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Independent View

A graph of the FTSE Techmark Index certainly shows the ups and downs of

investment. Just like the Grand Old Duke of York, tech stocks marched back

down again.

What we have seen is a first-class example of why investors should take

independent financial advice.

The role of the IFA has always been a handholding one. Do not kid yourself

that you can see into the future and predict what markets are going to do,

what the tax rates are or what the political climate is likely to be. The

only role that the IFA has to play is to bring some balance into the

client&#39s life.

Do not leave all your money in cash, do not put it all in the stockmarket.

Do not invest heavily in small companies at the expense of the bigger ones.

Establish your objectives and invest accordingly. These are the messages

we should be getting across to clients.

The technology surge was a classic bubble with lots of hype but not much

substance. I wonder how many advisers got lured into the trap of

presenting to their clients as if they were world experts on the subject

and investing in technology was a one-way ticket to financial success?

I suspect those who fit this description are cowering in the corner,

hoping things will improve and thinking up some excuses to give to their


Do not get me wrong. I believe in technology and certainly would advise

that all clients have an element dedicated to this sector.

You only have to look around you to see the developments which are taking

place in our daily lives and to realise that significant profits are going

to be made from these technological developments over the long term.

In fact, after the recent falls, there is a very good case of investing

now. What I am saying, however, is that no one should get carried away with

a trend nor take the opportunity for the easy sell.

An IFA worth his salt will ensure that a client&#39s portfolio is well

balanced and that if one element of it goes wrong the rest can compensate.

There have been too many times in the past, and here I particularly recall

1987, when too many investors were allowed to forsake cash and fixed

interest for the sake of equity and, in particular, small companies, only

to find that, when things went wrong, their wealth was decimated, leading

to some very traumatic times for many people.

I suspect that, like many other companies, my own firm is spending a

considerable amount of time and money on improving its systems.

A day does not go by without a new piece of kit appearing in the office. I

am amazed by what this equipment can do in allowing not only ourselves to

obtain up-to-date infor-mation but to communicate quickly and efficiently

with our clients and the groups.

However, it does not matter how impressive these gadgets are, they are

only any good if they allow us to provide our clients with more information

and make us better at our job.

There is no substitute for the personal touch and the ability to be able

to talk to one another. It may be old-fashioned but a face-to-face meeting

an individual letter or a simple phone call is always going to be necessary

for the IFA to provide the comfort and advice which the client should


It is tempting to latch on to the latest craze particularly when all round

you are talking it up. I remember reading some years ago that a long-term

investment was a short-term one that has gone wrong and I hope that not too

many IFAs are using that principle with regards to their clients&#39

technology investment of late.

As long as we continue to guide our clients in the right direction and are

there to comfort them when things do not go according to plan, then we are

fulfilling a vital role within the financial services industry which will

always be needed.

Stephen Lansdown is managing director of Hargreaves Lansdown.


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