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Jeremy Corbyn to costs: Six DFMs reveal clients' big worries

Volatility, a left wing UK government and costs at the forefront of clients minds.

Benjamin Newton

Investment manager, Credo Wealth, London 

'The key concern for UK clients is the impact of a left-wing Corbyn led government, especially as Theresa May’s government teeters along with infighting over Brexit and subsequent fears of a vote of no-confidence.

'While Corbyn continues to galvanise support, particularly among younger voters, with subjects such as minimum wage, student debt and a rental cap. The one inevitability under Corbyn would be higher taxes through increasing income tax for higher earners as well as other guises for the more affluent.

'From a more global perspective, client unease is related to current market valuations after their recent rally. Although cognisant of valuation metrics, at Credo we take the view that the alternative is cash which, over the long-term, is a guaranteed depreciating asset in real terms and we therefore continue to find interesting investment opportunities for our client base. Additionally, Credo views risk as permanent losses of capital and not in terms of short-term volatility.'

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Benjamin Newton

Investment manager, Credo Wealth, London 

'The key concern for UK clients is the impact of a left-wing Corbyn led government, especially as Theresa May’s government teeters along with infighting over Brexit and subsequent fears of a vote of no-confidence.

'While Corbyn continues to galvanise support, particularly among younger voters, with subjects such as minimum wage, student debt and a rental cap. The one inevitability under Corbyn would be higher taxes through increasing income tax for higher earners as well as other guises for the more affluent.

'From a more global perspective, client unease is related to current market valuations after their recent rally. Although cognisant of valuation metrics, at Credo we take the view that the alternative is cash which, over the long-term, is a guaranteed depreciating asset in real terms and we therefore continue to find interesting investment opportunities for our client base. Additionally, Credo views risk as permanent losses of capital and not in terms of short-term volatility.'

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Matthew Parden

Chief executive officer, Aspinalls Group, London

‘There are obvious candidates for the prize of being a client’s biggest worry, such as the geopolitical landscape and its impact on their lifetime goals and investment performance. But given clients often take a long-term view of markets, the resultant focus might include the costs incurred in achieving those objectives.

‘Mifid II will go a long way in highlighting those investment managers whose underlying fund costs are not what they appear, and therefore provide a true picture of their impact on investment performance.

‘And when the new disclosure requirements are fully bedded in, there will doubtless be an eye-opening moment for many private clients which will act as a catalyst for additional challenge and be a source of worry.

‘To borrow from Erwin Schrodinger, the state of worry will only crystallise once the information is interacted with, or observed by the external world.  And his experimental cat will be very much alive.’

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Lindsay Spencer

Senior investment director, Brooks Macdonald, Hampshire

‘There are three main concerns our clients are currently facing and they fall generally into two camps: pre-retirement and post-retirement.

‘Clients who are pre-retirement are concerned about capital preservation and future investment growth. As clients have seen global equity market indices rise steadily for the last couple of years, the worry is how portfolios will remain protected when volatility returns.

‘Clients who are post-retirement are concerned about the stability and level of income they are receiving from their investments. Though bank savings rates, government and corporate bond yields remain depressed, clients have a heavier reliance on investment income.

‘The final concern from an increasing number of clients is cost. Recently there has been pressure by clients to reduce the overall total expense ratio on portfolios, through both annual management charges and underlying fund charges.’

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Charles Newsome

Divisional director, Investec W&I, London

‘The simplest worry for clients is: “Is my money safe?” But most clients fit into one of two camps – the “return of my money” or “what is the return on my money” – and regularly switch.

‘I believe that the top investors have a well thought-out investment process, but also have the best control of their emotions. This is evidenced by not following the market herd and being prepared to follow your investment process, despite the market. While this can result in high outperformance, beware catastrophic losses through the failure to admit an error in judgement.

‘The best investment managers listen to their clients’ concerns, understand their needs and act accordingly, but ultimately, if clients are worried about their investments, they should discuss these concerns and should reduce risk.

‘However, a coherent, simple and well executed investment process will reduce client worries dramatically.

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Rikki Doré

Adviser, Courtiers, Henley-on-Thames 

'Many of our clients wish to plan for a comfortable retirement before leaving their estate to children and/or grandchildren, without leaving a burden.

'Tax efficiency and a degree of control and flexibility are important and several products and investments can help: junior Isas, children’s bank accounts, collectives, investment bonds, gifts and pension contributions are all options to explore. 

'The key is discussing and planning ahead. We understand our clients’ circumstances and aspirations before working with them to develop and maintain suitable ongoing investment strategies.

'With mid to long-term investing, there is no such thing as steady linear appreciation. Alleviating worry is part of the job and sometimes, clients find value in simply being able to talk to us.'

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James Menzies

Investment director/head of multi asset, Greystone Financial Services, Cheshire

‘Clients worry about the level of markets and whether now is the time to invest. Mostly though, clients focus on whether a portfolio is able to generate the level of income required and whether their portfolio is growing over time and meeting their investment objectives. 

‘Our internally developed risk assessment questionnaire (RAQ) helps measure a client’s ability to take risk, willingness to take risk and their capacity for loss to match our them to an appropriate risk-rated portfolio. 

‘The MGTS Greystone Conservative Managed, Cautious Managed, Balanced Managed and Global Growth funds are all constructed to match an equivalent risk profile. Many of our clients have a proportion of all four funds, giving them exposure to literally thousands of different underlying securities.   

‘In order to offset any of our client’s biggest worries, we explain to them what they can and indeed cannot expect, right from the outset. We detail the potential maximum drawdown and time to recovery of an investment – and explain that time itself is a diversifier of risk.’

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