A man on the radio a few mornings ago made the point that people by and large are far more interested in implications than they are in probabilities. He was a scientist, commenting, as sensibly as one can in the circumstances, on the story that a meteor is going to hit the Earth on February 1, 2019. Perhaps it was this understanding of its readers' preferences that led one “popular” newspaper to conclude that it now makes more sense to splash out on a holiday than save for a pension.
Unfortunately, no story about what will happen to people if they fail to make adequate provision for their retirement made it to print.
That is not to suggest that the press are averse to shocking people.
Earlier in the month, another “popular” newspaper apparently ran a headline stating that women on hormone replacement therapy are 41 per cent more likely to get breast cancer. It took another scientist to inform listeners of the same early-morning radio programme I mentioned before that the research revealed only 8 more cases per 10,000 women a year. The US survey itself described this increase as “slight”.
The raw statistics provided by the newspaper may well have been accurate but the headline was specifically designed to agitate. The positive benefits of HRT were ignored.
Today, we are all chuckling in disbelief at the story that a group of overweight Americans has decided that it is all the fault of fast food that they are obese. In their eyes, it is not their responsibility what they put in their mouths or, indeed, in what amounts and with what frequency. They say that the fast food chains are accountable and must pay, so they are suing.
Of course, everyone knows that you have to put money aside for when you stop work. Even in America, you cannot delegate responsibility for everything, surely. Enough is enough.
It is into this mad but real world that Ron Sandler delivered his report. What a jolly fine report it was, on the whole. That is what everyone commented, at any rate. There was something positive for everyone to say about it and everyone welcomed it in a general outbreak of harmony.
Well, not quite everyone. Fidelity boldly decided that it was time to say enough is enough. The media, of course, loved Fidelity for it, as did those parts of the financial services industry that, having anticipated another excoriating press, had, as a result of the distraction, largely been ignored. Fidelity defied the “lie low and say nothing” strategy adopted by most and told it the way it is in the real world and, with a million investors to look after, Fidelity certainly knows something about what encourages saving.
On the other hand, the “idealistic aspirations” of the proposals in Sandler's report demonstrate a distinct lack of savvy. Compelling the man in the street to pay fees when he prefers commission to be deducted from his investment, directing people to buy potentially more volatile products linked to indices just because they are cheaper (assuming that any company will want to be able to afford to distribute them) and implying that active fund management per se does not add value are recommendations with significant implications.
It is these that the Government needs to quantify, without statistical shenanigans, if it is to grasp the seriousness of its current collision course with the financial services industry. Otherwise, by 2019, it may find itself with more than a few private lawsuits, assuming nothing else intervenes.
Anne McMeehan is a partner at Cauldron Consulting