Wealth Management: Fighting against our instincts

Helen Watson, CEO, UK Wealth Management

Over the summer, the Bank of England's Chief Economist Andy Haldane grabbed the headlines with his warning that artificial intelligence (AI) threatens to replace a huge number of jobs. Haldane is not alone in expressing concern about the disruption that AI could cause. However, it is important to observe that the jury is still out on what impact the rise of the robots will have.

The more we attempt to make technology replicate human thinking the more we realise how remarkably complex the human mind is. Machines remain poor at picking up on cues in the wider world that humans instinctively react to and process - not that we are necessarily aware of what is going on. Instinct and unconscious biases play a much bigger role in our thinking and behaviour than many of us recognise, or would care to admit.

That extends to the way we invest, and that's not necessarily a good thing. As we explain in this Quarterly Letter, biases built into human DNA can all too easily lead to investment mistakes, which is why we have been working hard to make sure we identify such biases and counter them as best we can.

Coincidentally, Andy Haldane is a member of the Bank of England's Monetary Policy Committee, which in August voted to increase the base rate from 0.5% to 0.75%. One of the many benefits of having longevity of employee tenure is that our team was in place when interest rates were last at 'lofty' levels, more than 10 years ago. As a result of this increase in rates, we have begun to pay interest on cash in portfolios. If you would like to know more about how this affects you, don't hesitate to get in touch with your client adviser. In the meantime, I hope what follows gives you lots of food for thought, and thanks, as always, for your continued support.

Download the Quarterly Letter - October 2018 (PDF 542 KB)

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