Nobody likes a clever clogs was my father's warning whenever I was guilty of bragging (as you do).
Part of my task in writing our quarterly report to clients is to keep in touch with financial news. I have noticed a disturbing tendency recently for some journalists to indulge in the clever clogs “I told you so” approach. This is not only extremely lacking in taste but in any business where you can be held to account (which, of course, journalists cannot) it would be very dangerous.
Whether it is pontificating on the use of corporate bonds or the disadvantages of polarisation, writing “I told you so, back whenever, that this would happen” displays a lack of balance such as to make one wonder if the writer must spend all the time prone to avoid falling flat.
The subject of polarisation is occupying many column inches and the support of the Office of Fair Trading for its abandonment is frequently cited. This completely ignores the fact that it was this splendid body which was the main cause for the massive increase in commission, which journalists so deeply deplore, in insurance company terms of business.
Its logic, you may recall, was that, by removing a top limit to commission – because all were always free to pay less – this would somehow result in competition. It certainly did. One hundred and forty per cent of the old Lautro scale is now the norm.
The argument is now that the choice of being either tied or independent is not enough. The investing public is suffering because the big institutions cannot offer sufficiently competitive services because being tied is too restrictive and being independent is too onerous.
I cannot wait to read the new regulator's statement on terms of business. “Those who advise on life assurance, etc, are either independent advisers or representatives of one company or they may represent more than one company but not as many as an independent adviser.”
No one at the OFT will be confused by this because they do not understand competition or that the big battalions do not want choice. However, who is going to supervise this arrangement? Who is going to decide on a day-to-day basis if a reasons-why letter on a product not offered by the multi-tie host is adequate?
The FSA will have to introduce some form of standard format, which every one has to follow. This will bring about less innovation and flair than now. It is difficult enough to bring about change today.
It will still be up to the demands of the IFA community to push for new solutions to new problems.
The much confused investing, insuring and despairing British public will not be any better served. It is already a lucky-dip decision on who to go to for advice. In future, it will be more like trying to judge which train to catch from a railway time table. Many of them will not even be available, let alone get you to your destination on time.
The latest “new” service journalists are heralding contributing to the demise of the IFA is the launch by the likes of Abbey National of the “wealth manager”. Designed for the investor with £50,000 or more, this tailored app roach will offer personalised investment management from big banks and fund managers.
The banks have been offering this option for years. If the account manager is any good, and some are, he or she is promoted and the client loses.
A 1 per cent management fee! We have been offering this since 1986 and the regulators still do not know how to deal with the concept. They will send out statements showing the portfolio's performance and will “sack” underperforming managers where necessary. Golly gosh. All investment professionals have been doing this since before Status Quo discovered three chords were more than enough.
Where have these journalists been for the last 15 years? Yes, I know, in primary school. Not only is this service not new, it will not be personal and it will be no more tailored to the individual than a Big Mac. They even believe the service is aimed at the “can't be bothered, lazy investor who will not act on the “advice” they can glean from the financial pages or the net.
The arrogance is mind-boggling. People have more exciting lives than we in financial services or even journalism have dreamed of. They want to go on safari, sail the oceans, read decent literature, dine out, go to the theatre and hundreds of other pursuits. Some even play golf rather watch their money. These people are our clients and, in the main, do not care a fig about polarisation. Oh. We added personal wealth management to our title in 1996. Who's a clever clogs?