Women need to understand that risk is not a dirty word, according to Poppy Fox, investment director at Quilter Cheviot. This was a key message ahead of the group’s programme of events for International Women’s Day, which fell on 8 March, which included a series of webinars that covered the female psychology of investing and the relationship between wealth and health.
The group has had an ‘advising female clients’ initiative in place for some time, which looks at some of the financial challenges women face and finds ways to overcome them.
Fox has played an important role, including writing blogs on topics ranging from the financial impact of divorce to the importance of long-term investment in changing outcomes for women.
Fox says that while she wants to dispel the idea that women are excessively risk-averse – they come in many different investment types – women do want to build a good understanding before they invest, and advisers need to help them do that.
Those at the start of their investment journey can hold a lot of cash until they build their knowledge: “We try and show that risk is a good thing. Women are a little prone to sitting on too much cash and in an inflationary environment, that is problematic,” she says.
“We’re also trying to encourage women to get started early with investments and saving for their pensions, because the £180 they get from the state pension won’t buy them a lot of luxuries.”
She points out that £10,000 invested at age 20, in a moderate growth portfolio could be worth over £70,000 at retirement. Women need to let compound interest work for them by saving in their 20s.
Fox adds: “We’re not reinventing the wheel. We want to encourage more women to invest with us. We are also looking at whether women are put off by the finance industry.”
It is an important mission, but it also makes sound business sense. By 2025, 60% of the UK’s wealth will be in the hands of women, yet it also shows that 70% of women are not engaging with finance. This is a significant growth area for any financial advice business.
Fox doesn’t want to pigeonhole herself as a female-only adviser, and prefers to advise a breadth of clients. However, she says there is a lot of satisfaction in helping women who have become financially disempowered or gone through a tricky time, such as a bereavement or divorce.
“Some people just don’t want to deal with those who are at the start of their financial advice journey, but I get a lot of satisfaction from that.”
Clear intentions
Fox moved over to Quilter Cheviot as part of a significant investment management recruitment drive during April 2020. She had previously worked at Brooks McDonald for 13 years, latterly as an investment director.
She had joined Brooks McDonald straight from Durham University. Her degree in politics and sociology may not sound like the obvious grounding for a career in finance, but she says she was drawn to the relationship side of financial advice as much as the number-crunching.
“I wanted to do finance with real people. The relationship management side was always very important.”
She applied for a bewildering array of graduate trainee schemes, which proved vastly competitive. Also, having built a clear idea of the type of role she wanted, a diversified graduate scheme that might lead to a number of options wasn’t her ideal choice.
She decided to select a good company and get in any way she could, joining Brooks McDonald as a team assistant.
It was exactly as she hoped. She enjoyed the firm’s culture and the industry, and the more she learned, the clearer she was about her future path. She made her intentions clear and, two years in, won a place on the graduate scheme.
“I think it was really useful to find the kind of company I wanted to work in, even if it wasn’t the perfect job.”
It was a two-and-a-half-year scheme, which involved learning on the job and sitting various exams. Her early 20s were a blur of exams, which included the Investment Management Certificate and Chartered Wealth Manager qualification.
Plus, there were other ‘softer’ skills she learned from her peers. “I worked in a team with four investment managers. They each had their own style and it was useful to see different approaches at work. Everyone has a different way of presenting themselves. Eventually, I took all these elements and honed my own approach.”
At Brooks McDonald Fox managed a variety of portfolios. There was a lot of Sipps and general investment account work, plus the odd trust. “We had clients of every type, from the growth stage to people drawing down on their portfolios in retirement. It made for an interesting variety.”
Better blend
At Quilter Cheviot, Fox’s role is largely client relationships and portfolio construction. This is subtly different to the process at Brooks McDonald, where she would also be responsible for selecting funds and asset allocation. She can call on a 24-strong research team at Quilter Cheviot, plus broad asset allocation expertise to help build portfolios.
The fund team is under the leadership of Nick Wood. The group has a clear approach to fund selection, involving qualitative and quantitative elements and regular reviews. Yusuf Durmaz was recently hired to boost dedicated research on ESG and sustainable strategies. The group also has direct investments in the major markets of the US, Europe and the UK.
On the asset allocation side, assets are divided into three complementary building blocks. The first contains low-risk liquid assets, including government bonds, high-quality corporate bonds and cash, equities and lower-grade corporate bonds.
The second block is made up of private equity funds, industrial commodities and some hedge funds. Third is diversifier assets that reduce or offset equity risk during periods of market stress. They may include precious metals, unleveraged commercial property funds and some hedge funds.
Fox is responsible for taking the investment recommendations, the asset allocation parameters and the client mandate and blending the three elements. The result is a tailored portfolio for each client.
She says: “No two portfolios will look exactly the same, but one medium-risk portfolio should look broadly similar to another. It is tailored for individuals in a risk-controlled way.”
It is the nature of the service that the group does not use a pro forma risk questionnaire to establish a client’s risk profile, but instead takes a more qualitative approach. “This is a vital part of the job,” says Fox. “We talk to the client, discussing what they want their money to do for them and how long they have to invest.
“We also help them understand what a ‘medium-risk portfolio’ means in practice. What is the worst-case scenario? What is the most likely scenario?”
She says clients often don’t realise their real risk tolerance until there is a period of volatility, such as the one being experienced in markets today. “In this crisis, I’ve found there are two extremes. Some just don’t want to know. They’re very much ‘tell me if there’s a problem’. Others want to consider all the eventualities.
“Everyone reacts differently. The key thing is not to push the panic button. You need to have a long-term horizon.”
According to Fox, expectation management is a vital part of her job. Clients shouldn’t have any surprises about their investments and she is clear with them about the risks they are taking and the potential outcomes.
This is particularly important when advising women starting out in investing. If the risks aren’t well understood it may put them off investment permanently.
Core focus
Fox says the ability to call on a dedicated research team is in contrast with the Brooks McDonald approach and a real advantage, taking a lot off the plates of the individual wealth managers. “It means we can focus on our core day jobs,” she says.
They have flexibility in their recommendations within certain parameters. If she held 22% rather than 20% in UK equities, no one would push her to sell just to be in line with the suggested asset allocation. “We don’t want to trade unnecessarily or rebalance every week.”
However, the group’s risk system will flag if it moves a long way out of line or a stock has moved higher and now forms too large a chunk of the portfolio. “The system is our computerised eyes and we can run these risk metrics every day.”
Amid the current market volatility, the group is advising its clients to sit tight. “No one is in Putin’s head and we still like the fundamentals of stock markets,” she says. “Doing nothing is often the hardest strategy, but it’s often right.
“‘Time in the market rather than timing the market’ has become a cliché, but often market timing is just luck, and we don’t want to deal in luck. We want to make informed, sensible decisions.”
For the time being, Fox is “enjoying her day job” and doesn’t have plans to scale the corporate ladder. She is certainly getting noticed, as a finalist in the Women in Investment Awards 2019 and hailed as one of the ‘next 25 big guns’ by Citywire.
Fox plans to build her client book, taking on more and varied clients. She wants to do more to help women understand money and to encourage them to invest. Her guiding philosophy is to be nice to people. It was early advice from a colleague that has proved very important.
What is her own experience of being a woman in a (still) male-dominated world? “It has generally been positive. There are definitely moments when everyone is talking about football and I’m in the minority, but being the only woman in the room can also mean you stand out – and that brings opportunities.
“In my 20s, perhaps I wasn’t as confident as I should have been, but I’ve built a lot of confidence since then.”
This article first appeared in the March edition of Portfolio Adviser magazine
