CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

Much has been made of the latest Fintech businesses offering “robo-advice”. Fintech firms beings financial firms attempting to use computer technology to determine the most appropriate investment strategy. Hence we have robo-advice in that the advice you receive as to where to invest you money is not received  from a financial adviser or stockbroker but rather from your PC – and we all know how reliable they are!

The “new” fintech firms all seem to have wacky names like Nutmeg, Moneyfarm Money-on-Toast etc. The models basically take you down a computer logarithmic which determines your risk profile and then an appropriate baskets of investments – usually utilising ETF investment vehicles,  is presented. The problem I have with them – besides the name – although to be fair by the time I’ve told people I work for Collins Sarri Statham Investments Limited they seem to have lost interest – or perhaps it is just me! – the “problem” as I see it is that robots are just that bit well – impersonal. I confess I have met the very personable Nick Hungerford from Nutmeg and met some of his robots! And anyone who encourages people and particular young people to save and invest is to be admired. However investing in an ETF doesn’t really ally you to a company. In the past I have been a proud shareholder in British Telecom, GlaxoSmithkline, Reed Elsevier, Rolls Royce, and various other companies, all companies I could identify with. Equally in my youth I invested in penny shares, gold companies, all which held great promise but all of which failed to live up to their shareholders vision. I like so many before me, and no doubt after, had to chalk it up to experience, realise that investing is not always profitable and that small caps and penny shares are not for the risk adverse. Of course I have also invested in the odd unit trusts which seem to have morphed into OEICS – a fin-tech like word devised by – you guessed it, the EU! But again the concept of being a shareholder in a company I could identify with is sadly lost.

Now it could be argued that I work with a number of robots here at CSS. The difference being that our “robots” are human! Through our retail client profile – which we are always looking to update and modify – our brokers are keen to explore with clients the degree of risk they are willing to take. Of course risk is an elusive multifaceted concept. The degree of risk one takes in life is a great metaphor for the degree of investment risk people are prepared to take. When crossing the road I check both ways, then check again, before heading across. My wife always insists on walking to, and using a pedestrian crossing. Meanwhile I have observed that one of the friends tends to look once, then cross. Equally when investing I am cautious; whereas my friend tends to act quickly and decisively – sometimes he profits sometimes he makes a loss –– but he is comfortable to take that enhanced level of risk. To continue with this analogy our brokers explore with clients their risk approach and tolerance. Unfortunately sometimes companies, like motorist, diverge, suddenly stop, or accelerate, but our brokers are constantly monitoring the road ahead attempting to ensure the road is safely crossed.

Of course one of the major differences between CSS and FIntech firms is that as an advisory broker it is our clients who make the final decision to invest – having listen to our advice. Most fintech models work on a discretionary managed basis with the “robot” deciding on market timings and investing options. Whilst this is a perfectly good option for those who don’t want a hands on role in the investment process we find many of our clients like to have a more direct involvement. Of course it also has the advantage for clients of being able to discuss their ideas with an investment professional. I recall on one occasion a client was looking at a higher risk, small cap stock, the broker discussed with her the fact that she already held a number of smaller cap stocks in her portfolio and perhaps it wasn’t wise to add additional risk to the portfolio. Being able to talk things over with a financial professional enabled her to appreciate the risk she was potentially taking on – I am not sure a robot would have given her the same advice? Equally peoples risk tolerance and risk capacity change. At CSS we encourage clients to both regularly review the investment profile we have as well as look to change their investment should their attitude to risk or circumstances change. We have some clients who have looked to cash in investments during the recent market turbulence whereas others have viewed it as a buying opportunity despite the risk. Like crossing the road everyone’s view of risk is different and it is this that our brokers try and accommodate.

So if it’s a robot you want to help with your investing by all means invest with your fingers – however if it is professional advice just pick up the telephone. Our human “robots” are always ready to listen and give advice.

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