Choice Words: Justin Urquhart Stewart, co-founder of 7IM

“That way you continue the process. If they just sit there and say, Yes, that’s quite interesting – and then wander off to something else – you have lost them. So it’s a continuing story the entire time. Also, don’t just make it engaging – make it interesting.

“Make it a form of entertainment, almost – but something they can see in everyday life that also applies to their investments. That way, they can tie the two together – Ah, that makes sense. In many ways, make it so they can actually explain it to others themselves – because you want other people involved in this as well. If your clients are explaining what you tell them to somebody else, that means you probably got it right.”

‘Family financial planning’

Elsewhere in a conversation that also covers some formative experiences as a banker in Uganda and the importance of striving to buy the best wine you can afford – “aim for something achievable and then you are actually able to benefit from it as well” – Urquhart Stewart suggests the UK wealth management sector could thrive by encouraging clients to think more holistically about money.

“Something that developed from my days at Proshare is that we need to get people thinking not just about investing, but about broader financial planning,” he says. “Particularly nowadays, when you hear people ask, How are the next generation going to buy a house? Well, what used to happen is that the family did it.

For more from Justin Urquhart Stewart, read From ‘new broom’ to ‘Sorcerer’s Apprentice’ here

“It is family financial planning – not family planning as they have obviously already gone through that process! – but the financial aspect so money is passed down the generations, rather than expecting one generation to be able to make enough money today to go and buy an expensive flat in London or wherever.

“Chances are, they are not necessarily going to be able to do that whereas, more likely, the family can – particularly in terms of inheritance tax and all those elements. So get that planning done and then that could give you the finances to be able to do more investing. If you try and do it the other way around, I think you will run into more trouble.”

Transcript of ‘Choice Words’ Episode 13:

Justin Urquhart Stewart, with Julian Marr

JM: Well, hello and a very warm welcome to the latest in our series of ‘Choice Words’ videos where we get the chance to speak to key decision-makers in the world of UK fund research and fund selection. I am Julian Marr, editorial director of Wealthwise Media, and today I am thrilled to be talking to market commentator extraordinaire Justin Urquhart Stewart, co-founder of 7IM, the driving force behind such institutions as Proshare, Aim, Barclays Stockbrokers … I could go on but you’re not here to watch me. Hello. Justin.

JUS: Good morning, Julian.

JM: Now, as any regular viewers will know it is best I just move straight into my first question rather than chat around. So – the investment outlook. This could be a long answer, I guess, but what excites you about the current investment outlook and what gives you pause for thought?

JUS: Well, I mean, look at the volatility that’s going on. Everything you thought was absolutely standard last year has just been thrown up. A certain gentleman in America has just managed to break the mirror – and suddenly complacency has gone out the window. Some of it’s good – some of it’s absolutely terrifying! So that – and then add one or two wars and issues like that to it and people have an awful lot of things to consider.

JM: Picking up on your volatility point – is that a clever answer to both what is good and bad? What do you see as the good side of volatility?

JUS: Well, you need volatility in order to actually use it but, on the other hand, there is the frightening side of it as well. What you had thought was actually a very good idea suddenly sounds like a bad idea because people start firing bullets at you. I don’t need that anymore, thank you very much!

Rule one

JM: It is interesting you mention understanding investment because I always move on from that question to ask, To what degree should professional investors and their clients be thinking beyond traditional investments – let’s take that as cash, bonds and equities – into more ‘alternative’ assets? Is there anything that has caught your eye? Or what is your general take on alternatives?

JUS: You should be always looking at alternatives because markets are changing the entire time. You look at what is a standard market now: 20 years ago, there were all sorts of things we would regard as alternatives – types of technology and other elements. So look at the next stage that is coming through – look at the biotech that is coming through, which I know is particular area we are going to be looking at [at the Wealthwise Northern Forum].

Again, these are areas most of us won’t really understand – but that’s fine. Please educate us so we understand what is going on, understand the opportunities, understand the risk, what money is required to make this investment, and what the potential returns are going to be. So that, I think, is going to be very exciting – always look to the future but don’t necessarily always bet on that, because that is obviously going to be the higher-risk stuff. Have some higher-risk but remember – when it comes to investing, rule one is, Don’t lose everything!

JM: Fair enough. So is there anything where you are thinking, Oh, that’s just too much at the moment? Or else, I have seen this before – and here we go again?

JUS: Well, there are always issues when you are dealing with various elements of high tech and you can think, OK, we have had that one – but sometimes it is brilliant. We have had people talking about elements that we didn’t know were actually going to end up being the internet years ago – but it did finally turn into the internet and, lo and behold, it was a great success.

But you couldn’t have guessed that until you saw all the other elements coming together. So it is all very well and good to say, Oh, I knew that 20 years ago – but, if you didn’t understand all the elements that went with it, then you probably would have lost your money.

Life of crime?

JM: Some more personal questions now, what was your path into investment and, in a parallel universe, if you hadn’t taken it, what do you think you would be doing now?

JUS: Oh, it’s a terrible path I had! I was the world’s worst barrister – and it was only when my pupil-master at the Bar, turned around and said to me, ‘Justin, you do realise there is actually more money in crime than there is in trying to defend it’, that I realised that probably wasn’t the place for me! And that was a very good decision indeed because actually, inside the criminal bar, you make no money at all.

So time for a life of real crime – well, that will be financial services then! And that led me towards Barclays International – or Barclays DCO, which shows how old I am! ‘Dominion Colonial and Overseas – it really was almost part of the Empire. And it was fascinating to see then, actually, a world of finance that, in many ways, hadn’t really changed. This wasn’t about international transactions and things like that – this really was pen and paper and how do you actually get things from A to B?

And, for me, going out to work in Uganda, where they had telephones – they didn’t have a telephone system, but they had telephones! And you really did find yourself there going back to old-fashioned finance – how do you get money from A to B? How do you get trade business from A to B?

It is all very well talking about international banking these days being all very high-tech – but you have also actually got to do trade finance. How do you get that helicopter, with that engine, with that finance, from that country, to that place there – and the money coming back the other way? Basic stuff – a lot of people don’t know it.

JM: Excellent – and then in the parallel universe? I mean, it is interesting – I was actually the world’s most mediocre solicitor so we could have just gone into business together! Isn’t finance lucky to have us! So what do you think you would be doing otherwise?

JUS: I suppose I did spend some time, in the very early days, working down in France on a wine-bottling unit. It was quite funny. It was just a group of us there going around the chateaux – and not necessarily small ones either – doing the bottling because they couldn’t afford to do that themselves. So we spent so quite a bit of time going around doing that and, by the end of the stage, we were the same colour as the wine!

And most of us also ended up with small bits of glass shrapnel all over us because the glass of the bottles would explode every so often. So it was great fun and the wine trade is a good thing to be in to enjoy – but as a career, no. I could see my nose getting larger and larger and my liver getting larger and larger so probably not a great career to be in!

JM: Yes – keep it as a purely amateur relationship!

Survival instincts

JM: Fair enough. Now, what is rapidly becoming everyone’s favourite question on this series – outside of work, what is the strangest thing you have ever seen or done?

JUS: I suppose it has to be the time when I used to work in Africa and actually ended up in a coup – not exactly what I’d expected to be in! It was a very sad situation, obviously, for Uganda but it was fascinating to see how people in a desperate situation were able to survive and get through it – and also even the bankers, with Barclays, and how they were able to operate as well.

So it was really stunning to see how people operated under awful pressure, when they had no facilities, very few medical resources there, but they carried on going. And despite the stupidity of people like myself, they were able to carry on – frankly, I was humiliated by my stupidity, when I saw actually how those people could survive on virtually nothing.

Good advice

JM: Great. We are speeding through here as well – very succinct answers. Just a couple more questions – the first being, What advice would you like to have given yourself on your first day in finance?

JUS: ‘Listen’ – just ‘Stop and listen’. If there was any one thing I learned quite quickly, it was actually try and make sure you are as enthusiastic and as positive as possible. Now, that’s great and people hopefully regard you as being quite a nice person – maybe you could fool them doing that!

But listen to what people are telling you and really understand and question it and say, in the politest possible way, I don’t understand what that means. Quite often, you will find that, if they don’t understand what it means, they will suddenly find that, actually, they are talking rubbish. But otherwise, quite often, they will tell you and explain it to you – and, if those people are doing that for you, then you are in the right place.