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WELCOME to issue 6 Summer is upon us at last! If you love your sport, then you’re in for a real treat this summer. The Euros have ended, England nearly did it, they definitely brought unity to our nation and made us proud. Roll on the World Cup! It was good to have tennis back at Wimbledon. There will be plenty of cricket to watch including the new ‘The Hundred’. The British Lions rugby team are currently in South Africa (my partner Sunny will be avidly watching these games). Then we have the Tokyo Olympics! For those of you with green fingers, RHS Chelsea Flower show returns in September. The SK team has also shared their summer suggestions for the perfect ‘staycation’ activity. In this issue: l Neil discusses your mortgage options when you are nearing the end of your mortgage product. l Kunle interviews Square Mile Chief Executive Officer, Richard Romer-Lee. Richard has sage words of advice on culture, building a business and how he has dealt with challenges. l We also delve into the world of cryptocurrency with an insightful article by Jason Mochine. In other exciting news, SK has a new look! We have recently launched our new website. Thank you to Jason and Jenny at Grove Park Design for all of their hard work creating the website and of course this magazine! Look out for regular articles that we will be posting on the website. We have also welcomed a new addition to the SK team, Bethany (Beth) Buxton. Beth has joined our administration team to help us continue with our aim to provide each of you with friendly, helpful and reliable service. As always, the SK Team is here for you.
Editor email@example.com We encourage you to share our magazine with those you think may find it useful. If you have any feedback or would like to contribute to our next issue of SKQ, send Chloe an email at firstname.lastname@example.org SKQ issue 6 | 2
Quarterly Market Commentary
Q&A Richard Romer-Lee
Cryptocurrency with Jason Mochine
Remortgage or Product Transfer?
Get to know Emma
Announcing, The SK Invest Podcast
SK Summer Suggestions
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QUARTERLY MARKET COMMENTARY By Charles Hovenden, Portfolio Manager, Square Mile
• The UK stock market is now above its pre-pandemic peak. • Inflation remains the biggest threat, with prices rising by 5% in the US over the past year. • Bond markets seem unphased by the latest inflation figures, with central bankers insisting that the rise in inflation is transitory. We continue to monitor the situation closely. • We have been focusing on and improving the bond components within our portfolios.
The UK stock market rose by another 1% in May, taking its year-to-date gain to almost 11%. Since it was announced that the Pfizer vaccine was effective only seven months ago, the market has risen by 30% and moved past its pre-pandemic peak this month. With bonds and cash continuing to provide paltry returns against a global backdrop of unprecedented monetary and fiscal stimulus and booming economies, it is little surprise that the path of least resistance for stock markets is upwards, even though valuations are certainly far from cheap. So, what could go wrong? Without a doubt, the biggest threat is the return of inflation, dormant for so long but never extinct. Last week it was announced that prices in the US had risen by 5% over the past year, the fastest increase since August 2008. In China, the home of cheap manufacturing and a main engine of the deflationary trends we have seen over the past decade, factory gate prices rose by 9% in the year to May. China is now seeing the same demographic trends as most of the Western world, with an ageing population, declining birth rate (despite the relaxation of first its one child and then its two child policies) and a shrinking workforce. Bond markets, however, have been unphased by the latest inflation numbers, seemingly willing to accept the promise of central bankers that the rise in inflation is transitory. And that is the six trillion-dollar question. Is it transitory or the beginning of a more structural trend that could see central bankers suddenly racing, through higher interest rates, to get the inflation genie back into its bottle? We are monitoring the situation particularly closely, as it may have implications for investment portfolios. Our thoughts expressed in this update relate only to the portfolios we manage, or advise on, on behalf of our clients and as such may not be relevant to portfolios managed by other parties.
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RICHARD ROMER-LEE Richard Romer-Lee is the Chief Executive Officer of Square Mile Investment Consulting and Research. It’s been over two years since SK and Square Mile started working together and this was an opportunity for Richard to tell his side of the story.
It has been over two years since SK and Square Mile started working together and it felt like a good time to catch up with Chief Executive Officer, Richard Romer-Lee to get his take on responsible investments, the role of a CEO and some important life lessons.
My job is essentially to set the tone for the business, the culture, and to build, nurture and develop a team of talented people. So, in practice, I do what I'm told by everybody else to help them do their jobs!
To start us off, could you tell us more about what you do? Square Mile exists to help investors achieve a better financial future. We focus on empowering our clients with the knowledge, tools and support to help them deliver the best outcomes for their clients. Whether that's a financial return, an appropriate risk profile or matching responsible investments to their personal priorities.
I'm a great believer in hiring talented people who are far greater, far better at what they do than I would ever be. I see my role as providing the environment within which they can excel on behalf of our clients.
We love working with people. It’s what motivates us. SKQ issue 6 | 6
How does Old Broad Street Research compare to Square Mile? Wow, what a lovely question. It's wonderful that you remember Old Broad Street Research, which was bought by Morningstar in 2010.
There are some similarities. One is the clarity of purpose. When we build a company, it's about building something that we value, but more importantly, something our clients value and believe in. We want to enjoy what we do. We spend a great deal of time at work and if you are having fun, I believe you do a better job. And ultimately, everybody has got to be fairly and appropriately rewarded too. The biggest difference in Square Mile’s model happened post the Retail Distribution Review. Now each adviser business creates their own investment proposition to fit in with how their business works and to meet the needs of their clients, which manifests itself in how we work with SK Financial.
Your team has grown. What have you been doing differently since March 2020 to lead the team? The frequency of interaction with clients increased immediately after the pandemic. We also tried to provide some security to our staff by saying it was at the time, and still is, our intention to come out of this pandemic with the people with whom we went into it. Immediately after lockdown, I made sure I spoke to the staff as frequently as I could. When you are in an office, you can walk around the floor, you can see everybody and you get a sense of how people are feeling. We are doing our best to listen and communicate as effectively as we can in very unusual circumstances. What tips would you have for anyone starting a business? Don't be afraid to have a go. Surround yourself with good, driven, passionate, personable people. Build the right culture – it sets the tone for the business, your staff, your clients and you will be surprised what you can achieve. Understand cashflow. Revenue is vanity, profit is sanity. Your Chairman and I share a Kleinwort Benson connection. Relationships in business are so important. So too is business development. What have you been doing to build relationships in this new way of working? We’re in the relationship business. I think your clients trust you to help them with their financial future, you trust us to do our part in that to create the appropriate investment portfolios, we must then trust the fund managers who we pick to do their job. They in turn have to trust the people running the businesses or the corporations in which they're investing. So, we're all in the business of trust. Video calls with existing clients tends to work better than with those you are looking to build a relationship with. I have mentioned trust. I cast my mind back to Black Monday in October 1987, when I was 22. We went into the office that morning. the phones were ringing furiously, the markets were down 30%! My old mentor and great mate Richard Downs, with whom I set up OBSR, worked it out in about 15 minutes. SKQ issue 5 | 6
He said, “People are ringing, they're panicking. The financial planning has been done properly, right? They don't need access to the money. They will only lose money if they sell their investments. So actually, what we're going to ask them is do you need your money, and do you need to spend it right now? If you don’t, then remember markets go up and down. Trust the plan and stick with it. The worst thing you can do is to sell now.” We spent 12 hours on the phone speaking to over 100 clients with the same message. Not a single person sold. We provided reassurance to plans that had already been laid. As a firm you are active in the responsible investment space and doing things for charity. What are your own thoughts on social mobility? I left school at 18 with some fairly average A-levels. I was fortunate enough to be given an opportunity in a business as an office boy. I was prepared to give anything a go and was lucky someone was prepared to give me a chance. So when we're interviewing someone, it’s important to remember that everybody is an individual and is entitled to be treated equally and given every opportunity to prove their talents. I'm a great believer in assessing people for who they are, not where they've come from, or what they are. Children don't choose where they are born, they don’t choose their families or where they go to school. I think sometimes people forget about that.
How would you like to be remembered? Yikes. Well, I think just being remembered would be a start. I'll take that and hope it’s for the right reasons. What puts a smile on your face? Seeing people happy is what really puts a smile on my face. Watching my five-year old son playing with his Lego pieces or having a good old laugh with my wife Holly and friends. I also enjoy playing sport. What's your favourite quote? The client is always right. If you put your clients first and do right by them, everything else will fall into place. I love the humour and nonsense of PG Wodehouse books. There's one about a chap who's woken up one morning and remembers that he discovered himself cheating at Solitaire, as he called it, and therefore he wasn't going to speak to himself for a week. I thought that was hilarious. How do you deal with disappointment? My glass is half full, so if and when things go wrong, don't dwell on it. Learn from the experience and then try not to make the same mistake twice. What would you now like to have known that you didn’t know before? To me, life is a great adventure and a journey of discovery. And if you know what's going to happen along the way, or how things will turn out, it would take the fun and adventure out of it.
“I'm also a great believer in giving everybody a chance, in real diversity, in real cognitive diversity which makes for a more vibrant, more constructive, more challenging environment, and ultimately, a much better and more rewarding workplace.” SKQ issue 6 | 7
CRYPTOCURRENCY WITH JASON MOCHINE SKQ issue 6 | 8
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“Also, cash isn’t king anymore. The banks don’t want your money which is why they offer paltry interest if you’re lucky enough to get any at all and governments globally are busy printing money or conducting “quantitative easing” in order to stimulate their economies in what we all hope will be a post Covid-19 world.”
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You have two options, in a change which has come about over the last five years most lenders will now offer clients a ‘product transfer’ or ‘rate switch’ service which means you can transfer your existing mortgage to another product from their current range. This process is reasonably pain free in the sense that it requires no underwriting, income evidence etc and in most cases your property will not need to be revalued as the lenders will already hold an indexed figure on file from the original application which makes life easier. Nearly all the applications of this type are done online so the only thing you may be required to do is sign the acceptance form after checking all the details are correct. Some lenders will even allow you to transfer products “early” i.e. before your current fixed rate ends if a lower rate is available as a thank you for staying with them. How times have changed from being forced to go onto their higher standard variable rates!
home improvements, debt consolidation or perhaps to purchase another property. We would then compare the open market options to the Product Transfer rates outlined above and decide together on what was the best way forward for you. If we were to remortgage you to an alternative lender the application would need to go through the normal underwriting process confirming both affordability and suitability of the product alongside the property itself also then needing to be valued to confirm it was suitable security. Once the offer is produced the legal side of the process will then need to be completed as a solicitor will have to deal with the repayment of the existing mortgage and the setup of the new one. Most mortgage lenders now offer either a free legal incentive as part of their remortgage process which would cover this or a cashback paid which is paid to the applicant which contributes towards the cost of this work if another firm was instructed. We have previously found although there is the obvious benefit of the legal service being free with that incentive, the administration service levels can be tedious, so we always try and allow plenty of time for this to happen or if its urgent take the cashback and appoint your own solicitor.
Pros • Fast processing, on occasions can be done in a matter of hours;
Pros • You can potentially access the most competitive products on the market place;
• No underwriting, credit checks or property valuations;
• You can raise further funds for a range of different reasons;
• No legal fees or conveyancing required;
• You can adjust the term of the mortgage.
Cons • By staying with your existing lender, you may not be getting the absolute lowest rate on the market;
Cons • The process can take four to six weeks to complete;
• You can’t adjust the borrowing amount or term of the mortgage. The alternative to the above is that we would also look to the open market and potentially remortgage you to another lender if there is good reason to and circumstances permitted it. This would normally be done if other providers were offering considerably better rates than your existing lender or if you were looking to increase the borrowing amount for reasons such as SKQ issue 6 | 10
• Full underwriting, property valuation and conveyancing required. For those who aren’t familiar with our mortgage service, we typically do not charge any broker fees so there is no cost to you for utilising our services in this area. We receive a procuration fee from which ever lender is used which should cover our time. If you have any queries please do get in touch with your point of contact at SK or drop us a line at email@example.com
GET TO KNOW: EMMA
A member of the SK team tells us a bit more about their life, loves and future plans… I joined SK in 2014, having previously worked with Kunle, Neil and Tracey at Kleinwort Benson. At the time I was on a career break to raise my two daughters but a call one day from Kunle changed all of that and I haven’t looked back since. It has been exciting to see the growth of SK over recent years and I am proud to have been a part of it. I see great things for the future and couldn’t ask for a better bunch of people to be working with. On a personal level, I met my husband at Bournemouth University and like they say the rest is history.
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We have two beautiful daughters who are growing up fast and keep us busy. Earlier this year we adopted a rescue dog from Greece, and he has proved to be the most loving, kind and happy dog. We have got so much joy from him we decided to adopt another one, again from Greece. They were both strays and we feel so happy that they will now always have a safe place to sleep and will never have to wonder where their next meal is coming from. We also have two rescue cats that have been with us for many years.
My main passion in life is horse riding and I absolutely love the freedom and peace it brings, so any spare time is spent in the saddle. The children, horses and dogs tends to take up most of my spare time. Dream holiday destination: Borneo to see the orangutans Favourite season: Autumn What skill would you like to master: Polocrosse Favourite book: The Shining First Concert: Bon Jovi
ANNOUNCING THE SK INVEST PODCAST We are excited to have launched our new podcast series, The SK Invest Podcast. Every quarter we will be interviewing our investment partner, Square Mile, asking them questions raised either by our clients, our colleagues or within our community. Our first podcast is with Chris Fleming, Investment Services Director, who will be answering questions on the danger of rising inflation, stock lending, and cryptocurrency. This is available to listen here. We hope you enjoy it. We always want to hear from you so please do get in touch with any comments that you have on these podcasts.
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SK SUMMER SUGGESTIONS
A few of our favourite things this summer
Chloe: For anyone who is a fan of the TV series, Friends, Friendsfest is a full set tour happening in the UK. www.friendsfest.co.uk
Neil: Treasure Trails are a fun way to explore. There are loads of different ”treasure hunts” where you have to solve all the clues to find out where the “treasure” is stored and you then submit your answer and get entered for a monthly draw to win £100. The real benefit is before you know it, you’ve walked a couple of miles, taken in the highlights of the area you are in, and put your heads together as a family. My girls loved it. You just enter the postcode of the area you want to visit and then the company tells you the local trails that are available to you. A good way to explore new areas. www.treasuretrails.co.uk Kunle: London’s Lost Rivers tour led by Paul Talling, author of
Derelict London & London's Lost Rivers. He takes you around Hammersmith, Fulham & Shepherd’s Bush looking at numerous lost gig venues and reading from Paul's London's Lost Live Music Venues book. You take in various TV locations for The Sweeney & Denis Waterman era Minder and touching on the three lost rivers of the area (Parr's Ditch, Counters Creek and the Stamford Brook). www.londonslostrivers.com/hammersmith
Emma: Bodiam Boating Station, take a rowing boat down the river and finish with a lovely meal at the restaurant. We did this last year on a lovely sunny day and it was good fun. www.bodiamboatingstation.co.uk
Jade: A day out to London Zoo and Sea Life Aquarium. www.zsl.org/zsl-london-zoo www.visitsealife.com/london
David: Discover what it takes to be the world’s most famous secret agent. See some of the locations from the James Bond films, including the latest 007 film to be released in 2021 – No Time to Die, as well as Bond’s previous adventure, Spectre. www.britmovietours.com/bookings Beth: For an unforgettable summer experience that doesn’t rely on the great British weather, I recommend Backyard Cinema. Find yourself transported to a Miami beach complete with sand, sun and cocktails. With a wide range of movies to choose from there is something for everybody. www.backyardcinema.co.uk Tracey: Country Hotel Breaks for a staycation, I have been to the Mallory Court Hotel and Spa. www.countryhotelbreaks.com
Lesley: Regents Park Open Air Theatre . We have been going for a number of years seeing various productions all of which have been to high standard and thoroughly enjoyable. Lovely setting, you can take a picnic, buy food or sit down and enjoy a 3 course supper which needs to be booked early – starter and main before the performance with the dessert and coffee in the interval. www.openairtheatre.com Michael: Eataly , a one stop shop for all things Italian. Go for a meal, shop for all of your favourite ingredients or attend a cooking class. www.eataly.co.uk Richard: ‘London Ghost Walks’ is brilliant. Genuinely creepy! www.london-ghost-tour.com SKQ issue 6 | 15
“Make everyday a little less ordinary.” UNKNOWN
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances. Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. This document is distributed for information purposes and should not be considered investment or other advice or an offer of any product / security for sale. This document contains the opinions of the authors but not necessarily the firm and does not represent a recommendation of any particular security, strategy or product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Please contact us before you transact. Errors and omissions excepted.
SKF Trading Ltd trading as SK Financial. SK Financial is directly authorised and regulated by The Financial Conduct Authority.
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