95 - The Price of Pessimism

In this latest pile of TRAP, the Trap Pack discuss

• Topical Titbits
• Meat and Potatoes: The Pessimist Perception Problem
• TRAPist question from Ash S
• Culture Corner

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

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Transcript

Unknown: 0:08

Matt, welcome to the real advisor podcast, T, R, A, P, trap. Please follow us and join in the conversation on Twitter at advisor podcast, where you can suggest ideas and themes you'd like the trap team to discuss. Also remember to like and subscribe to our YouTube channel and leave a six out of five star review on iTunes. Doing all this really, really helps us, which means we can do more to help you. Now, let's head over to the studio for the latest pile of trap

Nick Lincoln: 0:42

you indeed, dear TRAPPIST, welcome back to what many people are calling episode 95 of the real advisor podcast, T, R, A, B, truer. My name is indeed Lincoln, and joining me as ever in the digital studio of doom are the three other Horsemen of the Apocalypse, Alan the storyteller, Smith and the ultra heart and Carl della vociu, the voice WIA. Now, gentlemen, we have a show packed full of that absolutely nothing. So let's start unpacking it straight away with another high energy review, read out by my very good friend the right honorable Mr. Andrew a sane heart.

Andy Hart: 1:18

It's an interesting review today. It's a two star. You know, we like the one stars. We like the five stars, the two stars are, you know, nowhere between them. Okay, so it's from Paul Revere, obviously, you make make your mind up with that. Here we go, full of themselves, four guys who are so obnoxiously and opinionated. Carl, you thought Terry Smith was obnoxious in his interview, listen to yourself and your co hosts. Way worse. Love it. Nick doesn't use bonds. Andrew says trusts. Give him the heebie jeebies. I think that was Nicholas. Alan won't use VCTs seems to spend more time making promotional content and going to seven seminars the clients pay for. He does full fat financial planning. Scott point, two stars, we don't like the two stars. I think

Nick Lincoln: 2:08

he likes it. What's, what's

Carl Widger: 2:10

his gentleman's name,

Nick Lincoln: 2:13

Paul, Paul Revere, isn't it? Paul Revere is the American mythical figure,

Carl Widger: 2:17

yeah, so it's just a

Alan Smith: 2:18

made up, made up name. Yeah. I think he's hiding

Nick Lincoln: 2:21

behind it. Yeah. Hiding behind it, yeah.

Carl Widger: 2:24

Could you credit that? Do you know what I think we should do if you guys are up for this? I know we're sold out and all that, but if Mr. Anonymous would like to attend trap live, I think we should extend a free ticket to this individual, and he'd be able to express his views. Then straight to our faces, yeah, yeah, the other 230 people in the audience, yeah,

Nick Lincoln: 2:49

his full name, full name and email, and then the ticket is

Carl Widger: 2:53

his, maybe his home address, and we could get,

Alan Smith: 2:57

not that you're taking it personally,

Andy Hart: 2:59

just reading between the lines. He must have listened to between five and 10 hours of trap. I mean, something you hate people that you thought were full of themselves. I mean, there has to be a line. But anyway, moving on. Nicholas, good stuff, good stuff.

Nick Lincoln: 3:15

And do keep do, keep the reviews coming in, whether you're giving, yeah. Paul Revere, go back and do. Give us a one out of five. That's the most crazy thing about your review, is the fact you gave us two out of five, but not one out of five. But please do leave reviews, good or bad. We do thrive on them in our various ways. I think we've enjoyed that one for some reason. Okay, let's put a timestamp on episode 95 of the real advisor podcast trap. Live is pretty much done and dusted. You can go online and see if you can get a ticket, but I don't think, Bob, yes, Mr. Lincoln, and any more tickets left. Oh God, sir. Oh God. Okay, thanks, Bob. So the ticket office looks like it's closing down, but if you are coming final reminder, well, not the final reminder, but just remind you again that Chris Emmett 2m two T's, real pain in the ass to spell. Chris Emmert is the main the point man for pre drink shenanigans. So if you contact him on LinkedIn. He will tell you where peeps are meeting prior to trap on May 13, at a local pub near Great Portland Street tube station. Hit him up. He'll add you to the list, and it'll be organized so his, his, his LinkedIn link is in the so called show notes. Okay, let's start off with the topical tidbits, and we're starting off with storyteller.

Alan Smith: 4:21

Yes, thank you, Nick. This was an interesting article that caught my eye last week. Interesting factoid around about the ISA product in the UK. Isas are 27 years old as a as a product, as a savings vehicle, an investment vehicle, as we know, you can hold money in cash. You can hold money in a lot of assets, lots of different assets. But the article confirmed that there are now, no less than 10,000 I said again, 10,000 isa millionaires. So people who have put money in invested, who knows when they invested? A lot of. US would have been early investors 27 years ago. And the expectation is there'll be, if things continue to go as they are, and markets do what markets do, we'll be looking at about 40,000 in the next 10 years, as the numbers are really creeping up significantly. And by the way, those numbers that 10,000 which currently exist, that's more than the total who of number of people who've ever won more than a million pounds through the National Lottery, and that number sits at around 7000 last little factoid, which I thought kind of blown, blew my mind slightly, the average of the top 25 isa investors over that time. All right, Andrew, guess, how much do they have right now? So there's a few. There was 10,000 that have got 1,000,025% of ice No, the top, the top 25 actual isa account holders. So 25 people, individuals, and they've obviously been four and a half

Andy Hart: 6:00

million higher.

Alan Smith: 6:03

Nicholas, guess,

Nick Lincoln: 6:05

sorry, I lost the will to live somebody else.

Carl Widger: 6:08

I'm enjoying the factoids. Factoids, I'll go with 6 million.

Alan Smith: 6:13

Wrong, 11 point 3 million. Wow. So the average of the top, top 25

Andy Hart: 6:20

to see their portfolios and work out what the hell they've been doing. Well, what we know

Alan Smith: 6:25

is they haven't been investing in cash. They won't have been investing in global equities alone. They have been either super geniuses or super lucky individual companies or so traded and of course, we know there's, there's always gonna be a handful of them that got either lucky or just geniuses, very few, but 11.3 measure, 11 point 3 million, tax free, do what you want. I think that the moral of the story is the boring things, like diligently using your tax free allowances every year, putting it in sensible long term investment funds, and crucially, I repeat, crucially, holding it for the long term, is likely to be a much more rewarding experience than guess. You know, using the national lottery and gambling and hoping that you become a millionaire, this is one way you could become a millionaire. We got to play the long game. I thought, I thought the data was interesting.

Carl Widger: 7:15

It is really interesting. Who you guys have been like saying that the UK Government is failing to make proper or brave decisions, proper and brave decisions, maybe. Who was it that introduced this 27 years ago, because the impact of that government minister who decided to do this, who was, you know, okay, let me

Nick Lincoln: 7:36

I'm gonna ask this, because you could say it was Gordon Brown, but it wasn't really Gordon Brown or Gordon Brown or Gordon Brown. It was the personal Equity Plan was introduced in 1988 by Nigel Lawson, and then brown rebranded. There's the ISA in 1999 so it's been going basically for the best part of 40 years, and it is an amazing legacy of of

Carl Widger: 7:58

the they've transformed is incredible. It's a brilliant

Alan Smith: 8:01

product, though, isn't it? And the main reason it's brilliant is its simplicity. It's just you put money in, you can save tax free. You can take money out whenever you want. You can take income from it. You can take capital from it. So that's the people get it. They understand it. And I just hope, I mean, I just got worried as well as you say, Carl, the current administration in the UK, they they see these numbers and say, Jesus as people becoming millionaires through this efficient tax break, we need to clamp down on that. I mean, there has been a lot of talk about restricting the amount you can put in. And it's not so

Andy Hart: 8:32

called British isolate. They're also making their contributions. There's just less tax drag. So the individual was still done the heavy,

Alan Smith: 8:39

yeah, yeah. But people were on are unlikely to make the same level of contribution if they didn't have the tax break.

Carl Widger: 8:44

Do you know what to be? And also, an interesting study will be of the 7000 lotto millionaires, many are still millionaires, versus the 10,000 or more isa millionaires, because they've had the discipline of doing it over a long period of time, because the other people have gambled to get the money, and they get this big, wider money, and may not have, you know, yeah, sensible things with it, yeah,

Nick Lincoln: 9:09

much higher, much higher attrition rate with the lottery or the NSN, the ISO

Andy Hart: 9:13

millionaires, is minimal, yeah, and don't

Nick Lincoln: 9:16

forget, with ISIS, you're paying, you know, you're paying the money in every year out of net income. There's no breaks going in, you know. So to think of some sort of tax wheeze, or people avoiding their taxes, nonsense. And the limits been frozen at 20,000 pounds a year per tax year for God knows how many years. And I think it's frozen until 2031 so if it kept pace with inflation, it should probably be around 2829 30k now. So again, fiscal drag, they are just eating away at what you can put in and shield from their avaricious claws. But I don't want to get emotional about it. Let's stay level headed. Let's move on to the next point.

Carl Widger: 9:49

Watch, which one is this

Nick Lincoln: 9:50

Nick Oh, sorry. You know you're thinking, okay, Irish banking competition ramping up.

Carl Widger: 9:54

Oh, yeah. So I've been on about this a lot, and it's interesting. There's kind of two two stories in the i. In the world of banking in Ireland about competition coming in so permanent. TSB is the lesser of the three pillar banks, and it's been sold subject to shareholder approval to, I think it's bawag. It's an Austrian bank, and they're coming in, and they've got it, apparently, at a steal for 1.6 2 billion. But the interesting thing, some of the shareholders have been told so the state owns is a majority shareholder and has the Minister of Finance has approved it, and the other shareholders have been urged not to accept this paltry 1.6 2 billion price. The interesting thing from reading around this was that bawag, if I have the pronunciation correctly, are saying that they're going to keep the branch network, which I was like, hmm, that seems kind of strange, bearing in mind what's going on in the world of banking. But they have also said that they're going to keep it and it will become less of a transactional branch network and more of an advice branch network. So are they talking about going into the world of pensions and wealth management and all that kind of stuff? I don't know, but it'll be interesting to see what happens. But in the exact same week as this transaction has been muted, Monzo have got their their banking license in Ireland, so they're coming in to reshape the banking world in Ireland. Now, I think that's a little bit disingenuous, maybe for Monzo to say, bearing in mind that Revolut are already in here, reshaping but it is quite good that, you know, we have another online banking facility, and that there is going to be significant competition in the banking world, in Ireland, which has been sadly lacking for 15 years or more at this stage. So it's just very, very interesting to see how all of this transpires. Alan Smith has a question,

Alan Smith: 12:07

not so much a question. That's always interesting when you see that it's the evolution of banking and it's all moving quite fast, and you, like, you mentioned Revolut in that story, and Monzo, I've just to say I watched an interview with Tom Blomfield, I think his name is, who was one of the founders of Monzo ex Starling bank as well, which is another one in the UK, in that kind of new bank, kind of digital model,

Andy Hart: 12:31

banks in Starling, he was go cardless.

Alan Smith: 12:34

No, he was in Starling. I mean great book, by the way. And Bolden, who's other co founder of Starling, which I read last year, a year before. Anyway, Tom Blomfield, who's, I think his name is, Bloomfield. Anyway, the founders names Tom, who is that thing? Yeah, he was that. He was at Starling. He went to Monzo. He's now out of

Andy Hart: 12:55

Mo cardless as well. Yeah,

Alan Smith: 12:57

he's now out of Monzo. And he's doing, he's working at Y Combinator in the in the US. But he was asked because, you know, they were all starting roughly at the same time. Revolut was obviously the massive success, much more so than Monzo have been. And just saying, why was that? And he said, because we just played, we played that. This a small game. We wanted to get our banking license, the whole thing. So they went back and forth forever, you know, getting a UK revolute. Have just had the just received, literally in the last month or two, a UK banking license. Meantime, they've just cracked on, you know, world domination. They've just opened up everywhere across they just, they were like, we'll sort that out later. We'll just keep going, keep growing. Whereas Monzo just paid no, we were going to work with the FCA, work with the Bank of England, or whatever it is. They need to get the regulatory permissions, and that's what's happened. And one is like a complete, you know, global, multi billion dollar business, and the other is much smaller than it might otherwise have been. It was just an interesting reflection from him going back to the monsoon, still a successful operation, but nothing like the scale of Revolut.

Nick Lincoln: 13:57

Quite interesting. Revolut

Carl Widger: 13:58

leveraged on the fact on the EU banking laws, so they couldn't get approval in Ireland or any of the bigger, probably well known nations. So they got approved in Lithuania, and then were able to cross sell that license in all the other European countries. It's very clever out of them. And meanwhile, they did apply for all the other licenses, but it took years and years to get but it didn't hold them up from driving on, getting the customers and developing their products. I suppose that's why they're so far ahead. So it'll be interesting to see what Monzo brings to Irish customers. But yeah, to repeat my point, loving the competition.

Nick Lincoln: 14:40

Good stuff. Okay, Ultra,

Andy Hart: 14:43

this is a useful resource when it comes to investments. I think Alan shared this on another group, but then I know that another guy has set out. So he contacted me the other day about the launch of it. So set up by a guy called Ashby Daniels, who runs similar product to. Home Premium, but in America called Money visuals, and he just come out with this new resource called market return data.com and he's also got a newsletter called benchmark. And on there he was, he was just a bit fed up of always struggling to get up to date current investment information. So we just set up the own page himself. I'm assuming, if he's used some sort of AI code behind this and he's knocked it up over over a weekend, we're gonna see a few more of these things are cropping up. So, yeah, it's just a good resource for all of the data around all the different markets all around the world, into that sort of stuff. Is it

Carl Widger: 15:39

a subscription model Andy, or is it a free resource?

Andy Hart: 15:42

Currently? No, it's just a free resource. You click on it and all the information is there, up to date. You know, the daily returns, weekly, monthly, three information overload, but it's well laid out, and it's it's useful, and he's got a weekly email link to it, called the benchmark, as I say, it's just an offshoot

Alan Smith: 16:03

product of his. So so you're, if I hear you correctly, you're promoting a competitor to Home Premium. Someone a subscription, they'll write the right advisor newsletters for their clients. Great visuals, brilliant. We should all check it out. What's your subs just disappear overnight. But he's very magnanimous of you.

Andy Hart: 16:24

Andrew. He's building a business in the US. We're doing it globally, different types of type of clients. Yeah, really good doing good work. Over to you. Carl, investor. Fin journey,

Carl Widger: 17:07

yes, you're the chairman now as well. Okay, yes. The Yeah, I would. This is probably not, probably. This is an Irish resource. This is the I've mentioned this before. So investor Finn is a couple of journalists in the business post they're doing kind of, they started out with 30 grand, and the aim is to get it to a million over 20 years, or whatever it is. And it's DIY Investing. And they do very short blogs every week as to either what at the outset it was, what, how they're deploying their capital, what they're investing in, and now it's kind of how things are going. And obviously they started in January, and from a geopolitical point of view, we'll be talking about this later on. There's been, like, lots of stuff happening in the world, and they're getting very nervous and a little bit worried about, you know, drops of three and 4% why I'm bringing it up is, from a DIY Investing point of view, there are some things they're doing that don't make tax sense. They're also doing they've they have invested in an S and P index fund, but they are buying individual stocks as well. But some of the challenges that they're facing, they're very honest, and they're very open about it, and it's really cool to see it. And they do quote in last week's, last week's blog, Warren Buffett, that you know that we need to stick with the long term here and remind ourselves that it's, it's a long term game, and we're in this to try and get to that magic million over a very long period of time. But the same time this is, you know, this is terrible watching this. And you know, how could we possibly be down three or 4% and and it's, I know we're going to talk about this later on, right? But it's, it's, it's all the feelings, all the emotions that all of our, not all of our, but a lot of our clients, and especially, and we've spoken about this ad nauseum, especially clients who are new to investing, who have come to you and done the financial planning, because I've had, say, an exit, and now they're investing their money. So I thought, I think it's a really good exercise in kind of getting the views of, actually, your your your own customer base, but also to see the difficulties that of how a DIY investor, the difficulties that they face, the complexities that they face. And then they've also done a blog this week about what that, I think, is entitled, What the hell is happening to crypto and gold, on the basis that, well, you know, if there's everything else has gone down, surely gold would go up, and crypto would go up, as you know, as hedges against everything else, and going the total upset has happened, and Jesus, Mary and Joseph, how could that be possible? And you know that that sometimes the logic doesn't actually play out in investments that you know, and that maintaining and managing your emotions through all of that is so, so difficult. And obviously we, you know, it used to be when equities go up, bonds go down. When bonds go up, it doesn't work like that. You know that you can look at textbooks and whatever, right? But it just doesn't work like that. We can all give a million different examples as to when that didn't actually happen, and so you can do all the reading around this thing. But when it's your own money and it's in the market. Markets are volatile. You know, managing those emotions is bloody difficult. So look, it's behind the paywall. So probably for the UK audience, it's, it's, it's not a great topical tidbit, but for the Irish folks, you should follow it because it's, it's really, they're really well written. They're really, really short, and they're kind of funny as well. So it's very interesting. And the more that the financial media can make this stuff interesting and entertaining to read with some serious messages behind it, well then I think that can only be good for everybody. Okay, okay, okay, end of topical tidbit.

Nick Lincoln: 21:10

Good stuff. Thank you. Watch. Okay, so I think this next story is something that's been a recurring theme in the, well, the last 10 episodes of The Real advisor podcast, and it's gathering steam and in the wrong way. Tell us a bit more. Sorry. Tom, well,

Alan Smith: 21:24

you're right. Nick, this, this has kind of grown legs since I first popped it up in our slate about this. The starting point was, there was an article in the FT about a week ago or just a few days ago. And you know, the subject, of course, is we keep coming back to it, private markets, private credit, private equity, alternative investment, that sort of thing. It is the view we're stating it publicly on this podcast, that it is not generally advisable for retail clients, clients of full fat financial planners, to hold, certainly not significant amounts, if anything at all, in private markets. Because what problems are you trying to solve that public market equities can't deliver? Is the kind of underlying thesis that we've got. Then I picked up on an article in the FT which said it was just making the point that now that a lot of these products and funds have been sold and sold very aggressively by some of the large banks and the sort of big global wealth firms, the interesting thing is the very same organizations, and it names them in the article. The link is in the show notes, but the usual suspects, you know, JP, Morgan and Goldman, all the rest of them are now selling these CDs, these credit default swaps, which is basically a bet against these products when they go wrong. And I thought interesting. Promote it, sell it to your customers, and then sell products which work well and worth holding when these products blow up. Now I know before anyone before Mr. What'd you call him? Mr. Anonymous comes back against it. No, that's not what it's about. It's about hedging your risk. I get that, but it does remind me some more of 2007 but a lot of these mortgage products were sold by the millions and billions and trillions. At the same time, these weird, complex products were also being sold

Nick Lincoln: 23:17

at collateralized, collateralized debt obligations, yeah.

Alan Smith: 23:20

Well, that was, yeah, that was the product that was sold. And then then there was selling these other ones, which were a hedge against them, blowing up and going wrong. So I think the moral of this story is the banks themselves never lose out. They've got to sort of bet on all horses in this particular race. It's the plural punter or customer at the end of the day who may or may not benefit from this. I was just flagging that up. Quite interesting. I mean, the market itself, we've spoken about it in previous episodes, is coming under significant pressure. I don't know if you guys picked up a UK business, MFS, they were selling a lot of these packaged up loans, and they've gone under. They've got into administration, which is another let canary in the coal mine, another little sign, not saying it's all going to go tits up, but ain't looking good right now. So that was the starting point. Just the ongoing conversation around these products, private credit, private equity, and then I saw a few days later with all these checks.

Nick Lincoln: 24:17

Sorry, surely this wouldn't apply to like plain vanilla pension schemes where millions of people have got millions of pounds invested. Would they? Alan, Surely not.

Alan Smith: 24:27

Well, funny, you should say that, Mr. Nick Lincoln, because at the same in the same week, I saw another article which referred to the fact that nest, which is a kind of it's a government backed fund that employed that UK employers can utilize to organize the administration and the investment of their company pension schemes. There are millions and millions and millions of people up and down the closely.

Nick Lincoln: 24:51

What it is, if you kind of get the right ballpark, yeah, yeah, government

Andy Hart: 24:54

endorse, not government backed. I'd say,

Alan Smith: 24:57

Well, either way, but it's the kind of it's the government's one that they promote versus there's a bunch of other alternatives. But nest was when, when auto enrollment was brought in to make it easier to facilitate for employers up and down the country, just to plug in, to adhere to adhere to the rules and regulations and to provide pension benefits for their employees. And we've actually flagged this. I remember in an episode, I can't remember it was, it was last year sometime, because the sort of the investment manager and the CEO of Nest seems to be very pro alternative investments private markets. But the article. Said that nest were allocating 450 million pounds of their fund, which is actually still relatively small, but of their fund, four 50 million into us. And again, that's the other thing. The other thing will piss off. Rachel Reeves will be happy about this with all the stuff she's

Andy Hart: 25:49

trying to be us a nice trip to America to meet the managers

Alan Smith: 25:51

us private credit, right? And you might say, well, that's that's not that big a deal. Four, 50 million, I can't remember. It's a 13 billion or something fund, or it's a significantly multi billion pound fund, but then you read the press release and use the newspaper article, and it's clear that Nestor said our target is to get to 30% allocation to private markets by 2030 so they want a third of their fund. Bear in mind who the ultimate owners of these funds are. It's the average employee in the average company up and down the country saving for their retirement. The employer is obligated to make a contribution. The employee will make a contribution as well. Sometimes employers pay more than the basic as well. So this is, this is not sophisticated investors. Let's face it. And nest, who I believe are the biggest provider of this type of thing in the country, want to allocate 30% to private markets. So, sorry, interesting. I've got, there's another point which I'll go into, because I've then started digging deep, and I thought, bloody hell, this is the biggest story that I don't spend much time looking at Nest, particularly most of our, you know, it doesn't come up too often our client conversations, but I did a bit of digging. But I'll pause there for a second, because I know there's some hands raised so anyone wants to sort of make a comment on this particular just,

Nick Lincoln: 27:11

let's just clarify, Nest is really an auto enrollment provider with a variety of funds underneath its banner. So it's not just one, like Master Trust Fund. You go into there, they've got five funds. So I don't know which fund they would target especially, but they're all bloody awful. I'm looking at annualized returns on these funds so that they actually got one. So their credit called the nest lower growth fund. And over the last five years, it's returned 2.6% per annum. So it's done what it said in the tin. But they're, you know, they've got retirement lifestyle fund. They're a higher risk fund.

Alan Smith: 27:43

The other this is the other thing, most, most of them, are lifestyle funds. Look at the list of funds. It's the lifestyle 2035 lifestyle 2036, which is so we know they've got these automated movements out of growth assets into less, so called less risky assets as the people get closer to their retirement age. And the other aspect of nest and Andy, you, you and I spoke about this a while ago. Again, I'm not I haven't done the specific research, unless they've changed it. But they used to have a facility. I think they still do where, if, when you join nest for the first few years, they keep you in cash and bonds early on, in order not to scare you. In other words, so if the market, if you just enrolled in your employer's company and then and put your own contributions in, this is this sort of behavioral nudge type stuff that they believe in. If the market fell pretty sharpishly, then you'd bail out the whole scheme. So we'll keep you low risk. We'll get you invested. We'll get you interested. It's not a terrible idea at the beginning, but what's not a good idea is towards your last few years of saving where your funds are at their largest and they will automatically move you into gilts, I guess long dated bonds. So it's the, I don't know,

Andy Hart: 28:54

Alan, I think they've stopped doing that now. What the lifestyleing? No, not the lifestyle. And they've got the target date funds, keep it simple, which is a former lifestyle, but form of lifestyle and but not as aggressive as lifestyle, like styling gets into zero target date is like a glide pass sort of thing. I think, I think people now just go on and choose their funds again. I could be wrong, but I think their high risk fund is not 100% equities. I think the only way you can get 100% equities is investing in the Shreya Sharia fund that can't have debt in it, can't have fixed income again, there's all these quirks and wrinkles in it. I think net. Net is still doing quite good things and promoting saving, and it is an easy option. I think they're also about 20% of their assets are UK. So again, it's not globally reflected. I suppose we're expert insiders, so we can spot all these errors. But I think for most people, it's okay. I think the thing that is concerning is, if they're going to be getting towards 100 billion of assets, and 30 billion of those assets are in private markets that we don't know how they're going to perform, you know that they're what's working now, and what nest should be invested in is what's always worked. And we know that that's global equities and global bonds. It should be really simple. Again, we've looked under the bonnet of the nest PDF that

Alan Smith: 30:12

what could Yeah, I shared that. Let me just, I know Carl's got a point wants to make, but I just want to look at this. So, I mean, they are very open

Andy Hart: 30:19

and transparent. Different fund. There's 30 different funds in one target date fund, yeah.

Alan Smith: 30:24

And if you, if you look at them, Andy, the actual funds, I'll just show I've been. No idea about these funds. I don't mean anything negative towards these funds, so lawyers, but you put your pens away. But let me just give you an example. So the Campbell global Meadowlark forest lands, LP, LP, 0.5% allocation total, the CBRE Caledonian Capital Management, 0.9% allocation, G, l, i, l, l, p, 0.1% allocation. I mean, what difference is that going to make? This reminds me, you know, when you come across every now you take on a client from a, yeah, a big discretionary manager, and they've just got these line, lines and lines and lines and lines of all these nonsense funds that you know that. I mean, honestly, some of them 0.1% 0.2% loads. I mean, I'm sure that these are very smart, you know, investment managers across the world, but some of them the octopus renewals infrastructure partnership

Nick Lincoln: 31:27

long term. Okay, gents, just before we read out the entire nest, PDF fund range so our adoring audience, can we get back to the points about private equity not being a good idea?

Alan Smith: 31:36

Yes, yes. Over to you.

Nick Lincoln: 31:38

Carl, can call long, long, long, long,

Carl Widger: 31:41

long time ago when this topical tidbit started, Alan, you mentioned that JP Morgan were selling private, private credit, yeah, and I was minded, and I just looked it up here because I had lots of time when you were talking there to get this specific quote. JP Morgan, CEO, Jamie diamond, warned in October 2025 that hidden losses in the private credit sector are emerging. Famously stating, because this was the quote I was looking for, when you see one cockroach, there are probably more. He likened the current private credit environment to the 2007 financial crisis, which is exactly what you said, one of the big issues guys, and we did mention this. I mentioned it, I think in the last episode about the Canadian pension fund have revalued their private credit downwards because the fund managers are not doing it, but, you know, because there's going they're just saying, who knows what the value is going well, yeah, it's like, everything is fine, everything's great. So this is going to hit a kind of crescendo at some point, and everybody is going to be forced to revalue their private credit. So people who think the private credit is going just fine and dandy right now, maybe in for a

Alan Smith: 32:54

massive surprise. Well, this, this is always, this is the the Warren Buffett thing. There was all this stuff existed in 2007 2008 but the minute you have increased volatility and the minute people want to get their money out, that's the problem. Now, a lot of these funds are also gated as well. The biggest ones are getting you can't get your money out. Now, even if you wanted to, you wanted to, which allows them to smooth and sell, sell down some assets, what have you. But the minute you have some anything remotely close to a 2008 this is going to be an absolute car crash. You heard it here first, folks.

Nick Lincoln: 34:11

Yeah, it is. It's bloody infuriating as well, really, because, um, yeah, the advice community will, you know, will will be left in part to pick up the pieces, and saying, I told you so five years prior to the event doesn't doesn't help you at all. Ameliorate the pain for the clients.

Alan Smith: 34:26

Paul Revere has probably got 30% allocation for all his client portfolios. Who Paul Revere?

Nick Lincoln: 34:33

No, I forgot about him. Okay? Next point.

Andy Hart: 34:37

Ultra. Okay. This is me. This is a recommendation called Neco health, or Nico health. It's a little bit left field, but I think it's connected this thing of ours. This is a health startup. Health tech startup is set up by Daniel Eck, the founder of Spotify. You know, we are interested in our own mental health, physical health, physical health, financial health, but this is focused specifically on physical health. It's worth going as an advisor. I've done this. It's a very futuristic scan of your body, so in AI scan of your body, blood tests, doctor goes through all of the markings with you. You know, prevention is better than cure. You know, Daniel Eck changed music forever, and they think he's going to have a bit of a stab with Neco health in terms of change in health care temporarily or for the long term. We don't know. It costs 299 pounds, takes about an hour. They've got four or five clinics in London now. Think they originally started in Stockholm, and they're going to be going to various cities around the world. So if you as an advisor, want to do it for yourself, just to check out all the key health points, I think it's very worth doing it. And if you've got clients that are a little bit extra health conscious. You know, the average age of the people that was in this clinic, I think, was about 60 people with a few quid concerned about their health. And, yeah, I found it well worth doing. So check it out. Nico health, Alan and Nick, you've also done the scan. How did you think it was? So I

Nick Lincoln: 36:17

talked about it on my niche healthcare podcast.

Alan Smith: 36:23

No, but it's not completely irrelevant to this. You're right. Of course, I did it last year. Did it again this year. I looked into what Daniel Eck was talking about when he started this. The point being that most diseases are preventable if you catch them earlier. You know the big four, the cancer and heart disease and all the sort of the main ones which they're scanning for. And if you identify them earlier on, you can treat them. And so his view is, rather than so the NHS and all the sort of normal health providers are dealing with once you've already got it and it's advanced, and they're trying to fix you. But why don't you do it before you've got very early stage, you know, issues or symptoms, but it's, it's just a really good experience. You know, it's like going into an Apple store or something. It's just super slick, great tech walking what from this place to that place. Get your bloods taken. Normally, you got to wait a week to get or more to get your blood results, and there you have it within minutes. Just so, yeah, I would recommend it. And if people listening to this, they've got clients that just, should just recommend the pitch UPS spend a couple of 100 quid. And just for peace of mind, if nothing else, just see that you're in reasonable shape. I think, yeah, health is wealth. It's important.

Andy Hart: 37:39

Very much connected. Okay?

Alan Smith: 37:45

He's not going through any checkups. He doesn't want to hear about it, okay? Ignorance. It's been like the private equity market, private markets. Ignorance is bliss. Just keep going.

Andy Hart: 37:54

Moving along. Go.

Carl Widger: 37:57

Carlos, what am I talking about now? Nick, one in

Nick Lincoln: 38:01

four has a retirement plan. Oh, yeah,

Carl Widger: 38:03

this was an interesting I wrote down some stats on this one. So this is an Irish Times article, and it was a report on the permanent TSP, who we spoke about earlier, reflecting Ireland research. So, so the headline says, one in four have a financial plan. And I went, there's no way one in four people have a financial plan. So then when I that's what the headline says. Then when I start reading the article, it says, yeah, the end the one in four, most of those one in four, part of the plan is that they're going to receive an inheritance, which is like a bit mad. But look, let's not be facetious about this. That actually just might be the case for a lot of people. So let's, let's be fair about that. But here's a bizarre thing, right? That the 25 to 35 year olds had a much higher instance of having a financial plan, albeit, they had done their financial plan based on their inheritance, much more so than the people aged between 45 and 54 which was mad. So there's a whole lot of people who are kind of financially conscious, shall we say, in their earlier years when they're kind of getting going, and then when life gets really shit busy, I guess, right? And they have kids and people going to college and trying to pay off mortgages and get really busy at work because you have more responsibilities, that's the time when they start being less financially conscious. They're not making plans for the future in terms of their finances and their goals, dreams and aspirations. I thought that was a bit crazy, and I assumed it would be much, much more different. But I suppose the point here is our work isn't even close to being done, and there's so much more we can do. And how do we find a way to, I guess, make financial planning more available? It's the age old problem. Andy always calls this a luxury product. And for sure, I think part of this study says exactly that. But yeah, I just thought it was, it was, it was interesting from two points. Number one, Jesus Christ, the media with their headlines like because

Nick Lincoln: 40:17

you read the article. You got you in,

Carl Widger: 40:18

yeah, but I read, I read the article, because I went, that can't be, that can't be, right,

Nick Lincoln: 40:23

yeah, well, yeah.

Carl Widger: 40:24

And then it's like, you know, like people who think that an inheritance is part of their financial plan really do need to meet a financial planner, because who your inheritance is is, you could get your inheritance when you're

Nick Lincoln: 40:37

82 Exactly, they ain't

Carl Widger: 40:39

gonna help you, like, you know, so or never or never, exactly, yeah, exactly, so, so yeah, just, you know, if ever I need a reassurance that we are at our infancy here in Ireland in terms of financial planning, I Got it from that article.

Andy Hart: 40:56

Okay, thank you. Yeah, Island Carl, that's UK as well. I would, I would guess that. Would you reckon lads? Yeah, 2% of people have a proper financial plan. Probably 1% of people have a proper financial well,

Alan Smith: 41:09

people, only 8% pay for financial advice,

Andy Hart: 41:13

yeah, pay for financial off that.

Alan Smith: 41:15

Okay, how many of. Those have

Andy Hart: 41:17

got a so maybe one 2% then, based on that, maybe 20, 25% 20, 25% of clients are financial advisors, probably have a plan, so maybe one 2% the population.

Alan Smith: 41:29

Okay, do you think so? You said before, about 10% of across the UK people

Andy Hart: 41:35

have a Yeah? I said, I said, 10% of financial planners create financial plans. So 25,002 and a half 1000 create financial plan. All right, who knows? Just all numbers. Okay, good

Nick Lincoln: 41:47

stuff. Storyteller.

Alan Smith: 41:49

Just a quick top tip. I thought this is quite interesting from my esteemed colleague, Mr. Charles riches, great name for a financial advisor, by the way, Mr. Riches, from the multi award winning business. But Carl was sorry. Charles was telling me something the other day. I thought was quite interesting. So we obviously, for quite for, I don't know, for a year, but 18 months or so, we have been using note taking. We use Saturn, and have been doing for a year or more. And he's obviously got all his client meeting notes saved in a file and a folder, sort of online. And so what he's now doing, because he's got his own blog that he writes up about things, sends out to his existing clients and contacts and professional connections, or what have you. And he, and he goes into all these client meetings, a lot of the similar themes come up across different client meetings, but he asks it to say, find the three most common themes that I've been talking about my client meetings for the last month, two months, or whatever extracts them all out, and now help me shape three different articles which are interesting, compelling, relevant, what have you. He doesn't ask the AI just to write it. He writes all himself. But he's got the he's got 80% of it done, which is direct from the horse's mouth. And it's interesting, because clients are interested. He calls it client diaries. And your other clients who weren't in those meetings, they're interested in what other clients are talking about. Have I missed something out? What are other people asking you? So I thought as a very, rather than sort of try to remember as a very succinct way of capturing your client conversations, client meetings and things which are important, and then, you know, packaging that up into content. Obviously, in due course, he could create video, create any number of things, but it just sends out monthly blog newsletter to his clients. You know, things we're talking about, things I'm chatting to other clients about. I thought that was quite smart, quite useful.

Carl Widger: 43:45

And that's not quite smart. That is absolutely brilliant. That is absolutely brilliant. Fair play. Talk about how AI can make our job number one easier, but can benefit our clients. Yeah, this is Wow, yeah, absolutely love it. Consider it introduced to Bettis next week. Well done. That is, that is fantastic. That is really

Andy Hart: 44:11

like the Cloner has found a new idea, yeah, and

Carl Widger: 44:15

he will be introducing that, I guarantee you, because anybody who says I don't know how to put up on LinkedIn, yeah, yeah, I'm coming for you, yeah. If you're having conversations with clients and they're engaging conversations, and you're doing financial planning the right way, well, this is the best way of informing people who are prospects are not already clients, not even on the radar. Yeah, that's, that's actually something I wouldn't mind talking about.

Alan Smith: 44:42

I'll tell you just, just, just to extend on a little bit, I'll tell you what else happened. Some of you guys may know Holly McKay and boring money, like one of the biggest, like, blogs, newsletters, etc, for retail customers. Well, Holly's team reached out to Charles and asked if he if he would write an article for them, and again, he fully upfront, told them. I said, Well, this is how I'm getting content. If you're happy for me to say this has come direct from conversations. And they said, brilliant. This is actually real life. It's not just some advisor talking about what they think an advisor should talk about. This is what people at the coalface in real life are talking about. So I think you just went out today, well, on boring money, which obviously has got a big audience. So even you know, it's huge, great, great, great progress. And it was a great idea. So again, well done. Mr.

Nick Lincoln: 45:28

Riches, yeah, yeah. Very collaborative, very good. Okay, so we are at a 44 minutes in. We have one remaining topical tidbit, ultra finishes

Andy Hart: 45:39

up, hopefully, hopefully Adeline and Nick can can assist me with this one, but I'm just going to sketch it out a little bit for maybe younger advisors that are coming into this business that don't fully understand their long term responsibility and regulatory requirement from giving advice. So generally, accountants in the UK get you as the business owner to sign off the accounts fully and take responsibility for it. They almost provide you with an assistant service. It's a bit odd. Lawyers give opinions. So here's my opinions, and then you take it from there. Ifas financial advisors in the UK, we're regulated financial advisors, and we give. Advice. So all the advice we give, we give to clients, they can complain about it at some point in the future. And we have this slight oddity in the UK where there's no, what they call long stop. So very, very elderly financial advisors can have all these complaints come in when they've been retired for 20 years, sitting on a beach in Spain, and all of a sudden they've got 40 complaints to deal with some odd annuities that they sold and set up in the 90s. The reason why we have it is because the long stop doesn't apply to financial advice. It's this weird situation where you have three years from the date you realized you were given bad advice. So if you did, you know a pension transfer in 2015 and the client realizes in 2025 that there's an issue, they then have three years to complain. So there's no long stop. So the advice, as they say in this business, you take it to the grave, because when the client finds out they've got three years to complain, however, they are looking into changing this. So it's all around the ombudsman, the Financial Ombudsman, and in March this year, the government is expected to legislate and modernize this redress system, and they might have a 10 year maximum limit. So if you give an advice, you have 10 years to complain, not the current situation where there is no long stop. So this is this will impact the valuation, potentially, of financial advice firms that have got a clean history and anything that was, let's say, potentially going to cause an issue, was sold over 10 years ago. There's just a few moving parts to it, but just be slightly aware that there is this unusual situation with regulated financial advice. I think Nick you are first.

Nick Lincoln: 48:15

Yeah. I mean, this has been going on, and and the sort of angst causes advisors ever since I've been in the in the profession, I'm sure it's the same for both of you guys. It does seem an anonymous it's not, it's not something I particularly would look forward to if I, if I did sell my business I walked away from financial services, you know, I'm on a beach in Spain, and a client says, oh, you know, I got a complaint coming in. It would, it would really, I don't know it really. I mean, if

Andy Hart: 48:39

it's legitimate, if it's legitimate claim, then fair enough. But, you know, complaining about something that was set up 35 years ago, because just now you've realized there's an issue. Yeah, I think a 10 year timeframe seems fair. But again, they're going to look into it and see what they're going to come up with. I mean, there will be just

Nick Lincoln: 49:01

before, obviously, with all these things, there'll be unintended consequences. If they get rid of it, or they bring in a long stop, there'll be other things, good and bad that happen down the line. So there'll be ripple effects. So we don't, I can't quite work out my head, but it, well, it seems like a bad system. The ripple

Alan Smith: 49:17

effect is the ambulance chaser, claims management companies that will be advertising everywhere. Oh, this is get look through everything, because you've only got a short window now to make a complaint. So look through absolutely everything you've got, which is inevitable. But look, this is logical. It is again, another sort of small step in this view that I think we all share that the regulator is get is sort of very slowly but surely joining the real world. They're getting a bit more sensible about and pragmatic about it. It does not make sense for somebody's entire career and everything else to go with them to the grave. It just doesn't make sense. What I would say is it would affect if you're a sole trader. It would affect you most people now, even if there was, even if there are one person advice business, wrap that up in a limited company, and therefore, I guess, you sell the limited company, or close it down, whatever you do, when you actually retire, you're rid of it, and the liability would go with the company, so they can come back 1315, years later, and try to sue the company. It's not the individual, it's not the human, unless there is sole trader, which is slightly different, which is another reason you should always have some sort of limited company for protection. And what happens? Because I've known a few advisors have done this in the past. They are compelled to buy what they call pi runoff cover, so for a period of time, they'll just they'll be cut in case a complaint comes up, but that doesn't last forever, but it's an additional cost, because you have to keep funding that insurance during your retirement.

Andy Hart: 50:43

Sorry, Carl, I know you're gonna come in. I had to do run off cover with a run off cover with an old company I had. I had to do every single year Alan, and I stopped it at the point I thought, all right, surely I've had enough now. But yeah, sorry. Carl, over to you. Do you not have the

Carl Widger: 50:57

statute of limitations?

Alan Smith: 50:58

No, that's the whole point. We do, apart from financial advisors. In this situation, retail financial advice isn't covered by it, sorry. Can we do

Andy Hart: 51:09

it's three years from the date the person realized they've been missold, yeah. So that is that. That means

Alan Smith: 51:15

so they could just say. They could literally say, I've just found out the guy retired 10 years ago, but I've only just found out this advice

Andy Hart: 51:21

he gave me. Found out today that he sold me the wrong pension 20 years ago. Three years to complain. Yeah, 20 years ago.

Carl Widger: 51:26

Yeah. I hope Paul Revere wasn't an old client of any of yours. No. But so what we have is like, you have six years statute of limitations, so you get your runoff cover for six years, and you have to pay for for the six years, which seems like a sensible and a reasonable approach, but, yeah, that's what you guys are talking about. Is You're right. Alan, the risk here is the ambulance chasers. Oh yeah, index ones. They were selling index funds back in 2026 and you're like, do you know if

Alan Smith: 51:57

you'd have bought private credit, you'd have been so much better off?

Nick Lincoln: 52:00

Yeah, and to echo, you've both got hands raised. I presume that should be coming down to echo. Alan's point, the FCA, the regulator, has made markedly more interesting moves that I think are good in the last two, three years. The one about they're starting to classify risk as being inflation, yeah, and having too much money in cash, and that's a seismic change to their is huge to their to their mentality. So let's hope that continues to enter,

Andy Hart: 52:25

okay, volatility,

Nick Lincoln: 52:26

yeah, exactly, yeah, yeah. Hence attitude to risk, hence capacity for loss and all that other bollocks. Okay, so 51 minutes into Episode 95 of the real advisor podcast, it's time for us. Now. We haven't got an interview this week. This week, this episode. Rather, we it's the meat and potatoes, where we we have a chance to talk about an issue in a bit more depth, about something that we think is of concern, either good or bad and and I'm gonna lead off on this, and I'm not going to get into politics, per se, because that can quickly get quite heated and so forth, but it's definitely at the moment, and I'm an optimist, but definitely at the moment, and for maybe the last 12 months, has been a heightened sense of everything seems to be just going a little bit bat shit crazy. And there's so much going on from possible fuel shortages around the world, because there's a nitrogen shortage, and nitrogen is so vital to the food chain, there's inflation's come back into western economies. That's not good. We know what's going on with Iran and the US, and the potential for fuel crisis is there. We know the mag seven cooled off, and they've been driving American stock markets forever, at least, the last 10 years, pretty much. And you'd be thinking, Christ on a bike. The markets must be in some and it has been a volatile period for markets. And I know the news has certainly been reporting when Trump tweets something, the markets go down, or when something else happens and the markets go down. And if you were Joe Public, and if you were sort of disassociative in the markets, but you know, you've got money in them, and you hear the news, you must be thinking, I don't want to look at my valuations, because it's everything is going really, really bad. I just, I had a client annual planning meeting last week, end of last week, and I just looked at the figures for his portfolio. Their portfolio is a family, husband, wife, sorry. And the fund they're in, which is a global equity tracker. There are many available from many different brands, but I think the Trappists know who I use, has gone up by the best part of 40% it's gone up by 37% over the last 12 months. Now, just disregarding what's going on in the world out there. I've never known a period in my in my advising career. I don't think where a funder I've owned has gone up, the mainstream fund I populate my clients portfolios with has gone up by Best of 40% but I've never known it any kind of return to go up in this kind of atmosphere we've got now, where there's just relentless bad news from the media. And I just wonder how many clients know about this, and whether we should be talking about it more with clients, be more with clients, be more just on the front foot with this and say, Do you know what? This is an absolutely amazing time we're living through in terms of the returns. I know that everything out there is diabolical, but for younger advisors as well, it's just another example of how the media, the media, is not your friend. The media only exists to sell clicks. These returns are astronomical and life changing. And this is, this is based on, on a couple of annual plan users I've had so that the figures are broadly there, but it's just a composite of these family stories. But basically, this lady, Jane, she had a million pounds or so in a pension pot. Okay, so convenient around figure, she had about a million pounds in a pension for she's now got around 1.4 million pounds in her pension pot. Now that is absolutely life changing money. And for we call her Jane, this is f off money. Now, by the way, for the listener who drives around with with her children in the car again, either throw them out of the window or just stop the podcast a minute. But that is amazing. Black off money that's just been generated by the markets and this enormous turmoil. But you wouldn't know about it, would you? You wouldn't know about it. And the other side of the coins, of course, with all this negativity and bad news, how much cash has just been sat on the sidelines waiting for the right moment when you've lost that 40% that 37% return, it's in the rear view mirror, and the chances are actually we're probably heading more towards a temporary decline. Okay? Because they've got to happen. The volatility is up and down. If you don't get the down stuff, you ain't going to get the up stuff. So we probably are overdue a temporary decline. And my God, when that happens? Given the coverage of markets recently, entirely negative, focusing on the downs, not mentioned this massive wealth creation, I think it's going to be a really uncomfortable time for a lot of people. So yeah, guys, what do you think? I mean? Carl, any views?

Carl Widger: 56:15

Learn? You go there. He's I'm

Andy Hart: 56:17

just gonna chip in, just for balance here. Nick, I'm assuming you've done 12 months from mid April to, you know, mid April. Yeah, so you did. You did run into the Trump tariff decline. That's why we've seen this astronomical 12 month returns. I'm sure you're aware of I'm just making that clear for the listeners. Over to you.

Carl Widger: 56:36

Carl, do Yeah, oh, your point is that you didn't get the downward of the Trump month.

Andy Hart: 56:44

Yeah, the last 12 months have been about my husband 35% Yeah, but, but it was, it was a deep decline.

Alan Smith: 56:52

Yeah, if you're doing 12 months back today, you've got to look. You've got a low starting point. Yeah, it's a point. But that's, that's fine, yeah,

Nick Lincoln: 57:01

yeah, yeah, but that's still everything that's going on in the world, you know? Yeah, no, look, the Trump tariffs kind of pale into what's going

Andy Hart: 57:10

on at the moment in the markets went down minus 19. The Iran war, the markets went down about minus 11. So you did talk about temporary declines in it. We have to hit two temporary declines. But the reason why currently, the 12 month data is so a positive is because its starting point is April 2025, Trump tariffs.

Carl Widger: 57:31

That's just Yeah. But even, even if you talk if you took from the start of the year to now, which takes in all the current geopolitical stuff, like the markets are only down just a tiny little bit, and we have, we've spoken about, you know, at what point you got your clients and whatever, but I think it's a really well made point. And I've been there, there's two chords of people we need to talk about here, right? Because, number one, it's the clients, but also, number two, it's the actual advisors. Are there advisors out there? I have come across them who are like, who don't know about that. Now, putting clients in, and maybe you should drip it in over time, and they're asking themselves all these questions. These are okay, human questions, but they're not okay advisor questions, because what you have to do as the advisor is proposed, what's the best thing for the client, not what you think the client wants to hear. And you have to be you have to stand firm on that. But having said that, we have a few clients that are driving us insane, because it's, I'll put that money and I'll invest that money in that fund when things

Alan Smith: 58:36

settle Yeah, but the market settles down now,

Carl Widger: 58:40

well, it's not necessarily when the market settle down because they actually have they they're to Nick's point. They think because things are going mad. They're looking at the news the odd time, and they're here. All markets have declined. So they actually haven't analyzed well, how far have markets fallen? So it's not necessarily when markets have settled down. Maybe that's what they say, but actually what they say is when things settle down. Now, for me, I think the world has just gone mad, and we won't get into the political side of it. Nick right, but I don't think things are going to settle down anytime soon. I think agreed we are in the new world, that things are just gonna move very, very quickly, and there's going to be geopolitical unrest in somewhere in the world, almost always, right? Definitely, that's on. I hope that doesn't come across as a pessimistic view. I think that's a that's for me, that's a realistic view. Of course, I hope I'm wrong, right? I obviously do. I listen to a great podcast, which was recommended by get the close personal friend one ready, a close personal friend of Alan Smith's Cameron Passmore. Oh yeah. So I follow him on LinkedIn, and some of his, I would say, himself, and Peter maluk, for me, consistently deliver really great content, really great ideas on LinkedIn. So if you're not following those two guys, do, and he just promoted, or he recommended, a podcast called The Wealthy Barber podcast, and the host is a guy called Dave Chilton. He's a former Dragon's Den in Canada, and he's interviewing a fellow called Ben Felix. Now, if you guys are familiar with all these guys, I was never

Alan Smith: 1:00:27

Ben Felix works with Cameron Passmore, just so you know

Carl Widger: 1:00:31

that's yeah. So he's a the CEO of that, of the of that. But I hadn't heard Ben Felix talk before, right? So listen to this, because there's other stuff in this podcast. Some of it is not necessarily relevant, right? But most of it is that the guy just is he, he's a great way of communicating normal stuff that we're we're trying to kind of deliver the messages all the time. He just is as a really great way of communicating them succinctly. The total opposite of me, probably right. He does it really, really quickly and really, really elegantly, right? But he, he was the one who, who I got the phrase, you know, when things settle down, and he said, You know, there's, there's a couple of buyers. Passes coming to four here, and one of them is pessimism. And do you know how guys, I'm not sure you can fix that, because we have, there's a client coming into my head at the moment. I don't know, like we no matter what we do, no matter what we have tried, he even admits we're right all the time, and he's just, like, just, there's actually two lines it's just, I can't do it. I just can't I'm just gonna wait till things settle down. And we're like, are these

Nick Lincoln: 1:01:41

actual clients or prospects?

Carl Widger: 1:01:43

Both? Both are already clients. So they have both have significant wealth. One is almost invested entirely in cash, right? He's in a money markets fund. And we're like, come on, we've demonstrated in the plan, how you know this money isn't required, blah, blah, blah. And the other guy is a relatively new client who's dipping money in as we go So, like, there's only so much we can do. And there's some people, if they have these biases, there's you might be stuck, right? And I know Andy and Nick. For you guys, you'll probably ditch them as a client. I will, we will continue to keep working

Alan Smith: 1:02:25

with these people. It's your duty. Call it your duty, to keep working with them, keep supporting them when the time is right.

Andy Hart: 1:02:33

The pessimist never make a successful investor out the pessimist the

Nick Lincoln: 1:02:37

tragedy, the tragedy with those two clients and people of that ilk, with that psychological setup, if the markets continue on a tear, it's very likely that FOMO will eat them alive from the inside, and they just think in the end, oh, sod it Okay, we got to invest. And they will go in when markets have had a really explosive run, and that's when they're most primed to have a temporary decline.

Alan Smith: 1:02:57

Yeah, I know someone else that did that Nick. That's the sadness of it. I know someone else that did that last year. Are you looking at it? Okay, move on. Who else?

Carl Widger: 1:03:12

Because I don't have any money, so it definitely was me.

Alan Smith: 1:03:15

No, no, that's story for another time. Trap live, maybe we'll share that one interesting. But yeah, in

Carl Widger: 1:03:21

the podcast, they talk about, he talks about stuff that we all know, the behavioral gap. He speaks about down bar, and he says, Oh, well, maybe you should be looking at the morning, sir. And I'm like, that's all the stuff we're talking about. But he just delivers it much better than I have been able to do. And, yeah, I just like, we can talk about this, and we can extol the virtues of exactly what we know people should do, but we also have to just admit to ourselves that we're dealing with human beings and it's not straightforward. And like for me, it does get extremely frustrating, it really does. And my fear is exactly what Alan just said that okay, I'll go in, and then the minute it drops, I told you, you were wrong, yeah. And it's like, Christ, come on, when you just you know, because it's gonna end up that it's going to be too late. And of course, people will say, Oh, it's never too late. And when is the best next best time? But like, there is going to be, like, we have not had a proper market correction, for me, right? Even with covid, I don't call it a proper market correction, because it was down and back up before anyone even noticed. We haven't had it since the financial crisis. It is going

Alan Smith: 1:04:35

to happen, which is coming up 20 years from now, the amount of investors, the amounts of like, 40 year olds that have never really experienced, ever a promise,

Carl Widger: 1:04:45

everyone working in my business, deep,

Alan Smith: 1:04:47

deep, long about

Carl Widger: 1:04:49

that financial crisis.

Nick Lincoln: 1:04:51

Shut up. Carl, yeah,

Carl Widger: 1:04:53

but it's like, genuinely, I'm not I'm not joking, saying that they have no idea how,

Alan Smith: 1:04:59

what, uh, yeah, how you handle clients. One of those, gee whiz, we were all there. Yeah, yeah, it's a different ball game. I'll just add Mike, because I think you're back to the original point, which is this disconnect they exist between the news flow and the media. This is not a new story, but it just feels particularly acute right now. And I think your point again. And full disclosure, Nick, you shared that information about the 3530 40% sorry, nearly 40% growth in that dimensional world equity fund over the last 12 months. And I thought, I've got that in my own pension fund. So I looked at that, and it's interesting, because again, in terms of advising ourselves, i very i, you know, I eat my own cooking. I tell clients not to check portfolios every five minutes, so I don't look at my own one. So I looked at my and I was really, I thought, because, again, just me, I thought, God, it is everywhere. Look, it's doom and gloom and negativity. I so I thought it would be up a bit. I get your point. Andy, you're comparing it against the very lowest point in the market, you know, 12 months ago. But it was up. It wasn't quite up as much as Nick's because my investment said

Carl Widger: 1:06:14

that, because I'm in the fund as well, and my. Pension Fund. And I'm like, have I done wrong?

Alan Smith: 1:06:21

Mine's up 35% my bitcoin holdings haven't done quite so well in the last 12 months, to be fair.

Andy Hart: 1:06:26

But just to clarify the specifics on this, so the Trump tariff low point to the market, closing yesterday, the S P has soared 43.01% the Trump tariff low to the to the last closing day. That's insane, staggering, considering what is going on. Well, okay, from a low point.

Alan Smith: 1:06:49

And I think, I think there's a couple of follow up points to that. One is the amount of people, you know, when Trump did that, and it was terrorists and all. And it was a even, remember, it was all a little bit farcical. They didn't have they had it on April the second, not April 1. Instead of, everyone thought was April fooled? I remember all these tariffs for all these countries, and countries didn't really exist. It was all a bit of a kind of crazy pantomime type of thing. And remember thinking, Oh, Jesus, where is this going to go? And it wasn't going to look good for the sort of the investment time horizon wasn't looking good from that point. But, of course, as you say, that is exactly what happened. But I know I remember reading a newspaper article. I probably shared it on here at the time, some kind of high profile influencer hadn't heard of him before, but apparently, well known, he said, I'm done. I'm out. I'm moving to cash this Trump is a nutcase. The world is going to be so volatile. I'm gonna, I'm just, you know, consolidating in cash, may well still be in cash. That's, you know, and sat there and obviously would have lived to regret it. The last point I want to say is that we've now hit again, another series of market all time highs. And Carl on one hand, you've got clients who are not prepared to invest. You've got other clients. We've all got other clients who are fully invested, but they're saying, I need to take some money off the table. Let me just take some profit here now. Let's cash in now and again. We have referred to this in the past, but it's a great opportunity to dig this out. We've there's links to this from previous episodes, but honestly, it wouldn't take long on Google to find this, but it's looking at how markets performed, using history as our guide for the following period after all time highs. So you've had an all time high in previous years. What did, on average, what are the following? One year, three years, five years, 10 years look like, and with that exception, the always or not always, but 90% of the time, markets continue to reach all time highs after they've hit a previous all time high. So again, you know, even if you're if you're not invested, you should invest, and if you are invested, you should stay invested, despite the fact we are again hitting all time highs worth researching.

Nick Lincoln: 1:08:56

Okay, given that a damn good thrashing, I think also, just give ourselves a pat on the back and everyone, I hope nearly all the traps.

Andy Hart: 1:09:03

I've got a few points. I haven't said

Nick Lincoln: 1:09:04

anything yet. Oh, sorry, I didn't see your hand raised.

Andy Hart: 1:09:07

All right, no worries. I'll just close it off. So I think it's a warren buffett quote, if you live long enough in the investment business, you'll eventually see everything, things that never happen. Happen. Banks collapsing zero, negative interest rates. Oil Futures go below zero. Bonds decline more than equities. 2022, the covid crash, the fastest we've ever seen. The mag seven come out of nowhere. And obviously this current one is extreme pessimism, serious war. But we're hitting, you know, new new market highs. Back to your point. Alan, it's cognitive dissonance. People want to believe that their portfolio is down. How can it not be? You know, all they hear is, and it might be a confirmation bias. They might listen to the radio all day, but they're waiting for the x, y, z. You know, global stock markets down nine points. They haven't heard the well, they haven't even reported. It's gone up, you know, 67 points the previous day. So, you know, bad news, sales. It's always the usual things. And the human, as Nick Murray says, cannot retain, you know, investing wisdom. They need to be constantly topped up. The human body can't retain vitamin C. The human body can't retain investing wisdom, so they need to be constantly topped up. And that's what we are, you know, sent into our clients lives to do, yeah, so that's it really back to you.

Nick Lincoln: 1:10:26

Nicholas, thank you. Okay, so we'll wrap this up. Just wanted to say that, and it's a cut, it's a pat on the back, I think, for the TRAPPIST, for the trap pack, you know, all of our clients throughout this period, we won't have changed anything, because unless the plan changed, we don't change the portfolio. The asset allocation for the vast majority of our clients will be at least 80% in the great companies of the world. So us for here, the vast majority of the trappers listing would have picked up significant, significant returns for clients, which are baked in now. And if there is a temporary decline, they're going to come from a much higher starting point. So there you go. That's the power of full fat financial planning and investing in line with with a plan. So the plan is the anchor, and your portfolio is anchored to that. Without the plan, your portfolio just Bobs around on the open seas, being pulled from left to right, and in the end, it's just the shipwreck to torture that. Now she's a death okay, I can see now Christ on the bike. 70 minutes in to Episode 95 of the real advisor podcast. I can see that post is at the front door. She's hauled the bulging sack of TRAPPIST questions up my driveway. If you want to leave a question for the trap pack to answer the TRAPPIST two, please investigate the link in the so called show notes, also on X, on our on our bio, in the pin tweet, there's a link there we are getting through them. This question is from November last year. I can see that from the the postmark on the envelope, which will open up now. He said quickly getting myself back in line. There we go. This is from ash. S no idea, and he's not on Twitter, but this was posted into our bulging sack in November last year, Ash asked, excuse me, I have a close family member who moved his entire pension into money market funds as soon as he realized it was invested in the stock market. This is very apposite to our discussion. He said he didn't want to gamble. In quotes, he's still around 10 years away from retirement. How can you help someone like that when they're completely convinced that investing in the stock market is just gambling? I've tried to educate them, and have even showed them my own pension and investments, to which they say I just got lucky. 90% of Ash's pensions and investments are in index funds. So very fortunate, as that question came out today, because it ties in absolutely neatly with the subject of this thing. And how can you persuade people who are loath to invest, who wants to have a go at that horror story?

Carl Widger: 1:12:42

I'll kind of just chip in that you should listen to that podcast that I just mentioned earlier on, because I think there's some really good stuff in there about the difference between gambling and investing. So I won't kind of go into the detail on it, but I would say, you know, external content that you can maybe prove your point by not just doing it yourself, because talking to family members who you know they mightn't believe just your word, you need some outside, external confirmation for this person, but also be aware of dealing with family members, because how is Christmas dinner going to look if you finally get them to go out of the money market fund into the global equity fund, and then it drops by 52% that'll be difficult. Good luck.

Alan Smith: 1:13:39

Ash, yeah, that'd be an awkward Christmas lunch. I've got two brief points to make. If you, if you are, if you, if you haven't given up yet. Ash, and you want to persuade a lot of this does come down to education. And I hear that people say is gambling. The reason people think it's gambling, because they disassociate, because they've got the words stock market. And it just sounds to the uninitiated. It sounds confusing, complex and sort of an inanimate thing. One of the best pieces of content that our mutual friend, Mr. Andrew Hart, I think, ever created, was a document which actually showed the companies of the stock market and translated them. You've got, I think there's one, if I remember correctly, you got, maybe you got a couple of versions of this, but it's like Oxford Street in London, one of the biggest shopping streets in the world. And all the way along, there's whatever I can't remember, but Marks and Spencers and next and all these. So that is where you make it a bit more real. So people say, Oh, I was in Mark suspenses at the weekend. Will you own a little piece of that? And so on and so on and so on. So to try to translate and remove this concept of this weird thing called the stock market, to say they're just companies, you use them every day, that is the first that's probably the only thing I do with this person. Because the last point I always remember back to the aforementioned Nick Murray, the greatest coach to financial advisors that there's ever been. And he eventually, because a lot of people ask this sort of question in the past, and he says, you can only help people who want to be helped, and that's it. If you just don't want to be helped. At some point you just you, you're, frogging a dead horse. So do your best. So you try to help, but at some point, save your energy for someone else. You've got to do that. What do you think? Nick Andy, yeah, 100%

Andy Hart: 1:15:27

it's education. But really it's self education, and it's clear that he doesn't want to educate himself. So we can't save everybody. He'll be he'll be in money market funds for the rest of his life and cash equivalents, and he'll get all the returns that he deserves.

Alan Smith: 1:15:43

And the sad thing is, he won't enjoy a great retirement. That's a sad thing.

Andy Hart: 1:15:48

Well, we don't imagine wealth is freedom. Freedom is opportunity. Yeah, we don't know the numbers, but it might be

Carl Widger: 1:15:53

87 you don't know. We don't have enough information

Alan Smith: 1:15:55

to make that exactly he said it's

Unknown: 1:15:57

10 years. He's got a

Alan Smith: 1:15:59

really retiring at 97 but who knows,

Andy Hart: 1:16:03

though, right? I didn't read the question. He's gonna, he's, he's gonna survive in retirement and not thrive. That's the difference, actually, five. If you got cash, you thrive. If you invest in global equities. Nick just

Nick Lincoln: 1:16:15

close on this, because, um. So. So this question was posted in November from last year, assuming this, this, this family friend of ash went into cash. Then the MSI, the MSCI World Index, is up 11% since then in sterling terms, up 14% since then in sterling terms. So that allows for the recovery from the Trump tariff that's way in the past before those figures, again, just gone, gone. You could have had it. You could have picked up that it's gone. Not, not, not a great story, I'm afraid. And you can't, yeah, I love the visual. You can't. You can't convince people against them. A man convinced against his will is of the same opinion still. And some people are just eternal pessimists. People that read the Guardian, get rid of them. Close family member cut him off. Goodbye. Right culture, corner

Carl Widger: 1:17:04

Guys, guys, could you lower your hands please? If you've got your hands raised, thank you.

Nick Lincoln: 1:17:09

Thank you. Thank you. Moderator, so my I go first Simon. Simon Sinek. Simon Sinek, who want to say has a podcast. He's Simon Sinek. I don't rate his writing that much, and that's gonna keep him up at night, I know, but he is a good interviewer. His podcast series is very good. He gets people talking. He's very engaging. And this story just tickled me. Tickled me. I don't really follow baseball. Obviously, it was America's sport, but other things are coming up. The NFL now dominates American sport. Baseball is a very slow language game takes hours to complete, and people just don't have the time for any more. So the numbers like cricketling, well, cricket they're shorting either. This shortened version is to try and keep youngsters interested, but it's hard work. And this interview here, he interviews a guy called Jesse Cole, who's the founder of the Savannah, Savannah bananas a minor league baseball team. So basically they're like, championship soccer. Major League is premiership and the minor league is championship. But it's full of people who are trying to get into the major leagues, andor people that play for the major league teams but were cut and they're still grinding out a career. So it's much smaller stadiums. Anyway, Jesse Coles was a former baseball player, and he didn't quite make it the major leagues, and he found baseball to play and watch boring and this is someone who played the game, so he has reinvented the game with his club. Long story short, listen to podcasts about an hour long, the savannah bananas, and this is all the will good area stuff about making the experience exceptional. So the savannah bananas, they do stuff with the crowd. They dance in unison when they when they hit a home run, they spent hours. So the gates open at 2pm for a 7pm kickoff, and the players are mingling with the crowd, autographs, everything. They're silly songs. Okay, so what the what of this is the waiting list to go to a savannah bananas game a minor league baseball team is 4.2 million people. They've just turned it into an experience. It's an amazing podcast. Just just listen to it. You don't have to like baseball and other takeaways for financial services, I guess so, because we deal with stuff that's all between the ears and it's words and verbiage. So if we can make the experience as memorable as we possibly can, then maybe we just help people to stay with the plan, to stay with their advisor. Make the experience people want their sport or what they ate, but they'll remember how you made them feel.

Alan Smith: 1:19:23

Okay. That's something that we should probably come back to. It's exercising some of my thoughts at the moment about the advisor experience. There's, this is not my one, but just following up on that. There's a podcast, you know, invest like, invest like the best Ari Emanuel does that. He does all the boxing, MMA, tennis and and he's talking about that experiences. Emmanuel, Ari A R I think, but, but he's a real mover and shaker, big sort of agent. He, you know, if you ever watch entourage, entourage, this is kind of loosely based on him, but he said it's the anti AI product, because people really love getting together, going to events like the bananas over there, and they've just made it a bit different. So there's probably lessons for all of us. I will check that out. Nicholas, is

Nick Lincoln: 1:20:11

there one good quote I meant to say, sorry. He says, We're not I'm not competing against major league baseball. I'm competing against Netflix. People want to be entertained. Yes, really, right? Watch. Give me a prompt, because you have kits and Carl preparing for the exit.

Carl Widger: 1:20:24

Yeah, Kittson card preparing for your exit. It's a really good like the kits and Carl stuff is I'm more inclined to listen to that than I am the kits and stuff because it goes on too long. The kids have stuff, but the guys have good chats. They're much shorter. And this is about preparing for your exit, following your question from somebody who was 10 years out from an exit. And it is something that's exercising my mind a lot over the last couple of months, and I will maybe talk about that a little bit more in the coming weeks or months, but

Nick Lincoln: 1:21:01

tell us now.

Carl Widger: 1:21:03

Tell us now. Let me just finish out my culture corner piece. I would say everyone should based on what I've experienced over the last little while, everyone should listen to this. They make some really good. Really good points.

Nick Lincoln: 1:21:18

So even though it's us focused, it's, it carries over the water.

Andy Hart: 1:21:23

That's, that's very interesting, Carl, that they've made some really interesting points, because neither one of them has done it. I believe, yeah, Carl has.

Alan Smith: 1:21:30

Carl Richards has twice. I believe, as you know, he is a close personal friend was mine. I did think it's quite funny. Carl widger saying, yeah, don't listen to kids, because it's too long. What are we at now? Nick about an hour and a half.

Nick Lincoln: 1:21:44

Yeah, but kit, just go kitties. Goes on. And also, when there's a blog, his executive summary is longer than most,

Carl Widger: 1:21:52

but I used to read his weekend reading, and I just, I must unsubscribe because I haven't read it for two years now, because

Andy Hart: 1:22:01

there's a sign, oh, come on, man, I don't have that stuff was crazy long before. Ai, is this gonna be shorter now? AI, shorten this. He's prolific.

Nick Lincoln: 1:22:15

Prolific. Next.

Andy Hart: 1:22:17

Okay, this is probably my favorite podcast, a podcast called Hidden brain. I'm assuming you guys have probably not listened to it. I probably consumed 100 hours of this podcast. I got various different podcasts on there. You can get yourself stuck in very high, high produced, high production. You know, the guy that hosts it is just full on into this podcast. There's a couple of examples telling the truth about lies, flourishing after depression. How to hide the truth. One for you. Nicholas, Secret of charisma. Definitely. Check it out very well produced. I absolutely love this podcast. And then final, final mention, a little bit of self promotion. Me and Alan were both on a podcast called Money gains, or up the gains with Sammy. And there's a link in the so called show notes, just my first in person video podcast. Let's say where I was the guest. Yeah, I thoroughly enjoyed it. It's about an hour long. Got quite a lot of good feedback about it. So you can check that out in the show notes on YouTube. And Alan was also on the show. You can check out his

Carl Widger: 1:23:24

Alan to close us out. Just before you do which episode, I'm just downloading the hidden brain, which episode?

Andy Hart: 1:23:31

So good call. Which episode do you make this hundreds on there, very well.

Alan Smith: 1:23:36

What one do you recommend? Are you

Andy Hart: 1:23:38

recommending the whole secret to commit the secret to charisma, for reckless, to get his teeth into later?

Carl Widger: 1:23:45

Very good. And I listened to four seconds of your other one, but your opening comment was, that's such a great question, so I turned it off. That was it, delete.

Alan Smith: 1:23:57

And then you picked up his, then you picked up Andy's book to read. Oh, no, he didn't right. Carl. Carl, you could keep, keep your fingers in your ears for this bit. For this one. This is for Carl widger. My culture corner is a new book called The Book of Elon, about none other than Elon Musk. This is a guy, Eric Jorgensen, who's done a few of these. He's done he did it about naval Ravikant in the past. And what he does is take all their published information, like all the podcasts that Elon's been on, all his like tweets and all these things, and just organize and assembles it into a book. I'm going to say whether you, whatever you think about Elon Musk as a man, or whatever he is, a an incredible entrepreneur, a visionary and what he's done, what he's doing, and he's got a whole set of systems and processes and frameworks and mental models that he operates from. And I, honestly, I think anyone in business could learn something if you, if you operated at point zero 1% of how Elon thinks and operates, you'll do bloody well. So it's not, it's not like the previous, the book that I think we've all read, the Jacobson, oh, wait, what's he called? The other the biography, Isaac sir, yeah, it's obviously not like that. Which the biography? This is just all the things from Elon himself, put together in a book, quick read, really good. I recommend it.

Carl Widger: 1:25:22

Yeah, look just on Elon right, like I recommended these extreme book here. And I said, it's just incredible. He's an incredible what he's achieved is absolutely unbelievable. And I think what I said, I'm trying to remember back, this is probably 50 episodes ago, was that there's a dark side, and for me, he has demonstrated more and more of the dark side, but, but to be clear, I am never arguing how, actually unbelievable, how out of this world. Almost like, literally, yeah, like, what he's doing is is amazing. Just I don't subscribe to the values, and I don't like some of the stuff that he puts out there, and that's okay for me, and that's okay for Elon to drive on but but for any of us to try and subscribe to the to the operating system of the you. Elon Musk's brain. I think that's a fool's errand. I don't think we can.

Alan Smith: 1:26:21

I take, take one, take one part of it. Maybe conversation for another time. You haven't enough time. But there's one particular thing I thought it's so applicable to financial services. It's just he's got a five, five part model. I'll leave you with that. I'll talk to you about it later. But, and I thought that just just do that alone, and it would be call our lives a bit a bit better. So there you go.

Nick Lincoln: 1:26:44

Okay, great stuff. Great stuff. 85 minutes in, and we're coming to the end of trap episode. 95 amazing. Only five away from the centenary. Who'd have thought? Who'd have thought? Great stuff. So dear Trappists. Thank you. As ever as this episode comes to a close and disappears down the U bend of Father Time as we yank on the flashing mechanism with with a good damn downward stroke, leave a review on iTunes, like and subscribe on YouTube, send in some reviews. Two out of five isn't really custom the mustard. We want five or one, okay, and be aggressive both ways. We love it anyway, dear TRAPPIST, from us the fat pack is adios. Take care out there. We'll see you on the other side in Episode 96 goodbye. Bye, bye.

Alan Smith: 1:27:34

Well done, Nicky. Are you definitely going to listen to that charisma podcast? I.