Financial Planning in the post-Covid world

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With so much still uncertain, what does Financial Planning in the post-Covid world look like?

Just over 100 days ago, the biggest uncertainty investors faced was a matter called ‘Brexit’; remember that?

Brexit was 24/7; constantly in the media for more years than I care to remember. We had those in the ‘Armageddon… we will run out of food and pharmaceuticals’ camp and those in the ‘freedom of trade, best thing that can ever happen’ camp, and those in the middle who just wanted someone in Government to pick up the mantle and deal with it.

Now what do we have? A hidden silent attack on humanity, and Brexit has disappeared from our screens, at least for the time being. 

So what has happened to markets since the beginning of the new decade and which investment approach has fared the best? 

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Below are actual examples of investors’ portfolios who had previously asked Goldsmith Invest for a review, but subsequently decided not to take advice as apathy settled in. Performance graphs are taken from January 1st 2020 and are based on the individuals current portfolios (blue line), against a transparent financially efficient portfolio managed by Goldsmith Invest (green line) on a like for like risk basis, gross of fees and charges. 

Response: I don’t like paying advisor fees, I can do it myself choosing the best buy funds promoted by the financial media Fund value was £253,257… Current value £238,170… GFS value £255,480.  Investor has lost £17,310. 

Response: My best friend is a financial adviser with SJP. I don’t want to let him down. He is a family friend. Fund value £347,034… Current value £331,430… GFS value £357,310.  Investor has lost £25,880

Response from successful business owner’s husband and wife: We understand the markets and do our own research using Hargreaves Lansdown. We are making money and do not need to pay adviser fees.  Husband Fund value £715,985… Current value £636,930… GFS value £715,980.  Investor has lost £79,050.

Wife Fund value £582,350… Current value £494,640… GFS value £582,350.  Investor has lost £87,710.

Total family loss £166,760!!!

I wonder what needs to change so that investors can understand that costs and charges taken by the industry will have a detrimental effect on their long term wealth?

The lack of incentive from consumers to walk away from poor investment outcomes or companies that inflict unnecessary high charges creates an apathy in the industry to do anything about it. Why would they if their clients accept their substandard performance or high fees as acceptable.

Do you use any of the investment strategies listed above? Has the paying extra fees approach worked for you? 

Certainly not for those investors above.

Do low fees mean low performance? Not if your portfolio is constructed in a financially efficient and globally diversified way as the graphs above clearly demonstrate. Yes, if you go for a cheap ‘buy online’ model portfolio approach, which just wants to attract funds under management at the lowest cost, to sell on to a big player at a later date.

That is why choosing a fund manager that can supply transparency with performance and low cost is so important. Even if the market returns are the same, having less fees being taken out of your investment pot, means that you have more money to compound and over time this amount makes a massive difference to your future lifestyle after all why do you invest, if it is not to maximise your returns. 

Now is a very important time in our history where investors need to take notice of what is happening around them in the financial world, especially if they wish to acquire additional wealth and have the option to control their future lifestyle. Government is borrowing at an all-time high, taxes are about to dramatically increase for many years to come, which is necessary to pay back the government assisted loans and pay back individuals salaries covered on the furlough scheme.

On top of this, I ask the question what have you or your financial adviser done to hedge your portfolio against Brexit? (haha! That word again, it’s still there!!) 

It’s frightening to think about what the future may hold, with economies, cultures and technology changing so fast. Who would have predicted 100 days ago that most meetings around the country would be held by Zoom technology and many employees will now continue to work from home.  What will happen to City Centres as buildings become redundant due to less demand?

But we can give ourselves a helping hand if we act quickly enough and reclaim our money from these large financial institutions there are other, more financially efficient, ways to invest. Creating sufficient wealth over our lifetimes will enable us to have choices in later life. Being dependent on others in the future, I do not believe will be a happy place. 

The question is, how do we create additional wealth without putting additional pressure on our current expenditure? With low interest rates and uncertain investment returns, creating additional wealth from the money we have accumulated to date, has become even more important.

However, suppose I could share with you a way to create additional wealth from your existing portfolio’s (just like I have in the performance graphs earlier)… just by using a transparent, financially efficient way of investing, using Nobel Prize winning academic data. The data is available to all investment managers, it’s just the big boys have their own way of making money to cover their costs. My approach is that this is your money and it is you who should benefit.

If you would like more information or to discuss anything mentioned above, please contact us or request an SOS

Keep calm and keep investing.

I have relied on Hannah for financial advice and support for a number of years now, in what has been a very turbulent time in the financial markets. Goldsmith continue to look for innovation and always strive to take the administration pain away. In a world where people in the financial services industry believe that they are owed a very good living by the rest of us that are not in that world, their approach is down to earth and their focus on supporting their clients is most welcome.

Dr R Fisher