Taking stock of some tough times to make money during recession
Mike Irvine, head of Davy Stockbrokers, talks about how the company has fared the recession amid some testing times for financial markets.
It has been a volatile few years on the stock markets. How has this affected Davy’s business?
While investing in the stock markets is an important strand of our business it is only part of what we do. There have been plenty of good investment opportunities for clients over the past few years and they have been able lay down solid investment foundations as markets have recovered.
You set up in Northern Ireland in 2007 at the height of the economic boom. Does the company regret the timing of that decision at all?
No, we are very happy with our progress. Setting up in difficult times makes a business stronger — you have to focus on your absolute priorities and there are no hiding places. Bad businesses can thrive in good times but get found out when times are tough.
Are investors generally more risk averse than they might have been three years ago?
On the face of it investors are generally more risk averse than they were three years ago. However I think that this is partly because there is a better appreciation of the risks that exist rather than a fundamental change in a client’s risk appetite.
An investor who would have invested in property three years ago may not today even though their risk profile hasn’t changed. The difference is, time has shown us that the risks attaching to property are greater than many people perceived.
Davy says it has managed to keep generating positive returns for clients during the recession. Has this kept demand for the firm’s services strong?
Within our existing client base demand has been strong. Obviously investors who aren’t clients won’t be aware of what we have been able to achieve so the challenge is to get the message out to those potential clients.
Financial services industries have come in for a lot of stick during the recession — are there any misconceptions about the investment industry you think should be dispelled?
A lot of the stick has been deserved. Any industry that treats its clients poorly should have to answer for its actions.
There is so much noise around the investment industry.
For an investor wanting to cut through that noise I suggest they ask two simple questions: ‘What do I need from my investments?’ and ‘Do my investments meet those needs?’. If the answer to either is ‘No’ or ‘I don’t know’ then your investment adviser isn’t doing their job.
Given current economic conditions is there a need for wealth management services in Northern Ireland?
The need is greater than ever. It is when times are tough that good advice is most valuable.
What has been the highlight for the company in Northern Ireland to date?
Being able to grow our client base and generate good returns for clients during a difficult period has been encouraging but as a team we are looking forward. We still have a lot to do to get to where we feel we should be.
What are the long term aspirations for the Belfast operation?
To be the most profitable investment manager in Northern Ireland and to derive half of our income from the rest of the UK.
What is Davy’s overall assessment of the markets as they stand now and what could the future hold given global economies remain so weak?
For 2010 we think that global equity markets will generally be the best performing asset class albeit they could provide a bumpy ride.
I would be slightly more concerned about 2011 — there is a real lack of visibility on how economies around the world will deal with some of the really big issues that have to be resolved sooner or later.
What is the best piece of advice you have ever received?
An old team mate of mine once told me ‘If you stop moving you’re dead.
It has always stuck in my head because I think in sport, business and life you are at your best when you are developing and challenging yourself.
There is no time and space to stand still.