Tips from the £16bn investor
IT HAS been an awkward time for the UK insurance industry. Last week, former Independent Insurance chief executive Michael Bright and his two co-defendants were jailed for conspiracy to defraud. So what does one of the industry’s most accomplished figures make of the damage that has been done?
“This was a rare example of a dishonest person pulling the wool over the eyes of the public and indeed the regulators,” according to Sir Mark Weinberg, who at 76 remains an influential figure in the financial-services sector. Beyond this specific case, the public has little to worry about, he insists.
“The soundness of the overwhelming proportion of the insurance industry, and indeed of the banking industry, is beyond question,” he tells JC Business.
Sir Mark, the founder of Abbey Life Assurance and Allied Dunbar Assurance, is currently president of financial-services provider and consulting firm St James’s Place (formerly J Rothschild Assurance), which he co-founded in 1991 with Jacob Rothschild. It now manages some £16bn of funds.
He acknowledges that the industry faces a challenging time as it moves from old-fashion insurance-selling to “wealth management”. “Managing wealth sounds better than selling life insurance,” he says. “The phrase itself is very vogue and is replacing life insurance, putting heavier obligations on you as a life-insurance company.”
As more of us define ourselves as “high net-worth individuals”, demand is growing for more complex insurance advice, and access to investment tools such as hedge funds. Inheritance tax is a key concern for his clients, but he advises: “One should never choose an investment because of the potential tax benefits or savings.”
He sees the recent credit crunch as proof that mathematically based computer models are dangerous tools for planning investments. “The simple truth is that the real world doesn’t correspond to the assumptions made in mathematical models, with the result that several hedge funds run by large international banks have recently seen large falls in value because of the occurrence of events that their models predict will only happen once every 200 — or even 2,000 — years.”
Pressed for investment tips, he cautions that “things happen, which you cannot predict. Investing is not based on science nor mathematics, but common sense.”
His “four simple rules” are: “Invest for the long-term; before you start, make sure that you have enough liquidity set aside to live well for the next two years; spread and diversify across asset classes as much as possible; and, finally, choose the best possible investment managers you can find.”
Sir Mark’s career in the industry spans more than 40 years, during which he says he has started again — twice. Born in South Africa, he is a qualified barrister who moved to the UK in 1962, where he received a masters in law from the London School of Economics.
But “not having the stomach” to start practising law for a second time in the UK, he founded Abbey Life Assurance.
“When I was practising law in South Africa, I was doing some legal work for Sir Donald Gordon on his Limited Life company and realised I had a natural interest for marketing.”
On moving to the UK, Sir Donald agreed to put up 25 per cent of the £50,000 start-up capital for Abbey Life. Sir Mark reflects that the same start-up today would require around £5m.
Almost 10 years later, Abbey Life was taken over by the ITT Corporation and Sir Mark left the company, starting up Hambro Life Assurance, later Allied Dunbar Assurance. He was managing director until the early 1980s, helping it grow into one of the largest life-assurance companies in the UK.
History then repeated itself as the corporation was taken over by BAT Industries, leading Sir Mark to leave to establish J Rothschild Assurance in 1991. It was renamed St James’s Place in 2006.
With more time on his hands after stepping down as chairman two years ago, Sir Mark began to look for other projects to get involved in. But the latest venture that has caught his attention was one he “would never have predicted”.
He was put in touch with skin-cancer specialist Dr Marko Lens, who was looking for investors for the development of his “anti-ageing” skin cream, Zelens Skin Science.
“The cosmetics industry is not something I thought I would get involved in, but he asked me. I swallowed hard and backed him.” The company, which exclusively supplies Space NK stores, is run by Chief Rabbi Sir Jonathan Sacks’s son-in-law Elliott Goldstein, who had previously been working as Sir Mark’s personal assistant.
Sir Mark’s wife, designer and hotelier Anouska Hempel, is also involved in the business, creating the product packaging. “We both became fascinated by it. It is nice working with Anouska.
“She has a considerable career of her own which I take a lot of interest in, although I think she would throw me out if I got too involved in her work.” The couple have six children between them and home is in Holland Park, West London.
And while he goes into St James’s Place’s Mayfair offices every day, “I don’t get up in the morning worrying about yesterday’s sales figures”.
He is a trustee of the Clore Duffield Foundation.
Sir Mark Weinberg: “Investing is not based on science nor mathematics, but common sense”