Xentum May Update

Welcome to our latest newsletter.

I thought I would start with a quick story

Right at the start of my financial planning career before I joined Xentum, I worked for a fairly old school financial advice company as a trainee financial planner.  Fresh faced and hungry to learn.

Within 6 months of my new role, the global financial crisis hit and I was asked to talk to some clients about their portfolios.

I had studied economic, markets and behaviour at university and always been interested by money but nothing could prepare me for those next few months and how difficult those conversations were.  I still remember it like it was yesterday.

People’s savings had halved in months and there was a real threat that the financial system would crash.  I experienced what people do in a crisis without a financial plan or proper guidance – they go to safety.

Within a few months I was also made redundant at that company leaving myself and my girlfriend (now wife) both without a job which wasn’t a great experience.

I joined Xentum a few months later and the rest is history.

Most of you will now know why I am cautious!

Despite how bad that time was it taught me some lifelong lessons that I will always remember:

Have a plan and stick to it

At the old school firm, we didn’t have financial plans for clients.  It was very much what I would call a solution or problem solving firm.  I had no idea whether selling or buying was the right thing to do.

Over the past few months at Xentum we have been really busy speaking to clients and going through their financial plans and also building financial plans for new clients in the middle of a crisis.

My belief is that a financial plan done correctly is the one place of truth that we can rely on and allows us to focus on the bigger picture.

I am really proud that not one of our clients has wavered from their financial plan and that is a dedication to the groundwork laid in the good times by clients and financial planners.

This is the period in which your resolve is tested and I am happy to say you have all passed the test!

Avoid the Noise

One key lesson looking back to 2007/8 was listening to the media and news didn’t help.

It didn’t help me understand what was going on and it didn’t help me calm anxiety about the markets.

I would look at the markets every day and my mood would be dependent on whether the market went up or down.  I personally sold shares that I had bought a few months before as I couldn’t handle the markets.  It was too scary.

Today I don’t even bother with the news apart from seeking out factual information and I only check in on markets every week and it is without emotion.  I now look at markets falling as an opportunity and focus on the long term.  I put some money into my pension around a month ago.

I did a lot of reading after the crisis and watched how people like Warren Buffet reacted and they didn’t flinch.

I understand why now as the data and evidence we have says to manage our emotions and hold at all costs but I didn’t know it back then.

Focus on what is important

I was completely miserable during that time in 2007/08 and I vowed never to experience it again.

I completely understand that this is a difficult time for many, however I have really enjoyed some elements of this crisis such as playing in the garden with my children and some of the Zoom quizzes with friends.

Not every day is easy but it is a lot easier when I try to have a positive mindset.

It is worth asking yourself whether any of your values or goals have changed as a result of the last few months.

Today 

So fast forward to today;  Yes we are still in a crisis, however at Xentum we are really amazed at how resilient our team and our clients have been which proves that we are doing something right.

Markets have risen considerably over the last few weeks but it feels like we will still see plenty of volatility that for a long term investor shouldn’t really matter.  My advice is don’t even follow the markets as it won’t help you.  Focus on more important things.

As I have said before, we will be rewarded for our patience and this will pass as the financial crisis did but I think there are elements of every crisis we can remember that will help us going forwards.

Question – It would be great to hear what you have enjoyed during the recent crisis and what you will take from it?

Have a great bank holiday (and hopefully a sunny one)