92 - Star Fund Managers: Fairytales or Superheroes?

TRAP LIVE26 tickets on sale here: https://www.therealadviserpodcast.com/

In this latest pile of TRAP, the Trap Pack discuss

• Topical Titbits
• Meat and Potatoes: Star Fund Managers: Fairytales or Superheroes
• TRAPist question from Sean Lowson: LinkedIn.com/in/seanlowson
• Culture Corner

Show links: http://tiny.cc/traplinks

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Transcript

Unknown: 0:10

Matt, welcome to the real advisor podcast. T R, A P twerp. Please follow us and join in the conversation on Twitter at advisor podcast, where you can suggest ideas and themes you'd like the trap team to discuss. Also remember to like and subscribe to our YouTube channel and leave a six out of five star review on iTunes. Doing all this really, really helps us, which means we can do more to help you. Now, let's head over to the studio for the latest pile of trap you

Nick Lincoln: 0:49

welcome back, dear Trappists, to what many people are calling episode 92 of the real advisor podcast, T, R, A, P, trap my name is indeed lick Lincoln, and joining me as ever in the digital studio of Doom are the three other Horsemen of the Apocalypse, Alan, the storyteller, Smith Andy Ultra, heart and Carl della voce, which is italiano joined for the voice the Young. Young.

Alan Smith: 1:17

Watch now. We've had all sorts of stuff on this opening. If you're listening to this, do jump across to YouTube, because you'd have seen two things. One is Mr. Widger Jr, aka Robbie appeared briefly on the screen wearing an Italy shirt. And the other person is lick nincoln, who looks like he's dressed for a funeral

Unknown: 1:39

with his full Italian love is Italian? Yeah, the mafia kind of a scenario. Yeah, italiano.

Alan Smith: 1:47

I'm totally Italian for English rugby, as Carl said earlier, I am. Yeah, let's see. Let's, let's chat rugby

Carl Widger: 1:54

for a minute. Shall we? I've got more than a minute to chat rugby. Alan, if you want to chat for a good while about rugby.

Unknown: 2:01

Let's think about the audience.

Alan Smith: 2:03

Yeah, I just got to say, I I spent Saturday afternoon in a an establishment in central London with my good friend and the most English person in the world, Nick Lincoln. And can I say it was a joy? It was wonderful. This doesn't happen. This is like a once in a lifetime time Scotland actually performed outstandingly, well, amazing knock up 50 points against the French, and then subsequently we sit around watch the England Game and Watch them lose to Italy. So it was a great afternoon. I will say, in Nick's defense, he was very magnanimous in defeat. He took it very well. I think, I think he just given up halfway through the England, Italy game. And I was so boring

Carl Widger: 2:52

one time where a guy got got a hump at half time, about

Nick Lincoln: 2:58

four, half time before half time cars, when he said, No, when he went about 18 nil down, when they're down or something, he stormed off. Yeah, it's great. It was very, very good. And the first game was fantastic, and the second game was dire. And by the end I was I was kind of rooting for England to lose, just so we can draw a line under this period of our rugby. There we go. It was afternoon, well spent. Okay, let's put a timestamp on episode 92 which I had to draw very quickly because it wasn't on there, hence me being late to turn my camera back on. Episode magic, two of the real advisor podcast. Let's get things going with some more high energy review, read or read from my right honorable friend, Mr. Andrew Hussein Hart,

Andy Hart: 3:35

thank you, Nicholas. Let's hope Scotland can do it this weekend and bring the championship home. Okay, the review this week is from Jessica York. Just want to say a big thank you for the content you put out. I've been studying for my level four diploma with the support of The Verve foundation and your podcast has been an absolute game changer. It's been a real tonic to the dry text, but heavy content I've been wading through a year ago, didn't have a clue what a GIA was. Last week, I got my final pass and officially achieved the diploma. Even better, I've just secured my first role in the profession thanks to you guys. After you mentioned a name of the person, name of a firm, last October, I took a chance and reached out. Fast forward a few months, and I'm about to start there as an advisor. Turns out a well timed name drop can genuinely change a career. I'm finishing up my current role as a teacher, wow, packing a lot in this final year, at the end of this academic year, and then looking forward to starting some full fat financial planning. Thank you. Again, genuinely entertaining, informative and clearly altering a solid six out of five stars from me, best wishes. Wishes. Jess, back to you.

Nick Lincoln: 4:54

Nicholas, yeah. Absolutely amazing. And Jess, Jessica York, she was not just she was. Had a good career in teaching. She, and this is all the public domain, by the way, because she's put this out on LinkedIn a couple of days ago announcing her career transition. She was head of biology at, I believe, I think it's called the Malvern school in Exeter. Very good independent girls school. It's been around since the 17th century. So it would have been a well remunerated role, I'm sure, and a well perceived role to have, and she's gone from that to this, and that message was absolutely amazing. And we wish you all the best, Jess, in this thing of ours. And what we'd like to do as we can make contact with you and keep in touch with you, and maybe have you on the show a year or two into your development, just to see how things are going. Because certainly, for me, the best part of this is when we, when we, when we when we get those messages anyway, but then when we speak to people who've made the jump, it's and that's not just going from a firm, whether you don't think they're doing it right, that's going from a profession, a completely different profession, into this thing of ours. And that's

Andy Hart: 5:49

an amazing, amazing and doing the exams in a final year. I mean, there's a lot to take on, so huge congratulations.

Alan Smith: 5:56

I agreed, Nick, it's one of the most rewarding things of doing this podcast, because we do see this reasonably regularly, people making material changes and decisions to their lives and careers and trying to improve themselves and get on and embrace this thing called Full Fat financial planning. So it's it's really, it's heartwarming, it's lovely, just really, really nice.

Nick Lincoln: 6:21

And sorry. Andy, we've got another one there. You reading that? Run out. Are you saving

Andy Hart: 6:25

that? No, that's all good nick we can move on. Okay,

Carl Widger: 6:28

yeah, I agree. Alan, it's one of the most rewarding things about this podcast, that and the serial under performance of the England.

Nick Lincoln: 6:36

There aren't many rewarding things, but that is definitely that kind of stuff is amazing. That's just love. I mean, I mean, I show this to Penny and stuff, and, TLP, you know, she got she's just blown away by it. And because I think it is amazing, it's just lovely. Okay, let's put a timestamp on the hastily written. How does 92 look? Given up? So candy with my numbers. That's not, that's not bad.

Unknown: 6:54

They're way better than the eights. Anyway, yeah, yeah, really.

Nick Lincoln: 6:58

Okay, all right, yeah. Where else do I struggle with the sevens? I think we're a bit of a nightmare, aren't they? Basically, anything that involves my brain is difficult. So let's crack on with episode 92 put a timestamp on episode 92 of the real advisor podcast, and we'll do that via some topical titbits. We've got a full slate today, but of course, rushing up, coming back up the you bend, you flush it away, but it's coming back up at us. Is trapped live for this year. So we got some details on that, some housekeeping, and we'll start off with you.

Alan Smith: 7:23

Smithy, yeah, got a couple of announcements to make relating to trap live coming up on May 13. May 13, one job round about then mid May 13 of May. Yes, me, 13 to me. So I've got a couple of points. I think Andrew has got a something to mention as well. Yeah, crack on with them. Then. Okay, for those who are, for those who are traveling to London, I think we know that there's, there's a number of events on on that in that sort of around about that 48 hour period. Brett Davidson has his event on earlier in the day. Trap live in the evening, and we've got advisor 3.0 the next day. So for those who are planning to stay in London, who are not from London and they might be looking for accommodations, so I've managed to secure a discount at a really good hotel, central London hotel called the Mandeville. Don't know if any one of you have been to it, but it's, uh, I know it as well. It's walking distance from the venue. We've got a good discount for those, either just room only or bed and breakfast. Link to the hotel's website, and the discount codes are on the show notes. So if you are looking for a recently priced hotel in central London to come and stay on that evening. Then please check out those, check out the show notes and check out the link and book your room for the night.

Unknown: 8:51

May well be staying there myself. Alan, there we go, my crew. So yeah, great.

Nick Lincoln: 8:56

There you go. You can, you can rub shoulders, metaphorically, hopefully with with the great watch, if you stay at that state of that place and Andy, we have some, normally we have they're quite well lubricated. Some are our audience, aren't they? How are they getting lubricated this year?

Andy Hart: 9:11

Ultra Yes. So if you're a bit of a loose end during the day and you don't have much on and you want to get together with fellow Trappists, there is a gentleman called Chris Emmett, who is a bit of a global, International Man of Mystery, international financial advisor, good friend of mine. He actually lives in hatchend originally. Anyway, he's got pre drink shenanigans going on a secret location. So if you wish to contact him, his link is in the so called Show Notes to his LinkedIn. So say, Hey, Chris, what's happening with the pre trap live drinks, get together and it'll give you the information. So that's that. Back to you, Smithy for the final big announcement.

Unknown: 9:50

I may, I may also be at Chris's that afternoon. No, I won't. You won't be. You get very nervous that day.

Alan Smith: 9:57

Watch, despite we've. We've got strict rules of professionalism.

Nick Lincoln: 10:03

Previously, the one day when we are vaguely professional for most of it, it's the one calendar, yeah,

Andy Hart: 10:08

walk chat, love, yeah.

Alan Smith: 10:11

Hopefully, just get in. Get in the zone. Get prepared. The other thing to announce is, as is has become our tradition, we recognize that there are some people, generally, a little bit younger, in our community, in our profession, for whom shelling out whatever it is couple of 100 quid is a bit punchy to come and attend the event, but they'd love to be there. They'd love to be be part of that community, rub shoulders with the great and the good. So as has been traditional, we are going to offer up to five scholarship tickets. In other words, freebies, free tickets for you to come along. If you are kind of you'd love to come along, but you can't quite stretch the budget to pay for a normal ticket. So the way to avail yourself of those, and the only way we can do this properly, is first come first served. So obviously, this podcast goes out in the wee small hours of Wednesday night, Thursday morning. So as they say, Early Bird definitely catches the worm. If you're up to five tickets are available, you would again check the what are we saying? Just send an email to the on the website. Are the real advisor podcast.com? Jump on the website. There is a method of communicating with us and

Nick Lincoln: 11:28

just basically give us your sob story. Tell us why you are deserving of a free ticket. Okay, I'll leave it at that,

Alan Smith: 11:38

as if we didn't rehearse this, which is what we hit record. So anyway, get in touch with us. Tell us why. Tell us why. We should give you a free ticket, and the first five who give us a compelling reason will avail themselves of a free ticket, and you can come along and meet us all on the day and on the evening. That's it for me, for now. Brilliant, superb.

Nick Lincoln: 12:01

Okay, we got track trap track survey. Is that just all right?

Alan Smith: 12:04

I was gonna, I was gonna carry that over, but now that you've mentioned it, he's mentioned it now, so

Nick Lincoln: 12:08

it's not, there's a slate. Take it off.

Alan Smith: 12:12

We're gonna send out a brief survey. So please make sure that you are registered to receive our emails. If you're not on our email list, you won't get this information. So get on the I mean, everyone who's bought a ticket for trap live is on our list, but others who can't make it along, please do register to receive our communications and our emails again, go to that website, the real advisor.com, and register to keep in touch with us, because we're going to send out a brief questionnaire survey, just to learn a little bit more about what is on the minds of our beloved Trappists, the real

Nick Lincoln: 12:46

advisor podcast, calm said, No, you didn't say, okay, okay, Christ, on a bite. We should drink more. I think we'd be more professional. I think we'd be more professional. I think we better. We're all doing this stone cold sober. It's complete and absolute, absolute shambles. Okay, right now we can actually get into topical tidbits. We're only 87 minutes into the show, and we're going to start off. Oh Christ, all right. Go on ultra

Andy Hart: 13:15

Okay, over to me, right. So this is annual letters. I'm a bit of a fan of annual letters. Usually it's written by a thought leader, usually a CEO of a company. And when they start doing these letters, they then generally stick to them. I think the original person to put an annual letter out was Mr. Warren Buffett. Buffett, I think he's been doing it since 1967 I've read the bulk of them, but the one that caught my eye last couple of weeks was the Collison brothers of stripe. They do an annual letter. They've been doing it for a few years now, but I read the 2025, one, and also on their podcast. He read through it with adding a bit more color to it, so some sort of wider mention for annual letters. The other annual letter that I've read in entirety is the Jeff Bezos one for Amazon, which is superb. I mean, this is free thought leader content out there that you can consume, certainly if you're a voracious reader. So the ones that I'm aware of are Warren Buffett, Jeff Bezos, Jamie diamond of JP Morgan puts out a great one, and Mr. Terry Smith of fundsmith puts out one more on him later. The one for stripe is brilliant. It gives you a huge insight into the into the internet economy, which is the bulk of the economy, really, at the moment, and growing. He talks about the pace of how quickly companies these days can hit 100 million annual recurring revenue. And they've got all the data stripe because they work with all the biggest companies. He talks about companies now launching globally, not country by country. He's saying the companies that are the most curtailed by innovation are finance companies, oddly, because there's so much regulation around them. So if you're setting up a, I know, for example, an Airbnb or something like that, that's less heavily regulated, you can make you can crack. Global Product or global company quite quickly. So it's my, as I say, brief mention about annual letters. I really enjoy them. The one that I read recently was the stripe brothers one, it sounds like you've maybe read it.

Carl Widger: 15:12

Carl, yeah, I actually watched it on YouTube, which is the way I recommend everyone does. And the fantastic thing for us, in fairness to these guys, is he mentions a few things about the infrastructure problems in Ireland, and I can't tell you how much that lands here, that people that the government are taking, you know, notice of what those striped boys are saying. So I love the fact that they're true to their Irish roots, but I also loved the way they spoke about how they deal with their own clients, like their clients and most of their new clients. He was saying, are early startups, and yeah, treating them really well, and and meeting them where they're at, and that kind of stuff. So I thought, like, like, you're saying, right? It's thought leadership about, you know, how to build a business, how to grow business, how to look after your customers. Yeah, I sold through. I forgot to actually mention it. Andy sold through, as you mentioned, it really, really good stuff.

Andy Hart: 16:04

And I could be getting the numbers slightly wrong, but stripe have got a product. It's called Atlas or something, and it helps companies register new companies where they set them up. I think Stripe are responsible for 25% of new companies registering in Delaware at the moment. So they're doing some awesome stuff. Stripe. So yeah, there's, a lot more more to it than just a simple payment processor. I mean, I personally pay stripe a lot of money every year, and I'm a tiny little company, so let alone the amount of money that that company's raking in from all the enormous organizations that they're they're looking after. Let me make any comments dinner

Nick Lincoln: 16:35

party note, when my next dinner party with the conversation lags, I'll be sure to bring up the fact that stripe are doing 25% of the corporations in Delaware. Of the corporations

Unknown: 16:43

in Delaware, because that will just get some more dinner party conversations flying.

Alan Smith: 16:47

There we go. No, just to say that that Carl is now only the third most successful man from Limerick,

Carl Widger: 16:55

yeah, where my kids were, my kids went to school, and my daughter, Emma's still in school in Castle, Troy, college, which is mental

Alan Smith: 17:05

amazing. Yeah, okay, done, always done, good.

Nick Lincoln: 17:09

Back to planet earth. Storyteller,

Andy Hart: 17:12

oh, this is, this is a cool car.

Alan Smith: 17:16

Well, this, this is, it's a recurring theme, and it keeps coming up because the story evolves, we'll be aware, and I think we might be talking about this later. But the we know, the UK government, through the Mansion House presentation, wants to have UK pension funds allocate more to private funds, private companies, private equity markets, private markets. There was a press release put out very recently by an organization called pensions UK. Pensions UK are effectively a lobbying body on behalf of the pensions industry in the UK, and they're really pushing back on this. They're asking that the UK Government rethinks the because these the Mansion House accord was a voluntary commitment, but it's now going through the reading. There's a bill, and the government have kind of quite sneakily added a few more things to it, after the speech by Rachel Reeves, which is to basically to say that this, these kind of outlines of how much should be allocated, 10% should be allocated to private markets. Then I was saying that's a minimum, and the government would look to mandate higher amounts than that. And he wants to bring it in sooner rather than later. So this, this pensions, UK, have requested three critical safeguards, either to put a cap on it, so if you do want it no more than 10% can be mandated, no more than that, they want. And they want a reduction. They want it to be phased in over a longer period of time, because the government wants to sort of rush this in pretty quickly. I think we've talked about, talked about this in the past. We know some of the reasons why government is trying to push this in, in at a headline level. It looks quite attractive, because it's a way for, you know, to encourage business growth, private market business growth in the UK. But they've gone about it. We've all agreed to think they're going about it in the wrong way. Government have no authority or right I don't think to mandate private company pension allocations, which are made on behalf of their membership. But it looks like after this initial report has come out, the government are trying to push this bill through. Is currently going through its reading at the moment, and pensions UK are pushing back on this, asking it for a rethink or for more time, because it's just it doesn't land well with pension schemes in the UK.

Nick Lincoln: 20:11

Yep, yeah, yeah. I'm totally in agreement with you. It's a disaster, yeah, yeah. Well, when this came out, I did say last year, think, Oh, that's a nice little pension fund you've got over there. It would be a shame if something happened to it, wouldn't it? I mean this, you know, they are. They're just going to bull, they're just going to Bully, bully pension funds into doing something that's entirely wrong. You. Entirely wrong. There's a reason. There's no investment in this country, and the politicians are the bloody reason, and here they are leading us down a path it won't work. It will not pan out well for anybody involved. Put it that way, okay, presuming that we've got a thing else to say on that, watch.

Carl Widger: 20:44

Yeah, good. Good article in the currency by a guy called John Luby. John Looby writes really well. He's a really good writer, and I don't agree with everything that he says, so I'm always interested to see what he's saying. So he wrote this article, and I like the way he said it out, right? It's about risk aversion, right? So that we're all kind of risk a person, we're doing things that we shouldn't necessarily do with their investments, even though they're long term. He it's a really great article. He calls out Daniel Kahneman, not calls out. He quotes them. Taylor talks about Warren Buffett. And then at the very end, after he's made his his his kind of argument, he kind of says, and there's obviously nonsense happening in the Middle East, and markets are having an adverse reaction to those. And if you've read above and you understand that it's logical, well then basically his point is, sit in your hands and do nothing. So I just thought it would be a really cool article. Now it's behind a paywall, and it is an Irish publication, so not sure this is much help to our UK listeners, but for the for the Irish advisors there, it might be a cool article to have in your back pocket, if you've if you are getting phone calls from clients at the moment who are a bit nervous, you probably Haven't, if you've got your investment philosophy, and you've been telling the story over a long period of time. But then again, your clients are investors, who are human beings, and it's okay sometimes for people to be nervous, and if they are, we got to meet them where they're at, which is basically the point that I mentioned earlier on about the stripe guys. So I would encourage everyone to have a read of this. So it's really well written, and it doesn't kind of start with, oh, uncertainty, volatility, risk in the market, blah, blah. Because when I'm reading a lot of the headlines in the papers, it's the usual crap, isn't it? Stock markets have heavy falls or whatever, and then you actually go, geez, I must have a look. And it's like they were down 1.2% yesterday. Like, you know, this will happen on a sunny July day and no notice, because all the journals on holidays. So, like, it's, it's ridiculous stuff, but bad news sells. We know that, you know, and people are getting nervous. We're watching bombs being dropped here, there and everywhere. It's like, is it the end of the world? It's not the end of the world, and it's certainly not the end of the investment world, human ingenuity will prevail every time. So recommend that article. Okay.

Nick Lincoln: 23:18

Well, said that man. Okie dokie, good grief

Andy Hart: 23:23

over to me. This caught my eye. This is innovation in the mortgage market open in that sort of bucket. I'm an ex mortgage broker, so I do keep a bit of an eye on the mortgage market, and I'm going to open up to you boys in a minute about the sort of that's okay, how? Anyway, I'll just mention what this is in relation to so this is a new mortgage by Skipton building society called track record mortgages. It's basically a mortgage aimed at renters, and they can show a track record that they've paid their rent, so they're willing to give them mortgages on very low deposits based on their track record. And there's various sort of devil in the detail, but again, just sort of mentioning it wider to full fat financial planners. I think if you can be calling yourself a full fat financial planner, I think you need to have an understanding of debt financed, the options that are available, because at certain times during clients life, you know, certain tweaks around mortgages, doing a bridging finance equity release, there's loads of use cases around debt. So just saying, Oh no, we just do investments and pensions. Don't look at all the other stuff. I think you're missing a trick. So I missing a trick. So I do say to people coming into this profession, yes, focus on investments, pensions, tax, financial planning, but have an eye for debt, because there'll be various times during a client's life where debt will be an important factor that they're looking at. Obviously, will, will, will outsource to their experts, but having a blind spot in your full financial, full fat financial planning business, I think is a bit of a mistake. I'm an ex mortgage broker, you know, bit of a man with a hammer. So I do see debt as a as a very important instrument in creating wealth for various reasons. So that's that. Alan Carl, sorry. Alan, hand raised,

Alan Smith: 25:10

I would agree with you. I think we've kind of alluded to this in previous episodes, that you're for most financial planners, the kind of ideal customer profile is somebody of a certain age. You tend to have little or no demand or need until maybe they get later age, and then maybe things like equity release and others as part of a. Of tax estate planning strategy, having said that these people, because of their kind of demographics and age profile, have got kids, and those kids are, I mean, it sounds like they are probably renting right now, and would love to get on a property ladder bank of mum and dad and all the rest of it. So we've certainly, over the years, created very useful partnerships with debt finance experts, depending on what the what, what the need and what the circumstances are, because that can really add value to your relationship with your core, you know, pre retirement client. So strong case for, you know, build your network. I've often said that the advisors, black book, all your contacts, all the people you know that you don't use every day, but every now and again, someone says, Do you know someone who could help with X, you say, yes, I've got somebody who's really good. You worked with a lot of our clients in the past. What do you think? Carl, yeah,

Carl Widger: 26:25

as you've kind of said a lot of what I was going to say, like, I do think understanding equity release. Andy, I think it's a very good point. And I think the kids stuff just on the track record mortgages like this is this is marketing framing at its very, very best, because with any mortgage that you're going to get out, you have to demonstrate that you're paying your rent. So I think that's probably a marketing piece. But I think the broader piece is really important. I think you're 100% right for, you know, for all the reasons you set out, I think you know understanding, having a good, good solid understanding, you don't have to be the expert, but a good, solid understanding is really, really important. So fair point,

Andy Hart: 27:03

because even quite smart clients have got massive blind spot when it comes comes to mortgages. They they don't even know basic things, like they can take out a new product with the current lender. They say, Oh, well, I've lost my job. Now I can't get a new mortgage with a with a new lender. So you can stay with a new one, take out a new rate. There's loads of just basic stuff they get wrong. So just be a bit more on the front foot with your clients that have debt as a full file financial planner, that's it. I think. Over to you.

Nick Lincoln: 27:27

Nicholas, hockey. Docky, thank you. So yes, we haven't talked about Iran, but obviously there are things going on at the moment that could be, we could look back on these with this could be seismic in a very good way, or seismic in a very bad way. We just don't know the minute, but certainly it is kind of spooking the markets and so forth. And we've had the pulling back of the Magnificent Seven, certainly this calendar year, and towards the end of last year, actually. And I came across an interesting article. He always writes interesting articles. Jason, interesting article, Jason schweig in The Wall Street Journal, behind a paywall, but the link in the so called Show Notes is one that I've shared with you do listeners so you can you will be able to read this. And Jason just starts his article off with a couple of opening paragraphs on the return of the things that we have always kind of believed in, but are transient factors in investing and actually investing, the value premium, the small cap premium, the point of having a diversified portfolio that includes quite a waiting in emerging markets, because all of those areas, international value, international small cap emerging markets have performed outperformed the S and p5 100 since the start of the year, and actually over the last 12 months. So who knows? Will this be a permanent return to those factors having Some so called alpha over the over the normal market, I don't know, but certainly I know that from my clients portfolios, they're doing just tremendously at the moment. And let's see. Let's see if that comes back in, because we know that large cap growth has been the dominant story of the last 510, years, really. And but these things do tend to come in cycles, and now more than everybody, dear TRAPPIST, and we'll come onto this with the meat of potatoes. If you're new to this thing of ours, the best favor you can do yourself is to make sure that you and your clients are in the most broadly diversified global equity portfolio you can find. And you're not taking bets, because bets in active management, they don't tend to pay off after after a while, they might pay off a little while the bookie will come and get you. In the end, the odds are always in their favor. They get the money, not you. So just a little article there, well worth reading, nicely written by Jason. If you guys have checked out your portfolios and seen how well they've stood up, if you're using a certain provider that begins with D and ends in L, no, I

Alan Smith: 29:27

think this is at the risk of repeating ourselves every time, but the word is, is, is the other word, beginning with D, which is diversification, and recognizing that when you have a properly diversified portfolio, a part of it will always be underperforming to the point everyone gets everyone you know when the s, p, s and p, or aka the mag seven was doing so well for so Long. So you try to you think, Well, I'm now underperforming because I've got International and I've got small cap and I've got all the value stocks, they're underperforming everything else. But that's what comes with the territory. You are never going to be able to predict the single asset class or part of that asset class that always outperforms everything else. So diversify. Diversification is your friend, and recognizing that part of it will be underperforming other parts of the market. Get used to it. Don't worry when your clients raise it and say, How come we're not beating this or beating that properly. Diversification is the way to go. Carlos.

Carl Widger: 30:30

It means, yeah. So I shared an article there trying to read my notes here, as I do it basically, yeah. So this does there was two pieces of news in the last week or the week and the week before. Number one is, there's a there's a firm called elk stone. They'd be sorry

Nick Lincoln: 30:48

car I didn't put in the spot that your hand was raised, so I thought you had something to add to the conversation with the conversation. We were just Oh no. How can we soar like pigeons when we've been shambles?

Alan Smith: 31:00

Carl, anyway, put your hand down, your digital hand. You might as well carry on now we completely

Carl Widger: 31:07

messed up. Oh yeah. Anyway, let me just keep going on this. So elstone, absolute shambles, are a private equity firm in Ireland that had kind of delved into the wealth space, and they have appointed a new CEO, the guy that founded it is kind of going to Chairman, and they put in a new CEO, and they're saying that their wealth division is under review. And then there was another article where a company called Lockton, who you've probably heard of, are basically selling out of the kind of individual wealth and health space. And I just thought it was interesting seeing these kind of two larger firms, Lockton to be a kind of a they're a global brand, and Alex stone certainly will be very well respected in the space that they're in, in Ireland, and really good people. And they both decided, hey, this wealth space is not for us. And yet, on the other hand, there's all this, you know, consolidation going on, and it's just, I suppose, the point here is that the strategy of, right, just get a shitload of money. And on the one hand, locked in, had acquired, you know, a couple of different brokerage firms, and sure, that'll all be grand without strategy. And then, you know, for elkstone to kind of do, oh, we'll do a bit of wealth, kind of on the side, even though it's not our core, it just doesn't work. And I know it's the first time in Ireland we've seen, you know, kind of a pullback. You guys have seen that a lot of we've spoken about it before, where firms would have gone into, you know, you know, spent many, many millions and then went off. That's actually not for us. We're going to back out. Whereas in Ireland, all we've seen is the consolidation over the last few years. And we're pretty early stages, I would still say, but it's, it's, it's a cautionary tale for everyone in this space that you know, just because someone has a big wallet and sticking a load of firms together and hoping that it works, our business is way more complex than that, and it's way more personal than that. And you got to think of two things. You got to think of, well, what's the service delivery to the client? But, and that's obviously the most important, because it has to be in the client's best interest everything, and it has to be a coordinated approach, but also putting a lot of different people together. Now, on the same team, can I would, I'm hearing in some places, is leading to some difficulty. So that culture strategy piece, as well as the service delivery, and then having an overall such strategy at everyone in the, you know, rowing in the same direction. It's not as easy as everyone thinks, and money just doesn't solve those problems.

Nick Lincoln: 33:51

Yep, yep. I think there's a recurring thing, isn't it, where firms collide together, cultures collide. And, you know, I mentioned that my son, you know, he works for an IFA firm, and they've been bought out by one of the better known consolidators, and they're just, you know, it's, it's, it's not all sweetness and light at various levels, both for the both for the, you know, the firm that the directors of the firm that have been bought out, but also for the staff that remain and adapt, that you get told certain things, and I'm trying to catch this carefully, but it's difficult. It's really, really difficult. And this thing of ours is so about the advice, about the end clients, isn't about the relationships. It's so about that. And it's so easy to fracture necklace.

Unknown: 34:28

Was that diplomatic?

Carl Widger: 34:30

But I guess in the two examples I've given that are in the news at the moment, both were the core business was not wealth and financial planning, right? It was, in lockton's case, it was employee benefits, yeah, yeah, sure, schemes, right? And it's like, you can't do it. You can't do it successfully and scale it to to a reasonable level. If it's an afterthought, this is, you know, this is hard. This stuff is hard. And it's very hard to, you know, scale it to any sort of a decent level, and especially if you don't have both eyes on the ball and on the game you're playing, yeah? So just thought it was interesting.

Alan Smith: 35:10

Yeah, look, Carl, you I think you spot on. You're right. These things are very cyclical. The grow, this is been the big play in the UK the last 10 years, which is m&a, private equity backed m&a and roll ups, buying a bunch of different firms and trying to smash them all together. We've already talked about the numbers of breakaways now happening, or the young advisors who are seeing. They're saying, I don't love this new ownership, this new structure, new support that I'm getting. So you were seeing, you know, we know behind the scenes of quite a number, and I think we're having at least one or two of them coming on the podcast in the future. The new game in town, though, and it's a conversation in depth for another time. Is this can continue. But with the new game, there's a really interesting white paper, I haven't put it in the links, but a paper written by my close personal friend, Dr Alok Shukla, who's he runs an organization called called implement AI, and he's talking not necessarily well for financial planning, but professional services. Professional Services being a 16, $16 trillion industry, club, management, consulting, accounting, legal, wealth, all those things up for huge disruption. If you were starting a business from scratch today and implemented all these wonderful new, exciting AI enabled tools to sort of do all the donkey work and the grunt work, you could create quite a different business model with the advisors and the other members of the team really just managing client relationships. That's worth that. Paper is worth checking out. It's quite interesting as kind of almost, you know, M and A mark too, because, as you say with these examples, in Ireland, it's no it's no longer working. Just trying to put together mature firms with different cultures, different styles, without a coherent strategy.

Andy Hart: 36:51

What we'll do, Smith, is, we'll put it in the show notes. That sounds really interesting, rather than bring it up again in the future. So we'll try and insert that into the show notes. Nicholas, it's

Nick Lincoln: 37:01

back to you, my friend. I've rejigged this slate so now Vanguard live strategy, global, your your episode by episode breaking down of this exciting break this is,

Unknown: 37:11

this is not going to move the darn much, is it. But this one

Andy Hart: 37:16

almost passed me by than a few boys knew. But Vanguard life strategy have an amazing fund called the live Strategy Fund. They're now introducing the life strategy global range. The main thing being, it is sort of more market cap done, this weighted. But we haven't. We have. We did it last episode. No, we haven't. So what they've done is they've got for funds with your granddad that, yeah, going out for baby granddad. It's what, what they've got, they've got two range of life strategy funds. Nick, they've got the ones that we know, and we've spoken about them, reducing the UK weighting in the normal life strategy funds. They've got a new range called Life strategy global.

Nick Lincoln: 37:53

We did mention that? Andy,

Unknown: 37:55

no, did we? No, I don't think we did. We mentioned, we mentioned that the decline from equity, yeah.

Andy Hart: 38:03

So the standard life strategy range is going from 25% in equity UK equities down to 20 and 35% in UK bonds, down to 20% in UK bonds. They've got a new range. Hence the new point Nicholas, called Vanguard life strategy. Global Life strategy and global are both being charged. At point two, we might have, okay, well, I'm just reiterating it.

Carl Widger: 38:29

I'll just put in there, because interestingly, the head of the life strategy range in Vanguard, Madison McCall, will be our guest on the next episode of All

Andy Hart: 38:41

right, I need to say no more there will be, of

Carl Widger: 38:44

course, you guys know, because I emailed you about that. But anyway,

Andy Hart: 38:49

sorry, I didn't know Madison's position, but Okay, fine. So and the fees are coming down, so All right, we'll move on. We'll hear full details all about the two different ranges sometime in the future. Back to you.

Nick Lincoln: 39:01

Nicholas, well, I have a point on this, actually, which wasn't mentioned in the last episode, although everything else was that. So this new life, the new 100% global equity fund, which is a global market cap weighted fund, correct? It'll be, I don't know what the difference between that is going to be in a Vanguard, global all cap tracker. So one or the other will have to go, I guess, because they're both gonna be exactly the same fund. But that's an

Andy Hart: 39:22

arcane point. I think they'll stay there. Nicholas, that Vanguard main fund you mentioned, is a pillar of my investment portfolio, my modern portfolio service. They'll keep the life Strategy Fund ranges. So they'll keep two life strategy ranges and that separate fund that you just mentioned.

Carl Widger: 39:36

But we will find out more on yeah, why don't I ask the person that's responsible for the life

Nick Lincoln: 39:41

strategy exactly, as if they're gonna know?

Unknown: 39:48

Okay, traffic, oh my god.

Nick Lincoln: 39:49

40 minutes in, and we still got quite a bit to go. So another one of these stories. Yes, well, I'm certainly and so is Andrew, and so is Alan. To a degree, we're strong believers in transact. And one of the reasons that we keep on going about this, and this is a recurring story too, but this is a new tip, this cash retention skim thing, rathbones, in 2025 made 87 million quid from cash interest retention. Now, those figures on their own, it sounds like a lot of money, but it's unless you've got it, you can contextualize it in some way. It doesn't mean much. So their pre tax profits last year were 153 million in 2025 so you could argue that half of their profits came from that cash retention. Now, to me, that just sticks in the crawl. So Rathbone has got an advice network called Vision, with 140 advisors. Its advice network, vision had income last year of 58 point 2 million. So its cash retention is 150% higher more income than its advice network. I don't know this just and the rates it offers. So if you keep more than quarter million quid in cash in ISIS on their platform, they give you the paltry amount of 1.6% interest. It's 1.35% on bounces less than that. And again, on transact, you know, it's comfortably more than that. And as Andy said before, and as I said before, the average portfolio amount on transacting cash is around six, six, 7% that covers transact platform costs, if that is the average amount in cash, which is an amazing deal, which is not, you can't get it on these platform Comparison Reports. You can't get it when you're doing your due diligence, which is the, you know, the cheapest platform. I don't know how we're going to get grip on the effort. The FCA is talking about this more and more and more. Somehow, the fact, if companies want to retain their interest from the cash. Great. That's fine. There's got to be a way that's factored in when we're doing product comparisons, and in a way that we can materially see it so we can do a proper charge analysis. Yeah, there you go. Another story on that, on that vein,

Carl Widger: 41:45

yeah, I interestingly, rathbones apparently are coming to the Irish market. Well, there's strong rumors, at least, that that is imminent. So for all the advisors out there, go back to Episode 92 and hear what Nick said,

Nick Lincoln: 42:01

yeah, and 91 and 90 and also wrap up their own bank as well. They aren't, they're unusual. They actually, they actually can handle client money. So again, I'm thinking there. Well, that's almost you know, it's this integrated model thing, isn't it? There, you know? Anyway, I'll throw your hands raised,

Andy Hart: 42:17

yeah, cash skim. We talk about it a lot. Transact. Are very vocal about this, yeah, the regulator has obviously got to step in at some point or not. This is no different to what banks have been doing forever in terms of skimming off the difference between what they pay and what they what they earn. But obviously, I know they're not banks, they're platforms. And when cash was returning, nothing, there was no issue. Now it's returning, you know, a meaningful amount. It becomes more of an issue. Very ballpark looking at transact, they look after about 80 billion. So if we work out five to 10% of that is often in cash transact. Could double their annual profits if they skimmed only 1.5% on cash. If they're a bit more heavy, they could, they could, they could earn more than their entire operating business doing millions and billions of transactions every year just by skim off cash. It's insane. There's a lot of money out there. I believe the US platforms, they offer their platforms for free because they make so much money from skimming off cash, so it's a huge, huge issue. And, yeah, watch this space. Carl, keep

Carl Widger: 43:21

Carl, yeah, Nick, I'm gonna, if you don't mind, bring my last point up, because it's a nice segue in here. Yeah, thank you. It's exactly what Andy just said, which is, I call this The Curious Case of the Irish pillar bank. So the three Irish banks, and they've just reported their their annual profit, so that's all like the Bank of Ireland, AIB, over a billion. But the amount of money they're making on, basically having so much money on yet the spread, right? So people putting money on deposit, not getting any deposit return from the banks, and the banks are like, Oh, happy days. This is all fantastic. We need to remember that we had to bail out these banks. The Irish people needed to bail out these banks. And that's not like two generations ago. That's in the last 15 years or so, the bankers pay caps are now gone. So they they're now all making fortunes again. Maybe I'm being really precious about this, but it's, I don't know morally. Is there a dilemma here? Surely it's in terms of capitalism and business their duty is to their shareholders to make as much money as possible. I get it. However, there's mega excitement in the Irish market at the moment because the Minister of Finance is introducing Isa, hopefully reducing exit tax, getting rid of the team disposal. So everyone is getting ready for this investment frenzy. It's going to be happy days. And so the banks went, whoo, that won't be fantastic for us, but we've got AIB owned good body and by garden own Davey, so we're kind of well positioned to do it there. So there was an article in the paper that there's going to be a hole in their profits. Well, there's not. And they're saying, no, no, we just pick up that VR wealth management bodies. And why wouldn't they? Right? And they also then have their their direct sales through their banking challenge channels as well. It's just, there's something about it doesn't sit well with me, and what I would be urging. Managing all of my colleagues in the advisory space in Ireland. Let's get really organized. Let's be really good. Let's be really proactive. Let's get together and promote what independent advisors can do and why you should be with an independent advisor, and to make sure that that that Joe Public, when this investment frenzy begins, that they understand the difference between you investing with the banks that we bailed out and you investing in independent firms who are really top class and will almost always do a financial plan for you as well. So that's my call to action today.

Nick Lincoln: 46:58

Like it. Like it. Watch good stuff. Who's next? We have rejigged the slate a little bit. Believe it's Alan. It's Alan and emotional intelligence Invesco storyteller, yes.

Alan Smith: 47:13

And by the way, just sort of wrapping up that last point that's just, that's another place when you talk about this cash skim thing that goes on, it's another value add that independent advisors provide for the clients. Because it's kind of, it's just unseen, isn't it? So the value you can create by saying you generally hold your retirement or pre retirement, we keep a year or two's worth of cash is going to be valuable to you. And I just, I just do, I think the thing is, it's like cultural, isn't it? I will say full disclosure. I do really like transact in terms of just the culture that they've got. All that everyone I've ever met from that organization has just been just good, just sort of straight talking, honest client, first, customer, people. Client, first, very advisor focused client. First. Anytime they've ever had a little glitch with them, they've just fixed it pretty quickly. But as I say, what they do because you're right. Andy, they imagine they could double their profits and therefore, and therefore turnover, in theory, double their market cap. There are, there are companies listed business.

Andy Hart: 48:15

They're a target for PE, a PE buys, yeah, for whatever the numbers agreed and overnight, yeah, the company's double because they just take a skim, obviously be huge against the current company culture.

Alan Smith: 48:26

Yeah, I just, I just think there's a lot to be said for it's just, it doesn't sit on a spreadsheet. But understanding the culture of organizations, I think we all do our best to align ourselves with organizations, institutions that share broadly, share our sort of our approach to client centricity, putting a client first and all that sort of thing. So, you know, hats off. To transact. The other companies can do what they want, but cash skimming is just not a demonstration of a client first mentality. So I want to say on that, moving on, there's something. It's just, there's some very useful resource. I don't the sort of thing that you would often see Andy, but Invesco. Invesco provide, I've been on their mail list for a bit, and I've just been paying attention to the emails I've been getting. So they provide a resource which, again, link in the show notes, called intelligence. Plus, plus, yeah, if you had a look at that. So they provide a lot of CPD qualifying content, videos, resources across three core pillars made, including emotional intelligence. Now this is a thing that we often talk about, but in the modern day of you know, the future of sort of technology and AI, being able to do all the kind of technical stuff, emotional intelligence has never been more important. And not everyone comes into this thing of ours with some sort of, you know, significant in depth expertise and knowledge around emotional intelligence, asking great questions, listening skills. So they prove there's a whole section on developing your emotional intelligence, and there's one on practice intelligence, so practice management, business building referral strategies, winning clients, all that sort of thing. So I just think, you know, there's, it's just great to have additional resources that we can tap into, or the TRAPPIST can tap into, in terms of downloads, videos I've seen on here. The one on emotional intelligence to see the video is from Sir Clive Woodward, last Rugby World Cup winning coach behalf of England, seems a long time ago, boys. But anyway, he's talking about, yeah, I think it's even longer than your last time you won the world it's even longer. Yeah, it is. Anyway, it's, I just think it's a useful resource. Have a look at it. Click the links. Delve into it. Emotional Intelligence and other stuff could be,

Andy Hart: 50:46

could be helpful. Really good. Alan, it looks really good. Alan, thank you. Thank you.

Nick Lincoln: 50:50

Yes, I want to look at that. Thank you. Thank you very much. Story time, okay,

Andy Hart: 50:54

intelligence section. Nick, yeah, yeah.

Nick Lincoln: 50:57

Well, I'll do, I'll do, when you've done it. Just proven the point that's very good. Alan. I vote that

Unknown: 51:05

the two of them,

Nick Lincoln: 51:08

we'll go on the

Unknown: 51:10

emotional intelligence bootcamp, and then we'll join Alan at the Silent Retreat.

Andy Hart: 51:19

Okay, this is a company that I'm sure Nick and Alan may be aware of. They cats compliance and training.co.uk, they're run by Mel Holman, and she's a close personal friend of mine. I've known her for many years, but I met her at an event recently and speaking to her about the industry, this thing of ours, and the percentage of firms that get directly authorized, the rise of the network, it's challenging being directly authorized, blah, blah, blah. She does a shed load of work with new firms getting directly authorized, and she said her percentages are insanely high. So if you are out there thinking about becoming a directly authorized firm, I would definitely check out cats. What do you mean by high that she gets? She gets them across, over the line? Yes, a very high percentage. I'm hearing very low percentages of people that apply for Yeah, accepted, and she quoted numbers that are, you know, 568, times that.

Carl Widger: 52:14

So what's the market average? Andy, as in acceptance rate?

Andy Hart: 52:20

Well, it used to be quite high. I think it used to be about, I can't remember. Well, me and Nick got directly authorized. I got in 2017 There you go. Nick got directly authorized in 2008 I think in 2008 it was very much a formality. I mean, I had to go through a bit more rigmarole, jumping through hoops. Now, I think it's a pretty, you know, treacherous project. I've heard very low numbers from I've had like 10% 10% of firms don't get first time round, and you get declined, and they don't really tell you what the reason is, then you've got a RE, full apply. It's not as if you had five, five areas and you failed area three, please, you know the you know, practice up on that. So yeah, compliance and training.co.uk. Cats. Mel Holman, if you are thinking about becoming directly authorized, I would recommend going having

Carl Widger: 53:13

a The reason I'm asking is I think the Irish one is still more or less a formality, albeit it was a very short questionnaire, and you were across the line. Now, I think it's, it's very detailed, and there is a kind of lot that you need to go through. Yes, I haven't heard about anybody being rejected, you know.

Andy Hart: 53:30

So, all right, so sorry, Carl, in the UK, the networks like valid path New Leaf sense they that they are very prolific at the moment. So that's the sort of halfway house you don't want to go and work for. Let's say a man can become an employed you can't get directly authorized quite yet. So you go in the middle to, let's say the networks. You might stay there because you love it, or you then might do the switch to become directly authorized. But I think I've heard it's a lot more challenging. Nicholas, over to you.

Nick Lincoln: 54:04

Yes, thank you, Audrey. I've heard horrendous stories about it this going directly authorized, and there's a really, really, really, really hard to do it. So Mel Holmer, if that's true and you don't want to go the network route, definitely make contact with a close friend of the show and friend with some of the trap pack. Rob Stevenson, he's mentioned this before, that a lot of the value in buying directly authorized firms is the fact that directly authorized, if you've got a clean record and you're directly authorized, that can add a lot to your sale value, in addition to the normal multiples of, you know, x times recurring income or AUM and client profile, that kind of stuff, because there are people want to buy into firms that have gone through the process and have a track record and a good record with the regulator. So so that is of interest even to even to us little minnows, ultra Okay, talking of, talking of, we haven't talked of stupid governments, have we yet? We kept off politics. But I'm going to talk about stupid governments here the Dutch, and this has not come through yet. And I did check on this has gone through that they've got two that they've got two houses, 2028, isn't it? I believe Parker phone, no, it's got to get through the Senate. So the Dutch, this is an idea. This is from the Bernie Sanders School of suicidal economics. They're thinking about bringing in capital gains tax on unrealized gains, and not like a 5% or 10% at 36% capital gains tax on unrealized gains. Now I don't know the manicure this. Okay, so forgive me for that, but this will be an annual tax that's levied on profits you haven't yet made paper only profits. You just know this is going to be an absolute cluster F don't you? You don't need to, you don't need to be Adam Smith. You know. You don't need to be Milton Friedman to think. What are they thinking about? The money is already flowing out of the Netherlands, apparently, and Kel surprise. So just File this under disastrous ideas that you know, window leaking, window Lincoln cretin shouldn't, shouldn't be allowed to implement this. I cannot believe this is happening. And, yeah, I don't know, guys, if you I've got my own hand raised.

Unknown: 55:58

The only disappointing, the only need to

Alan Smith: 56:04

look at what's happened to other areas, countries, jurisdictions, where they have, where this has been, or even talked about, muted, yeah, Norway being a famous one. Norway brought a version of this in a few years ago, Q mass exodus of all the wealthy from Norway into into Switzerland and other other places. And famously, I think we've talked about this in the past. California, in all their wisdom, they've announced that they're going to bring in something similar for, you know, it was considered to be the billionaire's tax you have to be worth 100 million plus and then, but then the plan is to make it more widespread. And can't remember what the numbers were, but something in the order of a trillion dollars of net worth has left California and headed to Florida and Texas as a direct result, you would think the Dutch which, which, by the way, is the birthplace of modern capitalism, the original, you know, merchants and Amsterdam Stock Exchange and what have you you think they begin, you sort of understand what happened before, when in other countries where they tried this, oh, everyone left, and we actually took less tax. It's bizarre. Hopefully, I did read something that they're having to rethink it now because of all the pushback they've had, not only from the people in Holland, but other countries, as well, as saying, This is it doesn't make any sense. So we'll we shall see.

Andy Hart: 57:27

They've got, they've got a couple of exemptions. Founders holding 5% or more of companies are generally not affected, and probably 4% of a large company. Again, you're going to be hit by unrealized gains. What do they do in a declining year? Let's say, Well, this is, I was thinking, just going up one year, it goes down, to

Alan Smith: 57:51

carry it forward, to be used against future gains. They carry the loss forward, yeah, to be used against future games. That's, that's the plan. But I think, I think they're going to have to rethink it. It wasn't used, as you say, to come in till 28 so they've got time to go sort of back to the drawing board and think it through again. Interesting.

Andy Hart: 58:06

Great. Anyway, so anyway, only around the corner

Nick Lincoln: 58:08

from us, isn't it really so let's hope that doesn't come across the channel, because we've got enough problems in this country without having that crap on our plate. All right, we're on the final 57 minutes. I think we made it the very last topical tidbit, and Mr. MAGpie is hovering around his language learning models.

Alan Smith: 58:27

No, no, no, no. That I've just posted the link to that white paper that I mentioned before, as Andy asked me to do. So we've already talked about this, but the link to, if anyone wants to read that paper, which is just about the kind of the new growth model for M and A, etc, that was it. So I think we're done now.

Nick Lincoln: 58:45

Nicholas, very good, very good. Okay, well, let's move on to what many people call the meat and potatoes of the real advisor podcast. Episode 92 of the real advisor podcast. Just a reminder, tickets are selling fast for the trap live show on May the let's go for the 13th. Let's just stick a pin in the counter and hope it's the right day. May the 13th, the winner buys a podcast. We are running on tickets. Unbelievably, we've got this five scholarship tickets to give away as well. So don't miss out. Come along. It's absolutely great. Okay, meat and potato. Well, this is, this is, um, whoa. This is going to be a contentious one for a number of reasons. A, because some people think it's boring and the arguments already settled, and B, because some people on one side of the camp are very passionate, and other people on the other side of the camp are very passionate. But I think it's time to give active management the big heave ho and a complete shoe. And we've kind of talked around how we all have evidence based investment philosophies running through our businesses. That's all four of us, and many Trappists do as well. We've never really gone to town on active management and given it the damn good shoe in that it deserves. I think it does deserve a damn good shoe in. So the most recent one of example of this, of course, is Andy's. He met him once in the street and gave him his card. So I can't call him a friend, Terry Smith of fundment, who I like as a person. I think you said that on

Alan Smith: 1:00:00

this on the ship before, just to clarify, not fundment.

Nick Lincoln: 1:00:04

Fund Smith, sorry, Laurie fun Smith, fun Smith, equity fund, which for years, was an absolute, just a hot, hot you know, it was a just a hot fund to be, and did really, really well. And like a lot of active fund management and lots of active fund managers, after a while, the Mojo kind of rubs off, and the Mojo has rubbed off Terry Smith well for for quite a long time now, and his performance figures aren't looking that strong. But of course, he comes from a long lineage of active fund managers who just cannot who lose their magic, and then you're stuck in this quandary of, okay, well, he was really, really good, and now he's been really quite bad for quite a long period of time. What do you do? Do you twist or fold? Do you stick with him and hope it'll come back? Or do you look for another fund manager? And this is one of the problems with active fund management, that the performance doesn't seem to be persistent over long periods of time. There are examples of that that disprove that I'll come on to the minute. And if they do lose their mojo, what do you do? Did you just wait around so the fund that I'd like to use, and I, you know, I use it a lot. My money's in it, my clients money. This is not advice if you're Joe Public, but I do lean heavily on the dimensional world equity fund, but other very good global tracker. Funds are available. Has beaten fundsmith now over one year, three year, five years and seven years, not over 10 years. Granted, okay, 10 years is when he was hot and all the money was piling in the well, the money was piling in five to 10 years ago, but over the last seven years, that fund is out as underperformed. Terry Smith's fund has underperformed the Global Equity Fund, and he's just thinking, What do I do? You've got, you've got Kathy Wood, the famous example, the arc Fund, which reach reached peak popularity around February 2021 that's when the money absolutely flowed in. And since then, has seen a 55 55% decline in its unit price. And this is the trouble with active fund management. You you get a reputation. You do really well. People pile in right at the top. The hot money goes in and then and then, and then, the actual return investors get is very, very unlike the return the fund generates on its fund fact sheets, when you look at it, because the hot money piles in and the performance goes off, there have been examples of active fund management in the past, that's really worked. Anthony Bolton, okay, he ran the UK special situations fund, the fidelity UK special situations fund, from 1979 I don't know when he finished it, but yeah, he ran it, I think, for at least 20 years, and he had an outstanding long term track record. But again, even with him, if you pass down how he got his returns, he was a UK mid and small cap value investor. Okay, so he had the sort of dimensional tilt, but with the active fund management costs, and for large periods of time, he underperformed the UK market. But to his credit, he didn't change his philosophy when when the markets weren't going against him, and he stuck to it, and the value small cap premium came through for him and his investors. But he's, he's a he's a rare example. And then he left the UK special situations fund to launch a fidelity China Opportunities Fund, and it tanked because he didn't know what he was doing. Was out of his market area of expertise, other ones. Neil Woodford joined Invesco, oh, sorry, perpetual, as it was in 1988 UK equity Income Fund. Brilliant for a number of years, until it suddenly wasn't. And then we all know what happened when he left Invesco, perpetual, as it was then to set up his own company. Up his own company, hubris, arrogance, I am God, didn't take didn't listen to the custodians of the fund who were trying to say to him, you know, you're in these highly liquid, tiny stocks, you know? What if there is a run, and, lo and behold, there was a run, and there still is a run. They're still trying, I think, to unwind the Woodford funds? Yeah, I just think it's enough, and Enough is Enough of this nonsense. I think if you're doing full fat financial planning, you're carrying enough on your shoulders without having to worry about what your fund manager is doing or not doing, whether they're going to maintain that performance. Why would you not somebody give me a bloody good argument as to why you wouldn't just buy global capitalism and walk away? I don't understand it. I think you're making a rod for your back if you're a young back if you're a younger Trappist. And we've all been down this road, by the way, so we're all converts, okay? And I've said this a million times, all four of us have gone from active fund management, fund picking to being whatever phrase you want to call it, Tracker, passive, you know, informed, passive, index, whatever. We've all gone down that route. And I don't know anybody who's ever gone back. I don't know a single bloody person. And if that's not screaming a message to you, I don't know what is, I think you're just going to have a way happier life as an advisor. You're going to have way happier clients, because you might be stupid meetings about fund managers, and there's no value in that. You might think it's valuable. You might like your free lunch that you get in some swanky Mayfair office with these people, but the customer pays right where are the customers? Yachts? There are so missed. You can reel this stuff off. And I, I, I'm close to thinking now that if you're doing this thing of ours, you're doing full fat financial planning, and you're still using actual fund management. It's borderline negligent. The evidence is so overwhelming, it's so overwhelming that you're doing this now, despite what you know mathematically to be wrong over the long term, because it's just so hard to outperform. There you go. I wanted to get that off my chest. Well done. Yeah, guys, I know this might be a boring me potatoes for some because I think we're all going broadly, so the same thing.

Carl Widger: 1:05:12

But will I go? So look, you know, I said a couple of episodes ago that we should talk about this because I listened to that podcast that Terry Smith did. So for me, he came across like, you know, I'm right. I'm still right, despite what the evidence saying. And it's just the market is wrong at the moment, and anyone who doubts me, well, it's kind of you're a bit of a fool. So I've done a lot of reading around this in the last little while. So for once, I'm a little bit prepared the our CIO did a did an article in the business post. Why? Why bother searching for the new Warren Buffett? And it's about this whole debunking the myth of styrofoam managers. But there's lots of other stuff that that I would urge anyone who's either sitting on the fence or very strongly on one side, and then I will give maybe a little bit like Nick that in the fairness of balance, maybe talk about one or two examples that. I that I think of you know, on the active side have outperformed so I think everyone should download the Morning Star, Mind the Gap 2025 report, right? So when you're when you mentioned the DALBAR study, everyone and when you're our age, everyone knows the DALBAR study, and the active people go for this, this, this. And you're like, Okay, well, download the Mind the Gap 2025 right? It's, it's the Morning Star Report is very comprehensive. There is loads and loads of information. The investors get 1.2% less than what the funds do. But there is loads of other stuff about whether you're invested in active funds or passive funds, and the best investor returns come from investors who are invested in what we would call, broadly speaking, and all in one kind of Allocation Fund. So whether that's a 10,000 stocks, you might have some bonds in there, whatever, right? Like the the world allocation funds from dimensional like the Vanguard life strategies, right? Those investors typically get better returns. Reads the report yourself and then decide, is there enough evidence in here for me to continue on the active way? There's a brilliant article, and I've shared it in the I've tried to share as many of these links in the show notes for people to go and read themselves. Robin Powell writing about Terry Smith on timeline. And Terry Smith outperformed in nine of his first 11 years, and then it went absolutely pear shaped, right? And this is typical as to what happens with star fund managers. And I also included a an article from wealth advisor.com and wait till you hear this stuff so it this is now to August 24 so I don't know what the updated numbers are, right. The Arc fund was started in 2014 and to August 2024 so that's 10 years, little bit more than 10 years. It had done 9.7 per annum. It's like that's actually pretty

Nick Lincoln: 1:08:26

good. Happy days.

Carl Widger: 1:08:28

Morning Star, I've calculated that the average investor return is minus 17% now can gonna be more, yeah, like, it's what's I can make up some numbers if you

Unknown: 1:08:44

want. Really, I thought was money 35

Carl Widger: 1:08:46

but good, but, but look, this is, this is independently verified information. So morning,

Nick Lincoln: 1:08:52

that's amazing. Well, well, dug out that style. I'd forgotten about that stat. That's an amazing stat for the wrong staggering.

Carl Widger: 1:08:59

And there's look, there's a couple of other articles that I could talk about, right? But the one, the one report that everybody needs to download is that, is it SPIVA, or is it SPIVA, s, p, i, V, A, yeah. SPIVA. Scorecard, 2025, now, there you go, right? There's loads and loads and loads of information in there. Top line, some, some top line stuff, right? 79% of active funds. When we're talking about large cap, US funds. So this is now. This is factoring in all the mag seven and all that 79% underperformed in 2025 now, how can that actually happen? I don't know. On page 12 you have, I think it's page 12 and 13 and then 14 and 15. There's loads of data around the so these charts are entitled The percentage of actor fund, active funds that underperformed their benchmark. Now, if you read the from page 12 on for the next couple of pages of the SPIVA report, and you still think that you should be recommending active funds, I would dearly, dearly love to hear exactly why, because there is no evidence. Like the best case scenario that you'll get is like, if you go to so an active fund that's small value, then it's like, only 50% underperform their benchmark. That's as good as you can get. But the vast majority of them, it's kind of one in one in five might outperform over a year. And then obviously, when you, when you build the timeframes out, that becomes like, you know, it's 99% underperform, and then how many funds just cease to exist, and this kind of stuff. There's also a very detailed report from Acadian asset management that I would recommend, but these were PDFs, so I didn't put links to that, right? A, C, A, D, I, a n, and it basically takes apart active fund managers and star fund star fund managers as well. So look, I'm pretty passionate about this. But in Ireland, I have a bit of a problem, because there is a bunch of active fund managers and are fucking superb, in fairness to them, and it's Zurich, and they have consistently, over a long, long period of time, they have actually outperformed their benchmark. So on the one hand, all the evidence is pointing towards, you know, using Vanguard, using index funds and Nick, I don't think we've banned the word passive, because passive indicates that you're not making any choices at all. Yeah, index is right, okay, no, we're just we have made a very educated, a very well researched choice. It's not that we're making no choice. We are making a choice. So let's ban passive, and let's call it index investing, Vanguard, dimensional. You know, this is what is going to get you the best returns over a long period of time. And really, you know, if you talk about dimensional, you are making some tilts, and there are arguments whether those tilts are worth it or otherwise, but at least you've done your your research and your evidence. So what I would say is to the people investing in Zurich, rock on for me, I know the guys. They're really great guys. They're really nice guys, and they keep delivering. So if you have decided that that's what your your investment strategy is hard to argue with. It actually, to be fair, but at some stage, the outperformance will cease, and then at that stage, well, what's your story then? So yeah, I don't think this is boring at all. In fact, this is one of the best conversations we've ever had, I think because it needs to be had. Yeah, reads this Viva report and then come back and tell me why you still think that active fund management is the way to go.

Nick Lincoln: 1:13:05

Yeah, also car Alan Andy

Unknown: 1:13:12

Andy, you go next Smithy. H for beauty.

Alan Smith: 1:13:20

At the risk of sounding like, what was it going to the pub with your granddad? Because we, because, I'll try to keep this short in the well, Nick's already said it. We've all, we've all come from I started a business and I copied what everyone else does, which is to choose active fund managers. And thought we were pretty good at it. I was in business during the great financial crisis, and we came out the other side, and I just lost all faith because I thought, and I told our clients that these guys and girls are all super, super smart, and they'll at least minimize the damage because they can. That's the story of active management. They can sort of see trends. They can they can stop pick they can sort of move to defensive assets during times of crisis. Well, I tracked it really, really closely, and all the funds that we were invested in fell further than the prevailing markets. So I recognized that this was not a long term sensible strategy. I have mentioned this before, but it's worth just repeating briefly again. I didn't quite know what to do. I felt intuitively we should be heading towards a sort of passive style of investment, but I wanted to be more thorough, so we retained a company called Albion strategic consulting, and worked with us for six months. And here's the crucial thing, and this is what everyone really needs to take on board. Investment Management, a bit like religion, politics and sport, is full of people with opinions who think their way is better than everyone else's. And what I say is, show me the data, show me the facts and show me the evidence. So we worked with Albion for months, and this is what I thought intuitively. I thought we're going to end up with some passive funds for the larger developed markets. It's very difficult to outperform, let's say, the US equity market, the UK, European equity markets. But I intuitively felt, and sort of my colleagues, that in things like small cap and things like emerging markets and certain types of bond markets. Active Management adds value. So core core index tracker active around the edges. That was my kind of intuitive gut feel going into this. But then every time the conversation was had, we went to the data, and that's all we've got, using history as our guide, and you see again, Carl, if you go into depth on that SPIVA report, because they break it down across all asset classes. So they'll look at small cap, they'll look at emerging markets, they'll look at bond funds, without exception, in every single asset class active underperforms index, the index or the benchmark each time. So I think this is the point. I had a chat with a young advisor on Friday. He is going to do what the aforementioned breakaway. He's going to set up his own firm quite soon. So we're chatting through what that was going to look like, what technology he wanted to use, and I threw into him, what about your investment philosophy? Have you thought that through? And he says, yeah, yeah. I. Probably going to do, mainly track of funds, with some active round the edges. And I said, Well, just slow down there, because I would, I mean, and Carl's talked about it, I think this is super, super, super important. This is the engine driving all your family clients, future, financial independence, success, wealth, intergenerational understanding and optimizing the engine is vital. And if you're going to do that as a throwaway, I think I'll chuck in a bit and chuck in a bit of that. Then I asked for two Nick go. I'm going to ask you to rethink it. I think there are some other we've already talked about it, but the naming protocols har often says words are weapons. Calling it tracker is wrong. We use the phrase systematic. It is a systematic approach. Clients like systematic, they don't love slavishly tracking an index. And to be clear, it's very it's difficult, if not impossible, to be a tracker, because someone's got to decide asset allocation, asset mix. We mentioned dimensional, I think dimensional far from a tracker fund, that they're sort of quasi active in a way, in the way that they screen out large parts of the market and particularly their trading philosophy. So I think we need to recognize the real value is in structure, planning, project management, relationship management. We simply want to build the most efficient, reliable, predictable, transparent engine to power that. And we've all arrived. And funnily enough, all four of us and many, many others, hundreds, 1000s of others, have arrived at the same place. The four of us have arrived at it independently. In fact, the reason we probably met up in the first place was at numerous various conferences and things where this stuff was getting talked about, but we didn't collaborate in advance of that we all arrived at. Because I think all of us are curious and thoughtful, and we leave no stone unturned and trying to find the very, very, very best solution for our clients. And anyone's listening to this is kind of on the fence, so hasn't really got an embedded philosophy. I think it's the number one thing you should be doing this year, there is no shortage of resources. I strongly recommend reaching out to dimensional fund advisors. And if you haven't been on it, go on their foundations. Course. They don't pitch their funds. They help educate people on the basics of investment backed by data and facts. I think Vanguard have got a similar program. Or and you reach out to one or both of them, ask to enroll in their next program and simply educate yourself, learn about all these things, learn the facts, learn the data, and then go back to your office and and ideally, either build your own, I think, as we've all done, or outsource it. Outsource it to one them, or timeline, or Vanguard or dimensional, there are some beautiful kind of made for you solutions now which embrace all this philosophy. So I think it's super important, and I think people should pay more attention to it. And I think based on the facts and the evidence, you will eventually arrive at the same or similar philosophy that we all embrace. Over to you, Nick, and

Nick Lincoln: 1:19:18

one of the interesting side effects is, if you're not in active management, you've got loads more time, not just as an advisor, but as a fund group. So active fund groups, right? They're always justifying their performance or relative under performance, or they're showing off their staff fund managers, and it is these awful lunches and all this kind of crud and just awful, just just, just rubbish coming out of them. Well, Vanguard and dimensional being two massive examples of what we call the systematic evidence based what have you, they don't do that. They don't have to justify anything to anybody ever. So they've got a lot more bandwidth to do other stuff for advisors. And so it's interesting that Vanguard and dimensional are two of the best brands, I think, for doing stuff about behavioral coaching, about advisor alpha, about how to communicate with clients, value added, stuff that has nothing to do with a fun performance, because they've got the resource and the scope to do it, and they're all with their subtle message from that is, it'll look after itself. We don't need to talk to you about it, right? Do we? Right? We're simpatico. We're not going to condescend to you and pretend that this, what we've got here, is something better than because you've kind of internalized that years ago, and it's kind of done and dusted, but we're going to give this other stuff to you that that you just don't get from other fund groups. I know you mentioned Invesco, who are an active fund group, and that emotional intelligence program does look quite interesting, but that's an outlier. That's an outlier from the active most of them just want to talk to you about their staff fund managers, and not talk to you about why they shuttered down that fund that was fourth quartile for 25 consecutive years, which is what happens.

Alan Smith: 1:20:39

I think, I think that's what that's worth expanding upon, just for a second Nick in that both the dimensional and Vanguard, and there are some others, they produce a lot of support and resource around what we could what we call the real chat. Their view is that the investment, the investment conversation, that battle has been won. So let's back in plumbing. It's Yes, back in plumbing. So we've got that, whether you choose one or both of those type of organizations, just That's it. Now we don't really need to discuss it too much. In other words, we don't have to spend days or go to conferences or lunches, whether justifying the funds both those companies, I think, and I'll share my. On experience in my firm, they have been outstanding in terms of delivering practice management resources. You know how? You know referral strategies to win new clients, attracting and retaining employees with other great going

Andy Hart: 1:21:30

their owners and other great planners.

Alan Smith: 1:21:32

They're, they call it the kind of network groups that they set up. And you get, yeah, you get together with others, and they bring people across study groups to bring people across from the US and other really smart people that I'd rather spend time with them and learn from those sort of people than the latest fund conversation, or why this next fund we're about to launch is going to be better than others. So I think practice management is really helpful once you've sort of arrived at your investment solution. What do you think? Mr.

Andy Hart: 1:22:00

Hart, Okay, a few points in the year fourth mentioned. Mr. Terry Smith, latest newsletter, he mentions about passive and active and the change of money, moving more from active to passive. I believe it breached it, as in, passive was 51% and active was 49% around about early 2020 sorry, 2024, now we currently sit at 53% of the money in passive and 47% of the money in active. This is us data, but that's where the lumpy stuff comes from. I would say close to 100% of younger advisors listening to us building their own businesses, close to 100% will choose asset class investing, index investing, that is the direction of travel. So we might be speaking to the converted, or preaching to the converted. Very brief story about myself. I've been looking off the money for about 18 years. 17 of those years I've been index active, sorry, index

Unknown: 1:23:04

regulated for nine of those years.

Andy Hart: 1:23:07

That's another story. So for only one year, I came into this business and I had no idea what I was doing about, you know, investing. I was basically active. I was, you know, via the wind. And the latest thing that came on my desk some old guy next to me telling me about some new fund launch. And it was torturous. Fortunately, the best thing I've ever done for myself is get involved in asset class investing and turn off that massive noise of the active management machine. As we know, investment management is a marketing business, not a financial business, so they do have the marketing clout. They do pass the busses, they do wrap the taxis. You know, that's why they're still got quite a lot of money there. Yeah, back to Carl's point. Framing is quite important. Calling it passive sounds like you're not doing anything, which, in a way, you are, but that doesn't sell well to clients. Calling it low cost is also probably badly framed. I mean, they like to pay low charges very they like to, they like to pay low charges in the hole in total. But saying it's low cost, again, it sounds a bit crappy to let's say, Yeah, wealthy individuals, I have done a lot of research over the years, probably like lots of people on the call, I read smarter investing by Tim Hale. It's a very chunky book, so I have done a deep dive into the whole investing space. I've read investment management for the Financial Times via Jason Butler. I've obviously been on various different calls, so I've immersed myself a lot in the investing world and how things work. But when it comes to how much time I've actually spent creating my portfolios and pitching them to my clients, not as much as I would be doing if I was in the active management space going around and about all of the time. So yeah, I'm a massive asset class investor. The bulk of my money I look after is in global equities. 85% of the money I look after is in global equities. I do follow the staff fund managers, the key one being Warren Buffett, if you call him a staff fund manager or just a great business person, but he has massively outperformed his benchmark, which is the S and P for about since 1967 I do follow Terry Smith. I believe he is if I was and I was forced gunned to my head, and I had to invest for an active manager for the rest of my life. I probably would place my money with Terry Smith. I follow Manish pabrai in America. Jim Simons, the Renaissance capital guy, has outperformed the markets by, you know, 1,000,000,000% since he started. So there are some outliers that can do it. So yeah, I echo a lot of the stuff that the other lads have said on the call, but getting this right with your business is absolutely crucial. If you've got happy clients and you've got a happy business, you've got a happy life, that is the most important thing. If you've got unsure, pissed off angry clients. You've got unsure, pissed off angry business, and that's going to be an unsure, pissed off angry life. So getting this all aligned is is important, and yet it is the plumbing. But a lot of clients is their life saving. So you need to have your ducks in a row. And you talk to clients about this over the years, I've been quite blase with it some. Times with clients, and I've lost clients, let's say, because I've been, oh, it's just the boring, low cost plumbing, you know, the important things your financial plan, we're going to fund it with world class investments. You can do that five years in, you know, once they're sort of, you know, well, set up in the right place, but you have to pander a bit and do a bit of a tap dance, as they say in sales. So, yeah, a few points there. Over to you, Carlos,

Carl Widger: 1:26:39

yeah, Andy, you made some really, really good points. I think that very last one is so important. You know, don't be too flippant about this, especially early on in your relationship with your clients. Look, guys, the one thing I would say is we're going to get absolutely hammered, probably more than I get hammered for the Bitcoin stuff, right? We are, because the people who are very dogmatic about active fund management are like sitting waiting for us, and we do get the odd comment. But so I think we're probably overestimating. We're definitely overestimating the impact we're having, but I think we're overestimating where the market is at, right, in terms of the advisors out there, I look at it, I think, for balance, it would be really great to, you know, I would put it out there for a meat potatoes, right? If you are an active fund manager, Star fund manager, Cathy wood, Terry Smith, but in all seriousness, like, you know, to open it up and to have the other side, it will be actually much better for balance and and if you're wondering what the advisor market is looking for, one of the things I know I'm going to be talking to Vanguard about is they're launching a kind of blended index active portfolio, where they're bringing an active fund manager, in to kind of an NPS, kind of a scenario, so there is still demand for it. And I will go back to something that I think it was Andy said, you know, the best portfolio that your for your client is the one that they will stick to. So at the end of the day, the most important thing is actually the financial planning and then a portfolio, right? So just to say all that, just to get in ahead of the the active warriors who are coming for us, we, I, we understand this is an imbalance view, because we've done our research and we're firm.

Alan Smith: 1:28:35

And can I, maybe I maybe I'll just come in just to wrap this up, because I think we've spoken exclusively about investment management, asset management, but we've got to be clear that this is part of a more comprehensive structure, and everything does come down to how do you position yourself? What is your value proposition to your clients? The reason that a lot of people hold on to active management is that they don't do proper financial planning, and therefore they're going to say, well, if I'm just selling index funds, what the hell are my clients paying me for? I hear that a lot and and we do. We've We've often said it offline and on this podcast as well. We kind of live in a bit of a bubble, because we assume that most people, most people tuning into this, are either doing it or on the road to do this full fat financial planning. A large percentage of the current UK and Ireland and run the world marketplace continue to position themselves as investment managers. That's their kind of raising debt, or that's what we deliver to you, Mr. And Mrs. Client. And so they just intuitively, philosophically, can't change. How are they going to move to something else? Because the value proposition has just been decimated. So you've got to join all the dots and say, Where do I really add value? What? And if I don't do this stuff that we're all talking about behavior and coaching and everything else, then perhaps I should, because that becomes sticky, defendable, and you never have to, I think dimensional. Let's say this, but you never have to say sorry. Imagine if you put all your clients into Terry Smith at the peak of when he was doing really well. You just, you spend your life apologizing. Oh, we'll move you out of Terry. We'll move you into Nick train, or to Kathy Wood or to someone else.

Andy Hart: 1:30:10

Meeting every single meeting for five years. You look after 50 clients. You've got 250 Yeah.

Alan Smith: 1:30:16

Apology meetings, yeah, I'm sorry. And having that conversation with the client about stick or twist? Should we move it out?

Carl Widger: 1:30:22

You're You're showing them the Fun Fact Sheet, your 9% 9.7% annualized return. And I know,

Alan Smith: 1:30:31

and the clients are looking at their portfolio and goes, well, I didn't get that exactly, so I think it's just really, really important. It's really important for advisors to be able to piece all this together as part of a big kind of like a business jigsaw puzzle. Know, your proposition where you add value and then once you are leading on that as the core value proposition, then it's all about fuel it. As I said earlier, it's just about fueling that plan with the most efficient resources. That's it. Okay? Listen, that was

Nick Lincoln: 1:30:59

a really good meat of potatoes. And we get that quite a lot of our time, and it will be quite contentious. Bring it on. Leave some snarky comments behind your anonymous profiles on YouTube from your mother's basement, right?

Unknown: 1:31:12

I'm doing that for you. Carl, that's. I know you

Alan Smith: 1:31:18

took the bait as well. Carl, you replied, okay.

Nick Lincoln: 1:31:23

At the front door, we can see this post is she's hauled this bulging sack of TRAPPIST questions up my drive, and we're now going to pull one out and see who it's from. So let's give this a look at before we do that, remember, please do leave questions for us on the pin tweet, on x, the pinned X on tweet, whatever you want to call it on that pin tweet, there is a form, a link to a form, leave it there also a link in the so called show notes, we do get your questions. We do it in chronologic of order. We'll come to a question unless it's really, really daft or just a bit weird. Let's see who this one is from. This is from nice paper, quality cartridge paper written with a pencil. Got capital this could be a ransom letter. Marry me in prison. Sean lauson says, who's on LinkedIn. By the way, Sean Nelson will put your link in the circle show notes, probably one, mainly for Andy Nick as they've mentioned, referrals being the main source of new clients recently, but I'm sure Alan and Carl get lots of new clients from referrals too. Anyway, my question is, how do you handle situations where a referral from a good client isn't a great fit for you or the business? How do you politely say no whilst maintaining a good relationship with your client? And yes, Carl will come into your pocket. I'll go very quickly, if that's Andy, if you want to leap in on this we have mentioned, and this is fine. These questions do come up in different forms all the time. That's fine, because some people haven't listened to the entire back catalog sados. So they wouldn't, they won't know that. It's very rare like, like mixers with like, so if a client refers someone to you, they're likely to be of a similar kind of age profile, earnings, background, emotional outlook. And so it doesn't really happen. I certainly haven't. I'm really struggling to recall a situation where I've had a referral and they just weren't a bad fit a referral for an existing client. They just weren't a good fit for me. So that's that's my answer. Short answer, ultra if you want to Andy's got a story, tell you you've got your hand raised. And I know Carl has got a podcast he wants to talk about. So we'll go with you first or Andy, because your hands are raised.

Andy Hart: 1:33:14

I'll mention a few points. This has happened a lot to me over the years, and it happened to be this week, your point Nick, you have an established business that already has ideal clients in the mix. If you're growing your business, and you've got a handful of ideal and a handful of non ideal, let's just call it weirdly, the non ideal are very, very active referrers. Then you've got that. So when you are a point where you're not desperate, and you become more choosy of what clients you take on, the non ideal referrals start piling up. I had one this week that was clearly not, not ideal, and I said to them on the phone, I you know, thanks for telling me your situation. But I specifically worked with business owners five years away from retirement. They were clearly not that, you know, if they were dentists, I'd say, I'm sorry about that. I specialize in doctors or whatever. So you can let, you can you can kindly let the so you lie down.

Alan Smith: 1:34:08

That's your answer. Sean, just blatant lies.

Andy Hart: 1:34:10

But what I do say, but what I do say on the call is, it's likely I won't take you on as a client, but I'm here to answer any questions or queries that you have. So, you know, fire away. So they sort of drop their guard. Then at first they're thinking, I'm there trying to, you know, land their business. So I'll make it very clear, you know, no interest in taking on as a client, really. But I'm happy to have half an hour, 45 minutes of my time, and you ask me as many questions as you as you can come up with. But again, it's the Nick Murray thing. So you ideally focus on your ideal client, and Nick is right. The ideal clients usually refer ideal clients. Sometimes clients say to me, what type of clients Am I looking for? I look after a couple, Mr. And Mrs. And the Mrs. A very active referrer, but his network is not as successful as as his partners. So again, we've, I've had conversations about that. You just got to navigate it, you know, with a lot of common sense, and just Just do your best, but let them down kindly. And if you want to embrace the the niche method I mentioned, then you could do that over to you. Alan, okay, I

Alan Smith: 1:35:15

just gonna say that. Well, what you said is spot on. Always be there. I'm there to help. Give you advice, give directions, and I'll point you in the right direction, because you just, you might just want, I mean, linking back to our last conversation, open a nicer use Vanguard. This is not advice, but it will get it will get you started. It's another thing. Again, thinking about younger advisors, it is very difficult when you're early in your journey to decline potential clients despite the fact they're not an ideal fit. So it depends on the level of not ideal. Are they just a bit outside your core, ideal client, or they like a million miles outside. But I would say, as much as it's tempting to sort of, I'll give it a go. You know, the class eight, the client he's got, he lives in Costa Rica, and he's got funds in Switzerland, and some, you know, we've seen them all before. And you think, well, I'll give it a go. Do not give it a go. It's not fair on you, and it's not fair on the client. So you politely decline. You help them as best you can. You point them the right direction. If you know. An advisor who specializes in that sort of thing that they're in, you should be you could refer on to a specialist that that's, that's what we do. That's what we continue to do. Any thoughts, Carl, thank you. Oh no.

Carl Widger: 1:36:27

Just very briefly, there's a kit says, And Carl did a podcast on this exact topic, and it's 35 or 40 minutes long, so it's not that long, and they explore lots of different ways of doing it, because I guess everyone will come up with their own ways of dealing with this. So I would be listening just to

Andy Hart: 1:36:49

that, just to throw back a little bit on that, obviously, kits and Carl Richards, I mean, yeah, they've not been in the chair for a while, you know, so it's quite theory based. I'm assuming

Carl Widger: 1:37:04

I let them know that you think that about

Unknown: 1:37:06

Okay, thank you. They are next consultants.

Carl Widger: 1:37:10

They're good, they're good. They're kind of, probably, you know, fairly well respected in the business. Look, I'll check it out.

Nick Lincoln: 1:37:19

Okay, cool stuff. All right. Thank you. Well, have you that gives you some something to think about, Sean, as you make your journey through this wonderful, wonderful thing of ours. So listen, Christ, one hour 36 shoot me. Let's move on to the next part of the show, which many people do indeed call culture. You I don't

Alan Smith: 1:37:41

know if any of you seen this. Channel Four produced a program called dirty business. It's just interesting the UK. Since the privatization of the water industry in the UK, I recognize that it's a, it's a kind of dramatization, but I'm sure it can't, it can't be untrue, because it wouldn't, you can't go public with it. But I tell you what it sort of, it it pisses you off. It makes you, you know, it's kind of some of the stuff that's got, you know, having fresh, clean, fresh water, I think, is a basic expectation in any sort of more modern society and the way that's happened, and all the sort of cost cutting that's been done because this has been privatized. You know, I am a big believer in free markets or what have you, but I think in certain core areas, we might need to have some rules and guidance about it, because it's quite shocking that program, and if it's I'm not trying to join the dots between that and private equity backed deals going on in financial services, but it's definitely well worth watching. It's a well produced and sort of semi dramatized program. So it's called dirty business. I've got the link there. It's on Channel Four.

Nick Lincoln: 1:38:55

Thank you very much. Mine is the LEX Fridman podcast, which I dip into very, very occasionally. I probably listen to one or two shows a year. I do find him annoyingly ponderous, even at 25 times speed. But his guest recently is a guy called Rick beato. And if you've got any ounce of musicality in your bones, you will probably know of Rick beato. And even if you don't, but you like music in general, you might well know Rick beato's YouTube channel. He's got a fantastically successful YouTube channel in which he breaks down popular pop songs and rock songs in the last 40 years. He plays guitar. He shows you how the song was constructed. He'll show you how what amps were used. And he often gets big, big guests on, like Dave Gilmore, pink, Floyd, that kind of thing for interviews, but just a passionate about modern music. And Lex Friedman is a kind of musician on the side, and he actually gets quite engaged for once and doesn't ponder on too much. And then about two thirds of ways with the show, they talk about the effect of AI on music. And that's quite interesting as well, as you might imagine. Rick beatham is not a massive fan of that, as he comes from the sort of organic creator yourself. So that's a good a good listen.

Carl Widger: 1:39:57

My one is the very first business post podcast, and it's interesting because the guy that they're interviewing is a guy called Michael Lohan, who's the CEO of the IDA. So the IDA is basically the Irish body that's tasked with getting foreign direct investment into our country. They've been rather successful. And this guy is very, very interesting dude. He's very down to earth. He talks about the work that he does at the IDA, but I also talks about being, being a CEO, and how he looks after himself, that kind of stuff. It's not that long. It's an excellent, interview. Highly recommend it.

Andy Hart: 1:40:40

Okay, I will close us up. It's the film on Netflix called, I swear. I mean, wow. It is such a superb film. It's about the Scottish guy that's got Tourette's. It's way better than it sounds. It's one of the best films I've seen in a long, long time. I recommend you watch that film as soon as possible. Back to you.

Nick Lincoln: 1:41:00

Nicholas, okay, there we go. There we go. I'm trying not to Yes, God Yes. Don't say

Alan Smith: 1:41:07

anything about me. Don't talk about Scottish people and with Tourette's and similar. He. He'd have been interesting watching the rugby on Saturday, watching someone with Tourette's, watching Scotland win. All right,

Nick Lincoln: 1:41:24

I don't know where we're going with it. Okay, comes to a close. Another pile of traps slides down the ebender Father Time. Please do like and subscribe to our YouTube channel. Please do leave a review or send in a email via the contact page, a contact form on our website. Our website is Alan, can't remember, www, podcast, calm, don't WWE. What are you? 96 granddad. All right, till the next time. Thank you, TRAPPIST for your time, and we'll see on the other side. Take care out there and trap live is coming up. Get your bloody ticket. Come on now. Thank you. Goodbye. You.