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Inside the mind of an investment manager

Philip Norman-Butler is a Senior Investment Manager at Charles Stanley in London

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by
Philip Norman-Butler

in Features

07.01.2020

In the words of Ernest Hemingway: “The best way to find out if you can trust somebody is to trust them.”

Trust has always been the bedrock of a good working relationship between a client and their Investment Manager. Trust is the starting point that allows an individual to rely on the manager’s expertise and, in turn, the manager must reward that client’s trust with excellence. It is something that all Investment Managers take very seriously at Charles Stanley, as our industry awards and accolades attest, but it is also just the first step in ensuring that a client’s financial health is well looked after for many years to come.

Long-term considerations are necessary. Life expectancy at birth has increased by 13 weeks per year on average since 1980 for males and 9 weeks per year on average for females in the UK. Meanwhile, in a low interest rate environment, assets need to work harder in order to go further. Coupled with a greater understanding of capacity in later life, and ever more complex markets, the importance of having a trusted Investment Manager who can help navigate the financial landscape on your behalf has never been greater.

Looking after wealth over time requires a prudent approach. From a well-deserved position of trust your Investment Manager is well placed to recognise – and thereby ease – any friction otherwise associated with the smooth transfer of wealth. To this end, I have personally organised family meetings in order to provide a neutral platform from which multi-generational conversations can take place. It is not unusual to talk to clients who do not realise that they have excess capital which they could afford to pass on to another generation. On the other hand, on several occasions I have advised that clients temper their generosity towards making gifts, if only so that they can be in a better position to look after themselves in later life.

Of course, grasping the nettle of inheritance is only part of the reality. In order to be in a position to encounter this ‘luxury problem’ in the first place, one needs to ensure that prudent decisions have been applied consistently over time. A regular portfolio review in conjunction with your investment manager will ensure that it is set up correctly for your needs, whilst pro-actively utilising the annual allowances (ISAs, JISAs, income, capital gains tax, spousal transfers, pensions, gifts etc.) will ensure that you benefit by compounding the available marginal gains over time.

Inheritance implies a transfer of wealth down to a younger generation. However, a well-placed Investment Manager can also approach the issue simultaneously from the bottom up. It is no good if the next generation are unprepared for the responsibility for what they are about to receive. Investment Managers are uniquely well placed to liaise with the next generation and, if required, help broach what can be a difficult subject to discuss. We can help smooth over the transfer of wealth either by incrementally educating beneficiaries via meetings, or through periodic reports, or by even ensuring that the very stock selection in a portfolio is relevant and recognisable, so as to better engender interest. By doing so, managers can help to create, initiate and deliver a prudent strategy that will work to help protect your financial wealth through the ages.

Nothing can be achieved without trust, which is the key component offered by an effective investment manager. Trust in that relationship ensures that your manager is well positioned to offer good advice from which you will be able to make prudent decisions. This is the level playing field that all must aspire to as trust, as for financial assets, is typically hard won, yet via complacency easily lost.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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