Monthly Newsletter – August 2023

2 August 2023

How do we search for a financial planner? What are the key metrics we have making these decisions AND we discuss the price of chocolate!


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What motivates an Investor to hire their advisor
An online survey platform was used to gather and analyse data from 312 current advisor clients, the request ‘Please list some reasons why you hired your advisor’.
The question was open ended allowing the clients to use their own words and be less pressurised by outside influences, e.g. who might be in the room or conforming to social desirability. The responses were therefore very emotionally grounded.
Top reasons clients hire their advisors:
This graph shows the five most common reasons for hiring an advisor, with each bar showing a few responses that fit into each category. The bars are also colour coded as to whether the response was emotionally or financially grounded.

This shows that although the investor hires an advisor to address a specific financial need, this is not the most dominant factor. In fact 60% of respondents cited an emotionally grounded reason for hiring their financial advisors, suggesting that there is an additional aspect of emotional drivers involved. For example, the degree to which someone feels comfortable making financial decisions and their ability to stay the course.

Source – Morningstar

Growth of global economic activity at 18 month high as service sector up turn remains solid
  • Global Composite Purchasing Managers Index (PMI) Output Index rises to 54.4
  • Output growth strengthens in manufacturing and services.
  • Price pressures ease further, especially for manufacturers.
The vibrancy of the services sector drove the rate of expansion of the global economic activity to a one and a half year high in May.
Business optimism and solid job creation continued as companies reported a further upswing in new orders.
As the graph shows, the J.P. Morgan Global Composite PMI Output Index rose to 54.4 in May up from 54.2 in April, to signal expansion for the fourth month in a row. The index is produced by J.P. Morgan and S&P Global in association with ISM and IFPSM.
The service sector outperformed manufacturing during May, with the growth of activity accelerating to its best since November 2021. The growth of manufacturing also improved to an 11-month high.
The survey covered business services, consumer goods, consumer services, financial services, intermediate and investment goods, who all registered output growth in May. The quickest rate of expansion was in financial services and the weakest at investment goods producers.

Silicon chips or chocolate chips?
Everyone is talking about microchips right now, anything even remotely connected with Artificial Intelligence (AI) has rallied strongly, with the Nasdaq up 31%.
Very exciting….but  there is an investment to do with chips you could have done which has performed just as well! Safer, no high-tech specs or incomprehensible jargon, and without the potential to change the world of employment!
This commodity has been around for centuries :or perhaps more recognisable as this Cocoa futures – the key ingredient in chocolate chips – has also risen by 31% this year as the market digests the impact of strained supply after poor weather with high demand. Europe is the world’s largest importer of this commodity; we can’t seem to get enough!Source: 7IM/BloombergThis is feeding through to prices as consumer surveys show the price of chocolate has risen by 14% over the past year, which is especially bad news for dark chocolate lovers as it comprises of more cocoa solids than milk chocolate.
So, although AI might be the next big thing, it’s worth remembering that technology hasn’t been the only way to make money this year; supply and demand can create other opportunities outside the headlines.

Price of a pint…….of milk!

The financial press talks about inflation, people talk about prices.
Things are getting more expensive.
There’s no single culprit for the surge in world inflation of the last two years. Could it be Covid? Global supply chains? Feckless governments? Labour shortages? Putin’s war? The weather? Or could it be raw capitalism?
Take the price of milk as an example. Supermarkets charge between 25p and 35p more than the price at the farm gate. This is partly to cover the cost of getting the milk from the farm to the shelves, but also for profit.
But look at what has happened since Covid, the supermarket price has rocketed!
When prices shoot up, questions start being asked:

  • Did lockdowns increase the demand for milk?  Unlikely.
  • Could cows get Covid?  Not that we know of.
  • Did delivery costs go up? Well, fuel did go up, but not that much and not until 2022.

So, did they see the chance to grab some extra profits, camouflaged by the economic uncertainty?  The chart tells an interesting story.

Interesting Money Fact:

Pests like snails and slugs love to eat your plants, but pennies can deter them. The copper in the coins repels these pests as they don’t like the bitter taste!





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