Invigorated meeting investors face-to-face
U COMMENT Keynote speaker Tom Ham, group chief executive and founder of Calton, was excited to engage with the country’s investment community at the conference in Edinburgh last week
So with the Scotsman Investment Conference under my belt, it’s time for some reflection. Perhaps my main one is this: no matter how convenient webinars are, there remains no substitute for meeting in real life.
To me the joy is in the little conversations – in the coffee queue or wherever – as much as in what we hear from the stage.
It was great to meet so many people from all across Scotland’s investment community, from the largest fund managers to the gentleman who described himself as “a retiree with a spreadsheet”.
The thing about gatherings like the conference is that it brings people together to talk about shared enthusiasms, showing that whether we’re of the investment industry or just use its services, we’re really not that far apart.
In my keynote, I took the opportunity to show how that gap between investment industry and client is narrowing. Through developments in technology, we are now at a stage where you can be your own fund manager without needing a suit, or – this is the clever bit – having to pay the person who wears the suit.
The investment industry has helped millions of Scots make provision for their futures over the past decades. But, if we’re honest, it’s struggled to keep up with the technological advances we’ve seen in other industries. As a result, your investment solution either tends to be one-size-fits-all in classic funds, or highly bespoke and expensive. You don’t get much of a choice beyond that.
That question of personal choice was at the heart of my session at the conference. In the age of hyperpersonalisation we are offered endless choice, but it often leaves us cold. Our preferences and habits are tracked and used to sell us things based on that random something we once searched for, but which now follows us incessantly round the internet like a sad puppy.
Instead of trying to sell you stuff, we want to show how the same techniques can help us to provides better choices in investment, without incurring huge costs. The same personalisation, but used responsibly.
ESG (environmental, social, governance) investment is an area where personal choice should be encouraged. It’s also an area where great power can be used in a way that ensures everyone benefits.
As I told the room last week, environmental, social and governance preferences are different for different people. Jane wants to run a zero-carbon portfolio; John wants to avoid Big Pharma. Samantha is happy to include defence stocks; Samuel doesn’t want fast fashion in his portfolio. How can we do this without inefficiency, make-work, and vast costs?
To answer that, we first need to look to the US, where a technique called Direct Indexing has been taking the industry by storm. This involves index investment – so following, say, the S&P500, but instead of buying a fund, technology allows investors with even modest portfolios of US$5,000 to buy all the constituent elements of the index directly, in the right proportions, and at a very low cost.
This capability has now come to the UK, but we at Carlton have taken it a step further than our American cousins. I’d be lying if I didn’t admit that this is extremely satisfying. We call it Custom Indexing.
Effectively this allows you to replicate an index – let’s say the FTSE 100 – without having to buy a fund.
But instead of just getting what’s in the index, you can screen stocks using filters including comprehensive ESG criteria.
You then have the option to exclude individual securities – perhaps you already have a shareholding in a particular company. The end result is that you have a personalised version of that index without the need to be in a fund.
Custom Indexing is about gathering information and taking action to ensure your investments match your attitudes and beliefs. What’s more this all happens in a fee-efficient manner. And at the risk of blowing my own trumpet, we are the only financial planning firm in the UK to offer this at present.
So there we have it. Gatherings like the Scotsman Investment Conference are opportunities to launch exciting new stuff in front of real people. We can take stock of where we are and plan for the future.
There was lots of great chat about emerging markets and AI, about the great returns from investing in female-led businesses and how we tell stories about businesses and investment.
We asked ourselves, what’s the best investment strategy for 2024? My answer? What it’s always been – choosing something that you can live with.
No matter how convenient webinars are, there remains no substitute for meeting in real life