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You are listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice, so please do your own research.
Peter Higgins 00:18
Hello, and welcome to this Investing Matters Podcast. My name is Peter Higgins. Today I have the huge privilege of speaking with Iain Barnes, Chief Investment Officer at Netwealth, I have the fantastic privilege of having Iain joining me on the Investing Matters panel at the Master Investor show back in April, I think it was Iain.
And we did brilliantly with an all-star panel there. So thank you for coming back for some more. I promise you Iain that we're not going to get any questions today about potential World War Three scenarios, okay.
Iain Barnes 00:57
Okay, that’s a good start.
Peter Higgins 00:59
Yeah. Thank you. So, Iain, Please, can we start a little bit please, regarding your background, where you grew up? What you studied and where you studied when you were a young man?
Iain Barnes 01:14
Okay, gosh, yeah. So I grew up in a bunch of different places actually, I grew up. I was born in born in Essex.
But then very soon after that, my parents took us on a bit of an international journey. So lived in, in New Delhi, in India, and then Karachi in Pakistan, up until I was about 11. And then came back to London, studied there and then went to university up in Edinburgh, where I studied history. Yeah, great time, all round.
Peter Higgins 01:48
What can you tell us? Tell us a little bit about all that then what was the journey and you know, New Delhi, Karachi, what were your parents doing in a sense of career wise moving around with that side of thing?
Iain Barnes 01:59
So my dad worked for a bank that took us out to New Delhi. We spent four years there, I think, from the age of four, up till up to eight, and then a further three years got bumped along the road down to Karachi in Pakistan. And then you're doing the same job and then he got rerouted back to London briefly before then, eventually he headed out to the States and, and carried on carried on a bit of a nomadic journey from that point.
Peter Higgins 02:34
Brilliant, absolutely fantastic experiences for you. So what did you What did you study at Edinburgh?
Iain Barnes 02:40
I studied history with a focus on modern history, but quite a wide ranging degree which was great fun. It was for four years, which was part of the attraction, I think, when I was when I was 18, trying to trying to delay the inevitable of getting a job because it was a bit cheaper back then.
And yeah, had a wonderful time. So I've got a lot of a lot of family who are based up in in Scotland. So really enjoyed really enjoyed going up there.
Peter Higgins 03:10
Brilliant. Now, I want to talk now about your first job, you know, in the investment industry, because obviously, prior to joining Netwealth, you have 15 years in multi-asset management, investment management holding senior portfolio roles at Schroder's and UBS Asset Management, please, can you tell me a little bit about those significant roles, including assets under management and what your responsibilities were please?
Iain Barnes 03:36
Yeah, sure. So I I joined the graduate training program, Schroder's around the turn of the century, sadly enough, and it was it was great, a great formative 10 years and a wonderful start to the career learning lots of different aspects of investing in a really fantastic organisation.
I worked originally within the European institutional team looking after balanced mandates there for institutional clients at a time when the investing and businesses side were more sort of co-joined, and then evolved into working directly for multi-asset portfolio management.
So looking after some funds, which were distributed via different advisors around different locations.
And really with a, you know, quite a wide remit in terms of picking different funds, but also managing the overall sort of exposure within a five-person team.
And that was yeah, it was a great, great experience. I left there to go to UBS.
So on the institutional side again, so asset management rather than within the wealth management world, and again developed a responsibility for income oriented strategies.
So running multi-asset portfolios, but with an income orientation, and I was one of the voting members of the asset allocation committee there, which oversaw, you know, quite a quite a broad remit in terms of, you know, geographic and, and, you know, sort of sort of different product lines there.
Peter Higgins 05:20
Thank you for sharing that you touched on you started as at the beginning of the century. And also the fact that, you know, multiple different skills that you attained during that time, what were your greatest learnings over that 15 year period?
Iain Barnes 05:36
Oh, gosh. Well, I think yeah, so I think that, you know, if we think about it, so, you know, starting work in the city in 2000, you sort of right there when the original dot bubble was bursting, and I think the turbulence of that journey was quite an education like right from the start.
And the one thing I picked up from all of the, you know, the great people that I've worked with is, is this, you've got to have a bit of a mentality, I think, when looking after people's savings and investments, that the environment that you're in, in any one point in time, will pass at some point.
So try to keep a very level head, in terms of understanding what's driving markets at a particular point in time, try to strip out a bit of the noise that inevitably sort of takes place.
And I guess, arguably, you could say, as increased through time, but just focus on you know, what you're trying to do with different investment strategies, with a view to delivering on the ultimate goal of helping your investors stay invested and reap the rewards that that investing in markets can give you.
Peter Higgins 06:53
Thank you for that reply. Appreciate that. Now, in you joined Netwealth, and their exceptional award winning CEO and co-founder, Charlotte Ransom, and the outstanding co-founder, Tom Salter, in early 2016, what attracted you to what essentially was a startup for hybrid wealth management service? And what was your initial responsibility there? Taking a big leap of faith really I thought, well, I thought, sure your family thought that as well!
Iain Barnes 07:20
Yeah, they certainly did. No, I think it's, it was the idea that, you know, you'd be joining an organisation right from the start, and having had a great education in, you know, in substantial companies, you know, being put in a position where you had ultimate responsibility for, you know, a meaningful part of the business, and the opportunity to really have an impact of helping something, something grow right from the start, which was, which really excited me.
And I think having worked on the institutional side, quite often building strategies that were then sort of sort of managed with a view to being distributed through a wealth management arm, sometimes, I felt I had a good sense of what wealth management clients were really after.
And I felt that there was a really great opportunity to break into a market that that we didn't really feel was sort of fit for purpose as things stood when we launched. And so that the opportunity to really make a difference, not just in terms of individual, individual client outcomes, but also in terms of sort of shaping a company the way we think it should be made.
Peter Higgins 08:37
Brilliant, I love that response, I love that you're wanting to get there from the ground up, as well, and take that leap, and actually make it work.
And it's been a huge success, which we'll talk about a bit later on.
Thank you for that, please, then share with me an overview of Netwealth, and its innovative approach, please?
Iain Barnes 08:55
Yeah, so Charlotte, and Tom started Netwealth in 2016, really, with a view of taking the best bits of a traditional wealth manager.
So you know, I would include competent portfolio management within part of that, but, you know, human led investment approach, access to quality, and experienced client advisors to provide human led advice when necessary.
And but so wrapping that up in a more technologically enabled framework, and that's really the key that trying to get that that flexibility, that good tech delivers for you to make something efficient and scalable, but still retain that. That human touch when individual clients really want it.
Peter Higgins 09:45
Thank you. And what I wanted to ask, firstly, about the three-pot theory let's go to the basics here and just get people to understand that particular nuance please, for those that have not heard of it before?
Iain Barnes 10:01
Yeah sure, so three pot theory is essentially trying to help people understand the different moving parts of their savings and their and their wealth and how they manage their overall picture of their financial situation.
So when we think about pot one, Charlotte calls it, that's your typically you know your current accounts and you've got your earnings coming into that bank account your outgoings going through it as well, you need to have sort of a bit of a bit of a buffer there.
And then we think about pot three, which we call the passion pot, it tends to be where people sort of concentrate a bit more of their wealth.
So for most people that in the UK, at least, that start with owning their own property.
Occasionally people have rental properties where it might be something like an investment in a friend's company, or, you know, exposure to your own sort of stock holdings that you get through your work etc.
Or it might be something that you have a particular passion for, like I say, like, you know, people talk about, you know, fine art, fine wine, or motorcars, or something like that.
But these are typically long-term holdings that either drive a lot of joy from, or you have a particular interest in, in building. The problem with those holdings, though, is that they tend to be pretty illiquid, so you can't trade out of those assets at the drop of a hat.
And so if something happens, you know, you want to, you want to be able to access a bit more of your finances.
So the problem is that people sort of tend to allocate a bit more to the other extreme in pot one, just because they're aware that they can't access what you know, what's going on in pot three.
So our approach is say, well, what about the bit in the middle, so pot two, the best way to, to structure your finances is to make sure that you've got this sensible, what we would call core investment portfolio, that's trying to make incremental gains.
But it's also readily liquid. And so by making sure you've got a decent pot two in place, you don't have to keep too much stock in a in an unprofitable allocation in your day to day funds.
So, so that's how we that's why we think, you know, you can really make decent gains by making sure you've got a sensible liquid portfolio in pot, two. And that's where we come in.
Peter Higgins 12:42
Brilliant. Now, if you do me a big favor here, and please just expand on the Netwealth investment methodology and philosophy that's applied across all the portfolios, please?
Iain Barnes 12:54
Yeah, so the first thing is that all of our portfolios are run, you know, sympathetically to the overall ethos of the of the company.
So we want to make sure that we're doing sensible things well.
Now, that means building in a level of diversification, so you have different assets that respond in various ways to changing circumstances. And it means doing it in an efficient way as possible.
So from our point of view, that efficiency means having a centralized team that look after all of the all of the clients assets within that Netwealth look after, so you haven't got different individuals doing different things.
And that means that it's pretty scalable from our point of view, so all clients have their own portfolios, but they all look exactly the same, per different risk level as appropriate.
The other part of the efficiency is to invest predominantly on a passive basis.
So the majority of our assets are held in exchange traded funds, or ETFs. And you can go quite a granular level to make sure that you get the right exposures within your portfolio. But it just means that you're cutting down on those, what we view as unnecessary costs. And by taking an efficient approach, it means that you're reducing those unnecessary costs.
And you're increasing the amount of the or the share of market returns that can be passed on to client portfolios. And that's where we really focus a lot of our energy.
Peter Higgins 14:25
Thank you for that you touched also there on the charges.
Can you just expand a little bit on how your charges differ to the bulk of your peers in the wealth management side of it, in the sense of, you know, much reduced and, and how do you go about getting that much reduced cost to benefit your clients?
Iain Barnes 14:41
Yeah, well, that's really where the technology comes in.
So because other people have got, you know, what we would, we would say, a sort of, like, antiquated sort of technology and things creak a bit or, or you know, there's a there's a big theme going on in the moment in wealth management.
I'm sure you’ aware of have different firms being bolted together at different times and try and sort of hammer different costs, cost structures together, and different information systems together, it all becomes quite clunky.
So we've built everything from the bottom up. And the technology is there to provide greater access to information for clients, and to help our sort of streamlined team to be able to share that information with clients readily, and so that everyone can interrogate and understand their portfolios a bit better. So that greater efficiency spreads throughout the whole business.
And, you know, the hybrid approach of making sure you've got qualified people available to do those, you know, those necessary parts, combined with flexibility from technology is, is what enables us to keep those costs down.
And the result, you know, it's always hard to say, but we think average costs, look through costs of our portfolios, probably a third to a half of the of the average.
And so when you're thinking that you're delivering the same market returns, but at lower cost, just those returns compound, like so much faster.
And as you extend the time horizon, because most people are investing for a number of years, that just, you know, compounds for faster and faster.
Peter Higgins 16:21
Yeah, it's very important to look at those costs and say the compounding effect is absolutely huge regarding it, Iain I want to talk a little bit now about the demographic of your clients, regarding, you know, where do they where do they come to you from, in a sense of the size of their portfolio, commencing to where it actually goes up to? Because, you know, some people might think, actually, that service might still be too expensive for me. So where can people come in?
Iain Barnes 16:44
Yeah, so the said the minimum for a lead investor is $50,000s.
Now we have clients, as you would expect your range significantly above that, and the average portfolio size about 350 to 400.
But we've got, you know, large institutions as well, that averred the back us, as well, and sort of quasi-institutional law or charity portfolios as well.
In terms of individuals, it's quite a broad demographic, as you would imagine, we, we work quite hard to understand where clients are coming from, and it's a real mixture actually, is that it's a, some people are investing for the first time because they've been put off because they haven't found a good solution.
And previously, another chunk of clients come from DIY platforms, either because they've found the experience like a bit more challenging, perhaps in you know, in volatile market environments than they had imagined.
And just sort of one step back from things. Alternatively, in some cases, it's really interesting to see, we've had some people who have who've started out on DIY platforms and enjoy it have been quite successful, but really would prefer to keep it sort of as more of a hobby, and have someone else look after sort of like the majority of their assets.
So things have grown a bit too big. But I guess, you know, the bulk of clients that we're seeing that we're coming across are people who are unhappy with their existing provider.
We think that gradually that there's a bit more education, in terms of the costs that have been incurred, you still hear some really surprising stories about how unaware people are of the look through costs that they're, that they're incurring on portfolios.
But, you know, if people have had a bad experience, or or they're unhappy for one reason or another than and they're looking around, then sometimes they come across us.
And actually, some of the some of the, some of the corporate activity within the wealth management space is, is quite a good catalyst for us.
Because inevitably, sometimes clients don't necessarily feel that they're, you know, that their interests are being looked after, as part of that transaction. And and that's a that's a catalyst for change. But it's quite a broad, quite a broad mix.
Peter Higgins 19:05
Yeah, thank you for that. I think you've touched on a really good point there regarding the consolidation that's going on regarding the asset management, wealth management space, and some people are going well, I don't want to be part of that group.
Because I wouldn't want to be here and that offers up an opportunity for yourself and your team.
So yeah, thank you for that.
Now, you touched on the fact that some people are actually moving across to your platform, and better service, lower charges, etc, going to be attractive to them.
What happens when a client approaches Netwealth with say, a large sum of money, they've sold the business or they're moving the whole portfolio to you, but they've got concerns about the uncertainty of the markets right now.
What do you put in place and how do you go about transitioning them almost slowly, if they don't want to put it all at the same time in the market?
Iain Barnes 19:50
Yeah, that's a good point. So we can work with people to set up a schedule that they're comfortable with.
I mean, it's always a big one.
Question for people if they have been invested, then we typically sort of say, okay, if you're, if you're just coming out of the market, just to change provider, it just makes sense to be invested straightaway, there's no reason why this should really change your overall risk profile, we would say, if people have come into money from you know, from a new source as a one off sort of life event that sometimes happens, then we can work with them to make sure that there's, there's a good schedule that people can stick to.
And really what we, what we tend to find is that the best solution is just to make sure that you've got something in place that everyone's comfortable with, and, and that you can just help you provide the discipline, because it's always a nervous situation when people are, you know, are wondering whether or now's the right time to, you know, to pull the trigger on a meaningful amount of money for them.
So you want to try and take that emotion out of it, if at all possible.
Peter Higgins 20:59
Brilliant, thank you. Now, Iain it's extremely difficult for investment professionals, and the best of times to keep up with the constant changes regarding pensions.
Please, can you tell us about the Netwealth pension service and how your team go about ensuring they keep up themselves, but also maintain keeping their clients up to speed regarding all the government changes that keep going on don’t they?
Iain Barnes 21:23
I think that's right. And, and so from my point of view, I just look after the investment side, the client advisors are the ones who would say on top of that, thankfully, so that's sort of out outside of my remit.
So I would have to defer to my better informed clients on that point.
But you're absolutely right, that it's a constant stream of information.
And changes that are, you know, the really impactful for people's long-term outcomes.
So, you know, quite often we're just there to, to be ready to provide a bit of a bit of background for people if they if it's not an area that they're comfortable with.
And one of our, you know, one of our clients’ advisors is easily able to inform them if any changes. I'm glad it's not me.
Peter Higgins 22:12
Now, given we've talked about all the various different portfolios, the pension, etc, availability of service from yourselves, can you share with us the nuance and the benefits of the Netwealth network and how that would benefit? You know, a larger group of people?
Iain Barnes 22:28
Yeah, so this is the network, something that has been really popular since launch, really, and I think it's about three quarters of all of our clients are part of a network, the idea behind it, is to be very open to people and say, okay, we recognize that you're probably not investing as an individual, you know, all of us are, you know, probably got in middle generation quite often, you know, so we're sort of influencing older generation sort of investment plans, as well as, as well as our children and sort of younger relatives coming through.
And what we wanted to do was to say, okay, why can't we work a little bit smarter, to make sure that everyone can benefit from you as a family or friendship group investing in concert.
So you have a lead investor, say, who might come in with a pension. But if you then add a spouse's set of ISAs, or you know, older relatives, general investment accounts, that can then take you up, say, into the next sort of cohort in terms of the fee levels that are on offer, and everyone gets to share on the lower fee rate that that bigger pot gives you access to, and it's really popular so for myself, we've got, you know, my pensions and ISAs, my wife’s ISAs, my mother's general investment account, my kids choices, all wrapped together in one network. And that gives you access to the lowest possible fees.
And we just think it's really nice in terms of opening up that conversation, which is so important as a family group around money.
You know, a lot of us get all to British about things and you know, don't tend not to discuss these things too much. And while everyone, you know, you're not you're not sharing, you know, the details of your financial situation with anyone, but your conversations always good around these things.
Peter Higgins 24:35
I think it's I think it's brilliant idea. And clearly it works. And you touched on the importance there of having those conversations, and also adds a layer of education for everybody, including, you know, we're going to talk about your son's a bit later for the children of the third generation.
You know, you're talking about your parents, you know, grandparents yourself and then then fantastic, you know, start that conversation which we don't tend to have I think until it's almost too late.
Iain Barnes 25:02
Yeah, exactly, exactly.
Peter Higgins 25:05
Okie dokie, one of the things that you've you have got on the platform as well. And a lot of people talk about ESG and all the rest of it, you've got the ethical side of the investing availability to clients. Netwealth, have the socially responsible investing portfolios, please, can you share those investment propositions with this as well?
Iain Barnes 25:26
Yeah, so we've launched those about three years ago.
And we felt it was yeah, it was, it was important to reflect, you know, the different opportunity set that people can, can choose in terms of how they invest their money.
Now, it's always a bit of a tricky area, because if you talk to anyone about what they think, a socially responsible investing means, you get as many different answers as people you ask.
So you have to try. And whenever you're trying to structure, an investment strategy for people try and build something that you think is attuned to your own thoughts, but also try and capture, I think, you know, some something that that will excite people.
Now, from our point of view, it was very important to us that we stayed quite true to the overall Netwealth ethos.
So that's basically diversification, consistency, and efficiency when we're looking after portfolios.
And so we wanted to make sure that we didn't lose those aspects when putting together what we call our SRI portfolios. So they're still investing in ETFs. And they're investing in ETFs, that follow a very consistent approach.
So you're not investing in like one US equity manager who takes, you know, one view on what, you know, ethical investing is, and another in emerging markets, who has a totally different approach, we think it's important to have something consistent so we follow the MSCI Socially Responsible indices for that, for that point of view.
But importantly, we think tried to map the level of granularity of our core proposition to those SRI portfolios.
So the outcomes will be different, you know, no one wants to invest in something that they think is got greenwashing in it, so it's just SRI and name only, the outcomes will be different, but they should only be different because of that, what we call factor of SRI risk.
So it's most clear, say when you're investing in, in the UK stock market, because we invest in, in ETFs, that follow the FTSE 100 and then a smaller companies index as well.
But of course, the UK index itself is quite concentrated in energy and, and other resources.
So the fact that some of those are excluded, because the strategies have got a very clear sort of carbon reducing objective means that your outcomes are going to be going to be quite different there.
The other important thing to note is that there is just that slight, incremental additional cost when investing in those strategies, because the liquidity of the instruments aren't quite as efficient.
Now we're talking from, like, super-efficient to sort of, you know, a slight, slightly more incremental cost there. But I think it's always worth noting.
Peter Higgins 28:31
Brilliant, no, thank you for sharing that. Now talking about the different nuances and the balance regarding these ETFs and the weightings regarding some of the stocks.
We've seen this new rebalancing going on, I think happened this week in the US regarding the S&P, and obviously, we're talking about the mega caps, which seem to be absolutely accelerating this year.
Now, some of those mega US tech mega caps, including the likes of Microsoft, Apple, Meta Tesla, Nvidia, as a market closely as yesterday, was soaring higher 44%, to 2055% year to date Iain.
What was being yours slightly, you know, you're the Investment Officer here at Netwealth, your strategy to attain some of that exposure here today to AI, robotics and so on and so forth?
Iain Barnes 29:24
Yeah, it's been it's been extraordinary to watch, right, because I think a lot of people, you know, I've been aware of the earnings power of the, of the consumer tech sector within the within the US for, you know, for the past decade.
But, but this year has been something else. I mean, I think, you know, they've outperformed for good reason over a number of years.
You know, the US stock market has led global returns significantly because of the consistency and of the earnings growth driven a lot by these names, the broader US economy and stock market as well.
But a real concentration here, I think the difference to us this year has been, there's been a lot of sort of ex post justification of why these, the stocks have been have been going up.
And a lot of the time, you know, they haven't been delivering those higher, stronger earnings streams, they've been delivering better forecast future earnings streams. And I think you have to, you have to recognize that.
But also, it feels as though there's just quite a lot of animal spirits acting within that part of the market.
Now, one of the reasons why we go passive is to make sure that you capture some of those big winners, like a lot of a lot of people are talking about the travails of active managers, they think it's people, active managers picking, you know, rubbish stocks, I don't, I tend not to think that that's the case, I think that the difficulty is, when a lot of returns are driven by a few stocks, if you missed a couple of the big winners, then your returns relative to that benchmark index, are just, you know, fall behind a little bit.
So that's always in the back of our mind of how to navigate through that. And it's been a, you know, it's been a winning strategy.
You know, since we launched, like a lot of active managers that have struggled, at the moment, we wanted to retain exposure to the US equity market, and all that it represents, you know, the dynamism of that of that economy.
But we did feel that some of those tech stocks were going to be a source of volatility in the future, rather than, you know, the real the real drivers of performance.
And so you don't want your portfolio when you're saying you're providing a diversified portfolio, you don't want too much concentration risk.
So, so we've participated in, but we've also added an ETF, which takes an equal weighted approach to the S&P 500, which has, you know, has been lagging this year.
But, you know, gives us confidence that we've got that broader exposure, we're not going to, you know, live or die by the performance of those of those individual names that you've mentioned. And one like further thing on that, even though, you know, we've allocated, say, 20% of our US equity allocation to an equal weighted strategy, which has definitely lagged year to date, our US equity portfolio is still beating the average active manager, which I think is quite interesting.
And because it sort of serves to some of the challenges of navigating or navigating through all of those sort of behavioral constraints that you know, people that are investors always hampered by.
Peter Higgins 32:52
Brilliant, no, thank you for that response, I really appreciate you touching on the importance of concentration risks there as well, because I think a lot of people get into the FOMO of it all, they see, you know, Meta, Nvidia, so on and so forth absolutely soaring as well as Tesla, I need to buy some of that now, it's like, maybe just to calm down a little bit, you know, and watch it and such.
Now, Netwealth are an innovative platform, tech lead, as you've touched on already, a piece of McKinsey research came out on estimates that artificial intelligence may deliver an additional economic output of circa 13 trillion by 2030, increase in GDP by 1.2% per year Iain, have Netwealth considered any further AI innovations regarding their platform, and maybe tweaking some things to make things even more efficient going forward?
Iain Barnes 33:47
Yeah, I think it's, it's a really interesting, it's a really interesting topic. And I think, even now, you know, you mentioned in Nvidia before, and people are, seem to have most confidence in, you know, the old, the old analogy of it in a gold rush, sort of, you know, making sure you own shovels, and things like that, rather than sort of going out and exploring yourself.
So I think a lot of people are uncertain as to where those future winners are going to going to come from.
From our point of view, we're trying to think about how efficiency can help across every strand of the business.
So within the investment component, it's, you know, I think, I think you can, you can obviously see immediately that there are boundless opportunities out there, but also all other parts of our businesses is quite important as well.
So when we think about our client advisors, we've got a team of eight client advisors who can offer different levels of advice or regulated advice with a capital A, or perhaps just sort of more, more basic guidance on people's investment strategies.
And that's where you know, you can, you can see AI tools becoming a lot more helpful, delivering the efficiency of that of that guidance.
So you can get good structures in place to make sure that you don't have to spend as much time, you know, as an individual advisor making sure that, you know, the client interests are all aligned properly. And then on the developer side, so half of our half of my colleagues are developers, so they work within the tech team, building the platform.
And there's all sorts of implications for, you know, I think for open source coding, and the rest of it, of how they can streamline all of the work that they're doing, either as a sense checking what they've done, or a sort of automated proofreading of the work that they put in, as well as you know, using, you know, other streams that, you know, our CTO is probably best better qualified to speak on rather than myself.
But I think it's fascinating to watch it.
And I think, you know, usually, a lot of people get, get too worried about the negative implications of new technology, rather than thinking about, you know, how we can embrace something and, and use it use that as a sort of boost to human endeavor.
Peter Higgins 36:19
Brilliant, thank you for that full response. Appreciate that. Now, talking about innovating, we talked about AI, but you've already started or launched another latest innovation by that. I mean, MyNetwealth, can you tell our audience about that, please? How they may be able to utilize it?
Iain Barnes 36:37
Yeah, so we're really excited about it. So I guess, a lot of the platform, the original Netwealth platform has been built to provide a lot more transparency, to help people understand what's happening with their investments, and to help project into the future, what their situation might look like, through different, you know, life events and, and types of investments, we wanted to take it a stage further.
And so providing a free tool, so you don't need to be a client to use it.
But it's a way that you can bring all of your different investments from different places, all into one place.
So that we don't you don't have to monitor everything with a spreadsheet.
And we can identify the nature of what that investment represents.
And so that will help you in terms of understanding what's going on, but also projecting the future performance of different asset classes.
And so it's really to, to enable people to, you know, to help plan things a little bit better, from their overall financial, state of mind. And then leading on from that if they want to then pick up the phone and speak to one of our advisors who can offer that guidance, so that they will have a have a conversation, and then that will produce a sort of a semi-automated and guidance report for them in an efficient way.
Peter Higgins 38:08
Brilliant, thank you. I've only got a few more questions for you. And I need to touch on your own personal investing strategy as well, you touched on you are part of the Netwealth network and you've got your family's investments in there, can you tell me about your own strategy? Do you just apply it to the Netwealth portfolios? Or do you do anything outside of that? Regarding your own personal investments?
Iain Barnes 38:33
Yeah, no, I'm everything is centered within Netwealth.
I think I'm pretty boring in that regard.
So I've got, you know, lucky enough to have a house and everything, then, you know, my ISAs and my pension are all invested with Netwealth.
I guess my pot three would be being a small shareholder within Netwealth itself.
So, you know, we tried to provide the opportunity for everyone who works here to earn a bit of ownership of the of the company, which I think is, you know, is, is really good initiative. But that's my pot three.
Peter Higgins 39:14
Brilliant, no, I really appreciate that candor, and thank you for sharing that. Now. With regards to your you've got three boys, so do they have investments coming in from the grandparents from yourself? Do they do it on a regular basis or is it sporadic and lumpy?
Iain Barnes 39:42
I guess it's a little a little bit of both, you know, we try and plan a little bit and then you know, got grandparents that are, you know, like to give them little gifts every now and then.
Everything you know goes into their Netwealth choices, their risk level six investors, and they really like the way that they're, you know, they can, they can see what is what is in their portfolios.
They know that I look after it. So they can be pretty harsh judges at times, you know, asking me why don't have more Tesla, and things like that whenever we see a Tesla.
But I think, you know, I think I think it's great in terms of and just having an understanding of, of money and encouraging, you know, an attitude and an aptitude to investing. And, and it's something that they, you know, they take a lot of enjoyment from.
Peter Higgins 40:39
Brilliant and they're getting their own back because I hear that you are also a coach for a junior football team. Is that the team that they play for?
Iain Barnes 40:49
Yes, yeah, so I'm a coach for the mighty Milford Pumas play in the Surrey Primary League.
I have coached each one of them at some at some stage, I've sort of I keep demoting myself to go down to the younger year groups.
So the kids are a bit nicer at that age. So yeah, I look after a group that going into the under 12 next season got high hopes.
Peter Higgins 41:15
Brilliant. No, I wish you well. Now I'm going to wrap up with a couple fast fire questions for you here Iain. Firstly, just loads going on regarding the macro environment and I'm just wanting to get you to touch on your current views on markets regarding inflation, and interest rates. If you just be so bold, I'm not asking you to nail it on the mast say, Iain thinks that… just a general solid viewpoint, please?
Iain Barnes 41:40
Sure. Well, I think I mean, obviously, it's the massive, you know, topic that's been driving markets for a number of years now.
And together with my colleague, Gerrard Lyons.
You know, we feel as though we've had a pretty good handle on the inflation story.
That's been driving markets the past the past couple of years.
We're at a very interesting point now, I think, where you're going to start to see a bit more divergence in terms of the inflation experience, you know, we know that the UK for a combination of reasons has had a slightly more stressed experience than other places.
There was good news last month, in terms of inflation starting to come down.
I think it's, you know, I think I think I'd agree with consensus that you're going to see headline inflation drop, you know, reasonably quickly.
The trouble, of course, is what that that core inflation number is doing and the one the one sort of nagging concern, I think that thinking about quite a lot at the moment, is that the market thinks that the UK and European economies is going to have to deal with higher inflation than the US for a given period of time. And the central banks are going to have to respond to that.
Now, I think you know, the Federal Reserve is meeting today, the expectations are that, you know, they are closer to the end of their journey.
Now, markets are pricing in, you know, decent level of cuts from the US interest rates in the in the next few months. Whether or not they come through, you know, not too sure.
But I think it's going to be interesting to see how the central banks in the UK and Europe try to handle the situation when the US is on more of a clear sort of easing path, and they're still feeling the pressure of high inflation at home. I think the risk of a policy mistake is really increasing, you know, arguably, you could say that they're too slow to get started on this, on the rate hiking journey.
But, you know, it would be a really pretty bad impact if they were to too late to respond to the to the slowing economy pressures as well.
And, you know, some of those indicators that came out this week on surveys for manufacturing industries, it paints a pretty, pretty stark picture.
Now, we know that manufacturing isn't as large component of economies as it used to, but it still tends to have like quite a quite a strong delta in terms of the direction travel for, for economy.
So we might see servicing parts of the economy slow as well. And so yeah, I think I think it's something to watch out for the like the sequencing that different, the different markets have to face.
Peter Higgins 44:37
Thank you for that thorough response. Absolutely brilliant reply, and I really appreciate that. Thank you. I've got one more question. And then I've got the final question. Okay. This is just your opportunity. If you could Iain and be so kind enough to reiterate to our global listeners of ultra-high net worth individual individuals, institutions and private investors. What makes Netweatlh, such a unique proposition and different wealth management company?
Iain Barnes 45:05
Why? I think it's the idea that we're trying to combine your bang up to date technology with the human element.
So we've got experienced professionals doing things in a sensible way, across either, you know, speaking to clients on an individual basis, or investing portfolios, making sure that we've got the processes in place that can enable us to deliver quality proposition at scale.
And because we can do that, it means keeping a lid on costs that we think are just unnecessary in the rest of the industry. And there's, there's a lot of, you know, there's a lot of road to go in terms of the journey for the UK wealth management industry.
But we think that the way that Netwealth is set up as a company, and particularly as an investment proposition, is much closer to where the rest of the investment, the rest of the market is going to look.
In, you know, 5-10 years and so we're really excited that the clients are recognizing that and supporting us, and yeah, isn't it it's an exciting thing to be part of.
Peter Higgins 46:22
Brilliant, thank you. Now, my final question, and you'd be pleased that it's the last one.
Iain Barnes 46:27
You’re building this one quite a lot.
Peter Higgins 46:31
You've had over two decades of experience many different experiences in the investment and wealth management industry. My final question to you is this, what are you most proud of? And why?
Iain Barnes 46:46
Gosh, from a professional point of view. I don't know I'm proud of what we're doing here. I'm proud of, you know being, you know, having the courage to join something from start and launching an investment service that I think is doing a really good job in terms of delivering a strong investment outcome for our clients.
Not trying to pretend that we're, you know, we're doing anything we're not, we're just offering sensible propositions in a in a in a tech enabled way, at low cost. And the compounding effect that we've managed to pass on to clients is adding value. And you can see that through the performance numbers. So I'm, I'm proud of that.
Peter Higgins 47:41
Brilliant, absolutely brilliant. It's been an absolute delight to have you on Iain on this Investing Matters Podcast with me, ladies and gents that was Iain Barnes, the Chief Investment Officer of Netwealth, Iain, thank you ever so much again for joining me again today, Sir. Thank you.
Iain Barnes 47:57
Thank you, Peter. It's pleasure.
Peter Higgins 48:00
Speak soon. Take care. God bless you.
LSE 48:04
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