Objectivity must drive the investment process

In the fifth episode of the Inside Out of the Ordinary film series, Philip Shaw, Chief Economist, Investec UK, talks about the importance of humanity in investing.

Read the full video transcript

  • Objectivity, episode V: Philip Shaw

    In financial markets and investing, relationships are very important. You need the soft stuff as well as the analytical tools. 

     

    Therefore, you have to have some cognisance of people’s emotions and you have to have empathy with individuals because relationships are so important.

     

    My first job in finance was with Barclays Bank, I had a few other jobs with other houses, but I thought it was time to move on. A friend of mine approached me one day who worked at Investec and said, why don’t you come and have a talk to my people, I think that there’s a lot that you’d like there. And that was 21, 22 years ago and I’ve not looked back.

     

    My role is trying to give advice but it’s practical advice. Really, I see our key aim is trying to give people advice so they can make their own minds up and that gives people I think the right context in terms of the interaction between economics and business. 

     

    You need to be analytical, you need a lot of empathy, you also require a certain ease of communication because it doesn’t matter how good the advice is that you give if you can’t deliver it in a reasonably cogent way no-one is going to listen to you and your advice is worthless.

     

    [Different speaker]:  "Good morning everybody. Thank you very much indeed making the effort all of you who have come over to London to be part of the Global Investment Strategy Group meeting."

     

    What the Global Investment Strategy Group (GISG) tries to do is marry-up the economic situation, the market situation and essentially what it does is it says these asset classes are what we want to invest our clients’ money into.

     

    [In meeting]: "Okay if we look at things from a real top-down perspective global economic growth in 2019 was probably at it’s lowest for 10 years and the big factor here has been the trade wars particularly between the US and China and the consequent tariff increases which have slowed down global trade."

     

    I supply my economics expertise and also some market expertise as well which I hope adds some value to the discussions and decisions which we have on the committee. But I’m a member of something like a 15-strong committee, it’s really the committee that makes those decisions rather than any particular individual and I think that’s its greatest strength. 

     

    I think if you’re too hard-nosed, too rational, too objective going down a single track you will miss a lot of the ways that markets move because people making investment decisions can be emotional.

     

    Sometimes it’s possible to think that investment bank or wealth managers are institutions, but the institutions are full of people. They drive those institutions, they make the decisions, you work with them and therefore you need a degree of empathy.

     

    Outside work I’ve got lots of interests. I love rock music, I’m a big Led Zeppelin fan, go to a lot of concerts, try and play the guitar occasionally as well and sport.  I play tennis 2 or 3 times a week and I watch a lot of sport as well. I’ve been a Chelsea season ticket holder for probably more than 25 years now, I think.

     

    A few of my friends say it is just written into my DNA. It’s an emotional thing and perhaps it’s, it is a bit of a release from a role where you have got to be so objective.  I just couldn’t imagine not doing it. 

     

    What I love most is I think the breadth of the exposure that I have to Investec and a wide range of clients. I get to give a lot of advice and hopefully make a difference to a lot of people. There is a lot that you can get out of this job and I think it is fantastically interesting and fulfilling.

Meet Philip Shaw

While we may think the world of markets and investments is cold and rational, we forget that there are real people that work in institutions and wealth management firms, servicing real people, says Philip Shaw.
 
“If you take an approach that’s too hard-nosed and too objective, going down a single track, you’ll miss a lot of what moves markets,” he explains. “Relationships are important too: you need the soft skills as well as the analytical ones. And even the best advice, if
not delivered in a cogent way that makes sense to the client, is worthless.”
 
Philip says that while he enjoys offering his expertise in economics and the markets to the Investec Global Investment Strategy Group (GISG) process, what he likes most is that it’s never one individual’s viewpoint that prevails but the whole group. “It’s always the committee that makes the decision.”

Philip Shaw, Chief Economist, Investec UK

Watch other films in the Inside Out of the Ordinary series

Process

Borderless

Balance

Variety

Wisdom

Possibility

Process

John Haynes, Investec Wealth & Investment

Borderless

Annelise Peers, Investec

Balance

Ryan Friedman, Investec Wealth & Investment

Variety

John Wyn Evans, Investec Wealth & Investment

Wisdom

Prof Brian Kantor, Investec Wealth & Investment

Possibility

Fani Titi, Joint CEO, Investec

Trust us to manage your wealth today

 

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