Comments in Sunday Telegraph article, 19th November 2017

Alasdair Walker of Hunter Aitkenhead & Walker, a financial planning firm, said:

What an exciting portfolio! The investor is clearly an expert and enjoys actively trading funds, which is not surprising considering his past employment.

The past five years have seen bull markets in most asset types, and taking more risk has generally been rewarded across the board, but one question I would ask in relation to this portfolio is: “What if the tech sector had major issues?”

This would have an impact not only on those funds explicitly focused on technology, such as Pictet Robotics and Polar Capital Global Technology, but also on BlackRock US Dynamic, whose top three holdings are Apple, Alphabet (Google’s parent company) and Microsoft, which account for more than 10pc of the fund.

Another area to explore is whether the costs of active management of the funds are being suitably rewarded. Taking BlackRock US Dynamic, for example, and comparing against a broad US index tracker such as Vanguard US Equity Index, an investor would have had very similar returns after charges, but would have paid 0.1pc a year rather than around 0.9pc.

More fundamentally, a “DIY” investor may not have the time, inclination or expertise to manage this type of complex investment strategy.

For those who want an easier time, a simple and low-cost portfolio with 60pc in a global stock market index tracker and 40pc in a global bond tracker (I’d recommend the Vanguard LifeStrategy 60pc fund) would have produced an annualised return of 9.4pc over the past three years and 10.2pc over five years, with little need for input from the investor and with costs of less than 0.25pc a year.

The Top 35 Next Generation Advisers 2017

Since appearing in last year’s New Model Adviser® Rising Stars, Alasdair Walker has continued to be involved with cashflow planning, fund selection and portfolio construction at Leicester-based Hunter Aitkenhead & Walker. He is also involved with recruitment and brand and business development.

Walker is active in the Next Gen Planner group of young advisers.

Top 2017 achievements
This year Walker arranged and hosted a workshop on coaching skills for advisers for a local institute.

Don’t sign on the dotted line: IFAs start e-signature campaign

Don’t sign on the dotted line: IFAs start e-signature campaign

A group of IFAs have begun a campaign pressing providers to offer electronic signatures for pension products, so they can ‘go green’ and move to paperless offices.

Prudential recently began a new ‘e-signature’ service, Prudential eSign. Now several members of the NextGen Planners network are pushing for other providers to do the same.

Alasdair Walker, director of Leicester-based Hunter Aitkenhead & Walker, Jane Hodges, managing director of London-based Money Honey Financial Planning, and Adam Carolan, NextGen co-founder and director of Cheshire-based Xentum, have begun asking providers whether they offer automated signatures.

Carolan said: ‘We did a recent brief survey of how much time and money it is costing both firm and client to deal with paperwork, and it is amazing how much it was. I plan to name and shame the providers not using e-signatures on 1 January 2018, which gives firms three months to get up to speed.’

How Planners are Changing Their Portfolio Picks Amongst Global Uncertainty

Alasdair Walker

Hunter Aitkenhead & Walker

For the past six months, the fall in yields has led Leicestershire-based Hunter Aitkenhead & Walker to manage its clients’ expectations about income, according to director Alasdair Walker.

‘Previously, we said 4% was a reasonable expectation of sustainable income,’ he said. ‘That is now closer to 3.5%, reflecting the gradual reduction in average yield of the FTSE 100. As well as the increase in valuations, we think this is due to reduced pressure on UK companies to provide yield because it is so low in other asset classes such as cash and gilts.’

Adding diversity

Walker said that, based on a total return approach, good investment performance over the past two years had offset this yield reduction. But, given heightened political and economic uncertainty and his prediction of stodgy growth over the next four years, this cushion may no longer be available.

The firm has responded by looking beyond the FTSE to a more multi-cap approach. Though this adds volatility it also adds a crucial level of diversity, said Walker. He said another response to lower yields had been to focus more on investment costs, by moving towards tracker funds.

‘For example, Invesco Perpetual Income has a yield of 3.1%, but Vanguard FTSE UK All Share Index tracker yields 3.5%,’ he said. ‘We have been switching into Vanguard and have reduced costs by around 0.8% or 0.9% without giving up any yield. In a low-growth environment, this can mean a lot.’

Moving out

Just before and immediately after the Brexit vote, Hunter Aitkenhead & Walker sold most of its large commercial property holdings, before the funds were suspended. It also bought into government bonds or strategic bonds in income portfolios.

Walker said the only response to current uncertainty was to take a neutral stance and ensure your portfolio was as diversified as possible. ‘We don’t know what events in the UK, US and Europe will mean for investments,’ he said. ‘We were using commercial property as a bond proxy, but now we have moved back to a more mainstream approach.’

He said he had observed a general move among other planners towards a total return model for income, rather than just seeking yield. ‘There have been attempts to get yield above the market, but we have seen advisers and wealth managers burnt by going into emerging market instruments, for example, looking for yield,’ he said.

New Model Adviser Rising Stars: The 35 Top Young Advisers of 2016

Alasdair Walker has gained a number of qualifications since joining Leicester-based Hunter Aitkenhead & Walker in 2011, attaining level six from the PFS in financial planning process (AF5) and personal tax and trust planning (AF1). Walker now has a number of duties at Hunter Aitkenhead & Walker, including asset allocation, cashflow planning and portfolio responsibilities.

On an ad hoc basis he gives pro bono advice to relatives of clients and his own friends and family.

Top 2016 achievements:

The past 12 months have seen Walker install a more modern back-office software into the office, which helped streamline many of the firm’s processes and improve client servicing.