On Monday, November 25th we held our final event of the year at the spacious new headquarters of the British Olympic Association near London’s BT Tower – and close to Netwealth’s offices. Despite the miserable night, it was a full house. Visitors were keen to hear about how we can make a difference for them, how we invest and our thoughts about the economic and investment climate.
Our CEO Charlotte Ransom opened proceedings and explained why she had felt the need for a new discretionary wealth management service after working for many years in the City. She had money to invest, but was put off by the significant disadvantages of the traditional incumbent wealth managers.
Charlotte described Netwealth as the solution for people who are either too busy or disinclined to invest themselves and are unhappy with the traditional providers; Netwealth is for those who are seeking a modern, professional and cost-effective manager to help them meet their future financial objectives.
Gerard spoke about the potential for the UK and the global economy. While global sentiment and many economic indicators dipped over the last eighteen months, the outlook has improved recently, helped by policy easing, and may well be better than expected in 2020. Challenges remain, such as the US-China trade dispute.
Meanwhile, for the UK, much depends upon the election outcome and our expectation is for greater political clarity, robust consumer spending and some recovery in investment plans to lead to steady growth in 2020.
Iain gave an overview about how popular asset classes fared in 2019 (strongly, mostly). He also showed how our sterling portfolios have outperformed peers this year, and since inception over three years ago. Iain explained how US economic strength and global liquidity has propped up markets since the financial crisis, while drivers of growth (eg, manufacturing PMIs) have faded in 2018 and 2019.
Looking forwards, global factors will be more important to performance than domestic ones. He also highlighted the shortfall that active fund managers have faced compared to passive funds over the past three years, a trend which is persistent over many time periods.
Matt cautioned that we may see increased volatility in 2020 and also demonstrated that, even in positive years for markets, there can still be intra-year losses of over 10% – reinforcing the principle of spending time in the market rather than trying to time markets to better capture gains.
He also illustrated the merits of being appropriately diversified as it is hard to know which asset class will be the top performer in any given year. Since we may be entering an environment of more muted returns overall, Matt highlighted the importance of tax wrappers and lower fees as ways to ensure investors can best protect the integrity of long-term net returns.
Charlotte closed the event with a lament. Even though the travails of one of the highest profile traditional wealth managers in the UK have been well documented, they are still not the most expensive in the country, meaning that traditional managers across the board are charging too much for what they deliver. Meanwhile, new entrants to the field claiming to improve the situation, offer very little that is different and still retain high fees.
None are properly embracing the efficiencies that technology can provide and, as a result, their clients continue to have too little insight into their portfolios and pay far too much for the service. The upshot is that many wealth management clients reduce the likelihood of achieving their goals, as investment values are eroded unnecessarily.
Fortunately, increasing numbers of people are realising they can now take a different path. They are choosing a wealth manager that is genuinely changing the way things are done and which will greatly enhance their opportunity to provide for themselves and their families over time.
Please remember that when investing your capital is at risk.