Well, that was a year!

Well, that was a year!

2020 has obviously been a difficult year for many of us, from both a personal and a business point of view. A great number of people, including myself, have suffered some painful losses and seen our way of life change almost overnight.

However, as this tumultuous year draws to a close, I prefer to focus on the lessons that we have learnt, the ways in which we have adapted, and the spirit of togetherness that has kept us driving forward through this challenging time.

As we went into 2020, we had various objectives as a business and we were quite excited by the plans we had put in place. As the first reports started coming through from Wuhan in China of a new disease, they were nothing more than an ‘interesting’ footnote to the news headlines. We should have listened harder! China doesn’t let that type of news slip out unless it has to. The speed with which it accelerated from an interesting footnote to an all-encompassing global pandemic that would claim millions of lives worldwide, cause countries to lockdown their citizens and bring all but essential businesses to a standstill was remarkable. As our CIO, Lance Peltz, has been heard to say on a few occasions this year, it is unprecedented how many times the word “unprecedented” has been used.

People talk about this year having changed certain aspects of our lives for ever. For ever is a long time and humans have a bad habit of forgetting lessons learned very quickly. However, it has reinforced my belief in how adaptable and resilient we all are. From Cavendish Ware’s perspective, we went from holding an emergency board meeting on a Sunday evening to discuss how we could keep our staff safe whilst working in the office, to closing the office and everyone working from home by the end of Wednesday.

Suddenly Zoom and Microsoft Teams were our friend. Various members of the team were sent out to try to buy the last remaining laptops in London and we then settled down in our studies, living rooms, bedrooms or kitchen tables to work. We already had a detailed Disaster Contingency Plan, which was crucial in making sure we could provide that continuity of service and our IT and operations were able to kick in seamlessly. The concern wasn’t that the work wouldn’t get done. The concern was how our staff would adapt personally to now working on their own. We are a sociable bunch anyway, but there is a huge amount of interaction and exchange of ideas in what we do, working within and across teams and disciplines to bring everything together. We’d never done this outside of an office environment. And there was a real danger in my mind of a feeling of isolation creeping in. One of our associate directors, Roy McLoughlin, has long championed the cause within the insurance industry of recognising and dealing with mental health and wellbeing. One unintended benefit of this year has been that it has brought that whole issue into focus and the awareness and acceptance of this area has increased ten-fold over the course of 2020. But I am hugely proud of the way everyone at Cavendish Ware has dealt so professionally and warmly with everything that has been thrown at them (often by me!).

As the impact of the pandemic was very quickly understood, so did the stock-markets respond. The FTSE 100 index fell by 35% and was the fastest fall of that magnitude since records began. Our mantra has always been that, if you invest alongside a plan, you should stick with the plan and the investment strategy. The worst possible thing you can do is panic and change direction. To get it right, you have to be able to predict the future twice over – first when to sell your investments and move into safe harbour, and second when to buy back in. The first is hard enough. Getting the second right almost impossible, particularly as you are also fighting your hard-wired natural instinct. As human beings, our decision making process is built on behavioural instinct – when frightened, we run away and we tend to follow the herd. This served us very well when meeting a sabre-tooth tiger some while back, but in the investment world it leads to very bad decision making. We become very heavily influenced by what is happening around us right now, rather than taking a measured long-term view and looking at the evidence of history. There has been a great deal of academic study and research carried out on this, under the term Behavioural Science if anyone is interested in reading up on the area. For all our clients in the various portfolios we run, all the losses that valuations showed back at the end of March have now been regained and portfolios are showing a profit. We have a Brexit deal, the issues around the US election are resolved and we have multiple vaccines due to be released. Irrespective of your individual views around any of these issues, stock-markets hate uncertainty and as we go into 2021, there is a far stronger backdrop. The quantum of the global fiscal stimulus is unheard of, larger than anything we have previously seen including world wars and therefore, although some of us will feel this is counter-intuitive, our outlook for stock-markets into 2021 is as positive as it has been for some while. We’ll be writing to you in more depth on this early in the New Year.

One portfolio that has done particularly well this year is a new portfolio that we (myself and a few interested and willing clients) have been trialling this year. The CW Impact portfolio has been designed to provide an investment option for any clients who feel that they want their investments to have a far more positive impact on society. With a high equity content (mainly due to limited investment availability in this sector) and a focus on obtaining a social return alongside a financial return, this portfolio carries a higher risk and investors should be prepared to accept lower investment returns in return for knowing that their investments are achieving that wider social objective. It is not simply an ESG portfolio. ESG, which stands for Environmental Social and Governance, provides a series of guidance for companies to adhere to, with the aim of improving the performance of companies against these measures across the world. It is the new badge-of-honour for any company looking to attract investment and for some is probably more of a tick-box exercise rather than a true statement of intent. ESG investing will, we believe, become the new standard and is a welcome step forward, but it is perhaps only the first rung on the ladder. Our aim with the CW Impact Portfolio is to climb far higher up that ladder to influence positive change, but it’s clearly not a portfolio for everyone. We will be talking about this more in the new year and if you have an interest in this area, please let us know.

One other strange outcome of this year is that we recruited someone into the firm without ever having physically met them – definitely a first for me. Indeed we’ve had three new additions to the team this year. David Healy joined us at the end of June, a very experienced adviser who we had been talking to before Christmas last year and we were delighted that David agreed to join us. He was followed in August by Mat Bonney, also an experienced adviser and who emanated from the same firm as David. Mat’s whole recruitment process was conducted virtually and I only physically met him about 3 weeks after he joined. Finally, in September we were joined by Ruhel Miah into our client support team. All three have already proved to be great additions. As a firm, we strongly believe in a team culture and a collegiate approach and they have fitted in perfectly.

In other news:
• We had one other new addition to Cavendish Ware – Jack and his wife Roberta had their first child back in May, Oscar Williams.
• We had a lot of exam success in 2020, topped off by Anthony Phillips, who became a Chartered Financial Planner and Fellow of the Chartered Institute of Insurance.
• We’ve introduced the concept of Impact Days for our staff, which is an additional day per quarter for us to spend in the community, doing charity work or helping with social projects, which we aim to fully roll out when we can in 2021.
• We’ve continued to support a number of charities and we collectively decided to divert the money we otherwise would have spent on a Christmas party to help support a local food bank.
We also won some awards!
• For the Seventh year running, we have been recognised as one of the Top 100 advisory firms in the UK by Citywire, which is an award I really value as it is testament to the whole team effort.
• In recognition of the fantastic work he has done, both in the industry and with clients, Roy also won Cover Awards Best Overall Intermediary 2020.
From the strangeness of this year and the good and the bad that we have all experienced, it is sometimes hard to look through what ‘normal’ is or will be. As I write this, we are still in tier 4 and the prospect of normality returning is some way off. I know the vast majority of us at CW are looking forward to getting back into the offices in Old Jewry and welcoming you there in person. When that will be, I don’t know.
So, what have I learnt and observed?
• I learnt a new vocabulary in 2020. Coronavirus (which did little for the sale and share price of Corona beer), pandemic, lockdown, furlough, staycation, zooming and WFH (working from home).
• With the sky over London empty of aircraft and the streets empty of cars, I appreciated being able to see more clearly and breathe more deeply, although for many this was through a shield and a face mask.
• I met neighbours for the first time whilst applauding the NHS – a double feel-good.
• Technology has been our friend and allowed us to continue to support our clients – in fact in some ways it has enabled us to build closer relationships as we have shared views of the insides of our homes, our families and, of course, our pets. No Zoom call seems complete without the visiting cat or dog.
• Finally, that I have a great team who, when it matters, pull together.

I hope you all have a very happy New Year and here is to a brighter 2021.

Adrian