In the last News and Views, I was telling you about the experience that I had encountered as we led up to a trip to Portugal, with all of the associated hurdles to cross and tests to attend. Well, I’m pleased to say that the trip went extremely well and we are now back safe and sound having returned to the UK on Saturday.
I thought I would share the experience of the actual travel because that was quite interesting in several ways.
Having read previously that paper is not favoured at the airport and they prefer you to have electronic copies of everything, I had stored the relevant documents on our phones. Mainly these were our boarding passes, the negative PCR Covid test that we had had 72 hours prior and the passenger locator form for entry into Portugal.
Having been warned to allow extra time for check in, we dutifully turned up at Gatwick 2 hours prior to the flight to find the check in area completely deserted, with only 6 or so people in evidence and we were greeted by an EasyJet representative who checked that we had the relevant documentation with us and scanned our boarding passes.
From there, we went to the automated bag drop, which duly delivered a tag that we fitted to the bag, put it on the conveyor belt and within 5 minutes we were on our way to the security check in. As you know, that can often have long queues, but on this occasion, there were about 5 people in front of us and with very little fuss, we were soon through and in the duty free area. Most of the concessions were open, but the place was deserted.
It’s at this point I think it’s time to share some holiday snaps with you – don’t panic, there are only two and neither of them is me on the beach! (Relief all round!)
If you have experience of flying from the north terminal at Gatwick, you will know how crowded it normally gets and indeed, that’s similar with most of the UK departure airports we have used. The following photograph though is a picture of the departure lounge and you can see just how deserted it was.
The second picture is that of the departure board and at first glance, you might think that there are a lot more flights than you would expect until you look more closely and see that the first part is for Saturday which was the day we were travelling, but the rest of the board was for the following day. Our flight to Faro was showing to depart at 3pm and I’m pleased to say that Weatherspoon’s (as seen above) were open and therefore we were able to enjoy a leisurely glass and a snack before boarding.
The plane was about 75% full and masks were worn at all times, with everybody being fully compliant and I have to say, it felt a safe and well organised environment.
On arrival in Portugal, we actually landed half an hour early and only 45 minutes after actually touching down, we were driving out of the airport in our rental car, having sailed through immigration, baggage collection and through to the car hire office, where there was only 1 person in front of us.
In advance of our return journey, we had to complete a video call to undertake a lateral flow test, which again proved negative and then completed the passenger locator form to re-enter the UK – that was fun with all the questions they had! And then the return journey was similarly uneventful, albeit that check in at Faro airport was nowhere near as well organised as Gatwick, which resulted in the plane being late taking off by the time all the final passengers were on board.
We were due to arrive at Gatwick at 9.30pm, so I thought I would check to see how busy the airport was going to be. In fact the flight prior to us, landed 1½ hours earlier and after us, there was only one more flight that day. Gatwick was therefore as deserted coming back as it had been going out and coming through passport control, we were able to use the electronic scanners, which automatically tied up the other documentation and we were through in less time than normal.
The final chapter is that we went for our Day 2 tests, which were negative and tomorrow we are due to go for the Rapid Release Test, which providing they are negative, means we will be out of self-isolation on Friday.
In conclusions therefore, apart from the extra hurdles one had to jump over to get all of the documentation sorted, and yes, that did cause a few stresses and strains, the actual travel itself was absolutely fine.
What has been interesting to note on our return is that some of the statistics being quoted are that having looked at 23,000 passengers returning from amber list countries, there were only 89 cases identified of people testing positive for Covid and of those, there were no new variants noted. The most recent statistics quoted for the UK are that 100 people in 100,000 are testing positive for Covid and therefore, the statistics for returning passengers might be at a higher level of around 350 per 100,000, but it is nowhere near the apocalyptic levels that were predicted or anticipated in the Government decision making process.
Turning briefly now to the investment world, although there have been a few jitters in Stock Markets, there is nothing significant and most short term reductions have been recovered from and the most recent concerns were once again linked to inflation and the potential for interest rates to be increasing sooner rather than originally anticipated. Mind you, on that one, what they are talking about is that maybe rates will nudge up towards the end of 2022, rather than in 2023, so there is plenty of time for all that to settle down.
I think the only disaster area to note at present is for people who have invested heavily in crypto currencies with some fairly significant falls in values, particularly with Bitcoin, which has been compounded by the interventions taken by the Chinese authorities in closing down crypto currency mining Companies.
I have to say, even though I might have just summarised the current position with crypto currencies, they really are a mystery to me and to most people I think, and probably best avoided for the majority!
All being well, I will be back to the office as usual on Monday of next week and thankfully, it looks as though we are seeing a return to summer weather.
As a final thought, not all statistics are helpful and in fact, earlier this week, it was recorded that locally to the office in Goudhurst, at a small village called Frittenden, the maximum temperature on the day of the summer solstice was below that recorded on last year’s winter solstice! In fact, it was the lowest summer solstice temperature recorded for over 40 years – hopefully, it will be that long again before we challenge that particular record.
As always, stay safe and we will keep in touch.
Richard, Chris and Lesley
A few weeks ago when we were partway through the roadmap to lockdown restrictions being lifted and with the prospect of international travel being allowed from 17th May, I took the plunge and decided to book some flights to visit Portugal in June.
Whilst the thoughts were initially prompted from a business perspective, because I have a couple of reasons to be there, it’s also been a while since we have taken a meaningful holiday and therefore, we thought that it would be good to spend an early summer week in Portugal. As she always does, Chris had a good look round to find accommodation and we were able to book flights with EasyJet on the basis that if we needed to change because of Covid, we could do so without any charges and we secured a villa that we had 100% cancellation rights on up until 29th May.
Imagine how smug I felt when the green list of countries was announced and Portugal was there! We had beaten the rush, both in terms of getting the flights we wanted and a reasonable property, all at a sensible price before things started to rocket skywards.
I would imagine you are ahead of me already – whilst looking forward to a week in the sun and anticipating that last Thursday, other countries would be announced for the green list, we then had the disappointing news that Portugal had been downgraded to the amber list! The major cost of our trip is the villa rental and of course, by the time the amber list announcement comes through, we’ve passed the cancellation date and although our first reaction was to think we can’t go, when I really thought about it, what it means is that the self-isolation on our return can easily be accommodated by working from home for that time and so I started to look into all of the testing requirements to see what we would need to do.
As a green list country, travelling to Portugal meant taking a PCR test within 3 days before travelling out and then to facilitate our return to the UK, we had booked a video on-line test for 3 days prior to return with a further PCR test on arrival at Gatwick. The full cost of these tests would have been £210 each, but with a promotional code from EasyJet, we managed to secure a reduced price of £170 each.
With the amber list news, this then brings in further considerations. Not only do we need a Day 2 test on our return, but we also need a Day 8 test – that’s another £85 each. However, that would mean self-isolation for 10 days, whereas there is a rapid release test that you can volunteer for after 5 days. The cost of that is £95 each and I thought well that’s worth the extra tenner, we’ll go for that! Oh, foolish me – the rapid release test is in addition to the Day 8 test, but again, we secured a discount code and therefore, the net cost of these additional tests came down to £144. So that’s a total of £314 each to have 4 PCR tests and a video on-line lateral flow test.
Now that all of this is in place, the actual cost of testing has cost just about double the air fare, which puts it into perspective somewhat!
Just when I thought we were done and dusted, I then had a message from Easyjet to say our return flight had been cancelled – oh joy. Whilst we are returning the same day, it is later in the day and so I had to change the time of our PCR test on arrival at Gatwick. That was when I discovered that the 24 hour service advertised by the testing company actually translated to them closing at 18.00, some 4 hours before we are due to land so now we have to return to Gatwick the following day, but thankfully that it is all booked now.
The nearest place that we can get the PCR test on a drive through basis, is Gatwick airport and therefore, that will necessitate 6 trips to the airport, 4 to get the tests and 2 for the flights out and back.
Along the way, Chris raised the question why are we bothering – but I’m afraid to say that part of my nature is that the more difficult something gets, or the more somebody tells me that I can’t do it, the more determined I am to see it through! When Easyjet cancelled though, I was on a wobble for a minute or two!
Although now that it’s all set up and perhaps it all looks fairly straightforward, I cannot begin to tell you the length of time it took on-line and trying to decipher everything that needed to be done, both in terms of booking the tests, but also completing pre-arrival paperwork for the Portuguese authorities and then we’ll have to do the same again for the UK authorities coming back. I have to say, I was starting to question my own sanity towards the end, but nonetheless, our trip would appear to be on, that is of course, unless the Portuguese decide to pull the shutters down between now and Saturday – I guess we should expect the unexpected!
I will let you know in the next News & Views how things worked out.
Turning now to investment markets, I have talked in the past about the increasing emphasis that is being played on ESG – environmental, social and governance issues, both at corporate level and in the collective investment funds that we are familiar with.
There is even more stringent legislation within Europe demanding that ESG considerations are taken into account and discussed as part of an overall investment strategy and more and more existing funds are looking to convert to ESG complaint/friendly and that is where I came across, for the first time, the phrase green washing!
In broad terms, this is where corporations or indeed, in some cases, funds, are trying to create the impression that they are ESG friendly, whilst in fact, it is more smoke and mirrors and façade than reality.
This is going to be an area that gains in momentum and ESG will in due course, replace the traditional ethical and socially responsible investing emphasis and the good news is that ESG considerations will become the norm over time.
In the interim, part of the job that we and the investment partners that we work with must do, is to ensure that our due diligence identifies where green washing could be in evidence and is avoided.
It was during the same presentation I referred to just now that the subject of risk washing was also mooted and this really is best described as being where collective investment funds have a description that says they are balanced or medium risk, with the implication that they fall in line with what is generally accepted as balanced or medium risk.
The actual risk level in funds is often determined by the level of exposure that they have to Stock Markets, which in investment management terms are referred to as equities. To my mind, a balanced or medium risk fund should have a medium position with equity exposure of around 50% in normal times with the ability for this to be decreased to say, 35%, or increase to 65% depending on short term market trends. The counterbalance to the equity holdings would be lower risk investments in Government debt, property or commodities for example.
What has become evident, particularly over the last 12 months, is that funds bearing the same risk implication by labelling themselves as balanced or medium, can have a very different equity exposure – some could be as low as 35% whilst others could be 75% or more. Why I say the last 12 months is particularly relevant is because since the dark days of March 2020, at the bottom of markets following the Covid-19 concerns, we have seen a significant bounce back in Stock Markets and the so called balanced or medium risk funds with higher equity exposure may well appear to be outperforming. In the short term, this may be true, but in the long term, the risk that is associated with them, is such that when corrections or downturns come, they will suffer disproportionately badly, which will show they were neither balanced nor medium risk at all!
This is another area where our due diligence is such, that we need to look carefully at the definitions that are being used when we are matching investment solutions with clients attitudes and appetites for investment risk.
I thought that might be of interest to you to know a little bit about some of the things that go on behind the scenes and what we are taking into account as part of our on-going review process and the investment solutions we recommend.
Enough from me for now, so let me close by saying stay safe and we will keep in touch.
Richard, Chris and Lesley
In my last News and Views, I made some small reference to inflation figures that were being published and that these had been played down by Central Banks as being a blip. Since then however, more and more of the headlines are latching on to the inflation concerns and how these could have an impact on investment markets and potentially affect the economic recovery.
As always, I thought it would be appropriate to give you the benefit of a few more of my thoughts on this subject, because if we rely too heavily on the headlines, you could be forgiven for thinking that we’re in for hyperinflation, the likes of which we saw back in the 1970’s – in fact, I saw one commentator over the weekend drawing such an analogy and saying how few people would have clear recollections of the impact that very high inflation had on business.
To my mind, this is simply scaremongering in the extreme and I genuinely do not believe that inflation is going to be running out of control.
There are, without doubt, inflationary pressures around at the moment, but these are likely to be short term in nature.
In many ways, the short term inflation is likely to be driven as we come out of Covid 19 lockdown, with a lot of pent up spending that is likely to hit the High Street and on-line shopping, which will all help to fuel the social and economic recovery. This anticipated upturn has encouraged reassessment by Governments and Central Banks to look at their policies, including the impact for inflation and interest rates.
The fact that this debate is happening at all led to markets responding with a swift adjustment in prices in the world stock markets.
This is in fact, what has led to the short term volatility we have witnessed, but markets are very resilient and no sooner had values dropped, than bargain hunters were snapping up those lower prices and market values were quickly reinstated.
I think one area where we are seeing a more severe upturn on inflation is in construction costs, and towards the end of last week, I was speaking to one of our clients, who is highly involved within the construction industry, both in Italy and the UK and he said that their raw material costs had been increasing exponentially. Talking to one of our UK Fund Managers, he confirmed that building costs are indeed, skyrocketing in the short term as certain materials start to run short and it’s the age old question of supply and demand.
Although all of these factors are real and are manifesting in the markets today, the Central Banks, including specifically the US Federal Reserve, the European Central Bank and the Bank of England, they have all indicated that their view is that this is short lived inflation pressure and they are happy to look through it when looking at their longer term strategies.
In fact, conversely, there are many deflationary headwinds that could be driven by developments in technology which themselves have been accelerated due to the pandemic and as importantly, underlying unemployment rates and spare economic capacity will all play their part.
As I saw one commentator put it quite succinctly, these factors ‘remind us that there is a need to distinguish between shorter term price distortions as the world exits a pandemic, vs. the longer term price dynamics where the evidence is in doubt. As the Federal Reserve Chairman, Jerome Powell, observed in February, inflationary pressures were not a threat prior to the pandemic when US unemployment was at a 50 year low of 3.5%. Further, it is unlikely that there will be sustained inflationary pressures now, with a US unemployment rate estimated by the Fed to be closer to 10% in January, particularly once the pandemic driven fall in labour market participation and other factors are taken into account’.
In addition, putting my cynic’s hat on for a moment, central Governments can’t afford the cost of borrowing to go up too much in any event because of the huge amounts of debt they are all now managing and although interest rates have been used to try to manage inflation historically, increases are unlikely to be deployed in the short term and the inflationary pressures should even out over the next few months. [Having stuck my neck on the block with that view, we can only but wait and see what happens now!]
As always, it can be easier to demonstrate these things in pictures and therefore I thought the following two graphs might be of interest. The line graph actually plots global inflation since the early 1960’s through to 2019 (this was the latest such graph I could find) and you will see there have been a number of spikes along the way, the last notable one being with the global financial meltdown in 2008/09, but the trend has overall been downwards and continues to be so.
The second bar chart perhaps is a little more meaningful inasmuch that it shows again global inflation rates from 2015 through to the current year and forecast for years up until 2025. Whilst again this shows a small spike in 2021, this expectation also demonstrates that this is not a runaway trend, but rather that it settles into a fairly repeatable pattern. Of course, this is a global statistic and individual economies will vary greatly from this average, but nonetheless, it helps to endorse the points that I am trying to make.
Turning to Covid 19 for a moment, it’s encouraging news this week that both Pfizer and Astra Zeneca seem to be virtually as effective against the Indian variant as they were against the Kent variant and other strains of the virus and hopefully, the roadmap can therefore proceed as planned in the UK and as other countries throughout Europe and further afield are catching up with their vaccine programmes, we will see many countries turn the corner soon.
I still have longer term concerns for third world countries and particularly when you hear that there are a number of countries in Africa where the vaccines that they have are going out of date simply because they don’t have the infrastructure and/or organisation to get them delivered and administered on time, which is a great pity. I cannot help feeling that more effort is required from the likes of the G7 countries and as they are due to meet in Cornwall next month, who knows, we might even see some initiatives coming from there.
As always, I hope that you’re keeping well, take care and we’ll keep in touch.
Richard, Chris and Lesley
We live in an age where there is a constant danger of information overload and as you will recall from some of my earlier News and Views comments, I am always suspicious of headline grabbing news items, with a preference to try to identify the core elements of any story
We are continually bombarded with commentaries and presentations from across the industry and it’s fair to say I’m quite choosy about those I decide to read in any detail.
One such summary though came this week from Investec, who are one of the groups we work with and the author of that newsletter, John Wyn-Evans, who is Head of Investment Strategy at Investec, could well be moving house because he’s having a clear out of his loft and as he said, sorting through the accumulated memorabilia and family heirlooms, or “junk” as others might see it, he unpacked a box that had been packed many years ago and rather than bubble wrap, back in the day it was old newspapers that were used to protect things. He referred to a copy of the Sunday Telegraph dated 8th March 1970 and an article that had been written by Ludovic Kennedy, which was about a book that had been written about Richard Nixon’s presidential campaign. One quote from that article struck me, which was ‘There’s nothing new in the notion of a Politician putting himself in the best possible light, adjusting his tie and clearing his throat and telling half truths and concealing what is awkward. It’s what Politicians do everywhere all the time.’
Fifty One Years later, I think it’s fair to say, nothing has changed in this regard!
I think that arguably, over the last week, we have seen evidence of this with all 3 of the main party leaders in the UK and in Scotland, displaying varying degrees of this phenomenon.
Boris Johnson is riding high in the polls overall following success in the Hartlepool by- election and local council elections and although lockdown rules are being eased in the UK, the fact that his key advisers are telling him that the rate of easing of lockdown should be accelerated, which he is choosing to ignore, is politically driven to ride the feel good factor from the Covid vaccination programme for as long as possible – ignoring the fact that the early days of managing the Covid crisis was shambolic at best, which is now long forgotten in political circles.
Looking across the House of Commons, Sir Keir Starmer has had a Shadow Cabinet reshuffle following the disastrous election results, which I heard described by one commentator as having little more effect than rearranging the furniture in the living room!
Sir Keir was quoted as saying he takes full responsibility for the results and yet, appears to do anything but. Don’t get me wrong, I think he seems a genuinely nice person, however he has a mountain to climb to reshape the Labour Party if they are to provide meaningful and effective opposition.
North of the border, Nicola Sturgeon was saying prior to the Election that if the Scottish National Party achieved an overall majority, she would take that as a mandate for a second independence referendum. They didn’t get the clear majority, falling in fact, just one short, but nonetheless, she said that this still gives her a clear mandate in any event and points to the UK leaving the European Union as being against the wishes of the majority of Scottish voters, with the implication that re-joining the EU for an independent Scotland would be a natural outcome, but is virtually silent when it comes to the tricky questions as to exactly how the books will be balanced and what post-independence implications there might be for the Scottish people. No mention of the fact the EU may not actually welcome Scotland in any event!
To my mind without doubt, we are still witnessing half-truths and concealment of what is awkward across the political divide.
(Hopefully, in expressing those views, I have not offended anyone, because I do not have any strong political views other than a mistrust of politicians in general and their self interest.)
It is pleasing to see how the vaccination roll out continues apace in the UK, with over 53 million vaccine doses now having been delivered, with over 1/3rd of those being second doses.
Clearly, this is being reflected in all the other statistics with only 4 deaths in the UK being recorded on Sunday, all of which were in Wales, meaning that Scotland, Northern Ireland and England had zero deaths that day. I read one article the other day that said technically, the pandemic has come to an end in the UK, albeit that it remains prevalent globally of course.
There is still quite a large proportion of the UK population for the 18 – 40 age group to receive their first jabs, but hopefully, we will see the trend continue with the Government stated target of all adults being vaccinated by the end of July.
I think there was a lot of disappointment expressed in the “green list countries” for overseas travel from the UK that was announced at the end of last week, with Portugal being the only main holiday destination for UK holidaymakers making the list. It’s hardly surprising that there has been a stampede of people trying to book travel to Portugal. In theory, it will be another 3 weeks before any other countries are added to the green list, but of course, that may change.
Turning now to the markets and we have seen over the last few days some volatility with big reductions in market values, which have been largely driven by the concerns over the re-emergence of inflation. This tends to demonstrate the sensitivities that can affect markets and as I read in one article, 12 months ago, we had an oil price that had gone into negative territory and as so much of the economy relies on transport, it is little wonder that an inflationary impact would be felt 12 months on, when oil prices have largely recovered. The traditional method of controlling inflation is manipulation of interest rates and if inflation was to become a factor, then increasing interest rates may well follow at some point, but no time soon in my opinion.
The world often looks to the US for trend setting and the latest inflation figures in the US were announced yesterday with quite a jump, more so than had been expected. Last week, the former Chair of the Federal Reserve in the US, Janet Yellen, suggested in an interview that interest rates might have to rise if growth and inflation started to accelerate too quickly. In itself, that was quite a natural and logical comment and yet it sent shock waves through the markets until she then executed a rapid U turn by saying that it was actually none of her business and said that the independence of the Federal Reserve should be respected. The main view seems to be that the impact of inflation is not a new trend, but rather a relatively short term blip, but nonetheless, one to be kept on the radar.
In fact, Jerome Powell, current chair of the Federal Reserve kept US rates at 0.25% and commented that he is not even thinking about, thinking about interest rate increases at the moment.
Whilst this all manifests in short term market volatility and reduced values, above all else, the medium and longer term views remain unaltered that we should see sustained economic recovery in most global areas, although there will be on-going uncertainty as far as China and India in particular, are concerned.
As always, stay safe and we will keep in touch.
Richard, Chris and Lesley
I have been trying to find out the exact population of the UK and the best estimate seems to be just over 67 million, of which, the adult population is around 50 million. The reason I was curious is because the total of first and second jabs in the UK has passed the 48 million mark, which suggest to me we must be around the halfway mark, based on a total 100 million being needed overall. When you consider that the vaccination rate is continuing at over 500,000 per day, this is a truly remarkable achievement.
Thankfully, EU countries seem to be catching up at last and the US roll-out continues at a pace but right now, the headlines are all about India and the growing crisis they are facing!
With a population of 1.4 billion and over 300,000 new cases a day, it is no wonder they are running out of vital supplies like oxygen and ventilators. It was good to see the UK and some other countries, stepping up to the plate to help where they can. The trouble is, there are many poorer countries in the world who cannot afford the vaccines, let alone have an infrastructure that can deliver anything like a comprehensive vaccination programme.
Then we hear about people complaining that their travel plans are still uncertain or perhaps being curtailed and it begs a question about a sense of priority, particularly when we are reminded by the World Health Organisation that “no one is safe until we are all safe”.
Thankfully we have seen the Covax scheme launched which aims to share vaccine surpluses with the poorer countries. To date, something like 38 million doses have been sent to 98 countries. They sound big numbers but in reality, it is a drop in the ocean when you consider we are talking about in excess of 4 billion people in third world countries.
I am not trying to be negative, but rather, to put things into perspective and to say how lucky we are to live where we do and to have the resources available to us.
Chris and myself had our second jabs yesterday and whilst it felt very reassuring, it was tinged with a feeling of guilt as well.
Talking of guilty feelings, we have taken a couple of days off to make a long weekend of the early May Bank Holiday and it almost feels like we are “bunking off school”.
We are members of a boat club and have access to boats moored on the river Hamble in Hampshire and so we are spending a couple of days on the water before heading to South Devon for 3 nights in an Air BNB. It seems to be ages since we had any time off, but it is good to get a little down time for sure.
On Thursday we had a cruise around Portsmouth Harbour and I was fascinated to see the two aircraft carriers, Queen Elizabeth and Prince of Wales moored alongside. From a small boat they look absolutely enormous, but I bet they look tiny when you are trying to land your aircraft on them. I thought about taking a picture to include in this newsletter but wondered if we might be “blown out of the water” as there was a heavy armed police presence keeping a close eye on any craft venturing too close. What I didn’t know was that Jamie (my grandson) did not have the same concern so here they are!
The one in the foreground is the Queen Elizabeth.
Turning now to the markets, we are seeing the first quarter results being announced with better-than-expected results appearing from many areas, including Banking and of course technology companies. Without a doubt, the economic recovery is well under way in the UK and US and despite the ever-present concerns about Covid globally, the main markets are shrugging off the concerns. On a couple of days, we have even seen the FTSE 100 index in the UK venture north of the 7,000 mark, closing yesterday at 6,961.
With the expectation that foreign travel and indoor socialising will both be largely allowed from 17th May in the UK, this is likely to help the leisure and travel sectors to start to rebuild as well.
We have a long way to go but so far, we seem to be on the forecast track of economic recovery, if not ahead of it, which will be reflected in market prices and investment values.
Enough for now – I am back to my bunking off school scenario!
As always, take care and we will keep in touch.
Richard, Chris and Lesley
As a mark of respect, I would like to pay tribute to HRH The Prince Philip who sadly passed away last week. Although Her Majesty, The Queen, has resumed some of her duties already, we know that she relied on the support of her husband through her long reign and in particular, the difficult times they have faced together. Hopefully, her immediate family will rally around her now and going forwards.
Whilst I appreciate that not all agree, I personally think the Royal family are a great asset to the country and are part of what makes Great Britain the country and culture it is. When I was born, Queen Elizabeth was already on the throne and so we have known no different and that probably goes for the majority of the population.
Turning now to our recent survey, may I firstly start with a huge thank you to everyone who took the time to complete the process. The numbers of respondents was overwhelming, which is very much appreciated and hopefully provides us with some valuable feedback that we can put to good use.
Whilst I am able to summarise the main results, I will not make reference to any individual comments, other than to say that it is my intention to reply to everyone but please bear with me as this will take a little while and I will respond in the order that the surveys were completed.
I think the best way to portray the results is to use some pictures and the first two look at the question about using Zoom or other video-based calls for a variety of meetings and you will see that 81% of respondents said they are happy to use Zoom, as you can see in the pie chart.
The bar graph though looks in a little more detail, and tells us that most people are happy to Zoom or similar for general meetings but 74% would prefer to have a face-to-face meeting for annual reviews
Our plan is to employ this approach as far as possible but let me stress that we will always be available for face-to-face meetings and will not be using video calls exclusively.
The next two charts look at how we store our information and could share with you via DropBox. We use DropBox to store all of our client records digitally that would otherwise be filling filing cabinets in the office. This is a highly encrypted system that we use, which has several layers of security, which satisfies the Regulator in this age of Cyber Security concerns.
As you can see from the pie chart, two thirds of respondents would be happy to receive paperwork from us via DropBox and this we will try to adapt for those who would like to use this system going forwards. This will involve us sharing folders and for individuals to set up their own passwords to be able to access the information. For home use, there should be no cost involved with using DropBox.
However, the bar chart suggests that the idea of sharing documents in this way is perhaps not so popular, but we could explore introducing it for people who have said they would be happy to use this method. We need to think about it before acting in any way and I suspect a pilot scheme might be worth looking at.
I will let you know more in due course in this regard.
The last two graphs are looking at a different method of accessing information which would be via a client portal directly into our back-office system. This would enable individuals to have access to all of the information we have saved and to update personal details like change of address etc.
The results are very similar to those for using DropBox, and again, some hesitance in actually using this method.
We are a way off this being possible in any event and we would need to make some updates to the system before launching, but I suspect, this will become more popular over time, particularly as it will also be available as a phone app as well. We will keep you informed as we make progress with this.
Finally on the subject of the survey, I thank you for all of the individual comments, which in themselves were very positive and supportive in the main, but have also given us some areas to review and to learn from and we intend to make the changes and improvements as far as possible to respond to these.
In the next newsletter, I will revert to more current affairs in regard to markets, the economic outlook and of course Covid 19.
We hope you had an enjoyable Easter holiday and let’s hope the weather warms up soon.
As always, take care and we will keep in touch.
Richard, Chris and Lesley
Survey Answers By The Score!
Since our last News & Views, I have issued our client survey and I wanted to say a sincere thank you to everyone who has responded already. The results are already looking quite interesting, and I wanted to let you know that I will leave the survey open until after the Easter Weekend and this will enable me to include summary details of the results in the next News & Views.
I did want to address a couple of questions that have been raised already, one of which was to ask if our intention is to move toward online and technology solutions only and I can confirm this is not the case. We recognise both the importance of face-to-face meetings and the value that these bring to all parties and so, once lockdown is behind us, my plan is to resume face to face meetings where appropriate and I sincerely look forward to being able to do this.
However, there are some aspects of communication that for some, can be better dealt with either virtually or via online services and in those circumstances, we want to make sure that we are employing the most favoured solutions. The last thing we wish is to create any difficulty or frustrations that could undermine our relationship.
Business Continuity/Succession Plans
The other question relates to our continuity or succession planning and as it was tactfully phrased “none of us are getting any younger”. Firstly, let me say that we thoroughly enjoy the work we do and the relationships that we have with our clients. As with all services, there are aspects that we have to “put up with” which are less enjoyable, keeping abreast of the increased reporting the Regulators require for example, but overall, we are very happy. However, the question of continuity is one that I have been mindful of for some while, and one which cannot be ignored.
With this in mind, we do have plans in mind, all of which are designed to ensure continuity of service for clients, maintaining the same professional standards and having a solution in place, just in case “the big man upstairs calls my number” or at some point we wish to consider retiring – but that is not on the radar at the moment.
I am very pleased to confirm that we are taking the first steps this week and can announce that with effect from 1st April 2021, we have another Financial Advisory firm, coming under our regulatory umbrella. Martyn Bates and Lynne Campbell formed their company, Bates Campbell Ltd, just over 10 years ago and prior to that time, they worked for me in my old business, so we have known them for quite a number of years. We have stayed in regular contact throughout, cross referring business where appropriate and now they have become an Appointed Representative of RAFP.
This means we will be taking responsibility for their regulated activities going forwards and this is the first step towards merging our two businesses into one new group structure, which we hope will take place during the next year. We cannot be sure of the timescale because this needs regulatory approval and as such, the turnaround time is currently about 6 months, once we have fired the starting pistol! So, it will take some time yet, but we will keep you appraised as we progress.
Martyn and Lynne have already been appointed as Registered Advisers for RAFP and if you care to look, you will find them on the FCA Register already.
With a huge amount of consolidation going on in the UK financial advisory sector, this has created an opportunity for us to bring our businesses together and the plan is to grow the combined group further. We have a recruitment process underway to add 2 more Advisers this year and so there will be more people to tell you about in due course.
By creating this larger business platform, we are addressing the continuity concerns and with Martyn and Lynne, who subscribe to the same client relationship standards as ourselves, our principles and client service standards are assured for the longer term.
Post Brexit Position
It has been a while since I mentioned the B word, but it is still with us in many ways. In addition to our clients who are located in the UK, around 30% are ex-pat UK nationals who are living overseas, many of whom reside in EU countries. Up until the end of 2020, we had a regulatory cross border passport which extended our permissions to be able to advise clients throughout the EU. That is no longer possible and furthermore, the EU/UK Memorandum of Understanding that has been worked on is not going to result in a practical solution going forward. Whilst it is true to say we are able to provide advice to EU resident clients when they visit the UK, the timing is not always going to be right, and I am sure catching up with family and friends will be the main priority on those visits.
I looked into a number of possibilities and am pleased to say we now have a solution in place. You may have noticed the FEIFA logo on our emails and other stationery and this is a trade association - The Federation of European Independent Financial Advisers, of which we are a member. One of our fellow members, Beacon Global Wealth Management, are based in Europe and I have jumped through the regulatory hoops to the degree that I am now an Appointed Representative of Beacon, with full permissions to advise throughout all EU countries once again. For the individual clients who are affected, I will be writing separately with more details shortly, but I would just stress here, this will not result in any changes to the level of services or costs involved. We in turn, will carry some additional regulatory costs, but otherwise it will be business as usual.
As you will be aware, I do not usually write “all about us” but thought this news was appropriate to share with everyone. Please do come back to me if you have any questions or need clarification and next time, apart from the survey results summary, I will revert to some topical issues to include.
We hope you have an enjoyable Easter holiday and let’s hope we see some sunshine too.
As always, take care and we will keep in touch.
Richard, Chris and Lesley
Like many professions, we have a requirement to complete at least 35 hours of CPD (Continuing Professional Development) each year and sometime that can be a chore but in many ways, it enforces a discipline which has a benefit beyond “ticking a box” for the Regulator.
This week, I have excelled myself, having completed over 7 hours covering a range of topics. The one I wanted to talk about now is related to the future for investment markets and the question in my title for today – is the technology bubble about to burst and linking in with this, to take a look at what is changing in the investment world as we hear more and more about ESG!
Without a doubt, the technology sector is what has been driving markets in the US to record levels and to a lesser degree, on a global basis. The result has seen the value of some of these Companies increase exponentially and the concern is that they become artificially inflated values, which sooner or later will result in the bubble bursting! However, as a backdrop, we also have to consider some of the factors which have been a driving force behind their success in what has become an ever increasingly changing environment.
The Covid 19 pandemic has played its part as we have seen with Companies like Amazon and other home delivery companies. Names like Deliveroo and Just-Eat finding success in the takeaway delivery sector and so on. These are not fads that are going to pass anytime soon but are rather an indication of how our future shopping and convenience expectations are going to evolve.
So rather than there being concerns about technology bubbles bursting, the sector looks set for further growth and in particular, the UK technology sector is likely to start playing catch up as it has been lagging behind really since 2016 when we had the EU referendum. Brexit is now behind us and although the fallout is only starting to manifest in some areas, other opportunities are being identified and explored.
Once again today, we have Minutes of the Bank of England’s last monetary policy Committee Meeting showing that near-term forecasts for the UK economy had improved further and despite increasing borrowing costs from increasing Gilt yields, they voted unanimously to keep interest rates at their historic low level of 0.1%.
With the increasing focus in many sectors on ESG, Environmental, Social and Corporate Governance, sometimes referred to as sustainability, this is likely to become a norm within quoted companies large and small. With this in mind, Fund Managers are now increasingly turning their focus to impact investing, where they can identify investment opportunities in Companies where they can have a direct impact on the outcomes of those organisations.
I am therefore of the view that a combination of impact investment strategies and technological advances will be key drivers in the markets going forwards.
Turning our thoughts now to the pandemic, what extreme headlines we have seen in the last few days from a number of European countries suspending delivery of the Astra Zeneca vaccine due to blood clot concerns and fear mongering that UK supplies will be severely reduced in April on the one hand, to the 25M+ first vaccinations in the UK which have been successfully delivered. As always, these headlines get exaggerated and as a simple soul, I have to question the logic of suspending a vaccine which potentially could have led to blood clots in a small number of cases; 37 people out of 17 million vaccinations delivered in the UK and Europe versus the infections prevented and lives saved. The World Health Organisation even stated that the actual number of blood clot incidents were statistically lower than would have applied in the same population number in normal times.
Yes, we should question these things, but this would seem to be unnecessary politics taking an extreme position at a time of global crisis – does it really help I ask myself or is this a smoke screen to deflect attention from something else I wonder?
As for the shortfall in doses in the UK, well that would all appear to depend on what starting point you choose! In reality, we are on course to deliver a first vaccination invitation to all over 50s by mid-April and the whole adult population by the end of July. The second doses will now start to accelerate as well, and they too are on track. My observations suggest it is the hoped-for accelerated rate of vaccinations which was being suggested in some circles a week ago which will not now manifest as surmised but otherwise we remain in good shape for an on time roll out.
And finally I say, beware the statistics – as was popularised by Mark Twain in the US, “There are three kinds of lies; lies, damn lies and statistics.” I think that says it all.
And to close, once again, well done the NHS and all the front line workers who have made this possible.
As always, take care and we will keep in touch.
Richard, Chris and Lesley
As the vaccination programme continues to roll out in the UK at an increasingly impressive rate, we also now have details that Boris Johnson has provided in terms of the timescale to apply to his roadmap out of lockdown.
Whilst I appreciate a lot of these aspects, and in particular the timing, are all subject to the statistics continuing to go in the right direction, the general view that I am hearing is a sense of relief that the “end is in sight.”
It is also good to see that the roll out programme is accelerating in the US and I had a message from one of our clients in Chile earlier in the week, saying that the programme there is well ahead of other South American countries in terms of their vaccination programme roll out.
Whilst there are concerns about variants and more aggressive contagion rates, we are in a much better place, but just have to hope that people don’t go too mad too soon!
Yesterday, we also saw the long-awaited Budget from Rishi Sunak, which in itself, was almost unique, but quite unremarkable in many ways!
Unique in the sense that the level of borrowing that has had to be entered into is on a relevant scale that was only equalled during the two World Wars, and therefore, no peace time Chancellor has had to wrestle with the levels of borrowing that have been required as a result of Covid 19. I felt that overall, he delivered a very logical Budget and whilst it left some people crying foul because their sectors were not specifically helped, overall, I think it was very good, given all the circumstances.
One sector that are unhappy is the airline and travel industry and I get the feeling that there is a certain element of presumption that the industry is big enough to sort itself out once the demand comes back from the general public. In fact following the announcement of the road map, the on-line bookings with travel companies rocketed for travel after May 17th and this is a fair indicator.
I have some sympathy though for the airline industry because there is a similarity here with our own industry when it comes to the post Brexit rules, with Financial services largely being ignored from the trade agreement. Once again, the belief is that the industry is big enough and robust enough to sort itself out, which it may well be, but it doesn’t make it easy!
Although we know that tax rises are inevitable, the combination of the freezing of personal allowances and tax bands for Income Tax and the introduction of higher Corporation Tax with effect from April 2023, do help to spread the pain that these will bring and certainly from a personal taxes point of view, the pain will grow over time, but as long as inflation remains low, the pain should not be too great.
Although increasing the headline Corporation Tax from 19% to 25% seems like a huge jump and in percentage terms it’s over 30%, it is worth remembering that this will still leave the UK with the lowest Corporation Tax rate of all G7 countries – albeit only just, and I think therefore, the UK remains a competitive environment for business and I am sure this would have been in the Chancellor’s mind because the last thing he wants to do is anything that would dampen business potential going forwards.
There were various other aspects that were frozen in terms of National Insurance and Inheritance Tax, but the one key area dealing with Capital Gains Tax was not addressed, albeit that I think this is a delay rather than the cancellation of a review – more to come on this is suspect in the Autumn.
On the flip side, the extension of the furlough scheme and increasing help for the self-employed has to be a positive thing, albeit that it leads to even more borrowed money that will need to be repaid in due course.
I also think, some of the underlying economic details that we have seen and forecast, suggest that the rate of recovery in the UK, both this year and next, is likely to be much higher than was previously anticipated and that the peak in unemployment numbers is likely to be substantially lower than those that were previously forecast prior to Christmas.
We are a long way from being out of the woods, but I think there are a lot of positive and encouraging signs that we are starting to see – long may that continue.
Acceleration of Technology
As so often happens in times of extreme circumstance, we see a number of things that can be accelerated beyond the pace that they were already following. We’ve seen this in the High Street for example, with the closure of some very large brands in favour of on-line shopping. This was a trend that was on the way anyway, but lockdown simply accelerated the process.
In our own industry, a similar influence is being seen with the use of technology.
Even with our little firm, over the last 12 months, we’ve managed to maintain our meetings with individuals on a personal basis by doing so over the Internet, with our favoured solutions being Zoom or MS Teams. This is because in addition to being able to see and hear the people you are talking to, we can share our computer screen so that we can share data that we can look at during the meeting, which is all very helpful. It’s not as good of course as meeting face to face and sharing a cup of tea or coffee, but nonetheless, it is a solution that is becoming much more widely used all round.
I have actually been partly surprised, but delighted, with the take up rate that people have volunteered generally and the willingness to actually embrace technology, which has led to me giving some thoughts as to how we should be embracing more technology solutions to improve the services that we offer and sharing information etc.
With this in mind, I think it would be extremely helpful to obtain some feedback from all of our clients, and therefore, I am proposing to put together a short survey that I will circulate and ask you to consider completing. This will really be looking at different types of technology that we might use and to again your opinions as to which would work for you and which you would be opposed to.
This will also give us the opportunity to ask one or two additional questions to make sure that we are providing clients with all that they would like to receive.
I appreciate though that surveys can be an absolute pain and therefore, if you would rather not be included in this process, perhaps I could ask you to reply to this e-mail, just simply to say that you would like to be excluded and I will make sure that you’re not bothered with that request when we are ready to process it.
I would anticipate being able to circulate this during the course of the next 4 – 5 weeks.
Before closing, I’ll just make a few quick comments about markets, which over the last months have shown some volatility, but are largely positive, albeit that we have seen some downward pressure on equity markets as a result of concerns over increasing Bond yields. What does this mean – it’s an indication that returns on Government debt, like UK Gilts and US Treasuries, are increasing, which leads to the fear of the potential for increased interest rates. I know savers would welcome the increasing of interest rates, but as far as the economy is concerned, and come to that when considering the mountains of Government debt all round, low interest rates for the time being are going to be maintained and therefore, I view the Bond yield jitters to be of a temporary nature.
It’s actually quite amazing how readily we accept huge amounts of debt and how this has changed over the years – my quote for today comes from Shakespeare in Hamlet ‘neither a borrower nor a lender be, for loan oft loses both itself and friend’ – those were the days!
As always, take care and we will keep in touch.
Richard, Chris and Lesley
It is remarkable to think that this time last year, we had heard about the first few cases of Corona virus in the UK, but little did we know what to expect! In fact, come next month, it’s been a full 12 months since I started writing News and Views and since that time, what a journey we’ve all had.
The feedback that I have been getting from people has been very encouraging and it’s pleasing to know that you enjoy reading my comments. If however, you would prefer not to receive them, do let me know and I can easily take you off the circulation list, because I know it can be frustrating if you’re getting correspondence that you would really rather not receive!
Some of the more recent feedback I have had was to comment that I have been saying a lot less recently about financial implications in favour of more general thoughts and largely, this has been because there’s been little new news to report on the financial scene. That having been said, as it has been a while since I have looked in any details, I will devote a bit more of this newsletter to the financial side of things.
Before doing so, I think I must make a comment about the sterling effort that the NHS are still managing to deliver in the UK and other front line staff and medical practitioners around the world as the roll out of the vaccination programme accelerates. The results being achieved in the UK are nothing short of phenomenal.
It must be disheartening when they hear in the news that the NHS is going to be under extreme pressure for another 6 weeks or so – they really do deserve some respite.
Of course, we are eagerly awaiting the announcements from Boris Johnson on Monday of next week, when he is set to lay out his roadmap for easing the restriction under lockdown, but as he has been encouraged by the professionals, it should be all about the data and not about the dates. It would seem that he has acknowledged this.
Whilst we accept that there are no guarantees, nobody wants to be bounced back into a further lockdown, and therefore, making careful plans for easing restrictions now will go a long way to ensuring this is indeed, the last Covid 19 lockdown – fingers crossed!
Certainly the most recent statistics are very encouraging and when you look at the graphs, these are showing a very good trend.
As you may recall, when we sent out our Christmas greetings in December, I said that we had chosen to do this by e-mail again this year and that we would be making charitable donations for an amount equivalent to what we would otherwise have spent on Christmas cards and postage. We did indeed make donations to both RNLI and the Kent Surrey Sussex Air Ambulance and I am attaching to this e-mail, copies of their letters of thanks that I thought you might be interested to see.
So let’s turn our focus now to the financial world and have a think about what’s been going on there!
The single largest factor that affects your investments is what’s going on in the financial markets and they in turn, do not like uncertainty. Winding the clock back 12 months, there were three main uncertainties that markets were trying to get to grips with, those being the Brexit negotiations, the upcoming US Presidential Election and the soon to become elephant in the room, the Covid 19 epidemic. It was the last of these that saw major markets globally drop dramatically in March last year by as much as 30% or more.
It’s fair to say that most of those uncertainties are now out of the way, with the finalisation of the Brexit transitional agreement and the US Presidential Election now being behind us, markets largely know what they are dealing with in both cases.
The Covid 19 impact is yet to be felt fully, but with the roll out of the vaccination programme, markets are already looking beyond the short term to where the economies may be going next. We even saw the Governor of the Bank of England last week, in an uncharacteristically bullish mood, stating that he felt that the recovery in the UK economy was likely to be significant after the end of the first quarter.
With such a large drop in March last year, and whilst all investments were impacted, why is it that our client’s investments did not drop to anywhere near the same degree and have largely managed to recover their values since?
The answer actually has a number of facets to it. The first of these is that when we look at Stock Market indices quoted in the Press or on the TV, they are typically talking about the larger Companies like the FTSE 100 Share Index looking at the 100 largest Companies in the UK, or perhaps the Dow Jones looking at the top 30 companies in industry in the US. It’s easy to be fooled or mislead by these headlines when in fact, your investments enjoy a much wider spread than simply the Companies reflected in the main indices.
Whilst Fund Managers cannot completely buck the trend of markets overall, it is their expertise in managing portfolios and spreading assets across many different asset classes that gives clients less of a roller coaster ride.
As global economies are beginning to recover, it is clear that we are going to see the evidence of winners and losers following all that has gone before. The obvious examples can be seen in the High Street with the likes of Debenhams and Top Shop disappearing and being snapped up by on-line retailers. It might be easy to say this is because of Covid, but in fact, the writing was already on the wall and the last 12 months has simply accelerated the process. The Companies that are innovative and adapt quickly to change will be those that survive and prosper, whereas those that choose not to, will go the same way as the dinosaurs!
Looking to the future, the general consensus is that we should see a return to sustained growth in markets as economies start to recover. Yes, unemployment is likely to increase, which will have a negative impact, but as some of the pent up savings that have accumulated over the last 12 months start to get spent, whether that’s in the High Street, on-line or on travel and leisure, this will all start to pump more money through the economy, which will help to drive the recovery. Job numbers will then start to increase again, and sentiments will become more optimistic.
Since the Summer of 2016, when the UK Referendum determined that the UK was to leave the European Union, UK Stocks have broadly been out of favour and indeed, we have seen the currency under pressure. Since the beginning of this year however, we have seen Sterling gain in strength against both the US Dollar and the Euro and my personal view is that this trend will continue. Furthermore, Fund Managers are looking forward to the opportunities that will unfold in the UK in particular in Equity markets, where they are expecting the UK to play some significant catch up.
Whilst there is never room for complacency, I sincerely believe that the worst of the recent tribulations are behind us financially and we should be able to look forward to a more positive picture unfolding over coming months and years.
I hope you will find these thoughts to be helpful and I would be pleased to hear from you if you have any specific questions you would like to raise.
Otherwise, it just remains for me to pass on our best wishes as always.
Richard, Chris and Lesley