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On the zest of a wave

It would have been impossible to be an observer at PIMS 2000 without noticing that the mood was optimistic. The keynote speeches reinforced the optimism which delegates had brought with them.

“Best year we&#39ve ever had” was a comment heard more than once and pointed to personal success reinforcing the message of favourable indicators. Delegates had had a good year and believed there were more profitable years to come.

If optimism was the dominant theme, it was far from being part of a general complacency. Indeed, delegates seemed to want to explore topics that were guaranteed to give them cause for concern.

Undoubtedly this arose from a universal recognition that the pace of change was likely to become even faster. It seemed to be accepted that although rewards could be earned, greater sacrifices of time and comfort would have to be made to secure the financial prizes.

The thinktanks and expert-led discussion groups reflected the prevailing mood of confidence but also concern. The fund managers&#39 session was much exercised by what Paul Myners might submit to the Chancellor of the Exchequer as recommendations.

The principal fear was the report would be windowdressing since all the important decisions may have already been taken. This realism was typical and was shown in all the groups.

In discussing international tax havens, nobody quietly accepted the assertions of the Government that it is only trying to acquire ever more regulatory power to thwart drug money laundering.

Sceptics suspected the real purpose was to get as much information as possible about the tax affairs of residents of high-tax countries trying to reduce their tax bills. The machinations of tax collectors and Government hypocrisy were not denounced by outraged IFAs but accepted as part of the background which had to be tolerated.

Sophistication may perhaps be the word that best captures the nature of the discussions.

People were prepared to discuss stakeholder pensions and try to work out how they might yield profits and even to believe there is great scope for generating other individual and corporate business while selling stakeholder pensions.

They coupled this with the cool assessment that there will be a reduction of profitability for IFAs and providers implicit in stakeholder. They also believed the objective of the Government to reduce dependence on state pensions must involve stakeholder contributions becoming compulsory.

This relaxed realism was characteristic and brought an unusual and very distinctive flavour to the discussions.

Any tax officer present would have noticed immediately that the finance industry has developed an invincible suspicion of tax gatherers. No subject can be thoroughly discussed without consideringthe taxman, whose motives and methods are suspected.

This can and sometimes does spill over into a general dislike of regulation, which can seem insensitive and astonishingly distant from the real world of financial provision.

Not only did the Myners report and interference in the offshore market provide two sources of possible grievance against the taxman but a subject like offshore bonds was to a considerable extent dominated by tax status and then again re-examined in the light of a possible threat from European tax harmonisation.

So dominant was tax atthe very heart of any consideration of offshore bondsthat it was admitted thatthe tax position of US and European residents was too unclear to recommend any bond to them.

Yet if tax inevitably intruded itself into so many subjects because its demands made the difference between profit and loss, the tax regime was not regarded as the most intellectually challenging topic.

It was a cross to be borne stoically and mitigated where possible. What tended to excite members of the groups was the challenges inherent in the immediate future.

There was great interest in the future of IFAs in Europe. It was taken as axiomatic that UK-based IFAs would have growing global activities. The internet will be very important in this and there are big opportunities for IFAs.

There was strong European representation which took a strategic view of the market. Banks were seen as vast but lumbering whereas the IFAs placed great stress on speedy service to consumers.

The great unresolvedissue of the years ahead, alarming in its unpredictability, was regulation.

Knowing where to invest matters and knowing the rules helps, but one of the most important investment decisions will always be what to invest in.

Technology has been the source of intense controversy. The passion of its advocates is equalled only by the vehemence of its detractors.

So the group that had to consider technology trusts had to decide whether they were just a fad or a valuable long-term investment. The over-riding conclusion was that technology investment is here to stay as a long-term option.

Increasingly, mainstream portfolios have technology as an important part. Many commentators take a very short-term view of technology stocks and are quick to publicise a fall even if the stock has been bought as a long-term commitment. There are safeguards built into the nature of the IFA&#39s relationship with the client so the total exposure rarely grew much above 10 per cent.

The thinktanks and discussion groups covered the essential details of an important issue and the wider implications of that issue for financial portfolios in general. The atmosphere in the groups was zestful and analytical. In this, they captured the essence of the mood of PIMS 2000.


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