On wealth management’s purpose, a ‘North Star’ mantra and freefall at 30,000 feet
In our regular video series, we interview the wealth sector’s key decision-makers to discover how they think about life, both within the world of investment and beyond it; what brought them into the business and what keeps them here; and what makes them and their companies tick
The potential of wealth management as a force for good emerges as a consistent and indeed, given the time of year, highly appropriate theme in our latest Choice Words conversation – with Paul Angell, head of investment research at AJ Bell.
“From my perspective, the best-case scenario for UK wealth management is we continue to democratise access and increase the investing rate across the nation,” he tells Wealthwise editorial director Julian Marr in the above video. “There are some good things afoot in that regard, with the new ‘targeted support’ legislation and perhaps even some Isa simplification, which is something, at AJ Bell, we really believe would help get more people into investment.
“And the worst case, I suppose, would be the inverse and wealth management services continuing to be the preserve of the wealthy. That would be a disappointing outcome when there are lots of people out there and lots of pools of assets that, as an industry, we can help to manage and grow and do more good for our society.”
And, earlier on, Angell notes: “I do find it a shame when, in financial services, we sometimes forget that we are helping people – you know, helping people save towards retirement or towards that first house purchase. And do more than save, actually – to invest to enjoy some capital growth along the way. I do see the purpose behind our role as well.”
Investment ‘North Star’
Asked what he particularly looks for in an individual investment, Angell explains: “We are fund selectors within my team and, firstly, we are looking for a fit to what we need. So, particularly on the passive side, does it have the right benchmark? Also, we have a mantra of ‘simple, low-cost, transparent investing’ – so the cost is important as well.
“Then, if the fit is right, how is the calibre of the investment proposition? By ‘calibre’, I mean we are thinking about, what’s the investment philosophy? What are the inefficiencies the fund manager or the business see within markets and how are they going to exploit them in their investment process? What’s the make-up of the team? How big is it? What experience have they had at successfully executing that investment philosophy through time? And that then nudges into performance.
“We do think about things at the firm level as well – in terms of, how set up is this business to commit to the UK market over the long term, particularly within passives? Is it a big provider that is profitable? But then also, in active, some of these boutiques can wax and wane in terms of their overall assets under management – and, when you see flows start to tail off across a business, you have to be asking questions at a fund level as well.”
We are having conversations with our partner clients, saying, Look, there are some alternative asset classes out there we do think can be additive within investment portfolios.”
And to what degree does Angell think professional investors should be looking beyond so-called ‘traditional’ investments – and towards what? “I mentioned our sort of ‘North Star’ as an investments business is ‘simple, low-cost and transparent investing’ – and alternative asset classes are typically not simple, they’re typically not low-cost and they’re often not transparent,” he replies.
“So it is not a great fit for our core business – by which I mean our unitised funds and also within our core MPS – however, we do see a role alternatives can play to improve diversification within some portfolios. So we have another part of our business where we partner with advice firms – the partnership being that we are running their investment portfolios on behalf of their end-clients, but they have some say as to how the portfolios are run.
“And, within that part of our business, we are having conversations with those partner clients, saying, Look, there are some alternative asset classes out there we do think can be additive within investment portfolios.” Examples Angell highlights here include commodities, managed futures, equity long-short and event-driven strategies.
“We are not putting these sort of assets into our core models but we are probably going to end up with, say, 5%, 6%, 7% allocations to the whole bucket and then make that up with some of those kinds of funds underneath,” he concludes. “Hopefully they will play an important role in diversifying returns, if we do come into choppier waters within markets.”
A full transcript of this episode can be found after this box while you can view the whole video by clicking on the picture above. To jump to a specific question, just click on the relevant timecode:
00.00: What excites you about the current investment outlook? What worries you?
01.55: What do you most look for in an individual investment? What would constitute ‘red flags’?
04.25: To what degree should professional investors be thinking beyond so-called ‘traditional’ investments? Towards what?
07.47: What drives your approach to client communications? Should professional investors aim to attract the ‘right’ type of client?
09.43: What was your path into investment – and, if you hadn’t taken it, what do you think you would be doing now?
13.01: What was the biggest investment mistake you are prepared to admit to – and what did you learn from it?
15.20: Outside of work, what is the strangest thing you have ever seen or done?
17.50: What advice would you have given your younger self on your first day in this business?
19.11: What are your best and worst-case scenarios for the future of wealth management in the UK?
20.42: Two Choice Words recommendations, please – one a book; one a free choice?
Transcript of Choice Words Episode 29:
Paul Angell, with Julian Marr
JM: Well, hello and welcome to another in our series of ‘Choice Words’ videos, where we get to speak to key decisionmakers in the worlds of UK fund research and UK fund selection. I am Julian Marr, editorial director of Wealthwise Media, and today I am delighted to be talking to Paul Angell, who is head of investment research at AJ Bell. Hello, Paul.
PA: Hello. Julian.
JM: Let’s kick on and get into the nitty-gritty straightaway – what excites you most about the current investment outlook? What gives you pause for thought?
PA: Arguably, this is a cop-out answer – but diversification. We think there are lots of great asset classes out there that offer good prospective returns over the long term for an acceptable level of risk. So we continue to think, as you blend those together in portfolios, there is a good investment outlook ahead.
JM: Very neat – and concerns?
PA: Yes, concerns – sorry. I suppose concerns is the opposite to diversification, then, and that is concentration, which lots of people are talking about – the US stockmarket being 70% of global indices or thereabouts. You have the ‘Mag Seven’ up around 25% or 30% of global markets – that’s just seven companies!
Then also you have things like meme stocks and bitcoin and other cryptocurrencies – there are lots of areas of the market that people can put a lot of their savings and wealth into – and there is going to be a lot of volatility without that diversification.
So that is something we are concerned about. We do see ways to get around that – through some allocations to more defensive sectors and also an equal-weight allocation within the US, rather than a market cap-weighted approach entirely. So that is what I would say to that.
Right fit
JM: It is great start – not a cop-out at all! Let’s focus in a bit now – in terms of individual assets, what are the key aspects you look for on the positive side? And what do you consider to be red flags?
PA: When we are looking for assets or funds – and we are fund selectors within my team – firstly, we are looking for a fit to what we need. So, particularly on the passive side, does it have the right benchmark? Also, we have an investment philosophy – a mantra – around simple, low-cost, transparent investing. So the cost is important as well.
And then, from there, if the fit is right, how is the calibre of the investment proposition? And by ‘calibre’, I mean we are thinking about, what’s the investment philosophy? What are the inefficiencies the fund manager or the business see within markets and how are they going to exploit them in their investment process? What’s the make-up of the team? How big is it? What experience have they had at successfully executing that investment philosophy through time? And that then nudges into performance.
We do think about things at the firm level as well – in terms of, how set up is this business to commit to the UK market over the long term, particularly within passives? Is it a big provider that is profitable? But then also, in active, some of these boutiques can wax and wane in terms of their overall assets under management.
And some of the boutiques don’t have a big corporate backer behind them and, actually, when you see flows start to tail off across the business, you really have to be asking questions at a fund level as well. So that would be a red flag.
Another red flag would be unexpected performance or unexpected positioning going back to – well, I’m not sure I made the point! – but the point around investment styles and philosophy. So, if it is a value manager, say, are they sticking to that philosophy? Because we will typically be blending a value manager with a growth manager and so we need the various parts of our portfolios – and therefore our fund-picks to be playing the right roles for what we brought them in for.
JM: Yes – there is so little certainty around at the moment, a fund manager should at least do what they say they will.
‘North Star’
JM: Great stuff. Moving on to alternatives, to what degree do you, and AJ Bell, think investors should be looking beyond traditional investments – cash, bonds, equities – and towards what?
PA: That is a really timely question for us at the moment, actually. I mentioned earlier that our sort of ‘North Star’ as an investments business is ‘simple, low-cost and transparent investing’ – and alternative asset classes are typically not simple, they’re typically not low-cost and they’re often not transparent. So it is not a great fit for our core business.
And when I talk about ‘our core business’, I’m talking about our unitised funds that we sell a lot of to the mass-markets and direct to retail and are very popular on our own retail platform and also within our core MPS. In those propositions, we are really trying to blend asset classes that fit within that investment philosophy I have outlined. So it is the traditional asset classes of fixed income – and the various components of fixed income; equities – various regional allocations and we do some sectors too; and then cash as well.
However, we do see a role alternatives can play to improve diversification within some portfolios. So we have another part of our business where we partner with advice firms – the partnership being that we are running their investment portfolios on behalf of their end-clients, but they have some say as to how the portfolios are run. And, within that part of our business, we are having conversations with those partner clients, saying, Look, there are some alternative asset classes out there that we have identified and we do think can be additive within investment portfolios.
Now they don’t necessarily fit within the ‘simple, low-cost, transparent’ nature of our core proposition but we are starting to use those. So what are they? Well, equity long-short, I think, is very good in terms of being beta-neutral – so you don’t have that market exposure. Also, you are able to pick up the return of cash due to the structure of those funds.
As for some other areas, we are looking at managed futures. We think you can find a good ‘absence of correlation’ there, particularly in down-markets, as those strategies can get the right side of the trends – even down-trends. And then, with event-driven, we think there is some alpha that can be realised there within M&A transactions that is separate to market beta. And then, finally, commodities as well.
So there are alternative asset classes that we think can work but we are not putting them into our core models. We are probably going to end up with, say, 5%, 6%, 7% allocations to the whole bucket and then make that up with some of those kinds of funds underneath – and hopefully they will play an important role in diversifying returns, if we do come into choppier waters within markets.
Bringing clarity
JM: Very interesting – thank you. Let’s move on to client comms. I know from experience that your press communications is pretty good – pretty fulsome – and I imagine it is the same on the client side. Still, what is your approach at AJ Bell? And, as a sub-question to that, I always talk about this idea of attracting the ‘right’ type of client, which may sound a bit judgmental, but what I mean is someone who is going to stick with you through the journey, not get spooked and jump out too early and then miss out on the benefits of AJ Bell’s wisdom in guiding you to the end of the road?
PA: Yes. For me, around communications, it is all about clarity. Investment markets are complex so an important role for investment professionals is to bring some clarity to proceedings – whether that be for our advice clients, through those partnerships I spoke about, but also our model portfolio proposition or the direct-to-retail customers, of whom we have many thousands and thousands on our platform.
So we are really trying to communicate – as clearly as possible – well, the complex world of investing, really. So what I am always trying to come back to is, Am I being as clear as possible in what I’m trying to communicate here? And that typically works well for us, I think. And we do a lot beyond just the investment team within AJ Bell in terms of communication and press and PR stuff so we have got a lot of guys who are working on tax affairs and personal finance and pensions and everything else besides – so not just markets.
Sweet spot
JM: Excellent – thanks for that. A more personal question now – what was your path into investment and, in an alternative universe, if you had not taken it, what do you think you would be doing now?
PA: My path into investment was studying Economics at A-level and, almost immediately, I just thought, Yes, I like this! I had grown up within society and, you know, bought sweets from a corner shop and now I had a framework around that – in terms of that was a businessman I was interacting with as a consumer, and he could have set his prices higher or lower and I might have bought more sweets if he had gone lower, fewer sweets if he had gone higher, because I was budget-constrained, and his profits would have changed on the back of that.
And I suppose the framework economics gave me to understand how the world – or at least the free market – operated around me was something I enjoyed right from the off and then informed my decision to study Economics at university. So I think I was always heading back towards the City – and financial services was kind of the obvious area and something I enjoyed.
And then the thing that stayed present from that first day in studying Economics A-level up to now is that you are always learning. We have just enjoyed a two-day conference, courtesy of Wealthwise, and we have been learning in every session, which is great to build out that ‘spider’s web’ of financial markets – who is doing what, why are they doing that and what is happening at the moment?
So that still fascinates me – as does helping people as well. I do find it a shame when, in financial services, we sometimes forget that we are helping people – you know, we are helping people save towards retirement or towards that first house purchase. And do more than save, actually – to invest to enjoy some capital growth along the way. So I do see the purpose behind the role as well. And then, in an alternative universe, what would I be doing?
JM: Running a sweet shop?
PA: No – I would eat all the sweets and there wouldn’t be any profits! Actually, I am being quite good – I’m doing ‘No-sugar November’ – so I’m doing all right on that front at the moment! I would be a pastor. I love my Christian faith – I think it’s just so good for people – and so I would be ploughing that furrow.
Point taken
JM: Fair enough. And thank you very much for your plug for the Wealthwise events – please do check your calendar for our 2026 Wealth Forums and other events, all coming to a great venue near you! There – I take advantage of these opportunities where I can! Excellent. I am not asking you for repentance now but what is the biggest investment mistake you have ever made and – we talked about learning – what did you learn from it?
PA: I have made a few mistakes in my career but, in terms of investment, I think the biggest was within emerging market debt. It would have been 2018 sort of time, 2017 maybe, and me getting sold on the high-yield story and forgetting that, actually, it is high-yield for a good reason. The strategy I’m thinking of was kind of short-dated – so it didn’t have all the duration risk, which is good – and it had this kind of 10%-plus yield but I was forgetting that actually, within emerging markets, you can often have some really wild credits.
You know, there were Argentina defaults, there was everything that happened in Lebanon around that time, there was Venezuela defaulting on its debt – and actually the fund just continually seemed to hit landmines out there in the market and really suffered for it. And, while I went into it on the basis I thought it was quite a safe, stable-yield investment, I came out of it having lost a fair bit of capital – and, just going back to my first point, relearning the lesson around diversification, particularly in emerging markets.
So, whenever I go into emerging market debt now, I like lots of issuers – there are some funds out there that might have 10 or 11 or 12 countries under the bonnet and that is a lot of credit risk in emerging markets. So I like lots of countries and also lots of corporates in there – and I like hard-currency debt and local-currency debt. So I like a more blended exposure within emerging markets, which has kind of been my core EM exposure through the businesses I’ve worked with. And, yes, I have learned that diversification lesson the hard way.
Pocket watch
JM: Very good. Moving on to everyone’s favourite question in Choice Words – outside of work, what is the strangest thing you have ever seen or done?
PA: I was thinking about this – and I think it was hitting an air pocket on the way back from the US, when I was six. So it was 1995 – and I did some ChatGPT-ing on this last night, just to make sure. Because I have always run with this story for 30 years but, now I am ‘going public’ with it, I was trying to check some of the facts and, you know, even learning what an air pocket is!
But the experience was such that we were flying along at 30,000 feet or whatever – and then suddenly the plane dropped 10,000 feet. Now, when I was looking back last night, ChatGPT was doubtful it had dropped 10,000 feet – but the chat from the pilot at the time was that he had done 35 years of flying and that was the worst incident he had ever had. So let’s stick with the 10,000 feet!
And the experience was remarkable in the sense that everyone presumed they were dying – I mean, it happened so quickly but I think everyone presumed they were dying because, as the plane was dropping, you had people getting on their knees in the aisle and calling out.
Then, as the plane was kind of readjusting – and this is what I was learning last night … so an air pocket is just where there are different movements of air and so the plane drops and it is only when the plane stabilises that, because everything has been in freefall, the items within the plane remain in freefall. But the plane kind of stops.
Anyway, the people who had been in the aisles must have got back into their seats because the ‘fasten seatbelt’ signs came on – but we then saw some people who didn’t have their seatbelts fastened go straight up and, you know, suffer neck injuries and things. Fortunately, nobody died.
Yet my older brother, who was 14 or 15 at the time, slept through the whole thing – even though pillows fell on him and things like that! And, you know, you just never think that is going to happen to you when you are in a plane. So that was what I could think of.
JM: That is an excellent answer! And fact-checked as well!
PA: Well, I’m sure I butchered some of those facts but …
JM: No, no – that is more than enough to be going along with. Well done – I like that.
Turbocharge your learning
JM: Quick question now, what advice would you have given yourself – or like to have received – on your first day of work?
PA: I think it would be to engage with people in the industry. There are a lot of brilliant people in this industry – within the investment side, distribution, media, operations – and, you know, everyone is trying to work towards the same goal of improving client outcomes. So speak to people, find out what they do and how they fit into that infrastructure and that can really turbocharge your learning – at least, it certainly turbocharged mine.
So that would be what I would be telling myself at the start – and, also, it is great to get to know people. It just makes it a much more enjoyable time if you have people around you in the industry who you genuinely like and get on with and you can help one another out when you need it.
JM: For sure – this is an interesting business full of interesting people.
PA: That would be another way to put it.
JM: Sorry – I am not paraphrasing you! Critiquing interviews as we go along would be a quick way to no more interviewees!
Force for good
JM: Two more questions now – the first one back to business, really. What do you see as the best and worst-case scenarios for the future of wealth management in the UK?
PA: The best case, from my perspective, is that we continue to democratise access to wealth management or asset management. And I think there are some good things afoot in that regard, with the new ‘targeted support’ legislation and perhaps even some Isa simplification – taking the separate cash and stocks and shares Isas and putting them into one.
That is something that, at AJ Bell, we really believe would help get more people into investment. So that is the best case, from my perspective – get more people involved and increase the investing rate across the nation – and then the worst case, I suppose, is kind of the inverse of that.
It is that not happening and asset management and wealth management services continuing to be the preserve of the wealthy – and that would be a disappointing outcome when there are lots of people out there and lots of pools of assets that, as an industry, we can help to manage and grow and do more good for our society.
JM: I like your general theme of investment as a force for good – we have to keep shouting that out. ed.
What’s Wat
JM: Final question – we call this ‘Choice Words’ because of what you do for a living, making choices, but now we are going to ask you for two personal recommendations. One would be for a book – it can be investment-related but does not have to be – and the other is a free hit so just a general recommendation you think the audience might be interested in.
PA: In terms of a book, I’ll stick with the industry and the best page-turner I have read has been Too Big to Fail by Andrew Ross Sorkin. That is a brilliant account of the financial crisis and a period of excess, certainly within the banking sector, and what he was able to do as a journalist was go and interview all the names involved with the banks – and the government, actually, in terms of some of the bailouts and so on we saw.
It is a brilliant book as you move through the period with him and are taken ‘into the boardroom’ to see what the decisions were, what the banks were being presented with and where the areas of excess were in sub-prime and so on. And I think that is a great book because it is a page-turner and interesting about a very bad time for the economy. It’s a great one to remind us how bad things can go when risk starts not being managed properly.
As for a wider recommendation, I was going to say running – but, just now, I had a different idea. Running is good because, well, everyone knows the benefits of running so we should all do it more, if we can physically. And I really enjoy running!
The other recommendation, though, would be Angkor Wat. I was fortunate to travel a bit – particularly post-university, that sort of age – and two man-made places left me with my jaw physically open for the entire experience of being there. One was the Great Wall of China, just north of Beijing, and the other was Angkor Wat, which is a series of temples in an area of an ancient civilization in Cambodia – I didn’t fact-check this!
Still, what I remember is the access. I don’t know if it is still like this – I went 13 years or so ago – but the access you get there is just phenomenal. You know, you’re looking at these ancient towers and you get to go right up to them and climb them with no safety ropes or anything. Everything is immaculately designed – the artistry on the walls and the brickwork and so on – and it is just a remarkable experience, which I really enjoyed. I was hopeful when I went to see the Taj Mahal, I’d feel the same, but I didn’t! So I would recommend that.
JM: That is great. Just make sure, with Angkor Wat, you have the right guide to take you just a little bit off the beaten track – or, at least, give you the impression you are off the beaten track.
PA: I didn’t even have a guide – part of the wonder of it for me was just being able to go off and explore it myself. I actually left the friends I was with and just explored alone for four or five hours. So, yes, if you ever in that neck of the woods, then I would highly recommend a trip.
JM: I would second that for sure. Those are great Choice Words choices, Paul – in fact, a wonderful conversation today. It has been really interesting. Thank you so much.
PA: Thank you, Julian.
JM: And thank you very much for watching. Please do look out for further Choice Words videos as they are publish
