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What was in the weekend’s papers? (08/06/2020)

Category: News

FINANCIAL TIMES

“Wealth management faces fallout from coronavirus”

Pressure on fee income and investment in tech has intensified during the pandemic.

Comment: This story covers two trends in our profession. The first is where if fees are related to the performance of the markets then they will have fallen. The second is the development and adoption of technology to make us more effective. As a firm, we are in a strong financial position and we do not see this changing over the short term. This has enabled us to maintain and develop the technology we utilise when working with clients. We do not look to reduce the time we spend with our clients but to enhance and free up more time for this.

“Pension mis-selling probe prompts exodus of advisers”

Financial watchdog finds the number of customers advised to transfer out is still ‘unacceptably high’.

COMMENT: This relates to advice on Defined Benefit Pension which are highly valuable pension benefits and should not be given up lightly. We advise on these, but we have a very thorough process, including external checks, to ensure we get it right.

“Active funds lead the way in UK market recovery”

£4bn inflows to retail funds in April after record outflows in March.

COMMENT: This is more about how many people are putting money into funds rather than how those funds are performing. We know that over time the average active fund will underperform the index after charges.

“Sharp spike in HMRC coronavirus scams”

Reports surge of people impersonating tax officials to obtain financial details during lockdown.

COMMENT: This is one to be wary of and you can find our post about protecting yourself against scams here.

“Wealthy investors ride the storm”

The rich have a more optimistic financial outlook than those who manage their money.      

COMMENT: We all overreact or underreact to events and rather than having this affect our portfolios we always advise taking a long-term view. Our investment process tries as much as possible to avoid having the opinions of an individual affect it in any way.  

“Pandemic will accelerate digital change”

Crisis brings welcome chance to promote technology without losing personal touch.

COMMENT: We are always looking to develop the technology we utilise when working with clients. We do not look to reduce the time we spend with our clients but to enhance and free up more time for this.

THE TIMES

“Should you be investing in China?”

A perfect storm of economic and political risks has raised growth fears.

COMMENT: Our portfolios do not specifically invest in China but invest more broadly via Asian Equity Funds. Even so, we would direct anyone who has concerns to this post which states that for a portfolio to spread risk well, it should have some money in areas which might cause concern.

“Markets are surging, but prepare yourself for a second slump”

Analysts warn of a “detachment from reality” as markets have surged despite the possibility of a second downturn when the economic realities of lockdown take their toll.

COMMENT: It can be argued that the price of a share represents the time-adjusted value of whatever future income or capital growth the market expects from it. The time horizon for this is generally not one or two years. This crisis should pass, and the markets will carry doing what they have always done. That is not to say that there will not be bumps along the way.

Our investment process does not look to try and time the markets as we believe this can reduce returns rather than improve them. Our portfolios held up well during the last slump and we do not expect this to change in the future.

THE TELEGRAPH

“Scandal looms as DIY investors are ignored by firms that sell their shares on the cheap”

Ignoring smaller shareholders while fund managers make quick profits damages the integrity of markets, experts say.

COMMENT: Rather than a “scandal” this relates to companies who issue new shares to institutional investors such as funds. As these companies are after cash quickly, they have sold large amounts to institutions and have sometimes offered discounts to do so. The reason this happens is that firms who want to raise cash quickly do not have time to write to individual investors. This is one of the reasons we recommend our clients invest using funds as they offer much greater economies of scale. There is the promise of technological solutions to rectify this imbalance but without some sort of compulsion, their effectiveness may be limited.

THE GUARDIAN / OBSERVER

“Take a trip down memory lane in search of better returns”

Memorabilia and antiques sales are booming for people with spare cash and plenty of time on their hands.

COMMENT: We all have a toy which if we had kept in the box and just looked at it when we were kids might be worth something now. Whilst this is an investment strategy which might provoke some nostalgia and be easy to get into, it is not one I would recommend anyone builds their financial plan around.

If you want to know more about how anything we covered could affect your planning, please feel free to book in a free no-obligation chat here or get in touch.

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