Last month we spent a day with some of our clients making some promotional films for Citywide. We used the stunning venue Rudding Park as a backdrop and we are looking forward to sharing the finished project with you soon. Here are some behind the scenes photos of the shoot:
Citywide are Once Again Awarded BS 8577 and IS0 22222
Do you have a disaster recovery plan?
At Citywide many of our clients are business owners so we’re familiar with the challenges and benefits of running a business. We’re all familiar with the importance of planning, and who among us has never come home after a long day at the office claiming it was a ‘total disaster’? But hyperbole aside, planning for real disasters – and how you’ll carry on – is essential.
No business is immune and ‘disasters’ can come in many guises, from man-made interruptions like hacking and IT failures, through to illness, injury or natural but unpredictable occurrences like flooding. Research suggests that 80% of businesses suffering a major incident fail within 18 months.1
But before the fear that disaster stalks us at every corner takes hold, there are sensible things you can do to take control and put a plan in place.
1. Expect the unexpected
It may seem flippant – after all, you’ve got a job to do and you can’t think of everything. But it’s true that prevention is better than a cure, so where possible, you should try and anticipate, then legislate for problems that could occur. Think about anti-virus software, SSL encryption and off-site data backups. Beyond IT, think about CCTV, fire and burglar alarms.
2. Evaluate your business
Take a good look at your business to make sure you understand its strengths and vulnerabilities. Draw up a list of things that could go wrong and include everything. Look at the five P’s – premises, people, power, productivity and property – both tangible and intellectual. You may also want to rank them in terms of likelihood, cost and time impacts.
3. Define Plan B
Knowing what could go wrong allows you to figure out how you’d put things right. As always, there are ‘known unknowns’ and worse, ‘unknown unknowns’. You can’t solve everything, but there are some things you can have a practical plan for. Do you have mobile contact details for your staff and can they work remotely? If there’s ever a problem that means you need to close your premises or can’t get in, remote working could be the difference between business as usual or grinding to a halt.
4. Test your arrangements
A good home security question is ‘does your smoke alarm have batteries?’ A more pertinent one is ‘have you tested it recently?’. Apply the same conscience and presence of mind to your disaster recovery plan. There’s no point having a plan in place if you don’t keep yourself and your staff familiar with it and periodically check that it works. Don’t lock it away in a cupboard and forget about it.
5. Cloud It
Research from the Cloud Industry Forum (CIF) shows that cloud adoption in the UK stands at 88% – an increase of 83% since 2010,2 among small businesses in particular. That’s good, but it’s still not 100%, so if you’re storing your livelihood and intellectual property locally, it’s time to think again.
6. Delegate
You may have a first aid operative and perhaps a fire and evacuation marshal, but do you have someone in charge of navigating major issues over a longer period? If so, are they sufficiently trained and do you have cover if they’re not around? It’s important for everyone to know and understand what’s expected of them and to be sure those skills are ready at short notice.
7. Get over it and move on
Plan B is essential, but it’s also temporary. A good catch is important, but ultimately you need to get the ball back in play and know what you’ll do to get back to normal ways of working. Look at how long you can get by on emergency measures and how quickly you can return to full operation.
8. Get a second opinion
For two reasons. One, depending on your expertise and that of your staff, you may not have the in-house knowledge to come up with a comprehensive plan. Two, even if you don’t think so, you may be avoiding the issue just a little and it’s not something to be done half-heartedly. Whether an honest third-party opinion serves to open your eyes or confirms you’re heading in the right direction, either way it’s worth asking.
If you need any help with Financial & business planning just give us a call on 01372 365950. We know that choosing the right professional financial adviser can be difficult. If you’d like to find out more about Citywide Financial Partners, book an appointment and we’ll travel to meet you – wherever and whenever suits you. We’ll explore your goals and aspirations and discuss building a strategy to get you where you want to be – all at no obligation to you.
How deep is your risk?
All investors know that they need to take risks in order to achieve returns higher than cash. If you asked ten investors if equities were more risky than cash, most would agree; but that depends on how one understands risk. The investment industry has done a poor job of explaining risk as it relates to an investor and tends to equate risk with return volatility. William Bernstein – a neurosurgeon-turned-adviser and prolific investment writer – wrote a great, short booklet on risk , where he explained the different risks that equity investors face, as follows:
‘Risk, then, comes in two flavors: “shallow risk,” a loss of real capital that recovers relatively quickly, say within several years; and “deep risk,” a permanent loss of real capital.’
Shallow risk – precipitous equity market crashes that recover relatively quickly
This first level of risk is the one that most investors focus on, yet is perhaps the least relevant, particularly for those with long investment horizons. These are the scary and emotionally fraught times when equity markets fall dramatically, the latest example of which was the Credit Crisis of 2007 to 2009. We illustrate below, the five largest equity market falls in the US market, since 1927 (in US$ terms).
Figure 3: Five largest falls in the US equity markets between 1927 and 2017
Data source: Ibbotson SBBI US Large Stock TR, Jan-25 to Apr-17. Morningstar © All rights reserved.
Deep risk – a permanent loss of wealth
Bernstein defines deep risk as the permanent loss of purchasing power on account of four events: hyperinflation, such as that of the Weimar Republic, where from 1921 to 1924 bonds and cash lost nearly all their value; prolonged deflation causing a depression and high unemployment; devastation i.e. wars and geopolitical events, such as the Bolshevik revolution (almost 100 years ago to the day) resulting in the closure of the Russian stock market and default on Tsarist government debt; and finally confiscation, which still happens today e.g. the Argentinian government’s expropriation of the Spanish oil company Repsol’s assets in the country in 2012.
There are two investment behaviours that translate shallow risk into deep risk. Being shaken out of the market by a precipitous rapid fall (shallow risk) and then failing to get back in again – as there never seems to be a good time to do so – crystallises a real loss (deep risk). Owning concentrated stock portfolios can do the same; a recent study in the US shows that 26,000 listed companies have been in and out of the US equity exchanges since 1926, with a mean life of only seven years. Only 36 companies have made it through from 1936. Owning high exposures to stocks that fail is deep risk.
The best mitigants of deep risk are to own a globally diversified portfolio of several thousand stocks distributed predominantly across developed equity markets of democratic countries with a sound legal frameworks. Equities provide the prospect of strong, long-term inflation-plus returns.
In conclusion
Investors know that placing money in the bond and equity markets carries risk. Yet the way in which many look at, and measure, risk is disconnected from investors actual longer-term investment horizons, focusing on shallow risk, rather than deep risk. Unless one understands the probability of an adverse event (hazard) happening and the effect of this exposure, due to a specific hazard on the individual investor, then it is likely that the real risks faced by an investor are masked by the shallow risks that have more emotional impact. Owning more ‘low risk’ bonds (or cash) is not necessarily always the right answer when trying to avoid the deep risks that investors face.
Other notes and risk warnings
This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed.
Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
1 Bernstein, W.J., (2013), Deep Risk: How History Informs Portfolio Design. Available at www.amazon.co.uk
2 Bessembinder, Hendrik, Do Stocks Outperform Treasury Bills? (May 22, 2017). Available at SSRN: https://ssrn.com/abstract=2900447
Citywide Win Best Brand Launch
The fifth edition of the Wealth Adviser Awards, presented on 19 May in London, brought together the leading names in the wealth management industry to celebrate the achievements of the best performing wealth managers and advisers in 2017.
The awards were determined by the votes of Wealth Adviser’s readers, who include wealth managers, IFAs, fund managers, family offices, law firms, accounting firms and other industry professionals.
We are pleased to say that Citywide won the award for Best Brand launch. Clinton Askew, Luke Beale, Michelle Smart and our marketing consultant Laura Janes attended the award ceremony.
You can read more about the other winners here.
Political risk: what does this mean for stock prices?
With the world holding its breath for the next Trump tweet on North Korea, with Britain fighting its own EU Brexit and France entering a new era of politics it would be easy to think that the only outcome of all these events is going to be catastrophe for your finances.
Surprisingly, conflict economics is a robust and well researched subject matter. Whilst the conclusions are not entirely consistent; in essence the increase in likelihood of confrontation tends to decrease prices, but the ultimate outbreak of conflict increases them.
In some senses this is understandable, markets don’t like uncertainty, a point that can be seen in the current Brexit negotiations. However, once hostilities start and the market get some certainty, stock markets rebound. Of course, along the way there may be setbacks or advances that change market sentiment. However, as the research shows, strong rebellions frequently reach a negotiated settlement because the incumbent can’t get a decisive win, whilst weak rebellions tend not to get negotiated settlements and the insurgents therefore snipe away from the fringes over many years.
Whilst there may be lessons here for the UK government, what should you do when there is so much political noise?
Here are five rules to help you through:
#1 Stick to the plan
Conflicts and other disruptive causes can affect share prices but there is nothing quite like panic to really affect your portfolio. Do not follow the Gil Scott Heron maxim from his track B-movie of panic now and avoid the rush.
#2 Quit trying to time the market
Predicting the top and bottom of the markets is a fool’s game. Remember being right on the first decision doesn’t necessarily mean you will be right on the second.
#3 Avoid being out of the market
Whilst conflicts can sometimes weigh heavily on the market, recoveries can be surprisingly quick. If you have trouble understanding this look up what happened with UK stock prices between March 7, 2009 and March 9, 2009.
#4 Remember diversification is your friend.
Being massively diversify means that individual stock, Country and industry risks are substantially reduced. Diversification enables you to capture the capital market returns without being subject to the vagaries of a single president, or a single government for that matter.
#5 If you feel the need to speculate in times of uncertainty, remember the alleged maxim of Nathan Rothschild of Rothschild banking fame; ‘Buy on the sound of cannons, Sell on the sound of trumpets’. Apparently, he did quite well shorting the market based on inside information about Wellingtons victory at Waterloo.
If you have concerns or questions remember we are here to help. In the last thirty years we have gained some experience around market volatility and if we can help we will.