Brexit is cooling investors’ interest in the UK
Daniel Freedman, managing director and co-founder of London & Capital tells Citywealth about his US clients’ Brexit worries, and how tech can boost the private client sector.
Tell me about your role at London & Capital.
I have a dual role at London & Capital. I am head of the US team, looking after US-orientated families living outside the US for their financial planning and wealth management. I am also a partner, and founder, so I participate in strategy and planning, while retaining responsibility for clients. I moved away from the operational side of the business to focus on building the business and the US team. For me, this has always been the best part of the job.
How has the private client industry changed since you’ve founded the firm?
When I set up the firm in 1986, there was more relaxed regulation. FIMBRA who are the Financial Intermediaries, Managers and Brokers Regulatory Association was born soon after we started, and since has morphed into the FCA. This has changed the industry considerably by raising the level of professionalism. In general, clients’ needs and requirements are little changed, but the products to fulfil those needs have. In the early days, the only savings products were insurance products and stockbroker accounts. Now there are ISAs and personal pension products such as SIPPs. Everything is much more transparent and fees are lower. There is also more transparency in terms of the underlying investments. Risk is also a major decision point for investors. This is a welcome change; from an antiquated ‘trust me’ approach, to one that is more open.
Are Americans still investing in the UK?
Brexit and the turmoil in the UK political scene is cooling interest in the UK, but this is balanced to some extent by the weakness of sterling versus the US dollar, which has made UK assets cheaper.
Tell us an interesting client story
In 1988, I did some work for a barrister. He did well and became a judge. However, he died young and left his wife and family. Their financial affairs were intact, but the wife had no idea about finance. She came to me and said ‘What do I do?’ The advice relationship changed: we had to move from long-term wealth accumulation, to helping a vulnerable person understand what she needed to do. She has been my client for thirty years.
What are the main challenges your clients are facing?
Understanding Brexit and how the financial consequences are going to affect them. They are feeling nervous about the UK government and the current uncertainty. Their assets have done well in recent years, but they are concerned about the future, about Jeremy Corbyn, Donald Trump and Brexit. Many believe we are likely to see a crash. As such, what they want to know is how to shield their portfolios.
Will the UK benefit from Brexit?
I think ultimately the UK will benefit from Brexit. The ability to manage the country for the benefit of the UK will be a big cost and time saver. It will enable us to make decisions based on what is best for our country. As a business owner, I believe our economy is hamstrung by EU regulation. The market is huge, certainly, but there is a big world out there. I don’t believe it would have taken the UK seven years to negotiate a free trade deal with Canada, for example.
What trends do you see in the industry?
Harnessing technology to meet the needs and requirements of clients is going to be crucial. Private wealth companies are doing a good job of trying to get this right with online apps, portals and robo-advisers, helping them disseminate information in a coherent way. This will be a big trend over the next five to ten years. Digital will be a much bigger part of the wealth management industry.
What was the best piece of advice you’ve been given?
Our investment director, Ashok Shah, once said to me: “Daniel, everything takes longer than you think.” I used to get a little aggravated when things weren’t done quickly, but this helped me be a little more accepting. That and ‘no technology project ever goes according to plan.’
What do you do to unwind?
I enjoy sports and I play 5-a-side football three times a week. One thing I’m enjoying at the moment is doing a form of spinning with my daughters. It’s called Psycle and you cycle in a darkened room with ‘deep house’ music blaring. I’m probably thirty years older than everyone else there, but I love it.