Risk VS Reward: Career Lessons from Terry Smith CEO of Fundsmith

welcome to a special edition of the financial planner Life podcast where today we interview a financial services Legend and we hope the first of many

Chris Ball CEO of hawton wealth sits down with the CEO of fun Smith Terry Smith and we dig deep on his financial

services career that by the SS of it isn't slowing down we talk about risk versus reward in your career you see

Terry was an early Financial Services disruptor he stuck by his own honesty integrity and values to basically make himself unemployable but it seemed to

turn out all right for Terry in the end Terry shares to us today as well about how to build a strong leadership team and what he looks for in people that he

surrounds himself with we look at his love for managing people and managing money but what does he prefer he also

has some excellent advice for the next generation of financial services professionals this is a wonderful episode and a great insight into a

financial services Legend thanks so much for your time Terry you're gonna love this [Music]

episode welcome and thanks Terry uh for coming on on it's great to be talking uh and great to have you here you're Good's let's hope you still think that at the end of the

interview I'm sure we will do um so obviously you you know you've been telling me you've been uh to Dubai many of times how how does it compared to

maius well uh there's a lot more Concrete in Dubai than there is in Marius so Marius is uh du south of here um 7 hours flight roughly about 3 and a half thousand miles um tropical island

50 m by 30 about 1.25 million um second largest Coral roof in the world so it's got lagoons and tourism is the biggest industry obviously uh but like it's got

of I don't know what this word really means it's kind of real it's not just a sort of desert island it's definitely like there's mountains and there are Industries there there's light engineering uh probably your sunglasses were made there or your medical tubes

might be made there and uh there's a financial services uh sector which I'm obviously part of there yeah yeah have you seen many people obviously since the elections say they GNA come out or more

people come out from the UK to um it's been a fairly constant stream to be honest with you with people moving uh over time the there's an expa Community there which is French South African English and and a few other uh bits and

pieces because it was a French Colony originally then it was an English Colony after Napoleonic Wars when we took it um and obviously it's um it's four hours flying time from South Africa a and

various issues around those countries at various times produce uh an increased number of people we've seen quite a lot of of um the silver economy is a bit growthing people coming there to retire

okay you know climate's nice it's safe I mean there's no great violence or racial tension or any of that sort of thing and uh uh so yeah we've seen quite a bit yeah I'm imagine you'll probably see a bit more as as uh I would think it's

quite likely after the budget in October that we could see quite a few more people from the UK see the benefits of living somewhere else yeah yeah interesting yeah we've seen quite an

influx of people into the buy um as you know and a lot of inquiries coming in as you know as a a nice place to live low taxation safe um maybe not as much as

The Silver economy as you said um but um but yeah we've definitely seen a uh an influx so you know where does your where did you develop your passion for investing because obviously you started

off with Barkley's Bank yeah was when I was with Barclays um when I was at Barclays I spent about four years doing all the training to be a bank manager basically I was a bank manager um and then they took me out and put me through

an NBA course uh for 18 months um and told me to take all the finance options which I did and then when I came back they made me their finance manager I was in a department reporting to the finance director running the banks or trying to

run the bank's balance sheet Acquisitions disposals currency hedging Bond issues all that sort of thing and during the course of doing that then there was no investor relations industry

what you now see in investor relations Professionals in companies and so on it really didn't exist there wasn't one uh and so when Brokers analysts who were following Banks rang up they would try

and get hold of the the finance director um and my boss the finance director delegated an awful lot to me um and he particularly didn't like dealing with bank Brokers analyst so I got to talk to

all of the Brokers analysts um on both sides of the Atlantic uh over that time and um out of that developed that and my job at Barclays I started to develop an

interest in uh in investment and uh uh markets and and how they worked yeah bit of a funny question and and I can probably guess the answer of it did you always want to be a bank manager is that you know when you went from school no oh

God definitely not no no no no no no no I did a degree in history yeah um and I was offered a a a fellowship um uh to become a history lecturer in due course

um and turned it down for what my professor called vulgar commercial considerations I didn't have any money and so I sort of went off and did interviews with all of the the companies that were out there at that time and some of them are still out there some of

them aren't which have pass I went to the metal box company which was became kidan in packaging uh what it is now marks and Spencer uni lever um barlay

Bank the Midland Bank the NatWest Bank and so on and I I'm just a bit like this I chose the one that gave me the toughest interview that was all that I based it on really nothing I didn't know whether working in making packaging or

uni lever in consumer staples or Marks and Spencers in retail or banking was going to work because I had no clue about any of it so I just took the one where they gave me the toughest interview wow and I don't know I just

like I thought yeah that's kind of interesting that they were not push over you like you like a challenge yeah I do yeah um um a lot of financial planners

start their careers off in Banks Banks have been notorious for you know an amazing training ground uh give you a really good grounding you know lots of learning great education obviously big

resources at the disposal for that kind of stuff did you have you found things or lessons that you learn in the bank that you you know you kind of still carry with you today or Foundation yeah

I I what you describe is exactly how it was for me which is I took every training course that the bank offered right every time they said do you want to learn about law relating to banking yes accounting yes you whatever it was yeah and then they sent me to do an NBA

paid for me to do an NBA but there were lessons I learned that do stay with you I always remember a thing this is slightly technical but hopefully it'll answer your question there's a thing called a letter of credit they probably still get used I think they do in

banking which is you're basically going to um buy something for uh to sell in uh so from China so someone in China's manufacturing it you're going to import it and you're going to sell it in Dubai

or England wherever you're going to sell it and so there's a sort of standoff if you like between well he's making the stuff do you pay him in advance no because it might not arrive or he might go bus does he just send it to you and hope that you pay him no he doesn't

because he doesn't know so there's a letter of credit what happens is the bank agrees to pay him when he supplies certain things usually a bill of lading showing that the stuff's been put in a container and shipped and they are

basically extending giving him the money but of course you haven't got the money yet because you haven't sold the stuff so it's a form of credit to you they're basically advancing money to you to pay your exporter who's going to sell you

the goods that's that's it's been used for a lot more things over the years but that's the basis of of the bill on London Bill these these things and um there was a thing many years back when I was in banking called the Nigerian

cement Scandal which is there was this big thing where they're building out sort of Nigeria after oil was discovered and there was this huge sort of gold rush to import cement into Nigeria and everybody in was trying to sell the

stuff to Nigeria it was a disaster there was a lot of corruption most of it never got landed because there weren't the port facilities for it it set in the ship holds while it was waiting off the port of Lagos Etc it was disaster but anyway on the way to it being a disaster

when it wasn't yet recognizable was I was working in banking and a guy came in a customer whose company was called transatlantic commercial Express now a clue to what you were dealing with was he was running it from his front room in

Hackman um but anyway it's great name and he came in he said I've got a contract from someone in Nigeria I can't remember someone building a shopping ball or something like that to import X

thousands of tons of of of cement and um and I've got a contract from the company in Germany from heidleberg or someone who are going to supply the thousand tons of cement so what I want is a back-to-back letter of credit I want one

where I get one from the Nigerian Guy saying when I produce the bill of lading um he'll pay me and then I want you to give one to the man in heidleberg um cement so that he'll ship the cement so

it's called a back toback letter it's two letters of credit one on either side side right cuz he wasn't importing this cement to use himself he was flogging to somebody else so he said will you do a back toback letter of credit so I sort of wrote up a proposal and I went to see

my boss who was the local director for the region he said no we're not doing that and I said why he said well he said with letters of credit something is always wrong there's always something wrong with the documentation the

insurance wasn't right the invoice wasn't right something he said so it's one of those things where they do get paid out mostly um but if you're looking for an excuse not to pay there's always one there and he said a back-to-back

letter of credit he said you would only do such a thing for an undoubted customer and an undoubted customer would never ask you I thought yes that's that's a lesson that stayed with me there are some

things which are really tricky and you would only do them for somebody who is absolutely certain and such a person would never ask you to do such a thing so that's that isn't it so you just don't do it yeah brilliant and obviously you enjoyed

your time at a bank was it tough to leave did you you know as you progressed or was it just naturally I no wasn't I mean um I jump Shi from the bank into the broken Community where I've been

dealing with all the analysts basically one of them eventually sort of uh the guy was the number one analyst in the UK sat down and he said you're wasting your time he said look you really care about what you're doing you're very

entrepreneurial I think and you're wasting your time you're going to progress on this sort of escalator up to The Bard or whatever in the bank and um it'll be okay but you you're going to it's not really you you need to come out

and and try and do things uh in terms of building your own business and that sort of thing and about coming to work with me and I said yeah okay then that was it that was it that was it and the bank was shocked cuz at the P when I did this

there was nil turnover in sort of Senior Management in the bank they were you can do what and so they kind of I said I'm going off to do this and they said well what will you do if it goes wrong I said we'll call you up and ask him a job back

I imagine and they said what if it's filed I said well I'll bring that West I said for the same job I don't know I said I kind of think I'm capable of doing a job so I don't think I'm going to starve to death if this doesn't work and I'd like to try it yeah have you

always been uh kind of an advocate for giving things a go and trying I I think the one thing that I more than anything more than I tried it and I failed I I I I've got more fear of I never tried it and I wonder if it would have what it

would have been like and if it would have worked it's more about missing the chance to do things and experience and feel what they would have been like that's is my main concern sure is way I'm missing out on an opportunity saying

no isn't it so yeah awesome so you know obviously you you know you were you were ahead of your time um when you were when you started off as a broken you obviously you know what we would call

now a financial services disruptor um you know and you released your paper accounting for growth and obviously that was that was quite a big risk on your career and and from what it seems like a fairly new career at that point as well

and it doesn't seem like you know you were kind of afraid to push against the grain uh no I I wrote the report and a book it was published as a book for what it's worth not worth much to it knock

Steven Hawkins Brief History of Time off number one uh I always say it's slightly less interesting who am I to judge um but yeah I was head of research at UBS at the time it was a

very big risk they fired me and sued me uh over it um clearly an awful lot of companies that I named in the book were very unhappy and they made their unhappiness known and that was the

outcome of it all and it was really quite bad at the time really bad at the time I had massive legal bills the outcome was uncertain I didn't have a job um it made me make the leap between work from working for somebody else to

work for myself though it was I would have other than that I would have been in a pretty comfortable job as head of research or something at an investment bank and I would have gone through that and life would have been absolutely fine I'm sure but because you know after it

had happened and I'd been fired sued and everything else I was kind of unemployable um and so I went and joined a startup um and that that was it it made me make that it gave me the impetus

to do that did did you did you feel at the time it's kind of like a sliding doors moment isn't it like if I hadn't released it but was you know as you were getting to release it was it ever was it

was there any ever doubt in your mind that you wouldn't no no no not really no I was told quite clearly by you know the most senior executive of UBS what was going to happen that I was going to be

fired and sued and that was very worrying yeah AAA rated bank at the time right and uh and so on and I didn't have a job to go to um and I had a young family at that time as well so yeah but there was never any doubt about what I

was going to do because I just thought you know this is uh this is not going to work is it I'm going to tell people I wrote this book but we never published it because because am I going to finish that sentence exactly yeah and they're

going to say well was it wrong and I'm going to go I can't comment I suppose it's kind like you've lost your credibility at that point yeah I think and is that super important for you then

yeah it is yeah it's it's important that to me that the people I deal with uh believe that I'm doing what I say I'm going to do and that I'm doing it in a pretty honest and straightforward manner

I think that's that's an important consideration yeah so honesty Integrity core values of your look I'm a realist I work in the stock market okay I ran a money broking business for a while you

know um you know the Wolf of Wall Street is a reasonably accurate dep depiction of events of that period in my humble opinion so you know I'm I'm not a monk I'm not I'm a capitalist right yeah

and I always say to people as much as it gives me a very warm feeling to do things right make money for people affect their lives very positive and so on I want to make money as well and um so I'm not a sort of choir boy okay um

but it's important for me that you do what you say you're going to do when you say you're going to do it in in a in a good manner or try at least try to make an effort to try to yeah if you say you're going to do something do it do it

yeah yeah I agree which is actually what a lot of people don't do a lot of people talk the talk very few walk the walk yeah interesting so OB because they're going to they're going to encounter problems yeah because you do and it's

how you deal with them that really is the mark of of what you're going to do yeah and then so obviously that was UBS and then it was Colin Stewart yeah yeah yeah um and then you you led a

management buyout yeah and to do that you had to float the business didn't you no we floated it subsequently to pay off the the debt so what happened was um Colin Stewart was a joint venture between me and and and a group of small

group of other people uh there including Mr Collins Mr Stuart we put their name on The Firm and um and a bank singer in freedlander which was origin eventually bought by one Icelandic Banks and

disappeared as a result um but what we decided at one point was um we thought well you know we need to own the whole firm and the only way we were going to be able to do that was to do a leverage

buy up because we had to give them North of100 million for their half of the firm yeah and if we went and raised equity for 100 million pounds then whoever gave us the it was £122 Million was clearly

going to own the majority of the firm unless we put up £12 million P that this isn't going to work it's a people business so what we did is we went out and borrowed 100 million pounds uh and

got a 22 million off uh off CVC private Equity okay um and we owned 55% of the firm I and my colleagues own 55% of the firm for that which was quite you know quite a big thing to do at the time and then we did the IPO

three years later to pay off the the debt and give the the private Equity guys an exit so you let your value build up yeah yeah we made um I I've you time

passes and this was over 20 years ago but I think that our entry price in terms of the equity purchase was something like a ninth of a penny or tenth of a penny and we floated at 350p

yeah so I mean the the percentage return was enormous absolutely enormous which is what happens if you put a lot of Leverage on something and get it right yeah it can also go the other way yeah it can go the other way exactly well the

good news is if you get it the other way it's not a slow death is it it's all it's all over pretty quickly you and it's always struck me as well because a lot of people typically

like one of two things they either like doing the work or they like managing people and it seems that you quite like doing both so you like investing clearly and and you're obviously very good at it

but then it also seems from your from your career thus far um that you also like building out big firms and managing groups of people or maybe you might tell me that's not the case but you know what

is it is it both or is it is it one or the other that is actually an extremely unusually insightful question I've got to tell you right you're absolutely right and I think that I mean saying I'm

I'm unique is is a bit of a I'm not aware of I'm not aware of another fund manager portfolio manager successful who's managed businesses and I'm not aware of anyone who's managed businesses

who's translated to be a portfolio manager so combining the two is certainly very unusual and it might even be unique yeah and um I like both actually I've I've enjoyed doing and

still enjoyed doing both so there's not one that I like more than the other particularly I wouldn't say um although bear in mind all of these are people businesses and the thing about people is they're capable of causing a problem every hour on the hour so you have to

bear that in mind in terms of the management of people and a management of people isn't isn't always glamorous I can remember when I was head a research UBS I had to deal with the fact that we had a very very very large water analyst lovely guy lacis aanu who used to break

the toilet seats when he s them and I used to get I used have to deal with complaints about the broken toilets and that that's what Management's about it's not glamorous it's not a glamorous job

um but I like both and I I would suggest that I'm a better manager because I'm I manage money for people and invest I think I think it makes me a better manager in terms of thinking about

investing for the business uh and how we deploy capital and what we do and profit margin and cash flows and so on and I think I'm a better portfolio manager because I understand businesses because I've run a couple of them um I mean the

story I always tell about running businesses is a a very good friend of mine sir Andrew cook who's got a steel castings business in the UK it was listed as now private and uh I defended

him in a big takeover many 30 years ago and he always said about dealing with analyst he said oh analyst he talks oh analyst he said they think that what happens is I come in in the morning and there's two buttons on the wall in my office a green one and a red one and I

press the green one which is would to make money and then when I'm going home at night just as I'm putting my jacket I think oh must remember to press the old red button on the way out he said it's not like that I've got to deal with you

know molten metal and Strikes and uh and buyers who want to beat me up on price and competition and and yeah that's it's a messy old business running a business

and and I think you know an awful lot of analysts like when they talk about guidance on companies and and what's the guidance for the next reporting period and of course the honest answer in some

cases is we Haven got got a clue that's your job yeah that's your job to come up with that the guy running to come hasn't got a crystal ball M it's tough isn't it because we see it a lot with financial

planners that a lot of them like the thought of running their own business but actually in practice it is like you said it's dealing with the the real heart I'll tell you other stories about I mean there was a guy I used to have um

Templeton as a client the original templon frankly to me I used to go to life of key in the Bahamas to see them and the CIO was a man called Hesco mark

Hesco and when I used to go rather grumpy I thought anyway he then set up his own business Hesco left templon and set Hesco and I went back to see him and I was then presenting my quest model which was an online model in the very

early days of being online so there was no Wi-fi You' plug in right this sort of thing and we went to his office and there was a power cut remember that holco and he said don't worry about it get in the car took me around to his house he said my son's 14 he'll rig it

up and we rigged up and I did the presentation his house and you want a coffee you you know what do you want why here and and I said to him at the end of the I said Mark don't mind me saying this I hope you seem an awful lot more

relaxed than when I used to come he said it was actually the same story he said I get calls about there's a lack of toilet tissue right and I'm trying to make decisions to manage money he said I hated being a manager in a big business

he said and I love doing this I like managing money I said and it shows yeah and it shows but a lot of managers who run funds successfully want to run their own business but they don't realize that running their own business involves a

myriad of other things dealing with suppliers staff Regulators it it security every single day that that's Way Beyond the management of money and

they don't like it or they're not very good at it or they fail and it distracts them yeah yeah you've got to have a passion for you've got to have a passion for both uh guess I would imagine I guess yeah and I suppose so so obviously

you floated the business done incredibly well and then didn't you start fundsmith up at a similar time to when you was just exiting well what what happened was I ran Colin Stewart and then

uh after we ipoed Colin Stewart um we um bought a company called um it was in called T Tokyo tet pre now TPI cap the biggest money broker in the world and um so I basically was running two

businesses I was running Colin Stewart and uh and tet prom at that time so my contract was to be CEO of two business owned by the same holding company but I was CEO of two businesses and um

eventually Colin Stewart was and when I when we bought tet and Tokyo it had a pension fund with a big deficit we knew that right and I took over being the investment adviser to the fund the trustees very kindly agreed to me doing

that and I use the Strat we use the strategy that we use for fundsmith to turn that pension fund around we turned it from assets which are two-thirds of the fund into assets that were 150% of

the fund's liabilities in a decade through the investment process and um that was a good testing ground for for for what we're doing but Colin Stewart got sold Cana called the Canadian

broking firm B Collin Stewart and so there I was with a an interest in investment B the experience of being investment advisor on this pension fund and see a contract which allowed me to use onethird of my time for something other than running tet pre-bond so I

said oh you know what I'm going to do I'm going to launch my own fund management business using that contract um uh car out that I had and so I set up fundsmith I wrote a check for the first uh investment in the fund and I wrote a

check for most of the capital that we needed to start off and I started up funds Smith I suppose that was that was kind of on to my next question which was um how did you manage two business

running two businesses uh simultaneously but you it sounds like you were already doing it before yeah I was that was carefully I had a porcupines make love carefully brilliant I hope and out of

all the businesses that you've run so far I mean you you might you you I would imagine you probably say fun Smith but is is that the one that you have enjoyed

running the most or yeah yeah lot um Colin Stewart was was huge fun because on day one there were eight of us in an office yeah and I don't know how many hundred of us there were by the day that we sold it to canold but it had been his

fantastically successful startup this leverage buyout which nobody had done with a broking firm before an IPO um my partner in the business who gradually people dropped out but Andy Stewart was

the longest standing of the partners was just a huge fun guy to I mean I had some of the the funniest and uh most entertaining times I've been in business with with Andy he was just hilarious uh in terms of some of the stuff he he

would come up with and so that was great fun and then talet was interesting as well because it was a different thing it was 3,000 people in 23 countries it was quite a big business and so you know it

was genuinely a global big business to try and run and that's a different kind of challenge um and it needed to be changed it had been run in a way where it wasn't as profitable as it should be and it was an industry that needed to be Consolidated so I needed to either be

bought or buy things and we did we bought prebon bought the number four competitor so that was fun but um this this you know the startups are fun if they work obviously um and fun Smith has

but it's really in the business area that I'm most am interested interested in investment analysis at investment is really the thing that I find that I'm most interested in and do you use fund

smth to run your own money as well yeah yeah yeah this is why I invest in I mean if I if I if we didn't run outside people's money in fundsmith tomorrow I would still be running my money exactly the same way it's what I do is is not

just our often think with an awful lot of fund managers they don't manage their money that way they they you know they're in a fund management business they've got funds doing large companies and small companies and International in the US and debt and commodities and everything

like do you put your money in here then oh no no I run it as best I can M money over there and it's like oh no I actually invest in the fund yes I've never taken a single penny out and I

have no intention of ever taking a single penny out uh and I would tell people in advance if I was thinking of taking a single penny out so they could decide what they wanted to do as a result of that yeah and what what drives

you every day of it because clearly you you obviously don't have to work um so it must you know from outside looking in it must be you know you actually just really really enjoy it yeah it's what I

do um I think that um uh most of us are defined by a few things I don't know what the few things are you know the guy drives a taxi supports Arsenal and likes

drinking beer I don't whatever plays golf right plays golf watches Arsenal drives a taxi and if you take away one of those things it's problematic and I think you should think very carefully about doing that uh in life that people

who've got an interest or and if if it includes their career and what they do think very carefully before you give it up particularly if you are in a position where you don't have to retire yeah right thinking about giving that up is I

think problematic my my late father-in-law was a minor son a very intelligent guy ended up as a school head Master you know from a generation where that wasn't normal and so on and

he took early retirement at 55 and you know there was such a deter and he like his interest with that and rugby basically and um the guy it was difficult have a conversation with him in in later years because he was he

slowed up so much and um and he was a really intelligent man and I thought you shouldn't have retired really should you you should have kept going until at least for another 10 years kept doing that and he didn't but uh you know I

think that's that's that's partly what this is what I do yeah I I you know I wake up in the morning I read the overnight stuff that's come in I ever think about things I talked to Julian I've worked with Julian for 38 years I

had a research I talked to him almost every day of my life yeah it's part of what we do that's nice yeah and you've obviously got built a you know really good Le leadership team around you you

must have to uh to grow how did you do that and you know what are the kind of traits you look for in your leadership team men it's a balance I me between I've got a small group of people who we've worked together for a long time

I've got one of our directors I've worked with for 45 years wow this year um he was my boss at baros in fact wow tell you a story about him if we have time yeah um and uh we Julian is 38

years you know and so on I've got a couple of guys who are in the 25 years grev marks probably 30 years so on but you can't just rely on that I've also got new colleagues who come in who become Partners who are part of it if

it's just well we're just this bunch of old farts who just run this business together I think I know what the end is I'm right the end of that movie you need to have new people coming in and we have we've got new people like Hugo and Peter

and Son who've come in who've become partners with us and I'm very pleased they have to to renew the business and I'm a Believer in delegation um I always tell the story about talip which people and I'm trying to illustrate that we had

a problem in Tokyo with the guy was managing it at wasn't it wasn't going right and and he screwed up basically H and we were run out of Singapore that was our Asia Hub and so I rang the guy

ran Singapore and said well I'm sorry you're going to have to go to Tokyo and fire this guy and um and replace him and he said I can't do that I said why he said well I've work with him for 30 years and he's my friend and I said oh

that's problematic I said okay I said what I'm going to do is I'm going to fire I'm going to fight a Tokyo and fire him then I'm coming to Singapore to fire you I said cuz I'm not keep dunk barking myself yeah right I really I I said I

have five people in my my friends and business I have and they say well how Willow friendship go I said that's up to you after this this is a this is a professional decision if you want to turn it into a personal decision then

that's up to you but if you don't I'll see you down the pub yeah right I said so you got to be able to handle this otherwise you're not a manager something else right and so I think renewing with

people you know having a core of people whom you can trust but building a new core of people you can trust over time yeah right as part of it and part of it is really delegating to people um and by the way that does mean they're going to

do things you don't like from time to time and get things wrong from time to time and you have to be willing to tolerate a degree of that yeah how do you do that do you have like with great

difficulty I was about to say are you are you kind of are you are you kind of very understanding with it or you know what's your style with it I'm you know I would say you really should ask my colleagues about that rather than me I

think I'm better with big disasters than small ones I get really really hacked off with small things like you know the meeting schedule was wrong and somebody didn't do what they should have done and so on whereas somebody comes in and says oh my God we lost 10 million pounds I go

it's okay it's all right it's just money we'll survive I go why what because when you get a big disaster I don't see any point in shouting really yeah you know I don't think it's going to make things better but and I think I probably let

off steam a bit on the small stuff uh and and I and and as a result I'm able to control to some degree my feelings and so when we get to the BL me that's a big problem yeah I've actually got get my thinking cap on yeah well I've got to

do something constructive it's going to take it from being you know sort of from from a problem into a a crisis

or a disaster yeah yeah awesome and if you were if you were starting out again now what would be one thing that you would do differently start earlier

start earlier yeah you did start pretty early FM but a lot earlier 10 years earlier it's obvious that one easy that one easy question to answer and and is

there one piece of advice that you give uh financial planners or fund managers that are looking to get into the profession yeah I mean it's a very good profession I and they should it's very

positive to think about that don't rush take your time gain experience take training and so on I see people who start businesses in this area and fail and it's not because they're not capable of doing it it's because they've gone

too soon go and work for somebody else go and take whatever job they offer go and accept whatever training they offer always be willing to do anything you

know they say do the photocopy do the photocopy right just I mean we've got one partner who literally came in and and did the photo copying and things like that and like this guy was pretty

good and and he's made there's um Lucy kellway used to write for the Ft used to do a um I think it was called on work or something she did a column which was about the nature of working in an office and so and it was kind of lighthearted

but somewhere within that lightheartedness there were these kind of kernels of yeah you're trying to tell us something important AR you I'm going to if I could find it if I look for it she did an article which said that the

the sort of the digital age has done a disservice to young people because it's convinced them all that they can be their own boss and found a business and they can't yeah they should go take a job right some of them may progress

through that in Du course to being able to found and run a business most of them won't right you know and she said I think it's done a great disservice to people because even the ones who are capable of doing it probably have such a

bad experience from going too soon that it's it's a disaster for them yeah I mean I know somebody who sh NES who's a son of a colleague and friend of mine who started a fund which I I backed him in a very small way just to get him

going and it's not worked and I think the reason it's not worked is simply because he went too soon yeah he should have gone and worked in another fund management business not ours because we don't do that somebody else's fund management business and got some

experience yeah we see that a lot actually in financial planning too where a lot of people are always in a big hurry to get going and which is great I mean obviously you know speed is good

you don't want to be a complete plotter but they miss that whole experience Gap and they don't want to learn from other people and it's it's a tough skill because in an age where everything is quick and you're used to everything

happening quickly to have that patience and that virtue to step back and say actually um you know I I can afford to take five years 10 years whatever it is to to learn I mean the average male life

expectancy in the developed world now is you know climbed into the mid 80s you going be doing this for a long time yeah right if you want um you know one of the great things about managing money is it's something you can do as Warren

Buffett and Charlie Munger have demonstrated into old age and do it better yeah there ain't a rush and the trouble is once you've screwed up in terms of going too early it's more difficult to come back than it is to go

the right route in the first place I think so it is yeah I think that happens I told a story this morning somebody said goes back to going to life at key in the Bahamas to uh to present to Templeton and of course back in those days it was Sir John Temperon not just

marel Wasco and he had this thing I mean obviously we going back way way way before the internet age that he said one of his advantages was cuz he was a real long-term investor to think about things he said that there in those days the the

newspaper the Wall Street Journal used to arrive a day after and so when there was some bad news it was too late to panic he said so he said I don't know what the I don't know what the news is to the day

after it didn't seem to do him a lot of harm funly enough you know and how how do you feel about all these people you know just just on that you know this day trading mentality people trying to jump

in jump out cuz obviously I know that you're a much longer term investor well there's more than one way up the mountain of investment the way that we manage money is not unique yeah um we didn't invent it um and it's not the

only way of doing it okay um but if you're going to do it one of the other ways be it day trading or momentum trading or value investing or so on that's fine um but I'm going to say a

couple of things about it one of them is on average you'll fail y okay uh because day trading or any of those very very high you know sort of frequency trading

things are very much like going down to the casino right the more you play at the casino the more money you will lose have you seen the movie Casino yeah the the guy who's the punter who's won big

from them and they they put a f on his private gy to stop him getting back in getting playing right we take you on average you are going to lose that's the first thing to say to say about the

second thing is you really really really need to stick to whatever your discipline is so don't be a day trader or momentum Trader say oh I really think I should own Nvidia because nvidia's got GPU trips and it's going to lead the AI

Revolution no no no no that's not what you do you own Nvidia because it's going up yeah the minute it stops going up stop owning it don't try and tell me you now understand something about it because you've made some money momentum

trading don't hop from one to the other right it's like me saying I'm a long-term investor I analyze companies and the markets they're in I try and find the good companies with great returns and all this sort of thing and then yeah but I think nidia's going up

so I had a few yeah it's like well it might be great but it's kind of I'm outside of my discipline at that point and that's probably not going to end well and what areas are you investing in at the moment what areas do you see of

Interest we always invest in the same areas I mean if you look at our portfolio you'll find the three big things that we invest in over time we have done we'll probably continue to do is consumer items so your everyday necessities and luxuries uh you know

when you have a drink when you eat something when you go to the bathroom when you clean the kitchen uh when you feed the pets Etc so anything in the consumer area is of interest to us basically

um medical technology is of interest to us people who make things that go into bodies tubes catheters artificial knees uh robotic surgery equipment um drugs in

one case in terms of the weight loss drug manufacturer noo neuros and Technology but when I say technology you've got to be careful because people think technology just means one thing

it's a broad Church technology so we own automatic data processing ADP sounds like a technology company doesn't it and it is it does payroll processing right we own amadas which uses technology to

do Airline reservations we own meta the old Facebook which does Communications and online advertising we own alphabet the old Google which does search and and online advertising we own Microsoft

which does operating systems and uh and distributed computing okay uh and we own Apple which does mobile devices um they're all technology companies but they're all got quite different drivers

haven't they the things the markets they operating are very very different um so you know and we own a couple of other companies out there as well I mean we own Visa Visa is a technology company I I know people say it's a credit card

company do you know how much money Visa is lending it's entire history to people not one single scent that's what the banks do Visa operates the payment system right it's a technology business

so technology people use it as a sort of as if they're all the same no they're very very different yeah and then we have a tale of things outside of

consumer is in the industrial area typically companies that got an installed base of equipment that they sell to people which gives them a tame

Market to sell service spares uh and upgrades and things too so elevator and escalator companies you put an elevator in here from who's this elevator fujite Tech this one Fuji you know there's a 75% chance that you've signed a

maintenance contract the building signed it on your behalf by the way M they're spending your money it's even better to to maintain it by the way it's a legal requirement to maintain it it's not just I'll do it when it goes wrong no you have to have a nice certificate on it

which says it's being maintained that's where the money is made right in this you know and there are lots of examples of people who Supply things like testing equipment elevators uh compressors

generators where once they've supplied the equipment the money is really made from selling you s spur service upgrades software etc etc like your car your car

isn't the main making the car doesn't make any money right servicing it's everything that comes after it yeah and did when you started the business did you or fans Smith did you ever expect it

to become what it is today obviously you know huge I'm not sure is the answer to that I realized it could become what it is today because people say you got 37 billion PS that sounds like quite a lot

of money doesn't it but you know in global terms it's minuscule um it's because we all have this kind of bias of where we're from or where we live we're not in the top 10 funds in America well

it's a big world out there it's a big world I could take the entirety of our fund and invest a whole lot in Microsoft and not have a disclosable stake wow right how about that crazy it's a big

it's a big old world out there right so I knew it was capable of doing this um but then to do it you need a number of things you need a good strategy uh uh you need hard work and then you need the

final ingredient which must never write off luck yeah so there are other people with good ideas and good strategies who work hard and fail actually you just need you need the balance of the ball to come your way sometimes as well have

have you found it harder to invest the money as the fund has got bigger cuz I know that's what Buffett says a lot doesn't it you know like the more money you have to deploy the more diff we can't really buy any companies under about 10 billion doar of worth because

if you think about it our average position size uh given that we've got that amount of money is probably around about a billion which means on a 10 billion company we've got to own 10% of the company which is disclosable and

we've got to like it quite a lot because selling that's going to be quite problematic isn't it because the day we start selling it everybody will know yes and so you know that's you know there there's a large swag of the world that's that's cut and some of that sway of the

world that's cut off from us is good uh and but we can't own it basically you know people have destruction tested using daily dealing open-ended funds which is what we are any liquid Securities that it can it can only end

badly yeah we've seen that haven't we yeah it can only end badly yeah awesome well on that note I know it's been you know you've uh you've got a busy day ahead of you as well so we really uh appreciate you taking the time of you

missed out my favorite movie quote which was the uh the one Vinnie Jones at the end Vinnie Jones at the end of stock Two Smoking Barrels when the the likely ads are in the pub and he comes in with a

hold all and and gives it to him and and the the guns that they're about to throw off Hammer Smith Bridge the two shotguns he's giving them a catalog to show that they're Holland and Hollands or PES are worth of fol worth hundreds of thousands

of pounds and leaves it there but he turns as he leaves the pub and he says it's been emotional it's been emotional and on that note we'll leave it there thank you very much Terry really appreciate it thank you