Richard Wilson

Group Chief Operating Officer (and CEO, interactive investor), Aberdeen Group plc

Where ii CEO Richard Wilson looks for investing inspiration

🎥 Dec 01, 2023 📺 interactive investor ⏱ 15m 👁 1502 views

Richard Wilson is chief executive of both abrdn Personal Wealth and interactive investor. But it is in his capacity as an investor that we hear from him in this episode of The Richard Hunter Interview, particularly his passion for opportunities in India, including where to look and how to access the market. Please like and subscribe to our YouTube channel. Follow us: Twitter: / ii_couk Facebook: / weareii LinkedIn: / interactive-investor Instagram: / interactive_investor Risk warning: These videos are provided for information purposes only. Occasionally, an opinion about whe...

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Transcript (36 segments)

Richard Hunter0:12

Hello and welcome back to the Richard Hunter interview, where I sit down with guests who know the city best to talk about the trends, triumphs, and turmoil that affect your investments. I'm delighted to be joined today by Richard Wilson, Chief Executive Officer of both Aberdeen Personal Wealth and Interactive Investor.

Richard joined Aberdeen in May 2022 following the acquisition of Interactive Investor and was appointed CEO of its personal division in August 2022. He leads the Aberdeen Direct-to-Consumer businesses including II. In this episode we will be discussing Richard's views on investing and which areas of particular interest to him there are as an investor.

So Richard, a very warm welcome to you and thank you for spending some of your time with us today. But before we get into your particular areas of interest, why do you think now more than ever it's important to be investing? Well, thank you Richard and thank you very much for having me. Well, if we look at what's happened in the UK over the last decade or so, the responsibility for your long-term financial future has increasingly fallen into your own hands. The days of the defined benefit pension have largely gone, so now your long-term financial health is down to you, and that really then is a question of how you invest. And the eighth wonder of the world, as they say, is compounding, so you really want to start investing as early as possible to be in the best place that you can in the longer run to have the life that you want to lead.

That's right. And of course it's not the rich man's game it once was either, in terms of the minimum amount you need to invest or the extraordinary amount that you need to pay.

Richard Wilson2:01

Well, what's happened in the last 10 years, and I'm very proud that we've been part of that process, is both to reduce the cost of access to investing from what might have been £12.50 a trade back in the '90s to now either free investing or in our case you get free trades, but the standard price being £3.99, which makes investing available to all.

In fact we've just introduced a pensions product called Pensions Essential, which provides all the services you need from starting to draw down for as little as £5.99 a month. So access has changed dramatically. So has the experience available. Part of the problem or challenge for all of us is that we struggle with confidence to invest and it can be very confusing.

What technology has allowed us to do is increasingly make that experience easier, so that it's more straightforward to make those choices that are best for you. And progressively the regulator and the FCA has also been supporting and making some of those choices more straightforward, whether by clarifying guidance and advice so that more people can take advantage.

The last area of course is that the choice of investments have expanded dramatically. In the last 20 years any adult in the UK can choose between 50,000 to 100,000 different instruments around the world, which is of course a mixed blessing because that can also be like entering into a supermarket with no labels. But that choice has got greater.

So for the UK retail investor and for UK PLC, many of the ingredients are there to help people along that journey.

Richard Hunter3:59

Which segues perfectly into my next question. You've highlighted China and India as regions of interest, and perhaps before we get to that we can just remind ourselves just how populous these countries are.

According to the latest figures we have, there's a global population of 8.1 billion. India is number one with 1.43 billion people and China just behind in second at 1.42 billion. And just by way of comparison, the number for the US is 340 million and the UK 68 million. So perhaps we could start with your thoughts on opportunities arising from India, Richard.

Richard Wilson4:42

Thank you, because you've spelled out why by definition those markets are interesting. They're just enormous, and they have been growing, although that experience and situation is quite different.

If you look at India first, on the one hand you've got an economy there which has been growing at around 6.5% GDP and is expected to sustain that in the medium term. And its inflation and interest rates have been moderating. Now I think this year, 2023, is looking like a sort of 5% print on inflation and interest rates moderating down to that level as we look further into 2024.

So that gives you a headline growth number which for a large economy is substantially ahead of most of the other leading economies of the world. India's already overtaken the UK in terms of GDP and it's expected to overtake both Germany and Japan in terms of GDP in the next two or three years.

So you've got a country that is clearly of interest. At the same time what you see there is an economy that has a functioning democracy and a stable government. Modi I think's been in for nearly 10 years now and based upon the state elections that took place in December, you'd expect in the general elections that you'd have to be a brave man to bet against him continuing in power, which provides a lot of consistency.

As well as that, you have the legal structure in India is something which largely inherited from English law, which provides a level of legal certainty. And digitization-wise, it has according to most opinion the most digitized economy in the world. And of the 1.4 billion people, now over a billion people have the digital ID cards, which is quite extraordinary.

So relative to the rest of the world, you have to look at India as being somewhere which has material opportunity. And you look at individual sectors, whichever they may be, and of course there's been all sorts of complications through COVID to get real transparency on what's going on.

But you look at the property market in India and you look at the fact there's roughly an 80 million deficit in housing units, with a growing economy where the middle class is expected to grow by around 20 million a year over the next 20 years. You have clearly areas of substantial opportunity as the economy and the population becomes wealthier.

That's a similar story historically if you look at China coming way back, but clearly China's context is both compelling on the one hand. You look at the fact that whilst the growth rates have come off materially and now I think they're sitting at GDP growth of 4.5% and interest rates and inflation dropping down to something around two or one and three quarters.

It has 450 million in its middle class. It is by any stretch of the imagination the economy which will compete with the US as the largest economy. There's obviously different views about whether and when that will take place, but it is clearly an extraordinary influential economy.

At the same time you have more recent concerns which introduce some question marks, the most important of which is the US-Chinese tensions around Taiwan and the other conflicts in the world which creates some concern.

You've got the post-COVID recovery and what's happened to the Chinese economy in the short run, which again it now appears to be dipping into deflation. And you have state intervention in the large consumer tech businesses, which obviously raises concern in terms of competition.

So they're very different stories, both economies. As you say, in terms of population they're somewhere around three billion of the world's eight billion population, which is clearly a significant chunk. Between those two, given the different context, my vote goes for India today, and hopefully in the near term the US and Chinese economic vital interests will encourage those governments to find some accommodation on the other issues that they've been struggling with.

Richard Hunter9:59

So certainly in terms of the nuances between these two massive countries, both were driven some years ago by as you mentioned the emergence of the middle class as well as urbanization. Certainly in terms of China there was additional propulsion as the Chinese began to adopt Western medicine, which obviously put the cat amongst the pigeons in the pharmaceutical sector because again you're opening up a potentially massive market. Are those themes still in place for either or both?

Richard Wilson10:30

Well, you've got on the one hand those themes are still what drives those conversations. You have a transparency issue in one of those markets, China, it's actually quite hard to be clear what's actually going on and what the actual facts are, which is unhelpful.

And India by contrast has struggled to find its feet in the manufacturing sector compared to the powerhouse that China has been. But between those two, the one thing that would tend to increase confidence in one versus the other is India being a democracy versus China being a command economy.

And your ability to flex and adapt and compete your way in different sectors, whether it be pharmaceuticals or technology or manufacturing, you have to believe that whilst a command economy can get things done quickly, it's not as adaptive as a market economy which can flex to new targets as your assumptions are affected by reality. Because as technology changes your view of what the future looks like.

Richard Hunter11:53

So for those, and there will be many of our viewers whose interest has been piqued here in India in particular, the next question is how to gain exposure to India for example. Clearly as you mentioned at the very start it's rather more straightforward to get the exposure these days than it was 20 years ago. So what sort of things could investors be looking for for a nice exposure to India?

Richard Wilson12:20

Well, there are a number of diversified funds and ETFs that have both specific focus on India and China and within their different segments of those markets. As a non-resident, it's possible but very hard to invest directly in the Indian stock market, and it's possible and sorry impossible or improbable to invest in the Chinese market today directly.

So you really do need to invest via some diversified product of which there are, most of the providers, most of the asset managers have a range of products which do that, and they're reasonably cost effective and provide you with some balanced exposure either to the whole economy or to particular sectors inside that economy.

Richard Hunter13:14

Well that's a very interesting point because it also depends on what level of exposure you want. For example even within our own FTSE 100 you've got mining stocks which are in and out of favor depending on the perceived demand situation at the moment from China in particular.

You've got the likes of Glencore who are now burrowing down in Asia and Africa, so that's effectively a China play, not to mention the likes of Burberry of course where the power of the tourist and the health of the China economy is something that's very important. So there are also other ways to put your foot in the door as well.

Richard Wilson13:50

There are, and of course you also have some areas like consumer tech which from being the darling, all of a sudden you see state intervention and confidence in that sector gets disrupted. So you've also got the question of trust in the environment. Is what you see what you get? And for as long as China is perceived to be intervening, that obviously will create a bit of a discount frankly on some investments. A large part of the value is about confidence in a stable environment, which in the last year or so China's clearly exhibited the will to materially intervene in some sectors.

Richard Hunter14:35

Well I know we could go on for hours but we are unfortunately out of time. So thank you very much indeed Richard once again for your time.

Richard Wilson14:41

Absolute pleasure. Thank you very much for having me.

Richard Hunter14:44

And thank you for watching. I'll be back soon with another Richard Hunter interview. But in the meantime you can find more expert investing insight on the Interactive Investor website at ii.co.uk, and you can of course find more interviews on the II YouTube channel. Bye for now.