75. Megan Brennan Manages Millions Sustainably

This week, I speak to Megan Brennan, portfolio manager at Sarasin and Partners LLP.

Megan explains the timeless money lessons her father taught her, which are the foundations of her relationship with money, and how she ended up as a fund manager, despite not knowing what she wanted to do after university.

She also discusses why aligning your investing style with personal values is becoming more popular and essential to long-term returns. We also explore how to reconcile differences in money values, beliefs, priorities and styles when forming a relationship.

Plus, I report on the findings of a new report on the essential elements of high financial wellbeing, review a new book on how to get out of debt fast, and share what new content is coming to my YouTube channel.

Episode Transcript

0:05
Hello, and welcome to the real money stories podcast. I'm Jason Butler. And I invite you to join me as I have intimate money conversations with people from all walks of life. Whether you're just starting out on your money journey, or well down the track, there's bound to be something you can learn from these stories about taking more control of your money, so you worry less and enjoy life more. Real Money stories is sponsored by Vanguard, bringing value to 30 million investors worldwide. Visit Vanguard investor.co.uk for more details. And remember, the value of investments can go down as well as up and you may get back less than you invest in. Hello,

thanks for joining me on another edition of real money stories. Coming up in this week's episode, I cover new research into financial wellbeing and the three things that you need to focus on to maximize your financial wellbeing. I've got a book recommendation for you on how to get out of debt fast and stay out of debt. I talked about the taxes that you're really going to be paying in the future, not what was in the budget. And I've got a fabulous interview with a very, super smart young lady called Megan Brennan, where we talk about money, we talk about environmental and sustainable investing and the roles of women in financial services, cracking interview that one, well, busy week as usual. This week, I had my COVID job, I got my letter from the NHS on the Monday morning, went online, booked my slot for the next day 830 straight in, in and out in half an hour, done dusted. So if you get the letter inviting you to have the vaccine, I strongly recommend that you take that up because I think any potential side effects or risks are minuscule compared to the problems that we have with COVID. And I think we all want to get back to going to the gym and seeing friends and some sort of form of normality. So I'm quite excited about that. And fair play to the government. It seems to be one of the things that I've really got. Got right. I've created a new money explainer video in my explainer series. This is all about buying a house if you're a first time buyer. Now I've worked really hard to try and pack as much content in to make it engaging to make it super helpful and super practical. So go to my YouTube channel, Jason Butler financial wellbeing, you can access that also via my website, Jason hyphen, butler.com. And check that now. It's the longest explainer video I've ever done. It's nearly 11 minutes long, but I think it's it's packed full of content, which will I wish I'd had when I was a first time buyer. Now some interesting new research, which has just come out from Aegon the big financial services group. And this was based on a survey of 10,500 people all around the UK, which was carried out by their center for behavioral research. And there were five key findings that came from their research. Firstly, that 55% of average earners, and more than one in three top earners still worry about money. Secondly, that only a minority of people know what gives them joy and purpose in life. The third finding was the ability to contribute to pensions and long term investment wasn't just a function of income. But it was also the person's ability to picture their future self to anticipate what they would be like in later life. And the fourth insight was that 4% of those who had a vague picture of their future self have actually thought about how we're going to meet those financial goals, compared to 33% of those who had a more concrete picture of their future self. And they found that there was quite a big gap between what the average 55 to 64 year old person has actually saved for the long term, on average is about 125,000 pounds, compared to what they are actually going to need, which they calculated as 304,000 pounds for the average person earning about 27,000 pounds when they're in work. And they also found that habits and ways of thinking can prevent us from doing the right things with money. Now I can make the point that as well as obviously having the right income and being able to do the right things in terms of habits and behaviors. They make a big deal about this concept of the money mindset. And indeed, this is a key element of my new book that's coming out later in the year, the money miracle. And what they say is that understanding what makes you happy, having a solid picture of your future self making savvy social comparison. So in other words, comparing yourselves with the right people for the right reasons, having some form of long term planning in place and developing strong nerves in a crisis. I've always known as resilience is the key to really getting ahead financially. Now, I couldn't have come up with nine money personas. Let's have a look at those and see if you can spot yourself in them. So the first Last one here is the wealth accumulator. Now they score well on money points. And that group has got a high level of wealth now and probably will have in the future. When it comes to creating a healthy financial mindset, they might not have spent the time thinking, what's it all for, then we have to spend, they're earning a decent income spenders are getting by okay, but often can display here and now tendencies, they score poorly when it comes to our mindset building blocks, perhaps because they haven't given any thought to what truly makes them have joy or purpose and often can make poor societal comparisons. So in other words, keeping up with the Joneses there, the next group is challenging circumstances. Now this group has the least money and mindset points. And they're typically earning a low income and that can make achieving financial security much harder. And worrying about money and how to cover everyday expenses also means that their focus could be less on preparing for the future, or knowing what brings them joy and a sense of purpose. Then we have the strategist now these people tend to earn well and probably have a rainy day funds to rely on, they score better than their wealth accumulator peers when it comes to mindset blocks. But strategies might not have as robust a picture of their future selves as they could. And their goals are likely to be largely centered around security and probably on what makes them happy or gives them purpose, then we have the economist. Now, people in this category are relatively well off, their paycheck tends to be reasonable, have enough to comfortably cover all bills and are likely to be saving adequately. The Economist apparently may have given some thoughts of the future, perhaps don't have concrete goals, or written plan. Then we have another group called the modest means. Now, they like to focus on the little things in life and typically have decent financial mindset behaviors, they're likely to be on a low income. And so saving for retirement for them feels a bit tricky, and this group might not need to count every penny, but will probably struggle to cover an unexpected expense. Then another group we've got here is the comfortably off now they're comfortable with their current financial situation as it meets their lifestyle. Now, they score middle of the road when it comes to mindset that they're able to focus on what gives them joy and purpose in life now, but they might need more financial freedom into retirement. Now, this next group is the stryver. These people balance they're typically low incomes and savings by having a clear financial outlook and they don't need to spend lots on flashing items and probably have a plan to improve their limited finances. With a long term perspective, they're likely to know that they're likely to want their future self to look like. And the final group is what they call the all rounder. Now this is the highest possible scoring group of people in this index that was carried out by Aegon. And they describe them as people who are very financially comfortable and can enjoy life now was planning for their future. And the all rounders balanced the importance of money and mindset well and already for what the future holds. And they advocate that being an all rounder is really where you want to be. And eigenes report concludes with three key elements that you need to focus on to improve your financial well being. They focus on joy, purpose, and plan. And so if we look at that joy means that you understand what brings you joy and happiness and purpose in your life, both now and in the future. That you have clear purpose in the sense that you are clear what your future self, what your what good looks like in later life when you're older. And you're not just living for today. And in terms of plan, it means that you've got some sense of some overarching strategy so that you can balance today's spending with what you're going to need in the future. So that may be a long term cash flow, it could be some milestones, it could be kind of some ideas as to where you want your life to go not necessarily all set out in stone, but just a rough framework so that you know how much is enough and how much you need to save and invest and spend and earn today. So very good report that will be out. Next week after this podcast has come out it's formally comes out on the 29th. But I got an advanced copy. Well worth looking at that.

This week's book recommendation is a book called never bet on read how to pay off debt fast and live debt free forever by Maria negativa. Now I've recently interviewed Maria and she'll be appearing in a future edition of real money stories very soon. But the book really sets out a manual for how her and her husband repaid 100,000 pounds of non mortgage debt in less than three years and how they then went on to build wealth after that. So really, really recommend getting hold of that book. And also watch out for Maria's interview on real money stories in a few weeks time. Now, a few weeks ago, I wrote a blog called the budget that wasn't which is really where We're talking about Richie soon next budget that he held all about tax and spending decisions. But what wasn't in the budget was what will have been published by the time you hear this pod, because I'm recording this on Tuesday. And on Tuesday, the 23rd of March in the UK, the Inland Revenue, HM Treasury are publishing some tax consultation documents. So what they're doing is they're separated this out from announcing it in the budget as they used to do. And this is basically a series of consultation documents that are sort of suggesting how they might reform capital gains tax, inheritance tax, pension tax relief, could be any of these things I don't know at the moment as I'm recording this. But do head over to my website, Jason hyphen, butler.com. Because I'll be putting up there a very brief overview blog, that tells you what you need to know about in terms of these consultations, and how that might influence things you need to do decisions you need to make in the future, because that's going to give us a general idea of tax policy in the UK. So yeah, I'll be writing a blog about that for you, which will be on the website, towards the end of this week that the podcast comes out. Right, let's get to this week's interview. Now, this week, I speak to a wonderfully smart young lady called Megan Brennan. And she works for sericin partners who are very well known in what we call the ESG investment space, that means environmental, social, and governance, and service. And I've got the long track record of making what we call sustainable investments, environmentally sound investments, and just really being very, very vocal with their voting with the companies that they investing. And what was also interesting in the discussion I had with Megan, is we talked also about her own experiences of money, and how she and her partner sort of dealt with their different money styles when they got together, but also her role as a woman in financial services, but also in the traditionally male and macho world of investment management. And I think it's quite interesting. Some of her perspectives and thoughts they're so well worth listening to. If you are interested in aligning your investing with your principles, if you're thinking of, you're a woman, and you're thinking of a different career that might not necessarily have been on the top of your list, but also if you're someone who's getting into a new relationship and wants to understand how to manage that merger of your finances. So I give you Meghan Brennan. Hello, thanks for joining me again, on another edition of real money stories. This week, I am joined by Megan Brennan. Hi, Megan Hurley Jason,

12:48
thanks for having me.

12:50
Good. Now, it was really quite excited to get you on the show because of what you do for your day job. And the particular emphasis that your organization has. So do you want to just explain to the listeners what it is you do? And, you know, kind of what makes it a bit different?

13:07
Yeah, sure. So I'm, I'm a portfolio manager at Ferris and, and partners based in London, just by St. Paul's Cathedral. And I work in the multi asset team, which means that I invest in a variety of financial instruments like equities, so shares and companies, bonds, alternative assets, like infrastructure and gold on behalf of a range of clients. So that's everybody from private clients to charities and institutions. But really, the common thread that they all have is that they have some sort of return objective, and be that related to inflation, or wanting to beat some sort of market benchmark. And I think what makes us a bit different at sericin, is the way that we look at ESG or sustainability or stewardship or whatever way you want to look at it. We call it stewardship in our in our approach, and the holistic way that we look at it. So not just a tick box exercise of is this company, doing something bad Yes or no? Will excluded or will will buy something which we think is marvelous. And actually, we do a lot of looking under the hood of what the company is actually doing and scoring it on various metrics, and then really working that into our financial modeling of companies to determine what we think they're worth in the long term. So we started out doing this many years ago, long before it was trendy and long before my time abroad. And I think it really grew from our philosophy as a large part of our business grew from charity business. And we took that philosophy of because check this this concept of ESG or ethical investing really started out in the charity world. And it's really come through into the mainstream investment landscape. Now it's sort of the new hot topic that people are talking about. But for us, it really started out over 20 years ago, when we were looking at investment portfolios that were doing the right thing for the society in the world, but also meeting the objectives of our client.

15:24
I like and I mean, I have a significant amount of my liquid portfolio in sustainable index funds, okay, so we can argue the price. But the point is, is that sustainability or ethical governance, whatever you want to call it is, the way I describe it to people is it's it's investing in companies where the puck is going to like an ice hockey, you're not where you are, now, it's where things are going to. So it could be an oil company, but then it's actually completely changing its emphasis to be something different, that can be positive, good. Whereas a company that might be doing something that seems ethical, I don't know, recycling cardboard, cardboard, or something, but there's actually got a very, very poor carbon footprint. So as you say, there's Shades of Grey, and that's why I wanted to get you on. So what was it that drew you to becoming a portfolio manager, and particularly with this, this strong focus on ESG, or ethical sustainability?

16:14
So what drew me to being a portfolio manager? That's a good question, Well, actually, so it was totally random. I was in my third year of university, and I was doing an internship at an accountancy firm in doing audits, and I absolutely hated it. So boring. And I'm sure there are lots of great auditors out there, and people who think it's really interesting, but I was not one of them. And I went to but but thankfully, the firm were very supportive and recognized that while maybe I didn't love auditing, that there were lots of other avenues that I might pursue. So I went on this sort of business acumen course for a few days. And at one event, and at the conference, there was a portfolio manager, who was giving a talk about what he did on a day to day basis. And I didn't have a clue what I wanted to do at this stage. And I heard him talking about his job. And I thought that sounds absolutely right. Because I don't have nobody in my family has ever worked in financial services. And I first went to work for a private bank called Coots. And my grandma thought that that was crafts, the dog shows, you know, it was sort of not really on my radar. But when I heard this man speak, I thought, gosh, that's really at my street. And I sort of chased him down the corridor after his speech and said, Gosh, you know, this is really interesting. And, you know, like, classic, very eager intern, very annoying, I'm sure. And he really kindly then spent some time telling me, you know, what he did, and, and introduced me to, you know, people who helped me get a big, a big picture view of the industry and, and that's how I fell into it. And in terms of sustainability, when I first joined this, the city or had financial services, I was based in the West End, at the beginning, I didn't really identify with this image of people who work in financial services, I really, really grabby and heartless and horrible characters. And, you know, they ruined the world in 2008, make sure there are lots of boats shining. But that didn't really feel to me, like the reality of the situation. And I actually really cared about, you know, the classic millennial things, I've actually the environment and, and, you know, were the companies that we were investing in doing the right thing, and were they generating returns in a sustainable way. And not because, you know, I'm on some sort of moral objective, but actually, I always thought it made good sense to invest in well managed companies. That was very clear to me from the outset. So I moved to Saracen and partners, three, three and a half years ago now. And that was what really drew me to Verizon is that they are really focused on this, and it just makes good investment sense. That's, you know, what we say to clients and, and, and what I tell investors is, it's not just about does Megan think that climate change is important. Actually, if you're investing, as you say, in an oil company, it's very important to look at their trajectory, particularly if we think there'll be either a carbon tax in the future, or a lot of a capital that they're deploying, which at the end of the day is shareholders money. And if they're deploying capital into new fossil fuel extraction projects, which will have a residual value of zero sometime in the future, it may be a lot sooner than we think. And to me that was pretty obvious from from criminality, pardon. In my career. That's what really driven

19:52
Yeah, no interesting. So it's quite interesting that you never chose this this sector. You kind of fell into it like many people do. I mean, obviously Financial Advisor for 25 years and I never chose, I did it as a temporary thing while I was deciding what was going to do for life and so I'm interested to know more obviously talk a bit more about ESG investing ethical sustainable in a minute, but I'm just interested to know, kind of what your kind of take and how what your relationship with money has been always now and, you know, kind of what can you remember, like, the earliest time you can remember about money and, and the the power it has over people and the role it has in people's lives?

20:30
Yeah, sure. So I guess I learned from an early age about budgeting, and being in control of your finances, my dad was very shrewd, he had three daughters, so he knew he needed to get this right. And he knew he needed to find some way to sort of manage this upcoming, you know, train in the, in the headlights. And, and from an early age, he gave me a set amount of pocket money, and that 15 euros a month, or whatever it was, which is a more, you know, 15 years ago than it is today. And that was my allowance. And that had to that had to make do and it was my responsibility if I wanted to go somewhere, or I wanted something, to manage my own finances. And yeah, I think that that really stuck with me. I mean, my parents came from modest backgrounds and worked extremely hard. And I saw also that, you know, the transition that that they had made from where they came from, to, you know, the, the life that they gave us, which wasn't extravagant, but but was, you know, more more secure financially. And so I think that my, my approach to money now is really grounded in those concepts of work hard, especially work hard at school. And because life will be a lot easier for you if you put the work in early, and to live within your means. And then I met my partner, who grew up in a completely different household. And so I've had then the second second phase of my learning about money when meeting the polar opposite. So it's been interesting.

22:10
So thinking about that thing about the allowance, you called your pocket money. You your parents clearly gave you agency didn't know they let you decide. So that was the first time you had power over money, right?

22:21
Yes, exactly. And I was only 12 or 11. So it was really early that my dad, you know, took that that approach of you have to be disciplined you and and we end up we earned our Lance as well. So it wasn't just a sort of handout. It was all right, commensurate of, you know, are you going to help your mom do x y, Zed, I've got two younger sisters. So he really instilled that kind of, you have to work and you have to budget from from the very early from a very early age. Sounds like

22:55
your dad's a rock star. Because I mean, getting that right. I've been telling me interviewed so many people, but that is a really, really good lesson. And if you can learn that from a small amount, then you can do it with the Big Four. Did you You said you had to do. We had a manual Sq toe on the show who is a brilliant, real larger than life guy. When he said we did chores, man, but we never got paid for them. We just did them. So we're all different. And that's the difference, right? So all of us, all of our parents will do different things. Sometimes that helps us, doesn't it? And sometimes for you that helps you. So as you went through your teens, did you ever do like middle sort of part time jobs that you got paid for stuff in the

23:38
summers all the time. And actually another really shrewd move by my dad was that he always still gave us the allowance even if we had the part time jobs or extra job because he didn't want to make it such that if you worked you would then you know, not incrementally benefit by the interview, right? Yes, I thoughts. I am my own train of business in like wedding events management. So I helped her at the weekend. And then when I went to university, because I went to university in Ireland, that isn't the same student loan system that there is here in the UK. So you really don't, the banks don't give student loans and there isn't really a system. So it's very common for people to work at the weekends. So I worked. I would work every summer and every weekend. But that was really in a way helpful not just because again, you have to learn to live within your means and but when I left university, I already had four years of work experience of dealing with public in a in you know, in sometimes contentious ways. Like I did everything from selling credit cards to being a waitress. So actually, I personally found it pretty helpful because I already had that conflict management, you know, dealing with the public skills,

24:56
learning tact and diplomacy. Yeah, absolutely. Good point that that wasn't the option of you getting yourself tapping into finance. So did you manage to leave uni in relatively financial tech? Or was it or had you had to borrow some money? Now

25:13
I had 600 euros in my bank account. So that was then after four years at uni with no debt, because it really it's not common for students in Ireland to have debt anyway. But yes, it's definitely difficult. I mean, my parents helped me, of course, and there wasn't that culture that there is of student loans and debt. So then when I came here and saw my friends, to my colleagues and peers who came from much wealthier families than I came from, who had been sort of 30,000 pounds of debt, I was thinking, Well, how do you sleep at night? That's absolutely mad. But obviously, in the context of your career, and you know, the way you paid off the way it's structured, it's actually not a big deal at all for my graduate

25:53
tax. Yeah,

25:54
exactly. But when I heard about it, I was shocked. But did you

25:58
grow up in Ireland? And

26:00
yes, fought from being eight to being 21 when I left, London, but I don't have an Irish accent. Both my parents are British. And I guess I was born in England to say, yeah,

26:14
yeah. Interesting. So and that's what I found. Obviously, I've been all around the world, probably, you know, you've been different places, then the different aspects of culture and the impact it has on your action. So what to what impact do you think or other what significance Do you think the culture of a country or region has on how you develop your money, behaviors and habits,

26:35
but I think it has a huge impact. I mean, in in Ireland, for sure. The the approach to debt, and now I was going through university at a time where we were in the depths of the financial crisis, but it's even still, it's even still true today. If you look at the deposit that you need to get a mortgage in Ireland, I think it's at least 10%, if not more, if it's your first property, I think on the whole, that's the minimum you need. Whereas here in the UK, until recently, for sure, you could get a mortgage for with a 5% deposit, or sometimes even less. And I think that being in a more conservative debt economy, although people probably look at the blow up of the various Irish banks and say, I'm not sure that the evidence really supports your theory, Megan, but that's the impact that it had on me is, I was never in debt, because debt wasn't necessarily available to me as a student. I never know exactly. So it just really wasn't on my radar. And it was always just where you live within your means with within what you earn.

27:42
I just love that idea. And let's call it in the UK graduate tax of someone being able to go to uni, or higher education or apprenticeship and being able to come out without, let's call it debt, graduate tax, whatever. That's, that's a wonderful thing. So living within your means working at the weekend and summers and not spending too much. But obviously mum and dad helping a bit was your key. That was that was how you did it, right. Yeah,

28:08
absolutely.

28:09
So when you come out of uni, then did you have it all mapped out kind of how you thought your career was going to develop? Because clearly you went into the accountancy thing? Did you just fall into that? Because they happen to be the first person who knocked on your door? Or because because you did a master's degree, didn't you?

28:24
I did Business Economics and social studies. So really broad, and I had absolutely no idea until I met until I met that portfolio manager. And I didn't have a clue. And no, I didn't have it on that chatted for a while I joined a graduate training program for a bank, which ultimately changed it to be a sort of wealth manager for a client, client relationship manager slash financial advisor. And pretty quickly into that maybe a couple of months in, I realized that actually, what I wanted to do was be an investment decision maker. So a person kind of sitting behind that person pulling the strings in the investments. And then I sort of sat on that team's desk for six months until they gave me a job, you know, just to probably appease me. But that wasn't the traditional route that you were supposed to take on that training program. And so No, it wasn't mapped out. And it was a combination of, you know, good fortune meeting the right people at the right time, and persistence and having a bit of conviction, which which was really difficult if, you know, I know what I'm interested in. I knew vaguely what I wanted to do, but the path wasn't so clear. Yeah, but like, you navigate it.

29:43
And did you take the CFA or are you taking a selfie? So let's just just for the people who don't know the Chartered Financial Analyst, okay, is the rock star qualification for portfolio managers? Right. So, if you take some, you know, I've got a couple of different charts. But I played looked at the Chartered Financial Analyst exam many years ago and I wasn't running money. I was just dealing with clients. And I looked at that and just thought, Oh, I don't think I can cope with any more exams. So what mechanist got there the CFA is almost like kind of she's Pooh poohing it. But it is a rock star qualification, it's tough. There's three levels, obviously, you've got to be hard work. And you've got to be quite bright. But it is the thing that suits the separates the sort of people who are serious about portfolio management and those that aren't. So just want to make that clear to anyone listening CFA is a rockstar qualification for portfolio managers. So tell me about the when you bought your house, because there's a lot of people who listen to this who either were thinking of buying a house, or they want to move, and I just wonder what you learn from that process? And did you always think that, you know, he was going to be easy? Or did he go how you thought it was going to be? What did you learn from it?

30:52
Oh, no, my main lesson is definitely whatever the quote is, then to double it, in reality, I think was that it was definitely a learning curve. And I'm really fortunate in that, although my family came from really modest backgrounds there. And they're not a family of bankers and investment people. There are a lot of manual laborers in there are a lot of builders. And that was invaluable. And, but I think the main things I learned were, you know, you have to get multiple quotes, and if your gut is telling you, this is outrageous, to go with that. And yeah, it was, it was a huge, I mean, being someone who doesn't like to take on debt, the idea of earning the bank five times your joint salary with with somebody else was to me something that I really had to get over. And that was definitely a point of not friction, that was definitely a challenge for me that my partner had come from them at a much, you know, more privileged background and had you know, these numbers on paper what meant a lot less to him. So his sort of approach what we could borrow was a lot different to mine. And so that was definitely something I had to get over and you know, your mortgage obviously if you look at it in isolation is terrifying matter of money. But it's definitely that was my biggest upheaval I think, is the idea that you owe the bank your life basically. But I'm, I'm so glad I did it. And obviously in lockdown, it's been very, it's been very good not to have to worry. Brenton thing.

32:30
So when you bought your house, did you did you properly factor in things like maintenance costs and needing to preserve an emergency fund of cash that you could put your hands on as well? You know, after you bought it? Did you think about those things because I I've met so many people who don't properly look at the cost of buying versus renting and don't properly account for holding back, you know, three months worth of sort of running costs as it were of their life. Then when the boiler goes wrong after the first month they go in and then they wonder why they're in a pickle? Well, the

32:57
first thing we did was get boiler insurance for exactly that reason. I'm I am a very cautious person and a very, I'm like a doomsday planet, even though I'm a portfolio manager, right? My, I guess my job is to worry about what could go wrong. And I do a lot of that in my personal life as well. So yes, if anything, we were probably more cautious. And on the more cautious end of we probably have to live without the sofa, you know, a new sofa for three months, because I want to have money in case that that pipe burst or whatever. But I know that that's not not everybody's approach, but I'm probably too much the other way and probably don't go on that holiday where maybe I could think a

33:40
realist, a realist, you know, just a realist is you excited about the future, but you're also looking at downsides, which is no bad thing, right? Always thinking what can go wrong, but hoping for the best. Now that I just want. I don't wanna let you off the hook here. I just wonder there is always a problem. When it comes to problem. There's always a challenge when it comes to a relationship where you bring someone to you, you form a relationship with someone, and they have a different upbringing to you. They're having different money values, often or suddenly different money experiences, they may have experienced different things. How did you manage with the financial merger of you and your partner?

34:13
Well, we had a we had a proper merger. That was how we dealt with it. And what what happened. And this is this is a contentious one across it's received differently depending on who who I tell the story. So the structure of my compensation on how much I get paid from work is a lot different to his but ultimately, they come out at about the same. Exactly, but the discretionary part of what I get paid, which is paid once a year, forms a more significant part of my overall earnings. So what was happening is we were we were paying for things ad hoc and then equally, and then at the end of the year when this money came in from my discretionary compensation, it was being used for things like me four new windows. And I sort of said, No, no, no, this is not going to happen. So what we will do is because I'm a saver and all he is a spender, by his own admission, and I said, what we're going to do is we're going to put both of our money in to a joint account, we can both get paid into the joint account, and then we can take our own allowances out of it, and it will be equal. And if you want to spend all of your money on going out with your friends, go to Ibiza and all of these things, that's fine. You're not accountable to me about that, and go and have a good time. And similarly, if I want to squirrel that money away and invest it, then I'll do that. And that's what we've done. And it's actually worked really well. And so it's all joint because we have joint financial liabilities. And then but we have our own autonomous spending that we don't have to answer to the other one about because I don't want to be that person who's saying no, what about the budget week, wouldn't suit me to do that, and wouldn't sit him to have me do that either.

35:57
Well, making what you've done there is, in my smart spending system, I've categorized spending between essential future and fat. And my view is always ring fenced the fund money. And if you want a relationship, it's not your decision, if you if he will, if you want to go and I don't know, squirrel it away into a savings account, or he wants to go to Ibiza, as you say, the idea is you are not accountable to someone for that amount of fat, as long as you've agreed it, and you're on the same page, what you choose to do with the discretionary money, it just stops the friction, doesn't it?

36:26
completely, completely. And it doesn't work for everybody. And I guess it's easier if you're earning around the same. And it's perceived as equitable. But I decided to strike while the iron was hot on that one.

36:39
really early on. Yeah. Have you any of your friends have you? They found it harder to to navigate that whole thing of relationships and equality? Particularly if there's a difference in earnings, or a difference in attitudes and values about money? Have you seen? Have you seen issues there? And how have your friends navigated that?

36:57
It's definitely difficult. And I think it's a difficult one to talk about with people as well. I mean, it's not, you know, I think culturally, potentially, as British people, we aren't we shy away from those conversations, I found that generally, my friends from places like North America are more open to having that conversation. And I think it is, you know, it's really difficult if you don't and the same, I think that, you know, when you when you become a family, if you get married, if you have children, then, you know, people generally tend to just think, well, we're just kind of in this together now. And it doesn't really matter whether you earn X or Y, we have the same joint responsibility. But I think it's more difficult up until that point. And there are different ways that people have approached it. Some people do it proportionately to earnings, some people just split it 5050, I think depends on the couple,

37:49
I think you made a good point there is that as a couple, you've got to find what works for you. But what you mustn't do is have silence, and one person has to take on all the jobs of dealing with the money. One person has to pay everything or one person is having spending money all over the place and upsetting the other person and not speaking about it. So I think the key is, I get quite a few people contacting me, who read my stuff in different places. And I had one the other day and it's on my blog, actually. And I said, Actually, I think there's more of a relationship problem here than a money problem. Basically, you are you're not he feels good when you spending money on things that you don't think are a priority, because every time you speaking to him, you're putting him down, or you're telling him how useless he is. Now, whether they're right or wrong of it, you've got to get to the bottom of this is that humans want to avoid pain, and they want to go towards pleasure or immediate reward. And if the reward is people think good things of him because he's spending money gifting money to people that he doesn't have. And you're nagging him to death. And that's not an I can feel good about. And so there's not going to happen, is it so? So I think you're absolutely right, what works for you may not work for someone else. But it's so great that you had that early conversation early in the relationship to set the set the foundation, so well done on that. So let's um, let's get back to the ESG environmental, social and governance stuff, because I was just interested if you many, many people who are on Instagram who follow me on stuff there, and certainly younger people who I've seen your lives I do. There is a increasing interest in I call it the provenance of money or the smell test, as it were, you know, that kind of younger people, but not just younger people. But more younger people and older people are more aware and sensitive to the role that companies play in well being of the planet, their fellow person and themselves. So I'm wondering if you could just share with us your thoughts on what you're seeing happening in terms of the universe of investable companies and how that might change in people's ability to invest their money in line with their values and their conscience.

39:51
Yeah, I mean, it's the conversation has come on so much even in the last two years. And one thing I would say is that there are a lot have traditional investment managers and investment houses which are doing this thing which we've called Green washing thing products and then making the brochure look much shiny or, and greener, more David Attenborough friendly and then misleading, and people into thinking that it's something that it's not fair, that would be one thing that I would just say that unfortunately, with the evolution of the industry, and we've also seen a bit of disingenuous behavior, which is not great. But on the whole, I think it's a, it's a really positive step and a lot more companies. So because we're active managers, we try to meet the management of the companies that we invest in, and either you know, throughout our investment horizon, or before we invest in them, and the conversation, the quality of the data. And the quality of the responses that we get from companies now is so much higher than maybe a few years ago, when companies didn't have the data about what their carbon footprint was. I mean, I think in retail, the question of your supply chain has always, or has been a thing, which has been, you know, on people's radars, if you look at prime Oracle, or any of those companies. That's, that has been much more established, but definitely in terms of climate change, and recycling circular economy, that, that we're getting much more informed responses from companies now than we ever have done. And you see a lot of companies raising funds for green projects as well. So it's not just in the equity world that the the opportunity set has increased, actually, in bonds as well, you

41:47
lend companies money for where they are positive change, they want to invest the technology.

41:51
Yeah, exactly. You can lend for specific projects be that a building wind farm, or more solar panels, so we're definitely seeing a lot more of those. And that was traditionally a lot more difficult. But we're definitely seeing the investment universe increasing, which is great. And

42:11
this blurring between good and bad, which was never really this binary, they're good, they're bad. Do you find it to be how do you how how does the average person work out where to invest? If they want to invest like this? How would you suggest that they all start out? What what are they? You know, what's the starting point for someone who wants to make sure that their hard earned capital, even if it's a modest amount in their pension fund, or something is working in a sustainable way? How, how do you suggest they think about it?

42:38
Okay, well, I'll just start out by saying there's no perfect company, if you're looking for perfect company, which has no carbon footprint, and you know, no impact on the environment and perfect governance, you're not going to find it, or if you're it's going to be extremely expensive. And I would say that there are a couple of industry standard indicators that you can look at. So there are the principles for sponsible. Investing. There are, you know, there are ESG providers, which score and rate funds, which you can look at as well, there are a lot of third party providers, who will look at the aggregate score of a portfolio and give it an ESG. rating. And there are a couple of you know, if you go on to a provider, a fund platform, many of them now have ESG indicators. And you can do it, as you said earlier through passive investments. So through exchange traded funds, which track particular indices, or you can go to an active manager like what I do, I think the distinction would be that if you're going to an active manager, and if that's what you want to do, they have the ability to do a couple of things like voting, which is, I think, really important, because if you want to instigate change, you can either use the carrot or the stick and, and you know, you can you can write letters and engage or you can vote against management's plans and their compensation if you really have to, if they're not showing the right behaviors. And that's probably the biggest advantage that active managers have is they have a voice and they can sit at the table. But similarly, if you are going to pay the extra fees for an active manager, you want to make sure that they are actually doing that. So I would look at their voting record and what they're doing in the press to maybe lobby a company for something you've probably seen a lot of that in the FT and your time. And yeah, so there are a few indicators there standard ones, and then company and investment managers specific ones.

44:41
And I think you've made a very good point that active management has had a hard time, rightly so because they've been charging a lot for not doing a great deal. But if you're going to spend extra over and above an index fund, I think you're absolutely right. I can use the word muscular and assertive, if that's the right metaphor, but assertive fund manager who Both looks at the data and will exercise voting rights is probably the way to go. If you're going to spend if you're going to spend extra, you want someone who's actually going to work hard to make your money, follow your principles, and also pick the hopefully the better organizations. But I wanted to just finish on one final thing, because I'm a father of two daughters. So obviously, I'm I believe that man is not a plan when it comes to your money. And I believe that there's no place that does no job that any should be ever distinguished by gender. But financial services in general, and particularly in fund management has tended to have more men than women. Okay, so we're not anti men here, anything like that. But what would you say to any young women out there? Who might be thinking, oh, I've never heard of fund management? What would you say is the very best thing about your job? And why other young women who, perhaps who are undergrads or even at school and do a divorce, why they might want to think about having it on their list of potential jobs?

45:55
Yeah, well, I think that's a really good question, and quite profound. But I would say that I love my job, because every day is different. And actually, the range of clients that I have, or the range of clients that are invested in in the portfolios that I run, I such that I have charities who are making real contributions to the world and doing really good things. And, and I have, you know, some great families and institutions as well. So it can be fulfilling, not just from a paycheck and competitive, you know, if that's what drives you great, the back there can be that edge as well of actually, you're helping people and organizations achieve that higher goal, a better long term purpose. And I would also say that if you don't identify with that stereotype of male financial services, a particular kind of person? Well, my experience has has been that I don't feel like that's necessarily me. And it hasn't held me back at all. And actually, we're in a world now where having a different perspective, and having more women at the table is a benefit. Because often we have different experiences and perspectives. And that's actually something which I have found is definitely more embraced now. And so it's probably much easier for me than, say my counterparts 20 years ago. But I have never found it to be a problem.

47:23
And I think at the end of the day, just like your talk about ESG governance of companies, sustainability, companies that don't have diverse workforces, whether it's gender, ethnicity, of view or age, they are going to be worse off in the future. So do remember that. It's not just about what you invest your hard earned money in, it's where you also go to work. And so if you're working in companies that are not really embracing, you know, the full talents of people out there, then that could be a red flag as well, because that's also about sustainability. But Megan, you're super busy lady, I really appreciate you spending the short period of time up to date with us. It's been great just to share some of those insights. gonna watch and see what happens with other stuff you're doing. So if people want to find out more about sericin, where can they go?

48:11
Yep, go to our website at VeriSign and partners. If you Google it, you'll find it very easily. And we're also on LinkedIn and Twitter now, so.

48:20
Yep. Awesome. Great. Thanks for your time. Again, lovely to meet you.

48:23
Thanks so much, Jason.

48:30
Thanks for listening to real money stories with me, Jason Butler. If you like what you hear, please do tell your friends. And more importantly, please rate us on your preferred podcast app, because it really does help us get the message out there. So until next time, good luck with your money journey. Real Money stories is sponsored by Vanguard bringing value to 30 million investors worldwide. Visit Vanguard investor.co.uk. For more details. The value of investments can go down as well as up and you may get back less than you invested.

Transcribed by https://otter.ai