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Investment view

The simplest questions can extract the most illuminating answers. So it was in Leeds last week at the IFA Events roadshow. In front of a packed audience at the Royal Armouries Museum, the investment question time panel (of which I was a member) received from an IFA one of the best questions I can recall. “What have you learned over the last three years?” What indeed?

The answers were telling. Newton&#39s Harry Morgan had grown in confidence as a result of what he had learned. His experience of managing client portfolios had made him realise that he was far better equipped to deal with difficult trading conditions and volatile markets than the average private investor. He expected to have his help increasingly sought by those who felt less able to cope with the vagaries of the market.

Independent investment trust researcher John Newlands had learned not to trust statistics. Not only was he scathing about the presentation of performance figures in ads but he found the information put out on asset values, asset and dividend cover and hurdle rates on investment trusts to be highly suspect. Check everything yourself was his view. Good advice but hard to put into practice unless you have his knowledge.

Andrew Watkins from Jupiter had learned humility. At least, I think that is what he meant. Like me, he has a few years tucked under his belt in this business. This lengthy and considerable bear market had been as traumatic as anything he had lived through before. Clients needed more care and attention, in his view. He felt older and wiser as a consequence of the last three years. I knew precisely how he felt.

The question was asked against the background of a savings industry that is failing to persuade people to put money away for the future. You might blame markets for this disenchantment. Certainly, the impression I gain is that there is plenty of cash about if you know where to look, it is simply not finding its way into investment products. Much worse is the fact that those at the lower end of the savings scale now seem more inclined to spend than invest. The market has not helped but, in my view, the Government is equally to blame.

You only have to look at the way it has tinkered with savings products and tried to impose its views on what should be available and how much we can charge. When Peps were replaced with Isas, the opportunity could have been taken to simplify this product. The rather tiresome investment restrictions were swept away but, unfortunately, additional complications were introduced in the form of mini and maxi Isas, cash, life insurance and equity options and, of course, the ability to reclaim tax on dividends.

Then there is its attitude to misselling. Clearly, it is important that wrong-doing is stamped out but, with the apparent delight with which the shortcomings of our endeavours to promote endowment policies, personal pensions and some other products have been be trumpeted, is it any wonder that the public&#39s trust in the industry has been undermined?

It is ironic, too, that the advantages of index-tracking funds (by which I mean their low charges) were exhorted at just the time when markets turned south. The list doesn&#39t stop there. The 1 per cent world may be upon us but competition and greater efficiency should deliver it, not Government intervention. I was much encouraged by the IFA Events roadshow but it reminds me that we need more than the return of the bull market, we need less Government interference.

Brian Tora is head of the Gerrard intermediary division

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