I know we are often surprised at how quickly time goes, but when I looked back and saw that the last News & Views was at the beginning of June, I was astonished, as I had not realised I’d left it so long and tomorrow it will be September!
On reflection, it’s been a busy few months, not only in the business sense, but on the home front as well.
You may recall that back in June I was talking about Consumer Duty, which is a whole raft of new regulatory requirements brought in by the Financial Conduct Authority in the UK, with effect from 31st July and like every other firm in the UK, we have spent many hours pulling together all of the new requirements and ensuring that not only do our processes and systems fully meet with the new standards, but, that we can also evidence that we can tick every box as required. I have to say, the biggest challenge is the evidencing and I think by now, our staff are getting fed up with hearing me use that word. Unfortunately, our Regulator has, for a long time now, had the approach that “if it’s not written down it didn’t happen”, and this is one of the reasons why we have to create so many copious notes about all that we do. Oh for that paperless society we had expectations of!
Whilst we were given the best part of a year to get all our ducks in a row for Consumer Duty with a deadline of 31st July, rather than this being a finishing line, it is a starting point and from here, going forwards, we will be evolving our processes to ensure that we stay on top of the requirements.
The most important thing to stress here is that this is all about consumer protection and ensuring that we, as Financial Advisers, not only have sufficient knowledge of the regulatory requirements, but also, that we know our clients well enough to make sure that everyone we work with is benefitting from these protections.
Ironically, one of the requirements of Consumer Duty is clarity of information and ensuring that our clients understand what is being provided to them. That goes hand in hand with an ever increasing amount of information, both technical and regulatory, that we are supposed to provide as part of the service – without doubt, this creates a conflict and one of the decisions that we have therefore taken, is that going forward, as far as possible, we will be separating the summary of objectives and advice that we are giving from all the technical and regulatory information that will be provided at the same time, but as an Appendix or Adendum to our advice document rather than creating one huge un-user friendly document. The fear here is that providing too much information in one place, can create snow blindness, such that the important factors are not clear to see.
Whilst this is a challenge for us, my message to you is that if ever you receive information from us that you are not clear about or uncertain of, please do raise your questions, as not only will this help us clarify things for you, but will also help us to learn how we can do things better going forward.
Consumer Duty is without doubt, a turning point in the financial services industry in the UK, but one, which should in time, be beneficial for all.
Markets – Sell in May and Go Away….!
‘Sell in May and go away’ is a well-known saying in the financial sector and really, is based on historical underperformance during the 6 month period from May to October. It is also often the case that the levels of trading during the summer months are much lighter and therefore, arguably thinner trading markets are more easily influenced.
Looking back over the last 3 months, whilst the UK may be showing signs of underperformance, other areas around the globe, including the US, Europe and Japan, are bucking that trend.
Taking the US as an example though, the S&P 500 Index on a year to date basis, is showing growth in the region of 18% and yet, if you strip out the top 7 Companies listed, those being Apple, Microsoft, Amazon, Nvidia, Alphabet, Tesla and Meta, the picture is somewhat different.
Those 7 tech stocks are the ones that have been driving the market largely this year and ironically, they were the biggest losers in 2022. Without these, the rest of the Index is relatively flat and arguably, looks much more like the UK FTSE 250.
The rollercoaster route of these 7 Stocks through huge negativity in 2022 and an equally huge rebound in 2023, highlights the dilemma that Investment Managers have – do they chase the big names only and accept the rollercoaster ride or is this a dangerous game to play?
The answer to my mind is clear, that for the majority of people, they need diversity and whilst these Stocks should form a part of the portfolio, either directly or through funds that invest in them, achieving a balanced and sensible return over time (without too many sleepless nights) relies on a diversity through a spread of investments, which of course, is the approach the Fund Managers we work with take.
Over the last few days, we have seen some positivity in markets globally, and as always, it begs the question as to whether this is a short term blip or the start of a rally towards sustainability. As always, that’s a question that can only be answered accurately with hindsight, but as the rate of inflation continues to fall, we will see interest rate policy take a breather at some point and there will undoubtedly come a point in time where Banks need to start lowering interest rates once more, to stimulate the economy and by association, the markets and so the cycle goes on!
Autumn Colours and Home News
I’ve always been slightly confused as to whether autumn starts on 1st September or with the autumn equinox later in the month. I thought therefore, that I would try looking up the definition of autumn and the first “helpful” answer I came across is that it’s the period between summer and winter! A little further research then went on to say that actually, it’s September to December in the northern hemisphere and March to June south of the equator.
Whichever definition you care to use, it’s clear that the evenings are getting longer and before long, we’ll see the colours turning on the trees – we’re just starting to see the first hints of that as I look out of my window at the East Sussex landscape.
We actually moved to Battle in East Sussex at the end of July, and this is the first time that we’ve lived outside Kent, so to a degree, it feels as though we’re simply on holiday, but we’ve taken all of our furniture with us!
Looking ahead for the remainder of the year, I wonder just how long it will be before I hear the first Christmas jingle in the shops, or the first advertisements will appear.
With the autumn, also brings winter flu jabs and Covid jabs for those who are eligible, and we’ve just heard from NHS England that they’re bringing forward the programme this year because of the concerns about a new Covid variant. The Covid vaccine will be available from 11th September, with a recommendation that all people over the age of 65, together with those who are considered vulnerable, should have these as soon as they are available and the roll out will probably be between 11th September and the end of October.
As the NHS website states ‘vaccinations are our best defence against flu and Covid 19 ahead of what could be a very challenging winter’ – we should also perhaps remind ourselves of the precautions we took in terms of hand washing, sanitising and mask wearing – prevention being better than cure.
My plan going forward is to be writing News & Views more often and so I will be in touch again shortly, but in the interim, take care and stay safe.
Best wishes from all at ABC.