes in terms of feedback and whatever. And Dave Robinson, if you know him on LinkedIn, was this fierce, fierce. He had a fierce hatred of SJP. Apparently, he's disappeared from the from the platform, but that's that's by the by but yeah, guys, I think you just got to go, go with your eyes open on LinkedIn. And as Andy has mentioned earlier in the show, AI, you can spot it a mile away. The soulless, soulless paragraphs of just, just

Alan Smith: 1:00:55

think you said, I said that link

Andy Hart: 1:00:57

should answer this question. So you said that link around pointed at him?

Alan Smith: 1:01:01

No, I don't think so. My LinkedIn contribution is excellent, and I'm not at all. It's quite interesting, because you sent that link early, earlier today, Nick and I quickly read it. It reminded me of, I mean, some of you boys are too young to remember. Used to be a show, a TV show on BBC called points of view, and all these angry readers would write in and say, you know,

Unknown: 1:01:29

yeah, why this TV show.

Andy Hart: 1:01:31

It was disgraceful. And it was the 10 minutes points of view. It was like a short Yeah,

Alan Smith: 1:01:37

there was that ginger and Robinson did it. And Robinson, yeah, but it used to always make me laugh, because it would just be raging at the TVs, and I think, well, mate, just switch it off.

Unknown: 1:01:49

It. Yeah, I hate this TV show.

Alan Smith: 1:01:53

So, and this was a bit the same. The thing about, if you have spent any time understanding social media platforms, so I'm not on Facebook, not on Instagram, not on Tiktok, but LinkedIn is it can be quite a good one, but you need to curate so I don't notice all these things, particularly all these the things people there were in the article people talking about, or everyone who's showing off. Because the point if, if you have seen a lot of these, is because you've clicked and read them. So the algorithm will keep sending you what you spent time reading. So I never we don't I see the heading of it and I think, well, I'm going to read that, because it looks like some guy's showing off about something, so unless it's compelling or interesting, so you're becoming a victim of the algorithm by constantly reading these things and then keep seeing them every day, because the algorithm keeps sending them to you. You can, you can mute. You can stop following people. You can, you can just take control of your own feed. And frankly, I think LinkedIn can be excellent. There are. So I mean, you're a close personal friend of mine, and your keynote speaker at hum, for example. Daniel Priestley. I think he posts, I think he posts some brilliant stuff on and video clips and what have you. So you can, you can learn a lot, and don't get too booked just arriving in the post Alan, there you go, as if by magic. You think this is, this is planned. That's Daniel's latest book, which you'll have to talk to talk, tell us about a culture corner next week, but, but there's people like that. There's other people that I've followed that come up with just some good stuff. It's interesting. And of course, there's virtue signaling. And congratulations to us, we won this award, and what have you. But you know, I would say, get over it. If you don't like it, don't read it and just

Andy Hart: 1:03:28

it's your channel for me, and I know Carl was gonna go next.

Carl Widger: 1:03:31

Yeah, first thing to say about transformed my LinkedIn experience was reading someone else's LinkedIn post saying, if you're sick and tired of reading the same posts from the same people and not seeing, you know, Andy Hart stuff come up, go into your settings and change it from most relevant to most recent, and then you just get the stuff. So if you then log in in the morning, you get the stuff that was posted in the last hour. Okay, into change from most relevant, which is the algorithm, to most recent. It just comes in as it comes in. So that's the first thing I'd say I read this article, and since

Nick Lincoln: 1:04:06

you will know that, Nick the I don't call Finish and

Unknown: 1:04:11

I'll come back the look. The one

Carl Widger: 1:04:13

thing I would say is, and I've mentioned this before, the fighting between UK advisors on LinkedIn is just like, my tolerance for is like, if I see it now, I'm just going, I'm not going muting or blocking, I'm going in, and I'm actually taking the time to I'm unconnecting or disconnecting, or whatever the word is, don't want to hear it, don't want to see it, because, you know what, if I happen to post something on my LinkedIn profile, I believe it's of value. I don't use AI myself for the LinkedIn stuff, but if I did, it's none of your business. It's my LinkedIn profile. Don't come into my messages and start telling me that I'm all wrong or that I'm good. If you, if you have a different point of view, go on to your LinkedIn profile

Nick Lincoln: 1:04:54

searching for you now on it call, I'm gonna start commenting and post it there.

Carl Widger: 1:04:58

It's just, it's like, my tolerance for it is just all time low, because everyone has different stuff, and I disagree with some of the stuff in the article, and I tell you why, right? Last Thursday night, we were the lead sponsors of the cleanest foundation annual Christmas gala ball. I'm waiting for the pictures to come in, and when they come in, I am posting it on LinkedIn, and I'm going to say it is an honor and a privilege for us to be the lead sponsors, because we spend a shitload of money helping a really brilliant cause. And I have clients and prospective clients out there who will be able to see that? Hey, here's a firm who are living their values, and that's news that I want to send out over a professional network. So, and if you don't like it, tough shit. No, move along. Switch me off and move along. So, yeah, I think LinkedIn is brilliant. It's free marketing it. I think it got me so many clients when I was only getting going, and I like it now, since I changed from most relevant to most recent, I'm like, not seeing the same old shite coming up all the time, which is like people fighting with each other

Alan Smith: 1:06:00

and yeah, don't click it. Don't read it, because in doing so, you telling the algorithm to send you more of it. Only click things that you think are interesting.

Carl Widger: 1:06:09

But if you change to that most recent thing, you do not get the algorithm at all.

Nick Lincoln: 1:06:13

I've done that. The algorithm shut LinkedIn.

Andy Hart: 1:06:16

It's on LinkedIn. You've got the options of top or recent. You switch it to recent, and then it will be

Carl Widger: 1:06:20

that's in the actual comment section. You got to go into settings, yeah.

Andy Hart: 1:06:25

Also, what they also try and do is they all try and switch you back without you noticing. They do on Twitter and LinkedIn only, and the layout

Nick Lincoln: 1:06:32

is horrible as well. Like the comments, load more comments and other comments by the recent, most recent or the yes, yeah, I struggle with it, but it's a bit of an ugly platform visually. But so if you guys are making good of it,

Unknown: 1:06:46

good sales

Carl Widger: 1:06:47

in you professional sir. And you're not on it, and you're not using it, I'd be asking, Well, why? It's a free marketing platform?

Andy Hart: 1:06:55

Yeah, I use it extensively now with mainly, mainly humans under management. Yeah, it's great, superb.

Nick Lincoln: 1:07:01

Okay, um, right, we've got Microsoft, Microsoft three, three more things to cover quickly, a storyteller, AI checklist,

Alan Smith: 1:07:08

yeah, just a quick one. And this is an example of something good and positive that I saw on LinkedIn that I want to share with the audience here, AI, but and everyone you know we're talking about AI and blah, blah, blah, it's, it's an over discussed subject, but there's a lot of people, including me and my firm, historically, that it's like, where do you even get started? What about client data, all these other kind of security risks and what have you so as a guy, some of you will know Mark lock, who is a consultant at the landcat, who's he's a good egg, and he puts out some good, interesting material, but, but Mark posted on LinkedIn recently, here is a very robust AI checklist. If you're running an advice firm, most firms are pretty small. You want to just go through this checklist and make sure that you're adhering to rules regulations. You've left no stone unturned in your kind of diligence and strategy and approach. And I just thought was a really good piece of content. So I've shared the link in the show notes if you want to progress their AI journey in a clear, a clear and organized way. So thank you to Mark. There you go. And in doing so, just denied the previous article saying LinkedIn was not always that good. That was it. Am I on again? Nick, yeah, because you're on some Christmas quiz. So make this short. I want you to I think we should enter a Trap Team too, as well. But my friends, there's a company called Mello, M, E, L, O, which some of you may know, organization that consulting firm, they help firms scale and sell their businesses. Don't know why they approached me. They approached the big names in the industry, Abraham previous, and also Kathy Ken Harrison from The Verve past, guest and me, I wonder why they didn't ask you, Nick,

Andy Hart: 1:08:47

but quite funny, they've listed you as Alan Smith, trap, trap podcast a year's live.

Alan Smith: 1:08:54

That's that's gone, that's finished. I'm only famous through trap now we're all done. Wait when this podcast goes out. It's next week. Link to the show notes. Jump on up. There's 1000 pounds, cash prize, a bunch of other prizes. I have no idea what it's going to be, what it's going to be about, and if they're asked doing a quiz about the industry, honestly, I'm not going to win many points, but people can enter that teams, you know, 123, people as a team. Enter it, raise money for charity, get a cash prize, have a bit of fun. Show up. I think it's next Tuesday. So I think you boys think you should enter a trap team. You guys should join in. Well, you're trapped, yeah, but I'm, I'm like, they I don't know what I'm doing, but I'm not well.

Nick Lincoln: 1:09:33

They know you say yes, they ask out, and he'll just say yes and then cancel other appointments. They're in his diary, because that's just the nature of the beast. I mean, these things, these things happen, don't they?

Andy Hart: 1:09:43

Right? Okay, let's show us. I'll speak to you about that later. I was, I was gonna say we know who Adam went for lunch with last week, Emily and Justin. Hence the recommendations, not true. Yes, true enough.

Nick Lincoln: 1:09:53

Enough, enough. 70 minutes in, we're coming on to the next start of the show, the meat and potatoes of episode 80, and I'm playing the meat and meat and potatoes drop early because I met a Trappist last week. Young IFA loves the show, loves trap hates the meat and potatoes drop, so I'm playing it for you now, great. Thomas, yeah, misophonia is a fear of eating sounds, a dislike of eating and food sounds. And I think great, and we don't need it. I've played it for you. Once. I'm gonna play it for you now, great. So enjoy. Turn it up. So we are moving on to the meat and potatoes of episode 85 and this is, this was triggered by a question from one of our beloved Trappists from James Sargent, who's an apprentice planner at Ernst grant, on building a it's very quiet. Yes, okay. From James Sargent, apprentice planner, earnest grant, he said, on building a stronger bank of analogies, phrases and effective questions. Are there any lines, approaches, or ways of framing things that you think land well with clients, I really, I'd really appreciate hearing them, which I think is a really good question. Well done for wanting to sort of soak up that kind of information. Because these, you know, if you want to get great answers, ask better questions. And questioning is an integral part of what we do for clients. A lot of what we do is very esoteric and kind of abstract and conceptual, and if we can convey complex, oblique messages using plain language to our clients, and that's that's a major skill set you need to develop. We've all said before. I've said it before, certainly, that you can have all the exam qualifications in the world and be a technical boffin, but if you can't get people to take the action they need to take, because you can't communicate with them, you're a waste of time, and you might as well work for sort of a pensioners technical team on a life dinosaur. So some of the things, which I think all four of us are going to go through three, three phrases, three things that we do that we need to bring into our conversations with both prospects, clients, over the course of the relationship, over the years, in many cases, of the relationship we have with the clients, I'm going to start off with three there. They're pretty obvious. But, you know. You, we forget these things, and sometimes that you just fall away from using them. So I was told years ago, when explaining something to a client and you want that client to take action, don't ask them how that sounds or, you know, does that make sense to you? Ask say to say to the person or the couple, how does that feel to you? How does that feel to you? That idea, Mr. Mr. Client. Because people respond to feelings and they generally, you'll get a more emotive answer and a deeper answer if you use the word feel as opposed to another word in that question. So that's the first thing I would change. If you're not using that word already, never say, does that make logical sense to you? They're going, well, I don't know, but how does it feel? How does that feel? Okay, the next one would be, and this all my all three of my points are ones I use during the annual planning meeting process, maybe because I'm going through a space in the minute. So they're front of mind for me. So mind for me. But at the start of the annual planning meeting with clients, obviously, I've got an agenda of things I want to cover with the clients. That's great. But the thing I say at the outset, after you got through the introductions and all the niceties, Mr. Mrs. Client, would just let me know what, what are the key things you'd like me to cover today? And they'll tell you in their words what those things are. Sometimes they might say nothing. Nick, do, just do the normal but generally, there'll be one or two things. Make a note of what they say. Make sure you cover those things and you use their words back at them when you're covering it, okay? It's getting them involved in the meeting. You're doing them a service, and you're being polite, which is a basic hygiene anyway, but if you use their words back at them, it's got to be right, and it's got to be true. And the third thing is, sometimes, when you're doing financial planning with clients, they're going to win clients, they're going to wince at the numbers. They're going to they're going to say, Well, okay, I agree with the pretty graphs. Nick and it's nice you got rid of all the red, but there's no way we can afford to do that. And my answer typically would be, well, you can't afford not to and but a nicer way of framing that is, I say, well, don't you don't. Yeah, these numbers look astronomical, but we've got to change the way that you think about money, because in 30 years time, your future selves are going to thank you for doing this. Now you put it simply, Mr. Client, we're not going to we're not going to save what is left after spending, because there never be enough. You're going to spend now what is left after saving? The savings come first, and you spend later, and there's no way about it if you don't do these things. Now, you're going to be in a pickle later. You can't afford not to do this. So that's those are the kind of three things I say. Take from that what you will. I don't want to go next. There are low I'm looking at the slate. But there are loads of great things here. But we'll keep it to three or four points per person, just, just for the sake of time,

Andy Hart: 1:14:08

you're muted. Thank God, Smithy, that's part of the show, as you can do that in real life. God, I pay so much good money to have as Alan Smith mute button,

Alan Smith: 1:14:21

boys, boys with friends like this. Jesus Christ, yeah, you share this. We try to just sort of old brain dump a few things. There's quite a few in common. We sort of repeat ourselves, which is a good thing in that we're all thinking roughly the same things. So I tried to do a couple of like practical what would be helpful for this sort of young trainee plan? I was going to go into a few meetings, a few first meetings, new prospects, existing clients. This is an obvious one as well. There's a lot of talk about, you know, opening questions. What do you ask these sort of first discovery meeting type questions. The best one I've found. Over the years, I've just devolved it to just being, tell me your story. Just tell me your story. It's the easiest question in the world for anyone to answer. It's not complicated. And then everyone, apart from me, of course, everyone likes talking about themselves.

Andy Hart: 1:15:06

I must have heard you ask that question 100 times, being out with

Alan Smith: 1:15:10

you a lot. Yeah, tell me your story. Andrew, no, that's enough. That's enough about you.

Andy Hart: 1:15:14

Let's bring it back to me, just randoms we meet. So tell me

Alan Smith: 1:15:18

exactly, right, you do randoms we meet.

Andy Hart: 1:15:21

You don't be quiet to let them tell them. Tell you their story. At least I

Alan Smith: 1:15:24

asked them when a client situation I usually do, Listen. Tell me your story, followed by, it depends what they say. And an obvious one is, you know, was what? What was money like growing up? Because that, I think that's really important to the person you're advising today. Yeah. I mean, Nick, you might disagree, but people will tell you, yeah, we lived a it was a difficult life, or it wasn't a difficult life, it's just frames. And people like talking about the background and upbringing. So tell me your story. And the next one to that really is, tell me your single biggest financial concern, because I'm coming in there with a sort of armful of solutions to it. But for them, they've only got one thing. Often I just need to fix this. So the idea of meet your client, or your prospective client where they are, instead of trying to deliver them all the solutions that you know you can deliver. And I'll give just a couple more of just throw away lines. Don't thing this is, I might give you credit for this ultra it's a version of, I think I'll polish it up, made a bit better. But would you prefer a high return investment or a low return investment? Definitely, me, the former is a bit more volatile. That's all you say, high return or a low instead of doing a high risk or a low risk, which is the worst question you could ask, Do you want a high return or a low return? Oh, I'd like a high return. Okay, we can deliver that. It's a bit more volatile than the other one, but that's why we are in your camp and helping you. I'll give you one more, by the way, where I've got this reversion of it is a great book that are the everyone should buy is the Nick Murray around the year, around the year with Nick Murray, he's got, like for. 365, days. He's got just loads of these little anecdotes, and this is one of his, which is, wealth isn't primarily determined by investment performance. It's determined by investment behavior. So you tell that to clients. Clients think it's all about the returns the investments. It's not. It's about your behavior. And you embed that early on. There you go. There's a few to kick around. Who's going next?

Andy Hart: 1:17:12

I'll go next. I had a similar quote from Nick Murray on my wall in my old office. Okay, I'm gonna mention a couple of points. Nothing too earth shattering. I'm gonna reiterate what Nick said. That is the key question you ask at the beginning of all meetings with clients. What do you wish to cover today? I've had it in the past, where I've just gone full force into a long meeting, and right at the end of it, they saw Andy. I've got sort of one issue, and this issue is enormous, and basically the whole relationship is now on the ropes. I had it another time where a client said, yes, I've got a few things Andy, but we'll deal with them at the end, I said, No, tell me what those three things are now. And these three things are, again, are quite big issues that we need to address. Sorry, Nick, just to

Nick Lincoln: 1:17:56

check with the point. Then, of course, the clients are thinking about that thing through the whole meeting, through that yes, that you you might they're looking at your lips moving, and you might be going, blah, blah, blah, blah, blah blah, because they haven't emoted this thing that's taken up their prefrontal cortex and it's throbbing away. So, yeah, sorry.

Andy Hart: 1:18:11

Go on. So yeah. So on. Hammering that home, that is the most important question. So would you wish to get covered today? Yeah, get out there very early on. Next one is in the prospecting stage. What do you expect of me? This gets all different, weird and wacky answers from clients. But again, I think it's important to have that one out front. Next one is, I've learned this recently, so I've been doing a little bit more sort of coaching training, but it's about trying to focus on the person and not the problem. Advisors all usually dive straight into trying to fix the problem when they should focus a bit more on the person the problem, rather than just fixing the problem on its own. A couple of other things I got to mention, I say to clients quite frequently as so basically I say, You are not my real client, the 64 year old that is in front of me today, but it's a 94 year old who you'll become. This is how the concept of current self and future self clients are always trying to worry about their current self, whereas I'm worrying about their future self. So you can say, you know, I'm really concerned about who you're going to become. And Nick mentioned it again this pay yourself first investment contributions, and they should feel uncomfortable. Because when you say you should invest this much per month, you need to invest this much per month, the client inside is thinking, well, that feels uncomfortable. So I just call it out and I say, Does it feel uncomfortable? They say, yeah, it does feel uncomfortable. I say, Well, that means you're doing, you know, you're doing the right amount. Should feel uncomfortable. We got a whole other list of things on the list, but I'm gonna end it there, Carlos to close us down.

Carl Widger: 1:19:35

Yeah. Well, look, one thing just to say there about, what you know, the point about is about getting the stuff out at the outset, right? That and Nick's point about, well, if you don't get it out of the outset, all they're thinking about throughout the whole meeting is so. So one thing that I saw happening in our business a little bit was when we were getting pretty good at voyant, right? So early days and we declined to go, what about if we sold the house and we have what if scenario, right? And what one of our advisors said, oh, yeah, yeah, we'll get to that later on, right? No, never, ever say that. Deal with it. Now, if you have to, just because you've got this beautiful process that you're going to go through, but if you wait until we get to it in a half an hour, the client, as Nick says, all that cheese is just like mush going into the brain. So anyway, my view, especially, I suppose, in Ireland, where the advisor, your family friend met Andy. That's the prevailing model here in Ireland. Always say, and for me, if you don't mention this in early doors, it's a fail, right? You got to say lifestyle financial planning is about your goals, dreams and aspirations, and then they're going straight away, going, what I'm I'm here to talk about the pension. So you've changed the dynamic. You've changed everything in what they're thinking. And you start having much, much better conversations. So you go away from the spreadsheets, the money and talking about the weather to deep, deep stuff. You're opening the door to the deep stuff. You're dropping the barrier a small bit, job, optional. Love that phrase. So a lot of successful people don't ever want to retire, or retire early, or it's like, okay, what we're going to try and do is we're going to get you to being job optional at the earliest possible stage that allows you to have the option. So you're going to turn up to work after that point in time because you want to.

Andy Hart: 1:21:28

I call it work optional. You call it job optional? Interesting.

Carl Widger: 1:21:32

Yeah, my job much better.

Unknown: 1:21:34

Watch, more impactful.

Andy Hart: 1:21:36

No, no, no, I wonder. Andy, it's not as if you're not selling anything from me over the years. Carlos, so you know, back

Carl Widger: 1:21:44

hashtag, stick with the plan, right? I have, I have. I have clients whose. Still say it to me on if they see me in a pub, they'll go, ah, hashtag, stick with the plan. Or on a golf course, hashtag, stick with the plan, right? So that was the best phrase we ever came up with, because we started becoming synonymous with hashtag, stick with the plan. And then we, you know, when things have a little bit of a drop, right? It's like, hashtag, stick with the plan, right? So none of those clients call us up anymore.

Unknown: 1:22:14

Are they still clients? Yeah, they are. But you know, when there's a bit of market

Andy Hart: 1:22:19

volatility, right? So think of inbound. That saved you call just by having that yeah, cheesy phrase, let's call

Unknown: 1:22:26

it. And it is a bit of a cheesy phrase, and it was like, you know? And people go, yeah, oh, here's,

Carl Widger: 1:22:31

here's hashtag. Stick with the plan

Andy Hart: 1:22:33

you should get tattooed on your arm. Maybe Carl, if no success, one day, totally and utterly

Carl Widger: 1:22:41

naff. I would never, ever do

Alan Smith: 1:22:43

anyone who's got a tattoo exactly business brand

Carl Widger: 1:22:47

with their business brand tattooed on their own body, if God would do that. So we're going to tell you the truth about your money. We're not going to tell you any comforting lies. When life goes in transition money moves, longevity is a much bigger risk than volatility. Your investment is like a bar of soap. The more you touch us, the less it will be. And here's one special one for the Irish advisors who meet loads of successful people who want to buy property, property, property, property, property, and more property. You cannot sell a window out of a house. Liquidity, my

Nick Lincoln: 1:23:26

yep, yep. You can't sell the porch to fund your next holiday. Great stuff. I'm to be honest with you, we could do, and maybe one day we'll get around to do when we launch trap Academy, trap University, when we've agreed on the name of the bloody thing, we will do a whole segment on this, on phrases, and there'll be workbooks and videos. And this will cover quite a you'll get tremendous value from it for whatever we're going to charge you for.

Alan Smith: 1:23:46

I think it's, though it is really important again, the aforementioned Andrew ultra crepitarian heart. And if you steal from him, you've stealed twice or three times, he's already stolen it elsewhere. But words are weapons. I mean, Rory Sutherland is a classic at this, but words are weapons. How you shape? You can say, like dream inconsistency. So like that one do you want? Do you want high return or low return? The same thing you want high volatility, low volatility. That will change families the outcomes of the sessions. Yeah, completely. And just dropping these little phrases in throughout really impactful shape. Be really careful and but you need to word consistent with it.

Andy Hart: 1:24:22

And then at one point, the clients use those words back to you, which is the point over to you.

Carl Widger: 1:24:26

Carl, can I just say right, so your two real life financial planning issues that you brought up today, Andy, right? Or challenges, right? And this question that we've just answered here, right? Albeit probably very quickly for me, that's why I'm involved in trapped these are the kind of really important things that will have a deep impact on our clients who agree to things, right? Not technical shit. Anyway. Great. Okay, say that

Nick Lincoln: 1:24:51

nice stuff. 80 minutes, Jesus Christ. Let us move on to the next part of the show, because I can see in the rain, it's very wet here, very dark and wet in the London environs at the moment, not particularly pleasant. But I can see post is struggling up the drive with the bolting sack of TRAPPIST questions. There she goes, ringing the doorbell. So this is part of the show dear TRAPPIST, where we answer a Trappist question. If you want to submit a question to us, please do so in the pinned tweet on X or on the link in the so called show notes. We are getting round to them. We are they are getting a bit thin on the ground. So more questions would be great. We do answer them all. We don't avoid the ones that could be slightly contentious, and today's one, I think could be slightly contentious. Let me just open up this letter and we'll see who this is from. This is from a Mark D didn't give his surname. I'm going for Mark Dampier, given the question, why do you guys stick with factor tilt so much as valiant small cap when this hasn't worked for almost two decades? For example, there are very few small caps anymore, as they are bought out by private equity and venture capital, and only lists when they are large caps. Maybe when the facts change, you should change your minds. Also adjusted for the higher ongoing fund charge that firms like dimensional charge. Do they still outperform? It just looks like Evidence Based Investing without the evidence Smithy. You were going to take this one.

Alan Smith: 1:26:09

I'll start it off. I think, I think we all to fear and degrees use dimensional fund advisors. They're not the only one who does this sort of thing that other asset managers also do it. I think, I mean, it's a good question, to be fair, it's a reasonable question. It hasn't worked for he said, almost two decades. Well, let's just assume that to be true, 20 years is actually a relatively short period of time in the history of investment. First of all, there's been periods, longer periods of that where small cap and value have underperformed broad markets. If we go back to the 1940s 50s, I think six. These, there's, there's big chunks of time, and it tends to always happen like that, big, long periods of time. So it's not, it's not particularly unheard of or unusual. And you know, if, if this, if these premiums just popped up every three or four years, there wouldn't be a premium. There wouldn't be it would just be part of the market returns. And everyone could arbitrage them. The point is, and they often talk about it at the likes of dimensional the patience is a virtue, because when they arrive, they arrive in very lumpy formats, and all of a sudden, new stocks, small cap stocks, are significantly outperforming everything else, but, but again, like everything, you can't predict it. You've got to under you've got to understand the basics, I think of risk and reward. Investing in smaller companies, investing in value stocks, inherently carries a higher degree of risk. In a pure market, you would expect to be rewarded for accepting that level of risk. Otherwise you would never, ever do it. It's the same as equities tend to perform better than bonds, but there are times when they don't, but if you didn't, if you weren't rewarded for taking additional level of risk and uncertainty, you wouldn't be worried. So the evidence still does remain. It remains over very long periods. The point that he's raised about small caps, they all get bought up by private equity. Well, that's part of a cycle. There are still 1000s and 1000s, 10s of 1000s of small caps, those new small caps getting started every day, that are growing, that are getting listed, that you can buy stocks in. So not, I'm not buying that one, and that this sort of, yeah, you the additional cost you might pay to allocate to these you might do, but the additional premium, and in terms of the investment return that you would expect will more than compensate for and I think with some of these companies, like dimensional and others, it's more than just the investment allocation. There's there are issues, if you spend time understanding it, about trading efficiencies, not market timing, there's a whole bunch of other things that they that they would do. I think the moral of this story is you've got to be bloody patient. Is the point. There is absolutely facts and evidence that support a long term buy and hold for factor tilts, because you will get rewarded for accepting a higher degree of risk. That's how markets work. But it's not predictable in terms of the timescale. What are your thoughts?

Carl Widger: 1:29:07

Yeah, all fair points, but I would say it's an excellent question, and it's a fair challenge. And I would say that we have challenged ourselves at Metis about this very point,

Unknown: 1:29:21

and we are probably,

Carl Widger: 1:29:26

you know, still kind of sticking to our guns on this. But maybe when the facts change, the facts change. What I would say is, I think making a change away from these factor tilts now would probably be brain dead, bearing in mind that there's seven or eight or nine different companies driving almost all of the return in the s, p5, 100. Therefore, if there is a correction, or they're talking about an AI, boom to bust, well, you know, then if you have these factor tilts, you're going to be in a much happier place.

Unknown: 1:30:05

But I'm okay with being challenged on this, and I think it will be

Carl Widger: 1:30:11

disingenuous to say that we haven't challenged ourselves on this exact point, because it's a fair question like, would we love if these factor tilts started showing some definite kind of premium return? Yes, we would, but bailing out of it right now, I think that will be absolute madness when you're stuck with it for so long.

Andy Hart: 1:30:35

Yeah, Alan and Carl have covered most of it, correct? It is a great question. So I also have an element to emerging markets. So again, just by the general globe, you know, global stock markets, or do you factor in tilts. The tilts he's mentioned are obviously small in value. And then also we've got the emerging markets. I mean, the essence of a well diversified equity portfolio is there will be elements of it that underperforming at different times, which shows that it is well diversified. I'm still sticking with, as Carl says on the long term data and Alan's alluded to, it would be sod's law, wouldn't it? When we've when the facts have changed, we change our mind, then the facts stay as they were, as it were. So yeah, no. Great question. Over to you, Nick, for

Nick Lincoln: 1:31:20

the sake of privacy, I don't have much to add to that. I use the fund choice that I used, really for the point you made there. Andy, that it just gives me broad it captures all the captures all the elements of the market. It captures all the dimensions of the market. And that's so I'm not taking I just, I want to take no bets. I just want to invest in capitalism, per se. I want a healthy exposure to emerging markets, which themselves have underperformed. These things do go in cycles. I looked at the figures, you know, on the fund solution that I use for my clients, for myself, and, you know, over five. 1050, 20 years, the return has been staggering. Okay, I might have got, with the benefit of hindsight, if I'd gone into a more NASDAQ heavy, a more S P heavy solution back then, I'd have been a bit better off. But I'm talking double digit returns over nearly all time periods, but annualized returns, I'll take that. Thanks. That'll lead my class to financial nirvana. I don't really sweat the rest of it, and as and, yeah, I think these things, everything reverts the mean in the end. I think the value and size premium are based on solid academic research, therefore I still think they're valid. They disappear for long periods of time. Carl said it, if you, if you, if you go out the dance hall now, you ain't gonna get involved. Invited to the dance by that chick you've been following for months with them, those, those random texts you sent at night when you've had too much to drink, is that just me right? So shall we leave

Unknown: 1:32:37

my god? Shall we draw

Nick Lincoln: 1:32:39

a line under that? Yeah, I think we should, right. We are Jesus. This is why I'm rambling. I'm tired of 94 minutes. Shoot me. Okay, let's get on to the next part of the show, which many people call culture.

Alan Smith: 1:32:51

Close, personal friend of mine, I've done too already. I'm not known to many I think of the TRAPPIST community. Carl Richards, aka behavior gap guy. He's got a new book out. Did he send it to any of you boys? You go, yeah. You copy, yeah. Anyway, I got a copy. It's called your money. And actually, it's designed to be a sort of like a coffee table type book. There's 101 sketches. Many of the sketches you've seen before. There's the classic ones. Quite a few are new ones. So on one side of the page is a sketch. And you know, I just, I love the fact he distills down complex issues, stories and situations into like a couple of circles and a square or something, just to explain things very simply, using simple sketches that we could all probably try to copy ourselves or in client meetings. One side of the page is the is the image. The other side is a one pager about explaining a bit about what it is. It would be a really good gift to give to clients. It pretty much capture, encapsulates all the things we talk about, about financial planning, and focus on the important things, not the unimportant things. It's a great book. Carl Richards, your

Unknown: 1:33:58

money. Thank you.

Nick Lincoln: 1:34:00

Great stuff. Thank you. My book, which I've almost finished, I'm in the new mine. We know, and I know it's going to pan out. So I can't say I'm, I'm, I'm reviewing this book without knowing the entire story is the meltdown scandal, sleaze and the collapse of Credit Suisse by Duncan Mavin, not Mavin, but Mavin. So Swiss banks, a long time, lots of reputation for sort of probity, and it's where the quiet money goes, and everything's the Swiss banking history has also got the darks, a very dark side, you know, think of the Nazis and the money looted from the Jews and so forth, UBS and other banks, they generally have gone through those rocky periods pretty well and put the occasional scandal behind them. And I didn't know this quite how riddled Credit Suisse was with scandals from the get go, it's formed in 1856 it collapsed in 2023 and for nearly all of its history there was one scandal after another. So this idea of there's a probity and sanctity of the Swiss bankers, for whatever reason, credit Swiss had within it, there was a kernel, a seed that just couldn't be taken out of corruption and wrongdoing. And they'd get various CEOs in, and the new CEO would come in and go, Okay, we've got some bad news to get out there. And he'd get out front and center from the previous regime and thinking everything was done. And as you whack that, that mole, another molehill, popped up somewhere else, and they just got through them. And then it just steamrolled and steamrolled. And by 2023 Credit Suisse, this once august body. Remember the Credit Suisse, equity income funds run by and then in the 90s, they were sold predominantly by our buyer phase in massive, massive, you know, outperforming active funds, and the brand has gone bought by, bought out by UBS. It's an interesting read. It's historical read as well. It's a it's only 599 on Kindle presently. So if you want to learn about how a bank can collapse,

Andy Hart: 1:35:43

did it allude to it in the book? Nick that it was a great buy by UBS, as if they bought an asset, you know, a perfect time when it was at rock bottom

Nick Lincoln: 1:35:52

valuation, or, well, that probably been the next chapter. Because, I mean literally, mate in the final chapter. So at the start of this, where I said, I haven't yet completed it, you, obviously you were zoning out. Were you? Okay? I'll bear that in mind when he comes to your country

Alan Smith: 1:36:04

corners, what's yours? But Andy on that, on that question, because the story was and this shows you about you don't know what you're going to get. I think it will come out as being a good buy for UBS. One of the reasons, what? Because they've got all the history, the legacy. But if you were a Credit Suisse bond holder, and they had all the ultra high net worth clients had these Credit Suisse, you know, income generating bonds, they got wiped out, went to zero as part

Nick Lincoln: 1:36:29

my crowdfunding experience with curve, I don't know. Yeah, with curve,

Alan Smith: 1:36:33

it's very similar these Swiss billionaires and Nick Lincoln. That's what you've got in common.

Carl Widger: 1:36:38

All got white. My 1000 pounds got wiped out.

Nick Lincoln: 1:36:41

It's the principle. It could have been the pound. It could have been 10th that bastard.

Carl Widger: 1:36:45

Watch, yeah. My brain is a little mushy at the moment. And struggling to focus on anything. So I needed some easy watching

Nick Lincoln: 1:36:54

NFL, NFL that Kurt Warner. Oh, good man,

Carl Widger: 1:36:58

yeah, yeah. Freaking underdog. The Kurt Warner story, yeah, it's an underdog story about a guy. Anyway. I won't ruin it for people, but it's absolutely brilliant. It's a love story as well. It was perfect timing for me. And I would say to anybody, over the festive period, coming up for a family movie with a superb ending. And it's a true story. Watch.

Nick Lincoln: 1:37:24

It seems to be a really nice guy as well, and very

Carl Widger: 1:37:29

obviously, just the nicest guy and talk about integrity and all that guys. This guy has it and had it in spades, and overcame so much adversity along the way and made it to the big time. It's a fantastic story. I loved it.

Nick Lincoln: 1:37:43

And of course, that team is no longer the St Louis RAM. St Louis Rams and Lewis rams are no longer now, the LA Rams. Okay. Final one, ultra

Andy Hart: 1:37:51

final me, this is a podcast series. I'm a big fan of the audio story, and I think one of the best audio storytellers in the world is a guy called Jad apron, who set up radio Lab, which is one of the most successful podcasts ever. He's got a new one out about a very interesting Nigerian superstar called fellakuti. Fear. No man, it is brilliant. I think it's 10 episodes. He spends a lot of time in Nigeria, so you learn all about the country there and the sort of issues I've had over the past. And it's awesome. If you're into audio storytelling, it's well worth a listen. And if you're a fan of Jad appendrad Back to you, Nicholas, great stuff.

Nick Lincoln: 1:38:28

And it's such a great, great culture coin recommendation that Ultra is going to make you search for the link because he hasn't put it in the show notes. All right, listen. This is all good podcast platforms. Let's, let's just close off this episode and say, Carl, lovely to have you back, fella. Yeah, yeah. Okay. Well, there you go, dear TRAPPIST, Episode 85 comes to a close. Another pile of traps slides down the U bend of Father Time. Do rate and review us on iTunes or your app of choice. Like and Subscribe to us on YouTube. It all helps the algorithm or something. I don't really know. I'm just winging it as I go along, but dear TRAPPIST, until the next time from the trap pack is Adios, take care out there, and we will see you on the other side. Good bye,

Andy Hart: 1:39:09

bye, bye. That was our longest show ever. Lads, how long?

Nick Lincoln: 1:39:14

141, yeah, it's good.

Andy Hart: 1:39:19

Should we take up to two hours? No, take it to two hours. Never. We'll just keep stop. Do?