📈 In this episode, we delve into the world of investing. Join us as Helena Wardle, Founder of Money Means and Partner and Chartered Financial Planner at Smith and Wardle, shares insights and strategies to bolster your investing confidence and broaden your portfolio. Together, we'll explore the significance of diversification and learn how to strike the right balance between risk and return. In a high-interest rates environment, we'll address the dilemma of whether to prioritise mortgage repayments or continue investing. 

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the key investing challenges

• The biggest misunderstanding is investment composure. It’s very simple for us when we start investing to say, oh, okay, we know this will go up and down. But actually going through it with your own money and seeing that experience is very difficult for people to manage.

• What helps people is really thinking about that in a lot more detail before you invest and finding strategies to help you cope with that so that you can manage that emotional rollercoaster a little bit better.

• Wealth advisers are there to support them and remind them that they talked about this, they expected this to happen, and that they know it's normal. The best thing that you can do is to sit on your hands and to leave it. And, and generally that rule stands, but it's a very, very hard thing to do.

• If you invest, commit, understand that's part of the journey and find a way to help yourself.

• Don’t look at the charts on your phone. Write down the action that you want to take and sleep on it.

• So writing it down, thinking about it properly, and then really think about how would you feel if this happened?

• Investment composure is incredibly important because it's something that people really underestimate.

• As people gain experience, so the longer they invest for, the better they cope. It’s very normal for it to feel uncomfortable, particularly at the start.

how advisers help clients in their journey

• Keep it simple. Simplicity pays off. Wealth advisers want to make sure their clients can afford to stop working at 60, or help their children - the priorities are wide ranging and it’s not always about making more money but more about having a specific goal.

• If you don't have the time, inclination or interest, don't think investing is not for you. There are many exceptional solutions out there that do all the hard work. All you need to choose is what flavor do you want something that's really just stable, and might have a few bumps but not many, or you're okay to leave it and let it do its job.

• When people choose things specifically and don't have the experience or expertise to support them with that, you do need to accept and understand you're taking more risk.

• Diversification is also key. The more you can spread your money, the more you reduce your risk. And that's been proven time and time again.

• When you see the risk word risk, you need to balance it out with opportunities and think about, okay, so I am taking that risk, but what is the opportunity I'm taking at the same time?

• That's how you should try to reframe it more, because if you are investing, you're effectively trying to grow your wealth or grow your money or make it do better. That in itself is an opportunity that needs to be balanced out. Now what you can do is put you in a yourself in a better position to cope with risk — you need some foundational elements.

• You shouldn't invest money if you don't have emergency funds to fall back on. Some people use their investments as emergency funds and that's not a sensible move, particularly when we look at how up and down the world is at the moment.

• You want to give yourself opportunity to take advantage of the risks you're taking. When something feels uncertain or uncomfortable, it's quite a good thing because it means we are trying to do something different that will put us a little bit out of our comfort zone, but we should benefit from it.

PORTFOLIO BUILDING

• The core to portfolio building is to have your foundations right. It's not just looking at just the investment element, it's making sure you're in a position to invest. That's a starting point.

• In terms of how to construct an investment, you look at what it is that I'm trying to achieve and what's the time horizon on it. If you are saving short term for something, you will save differently to how you would save into your pension. The pension element is incredibly important because most of us don't either don't know our money's invested in when it's in a pension, and we don't know we have a choice as to choosing how that's done.

• When you have a longer time horizon, you might be able to ride out ups and downs a little bit more than when you have a shorter time horizons that actually drives what you choose to invest in.

• We really can't control what happens, and we forget that we don't really know what the future holds. The best thing you can do is understand that when you hold a good portfolio, you'll always have elements that will not do well at certain times. That's normal.

• The best thing advisers can do for clients is understand what they are trying to achieve and help them see what is actually the best way to achieve that objective. Then, to invest their money in a solution that will spread it around with the level of tolerance they've got to ups and downs.

• The higher your tolerance for ups and downs, the more equities you'd hold. When something is perceived by past investments as safer doesn't necessarily mean it will not be bumpy.

• You should spread your money really well and you should look at your charges and reduce them. If people's costs are low, advisers help them take advantage of tax efficiency and spread their money in a way that's aligned to how they would tolerate risk.

• The reality is if you're paying a professional, they should help you understand whatever you might not understand. So ask them difficult questions and if they squirm, find someone else.

Fees, charges and financial advice

• First of all, financial advisors are not fund managers, so I think we need to really do a lot more to make that very clear. A financial advisor is supposed to be a person that can listen to your situation, understand your circumstances, and help you find the best strategy to do what you need to do financially.

• They will recommend solutions and strategies, but they are not fund managers that that is not what a financial advisor do.

• The challenge with advice especially in the UK is that it takes an enormous amount of time to produce a plan. Doing the comparisons and the research can take on average 12 to 14 hours for a light case.

• The average case takes about 28 to 30 hours to pull together. There's an enormous amount of work that goes behind the scenes, because financial products are complicated. Financial planning in itself gives people direction, clarity, and if an advisor takes a client on, then it's usually on the basis that they believe they can make them better off.

• The tricky thing for people is that comparison is hard. It's really, really hard to compare charges. The majority of advice businesses will charge and percentage fees. If you are then questioning that value, please go back and say to an advisor, can you give me some idea as to why you believe it's worth my time doing this process? Because good advisors can answer that question.

• They will be able to come back to you and say, ‘okay, I've identified x, y, z, it will save you this much in tax to do that, we will save you more than it would cost.’ .

• There's solutions that are maybe not advice, but that still offer good guidance and personal direction. So don't feel like it's out of reach!

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HELENA WARDLE

Helena is a Chartered Financial Planner helping clients in Hitchin and surrounding areas to achieve their financial and lifestyle goals. Together with her business partner, Jonathan Smith, she runs Smith and Wardle Financial Planning. They specialise in creating financial plans and providing financial advice to anyone wanting to plan their future.