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PROFILE: David van Shaardenburg
from ASSET NOVEMBER 2020
by ASSET
An investment junkie at 13
Daniel Smith meets our regular Investment Commentary contributor David van Shaardenburg. What's his take on current market-impacting events?
BY DANIEL SMITH
Teenagers aren’t usually known for their passion for financial markets: but David van Schaardenburg was an exception. At 13 years of age, he found himself drawn into the world of finance, inspired by “the excitement of markets”.
“I’ve always been a numbers’ orientated kind of person,” he explains. “So I think investment naturally appealed to me.”
But it was the factors of markets outside of numbers that really got van Schaardenburg’s blood pumping.
“You look at the marketplace. It’s not predictable, you’ve got to use your wits. I just found all of that incredibly intellectually interesting.”
With such an early interest in markets, it would seem that a career in investment management was a given.
Van Schaardenburg laughs at the suggestion.
“I don’t think I was quite as good at having any kind of long-term plan. I finished my accounting degree and worked out within three weeks that accounting was not sufficiently interesting enough for me. Which is funny because I work at an accounting firm now, doing investment management.”
That company is Findex Wealth Management in which van Schaardenburg is a senior partner. Findex is one of Australasia’s leading providers of integrated financial advisory and accounting services.
The company’s vision, summed up by van Schaardenburg, is that, “a lot of people know how to earn money, but they struggle with how to turn that into wealth. Findex bridges that gap.”
The journey that van Schaardenburg took to reach this position saw him take up varying positions in multiple countries, but each role had a focus on the excitement of markets that had first drawn him into the financial world at 13.
A role that set the scene for van Schaardenburg was his time at FundSource Research (formerly IPAC). The role saw him providing fund research to investment clients and advisers.
“What attracted me to that group at the time was there were several really smart guys at the company.
I am a big believer that if you invest in the early stages of your career in knowledge building then you hope that it’s going to have a payback down the road.”
This focus on knowledge and deep research came to pay dividends for van Schaardenburg in the late 1980s. “When I was 25 I was managing $250 million in Australasian equity portfolios and I realised that the New Zealand market was a bubble. You could trade well within it, but there had to be a point in which you got off the wave. I sold the whole portfolio in June 1987, quit my job, bought a house and put the rest of the money in the bank. So when the 1987 stock market crashed, I was making money when a lot of people were losing their shirts.”
This experience of navigating extreme volatility in the global market has meant that van Schaardenburg has felt pretty at ease in the world of Covid. “This is not an economic meltdown, this is a health crisis. Of course we are seeing economic disruption and it’s falling unevenly. But the core of our financial systems are not under threat. Covid has its own challenges, but the banking crises and the GFC were much more difficult.”
Coming through the 1987 market crash and the GFC relatively unscathed is no mean feat, and van Schaardenburg has some core lessons to impart for others in times of crisis. “Number one is Don’t Panic. When markets lose their cool, I smell opportunity. Back in March where it looked like things were going to get worse we reweighted client portfolios into shares. I was calling clients who were asking us to move their wealth into cash or conservative funds and asking them, ‘do you have more cash to put in?’. There are very few opportunities for investors to get a clear gain from the markets, this was one of them.”
The volatility of the markets is a period in which investors need to take a look at themselves and see what kind of investors they are, says van Schaardenburg. “In 2020 there are two types of investors I am interested in, the fearless and the desperate. The fearless is this new wave of optimistic, somewhat naive investors who are going fearlessly into anything that moves upwards. The desperate are the people who have money and are looking for a reasonable return for their risk and they are struggling to find that. They are getting FOMO and possibly getting into situations they [maybe] shouldn’t go into.”
As van Schaardenburg sees it, both the fearless and the desperate investors are making matters worse for themselves by not utilising advisers. “Obviously there’s a great DIY culture here in New Zealand, which is great. But I know that if I am going to do a task that has significant downsides if I get it wrong, like plumbing my home toilet, I’m going to call up the expert. Because you know, maybe I could do this myself, but if I get it wrong I am up shit creek.
“But this country’s DIY culture is keeping a lot of people from talking to an adviser, and what’s worse is that people who are seeing advisers aren’t getting a good enough return out of that. The cost of investing in New Zealand is still far too high. Adviser fees, fund fees, KiwiSaver fees, brokerage fees, they are all high by international standards but we don’t have a premium return that justifies that.”
Van Schaardenburg feels that the upcoming regulation changes will have a positive impact, but he also has “an intolerance for anything but the very best”.
“This is an opportunity to bring the New Zealand investor up to the standard of the global competition. It is absolutely crucial that the regulators get these changes right.”
At this point van Schaardenburg feels that more needs to be done, especially in the realm of financial education. “In my opinion the AFA qualification is equivalent to year one of university business school. That is not high enough. Should you be a financial adviser at this level? Should New Zealand investors be accepting this? These are all topics that the regulation changes aren’t going to address, but they are things that New Zealand investors need to be thinking about.”
When not wrapped up in the world of financial markets, van Schaardenburg enjoys spending his time collecting the biographies of New Zealanders who fought in World War II.
“I scout around second-hand bookstores throughout the countryside trying to find these dog-worn books. What I admire about these people is their community spirit. It might seem an odd way to put it but they were prepared to give up their lives to protect their community. Back when I was younger you would interact with the old guys who had done this, and they just had the best spirit. I just have a deep admiration for them.”
