February 2017 - Making a Difference

To laugh often and much, To win the respect of intelligent people, and the affection of children, To earn the appreciation of honest critics, and endure the betrayal of false friends, To appreciate beauty, To find the best in others, To leave the world a bit better, whether by a healthy child, a garden patch, or a redeemed social situation, To know that even one life has breathed easier because you have lived. This is to have succeeded. When I started this month’s newsletter I was going to talk about our technical developments where we are making independent financial advice available online at no initial cost and a very low ongoing cost. However the funeral of close member of the family put that on hold and returned me to the eternal question of ‘what is it all for?’ The quote above has been on the front page of my website for over ten years and while in the meantime much has changed on the website this quotation has gained intensity and meaning. When I started helping people with financial advice 27 years ago in January 1990 I became aware that many people do not understand money, they needed help, and this was my chance to make a difference. In this aim I have been successful most of the time. I am lucky to have some wonderful clients and I am always delighted to receive their comments such as the comment that I received from Marie last week: I just wanted to say a big thank you for your words of encouragement. True friendship multiplies the good in life and you have it in abundance. I'm so lucky to have you as my Financial adviser and friend. Comments like this are worth far more than money: I haven’t always got it right and sometimes service could have been better (even Marie knows that because she has been kept waiting at times), however balancing giving my time for often ‘too little’ return has meant that sometimes it was impossible to do more. I chose not to focus on higher paying clients because I was reluctant to leave the clients on lower incomes and with low levels of assets to the wolves. My first two clients from January 1990 are still my clients and I am now helping their children. I am currently working on a series of ‘client stories’ to illustrate where I have made difference which will be coming out over the next few months and I hope that you will find it interesting reading. I am reluctant to finish on a cynical note but on reading the above my business adviser said: “Clients have to be able to take good advice and recognize what is being offered and follow through. Clients often get ripped off to the point to which they deserve!” This is very sad but true - another way of saying: “you can take a horse to water but you can’t make it drink”. So well done to you for having followed through on my advice because I know that you are all better off as a result. I’ll pick up news of the online services next month. In the meantime, if you have any queries please get in touch.

January 2017 - Known knowns

“There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don't know. But there are also unknown unknowns. There are things we do not know we don't know.” Donald Rumsfeld US Secretary of State for Defence February 2002 We live in uncertain times and we may not know what 2017 will bring however when it comes to investment one of the things that we know is that Capital Markets work. We may or may not like many of the things that are happening in the political world but investment markets are neutral and they will strive to obtain a market return regardless of politics or circumstances. In case you haven’t read our Investment Policy statement for a while I repeat the number one clause below: ‘Capital markets have consistently rewarded investors for the capital they supply. Companies compete for the supply of investment capital and millions of investors compete with each other on a daily basis for the most attractive returns. This competition drives prices towards fair value so that on any given day a point of equilibrium is reached between the buyers (optimists) and sellers (pessimists) on the price of a security. This price moves randomly and almost instantaneously to reflect new information such that it is difficult for any individual to systematically profit from market miss-pricings. We therefore accept market rates of return. Many investment managers believe that they can actively exploit market mis-pricings by stock-picking or market-timing - the traditional activities of active fund management. If markets were not efficient then the brightest, hardest-working and most highly paid fund managers would be able to beat a simple buy-and-hold strategy over time. But nearly forty years of academic research has shown that traditional investment managers are unable to outperform markets by anything more that the amount we would expect by chance. Indeed, a multitude of studies has reached the same general conclusion: the average actively managed fund does no better than the market after fees, transaction costs and taxes.’ Our investment portfolios are designed to provide you with the market return and over time you can expect to receive a return on your capital. The amount of that return will depend on your risk profile which determines the amount of volatility that you are comfortable with. Risk and return are related so if you are a higher risk person you can expect a higher return over time. However a word of caution: it has been shown time and time again that investors who invest in portfolios which are too high for their risk profile usually get out when the markets go down and over time they receive much less return than the investor who chooses the correct investment profile at the start and sticks with it. If you would like to discuss our investment policy in more detail please get in touch. You can download a copy from our website at: http://www.interfaceifa.co.uk/documents.php Please get in touch if we can help.