The Top 100 Financial Advisers list is a collaboration between The Australian and its corporate cousin, Barron’s.
Amanda Fong, Escala Partners.
Amanda Fong believes investors should beware of indulging in an “unhelpful preoccupation with the short-term”. A partner-investment advisor at wealth management firm Escala Partners, she cites the Russian invasion of Ukraine as an example of one extremely rapid return to normality in terms of international oil prices.
Russia marched into Ukraine on February 24 this year, in a significant escalation of the Russo-Ukrainian conflict. Oil prices jumped from about US$91 a barrel to roughly US$124 a barrel within about a week, Fong says. But by March 16, just 20 days later, the oil price was back under US$100, even though the Ukraine war was spreading in breadth and growing in intensity.
“It was a very short, sharp impact,” she adds. “Geo-political crises don’t have a significant impact on the portfolio in the long term. “That’s because those geopolitical events have a very short impact on markets. Once the worst of the crisis is over, then markets tend to focus back on fundamentals.”
More broadly, Fong and her colleagues have considered a range of these sorts of historical geo-political scenarios, including the GFC, the pandemic, and Brexit, and found the overall lesson is that hasty decisions to divest have often proved unwise. Closer to home, peaking inflation has caused some concern in Australia this year, she says. Yet despite the mid-year panic and although there is still some volatility, the markets have largely rallied.
With three decades of experience in the Australian finance sector, Fong is keen to emphasise the importance of long-term thinking. “We’ve said it for years; if investors have the luxury of focusing on long-term goals, then that’s what they should focus on,” she says.
Fong began her financial career with a Bachelor of Commerce degree at the University of Melbourne. She found a part-time job in the investment research department of a stockbroking office while she was at university, which became a full-time position after she graduated.
In the early 2000s she moved into a private client investment advisory role, which requires the balance of differing priorities, and an understanding of different clients’ needs and expectations. As well as providing advice to these clients, she offers guidance on a pro bono basis to three educational institutions.
“Everyone wants capital preservation; they want growth of their corpus and they want income,” she says. “That’s not possible. You need to partner with your clients and talk them through each of those outcomes and get them to understand what they each mean and prioritise what’s the most important.”
Fong says environmental, social, and corporate governance (ESG) considerations now weigh increasingly heavily with younger generations of investors. “They’re far more interested in the long term in terms of climate change,” she says. “It’s not about excluding investments, it’s more about engaging and impact investing.”
Selecting investments according to ESG principles requires research into the field to determine whether the claims of various players stack up in terms of environmental impact and social effects, she adds.
“Investors need to understand they should look beyond the title, the name of the fund,” she says. “It’s very easy to say the ‘clean energy fund’, or ‘sustainable long-term fund’; you really need to understand what they mean. What do they invest in, what’s their process, what is it that makes them say they’re sustainable or clean energy only?”
Some wealth management firms, including Escala, have in-house ESG specialists to assess these types of investments and determine exactly how responsible they are. “It’s an area of focus, it’s an area of interest,” Fong says. “It’s certainly now a normal part of engagement conversation.”
Cathy Ding, Morgan Stanley.
Born and brought up in Beijing, financial advisor Cathy Ding is fluent in Mandarin and English. A Sydney-based executive director with Morgan Stanley, she provides advice to ultra-high net worth clients on investments in Australia and elsewhere around the world.
“Most of our clients have an Asian background, I think that’s where our edge is,” she says. “Having the language ability definitely helps with understanding the needs and the cultural nuances of doing business with Asian clients.”
With Russia’s invasion of Ukraine, spiking inflation around the world, the still-rumbling Covid pandemic and fears a Chinese invasion of Taiwan is imminent, this is a difficult period for investors. The markets are increasingly unpredictable and fund managers are thinking twice about high-risk propositions.
“A lot of our clients are getting nervous, which is understandable given the geopolitics, the recent global market volatility and challenging economic outlook; I think we are living in uncertain times,” Ding says. “For our clients, the focus needs to be more about risk management and to have a portfolio of quality assets diversified across geography and asset class.”
Ding moved to Australia from China in 2007, and graduated with a Bachelor of Commerce degree from Melbourne University in 2010. She is also a qualified chartered accountant, and earlier in her career she worked for one of the big four accountancy firms providing clients with tailored individual tax and legal consulting and immigration services.
Before joining Morgan Stanley, she worked at Deloitte Touche Tohmatsu, where she specialised in migration, taxation and business consulting services to high-net-worth and ultra-high-net-worth Chinese nationals.
In 2017 she was recruited by Garth Hu, a team leader Morgan Stanley, who ranked number one on Barron’s list of Australia’s Top 100 Financial Advisers in both 2020 and 2021.
The bank has largely independent teams in Hong Kong and China and Ding and her colleagues abroad share platforms and research, which she has found provides a useful resource for advising her clients, who require a close focus from her. “They want one-on-one service and they want a tailored solution to fit their needs,” Ding says. “Ultimately, their common goal is capital preservation and capital growth.”
A number of her clients are socially aware, she adds, and increasingly concerned about the environment and the common good. She and her colleagues see this as a trend of growing importance across the investment field and she is always on the lookout for sustainable ESG (environment, social and governance) compliant investment products for her clients’ portfolios.
The move to more conscious ESG investing has begun to affect the markets as well, she says, noting as an example that while oil prices went up last year, oil stock has not fared particularly well. Ding and her colleagues believe this is a result of the growing numbers of ESG funds which avoid investing in polluting industries, and look more to predominantly sustainable fields. This is a world-wide trend, seen to a greater or lesser degree in both developed nations and emerging markets.
“Australia only represents a small fraction of the world’s investable assets, so that’s why it’s key to look outside Australia,” Ding says. “Emerging markets, the US, Europe; there’s a lot of other opportunities and a firm with a global footprint like Morgan Stanley can open up the investment universe. That’s what our clients value.”
Kellie Davidson, Pitcher Partners.
Kellie Davidson has been fascinated by the share market since she was a child and she was allocated a paper portfolio at school. Years later, when she was 21, her father gave her $6,000 with the proviso that she invest in three stocks, a gift that focused her attention on potential company growth and yield.
Now a Melbourne-based executive director and representative at Pitcher Partners Investment Services, with 20 years’ experience in the investment field and an economics degree from La Trobe university, Davidson says her early interest in the stock market soon grew to encompass the broader field of financial planning. As well as providing professional investment advice to a range of clients, she now sits on the Pitcher Partners’ charitable committee, which guides the firm’s corporate social responsibility activities and oversees pro bono work.
Like everyone in her profession, her focus these days is how to protect clients’ wealth at a time of immense instability and change.
“This is the most uncertain environment since the GFC,” she says, pointing to the growing concern about inflation both in Australia and abroad: a new development in the economic sphere. “We haven’t spoken about inflation and its impact for years; it wasn’t in the investment narrative in terms of how you thought about constructing a portfolio.”
Investors should no longer expect a life raft from the Reserve Bank, Davidson says. “Central Banks were the white knights who came to the rescue any time we got the economic wobbles – they came in and cut rates or talked about keeping rates lower or some other liquidity mechanism, and now they’re in a position where they can’t do that,” she adds, noting that economists in Australia and elsewhere are struggling to find consensus on how to underpin a soft landing.
It has been a difficult time for investors on many fronts. Global political turbulence, the on-going pandemic and its aftermath, and looming fallout from climate change have shaken the finance sector and up-ended long-standing verities.
“This is one of those years, if you had any funds invested in growth assets, you had a negative return,” Davidson says, adding that looking widely across a range of asset classes, potentially including shares, property and bonds, is the best way to determine an investment strategy. “Within each of those asset classes there is something that can generate a yield,” she adds, noting that investors have to accept their portfolio value might shift, but there would be growth in the long-term as long as forced sales were avoided.
Most of Pitcher Partners’ clients are high net worth individuals, rather than institutions, and Davidson is now advising the children of some of her early clients. The wealth is moving through generations and she says she advises on extremely long-term investments, made with an eye to providing a secure financial base for children or even grandchildren.
At the same time, she is having an ongoing conversation with all her clients about risk tolerance and explaining the best way to minimise risk is with diversification. In the current climate she has found that many investors prefer to sleep well at night rather than live with the chance of damaging financial loss.
Like other economists, she is finding it difficult to accurately predict how the future will unfold following the pandemic and its rumbling aftermath, which has skewed long-standing traditions in trade and in the workplace, and cast doubt on once-secure economic expectations.
“As we have come out Covid more recently, there’s been a flood of liquidity in the market,” she says, “and it’s largely been an experiment, in a way, because we’ve never had times like these.”
Liz Wheatley, Perpetual.
Liz Wheatley works in a niche field of financial expertise: she provides philanthropists and not-for-profit organisations with investment advice and helps build their fund-raising and governance capacity.
“It’s about the long-term sustainability of the organisation; making sure that they’re financially protected in the long-term, but also that they are able to allocate funds into projects and purpose as they continue to evolve,” she says.
Now an associate-partner at Perpetual, Wheatley works with a range of charitable organisations, from those with a corpus of a couple of million dollars in reserves, intended to help sustain the organisation into the longer term, to her biggest client with $160 million.
“It’s a different style of advising,” she says. “There is an investment component to it, but it’s also working with boards and executives who are managing somebody else’s money: it’s not their own money, so there is an additional level of responsibility.” Organisations in the not-for-profit sector have to balance commitments to donors, partners, and government, as well as fulfilling their core mission.
As a financial advisor, Wheatley can help create an investment strategy that is tailored to the mission and to the organisation and help set up governance structures to manage the demands of variable funding, regulatory change, rising demand and market volatility.
Her career began with an economics degree at the University of Canberra. In the 1990s she had a position as a policy advisor in the international division of the Department of Defence, working on the Asia and South Pacific desks when Paul Keating was prime minister. After a stint as a civilian representative in the Navy Staff College in Sydney, she moved to the private sector, joining AMP Capital with a role looking after institutional clients.
Now with Perpetual, Wheatley says there are 56,000 registered charities in Australia, and her employer has one of the largest funding rounds in the non-profit sector, distributing about $100 million in the 2021 financial year to fund programs in a range of different areas. Fund recipients include Women’s Community Shelters, Mission Australia, the Wayside Chapel, Vinnies and the Salvos for homelessness and drug and alcohol programs, medical research projects at the Garvan Institute, major universities and hospitals around Australia, the Patrick White and Miles Franklin literary awards and an extensive spread of community projects of all sizes.
As well as funding programs, not-for-profits and philanthropical organisations also invest to provide funds for future needs, and these investments are chosen to align with the organisation’s values. Some investments are avoided altogether.
As extreme examples, an organisation helping the disadvantaged would not invest in a predatory lending firm, Wheatley says, and a cancer research organisation would obviously steer clear of alcohol and tobacco companies. There are greyer areas in the centre of the equation which make decisions more difficult. Determining the environmental impact and long-term social benefit of any given project is far from easy.
“Investment portfolios are aligned with the purpose of the organisation but also with the expectations of donors, funders and governments,” Wheatley says. “A lot of balance is needed to find the most suitable approach to investing.”
Many investors from the not-for-profit sector are keen to put funds into environmentally-sound and sustainable companies, yet it can be difficult to assess the accuracy of sustainability claims. Most large corporations have made ESG (environmental, social, governance) commitments, but there is little consensus on standards.
“We’re starting to see the use of the UN sustainable development goals as an instrument for measuring,” Wheatley says, referring to 17 global goals that include ‘responsible consumption and production’, ‘sustainable cities and communities’, and ‘affordable and clean energy’. “But there’s still work to be done on how we show we’re doing a good job from an ESG perspective.”