Beware the experts
We are pleased that the Charity Commission finally published their updated guidance on investment (CC14) last week, to which we contributed in our response to the consultation. The guidance is helpful, shorter and offers greater clarity to trustees in making investment decisions that are right for their charity. A new section focuses on the requirement to take professional advice (unless trustees already have sufficient expertise or the amounts involved are minimal).
It may seem strange for us to say this since Yoke is a self-proclaimed charity investment and finance expert, but relying on experts for advice to guide or in some cases determine your actions is, at best, a risk and, at worst, a disaster. This is because the advice must be suitable. Here are three occasions when it is not, for one reason or another:
where a charity delegates to an investment manager: this works well on matters of strategy (i.e. what policy you should have), but less well when putting it into practice since most managers are only regulated to provide advice on their own products;
where the advice given is not regulated by the FCA (all investment managers are, but only some consultants are);
where the adviser is motivated to secure long term business from you, but where the value and insights only appear at the outset.
When it comes down to selecting an advisor, don’t forget that while nobody gets fired for buying IBM and while appointing a high profile brand name can provide comfort, charities come in a variety of shapes and sizes and don’t all fit in the square-peg hole. No credible trustee is going to think, "Well, I don’t think this is a good idea, but our investment consultant told us bitcoin was a great diversifier, so we invested"!
As we identified in our blogs, The Emperor’s new clothes (Apr 2023) and Does a charity need a charity investment manager? (Apr 2021), an advisor who has a deep understanding of how a charity works, how it uses all its assets, and its dynamics and stresses will often give the right outcome. At Yoke, we work within the investment guidance of the Charity Commission to empower you with the confidence to make the best decisions for your charity. Do contact us for a chat.