Welcome to the new morningstar.co.uk! Learn more about the changes and how our new features help your investing success.

CEOs Come and Go, But Investors Must Stay the Course

Editor's Views: Investors should hold their nerve despite the flurry of changes at the top of Britain's boardrooms, and why spa breaks and pensions should never mix

Holly Black 4 October, 2019 | 10:33AM

editor

It’s been a big week of change: Martin Gilbert is leaving Standard Life Aberdeen, Invesco’s chief investment officer is stepping down, and there are changes at the board of Woodford Patient Capital Trust.

Revolving Doors

On the stock market, Tesco’s Dave Lewis announced his departure and BP’s boss is stepping down. I can barely keep up. Apparently, this year on the FTSE 100, there have been 10 bosses step down and a further eight announce their departure who haven’t quite left the building yet. What’s going on?

Three-and-a-half years of uncertainty, it would seem, is starting to take its toll on consumers, the economy and British business. Certainly, we’ve seen a slew of profit warnings already this year, the demotion of M&S out of the top-flight for the first time ever, and the high-profile collapse of Thomas Cook. I’m not sure what changing bosses or chief investment officers can achieve at this point, when we still have no clarity over Brexit – despite it being less than four weeks away.

For investors, it’s all very unsettling. We can see that in our fund flows data each month, where investors are consistently taking money off the table and trying to find a safer home for it. Me personally? I haven’t looked at my Isa account in months because I don’t want to be lured into making unnecessary changes because of short-term volatility. Just because it’s all change everywhere else, doesn’t mean you have to do the same.

Perks and Pensions

Prudential’s almost-£24 million fine over its non-advised annuity sales this week was deeply troubling. The firm had been incentivising its call handlers with spa breaks and holidays and failing to tell people they could shop around and potentially get a better deal.

This seems to be something of a worrying theme across wealth management firms at the moment. Only weeks ago, it was revealed that St James’s Place had been offering perks in the form of cruises and safari holidays to its advisers.

And while these people are enjoying a massage at the spa or a sunny getaway, thousands of savers who have worked hard to build up a pension pot over decades are potentially receiving poor advice. How is that fair?

This industry needs to take seriously its duty of care to its customers. Because what we do with our retirement savings – both while we’re building up our pension pots and at the point of retirement – are some of the most important decisions we will make in our entire life. And I’d hate to think I was steered in the wrong direction because someone fancied a holiday.

The Final Frontier?

Should investors boldly go where, well not exactly no man has gone before, but where many investors might not have considered. Investing in space is definitely an interesting proposition and an area in which some companies appear to be investing heavily

Depending on which area you get involved in, space investing is either like backing an industrials or manufacturing firm, putting your money into tourism or taking a punt on a racy tech stock. Some of the innovations in the industry are pretty out of this world (sorry) – the idea of drones delivering us parcels by flying through space because it’s quicker suddenly makes Amazon Prime seem a less impressive proposition, and there are plenty of countries on Earth I haven’t made it to yet without adding space travel into the mix.

The safest way to access the trend seems to be through funds, for now, where your exposure is low and the due diligence is done by a team of experts. But I can’t help thinking, if a major tour operator like Thomas Cook can’t survive the challenges of its industry, how is a space travel firm going to make it? I think I’ll be keeping my money a little closer to home for now.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites