The Ugly Truth About Investment Loyalty
I've been a Manchester City fan since 1970. I chose to support them as all my friends were either Leeds United or Manchester United fans, and Manchester City were an attractive footballing alternative who were having a bit of success at the time, winning the league and the FA Cup in consecutive years. However, just as I formed my allegiance to them their success dried up and apart from a couple of cup runs they remained relatively unsuccessful until 2011. You know what it's like though - once you've made your choice of team it's incumbent upon you to stick with them through thick and thin. After all that's what supporting a football team is all about; you make your choice, and for better or worse you remain loyal to them whatever happens.
Just imagine though if I'd been prepared to switch my support between different teams over the years based on their performance, rather than simply sticking with Manchester City? Had I for example, switched to a blend of Liverpool and Leeds Utd in the 70's, Liverpool and Everton or Arsenal in the 80's and Manchester Utd and Arsenal in the 90's and noughties before reverting to Manchester City, I would have enjoyed way more success as a result. Between them they were either first or second in the league every year throughout that period, winning numerous cups long the way too.
And it would have been quite possible to chose those clubs based on their results, coupled with a bit of football nouse. Indeed, the pundits have only failed to predict all the top teams in a couple of the last 40 plus years, most recently when Leicester surprised everyone by winning the league in 2016. In virtually all other seasons the top three or four teams have been easily identifiable by those with the experience and expertise to pick them out.
Now, being a football supporter is an entirely emotive decision, which is why we tend to stay loyal to one particular club. So why do many of us behave like football fans when it comes to choosing Fund Managers to look after our investments? That shouldn't be an emotive decision at all, yet far too often we hold off moving our money when results are not going the way they should and there are better alternatives available.
Now, I do understand that everyone can go through a bit of a lean period, and sometimes it is better to give your incumbent the benefit of the doubt for a time. Clearly that is not always the case, as the recent fall from grace of the one time darling of the investment world, Neil Woodford, is a timely reminder.
So when it comes to your money surely the key is to make evidence backed, emotion free informed decisions about switching, and on a regular basis? Of course, not all of us have the time or the expertise to do this which is why many of us chose an adviser to do it for us.
Choosing an adviser wisely is clearly important, as they will of course charge for this service, but it is not all about the cost; it's about value for money. Look for an adviser with a dedicated investment department, with full time, daily focus on the investment performance of their panel funds. Get them to give you testimonials from satisfied customers along with the number and scoring of verified reviews they've had from clients, and ask them about their recent investment performance. They should also be prepared to back up their claims about investment success with hard facts which clearly demonstrate they are indeed followers of the latest winners and not blindly loyal, or just plain lazy.
And choosing winners works whether you're a fan of active or passive funds, so this sort of support can work whatever your investment philosophy. Check out the following link for more information https://www.ellisbates.com/individuals/investments/
Of course, being a Manchester City fan is now much more enjoyable than it was 30 years ago, but one thing I have learnt in the past 50 years is that I can't and won't take their recent success for granted and I know it won't last for ever. I am enjoying it whilst it does though!
Ellis Bates Financial Advisers are independent financial advisers with offices across the United Kingdom. They specialise in active investment management of over £1 billion of assets on behalf of clients, who have given them a 4.9/5.00 score with Trustist.