Apart from the huge danger society faces from amateur investors dicing with financial ruin, surely there’s margin to be made and a future pipeline of clients to tap, writes Liz Pfeuti.
In my university days, I used to spend my holidays working on a local campsite to earn my beer money. The owners were car fanatics and ran the local garage and petrol stations, the reception areas of their various businesses were littered with car magazines. There was little they didn’t know about how to keep the fleet of cars in the surrounding villages on the road. They also constantly impressed us with a quirky Audi or other limited edition vehicle release charging around the country lanes.
One year, the father of the family received a gift – a driving day at a well-known race track. Finally, he could get behind the wheel of an actual racing car. A dream-come-true moment, which also became a bit of a reality check. “I couldn’t drive it,” he said, without a hint of embarrassment upon his return. “We had a go of others they had, but the actual racing car? No chance.”
Apart from the speed the car was able to achieve at full throttle, which he had only really appreciated when doing a lap in a two-seater vehicle used for training and visitors, observing the sensitivity of the steering and brakes, without even getting into the G-force potential, had quickly brought his own skills into focus. I think the organisers sensibly restricted access to these multi-million-pound machines to a select group of well-insured individuals. Did this experience turn him off racing and cars in general? Of course not. The family still attended Grand Prix, and the chat about grip, fuel injection systems and motorsport’s ever-changing rules could still be heard most weekends in the bar. Now, however, the family had an appreciation of how all the elements came together and how it needed a real expert, at the wheel and in the workshop, to make the enterprise perform.
How does this relate to fund management, I hear you ask?
How many of you drive? How many of you think you could confidently snuggle into the cockpit of an F1 car and do multiple rounds of the Singapore night track – at race pace? Thought so.
If it is difficult enough to transpose the skills we use every day into something much more technical and life-threatening, why do so many people think they can do it with investment? Get a decision wrong at Silverstone, and it could be game over. Get a major investment call wrong, and you may be extending your retirement date for some considerable time – or worse.
First up, this is not a criticism of retail investment platforms. They offer a service and the opportunity to take control of everyone’s financial future. Many also provide training and ways for less experienced investors to learn ‘on the job’. Rather, I think, as an industry, we need to look at why so many have turned away from the services we offer. Is it a performance issue? Is it cost? Is it that we have created so many ivory towers regular people don’t think investment advice and implementation are for them? Have we talked ourselves out of a massive customer group just as margins are being squeezed? At the same time, markets are more volatile, and nefarious actors are hiding in plain sight behind get-rich-quick schemes dressed up as crypto investment.
Apart from the huge danger society faces from amateur investors dicing with financial ruin, surely there’s margin to be made and a future pipeline of clients to tap? If I were still working on that campsite, I’d ask the petrolheads who manage their portfolios. I’d take a good guess that at least a few are going it alone, and they are only likely to find out they are not fully in control of their investment vehicle when it is too late.
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