Next generation: Donald Mcfarlan, Capital Generation Partners
What originally attracted you to the world of finance / wealth management?
I’ve always been interested in how things work and how things fit together, as well as how the world works. Investment management is, in a way, trying to understand how the world works and how “investments” fit together.
I was lucky that my parents were interested in their investments and agreed to talk to me about it from an early age; it all grew from there really.
Who is your investment hero / someone you admire in the industry?
There are a lot of investors that I admire who are particularly successful in their own sphere within the industry at large, but the person who really comes to mind as being the best is David Swensen.
He took over the endowment from Yale at the age of 31 – barely 3 years older than me – and essentially rewrote the book on endowment investing (he of course wrote THE book, Pioneering Portfolio Management). The returns that Swensen chaired at Yale have been incredible, and his approach to asset allocation and portfolio building has been emulated by many very successful investors.
What is the biggest problem this generation faces in the field of wealth management?
Flirty? People who work longer and stay longer in positions of responsibility!
More serious, the apparent mistrust of our generation towards long-standing institutions and “traditional” finance. Robo-advisers have their issues, but they’re certainly growing and taking business away from more established investment management firms. I understand the argument that the rise of Reddit, Robinhood, Crypto-platforms and others is democratizing the financial industry, but I’m not convinced that all is well.
What was your first / best / worst investment decision?
First: I bought shares in Majestic, the wine merchant, while I was still in school.
Best: Purely in terms of annualized return, buying some UK REITs in July 2020 tops the list. I rebalanced my retirement portfolio, leaned in value last year too before value rallied in November.
Worse: buying the “plunge” in early March 2020 comes to mind, but in reality, the result was not too bad. I still have a long way to go to improve myself in sales, I am biased by my current holdings.
What advice would you give to young talents who wish to enter the world of wealth management?
Learn about the different aspects of wealth / investment management, the variety of roles within the industry is astounding. The University of Leeds Library actually had a Citywire subscription that I used to read and that’s how I discovered CapGen – I’ve been here for 5 years and loved almost every one of them. minute.
I’m a little late on podcasts, but there’s no bigger fanatic than a convert, and I’m now an avid subscriber to Ted Seides’ Capital Allocators podcast and also the Money Maze podcast with Simon Brewer. Both are easy to listen to, super interesting, and have a great variety of guests, who share all their travels in their current seats; both would be a great place to start learning.
How does being from a younger generation benefit / bring an advantage to your role?
The transfer of wealth from baby boomers to millennials and millennials over the next few years will be huge, the largest ever. Being a millennial gives you the opportunity to see the world of investment management from the perspective of the next generation of wealth owners and understand their financial priorities in ways the previous generation may be less able to do. .
What is the biggest larger issue surrounding the wealth management industry?
The mismatch between customer expectations and expected returns. Many clients and capital pools have only had the experience of investing in the post-GFC bull market. Like many people who manage capital pools. Expected returns are low – expected actual returns even lower – and volatility and dispersion are expected to increase. Portfolio managers will need to work harder to meet their return targets and the temptation to take excessive risk will grow stronger.
The highlight of your career in wealth management?
2020. Before that, my professional life had coincided with largely benign capital markets. Understanding the importance of good process, clarity of thought and judgment in times of extreme uncertainty will hopefully be something that will stay with me for my career.
The perfect tea / biscuit combination?
Darjeeling without milk chocolate and dark chocolate. No soaking.
Abandoned on a desert island – a book, an album, a practical object?
Joy of the Morning – PG Wodehouse; my “loved songs” on Spotify, sunglasses
You have a time machine – are you going to the future or the past, on what date and time and where?
Future, New Year 3000 to have the opportunity to celebrate a new millennium, and see if we live underwater …
You can live in any country in the world from tomorrow but you can never leave that country, where do you choose?
Italy, to satisfy my passion for cars.
Which three people (dead or alive) would you invite to a dinner party? And what are you cooking?
Lewis Hamilton, Ayrton Senna and Jackie Stewart to facilitate the debate on the most important generation of Formula 1 drivers. Lewis is vegan, so something like Imam Bayildi.
You are granted a super light power – what do you choose?
So that I would never have a flat tire on my bike for the rest of my life, if I was allowed to, I would also extend it to the people I ride with.