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Join Gabby Logan every week as she speaks to some familiar faces about their relationship with money, the financial lessons they've learned on the road to professional success, and how they're investing for their family's future.
Visit ii.co.uk for more investing ideas and information.
Gabby: Hi, I'm Gabby Logan and this is the ii Family Money Show. In each episode, I speak to a familiar face about the role money has played in their family life and professional success. This time I'm joined by the former Army Officer, Rugby World Cup winner, and now company Chief Executive Josh Lewsey. After two years combining his army and sporting careers, Josh resigned his commission to become a full-time rugby player, and he went on to win four Premiership titles, two Heineken Cups and a European Challenge Cup with Wasps, oh and a World Cup with England. Since retiring from the game, he's moved into business, setting up his own consultancy company, leading big projects in the financial sector, and becoming Chief Executive of a financial services firm in Hong Kong.
In our interview, he tells me what it was like starting his rugby career just as the game was about to go professional, why he feels it's important not to dwell on the past, and to focus on your aim for the future instead, and why your investment strategy should line up with your own personal life goals.
We talked to you today in Hong Kong, that's where you live, where you work, and where you found a life. We’ll get all onto all that stuff and the current day in a moment, but let's take you right back to your childhood and your ambitions, and whether even playing rugby for a living was something you ever thought about because the sport wasn't professional when you were a kid.
Josh: Well I was going to say this is the first interview that I've done for a very long time, so when you say, “Let's go back to your childhood” it sounds like some sort of therapy session. Yes, well look, I mean I grew up in a family of three brothers and, as you know with kids of your own, at that stage rugby's a cheap form of babysitting where you want to get them out and running around the field rather than messing the house up and smashing all the furniture to bits, get them outside, particularly when you’re one of three boys.
So look, we grew up playing a lot of sport, it wasn't just rugby, but just enjoyed being outside. We'd always lived in the countryside, so we were pretty active like that, and we were encouraged to be like that. And obviously when you’re one of three boys you get lots of practice at the physicality side, and we played lots of sport at school as well. So I think we all had a natural home really in sport, but then later in life obviously specialised a bit more into rugby.
Gabby: And was the childhood – it sounds quite idyllic running around, three brothers, having a great time, was it materially comfortable? Were you even aware of what your parents – earnings, or where you were in the strata? Did you think “I'm a middle class child, I have comfortable things,” or were you completely oblivious to all of that?
Josh: I think the answer’s yes to that. I think that certainly in younger years you're a bit unaware, but as you grow up become more and more aware of some people's money. Look, I think my mum, she grew up in a mining village in South Wales, and I was born in 1976, and it wasn't long after that you started having the impact of Thatcherism across the UK. So, that created a real big divide in terms of ideologies around money, approach to things, etcetera.
And, as I said, we went down, we used to spend our summers down there, but it was very apparent, there was big, lots of people unemployed. And also, I remember in the early – my father worked for IBM, and he was selling mainframe computers, and that obviously went out with the birth of the internet and obviously personal computers.
So I remember in the early Nineties he’d been made redundant and therefore it was a very, very big, big focus for the family to be very prudent. I think we were always very prudent with the parents, and that generation were very much focused – they were brought up in a post-war generation where they went through rationing, and we've all become very, very spoilt really in terms of the modern day age and some of the things we take for granted in many parts of society. But yes, very, very much was aware of that.
And then lastly, I think, as well, was we went to a grammar school, so we were always aware of the wealth that perhaps existed in private schools and what some people had, but I think that that gave you a really nice spectrum around going to school with – as I was at an all boys’ school, so sons of professionals and doctors and so on, but also at the other end of society. And my mum was a teacher as well, and she'd always taught in the state sector, so that spectrum of society, I think it was quite a healthy thing.
But it also then illustrated what you can achieve, but my god, you had to work at that. So it was in many ways a very good grounding in terms of values and work ethic for setting goals for later life.
Gabby: And we'll get onto how those goals were achieved and manifested themselves, but it doesn't sound like, from what you've just said for your parents that there was probably much spare change. They weren't talking about their investments, or talking to you as a kid about their investment portfolio.
Josh: Well, yes and no, I think because my father was probably a capitalist at heart in the fact that he was one of the few people – so I remember on Sundays when we used to have our own – where we'd earn our pocket money from, and I remember chopping logs. So the view was you weren't going to get pocket money unless you worked for it, so we had various chores. I remember going to collect little logs from the woods, chopping the logs, stacking them up, bring them inside, where the other job was shining their shoes, so if you go to work that week.
And then the last point was also working through, as they were back then, in terms of the share prices in the newspaper, to actually working through the old London Stock Exchange to work out what shares were worth that week. So from a very early on age, we were aware around this thing called business, and didn't really understand what that was, but what that translated to was effectively you had one small share of this company. You had no idea at that age what they did, but that was your way of checking it, and we had to go through the mass of that every single Sunday.
So I think it was a pretty good base and understanding around there is something broader out there than just school and running around a sports field, that – something called investing in money.
Gabby: Yes, that's quite a comprehensive education they've given you there compared to lots of people I speak to on this podcast. And a real life experience as well, because obviously you’re working out how much your labour’s worth when you're chopping your logs, aren't you? You know exactly what you're supposed to be getting.
Josh: In theory, yes.
Gabby: Yes.
Josh: I mean it's definitely child labour, there’s no doubt about that. I don't think we were on minimum wage.
Gabby: This is the rights of parents. I used to do ironing for a pound an hour, and stupidly, at the age of 10, decided that I'd be as quick as I could. If I could get 40 items out in that hour that was amazing. What I didn't realise was, of course, I should be doing 10 items an hour and dragging out my labours. But my mum thought I was a genius because I was returning piles of ironing.
So going onto the sporting landscape and the talents that you were exhibiting, this is a period of time where – and I think actually, when I look back now, you guys had the best of it in the sense that you had a bit of amateurism and professionalism coming. So you had to work out what you wanted to do and be in life; you never thought that just being a rugby player was ever going to be it because you didn't really know how this was going to pan out. So you had all kinds of plans going on in the background.
You were sponsored by the Army to go to Bristol University, so at that point, where was your mindset in terms of where rugby figured in the scheme of things?
Josh: Well you're absolutely correct, I think rugby pretty much turned professional when I was on the M4 on the way down to university. And yes, there were some people at the time, and you know some of those people in the early days of Wasps that just said, “OK, well I'm not going to go to university, I'm just going to focus wholeheartedly at this.” And I remember people signing contracts then and kind of £15,000 for the year and thinking they were absolute millionaires, and you felt you’d made it.
So you're absolutely right, prior to that point I'd always thought that I'll try and play as good a level of rugby as I can, but it was never a job. And even then, when rugby went professional, I always saw it as a professional hobby that I would've done for free anyway because I loved it. And that what that then did was forge in you a really discipline to make sure that whatever it was, whether it be the military, whether it be studies, I always worked full-time outside. And that's probably a bit of an anomaly, but certainly now I probably look back now and see that as probably a good characteristic.
And ironically, I think the game of rugby, but also other professional sports has probably gone full circle now in realising actually it probably makes you a better player, a more balanced individual and, in theory, makes your transition to later life a little bit better because it allows you to put sport in the perspective that it is, and the folly that you can have some amazing days but you also have some down days as well, and you know people through your job have been through highs and lows.
So I think being able to take that and see it for what it's worth, and take the upside of it but also make sure that you've got almost a bit more of a – slower burns of career as well, I think probably makes a lot of sense. And you are right, I mean I was very fortunate, we played in an amazing group of people, and people with massively diverse backgrounds. When I went down to Bristol I played at university, but I also played for a Bristol club because I wasn't going to travel back and forth down the M4 to Wasps.
And I remember when the game first went professional, there were teachers in that team, there were plasters. Kevin Maggs was a kerb layer for Bristol City Council and he ended up becoming 60 caps for Ireland. And I think that we were so lucky to have that group of individuals, so I really do treasure that time, and I think that we played in almost the perfect time for the game.
Gabby: Yes, you then got to experience after university – well actually you then went off and did full-time army for a while, didn't you?
Josh: I did it both together, but I delayed it [unintelligible 00:10:31].
Gabby: So you were full-time rugby and full-time army. You were finishing at Sandhurst, were you?
Josh: Yes, yes, so exactly that. So we had two years back at Wasps. I was then out of favour internationally. I thought, “Well, if I'm not going to do this at international level, then frankly this is always going to be a secondary career to what I’d always planned to do in the first place” which was becoming an army officer and go off and do an operational tour.
So did that, went through Sandhurst; that was quite a full-on year. So when I hear some of our youngsters say, “I can't do that, I can't fit that in, I haven't got enough time.” I say, “Well you can if you want to, and if you want to do something hard enough you can find the time.” So yes, so there was lots to fit in. I'm not sure if people would be able to do that nowadays, but we certainly did by hook or by crook then, and had a lot of fun at the same time as well.
Gabby: So when you eventually, after your education and your army experience, became a full-time rugby player, you did experience full-time professionalism, you must have felt like you had all the time in the world, Josh, finishing training at lunchtime every day.
Josh: Well, it's interesting. I mean I played full-time when I was at Bristol, but also you only play 80 minutes a week, so what do you do with the rest of the time. You can either play PlayStation with your downtime, you train only really a couple of hours a day, really, so you have lots of downtime, so you can utilise that in a far more productive way or just use it in another way.
For me, I was always working away, so I did my degree, and through the military you did that as well, and we can actually manage the two. Unfortunately I had to resign my commission because it became apparent that after two years we were – the army was gearing up to go off to Iraq for the second time, and I'd brought back into the international fold, so I was trying to marry that. And [unintelligible 00:12:24] was that each summer you’d go on operational tour to New Zealand or South Africa or Australia, but you couldn't do that both together.
So when I then said, “Actually, I'm just going to focus on this,” and this was 12 months before the World Cup when I resigned the commission, which is still probably one of the hardest decisions ever made, you then said, “OK, well I won't put all my eggs in one basket; at least I will go back and continue with my studies, make sure you've got a job outside that.” So I always worked full-time outside that and maintained that as well.
So to your point around extra time, that was correct, but I made sure that I was doing other things to keep continuing the other career at the same time in that downtime when you weren't playing or training.
Gabby: And as you say, that was a year before the World Cup. At the beginning of that year you made your England home debut in the Six Nations. And perfect timing, Josh, with a World Cup coming later that year, so all the stars were aligning. Things were falling into place for you, weren't they, at that point. I wonder how much all of that experience outside of rugby, when you look back, actually gave you whatever it was actually you needed to get yourself back into the England fold, and to be in the right place at the right time, how much it contributed to you as a person and how you approached your rugby.
Josh: Yes, I mean that's a good point, and I think that's certainly I think we all go through tough times, right; I mean we all go through things when you question yourself, and my face didn't seem to fit for a while. And then you get some – your advice, and you go well actually you end up learning lessons through that. You learn lessons usually in – more in adversity in life than when you think when the going is good.
And for me it just took some lessons around that you could only worry about what you can actually control, and secondly was if you're good enough for long enough, and when you get your chance that's when you take it. So yes, I think there are lessons for life in that and many sub-careers and jobs, and you've just got to keep drafting away, and when you get that chance you’ve got to make sure through merit you deliver.
But it's really around being long-term greedy, setting longer term aims, and I think resilience. And I think that it's quite interesting, if you look at – if you study a lot of CEOs now, and people who have achieved in many different industries, I think there's probably two characteristics I see as are common amongst a lot of great CEOs. And some of the great CEOs, by the way, aren't necessarily the names that you’d sometimes always associate being the big names. I'm talking about Level Five CEOs with Level Five leadership.
And there's two elements that come across from those people; one is resilience, and the other one's humility. So great lessons for life that obviously transpire through a sports field and the sacrifices you make to eventually fortunately get to the World Cup, and get picked and all that sort of stuff. But it wasn't without having to work really hard to get there.
Gabby: Of course, yes.
Josh: And that was probably the same for a lot of people around that, but also those lessons set you up for lessons later on in your life.
Gabby: Indeed they do. And the army, I imagine as well, is something where you not only learn great leadership, you see a lot of great leadership. You probably see leadership that you question as well, but you can't be part of a team like that, you know that team that won the World Cup in 2003, without a good crop of leaders. And it's always said, isn't it, that there's more than just the captain on the pitch; there have to be people all over the pitch in any team sport who know how to lead.
Is that something, when you look at that team now, that you, with all your interests and years now working in business, you look and think actually there were some really big leaders there?
Josh: Yes, but I think that necessary doesn't do the nuance justice. I think if you look at what makes a successful organisation – and everyone looks at leadership, and it's the most popular thing; people use things like culture, but it isn't the only thing. There's also some fundamental basic building blocks that need to be there in the first place, so you need to have the right strategy, you need to – people need to operate effectively together, they need to be structured in the right way.
So I mean going back to that time that people talked through, I don't think we'd have won the World Cup. I mean people 20 years on, it's very easy to nit-pick certain things. I think it was a combination of Clive was a bit of a visionary in a lot of the stuff that he did, and I think he set the ambition and the platform for a lot of – and brought in some great coaches with great innovation. But also aided with that was a group of players that came together at the same time.
And sometimes it takes a – not necessarily the most polished group of individuals, but sometimes some waifs and strays to come together as a rabbled crew, and then when you've got some amazing leaders and you've got clear direction, and you have time to build that, and people always forget that success doesn't happen overnight. That team failed in 1999, Clive was given another chance to coach on, and the genesis of that performance was probably a world record defeat to the hands of Australia in 1998.
And I was actually on that tour; Johnny's – one of Johnny's first games, and Johnny became like the greatest hero of English folklore. But that day, along with everyone else, there weren’t as many great performance, so it was really a case of this is as tough as it gets, so where do we set the ambition and go again. So it was a long time coming, it was a journey, and I think there's lots of lessons around leadership, around grit and determination, and there's some luck along the way as well.
Gabby: And the army, going back to what you learned about leadership there, it’s quite formalised, isn't it, leadership in that sense because you're working your way through ranks and your job is to lead. Whereas there's more, as you say, more nuanced leadership skills, softer skills, that are needed when you're in a team and you're not the captain, for example, or you might not even be a unit leader within that team.
So what did you notice from what you were learning in the army, and how that leadership pattern was different in rugby, or were there similarities that you recognised from what you've been taught?
Josh: Good question. I think you understand the military you study leadership in all different formats, you understand the importance of organisational structure. So very quickly the clarity of roles and responsibilities is determined very quickly. In a business environment or a sports environment, sometimes that takes a while to forge, so people talk about storming, norming, forming phases.
And when people use a phrase in the sports context around, “Oh, I knew my role,” well it takes a while to get that. You can't put a new team together and everyone knows that. So that is a sort of coming together of many factors, two other elements are really important. One is the importance of followship, and understanding the contribution of followship to a team structure, and that is a form of leadership itself. And my personal viewpoint is, I don’t think you can truly understand leadership. You can become a great leader by the way, but you don't necessarily understand leadership unless you know followship as well, and that doesn't apply to everyone.
And then lastly is the structure of how you communicate. So in the military you learn very formal ways of communicating, disseminating direction or strategy around the why, the what, and the means, and it is a format off the back of mission command to actually devolve responsibility and therefore bottom up accountability because basically you're telling people the boundaries in which they – the aim of what we're trying to achieve, the boundaries are what they need to operate in, the means in which they have to get that job done. But how they decide to do that is devolve right the way to the bottom unit of the army, or the military, in order that the people at the bottom – because they will be better placed to make that decision than someone very much at the top, so the how is determined from those people.
And in that you are encouraging bottom-up leadership and bottom-up accountability, and that's something that certainly I've tried to adopt and tried to encourage in a business context, but it's not always something people want to take on board, and that therefore requires an element of organisational structure to do that. So look, I mean that's probably a long-winded way of saying there's some actual clean learnings around the structure and approach that are very much underestimated unless you've actually been through that formal training or have actually studied this stuff I think.
Gabby: It's very interesting though I think, and how you then translate that into your business career, and what you take from both of those careers, sport and the army. And I wonder if we talk a little bit about risk if you – both involve a lot of risk as well, don't they. Joining the army is extraordinarily risky for somebody, isn't it, potentially, because it's life-threatening. You could be sent into action and the ultimate end game there is for somebody else to want to take your life.
Playing rugby involves risks, not just on the field but also your career can be cut short any moment. When you decided to go for it in the rugby sense and you gave up your army career, how much did you weigh up risk there?
Josh: I don't think it was – risk was not really a thing, it was a case of where can you contribute most, and where could you have the biggest impact in a sense of duty or purpose. And so I think that that is an overriding factor than risk. And when you are in your young 20s you quite happily jumped into some of those things when you don't necessarily have the responsibility of children, and I think you're probably a bit more gung-ho.
And also on a lighter note, I did sort of sit down with my best mates from the military at the time, from the army at the time, and I said, “Listen lads,” because I’d been told – and this wasn’t by the [unintelligible 00:22:35] coaches, but a couple of the older players had sat me down and said, “Look, you're 12 months away, you've got a good chance of doing well, but you can't do both.” And it was obvious to me that I either wanted to do the job properly and become – go off and do operational tours, or [unintelligible 00:22:52] a proper officer or not at all, because otherwise that just – and for me that was wrong.
Gabby: So it was never a risk really for you?
Josh: Well I think that, yes, I wanted to do – I wanted – if I was going to do it, I was going to do it properly. And my best friend got shot in Iraq, and so that really much brought that home around that time. But to answer your question, a couple of lads, you sat down and said “Look, lads, what would you do?” and “Am I making the right decision?” And saying [unintelligible 00:23:19], “Well listen, I'd give my right arm to play rugby for England, and if you don't I'll cut yours off, so don’t …”
Gabby: Gallows humour.
Josh: Yes, yes, exactly. One of the other guys had said, “Look, as long as I get some freebie kit then I don't care.”
Gabby: Get the stash.
Josh: Ironically, then you play all that through, and then 12 months later or whatever it was, through the highs and the lows and the ups and downs and the journey you'd been on, when we finally lifted the trophy, like the first call I made was to a couple of the guys who were actually in a live firefight over in Iraq. They shouldn't have had their mobile phones on, but I told them; that was the first call I made, and said, “Look, we did it.” And it was a pretty emotional time for a lot of people.
Gabby: Yes, I imagine. And going on from that, I think, most fans of sport, let alone fans of that England rugby team can imagine the joy. And funnily enough I was doing the athletics this weekend, and a long jumper called Jasmine Sawyers won the gold in the European indoors and jumped seven metres for the first time. And watching on in our studio was Jake Whiteman who's the world 1500 metre champion, and he said, “Oh, I'm just jealous of the evening she's going to have.”
And I think that relief, that sense of relief and that sense of joy that comes through winning is something that sports people find sometimes quite hard to explain to the lay sports fan because it is accumulation, isn't it, of all the effort. All the effort. And then when you get into civilian life away from sport, it does probably make it harder to find the joy in other things. You don't remember listening to Kenny and Brian Moore having a conversation once with a very successful businessman, saying to him, “No, any deal you close won't feel the same as lifting a Six Nations trophy, or lifting ...”
Have you found that in business? Have you been able to tap into the joy when you do a very successful deal, or if there's an investment that comes off?
Josh: Look, I think you've got to take your victories where you can. And I remember commenting on this a few years back. I think it's important to say that one – that was probably 20 years ago, so stop talking about the past and move on. And one of the – you know, this is the first interview I've done in quite a few years because I think it's really important not to dwell in the past. And because I think if you dwell your identity just to say how something happened 20 years ago then you're always living in the past, and you're always set.
So I think you've got to look forward and try and take enjoyment in other areas, and reinvent yourself is the wrong thing because ultimately you're the same person. It's around building on the characteristics you already have. But I think for a mindset, I mean there's been a lot of – it's really sad to see some of the people who have really struggled through depression and mental health, and some of the factors you see around the headlines with some of the guys recently, I really – I want to just give a big hug to some of those guys, and some of those things are really sad.
But also I think you've got to have a positive mentality to not associate your whole identity with something that happened in the past. So for me it was very much about draw a line; yes savour that moment, yes we were very lucky to have that moment, and this year we’ll have, I’m told, a 20 year reunion. And I never get to talk about this stuff; I don't even have a television; I don't often watch the game. So actually sharing in that, those times, are quite funny, but I think it's also important to see it in the department of life that it was.
It was one chapter, it was an amazing chapter, but also you've got the rest of your life ahead of you. So I think you've got to look forward to other things and find contentment and happiness in other walks of life as well.
Gabby: And so was it always going to be business for you? Was there ever a point where you wanted to stay around? I know you had your job at the Welsh Rugby Union when you were Head of Rugby there. Was there ever a point where you thought that a life in rugby would make you happy?
Josh: I think that – you know, good question. I think I still probably – if I had known how things have gone I would've probably retired earlier than I did, and I was pretty early when I retired, because I think that I felt as though I had unfinished business in the military. I felt as though perhaps I should have retired earlier and gone back into it. I would’ve liked to have done a couple of operational tours, I played for my country, but I didn't; sort of serve or fight for my country. So that was kind of unfinished business, but again, it’s just because of you can't do everything. And age catches up with you, doesn’t it, so that was probably one element.
As for career-wise in terms of job, I was always fascinated around markets, capital markets and investing. So for me, I was always passionate about that, but also improving companies. And so for me going to PWC and then Citibank was an element between one side improving companies and the other one was, what is it around you need to invest in a company, what is one company in terms of relative value or relatively expensive versus another? And for me that fulcrum was key.
Now when I left banking for a while, because I sought for a bit of a purpose, and that was perhaps the moment for me where, being blunt, I was probably missing that sense of purpose that I'd had more in sport. And it was also my way of going, bringing it back, and being able to contribute and do something that mattered. But having done that, and done some really nice stuff which I’m really, really proud of at some of the more junior level of the game in Wales, I felt as though actually I missed some of the more dynamism that happens in capital markets, in investing markets. So that was the opportunity to get back into the business world and that's a continuation of that in what I'm doing now.
It's a dynamic market, it's been really interesting. I think in 20 years’ time we'll look back and go, “Wow, that was an amazing chapter of your life” living through COVID here, also seeing some of the unravelling of the geopolitical elements between the US and China is really interesting. And particularly being based here, and the version of the press is a little bit different than you get in London, and certainly different the way you get it in the US. So yes, playing all that through it becomes a really dynamic interesting market, and it's just great that it's opening up again as well.
Gabby: Can you see yourself staying there forever?
Josh: Oh, I don’t know. I don’t know yet. I think that you see yourself in five year chapters, and now I think there was a moment sort of during COVID where you think “Actually is this the right place to be?” And I think a lot of people did move away, particularly with the impact on families. But look, there's an opportunity here over the next few years, I think, and you’re always aware, when you're the third region, that there is a bigger world out there.
So there's an international mindset, and there's usually a can-do spirit in a lot of the people that are based here. And we have an APAC role, so it means travelling down to Australia, or New Zealand, and into [unintelligible 00:30:15] and [Azyam? 00:30:15]. And there’s 4.3 billion people in Asia so it's not a small market, it's a very heterogeneous, very mixed market, but it means for really interesting conversations. And particularly back to theme of this talk around investing and saying, “Well actually how do you invest?”
And we've had 15 years of a relatively [banal? 00:30:36] investing environment to all of a sudden high cost of capital recently, a deglobalisation theme, growing tensions between China and the US, and where do you thread that needle in terms of where you allocate capital now. We obviously support companies do that, but it just becomes a fascinating cerebral exercise as well as a practical one on the ground.
Gabby: Let's talk about your own personal investing strategy. You talked about life being there in five year plans, or five year projects, are your investments for the longer or medium term?
Josh: Look, I think that your investing strategy needs to mirror your life goals and what suits you, and I think there's some great – there's some fantastic reading. So, as you know, I can read a lot on investing strategies, lifestyle approaches, and there's great books like The Psychology of Money, and sort of life lessons around money, happiness, greed, all that sort of stuff. So making sure you know what success is, what performance is, what's the return you need, what – how you measure up risk as part of that, to actually what suits you is a key thing that many people, I don't think, do.
And, again, when you go back to it in your younger years you don’t really plan for this stuff, but as you start to – you know, we’re comfortably into 40s now, and you go “Well actually you’ve got to start thinking through this for the longer term.” So that's a long-winded way of saying “Both.”
Gabby: But maybe it's changed slightly, has it, as you’ve got older, then, in the last few years? Am I getting that you've started to think a little bit more long term?
Josh: I've always – so I've read all – I mean so everyone talks about being prudent with long-term investing; I think generally your approach should be long-term investing, but it’s around what’s right for you at that time, and can you take risk. And if you are a solvent individual with a relatively good job, you can take higher risk, you can take the leverage, you can … So learning what you can tolerate, and you are willing to effectively lose is a really important part.
So, but all your listeners, I'm sure, will be very familiar with the importance of compounding, longer term focus, etcetera. But I think that there are big – well, you know, this is kind of what we do, is that there are two big thematics in the market which I'm very passionate about. One is the investing industry needs to add more [unintelligible 00:32:59]. So it needs to add more value for the fees that it charges, and because of that I think you're going to see this bifurcation between some passive investing in the one end, and through what I call actual investing – not active, but actual investing – in the other where you get involved in the companies, you improve them, you drive that [operational alpha? 00:33:18], you improve the governance both on the financial side and the sustainability side.
Gabby: And that's what gives you a kick, is it, the active investing for you?
Josh: Yes, very much. Exactly. And that's effectively what [unintelligible 00:33:29] support private equity firms. There’s a lot – they’ve had a lot of criticism of many years around leverage and where they – breakdown performance. OK, where's your actual performance come from? Does it come through market beta, so the multiples going up? Is it around your leverage on the thing? Or is it around operational, your EBITDA? This is very, very simplistic. So understanding where that comes from, and that doesn't really matter when the market's been going up at 20 percent a year for the year 15 years.
But we've now entered a period of time where – you know, the famous phrase by Warren Buffett, “You only know who’s been swimming naked when the tide goes out.” So I think we are now into a really interesting time where if you haven't got that operational focus, and you haven't got that focus on alpha, then I think some of those investors are going to become more and more challenged.
And that's increasingly where I think then normal people need to be aware of these things, so actually know where to place their money and be a bit more mindful. And the people who are investing on these people's behalf then need to demonstrate their value-add in a far more tangible manner.
Gabby: Just for our listeners there who may be listening without vision, Josh is in an office in his building in Hong Kong, and there was a fantastic horn blowing incident in the background there which just gave me a bit of a real-life Hong Kong rush-hour type scenario going on.
Josh: Yes, exactly.
Gabby: Because I'm speaking to you in the Buckinghamshire countryside, and I think I can see a cow in the distance, but definitely that horn was at your end.
Josh: Yes. [unintelligible 00:35:04].
Gabby: Not mine. But, yes, it's given me a kind of a – I kind of want to wander outside your building now and take in the sights and sounds. I haven't been to Hong Kong since the year of the handover actually, so a very, very long time.
So away from the lifestyle, if you like, in Hong Kong, you mentioned there you went over there, you swim at the weekends or in the mornings, whatever, before work. I'm sure there's plenty of great stuff. You can fly quite quickly, can't you, to interesting places as well in that part of the world. Josh, you've got a couple of children, and a lot of people when they're making their investments and they're planning their financial futures obviously are wondering how those will affect their kids, and how to make those investments work best for their children. Is that something that you've adopted and changed your strategy of investments because of over the last few years?
Josh: I haven't changed anything as a result of that. I think that one thing, as I said, we work a lot with life insurance firms and you can't help but be aware that the vast majority of people probably don't invest enough for the longer term, and particularly for a rainy day, or if something sad happens. And we all know as you get older in life, sad things happen, just – and very, very unexpectedly. So the life insurance industry is really huge here in Hong Kong, so no specific policies with that in mind, but what it does do is sort of say like kind of why do we work here, what is success, what do you need in terms of your financial comfort level, because that really sets the bar in terms of how you shape your life, and the lifestyle, and some of the decisions you make.
And I think that people – I think that, again, I could sort of reference some great books around this sort of stuff, around saying, look, what's enough for you, and what's your happy level. And everyone has different views on what that is. If you want to be a billionaire, well good luck to you, but you'll be spending probably a lot of your life relatively unhappy and satisfied. And I think it's really important then to get your sort of happiness out of simpler joys in life, and so I think that it's all part of that factoring what matters to you, what you want by when, and having a broad plan to that, and knowing full well that plan probably will get moved at some stage. But as long as you’re prudent and solvent to that regard, then that kind of make sense.
But also, I think that, as I said, we all know people who have suddenly got ill or have lost family members, and you don't want to ever say, “Oh I wish we did this,” or “We wish we did that.” So I think being prudent at saving is great on one side, but you've got to live life as well. So I think it's really a case of balance and making sure that it's part of a broader lifestyle plan; your financial investing plan supports that.
Gabby: Josh, you speak a lot of sense. I'm sure that that wisdom will be appreciated by our listeners, so thank you so much for all your time today, and it's good to catch up. Hopefully, you will be across to celebrate the 20th anniversary later this year of the Rugby World Cup win, and I might bump into you somewhere. It feels like just yesterday that you guys were walking around that pitch in Sydney. I don’t know about you, but time flies.
Josh: Yes, it feels so long ago now.
Gabby: Thanks for listening to the ii Family Money Show. If you've got time, please give us a follow in your podcast app and leave us a review or rating. You can find loads of ideas on how to plan for you and your family's financial future at ii.co.uk. See you next time.