Alan Smith: The Family Fortress Method for Building Wealth That Lasts

This transcript is auto-generated and lightly edited for readability, it may contain errors.

**SPEAKER_01** [0:00]

Welcome back to the Money Gains podcast. Do you want to plan your perfect life and are we wired wrong about money? Joining me is wealth manager Alan Smith. Alan, welcome to the show. Thank you for having me. Yeah, thanks for coming in. I’ve been like literally binging your LinkedIn recently.

**SPEAKER_00** [0:16]

You madman. Well, it’s good stuff. Or my LinkedIn. Yeah. Yeah, just it’s like a stream of consciousness. Things I think about. I don’t know. I’ll type this, I’ll share this one with the world.

**SPEAKER_01** [0:25]

I first came across like the postage stamp inflation one, and that’s how I found you. All right. And then Andrew Craig, who’s a good friend of the show, who’s actually in before this. You’ve been like bantering back on a few bits and bobs with each other. And I was like, ah, he’d be a good guest.

**SPEAKER_00** [0:42]

Okay. Well, here I am. We like it. We’ll see.

**SPEAKER_01** [0:45]

For those that don’t know you, bring us up to speed.

**SPEAKER_00** [0:48]

Um, all right. I’m uh Alan Scottish originally moved on to London a long time ago, about 30 years ago. And um to cut a long story short, I was all I’ve always worked in financial services. Um, I’ve only really had two jobs. I worked when I first moved on to London, I worked for um a very large like global European asset management company, you know, big corporate institutional investing, retail investing, a whole bunch of stuff like that. And I was mainly in the sales side of that. So I’ve spent a lot of time promoting that company’s products, services, investment portfolios to intermediaries, to banks, wealth managers, that sort of thing. So I really got to learn the ropes about kind of investment markets and also the people that advise clients and customers. And, you know, and I saw uh good, bad, and ugly all the way to the world. Yeah. And uh this is quite a few years ago. So you know, the markets moved on, the world’s moved on as uh I thought I would say it’s a lot more of a professional environment nowadays, you know, qualifications are required, and you’ve got to, you you know, you I I think pretty much all firms have upped their game significantly from my early days. Uh that’s another podcast stories for another time. But um, and what I thought at the time, because I I would meet quite a few really good businesses and they were doing some amazing things. And let’s say, you know, firm A was doing one particular thing well, and firm B was doing something different really well, and I just had this mad idea. If I could cherry pick kind of best practice from a bunch of different firms, I could give it a go myself. Always had a bit of a um entrepreneurial itch that I think I needed to scratch. I come from quite a certain my my dad for quite an entrepreneurial family. Oh, interesting. Growing up, and I thought, and I just got to the point, I was at the point in my life, I’d been at this firm quite a few years and enjoyed you know a good amount of success, but I was single, I had no kids, and I thought if I’m gonna do anything, this is kind of the lowest risk time. Yeah, I could live on baked beans if I had to, you know, for as long as it took to get going. So I felt it was a it was quite a big thing to leave this big corporate culture and start my own business. But literally, I just that’s exactly what I did. And I opened a tiny little investment advice firm and a call it a glorified broom cupboard above a shop in Victoria. Oh, was it in London? Yeah, just literally me and a laptop and a and a work ethic, and I just went after it and just grew it. So that was that was 20 years ago. Um, so that’s capital, right? As capital partners, we call it, yeah. Um, so that’s how it’s been. And really, I had no plans to take over the world or build this like massive institutional, big global business at all. I wanted to give myself a job, you know, try something myself, see, you know, test myself to see if I could make a success and effectively create a job for myself and then eventually create a business for myself. And well, we’re still here, so so far, so good. It’s worked hard. But we really just built it organically, kind of one client at a time. Um, our business is predominantly built on referrals, it’s kind of word of mouth. You do a great job for somebody, they introduce you to their friends, family, or someone else, and kind of one at a time. And as we got busier, I’d go and hire somebody to come and join the company. Then we build it again, and we’re gonna bring some more people, and again, that’s a whole other story about some of the hires that I made, which some didn’t work out, and some of the guys and girls are still with me now after all these years. So here we are, we’re we’re we’re an independent um wealth management company um based in London, um, and we look after the kind of financial affairs and arrangements of about just under 400 successful families.

**SPEAKER_01** [4:17]

Is it mainly family offices?

**SPEAKER_00** [4:20]

It’s well, I mean, I I I always talk about families um as opposed to necessarily clients because a client indicates kind of one person, yeah, usually. And there’s no question about it. And when it comes to money, and I think this is something that that we understand and we do pretty well, it’s it’s it’s a family affair, really. There’s often there’s there’s a spouse, there’s a husband and wife, there’s two people, and then there’s kids involved, sometimes there’s grandchildren. And you really have to look at the the kind of overall profile of that family because there’s a lot of interaction. You know, some parents or grandparents might want to help their kids on the property ladder or education and all sorts of because it’s so it’s a sort of 3D experience. That’s why I talk about families. We look after families. It’s not very rarely is it sort of one person that says, Can you manage my financial affairs?

**SPEAKER_01** [5:02]

Yeah, because you know they might be their money, but they’re it’s match massively affecting the kids, the aunties, uncles, the sisters, etc., as that money grows, right?

**SPEAKER_00** [5:11]

Well, I think that’s the key point to understand. It’s something that I’ve always believed in from day one, and we continue to do that. And I think, no, I don’t think I know, it separates us from quite a lot of the other wealth managers out there who focus solely on money. Because I recognise, you know, money is it’s just fuel, it’s the means to an end, it it drives decisions, it creates anxiety for people.

**SPEAKER_01** [5:34]

Yeah.

**SPEAKER_00** [5:35]

And I’ve met people with a lot of money who’ve got money worries, different types of money worries. I’ve met people with not much money at all who’ve got money worries. So it cuts across. Money is a very kind of interesting, fluid thing, in that there’s a lot of human psychology wrapped up in it. Yeah. So we really get that, we understand that. We spend a lot of time getting to know clients and really sort of diving deep early on about their own money story, really, because you know, we’ve all got a money story. What was money like when you’re growing up as a kid? And I’ve met people who had lived a very wealthy lifestyle and people who struggled. And it it sticks with us, you know, they stick and the sort of decisions you make day to day are often some of the are rooted in, you know, when you were 10 years old, 15 years old, and what was going on around you. So we really try to dig deep and understand that, you know, what’s driving these people, these clients of ours, how are they making the decisions? And importantly, you know, kind of what are they trying to achieve? You know, what’s the money for? You know, a lot of firms I see, unfortunately, is straight into, well, I’ve got X amount of money, what should I do with it? And it’s like out of the draw. You can have this portfolio, invest in it. It did 10%, 20%, 50% last year, put your money here. And I’m going, well, well, hang on. What’s the what’s the what’s the purpose? What’s the plan? So we built a because it’s very, there’s a lot of moving parts, right? There’s a lot of things to go on, particularly if you if you’re advising a couple, a family, into generational stuff. There’s just a lot of stuff going on. And in order to make it to try to just distill it all down to like a practical framework, we we talk about the three key things, the three Ps we talk about, which is plan, portfolio, and partner. Those are the three things you need to get in place. Happy to sort of break them down if you want to take a look at it. Yeah, please, that would be fantastic. But you need to get that’s the whole the ethos and the understanding of the kind of the work we do. And it frankly, I think everyone needs to have a version of that. So just briefly, the plan is exactly that. It’s a roadmap, it’s a model. We call it future map. We just got this structure, we use some modern, pretty sophisticated technology to we kind of brain dump, we ask all these meaningful questions of clients, really trying to understand what’s the money for, what’s the time horizon. And the obvious analogy is if you set out on a journey, you the first thing is decide where you’re going, right? If you just get in your car or get in your bike and say, I’m gonna go aimless, then you might end up going in circles and you don’t really know what you’re trying to do or the time frame or the horizon or how you want to travel, do you want to move fast or slower, do you want to take the scenic route? What are we trying to do? So that’s the plan, you know, which starts off with a really good conversation with people. And often people haven’t really articulated that in their life, but you but through a through a um, you know, really good conversation and we asking some some really thoughtful questions that we have over the years honed into something um that really resonates with them. And sometimes people say, that’s a good point. I haven’t really thought about that. You know, what do you think? What should we do? And you begin to map out, take that stuff out of people’s head, document it using, as I say, some some some decent tech, use visuals, using screens. We can model, we can run a lot of what-if scenarios. What if you retired early? What if you decided to help your daughter on the property ladder? What if you if you took money out of here and put it there? Let’s model, let’s kind of play a bit with your idealized future lifestyle, all the possibilities. And sometimes it’s well, you can’t do that right now. Your ambitions are too bold in relation to your current and potential future resources. So, how can we change that? Do you want to, if you worked five years longer, then you could achieve those things, or if you did this or you did that, or if you had a higher expected rate of investment return, there’s a lot, there’s a lot of levers we can pull. But the point is we need to get all that stuff out, model it, plan it, and then give people a roadmap to run on. That’s that’s the first thing we’ve got to do.

**SPEAKER_01** [9:12]

Say if and uh the average person is listening to this, how would they approach that on their own if they’re sitting there listening to this right now and they’re like, I need to I need a planner.

**SPEAKER_00** [10:05]

Right. Well, if you if you if you’re doing it your own, the simplest way to think about this. Look, if if you if pretty much you meet everyone else, what are we trying to achieve? We want to have every I’ve never met a human that wants to have a worse future than their present or their past. Everyone’s aspiring for better, however, you judge better, better, it might be more money, it might not be, it might be more, more time, more freedom, more travel, more time with their kids. You tell me what your idealized future is. You’ve got to then put a number on that because whether we like it or not, you’ve got to create the resources now and in the future to fund that future lifestyle. So to do it yourself, um, the simplest way of doing it is say, work out what you’re, you know, have a think about that, get out of your head, write it down. I think it’s an important thing to get things out of your head. And you see something visual, type it, write it down, see that, and say, does that look like exactly how you want to live your life? And then begin to put some numbers on it. What do you think that would cost you? How much would you need to hit your bank account after tax, after anything else, every month to live your perfect life? So let’s just see I for ease of of math, it depends on you know where people are in in their life. But for ease of maths, if it was if you needed to have a hundred thousand pounds a year, because because the math’s easier, um the simplest way of doing the what you where you need to get to in order to have this idealized lifestyle where you don’t have to swap your time for money, because that’s what all of us are doing pre-retirement or is we are swapping our time or energy, our intellect for economic reward, right? So if you want to, and by all means, you can carry on doing that, but to have a work optional lifestyle, which is financial independence, financial freedom, you need to create the resources in order to do that, which will generate an income to pay all your bills now and in the future. So if the number is 100,000, the simple rule of thumb is multiply that by 25. All right, so that would be two and a half million. So for someone, someone to do that, that’s a very rough guide. There’s a lot of other things you have to build into, like tax, inflation, a bunch of other things. Um, and if so, and if the number, if you if you know, living a great life is 50,000, then it’s 1.25 million. But that is a rough guide. That’s the your target goal to build resources. And again, we haven’t talked yet about what the resources might be, but something, some sort of asset-based, some structure that is likely to throw off the income, i.e., this 50,000, 100,000, 20,000, whatever it is, to allow you to be financially free, independent. If you love your work, love what you do, crack on, keep going. Yeah. Some people will want to say, look, you know what, I’d love to just do three days a week doing this, or I’d love to take six weeks off every year and travel. I’d like, but you’ve got options. And what we all look for is optionality in our life, this sense of freedom. I can kind of do what I’m doing.

**SPEAKER_01** [12:49]

You might change your mind there at a time.

**SPEAKER_00** [12:51]

And that’s the other thing. And you’ll and you’ll change, and you will change your mind. And as life goes on, even when you’re on the journey, you’ll say, Do you know what? I’ve thought about this. I don’t want to do that anymore. I’m gonna go elsewhere. But this is back to the roadmap. This is why you have to have the roadmap. Um, I mean, if you go to Excel, you can plug all the numbers in. There’s there’s a uh there’s a few online tools and calculators that you can plug in. But what what what you what you’re looking for is this is what they’re plan for the first part of these three things that we do. Where are we where are we headed? What are we trying to achieve? And by the way, um, and a lot of the clients that that we work with, they’ve kind of achieved that because we work with a lot of um business owners, entrepreneurs who’ve had an exit. So they’ve had this big liquidity event, you know, they’ve had a load of money often just sort of dumped on them just to say, right, shit, what do I do now? Yeah, yeah. You know, it’s kind of it’s it’s a it’s a great, but it’s also a work worrying period of time. People have never had meaningful sums of money in their life and they need to. So for a lot of those people, it’d be like, well, my life right now is pretty good. So what I want to do is not blow it up. You know, I want to maintain this for as long as I live. And then you can go down rabbit holes of well, how long are you gonna live for? And I well, one thing I I do know and sort of keep my eye on kind of AI developments in technology and healthcare, well, people are likely to live longer and longer as well, which is great in many ways, but it’s likely to create some financial challenges as well. If you’ve got another sort of 10 or 20 years that you’ve got a fund, uh then you need to have a have a plan. So simplistic way, work out how much you’ll need, what does financial independence, total freedom look like? How much revenue, income do you need, times it by 25? That’s your target, that’s your goal. And then you’re off to then you run, instead of just investing just wildly, I’m gonna chuck money into this fund or this crypto thing or whatever, you say I’m building towards this thing. And it’s gonna take me probably some years to achieve it, but that’s where the discipline lies. That’s where you’ve got this roadmap, you’re on the road at that point. But then that’s that leads straight into the second part, which is portfolio. And I use portfolio in a very broad sense, then, because it just means resources to fund the plan. You’ve got the plan, I’ve got to fuel the plan now, I’ve got to do something. If I build the plan and don’t do anything about it, it’s gonna be it’s not gonna go anywhere, right?

**SPEAKER_01** [14:57]

Yeah, totally.

**SPEAKER_00** [14:58]

So then it comes to how do you optimize, organise, structure these resources. Now, I’ve met lots of people over the years, and you some individuals have got very you know strong ideas, whether it’s real estate, property, bitcoin, equities, whatever it might be, people have got ideas. What I know, having been doing this for a long time, that there are some rules of the game, there are some forms of investment which are likely to lead, nothing’s guaranteed, by the way, in the in the future, anything, particularly investing. Um, but there are some, if you if using history as our guide, like using 100 years of data initially, there are some things which are likely to give you more bang for your buck, if if you like, uh, in terms of investment rewards. So, my firm, we’ve just we’ve we’ve built these over the years that absolutely optimized investment strategies, which by and large are pretty plain vanilla, they’re pretty straightforward because all the fancy stuff, frankly, it can work from time to time, but the core investment strategies that have worked for decades and decades, that’s what if I’m betting on my next 10, 20, 30 years, I’m gonna stick with something, something predominantly which is proven. It’s always worked versus something that might be working right now. And there’s often something that’s working right now. Oh, yeah. Uh, so I’d be steering clear of that. Again, I’ve got thoughts about you know, this it is evolving, it’s changing, but there is tried and tested investment structures and strategies um that people should be thinking about. So that’s the that’s the uh the portfolio plan portfolio. And the last part, which I often think people who want to, not everyone wants to do this, but last I think it’s really important is this we call it partner, partnership, because which is uh a role that myself and my colleagues play, which is is having somebody, a trusted advisor in your court, a um, you know, like a coach, a guide, a sounding board, something to bounce things off. Um human beings are not wired correctly to make smart money choices. You know, we are wired like we’ve got the fight or flight mentality, and it’s natural, and it saves us. You know, sometimes you do, you’ve got to take to your heels and start running. Yeah. Sometimes you’ve got to protect yourself. You know, we’ve we’ve we’ve still got the DNA of our cave-dwelling ancestors when there’s a you know, saber-tooth tiger coming after you, and you, you know, you run, you protect yourself. So naturally, in those moments where we’ve got short-term volatility investment, you’re looking at your investment account, and we were talking about it before, and it’s on your phone, and you can literally watch it minute by minute going up and down, and that thing falls quickly. Your fight or flight kicks in, I’m out of here, I’m getting too much, that’s too much stress for me to bear. I don’t like it. Yeah, um, it’s one of the challenges.

**SPEAKER_01** [17:32]

You’ve been through it a few times, you’re like, Woohoo!

**SPEAKER_00** [17:34]

Well, right, that’s the thing. But if you haven’t been, if you haven’t been through it or and it depends.

**SPEAKER_01** [17:38]

I mean, well, not if you’re coming up to retirement.

**SPEAKER_00** [17:41]

For someone like me now, I’m like, Christmas, you know, like Yeah, if if you are, and if you’re kind of DCAing or pound cost averaging and stuff, brilliant. You’re buying you’re buying a lot more uh for your money. But um, I want to say to you, you know, you’re a youthful crew right here. I’ve been around a while, and I and what I can tell you is 2008, great financial crisis. I’m gonna guess, looking at your youthful appearance, that you weren’t you weren’t stacking cash at that time, didn’t have a lot of money. I’m gonna guess.

**SPEAKER_01** [18:06]

I was very drunk in a university bar.

**SPEAKER_00** [18:08]

Well, there you go, right? Um, yeah, you’re probably spending your money on beer.

**SPEAKER_01** [18:12]

Oh yeah.

**SPEAKER_00** [18:13]

Um but I was operating then and I was in business, and there was a moment when I’m not kidding you, the banks were going bust. You know, you were queuing around the block for you know, Northern Rock was gonna do a big building society bank, Barclays were under pressure, look Nat West, Royal Bank of Scotland, had to get bailed out by the government. There was like the money system was collapsing. Yeah. Now, and I was, you know, I was still pretty experienced then, but I was thinking, oh my God, is this it? What happens now? So we’ve never anyone who’s under the age of 30, 35 hasn’t we got we had COVID in 2020 and it was a it collapsed, but it bounced back within two, three months. Yeah.

**SPEAKER_01** [18:51]

There was no like Lehman Brothers.

**SPEAKER_00** [18:53]

And I always had a sense this is that it’s like it’s bad, it’s terrible, because it’s pandemic, but it’s a it’s a health thing that I had confidence would get resolved. It might take a while, but we’re gonna get resolved. Different type of crash. The other thing was this was the the financial system itself was just breaking down in front of you. So as much as we can say, Yeah, I love a bit of a sort of negative time. Were you thinking I I don’t know if maybe you know I’m gonna lose my house, gonna lose it, everything. It takes a strong-willed person to say, no, fine, I’m buying, I’m buying more, I’m buying more. Um so that situation, yeah, absolutely. Yeah, and and who knows? Who I mean, I uh I don’t know if if if this sort of remit of this podcast, but I’ve got increasing concerns about the levels of debt that governments are having, the US, the UK, all around the world.

**SPEAKER_01** [19:37]

That’s one of my questions for you, because you said um a million seconds was the 23rd of May when you said this, but a billion seconds ago was 1993, and a trillion seconds ago was 30,000 BC.

**SPEAKER_00** [19:51]

Exactly.

**SPEAKER_01** [19:52]

But the US national debt is currently rising by one trillion dollars every hundred and eighty days, and it’s now over thirty-six trillion.

**SPEAKER_00** [20:00]

Right.

**SPEAKER_01** [20:00]

What the that just went it, but it puts it into perspective, right? Because they just see a number in a in a newspaper.

**SPEAKER_00** [20:06]

Well, that this this is that was the point of of saying that we have no concept whatsoever of what a trillion anything is. A trillion sounds like a billion, sounds a bit like a million. Yeah.

**SPEAKER_01** [20:17]

Well it’s in Nvidia’s mark three trillion market trillion. A trillion trillion, but like thirty.

**SPEAKER_00** [20:22]

A trillion seconds ago was 30,000 BC. But a million seconds ago was only a couple of weeks ago. So it’s this exponential number. And I don’t think and no, and no one really a lot of people kind of got going about their life and their business, don’t really, what does it matter? You who do they owe the money to in a trillion or thirty-six trillion? It’s just all just blah, blah, blah, big numbers. But if you just stop for a second and work that out, bottom line is, and the UK is our numbers aren’t as big as that, obviously, but we’ve got exactly the same problem.

**SPEAKER_01** [20:50]

Still the same problem.

**SPEAKER_00** [20:51]

The same problem. We governments are spending more than they’re taking in, right? So, and in the UK, the uh the pretty much one of the few places that governments are can receive income is tax. So they tax the citizens and the companies and everyone that they can. Taxes are high. Taxes are a 70 70-year high, high since the end of the Second World War. Yeah. There’s only look, I mean, but I don’t I I try not to be political because this goes across every political party I’ve ever seen. There’s not one that’s better than the other. I don’t, in my experience, than the the last several decades. Yeah. Because they all keep doing the same thing. Um, and they raise taxes, and the you know, the latest all you see, all the stats about wealthy people leaving. Yeah, yeah. I get on my, you know, get in my day job and I’m speaking to wealthy uh entrepreneurs. I can only imagine I’m speaking to a few at the moment, and they’re planning their sale and exit pretty soon, and they’re thinking, well, Dubai’s looking quite nice, actually, zero tax. And I think unfortunately, yeah, well, so unfortunately, a lot of politicians don’t get this. They think, well, just keep putting everyone I know is happy to pay tax. We know we like to live in a civilized society and pay for the hospitals and the schools and the police and everyone else. That’s reasonable. That’s a that’s a fair exchange for the circumstances. Yeah, but when you feel you’re really being squeezed and the services aren’t very good anyway, yeah, and your tax is going up and up and up, people be getting people who were not even remotely thinking about it are saying, Is there anything else I can do here? And one of the solutions is you leave the country, which most people don’t want to do, frankly. Britain’s a great country, it’s a brilliant place. There’s so much going on for it.

**SPEAKER_01** [22:20]

Your roots, your friends, all that stuff.

**SPEAKER_00** [22:22]

So it takes a huge thing to say, I’m gonna potentially give that up. It shows you how acute the problem can be if someone’s gonna leave behind friends and family because they’ve been they feel they’ve been rinsed enough. They feel this, you know, enough’s enough. And a lot of people who are just they can’t leave, but they’re feeling uncomfortable, they’re feeling unhappy about it. So taxes, they can’t really be raised anymore at the level they are. Now, but the spending continues at you know unparalleled levels. The spending between 2019 pre-pandemic and spending now is exponentially greater. But personally, I haven’t I don’t experience that everything’s wonderful and waiting lists are short at you know doctors or hospitals or whatever, that everything’s brilliant now. It’s not spending is going on like at a crazy rate. Yeah. So how does government pay for the bills?

**SPEAKER_01** [23:10]

It’s increased, it’s increased hugely. Yeah.

**SPEAKER_00** [23:12]

So how do government pay the bills? They borrow money. They give it to so they, you know, they issue they issue bonds, they sell them in the market, people pay the, but they’ve got to pay a guaranteed rate of interest.

**SPEAKER_01** [23:21]

Now no one’s buying the bonds, so they have to look at the ball. No bonds, they buy themselves, yeah.

**SPEAKER_00** [23:25]

Uh, and on it goes. But what that does in turn, which is an important point that I was trying to make, and and it’s a big theme of mine, really, is that creates it it debases the value of the pound. The pound has been devalued by about 99% in the last several decades. Um, so the pound you’ve got is worth far less, and inflation is a big part of it. So, back to this thing about financial independence, what have you, you need to live your life in one year, five years, ten years, hopefully 20, 30 years ahead. You need to have the sufficient resources adjusted for inflation and the devaluation of the money that you’ve got to pay for, because I can guarantee you, so paying paying for that trip or that great family experience, whatever, will cost more in pounds in a year than it does today. Yes. So, what are you doing about it? What is the best uh the way to uh achieve that? So I was trying to make the point there because this $36 trillion, no one knows what it means. 30,000 years ago, BC uh is nuts, right? So it just makes you think, wow, so a trillion is a big number, 36 trillion is an even bigger number. And by the way, what goes on the US is the great the biggest economy in the world. So what happens in the US is felt around around the world, and frankly, most Western countries are following exactly their model, just on a slightly smaller scale.

**SPEAKER_01** [24:38]

Yeah. Are any countries doing it right? Yeah, look at it.

**SPEAKER_00** [24:41]

Well, there’s a few countries. Um, Singapore is is is often put up as a decent example of a country that’s kind of managing its P&L, its country P&L. They they are they are doing a lot of things, they are raising the you know, the taxes, they’re raising funds, but they’ve built their own. It’s interesting, some of the countries and Norway would be another. No, I think they built their own sovereign wealth fund. So the money that they have raised through revenues and taxes, and in Norway’s case through oil, yeah, they’ve saved. You know, they’ve put and it’s a I can’t remember, it’s a it’s a tri multi-trillion dollar fund. The UK, all the North Sea oil revenue we had, we we didn’t do that. We were the we were the sort of naughty kid who spent it all on stuff instead of saving some, and here we are. So there’s a few countries, but they’re few and far between, frankly.

**SPEAKER_01** [26:31]

Yeah, they are they really are, which is interesting because it’s like it what I you know reminded me when you said that of like the big short film where they just went back to doing exactly the same thing again after they got their bailouts.

**SPEAKER_02** [26:42]

Yeah.

**SPEAKER_01** [26:43]

And so as realistically, if you were to look at that as a you know carte blanche, then you’d probably say then it’s quite likely that that happens again, right?

**SPEAKER_00** [26:53]

Look, they they can carry the the thing is it’s not in the interest of any, you know, there’s there’s a whole whole lot of conversations we can go down different different routes on. The decisions are made by politicians. Politicians’ number one goal in life is to stay in place. Oh, yeah. So taking tough decisions and cutting benefits and saying we can’t afford to pay these pensions at the current rate, they lose votes, they lose their job, and that’s what happens. So another lot come in, because the people in power have lost their, but because the population thinks like everyone does, they think about themselves. If he’s gonna cut my pension, if he’s gonna cut my benefits or my whatever else or put taxes up, I’m not gonna vote for them. I’m gonna vote for this other person who’s now standing in the wings, promising me all these wonderful things. Yeah. And when they get and then they get in and they have to and they do the same thing. So we’ve got this massive disconnect. It’s about it’s it’s incentives. I mean, one of the greatest investors that ever lived sadly passed away recently, Charlie Munger. Charlie Munger, yeah. Warren Buffett’s right-hand man, one of he one of his many, many famous sayings was, show me the incentives and I’ll show you the outcome, right? So the incentive, if the incentive is to stay in place, to keep your job as a senator or as an MP, you are going to not make tough decisions because you know, we’ve got this. And it it’s one of the challenges. You know, democracy is great. It’s the best way, but the the problem is it means you’ve got to pander to the audience and the and the people that got the vote and promises. No one’s making tough decisions. So the only tool they’ve really got in their toolbox, especially if you exhaust the tax one, which is pretty much exhausted for most people now, um, is to print more money, is to create more money out of thin air, enter it on a on a ledger, on a digital thing, and then with no, there’s push it into the economy, there’s more money. But those, the money you’ve that you and I have got is now worth less. So it’s a real, real problem. So, number one, be aware of it. Trillion is a big number, 36 trillion is huge. The outcome of this will continue to happen unless somebody’s gonna be brave enough. And I can’t imagine it is the de if the US defaulted, they partially, I mean, the red the credit rating’s been reduced, but if they partially defaulted, that’s probably a good thing. It re resets things. It re- Um But but I I can’t see the you know the Fed or the Bank of England allowing that to happen. I can’t see it. No, it’s probably it’s like the tough love you should be giving yourself.

**SPEAKER_01** [29:06]

Yeah.

**SPEAKER_00** [29:07]

But for loads of reasons, it’s unlikely to happen. Therefore, the money printing is likely to go on, which means you’ve got to look after yourself.

**SPEAKER_01** [29:15]

Yeah.

**SPEAKER_00** [29:16]

That’s what it comes down to.

**SPEAKER_01** [29:17]

Because in that situation, property, assets, etc. rise, right?

**SPEAKER_00** [29:21]

Well, this is this is the thing, and this is why God, it’s another thing on my soapbox. It’s you know, I can’t, you know, I’ve come from pretty humble background, and I’ve got mates of mine that are meet, and but you know, they’re just normal people and they’re like firemen and and you know, just they do regular jobs and they’re struggling. And and this much talked about wealth gap is getting bigger. Yeah, it is. There’s no question. If you’re just a regular person and nine to five, you know, doing your work, getting paid, you’re becoming poorer in real terms. Your wages aren’t keeping up with inflation, you can’t get on a property ladder, you can’t save enough for a deposit, you just can’t move move fast enough. Unless you’ve got wealthy parents or someone that can help you, and most people haven’t, you’re struggling. But if you’ve got assets, you’re getting wealthier. If you own property, if you’re on stocks, if you’re on a number of other things, real assets, assets which will be adjusted, which have got a history of keeping pace with inflation. If you own stock in Apple, if inflation goes up, the price of your next phone or MacBook is going to cost you more. So Apple and all the companies are protected. If you’ve got a viable uh product or service that people want, you’re kind of largely inflation-proofed in many, many respects. And if you own some of that, and and yeah, historically, real estate and property has been a useful defense against inflation. So that’s the trouble that those that have got it are kind of doing okay. Even then, I would question some of the investment strategies that are taken. If in if inflation is a challenge, if you agree it’s a challenge, the cost of everything’s going up. You want to, at the very least, you want to preserve your purchasing power. Totally. Ideally, you’d like to grow it, but at the very least, you don’t want to be going backwards. No. So you’ve got to think about that. That’s the part of my planned portfolio partner. That middle bit portfolio. I’m broadly agnostic. If someone comes to me and says, Look, I just buy real estate, I’m a property guy, I go, okay, that’s fine. I’m not going to say no, you’re wrong, because he’s not necessarily wrong. And some people have got a love for certain types of asset classes. So as an independent firm, we’re agnostic. We’ve got our own beliefs grounded in data history, decades of history, empirical research, not just our views. This has come, this has come from decades and decades of economic research has as to how to optimize. Um, and I’m also a big fan of diversification. Yeah. Because what might be working right now might not always work. Um, and investment uh asset classes go through cycles. You know, gold gold’s been flying recently.

**SPEAKER_01** [31:42]

That’s actually one of my questions for you today, actually. Yeah. It’s obviously had a storming last few years and like you know, outperforming the S&P 500, but it’s a commodity, and it’s also had its, you know, its crashes and its drops, just like anything else.

**SPEAKER_00** [31:56]

Right.

**SPEAKER_01** [31:56]

Um, and now they’re looking at silver doing the exact same thing, and that’s the big talking point right now, because gold’s already done its all-time highs. So it’s like, you know, where it where where do you sit with that? And like, how how on earth do you because obviously your investors are like coming to you going, just like you know, I’ve got a question for you obviously about cryptocurrency and Bitcoin, but like if we throw this all into one hat, like they’re coming to you and going, because they’re seeing it in the FT, or they’re you know, they’re seeing it on the news or on social media or something like that. Like, how are you handling that? Because these are higher risk assets.

**SPEAKER_00** [32:27]

Uh right. The key thing here is diversification because of because of those things, and not to be seduced by what’s working now. If you followed what’s working now, you’d be 100% in gold and Bitcoin right now.

**SPEAKER_01** [32:40]

Yeah, oh yeah.

**SPEAKER_00** [32:42]

Right? Yeah, yeah. Which is great. But does that mean because it’s been working for the last two years or three years or whatever, that the next three or four or five years. No, no. You you know, you we’re all doing this impossible task, which is trying to create a crystal ball, see into the future. And what if we could all do that perfectly happy days, no one can. I mean, I’d be every year in about December or January, I schedule a post on LinkedIn or anywhere else that shows the predictions of all the big, like the Goldman Sachs, the JP Morgan, every year, and God knows why they do it, because it’s the prediction for the S&P 500 will be the end of the year. And oh my god, are they so wildly out? I mean, some of them and these are the PhDs and economics, the financial rocket scientists hundreds of people, the smartest people financially in the world, and they are not even some of them are not even close. Not even close, and they’ll do it every year. Uh, and that’s only a 12-month prediction, never mind a 10-year prediction or something. So um, making predictions is a fool’s game, not worth it. So, what do you do, like all these things in life? You kind of hedge your bets. You hedge your bets, and you say, I don’t know, and a bit of a bit of everything. Uh, and depending on what it is you’re trying to achieve and your time scale and what have you, the bottom line, equity, equity, you’ve got to understand equities. And I’ve had to really, you know, explain this to some clients because even the word you sometimes I get caught up with jargon because I’ve this is what I do in my day job. I think it’s really important to talk about things that people understand, and equities really are companies. You’re you’re an owner of a company. I tell my kids have got their you know, junior ISAs and things like that, and I say, good news, you own a little bit of Apple and Amazon and Tesla. And I’m do I dad?

**SPEAKER_01** [34:11]

Very, very, very small part of it.

**SPEAKER_00** [34:13]

But you do because you’ve got to translate that. And I I refer to it as the great companies of the world. You know, if you’re invested, you own a tiny bit of these organizations that all over the world are some of the smartest people getting up every day, not for you, for themselves and for their stocks and for their own stock options and things. They’re working out ways to grow their revenue, to create profitability. And you own a little, you’ve you’ve given them some capital to fuel that, you’ve given them some of your own resources, and they in turn are going to use that and across the world and across the scale and shareholders to generate growth. So it’s if you can own a little bit of human ingenuity, imagine all the smart people in Silicon Valley right now building things in AI, and you’re going to buy your job here, but you can benefit from that. So owning companies in the form of equities or shares, to my mind, diversified, globally diversified. I’m a big believer in low-cost index funds, not trying to guess this fund, the you know what stock is going to outperform, who’d have guessed NVIDIA five years ago. No one. Um would have guessed, you know, and the companies that have done brilliantly well, who’d have guessed that they were about to fall. So we can’t, and and as all the data proves, there’s practically no active investment traders and managers that are consistent year after year. So it’s eight percent. Yeah, eight percent. I mean, and and the number the longer the time period goes out, it becomes it becomes one percent. It becomes 100%. And those 1%, you can’t get access to them because they’re closed, because they are very, very good and they don’t want retail money. They’re just they’re dealing with sort of institution and doing their own thing actually and making fortunes for doing that. Absolutely. So for most people, it’s not so access the capital markets in the lowest cost, most diversified, sensible way. So equities, I’m a big fan of equities um and shares. And then you’ve got but if property as you think, property does provide some diversification. Totally. Gold, I’m not personally a big fan of gold, but I get the the argument for it. Gold often is a crisis uh asset defense hedge asset. You know, back to the 2008 financial crisis. If you owned gold, you did well. I can’t remember what the numbers are, but you you you went up, your portfolio would have gone up in value because the market floods into and owning bonds, long-dated you know, government bonds, was great because like it wasn’t just people weren’t talking about the return, what return they were going to get. They were just talking about would they get eight the thing at return, yeah, get their investments back. So capital flows in times of crisis, capital flows into what are you know seen as um low-risk assets, uh gold, long, long bonds, etc. Um, but crises are hard to predict. And a reason that gold is is increasingly popular is because smart people are looking at the trillion dollars, the multi-trillion dollars, recognising inflation is a problem. Gold has historically been, gold’s got a two and a half thousand year track record, yeah, and it has historically been a reasonable defence against inflation. But there are times when it’s massively underperformed for years and years and years. Yeah. And do you have the patience to sit there while the SP is killing it and your gold is isn’t doing so well?

**SPEAKER_01** [37:12]

Well, you would own both, right, at the same time in the in a lot of cases.

**SPEAKER_00** [37:15]

If that’s if that’s what you wanted to do. Equities have proved to be a better hedge against inflation than gold.

**SPEAKER_01** [37:20]

Yeah. I agree, I agree.

**SPEAKER_00** [37:22]

Or over any any meaningful period of time.

**SPEAKER_01** [37:24]

Yeah. Um I tend to like come in and out of gold over a number of periods of time. Um, but I play I I’m in this stuff all the time, you know, and I’m looking at it all the time. So it’s very different for me than say the average person who would probably be better off with a low-cost index fund today. Because a lot of these companies will own their own gold within that, so you are still well.

**SPEAKER_00** [37:46]

If you if you’re buying local, yeah, exactly. Buying low-cost index funds, you’re exposed to some gold companies as well, depending on which index you buy. Yeah. And if you wanted to, you could buy a gold ETF and just put a small port. Totally. The key thing there is I know that if that’s what you do and you and you’re into it, but for most people, stay away from it. You know, just the greatest temptation. Time will it will play out if you’re prepared to give it. We’ve got such, we live in this TikTok generation nowadays where attention spans are so damn short. And I’m saying you’ve got to leave that for five to ten years. It’s like, five to are you kidding me? Yeah. Five to ten weeks would be a long hold. And there’s no question about it. The more activity that you do on an investment portfolio, the lower your returns will be, unless you are the 0.101% of people who actually are successful active traders. Almost no one can do it.

**SPEAKER_01** [38:34]

No, and that and the thing as well, they come in and out, they they do the, you know, I want to sell at the top, but it’s impossible.

**SPEAKER_00** [38:40]

That’s the natural human condition. Well, they want to sell at the top and buy at the bottom, they do exactly the opposite. Yeah, they do. They sell at the bottom because I can’t take it anymore. And then they’ve got FOMO, they’re sitting in the sidelines, and everyone else is just seeing things rise. Yeah, and they go, I can’t take it anymore, I’m buying now. 100%. Sell low, buy high, repeat until broke.

**SPEAKER_01** [38:57]

Yeah. And the and the 10 best performing days are usually after the worst. Oh, that. And it’s like 92% of your returns is made on the 30 best performing days, which happens over a 30-year period.

**SPEAKER_00** [39:07]

There’s so many statistics like that. There’s in the S&P 500, almost all the return is seven companies, or it has been the last number of years. Magnificent Seven, yeah. Um, now if you double down and that just bought the Magnificent Seven, your returns will be far, far more.

**SPEAKER_01** [39:23]

Yeah.

**SPEAKER_00** [39:23]

But recently, they’ve come off. Yeah, they have. So that’s why it’s it’s a very challenging game. Full-time professional money managers who, like saying, you know, have got PhDs in economics and have got the most sophisticated computer firepower more than you or I ever had, they can’t get it right. They generally can’t get it right. The data proves that most of them fail to beat the index. So why don’t you stop trying to be like that person? Capture.

**SPEAKER_01** [39:48]

I just manage it with a bit of my money because I like having a bit of fun. Right. But a large portion of like 80% sits in low-cost index funds. Right. And I have a bit of a laugh with 20% because I I’m trying to pick the new Amazon, you know.

**SPEAKER_00** [40:03]

Well, talking about Charlie Munger, his sidekick, as was Warren, Warren Buffett, he said your investment watching your investment portfolio should be like watching paint dry. Yeah. If you want excitement, take up skydiving. That’s what he said. Don’t confuse the two. Now I get it, and I do it myself. So we’ve got a very and a lot of our clients, they like this. And a lot of the entrepreneurial type clients, buy and hold index funds for long term is boring. It’s but it’s good boring. But I want it, so so we we built an idea, and I called it the family play pen. Um, sorry, the family fortress and the investment playpen.

**SPEAKER_01** [40:39]

Yeah, yeah, yeah.

**SPEAKER_00** [40:39]

So the family fortress, that is the stuff it’s oh, it’s worked for decades, centuries. It just works. Yes, it kind of goes up and down a bit, but over the long term, you’re not it’s not gonna blow you up, and it’s not gonna like have your house taken away from you. Yeah, that is your family fortress. Not that exciting, but my God, you you’re happy that it’s got it. But if you’ve got that thing, I just have a bit of fun, I like trading, I like looking at things, I’ve got mates who are in the markets or whatever. That’s your investment play pen. Definitely no more than 10%, preferably 5% of your overall investment wealth.

**unknown** [41:09]

Okay.

**SPEAKER_00** [41:10]

Um, and let it go. And if it’s 10x’s, if it’s 20x’s, it’s happy days. If it goes to zero, it’s not it’s not gonna kill you.

**SPEAKER_01** [41:15]

So, what I do is I do it in the industries which I understand like deeply. Um I’m not just banging it on some biotech company because someone down the pub’s told me it’s a good investment. Like it is logical plays like that are factoring out over, you know, five to ten years rather than me like dipping out and I’m planning on getting out next month. Absolutely not. Like I’m just I’m looking at those as long holds over periods of time, but calculate more calculated bets, essentially.

**SPEAKER_00** [41:45]

Yeah, if you’re doing that, and for sure, and I do that as well. There’s there’s a few, I think other people I again, clients I I work with, I like the idea of investment play pain because it allows you to kind of go anywhere that you want. So if it’s like if it’s a biotech, if it is a biotech stock, and I quite I quite like investing in like startups um where I’m an angel or a you know early seed round uh investor of things I know about. And there’s people I know. So I’ve I’ve got a few investments there. I know the founders, I’ve known them for years, and I know what they’re trying to build and what they’re building. So and you know, with the with with tax rates that they are, you do the one good thing in the UK, there’s a really good tax break, as you know, called SEIS or EIS. And so you get a big income tax break and you get you know growth tax-free and all the rest of it. So, but it’s kind of fun money, and look, the data is terrible because 95% of startups won’t make it. Yeah, um, so the odds are stacked against you from the beginning, but a handful will make it, and and it’s fun, it’s interesting, and I get to go to shareholder meetings and stuff and find out what the hell they’re building and what’s going on. Yeah, but I’m not putting my family’s life savings in it, nothing like it.

**SPEAKER_01** [42:47]

I mean, I’ve been having a bit of fun with that lately. It’s great, like, and there’s a few of my friends’ businesses, they’ve started apps or or tech companies, and I’m like, it’s just a really good idea, yeah. But you’re probably gonna fail, but you know, it’s 20 grand, and I get the 50% income tax relief. So thank you very much. Like the risk is lower on those investments, so it’s good fun.

**SPEAKER_00** [43:06]

Yeah, exactly, exactly. But that’s the whole point. If you bring everything back to this conversation, they having an overall strategy is the point because unfortunately, that’s what I see sometimes. People will do that and they’ll buy and sell the trade, but it’s no you you have to create context. What the hell am I trying to build, create, do, achieve, avoid? That’s when it comes down to get it out of your head. Yes, if you if you want to, if you’ve got sufficient resources or or the problems are big enough, hire a professional to work with you because having that independent third party is really I’ve I got a I’ve got a financial planner myself. Really? For sure. In the same way as I’ve got a personal trainer at the gym, because I’m I just wouldn’t do stuff myself, I wouldn’t go to the gym at six in the morning, I wouldn’t could be bothered. But I’ve got a guy waiting for me, so there’s accountability for it, yeah. Accountability, yeah, and also in my case, he I would say I know he’s a smart, smart guy, um, but he holds me accountable to my ambition. And he and so the investment stuff I know pretty much, but he’ll just like hold my feet to the fire and say, You said you’re gonna do this, you said you go, you haven’t done it. Or I’m thinking, I I because I’m susceptible like everyone else, I’m human, I’m thinking, God, I don’t like this truck, this, this dollar debt. I think there’s gonna be a really almighty something that’s gonna make 2008 look like a tea party. I’m worried about this. I need to, and he’s gonna, it’s just having that conversation with I think having a relationship with somebody who has got your own best interest at heart, but they don’t have the emotional connection. We’ve only got the emotional connection with ourselves.

**SPEAKER_01** [44:32]

It’s like you go to the therapist, right? To get it all out, right?

**SPEAKER_00** [44:34]

I’m honestly, I can’t begin to tell you. Some of the clients I work with, some of the, I swear, smartest people in the world, some of them extremely wealthy. And they’re coming to me, and I’m thinking I’m thinking my little head’s going, why am I even asking me? You know the answer. But they want to hear this idea of independent, a sounding board. And it could be something, often it’s things. I think I’m I’m thinking of doing this. Have I missed something? We’ve all got blind spots, right? There’s things you that you might have missed in you in your own internal thought process that with an independent third party that knows you, knows your family, knows your circumstances, but can look at it objectively, not emotionally, and say, No, it’s all good, but don’t forget about da-da-da-da. They got you’re right.

**SPEAKER_02** [45:13]

Yeah.

**SPEAKER_00** [45:13]

And you know, avoiding big mistakes can often be far more important than just doing the right thing. Could you be doing the right thing, doing the right thing, make one mistake, it’s you know, you got a problem. So those people that can do it, find somebody that can help you with that. And by the way, it doesn’t have to be a paid-for wealth manager or IFA, it could be just a really good friend. Yeah. And just have that conversation with them. It’s kind of on the same journey as you are, and be prepared to often, I mean, we Brits are funny as well, um, in that we don’t like talking about money a lot of people. Um, average clients tell me the most detailed, intimate parts of their life, but when it gets around to money. I don’t really like to talk about it. We’ve just got this innate thing that is kind of it’s a bit rude, it’s a bit, I don’t want to know what my mate’s making as a salary. Yeah, yeah. But if you find somebody that you can sort of be, you know, reasonably open with and have that conversation just to keep keep you on track, that’s good. But everything comes down to and if it literally is a back of an envelope, it’s a plan. My objective is to get to financial freedom in 10 years, in 20 years, whatever. And that means I need to have a million pounds or whatever the number is. Right now I’ve got 10,000 pounds. I’ve got nothing, whatever it is. What’s the journey? How am I going to best achieve that? Um, whilst minimizing risk, maximizing opportunity.

**SPEAKER_01** [46:28]

Yeah, yeah. And there are a multitude of different ways to go after it and get that.

**SPEAKER_00** [46:31]

Like there are a multitude of different ways, but there are a handful, and we’ve talked to about quite a few of them, but a handful of things that there’s like big building blocks. There’s a lot of small things, but the big building blocks is build a plan, fuel it them with the most efficient resource you can, and if you can, yeah, and and and keep on track. And if you write it down, by the way, that moment when you when you just act human and you think, oh my god, the market’s changed this down 30%. I feel like I’ve got to sell or I’ve got to do something, or even I’ve got to buy, you might not might not be on the plan or the agenda. If you’re just reacting, if you’re buying and selling in reaction to market movements, you’re doing it wrong. I would I would say by by and large for most people. But if you document and you literally you’ve got this North Star that in those moments of panic and worry, you go back at this document. As I say, we build these um this this kind of roadmap, this future map, as we call it. And in the moments the client says, Look, I can’t take it, or I want to buy gold, or I want to buy whatever. We said, Well, okay, but let’s just go back to what we agreed in a moment of rational thought. We were just saying there was no panics, there was no worries, we’re building out this plan. We said we agreed the rules of the game because we know for a fact that volatility is ahead and market corrections, it’s a it’s the price of entry. It’s guaranteed, it’s absolutely guaranteed. Yeah. And you’re gonna get in your lifetime a 30%, a 40%, a 50% drawdown. Oh, yeah. And you’ve got to make up the rules before because when you because people say, Oh, I’ll I’ll deal with it, I’d buy more. I’m not sure you would.

**SPEAKER_01** [47:57]

Uh, it’s taken me a while. It took me till this recent one to really actually go full hog. And every time I do it, I just up it, up it up, up it, up a touch.

**SPEAKER_00** [48:07]

But this what do you mean this recent one? This year.

**SPEAKER_01** [48:08]

Yeah, the Trump one. But I mean that was a correction. I know I think it was a blip. Yeah, no, of course.

**SPEAKER_00** [48:13]

But and it recovered within a month. Yeah, I yeah, I so I’m talking about when you’ve got a 50%, you’ve saved up for years and you’ve got this money and it’s fallen by half.

**SPEAKER_01** [48:24]

Yeah.

**SPEAKER_00** [48:24]

To have that mental strength to say, I’m sticking to it. I’m not buying more, I’m not selling more. I’m sticking to it. That that is tough. And as I say, I think it’s a challenge for particularly you your audience members who are who are younger, because of j it’s generally been a it’s been a bull market for years with the occasional blip.

**SPEAKER_01** [48:41]

Yeah. Well, the yeah, the average 20% drop is 3.3 years. Right. So you’re gonna get one every you know, three odd years. So you like you’ve got to be ready. And then 20% is one point two, one point two years.

**SPEAKER_00** [48:54]

So it’s a yeah, if we but if we have anything remotely like 2008, just in the 70s, even before even my time, the you know, markets were down 70%, obviously down 74% or something, some crazy number. And I tell you what, it takes it takes some mental fortitude to just be holding on. And all around you, you see like the world is collapsing.

**SPEAKER_01** [49:13]

So, in your with your clients’ portfolios, are you building cash positions for capitalization on anything at all?

**SPEAKER_00** [49:19]

Or so what we what we do, so so cash, the my the primary purpose of cash is liquidity for the spending. Cash is not a real asset, cash doesn’t grow ahead of inflation. Of course, yeah. So, and unfortunately, I didn’t look at the statistics, I see this as well. I can’t remember what the numbers are, but billions and billions of pounds are held by retail customers, people uh in cash because because there’s a lack of and then the the work you’re doing is fantastic because it’s educating people because cash is there’s a sense that it’s safe because we’ve got a thousand pounds there, and I look in a year from now, three years, it’s still a thousand pounds, plus about a bit of interest, because there’s no there’s no joined up thinking that yes, but your purchasing power has reduced 10%. You’re gonna buy less with it. So the huge amount of money in cash, cash is not an investment asset. Cash is cash is a short-term liquidity play. So, of course, we’re building financial models and financial plans, and within it, we’re trying to understand what people’s capex, what their anticipated capital expenditure is gonna be. So the first one is if they’re relying on their portfolio for income, and the retired clients are, how much do you need? How’s that adjusted? Cost of living’s gone up, where are you traveling to this year? Do we need to sort of put a bit more extra? And we’ll and we’ll sit, we’ll keep money in cash. Yeah. Because at least we know it’s there. There’s no volatility in that. We know we’re taking we it’s dissolving in front of our eyes, but we’re taking that as the price we pay because I’m gonna spend it within the within the year, and people will have occasionally someone will say, just basic life’s things, we’re thinking of buying a new car, fine, when, what are you gonna do? Allocate that. We’re helping our it’s it’s our fifth, whatever, 20th wedding, 30th wedding anniversary. We want a big trip, we’re gonna fly the family to the Caribbean, it’s big ticket, right? Let’s let’s just put the money in in there. So that’s the use of cash, managing liquidity and capital expenditure, both income ongoing and and sort of big lump sum type thing. Makes sense. That’s part of the model, that’s part of the plan.

**SPEAKER_01** [51:05]

Yeah, it’s smart play. It’s smart play. The reason I asked that is obviously, you know, I know you’ve quoted him uh before we did the episode, like Warren’s gone big on cash recently. And it’s uh I find that really interesting, you know. And uh we did the we did that in January, went a bit more on cash, weighted when this thing happened. We we went in a bit harder. And like I’m having fun with this, by the way. This is not me saying uh not financial.

**SPEAKER_00** [51:28]

Warren’s got a slightly different thing. He’s got a you know, he’s got a big business and he’s got he’s got he’s got a lot of shareholders.

**SPEAKER_01** [51:33]

Two million dollars a day on Coca-Cola dividends.

**SPEAKER_00** [51:36]

Uh you know, that’s so my advice to anyone who’s who is who’s doing that is um look at Warren Buffett, look at some, look at Ray Dalio, or look at some of these people who’ve been incredibly successful. Assume you are not Warren Buffett.

**SPEAKER_01** [51:49]

You know, you are not Warren Buffett. Starting point. I think you all think that you are when when you have your good first good year. And then you and then you get a hard, cold, hard slap around the face when reality strikes.

**SPEAKER_00** [52:00]

You are not Warren Buffett, and neither’s anyone else. There’s only one Warren Buffett. No, absolutely. But even then, if you look at the stats, had Warren, I know it’s easy to say because he did, but had he not bought Apple, he’d have underperformed the SP for years. Yeah. Now you can say, well, that’s the point, he did buy it. But that made up so much of his return. Huge and without that one decision, he’d have underperformed the market like everyone else. And even now he’s barely keep keeping pace with the S&P 500 because obviously the tech stuff, which he’s not a big player in other than Apple. Um, but no, so cash is not an investment. Cash is a short-term. Warren Buffett knows what he’s doing. Going to say that. So he is playing, you know, he’s playing that game. But I would advise people not to pretend to Warren Buffett and say, I’m gonna stack cash for now, waiting for the opportunity, because opportunity cost of that. The market is if the market’s running away while you’re still waiting for the your your time to sort of pile in, you might be waiting, you might be waiting a long time. You might get it right.

**SPEAKER_01** [52:53]

I’m not I’m not saying that we’re going, you know, 50% cashier, like Warren. We’re we’re edging from a two to a four percent, for example.

**SPEAKER_02** [53:01]

Yeah.

**SPEAKER_01** [53:01]

Like just having a bit of fun with it. Because it’s like at the end of the day, if it pays off, then you’re like, but if not, it’s like, oh well, yeah, it was two percent. And as long as you’ve got your 80% index funds for me, it’s just like, or for you in some cases 90%, like I get I totally get it. But you you’ve got to have the fortress, you’ve got to have the fortress.

**SPEAKER_00** [53:17]

Build a fortress. That’s that’s the main thing. I completely agree. Have your investment play pen, whatever you want to call it, have have fun, have the entertainment. Some people, and they do, they they they enjoy it and they’re trading, they’re online and doing a whole bunch of things.

**SPEAKER_01** [53:29]

Yeah. Um, just to kind of wrap this up, obviously, world’s changing at a rapid rate. Like, we’re seeing AI take over entire industries almost overnight, with like someone in their bedroom comes up with a brand new bit of thing, and you know, hundreds of thousands of people could potentially be shifting their work line. Um driverless taxis, big part of this, you know, all of these mad proprietary text which is coming out. In your opinion, how are you like speaking to your clients about this? Because 100% they’re asking you and what they you know, and they’re running businesses themselves or or potentially going back into new stage businesses and they’re integrating these systems in. How are you managing those conversations?

**SPEAKER_00** [54:12]

There’s two aspects to it. One is as an investor, one is as a person, a human being, or running a running a business. As an investor, you know, I’m already all in on it because I own all those tech stocks. And all, you know, we I put out that um Tesla are will be rolling out self-drive taxis, you know, in London next year. So the future’s arrived, you know, it’s already here. But fortunately, I own Tesla stock because my index funds. And I own NVIDIA and I own all those all those plays. So from an investment viewpoint, look, the I and I in in financial services, I’m kind of deep in the weeds in that as well on AI, and we deploy quite a lot of AI technology, and we’ve been doing it for a couple of years, and oh my god, it’s revolutionized our business. And just the time savings, the opportunities, and I’m thinking this little business here that we’re doing it, and I’m so when I’m speaking to clients, like I share my own experiences as a founder, as a business owner, I say, Well, what is it you’re doing? Because the technology is disrupting every single one of us. Are you pivoting? Are you evolving? In my firm, for example, we are really up in our game in like the human first. The the AI is is what it’s doing apart from everything else, but it’s creating more time. Running a financial services business, historically, it’s a height, it’s a regulated business. There’s loads of kind of moving parts and regulations you’ve got to adhere to. Even just take on a new client. There’s a there’s a lot of stuff for us to do that just literally takes hours and hours and hours to do. But we’re getting that done in minutes now, not ours. So, in theory, we’ve literally got more of the one of the few finite resources that exist, which is time. Yeah, we’ve got a bit more of it. So, what do we do with it? Do we either sort of go and play golf or go down the pub, or do we have more FaceTime with clients? Because clients love this, you know, face-to-face, the conversation, jump on a coal, meet for a coffee, have that. We’ve got more time to do that. So our client experience inevitably is better. Clients enjoy it, we actually enjoy it more because who wants to sit in rooms with spreadsheets and stuff? No one wants to spend their life doing that. Totally. We all of us in financial services, me anyway, and my team, we joined it because we like working with people, we like helping other humans, not sitting in filling in forms and all the usual nonsense. So we’ve got the tech to do that, elevates us, elevates the experience, makes our job much more enjoyable, makes the client’s job more enjoyable. If you’re running a business, that’s the question to ask yourself. Which part of this job is AI not going to take away? One thing AI will never do is be human. That’s by definition, it can’t be. So, what are the things in my business, my company that are uniquely human that only I could do, albeit powered by technology? Brilliant. That that you know, to me, that’s the future of doing that. There are some roles and occupations that it’s hard to do that. Like if you’re a taxi driver, that’s gonna be difficult. But for sure, this for a long, long time, a lot of people will still prefer to get in a taxi with a human driver. And maybe forever, there always there always will be. Yeah. The market, but but by the same token, quite a few people would be happy to just to get driven from A to B. They don’t care. In fact, it’s an advantage.

**SPEAKER_01** [57:05]

Yeah, well, you saw it with Uber, right? Like Uber and black cabs. Yeah, everyone might, oh, cheaper. Thanks.

**SPEAKER_00** [57:10]

Um, still going to yeah, I still I just want to get A to B. Still got that. Yeah, no, exactly. So for anyone who’s thinking about that, thinking about their own circumstances or they’re working in the business, it’s like, what is if I’m to think and I really spent a lot of time with um I would say AI. I’m not an expert by any means, but I’m a practitioner and I’m a user. And we’ve got this word, again, it’s a bit like the debt thing. We’ve got this word called exponential, which I didn’t really I kind of knew what it meant, but I didn’t spend a lot of time thinking about it. Throughout history, progress has been linear. If you think about from the very the time that the first iPhone came out to what it is now, it’s years, it’s been out, I don’t know, 10, 12, 15 years. I don’t know, years and years and years and years it’s been out. It’s really cool now, the you know, the modern smartphones versus when they first came out. But that’s a linear line. It goes on year and year year. We’re now in an exponential curve, it’s just straight up. Yeah, the stuff. And you see it, you see it online, the stuff that OpenAI and and Google and all that they’re putting out weekly. There’s a there’s an absolute race on right now to create this stuff, land grab, market share, and the stuff that’s happening is happening really quickly. So you haven’t got the luxury of, I’ll see how this plays out over the next 10 years. Your business, your life is gonna be, I mean, I’m five years, I mean, one year for sure, five years, things are gonna be totally different in so many ways in all our lives, how we go about our business, how we how our jobs, and if you’re in a if you’re in a job, you think I think AI is going to really disrupt this, I’m not quite sure how, you’re either pivoting to elevate the things that AI is going to have a challenge replicating. And as I say, for me, it’s that you know, literally back to old school having a human conversation over a cup of tea or a glass of wine or whatever, you know. Um but so if you are that, think more, think more about that, and think also about how you’re gonna preserve your purchasing power in in in in in real terms, and because I do think that the rise of crypto assets uh in in general and Bitcoin in particular are gonna make a big impact. And I’m again very alive to that in the in in the in kind of the UK financial services space, and you know, we speak to clients about that sort of stuff as well.

**SPEAKER_01** [59:13]

Oh, okay. Wow, as mate, you’ve absolutely smashed this to pieces. I think there’s so much for someone to take away. Like you, if you’re a business owner, if you’re uh you know working in a nine to five, like this is stuff you can put into play today. Um, yeah, mate, I’ve absolutely loved this. Where where do you want to send people? If you’re LinkedIn or uh yeah, check me out.

**SPEAKER_00** [59:34]

I’ve got if you look at Alan Smith Capital, you’ll find me on LinkedIn. Uh website is capital.co.uk, so it’s quite easy to get and to find. And and you know, shameless plug as well. I do it’s particularly for anyone who is a business owner. Um, I run my own podcast called Bulletproof Entrepreneur, where I speak with you know successful business owners, a lot of whom have been on the journey, have have had a successful exit, and they’re happy to help others who are like a few years behind them. So check out Bulletproof Entrepreneur.

**SPEAKER_01** [1:00:02]

I’ve been really enjoying it, mate. It’s good, it’s a good, good little podcast. It’s my it’s my new, my new one to binge through all the episodes.

**SPEAKER_00** [1:00:09]

Thanks, thanks, appreciate it.

**SPEAKER_01** [1:00:10]

Yeah, no, it’s great. Thanks for coming on, mate. Really appreciate it.

**SPEAKER_00** [1:00:12]

Please have enjoyed it. Cheers. Cheers.