The Charters Annual Summary – 2020: A year to control your emotions and take stock of what’s important

The investment management firm Morningstar recently released a fascinating study comparing what investors actually value about their financial adviser with what financial advisers think investors value about working with them.

To get to the final findings 693 individual investors ranked a set of common attributes in order of importance. The attribute investors least valued was ‘(my adviser) helps me stay in control of my emotions’.

I’m not entirely sure how to interpret this, but to my mind the result could be down to one of two things:

1) Investors simply don’t value the idea of an adviser helping them stay in control of their emotions; or

2) Investors think they’re completely rational and don’t need an adviser to help them control their emotions.

In this year more than any other it has been tough to stay in control of our emotions. Indeed, as I sat writing the draft copy of this article in early December, I couldn’t stop thinking about how grateful I am for many things in my life.

Whilst 2020 has been an up and down year for most of us (me included), and downright tragic for some, I sincerely hope that like me, you can take some positives into 2021. Remember, every down has an up!

So, I thought about how the pandemic has made me rethink what’s important. It’s given me time to re-evaluate my priorities and think about resetting some of my objectives for the future.

At the top of my list is spending more time with friends and family, in particular, my children, Elle and Maxwell, and my parents.

This year I also rekindled my passion for playing golf (badly). If you’re ever playing at Ladbrook Park and hear “FOURRRR!”, there’s a good chance it’ll be me after hitting a push slice off the tee. But despite the standard of play on offer, I’d go as far as to say that playing golf has helped me get through the year. It’s given me something to do and I have fallen in love with the sport.

What about you? What have you missed? What are you grateful for? What will you change in your life because of the pandemic? What will you do more of in 2021 and beyond? Drop me a note to I’d love to hear about your experiences in 2020, both good and bad and how you’re reflecting on the year.

But back to the Moringstar report and how emotions and investing are intertwined, even if we may think we don’t need that bit of guidance.

If I asked you to rate your driving skills on a scale of one to ten, how would you respond? Research suggests that there’s a good chance you’ll give yourself an above-average rating, like a seven. But if everyone who’s reading this article rates themselves a seven, how can it be possible for everyone to be above average? It just doesn’t stack up.

The same applies when it comes to managing your finances. The Moringstar report suggests that all investors are completely rational and better at managing their emotions when compared to the average investor.

In reality, the report shows that behavioural finance (the study of how psychology can affect the financial decision making process) is in play.

Consider the stockmarket’s performance over 2020. In February and March of this year, it went down, down again, and then down some more… (*gulp*). The FTSE 100’s low point year to date of 4,993.89 was recorded on 23rd March. People were scared, COVID-19 was everywhere and the pandemic had taken over the world. The index had dived over 2,500 points, or 34.73% from a high of 7,651.44 just two months before. As a financial planner, I know and understand that markets will tank every so often; that’s what history tells us will happen and we should expect it, even embrace it.

However, that’s no comfort if you see the value of your hard earned cash fall dramatically, right? Such a sudden drop followed by more sudden drops is likely to create an emotional reaction.

Having lived through a number of stock market crashes prior to this year’s ‘Covid crash’, including the technology bubble in 1999/2000 (the so called Dot-com bubble), the September 11 attacks in 2001, and the 2008 global financial crisis, I recognise how important it is for investors to hold their nerve, manage their emotions, stick to the plan and remain 100% invested throughout, even in the eye of a Covid storm! And in all credit to our clients, that’s exactly what they’ve done, every single one of them.

At the time of writing (14th December 2020), the FTSE 100 had recovered to 6,531.83. Those investors who stayed in their seat have benefitted from the upswing, and generally portfolios have recovered to pre-pandemic levels.

But the Moringstar research suggests that investors need help to make the decision to do nothing, even if they don’t realise it themselves.

This has led me to wonder many times this year about how DIY investors have fared managing their finances through the pandemic.

In fact, over the last six to nine months I’ve taken various calls from non-clients, all of whom sold down their portfolios in March of this year – at the height of the pandemic, and just when markets were at their lowest, thus crystallising their losses.

It’s only natural, of course, to feel anxious and worried in a crisis – to make an emotional decision. The vital thing when it comes to your investments is to stay rational and not make knee jerk reactions. You should always remember that it’s virtually impossible to time the markets, so as a general rule of thumb, you shouldn’t go there.

Your investments are a way of preparing and planning for your future; they are not your future itself. If you don’t need to release the money from them at the time of any given event in the markets, then the event itself is unlikely to really require you to take action. This is the difference between financial planning with purpose for your long-term future and ‘having a go’ at the markets.

I have no doubt that many DIY investors will have lost out this year, by simply letting their emotions get in the way of managing their finances. By way of quantifying this loss Dalbar’s Quantitative Analysis of Investor Behaviour Study 2019 identifies a 1.74% gap in average stock market returns over 20 years vs average investor returns over 20 years. This gap is entirely down to investor behaviour.

Happily, as I mentioned, every Charters client ‘stayed the course’, weathered the hit and benefited from their portfolio rebounding later in the year. Ultimately, the most important thing to me is that we are delivering exceptional service and advice to our clients, helping them to make the best decisions for their futures.

By way of rounding off then, here’s another emotion: it gives me immense pleasure to tell you that our client reviews mean I currently meet the criteria to achieve Top Rated status in 2021. As long as I continue to meet the criteria, I’ll feature in the 2021 Guide to Top Rated Financial Advisers, distributed in The Times this April, for the third year in a row.

As I look to 2021 with renewed optimism that vaccines will prove their worth, we hope to bring clarity, assurance and contentment to more client families. If you’re not currently a Charters client and think you could benefit from our services then why not contact us to pencil in a date for a chat and a coffee? Your exploratory meeting does not involve any type of fee and puts you under no obligation to take up our service. As current clients can tell you, we can help you position your finances for the long-term within the context of your personal situation and where you want to go in your life in the future, with the flexibility to adapt as circumstances change.

That’s it from us until January. We would like to take this opportunity to thank you for reading our articles throughout the year and to wish you a very happy Christmas and a healthy and prosperous New Year. Please feel free to get in touch with us on 01789 263888 or email

PS, if you’ve enjoyed reading this article, you can find more information on a few of the topics I’ve touched on here by clicking the links below:

Rethinking what’s important

3 top tips to survive a bear market

Why timing the market doesn’t work

The link between human behaviour and investing