Podcast 64: What financial advisers really do with your money & how to get value for money

56 min Read Published: 29 Nov 2015

Click on the media player below to listen to Episode 64 of the MoneytotheMasses.com podcast. You can listen to other episodes by clicking on 'More Episodes'.

 You can also subscribe to the show via iTunes

Show transcript

Andy: Hello. Welcome to Episode number 64 of the Money To The Masses Podcast with your resident expert as always, Damien Fahy; and me, Andy Leeks. Damien, welcome back to the show. How are you doing?

Damien: Good to be back, Andy, episode no. 64,

Andy: I know. So what have we got coming up?

Damien: We've got a few things. I'm not going to give away everything at the beginning because I don't know how much we'll get through. Because I've kind of prepped quite a bit, but a couple of the things are going to be focused around financial advisers. So if you've ever had a financial adviser, you'd want to listen to that part of the podcast. And we might then go onto a couple of bits on investing as well. So a couple of nice observations that people might want to bear in mind and a couple other bits and pieces as well along the way.

Andy: Okay. So it's going to be a good one Damien, what are we going to start with?

Damien: Do you know what? First of all I'm going to start with something we should start with every week, which is encouraging people to leave reviews. The reason I'm starting with it this week is, I've actually exchanged quite a few emails with various listeners this week, and I always forget to mention it to you, Andy, because obviously, you like seeing the feedback. But we've been having a lot of people feeding back on the podcast and saying how much they love it.

To name a few people there's Guy Walters  who I actually have exchanged various emails with. Matt Batham and Ray Leathers to name just three of them. I've been exchanging lots of emails. Because you can email me, this is the thing. People don't realize that I do reply to everyone, and I do enjoy it. So a couple of those guys actually admitted that they should have left reviews and hadn't for a long time. So they then went and left us a couple of reviews on our podcast on iTunes which helps us massively. So if you are one of the people listening out there who hasn't left a review, then please do so.

Andy: Yeah, absolutely. I totally agree with that because I'm a podcast connoisseur. I listen to lots and lots of podcasts, and they're definitely worse ones than us out there that have got at least 10 times the reviews. I don't know how they're doing it, whether they've exhausted all of their family and friends. But yeah, I suppose good for them but yeah, it'd be great if we can get some more reviews.

Damien: We're too polite Andy. We're too polite. We give everybody great content and then every now and then say please leave a review. So leave one. If you haven't left one please do. Anyway, we'll move on from that.

There's a couple of things. One of the guys who got in contact asked me for an update on Walletgate. The story from a couple of weeks ago. It seemed to capture people's imagination. The sheer comedy value of that particular piece. For people who haven't heard it, go back and listen. I think it was episode 61 or 62 that I found a wallet and ended up being a national newspaper story.

Now, the update on that is that the guy lives four doors down to me. I've already seen him once in the street and we were on the opposite sides of the road and he was very sheepish. And I'm not sure if he saw me in a sheepish way and kept his head down and because of what he'd said or because of what happened with the paper.

So there's not much to update other than I've seen Mr. Wallet, and he kind of gave me a wide berth and I just chuckled to myself. But that's Walletgate. Fortunately the nights are drawing in so I don't tend to see too many of my neighbours anymore because it's too dark by the time they come in from work. So yeah, not much to update on Walletgate which is probably for the best.

Andy: I'm surprised you've got any neighbours talking to you. You've had Walletgate, you've got this extension going on at the moment with the loft and obviously must be annoying every neighbour under the sun with that.

Damien: Oh, I fell out with one neighbour, Andy. People listening to this podcast, I am a really decent bloke, and I went 'round to my neighbors and said, "Look, any problems, blah blah blah." And you always get one person who will still moan even though it was not justified. Sometimes you can't please all the people all of the time. Can you, Andy?

Andy: You really can't, no. And there's probably people that don't even like this podcast.

Damien: All right, let's move on.

Andy: If there are any of those people out there, then please ignore what Damien said about leaving review at the start of the podcast. Just ignore that. Moving on.

Damien: I haven't said that, quick one. On neighbours, there are some really good people out there, because this evening it was raining and a chap knocked on my front door and said to me, "I think your cat wants to come in because it's raining." And the cat came scouring in the door. So my cat has somehow, acquired the ability to convince random passersby to knock on the front door to get her let in, which is an incredible talent from a cat. So yeah.

Andy: There it is.

Damien: Yeah, so there you go. There are some nice people out there. But talking about slightly shrewd people. There's one other money related story, my daughter, you know her Andy. But people who don't obviously I have a five-year-old daughter who actually inspired Money To The Masses and she's obsessed with losing her teeth. We mentioned about the tooth fairy in a previous podcast.

Well the other night I went into her bedroom. I was putting her to bed and as I was putting her to bed, suddenly a piece of paper fell on the floor from underneath her pillow. I picked up the piece of paper and said to her, "What's this?" At which point she went, "No, no, no don't read that." Of course I then read it and it said, "Dear tooth fairy, my tooth has fallen out but I've lost it." And she's got a full set of teeth.

So I didn't know whether to admire the sort of cunning and ingenuity to try her money-making scheme, or the fact she was trying to pull one over on a tooth fairy and lie. Of course, I just burst out laughing said, "You can't do that." And then I got into a ridiculous conversation about a fictional being and how they would check and stuff like that. So that just shows you how shrewd youngsters are.

Andy: She really just went and did that of her own back?

Damien: Yeah.

Andy: That's amazing. You should put a little letter back from the tooth fairy with a little moral on there saying why it was wrong.

Damien: Well what I would have done is I would have put money under there and just see if she would have kept repeating the trick and for how long.

Andy: Oh I see, okay.

Damien: To see if eventually she'd come and then go, "Dad! Dad!" I'll never know. So there's pile of money that's accruing in her bedroom. Well I admired her shrewdness. I reckon Alan Sugar would have definitely hired her.

Andy: Yeah, I think that's brilliant. Well done her.

Damien: We've veered off topic. Right. Onto the first piece. This is probably going to end up being two pieces around financial advisers. Okay. Now, the first one is to do with investing really. And what I wanted to do was highlight to people the lack of time that financial advisers spend on creating your investment portfolios and it isn't just about beating them up. I know there are a lot of people out there who have had a financial adviser or have one. They would obviously pay them money or go to see them to get advice and they don't really know what goes on in that office once they leave and they just get a bill or they see the money be somehow deducted from their investments.

Now what I want to do is just to highlight to people what really does happen once you've seen a financial adviser. You might have some insights on this Andy. I don't know given that you've worked in that realm. But I've worked for a number of financial advisory firms and very good ones, and this isn't a slant on them. But generally what happens is that let's say you go to see a financial adviser and you answer an attitude to risk questionnaire and you go through your personal circumstances. You fill out what they call a fact find which is a questionnaire basically about your circumstances, then they go away and maybe write a report or make a recommendation.

But what I'm going to focus on is the investment part because when they've done the analysis and make a recommendation, it always boils down to if it's an investment-focused piece, which funds to buy or what assets to invest in. Then what people tend to think happens is that the adviser would sit there and scratch their beard for hours on end and then go, "Yeah, do you know what Mr. Smith, he's this kind of person, he'll probably like this type of investment."

What I want to just highlight to people is that doesn't happen at all. That is not what happens. Now if you were lucky enough to get a financial adviser that had somebody who had an expertise in investment, then as I say you're lucky. But what happens to for most people out there is there is a person, probably that financial adviser themselves, who's running a business, doing reports and seeing clients; who doesn't really have the time to sit down and to work out the investments to put you in or funds to buy. It's not just because they don't want to; they don't have the time or the expertise.

So what they would need to do to combat that is employ someone who is very knowledgeable in that area. But of course to find that sort of person costs quite a bit of money. So, what you'll find is most financial advisers do not have any specific investment expertise any more than a lot of their clients. If their clients sat there and read the FT most days and were quite fairly well read on investing, they would probably know more than their financial adviser if they went in there and had a chat with them. And I'm not giving a kick in the teeth here, financial advisers; I'm just telling people this is just the way it is.

So what would happen is if they've established your attitude to risk, they will likely just go and pick a portfolio. A portfolio is not bespoke to you but lumps you into one of a number of categories. So if you were like a cautious investor or a medium risk or a high risk or variations in between, but they'll probably only have a couple of different permutations. They'll have a short list of say, 20 companies if you're lucky and then some bond funds, some equity funds and some higher risk funds. And then you'll go in them. Then what they'll do is they will then probably, well you hope, from time to time change that shortlist but they won't necessarily do it for you individually.

So the point that I'm trying to make is that you need to, if you're going to go and get some financial advice particularly to do with investing, grill them a bit more on why they've chosen things, and if there's a shortlist and why are things on the short list? And is there anything in here that's specific to you? I understand why they have shortlists because they can't sit there and spend all their day researching every fund. But there are some out there that will do that. They may have the resources and manpower to do that. They're the IFAs, the financial advisers you want to look for. So what they would normally do is they would dump you in a portfolio of funds which could be for any one of their clients with sort of tweaks around the edges. Or they'll dump into something called a multimanager fund. You've heard of those?

Andy: Yeah.

Damien: They're the ones where...it's like a fund of funds. It's sort of a fund that just does everything and it's got a bit of bonds, a bit of equities and sometimes invest in other funds. Or they'll get some sort of discretionary-based fund where there'll be one manager that will invest in all different types of assets and vary that in accordance to how they see the market going rather than being just pool all of the funds.

So that's kind of what happens, and I'll be honest with you, there'll be some financial advisers listening to this who won't like me saying it, but I reckon there would be plenty of people who've had investment advice where the adviser spent less than 10 minutes on the fund selection. That's just a fact, so if you're sitting there paying hundreds of pounds an hour for that service, you're probably not getting anything that's particularly tailored to you, because they don't have the time.

So you need to grill them a bit more. Ask them what their process is when you're going to go for advice or you have ever had advice? Find out what it is and when you're going to get those funds reviewed because that's the other thing of course. They won't tend to review your funds or when they drop things off their shortlist even. Even if they're going to use a short list and you are happy with that way of doing things, they won't necessarily ring you up and say, "You know what Andy, that fund you're had for the last year has just dropped off our shortlist." Because if you're in the financial advice world, you want to do as little as you can for as much pay; that's how it works, unfortunately. That's not how it should work but a lot of people, because of the cost of compliance and the cost of running a business, we've now found ourselves that people either go for rich clients or they try and work with their existing client bank but they end up offering less of a service.

Andy: Yeah, now that makes sense.

Damien: So, where does that all lead us? That leads me on to the second part of this podcast, which is around commissions. The reason I bring it up is because in the first part I was talking about financial advice and the investment side of things and they probably spend very little time on average. Of course there are some really good ones but I'm talking on average. Lots of them spend very little time on your investment portfolio. Hardly ever review it and you're not getting a great deal of bespoke service there. So that's okay if you're not paying much money for it because in the robo-advice world and, again, we did that podcast. About two or three podcasts ago, we talked about the future of financial advice and robo-advice.

Well that's going to be what that kind of service is going to give you. You know, where you're going you get a commoditised product, but you're happy. You're going to be happy with that if you're paying maybe a couple of hundred pounds one-off and you get dumped into certain portfolios. You're not too bothered by that because you see what you're getting. But when you're paying a premium price for financial advice -- I didn't mean to make that rhyme, but there you go -- if you pay premium, you expect a premium product, don't you?

Andy: Yeah.

Damien: I now want to talk about the commission side of things, which if I haven't upset any financial advisers who are listening to this podcast...

Andy: You're going to now.

Damien: I'm going to now because, well, you've probably heard me talk about the retail distribution review, which is called the RDR, which was a whole set of legislation and laws that came in back in 2012. The aim of it was that the regulator looked at the industry and thought the way that consumers are charged and how much money is taken from their investments is too opaque, too confusing. They don't really know what they're paying.

It was a bit like, to use an analogy, if you went to a supermarket and you rocked up at the till and the woman looked at your trolley and went, "That's £121.50." And then you just go, "Sorry?" That's basically how financial advisers worked historically. And so what RDR did was it brought in a new set of rules, which was saying, "Okay. You've got to start itemising some of this stuff." So other than just rocking up to a till like the example I just gave, they're having to break down, "Well, who's getting paid what out of this?" The problem is that with your shopping bill it's okay because you're not spending much money but when you go to financial advice you're actually spending quite large sums.

So RDR came in. In a nutshell, advisors, fund managers and the platforms which you buy funds through had to tell you who's getting charged what and do it in a more...what's the word I'm looking for Andy?

Andy: Oh, it's...

Damien: Explicit, that's the word. So then we moved from this old world to this new world where you had very fuzzy charging to where we had to have everything lined up and everyone knew what they were paying for.

What has happened previously, advisers were getting commission, which was bundled in and baked into the products that everyone hated. With investments every year you'll pay up to 0.5% trail commission to the financial adviser. So if you have £100,000 investment, the financial adviser might take £2,000 or £3,000 upfront and then every year you're paying him another £500 until basically the day you withdraw your investment, which for a lot of people is actually quite extortion if you're not getting any service back.

Damien: So what's advisers had to be more explicit and say, "I'm going to charge you £500 a year, every year, are you okay with that?" So people could obviously then turn that off and say, "Well, I'm not actually." Or demand more of a service because they knew they were handing over £500 every year. But the legacy stuff; the stuff that was sold before these new rules came in, they were allowed to not do anything with that. So what you found is that advisers didn't bother; they could just leave all that money that had been invested and keep creaming money off of that every year. This isn't small amounts if you have lots of clients. I mean to put some figures on it, you'd quite easily get a decent sized financial adviser who's probably making, easily a few hundred thousand pounds a year, trail commission. So before they even get out of bed on January the 1st they know they've got a few hundred grand coming in the bank from investments they've already sold previously and now they probably aren't even giving a service to that person. Because hopefully, they're thinking the person might have forgotten that they even got a financial adviser.

I've seen statements where people are getting trial commission 20 years after they've sold something; so a financial adviser is still being paid on stuff from 20 years ago. Yet you haven't even seen the client in 20 years. So what's happening now and the reason I brought all this up is that I'm going to say to people, "Well, go and tell them to turn it off." Stop paying is the point of this conversation.

As of April next year, there's going to be a change in the rules; April 2016. That means that some of this legacy commission that's still ongoing will be automatically turned off by the industry.

So if say somebody like Fidelity FundsNetwork, a financial adviser could advise you to buy investments and he might transact it through a fund supermarket like that or some other large entity. Those companies are now turning of the trial commission that they will pay to the financial advisor as a result of an investment that was made because ultimately, there's got to be lot more transparency.

So as of April next year, a lot of financial advisers, apparently about a third of financial advisers still have trial commission being paid to them from legacy investments. So if you just took that as a 30%, so like almost a third, that's a lot of people and you can guarantee there'd be people listening to this podcast who will have been advised about this, but there was some research done that showed that most financial advisers hadn't told their customers about this new change in rules that's coming in, in April, where they're going to probably have to turn that trial commission off.

So I'm talking about it today because I want people to go and speak to their financial adviser and ask them, "Am I paying trial commission?" If you are, then say to them, "I heard there's some new rules coming in in 2016. They're going to turn it off. Does that impact me?" And if the financial adviser just say yes or no and even if whatever he says, just say I want to do something about it now.

There are three things you can do. You can either sell the investment if you don't want it anymore, and that will turn it off because there will be no investment for them to skim some money off. You could ask them a better service for the money you're paying, which it may the better thing to do, because if you still want the investment. Or three, you could get a rebate. You could go to them and ask them to start reimbursing you some of that money. And there is no reason why you can't do that, in fact, the FCA have stated that they're the three actions that consumers can take, and they're encouraging it.

So the reason I said to you there, Andy, is financial advisers will hate me is because I've just done two pieces saying that a lot of them don't really spend much time on your portfolio, and even if they do or don't, there's a lot of them that are still getting paid a lot of money by people when they probably aren't giving them the service. Because, let's be honest, I'm not anti things being paid for like commissions and things and fees or whatever, if it's warranted. And that's why I want people to go have conversations with their adviser and just ask them pinpoint, "How much am I paying you? What do I get for it?" We touched some bits of this before but this is relevant because there's going to be a rule change in April 2016 which should be sparking conversations with your adviser and if they're not then you're either a) not impacted by it because you're already on this new arrangement and you're paying fees to your adviser instead of commission, or b) they've not mentioned it yet.

Andy: Okay. I think that's really interesting to hear. You've explained to listeners there about what you need to do in terms of investments and get the best value for your money if you like. Give us some good things about a financial adviser. Give us some things that maybe perhaps people wouldn't know that they do, that adds value. Not necessarily in investments because they're rounded individuals; they've got a good base knowledge in lots of different things. So what do they do?

Damien: That's a good question because I am, despite this piece, the last two pieces I've done, I am a bit of a financial planning champion. I do like the industry and what they do. It's just that there are obviously you just talk about the good and the bad and allow people to make objective decisions.

On the plus side, financial advisers, the best of them, are very knowledgeable in a lot of areas to do with tax, investments, pensions, insurance, mortgages and they can make a huge difference. To give you an example, if you're an individual you might make an investment but actually you might be better off using some of that money and restructuring it in different ways and using it to pay down a mortgage. Or put it into a pension, that can actually get you tax relief that could multiply your investment in much bigger ways.

So it's that kind of tax structure knowledge and being able to optimise your investments and your money, is what financial advisers are brilliant at, and planning. I think the thing is that once they've done that initial stuff, the legacy after that, if they've done this overall analysis and given you a financial plan, it's what you get ongoing which I think some people struggle with. But I think financial advisers can make a huge difference.

I've seen it. I've seen where people come and they're so muddled. People who've got divorced, people who've had deaths in the family and stuff like that and they come, they don't know what to do and they feel so much better once they've had that bit of financial advice. There are people who've claimed on things like insurance-based products, life insurance, critical illness which they would not have had if they didn't seek financial advice. So their knowledge base is large and I think what they can do is give people a plan, which they can stick to.

Andy: Brilliant. Okay, that's good. It's nice to finish that off and see both sides of it. What else have we got coming up in this show?

Damien: Well, I've whittled on quite a bit there but there are two investment things I just wanted to mention. Have you ever heard of the term short squeeze?

Andy: No. I haven't heard it. I mean it sounds... No I haven't.

Damien: Where was your mind wandering there, Andy?

Andy: Well, no. I don't even want to think where my mind was wandering. But no, I haven't heard that term.

Damien: Somebody asked me the other day why did markets rally a lot recently? In October 2015 there was a huge rally in the market after a big fall. In August, September, markets tanked, they were down 12% or something and then they swung back the other way in October and October is supposed to be the worst month for stock markets historically.

If you go back and analyse America and the UK, October is a nightmare. Some of the worst crashes have happened in October. But this October was a bit of a stormer and everybody was sort of surprised by it. But just before that, actually on the 1st of October I wrote a piece for 80:20 Investors and highlighted, there was a definite opportunity that this could happen. Even though the world was saying it wasn't going to happen because there was a parallel in 2011 where a similar thing had occurred. We'd had a big fall and then it bounced back. Now the term short squeeze is relevant because that explains part of the reasons why markets bounced.

Now if you imagine, if there... where people short the market. I don't know we've talked about shorting maybe before, and it's where effectively you're selling the markets. So you think the market is going to fall and investors can actually bet that the market's going to fall, tank. What they do is they borrow shares from somebody else and sell them then buy them back later and make a profit.

Now, if enough people do that and everyone thinks that the market's going to start to collapse, then it has to...If it doesn't, if it starts to go the other way and starts to rally all of a sudden; everybody's suddenly think, "Oh my God, what's going on?" then they start to buy back. And they buy back and buy back, and buy back, and keep doing it because they realise that they've actually bet on the market's going to fall. It's a bit like when you might bet on football. And you're sort of trying to back and lay bets. So if you're betting that the market's going to fall, and it suddenly doesn't, it goes the other way, you're going to start losing more and more money if the markets keep rising. And what they end up doing is it's self-fulfilling because all the people who are short selling suddenly have to buy back to clear their bet and they end up buying at higher and higher price.

As it keeps going, all the people that were left that were short selling are buying at higher and higher prices. So actually they start making the market go up. That's what a short squeeze is because we had one of the biggest short squeezes in...I don't know how long it was, it was a ridiculous length of time and that's what's driven it because we had one very recently in Japan, well we've had one pretty much everywhere in the last couple of months. So it's a case of where you can get people who short the market, who don't want to be in it basically can actually make the market go up.

Andy: Okay

Damien: I just chucked it out there because there might be people who are getting into investing and reading around it and might see that term, short squeeze and think, "What the hell is a short squeeze?"

Andy: Do people who are involved in short squeezing know that they are doing it? That they are essentially responsible for it? Or is it just a whole mixture of people that are all doing this in order to...Do you see what I mean? I don't know if it's a silly question.

No, it's not. What it generally is, is big institutions who do it because, what happens if you get pension funds say, that hold lots of different investments and they may have lots of shares in particular companies. So if they've got shares that sit in there and they are holding them because they like that company and they are going to hold them forever because they have pension, massive pension funds and so therefore they're not buying and selling as regularly.

Well what they do, is another investor will come along and say, like an institution will say, "Do you know what? I think Apple shares are going to fall so can I borrow your Apple shares and sell them in the market and when it does fall I'll buy them back at a cheaper price?"And then I keep the difference but because I've taken a risk with your shares, I will definitely give them back to you because I signed a contract to say so. I'll give you like a little fee." And that's what short selling is.

Andy: Yeah.

Damien: There's been a bit of an uproar in recent years about it because all of the ETFs and stuff that people get, you've heard about exchange-traded funds, these index trackers. They were doing it, they were allowing other companies to borrow their shares and short sale.

So in answer to your question Andy. Short selling tends to be large institutions doing it and that's why when it unravels like it did, it will normally only go one or two ways. Certainly because it's such a weight of money that's sort of pushing the market down it'll either snap like an elastic band and it will plummet or it will do as it did this time round which it doesn't happen that often. It'll bounce back the other way and causing all these short sellers to suddenly panic because that pension fund is still waiting for his shares back. And of course the short seller is thinking, "I'm going to make up huge loss here because I've agreed to sell them back at a certain price." And that's what happens and that's why they unwind. So the short sellers definitely know what they're doing and that's why also you see in other places, in China for example they banned it. When the market was falling they started banning short selling, they started really interfering in the markets like that.

Andy: Because I was just thinking, short selling is that essentially, these are trades going on outside of the market, the initial deal that's done to borrow the share, that's not really inside the market is it?

Damien: No, no, because you've got two people.

Andy: But then they are having to get into the market in order to try and get something back to pay back the...

Damien: Yeah, they're borrowing something. It's just like you borrowing an asset, selling it. It's a bit like going down the pawn brokers, you know when people do that, they sort of get a bit of money for an asset and they kind of buy it back. That's really what it's doing but you do it with somebody else's stuff and that's why people think is not really ethical.

Yeah so short squeeze, interesting idea when sometimes you don't understand why a market will suddenly fly and rally upwards after a big fall. Sometimes it is a short squeeze. You'll never know if it's really going to quite happen but once it starts to unfold that's why it kept going and kept going and who knows. One thing that it does mean is that once all those short sellers have exited their beds it can mean that the market is left with not enough buyers. Because all the people buying the shares were people who are suddenly thinking, "Oh my goodness, I've got to give these people their shares back I've borrowed." Do you know what I mean?

Andy: Yeah.

Damien: And if they've all done that then, then suddenly there might be fewer buyers and if there is fewer buyers, share prices fall.

Andy: Good.

Damien: But on to the next one, which I just want to do before we wrap up, which is small caps. Smaller companies, small caps is what people call them. These are things that appear for example in the mid-250. If you see the FTSE 100 you sometimes see it extended to the FTSE 250 and they say they're smaller companies, they're not that small. They can be about 500 million in sort of market cap size. They're big companies to you and I. But in their grand scheme of things they're kind of middle or if it's smaller can go further down the scale. But the reason I wanted to mention those is because we're talking about market rallies and market falls. And small caps are quite interesting because they...There's a phrase. Have you ever heard the phrase, "A canary in a coal mine?"

Andy: No, but I know what a canary is used for in a coal mine.

Damien: That's the point.

Andy: Okay.

Damien: So you have heard, I probably phrased the question badly. But the canary in the coal mine is obviously meant to be a sign of...what was it the sign of Andy? Whatever.

Andy: It's there to alert the poisonous gases, isn't it? If the canary is dead, it's time to move or...

Damien: I think it is that. It's meant if it's not chirping in basically something is going amiss, there's some deadly gas that's leaking and you must get out. But that's what they say about smaller companies funds and shares. You see that when people invest it's sometimes interesting if you look at the difference between the FTSE 100 and the FTSE 250 and how it's performing. Because the FTSE 250 and those companies are probably more in line what's going on in the real economy in the UK because lots of those companies are UK-based. They get most of their revenue from the UK. But the FTSE 100 companies I think about 80% of their revenues come from abroad. So they're not quite so linked with the fortunes of the UK economy. So at times they can diverge and go different ways.

What's happened is if smaller cap companies start to underperform, that index starts to drift away and doesn't do as well. That can be a sign that the UK economy is always not as well as people are making it out and as the FTSE 100 would kind of led you to believe. Then in an equivalent market rally it can also be a sign if the economy is not great or not as good as what people think then earnings aren't on and perhaps the market might then tumble. So I just chuck it out there, it's always nice to educate people just sort of little tidbits to look out for. So short squeeze is one term and the behaviour of small caps as a canary in a coal mine is another.

Andy: Okay. Good. Okay small caps and short squeezes. I've learned two new things today, and as I do most of the podcasts. So very good. We've rocketed through those this week, Damien, and I have to say you're on fire.

Damien: Before you go, Andy, I have to tell you another story. I'm going to tell the story because I thought it was vaguely amusing. It's to do with a scam. My wife got one of these emails that said, "Dear..." to my wife and they state surname. It went along the lines of, "I have been sort of sorting out the estate of a Mr. so and so." Basically with the same surname as my wife. "Who moved to this country about 20 years ago and it turns out that I think you're the last relative that he had da, da, da. "

What was funny, she showed it to me. I was just laughing at this email because it basically the usual scam that they're trying to get you to get in contact and send some money to them so they can then pay you because he wants to release the assets from the estate. So he needs a bank account in the same name as the deceased and therefore can he borrow your bank account. I don't know if they check the numbers they type in these scam emails. But when I looked at it, it was $1.2 trillion he claimed that...I think he got carried away with the notes.

Andy: Whoever this person is owns Africa.

Damien: Yeah, he basically owned Africa. But it wasn't that that alerted me to the fact that it was a scam. It was the fact that because my wife has such an unusual maiden name. He'd used her maiden name and I think the only six people with that name in the country I basically know. So I laughed because it's a name that even I'm sure she married me just to get rid of. Because it's very unusual as you know. So I'm not going to say it because there are probably some of her relatives listening. But yeah, watch out for the scam emails promising you $1.2 trillion if you become a conduit to the money. Because they're not true.

Andy: Good. So we're all done for this week?

Damien: Until next week, Andy. Until next week.

Don't forget to claim your free copy of Damien's bestselling book, 'The 30 Day Money Plan: Sort Your Finances in just 5 minutes a Day' worth £4.99. Just go to MoneyToTheMasses.com/podcast to find out how.