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Phil Wickenden: Bonds, brands and beleaguered reputations

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Last week, Tesco put a range of its own-brand television sets on ‘mega-sale’, insisting it was not because the range has the misfortune of sharing its name with the international terrorist group ISIS. 

However, it is funny how a name can sometimes wreck the perception of a product.

This brings us back to the subject of bonds. We have been aware of the sound bites expressing the feeling that bonds are dead but, as the legislation on the taxation of bonds was not changed by the RDR, we asked: are they really becoming redundant or has an over-simplified catch-all sentiment snowballed, providing a (misdirected) shortcut to reason?

Describe a solution that can help with tax deferral, assignment to minimise tax on ‘exit’ and can be classed as a non-income producing asset, and there is little arguing with the possible appeal (at least for certain clients).

Call it a bond and you may as well call it Al-Qaeda, judging by the perceived non-relevance in some advisory enclaves.

Advisers are, by their own admission (excepting specialists), general practitioners and, as such, cannot be expected to know everything about everything.

When pressed to comment on anything that we may not be 100 per cent certain of, the natural instinct is to gravitate towards accepted truths and received wisdom, irrespective of its root.

Technology has merely accelerated the speed at which this entrenchment can happen: it was never actually stated that the forbidden fruit mentioned in the Bible is an apple. Some claim that it was more likely to have been a pomegranate. The apple was seized on because of an early pun between the Latin words for ‘evil’ and ‘apple’. Either that or the predictive text function on Adam’s iPhone was playing up.

After a certain point in the cultural acceptance of non-truths, you run the risk of outright mockery by attempting a counter-argument, even with hard evidence on the table. The upside, of course, is that making a strong stance against the status quo gets you noticed, which should be good news for anyone who is willing to fly the flag for balanced, solution-neutral financial planning.

Of course, bonds are not – and never will be – the right solution for everyone (it was this attitude that perhaps created the problem in the first instance) but they have, and should continue to have, a strong relevance: far stronger than their beleaguered reputation warrants. 

Phil Wickenden is managing director of So Here’s The Plan

Wickenden

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