Last week, we were hosted by Rothschild & Co at their amazing office (see image below). Joining us to provide insight into finance and investments was the lovely Jade Vanriel, representatives from Rothschild's Private Wealth Division, as well as the founders, co-founders, and directors from MoneyFarm, Isabella Forum, LendInvest, MoneyGirl, and Onyx Property Consultants. So read on, and find out what you missed at our second Money Matters event!
Katherine Taylor (Director, Rothschild Private Wealth) kicked off the evening with a little history on the Rothschild Group. The Rothschild Group was founded by five brothers in Frankfurt, who were nudged by their father to go into Europe to discover their dreams. One came to Manchester and established himself as a textiles merchant. However, he often faced trade issues given the political unrest at the time of his trade career. Instead, he decided to pursue a career in banking. He purchased a house next to the bank of England. the same land which now stands as the Rothschild's office in London, and has been the Rothschild's property for the past 200 years.
The company currently operates in 3 business areas; Global Finance, Merchant Banking, and Private Wealth. The bank has supported first generation wealth clients, hosted events such as WCANs Money Matters for those who intend to learn more about investments, and created opportunities to enrich young people and provide them with experiences in the corporate world. Karen emphasised the company's primary focus is to help it's client build wealth, leaving us with a profound quote from the founding father:
"It takes a great deal of boldness and a great deal of caution to make a fortune, and when you have it, it takes ten times as much to keep it."
Next Paolo Galvani, Co-founder and Chairman of MoneyFarm, talked about his company, and gender differences in investments.
Prior to founding MoneyFarm, Paolo's first investment experience was in stocks in US markets, and equity. He highlights, that In order to invest, you must plan. You must nudge yourself. For example, planning to contribute 5% of your salary to investments BEFORE your next paycheck will most likely result in action, than trying to make that decision on your payday.
Paolo then talks about MoneyFarm, and the service it offers. He first explains the difference between large cap (market capitalization) and small cap investments. With large cap investments, there is less volatility and more stabilisation, whereas small cap investments have less liquid shares, more volatility, but higher returns. It can be very difficult to find people who will invest the small capital. MoneyFarm simplifies this by asking different questions to find the client's risk appetite and determine their risk profile. Their technology allows them to offer diversified investments regardless of the amount invested. MoneyFarm uses ETF portfolios for its clients and have ETF for bonds, equities ( which is the core of their products), enabling clients to have a diversified portfolio. They also have ISAs, and an upcoming Pensions project (check out their blog for more info).
When starting MoneyFarm, Paolo explains he thought women would be the best investors, however he came to identify a gap in his clientele. 80% of investors in UK are male, and there are less female investors in MoneyFarm Italy. On average women are paid £300 000 less than men. Family wise, women bear the weight, and this increases life expectancy. This should lead to a pro-active pension and investment activity with women, however this is not always the case. Financial independence is not common with their female clients, though they are incredibly successful professionals. Surprisingly, these women have their finances managed by either their husbands or their fathers because they perceive managing finances as being "complicated". Paolo believes it's time to change that, and advocates spreading awareness through MoneyFarm.
Paolo was joined by Esther Bortot (Rothschild Private Wealth) and Rod Lockhart (Managing
Director, LendInvest) fo a panel discussion on investments tools.:
How relevant are the products to young women with less capital than average investors?
Very relevant. Having less capital does not mean you cannot invest with FinTech products. Put aside small amounts in a more structured way. Age gives you more advantage to take risks. which can result in higher return. You should also have savings plans as these are more effective for monthly contributions, than single injections. Although not all FinTech products may be suitable for young investors, you can still take invest through other means. One way is through tax efficiency. The ISA is a great tool, and you have an annual tax free allowance of £20000. Invest small amounts and let it grow over the long period, tax free. Use your ISAs!
How do you choose your investment plans? It's good to assess track record of the company one is investing with. Look at costs carefully, and ensure they're being transparent. Also assess what your risk appetite is, and ensure you understand the product you're investing in.
Why don't young people invest? The panel agreed that this is most likely due to a lack of awareness around investing. Also, marketing financial products is a sensitive area. Sometimes, young people aren't able to pass the on-boarding process, because they do not fit the criteria some investment companies are looking for. Companies cannot entice young people to invest in their products that aren't suited for them, and sometimes there isn't transparency around the products being sold which often deters young investors.
How do small companies build trust? Have a great track record as a small company, build client relationships by providing exceptional service. In financial services business it's important to be financially sustainable. LendInvest are creating a product that can survive without LendInvest and have a contingency plan which enable investors to see results on their capital investments. Also, a lot of young people are deterred by the jargon. Jargon is a weapon to make things unclear about investments. Jargon can be used to separate people who know finance and those who need it. MoneyFarm has a blog dedicated to helping people understand jargon so do check it out!
Lastly, a panel discussion on Real Women and their Real Money Experiences. We were joined by Grace Ma, Co-founder of Isabella Forum, a peer to peer financial coaching network for women. An entrepreneur at heart, Grace initially worked in private banking advising bankers on how to use their money. She later developed the passion to help women better understand their finances; from this, Isabella Forum was conceived.
Also, on the panel was Ugo Arinzeh, Founder of Onyx Property Consultant. Her career journey began at Bank of Merrill Lynch, landed a role in corporate real estates in investment banking. Along the way, she started buying property which she really enjoyed, and proceeded to building a portfolio. After 10 years, she got the opportunity to work for Architect David Adjaye, which spurred her move to London. Here, she established Onyx Property Consulting.
Joining the panel was Jade Vanriel, A Youtuber, Law graduate. Jade bought first property last summer, at the age of 22. and took to Youtube to share her story, which has since gone viral. She also plans on launching property website too, to aid young people.
Finally, on the panel was Emma Flaherty, Founder at MoneyGirl, who currently works as a Recruitment Manager at a Redwall Consultancy, specialising in Wealth and Asset Management. She previously worked at EY where she realised the disconnect between women and personal finance management. Emma Founded MoneyGirl to bridge the knowledge gap between men and women, provide straight talking, jargon free personal finance information, and break down stigmas and fears associated with finance.
We asked the ladies to talk us through why property was their first investment choice, if it was, and how they did it.
Gemma: "From an investment perspective, you're putting all your capital into one asset that may not actually bring you results and that can be very risky. I kept pushing it back till rent costs got too high, and with Brexit, it was a good time to get into the market. I chose to buy smaller properties as it is less pressure and didn't feel as stretched. People should think about from both an emotional and financial perspective. What does it mean to them? When you rent it out, how much could it return for you? Will rental yield cover costs of mortgage?"
Ugo: "Owning a home is the American Dream. It is touted as the thing you do. However, not everyone should, and that's where people go wrong, they buy property and overstretch themselves, and don't know what to do when things go wrong. I systematically trained myself to invest i.e. matched funds from company, before pursuing property. Property isn't the only thing to invest in."
Jade: "I invested in property because of safety and security. Whilst at university, I decided owning my own property was a must, so I began aligning my finances to meet my goal of becoming a property owner. I didn't want to just buy a house, I wanted a project, something I could also invest my energy into. I never wanted to rent."
Emma: "We're all learning, buying property doesn't mean we are better than anyone in the audience. Investing in property requires sacrifice, and if you're willing to sacrifice and commit you will benefit from it as it is a worthwhile investment. I'm currently buying my second home, because I wanted security and stability, which has meant moving back into my parent's home, and saving aggressively (saving half of monthly salary)."
The key message from the ladies was to have an investment plan or savings plans, and commit to it. Do your research, property is not the only means of investment so explore other options like FinTech products! Lastly, take your time, and save/invest in your lane. Analyse your income and save within your means! You don't have to compare someone else's savings/investment journey to yours!
Teju is a Psychology graduate at the University of Warwick, and currently works as a Consultant at Ernst and Young. You can connect with her on twitter @okantitun