Free advice - resist change!

20 November 2023

In Paul Johnson’s book, ‘Follow the Money’ he explains that all governments know the top three things they should do to create a successful, growing economy. They are: 

  1. 1. respect the law and international treaties, and never interfere with property rights; if you fail here you’ll never even make it to stage 2, which is

  2. 2. invest heavily in infrastructure, followed by

  3. 2. invest heavily in education (at all levels).

Notwithstanding the clarity of this task, no government ever fully embraces all three requirements, instead preferring the expediency of short term solutions to long term prosperity.
The investment management industry is not dissimilar. Everyone knows that investors should settle on a sensible asset allocation, set their strategy and let it run. If only it was that easy. If the industry practiced what it preached, its marketing budget would be practically nil. But that’s not how it works and the opposite is true. The considerable amounts spent on marketing have the sole aim of unsettling investors by tempting them to move to something new or old, but back in fashion.
It is solely up to trustees of charity funds to resist the siren call of ‘my firm is better than yours’ and the associated marketing. Only they are in a position to avoid flailing between the latest investment fads, be it private credit, gold futures or alternatives. Investment consultants are little help because they too profit from change. When you remember that a firm that has had a run of good returns is more likely to disappoint than succeed in the future, trustees should think doubly hard about the timing of this switch.
Why do good investment firms disappoint? It’s not that they have stopped being good firms, but because they are good firms when the market direction shifts their approach remains the same but without a following wind providing support. Only over time, with many changes in the direction of the prevailing wind can you really understand who takes a genuinely long term approach. Unfortunately governments (and electorates) don’t wait that long.
So if you want an independent, FCA regulated, firm to help serve you with your best interests put at the heart of the process, then Yoke and Co will deliver this. We have enough clients not to need to prompt unnecessary change to generate revenue, but like our blogs, we want charities to have simple, honest and unaligned advice.

As part of this commitment we have just launched our free DIY guide to conducting your own performance review so you can carry out your trustee obligation to review sensibly, cheaply and with your long term interest at its centre.

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