Count on good financial advice from Paterson Financial Planning to rise from shadow of Covid-19

As we have encountered the storm of the pandemic, the financial services industry has changed too. Smaller advisors have consolidated, forming bigger companies, and some advisors – perhaps those longer in the tooth – have seen it as a catalyst for retirement or leaving the sector.

Other businesses, however, have risen to the challenge and thrived. Glasgow-based Paterson Financial Planning has been growing and building its client base since it was formed in 2004, but it has found the pandemic has presented opportunities. This is likely to continue to be the case as we move into a post-Covid world.

“We are a medium-sized, independent firm with a family focus and we’ve found we’ve attracted quite a lot of new clients who have stepped across to us,” says Damien Paterson, the company’s Managing Director.

“Our industry is massively changing and we want to continue to be at the forefront of that.”

The result is that the firm has had to take on more staff to cope with the greater workload, though with everyone currently still working from home this creates its own challenges.

“It means you can’t train people in the office”, Damien says. “Personally, I think that’s the best place to be because you can lean on other people and it’s easier to pass on information between you. 

“It’s a little bit trickier to work with each other when you’re going it remotely.

“In some circumstances people do need to be physically together – if you’re not, then too much gets lost in translation between members of staff.”

Fortuitously, the company started planning for lockdown before it arrived in March last year, so it was prepared for what was to come. 

However, it has been a long 14 months since. “We are a client facing business, and ultimately new clients want to see who you are and to get a feel for you. That’s very important and it’s hard to get to know someone over a video call. 

“From our point of view, the sooner we can get back into the office, the better.”
Paterson prides itself on the advice it gives to its clients and it did expect 2020 to be challenging even before Covid hit. “I like to think that we educate our clients properly”, says Damien.

“We did tell them that last year would be a bit choppy in investment terms – we had Brexit hanging over us, an election in America and Trump’s trade war with China. 

“And at that stage we didn’t know that the pandemic was round the corner. Thankfully, at the end of the day we didn’t have a queue of clients wanting to go into cash. Not a single person did that.”

In a turbulent market, Damien points out, the choice of investments is critical, and his company was able to rise to this challenge. “Obviously, markets were falling and the value of investments was dropping, but not to the extent that you might see in some tracker funds.

“From this perspective, we’ve always been more focused on capital preservation rather than jumping into shoot-the-lights-out investment funds.”

The firm takes a mature and responsible approach to investing: it specialises in helping clients invest for important lifetime staging posts. “It’s about the big plays – when you are going to retire, how much you are going to earn in retirement and if you are working towards specific objectives. That involves planning, and planning requires working for stability.

"Obviously you can’t have a straight line when it comes to investment, but we do aim towards that.”

While using video calls almost exclusively during lockdown has been far from ideal, Damien does feel that they have their place and can even be advantageous on occasion.

“We may have, say, husband and wife clients with one working in Glasgow and the other in Edinburgh. Getting them into the office at the same time can be tricky and, if you are doing a 15 or 20-minute review meeting, it can be easier for them to do it online rather than having to come into town, park and so on. 

“It’s a Godsend for them and us to be able to take part in Zoom calls.

“Having said that, people who are investing a million pounds or more want to see you. They want to read the body language. I wouldn’t want to invest that sort of money with someone I had only met over a video call. So it’s about using both the personal and the online approach.”

What difference will an emergence from the pandemic mean to Paterson Financial Planning and to the wider financial services sector?  Damien’s colleague Richard Farquhar, who is a Director of the company, is optimistic.

“We’ve worked hard and taken care of our clients, so we see things improving rather than dropping off”, he says. “Now that Brexit is done and whether it’s a good deal or not, we expect the UK economy to tick on.

“Markets don’t like uncertainty, and at least we now have some stability in that regard. Sadly, some sectors of the economy such as retail and hospitality are likely to be badly affected. In the financial services sector, I think we will continue to see change as advisers in their mid to late 50s continue to sell up and move out.”

What investment sectors appear best placed to take advantage of the recovery? 

“We think UK smaller companies having a decent run going forwards, Damien says.

“There are some cracking businesses out there and they have some really excellent products. They also have a great market base to go at but they are undervalued. Looking at the US, a lot of people buy tracker funds. It’s really about balancing things out. 

“Certainly I think there is going to be some volatility there, but that isn’t necessarily the worst thing in the world. 

“I think we can afford to be confident.”

www.patersonfp.co.uk

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Ethical investment growing into a first-choice strategy

OVER the past two decades or so, investors have become far more curious and selective about the sectors of the market they place their funds in.  

They want to invest responsibly, avoiding controversial industries in areas such as tobacco, alcohol, arms and fossil fuels. This market– once called ethical investing, now more likely to be termed environmental, social and governance (ESG) – has grown hugely as interest in the global sustainability agenda has taken off.

There was a time when these investments were thought to involve a compromise: having a social conscience was thought to mean accepting lower returns. 

Now, according to Paterson Financial Planning’s Richard Farquhar, this is no longer the case.

“Ethical funds originally offered little choice in terms of investments but that has evolved over the years. For instance, you now have socially responsible investing (SRI), which is a branch of ESG. 

“However, clients don’t really care about the badge. They know what they are looking for and it’s up to us to build a solution that suits them. And over the years the demand for these funds has blossomed.”

Sustainable investing, he adds, can take many forms, with different clients demanding different things. 

Investors are generally seeking companies that first and foremost look after their staff, treat the environment as a priority and are committed to good corporate governance and paying enough tax.

“With ESG every investment is going to come under the same scrutiny to make sure that it ticks all the boxes. 

“And there are some really interesting funds around. 

“One I have seen recently, for example, is a new housing fund that has been put together in association with Shelter to build properties for the homeless. There are also clean water and clean energy funds. You might think these kinds of investments would appeal particularly to our younger clients but in fact we are finding it’s people from all age ranges. 

“There has been a huge sea change thanks to the visibility of campaigners such as Greta Thunberg.”

All the investment partners Paterson uses are, Richard says, now offering ESG solutions. 

“There’s a huge amount of choice. We use a partner company that speaks to each individual fund management company and rates all of their funds on this basis, drilling down to look at just how socially responsible they are.”
Paterson Financial Planning MD Damien Paterson agrees that a wide range of ESG investment options are now on offer. 

“Things have progressed massively. In the past these investments could be hugely risky, but we are now seeing ethical bonds and the UK Government is bringing out a green bond. 

“There are lots of choices we now have to balance portfolios and give clients what they want or need in order to hit their targets.”

How green do clients want their investments to be? 
Richard Farquhar says that different shades can now be catered for. 

“Everyone has their own personal preference – most people are probably in the middle.

“You do get investors who specifically say that they don’t want to put their money into things like tobacco or arms companies, but these things can now be taken out.  We can put something in place that works for them.”
Interest in ESG investing is currently so strong that Paterson Financial Planning now actively asks clients what their ethical preferences are at the initial fact-finding stage. 

“More and more of them are telling us that sustainable choice is important to them.

“The thing is that ESG portfolios are performing really well and the market is going to keep getting bigger. Innovation is taking place in all industries to make products and services cleaner, healthier and safer. 

“I think that in future, it’s just going to become the norm.”

This commercial article was published in The Herald on the 15th May 2021 by Patterson Financial Planning Ltd.