I keep telling you June is the month that keeps on giving. And what it’s given me now is a crocked Achilles tendon and gracious, doesn’t that just smart. Obviously, in common with all men, my ability to withstand pain without whining is unparalleled but even so: michty. Jings and crivvens and perhaps even help ma boab. My current target is just to be off the crutches by the end of the month as I refuse to meet July in a state of vulnerability.

Not sure why I told you that. Actually that’s not true. It’s all to build rapport and draw you into reading about the subject of the week. Is it working? I bet it is. Is it? IS IT?

Man, these painkillers are good.

The subject of the week, then. It will not have escaped your attention that there’s a thing called inflation that’s causing some ructions out there. For the young ‘uns amongst you, inflation is a thing we used to have along with something called ‘interest rates’. We haven’t had much of either for quite a long time and now we have quite a lot of the first one and will probably have quite a lot of the second one soon. If you want any more economics lessons just let me know.

Those of you who run businesses will no doubt have spotted that most of your suppliers are jacking their prices up – somewhere between 5% and 10% is our experience. The normal consequence of this is dog-kicks-the-cat-cat-kicks-the-mouse (don’t kick cats); that is to say that price rises get passed on. But in a sector that works on percentage-based fees, this is a tricky needle to thread. We’ve tracked ongoing adviser charges for a long time now, and to be honest they’re almost completely static and have been since RDR. There was a time when brave speeches about moving to 1% of assets under advice were all the rage, but that’s settled down now and if anything the first rumblings of price compression are starting to happen.

The nice thing about percentage-based fees is that they go up as people accumulate wealth, and as stock markets increase in value. And for the last twelve years or so, bar a couple of temporary aberrations, that’s been the game. So supplier price inflation is a pain in the places profanity filters won’t let me mention, but it’s no more than that. Unless…

…unless asset values are also down, and clients aren’t necessarily accumulating wealth as they’re needing to use some of what they’ve got to meet their own pressures.

I was writing a thing about wealth managers for a thing yesterday, and this came up. If you look at the share prices of the WMs, and also associated companies from platforms through to asset managers, you’ll see some firms who’ve been used to dishing it out now having to assume the position and prepare to receive. Share prices are fickle and by themselves don’t necessarily prove anything, but they are useful as an immediate indicator of investor sentiment about sectors, and there are some signs out there that the (irrational?) exuberance of the last few years may be coming off.

Maybe it will all come back round again. If not, some wag (hi Mike) on our daily call this morning suggested that we should set up a JustGiving page for the Tristrams who may be forced to downgrade from a Maserati to an Audi.

That’s funny, not least because advisory / planning firms won’t be feeling any pinch yet. But – as a thought experiment at least – it’s worth considering what would happen if your asset base on which you charge percentage fees were to reduce by 20% or 30%. Can you withstand it without needing to take action? If not, would you be able to hunt and gather and service enough new business to make up for it without exploding your cost base? Would your clients wear minimum fees if they aren’t in place already? Or would they wear an increase up to that 1% from 0.75% or 0.5% (still the most common rates of ongoing adviser charge). We also have Consumer Duty to think about and an increased responsibility for demonstrating why charges are appropriate, fair and good value.

It was the summer solstice yesterday, and as every year I made it clear to the lang cat team that any gags about the nights fair drawing in, or winter is coming or anything like that would be met with the most frightful countermeasures. Nonetheless, part of resilience and ensuring consistent service for the clients on which the whole sector depends is scenario planning. I wonder how many firms have done their own cashflow plan with scenarios of inflation at 9% and asset values down, say, 20%? Might be worth a bash.


  • Bit of a stooshie at Transact/Integrafin over VAT going on. Julia Bahr has the skinny here. Transact will contest the ruling, but (see earlier bit on share prices) the Integrafin share price at 10am today was down over 58% year to date at 230.2p.
  • If you’d like to cut through the noise on ESG then our HomeGames today is exactly what you need. 12.30pm as ever.
  • Can’t let an Update go by without doffing the cap to Andy Bell, who is moving upstairs and handing day-to-day tea-making duties to Michael Summersgill.
  • And your music choice this week is meltingly brilliant. No lyrics, just a huge slab of post-rock intensity from Ireland’s God Is An Astronaut. Please grab your companion and refreshment of choice and sink into Coda from GIAA’s forthcoming live record. You’ll be glad you did. Or it might just be the painkillers…

See you next week