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The Independent view

The 11th of this month was the big four-zero for me. Unfortunately, not my birthday but the 40th anniversary of the occasion on which I walked through the door of an office in Bournemouth to start full-time employment.

I was to learn two things very quickly – why it was important that administration was kept accurate and up to date and to drink Director&#39s bitter, not brown ale (there was a Courage pub next door).

Forty years on and, looking back, there have obviously been a number of changes – and not just that there is no longer an office in Bournemouth. Nor that, of the three colleagues who started on the same day as me, one became a minister of religion, one opted out completely and the third is working for another company in the same town.

None of us is with the same employer as then, which speaks volumes. Financial services have altered, as have most business activities, to become far less people-orientated. Both customers and staff are dealt with in a far less caring, personal manner.

In many ways, financial services have also become far more professional, with the introduction of minimal competence testing and the advent of “the regulator” having curbed a number of the excesses of the past.

I still believe the regulatory obsession with form rather than substance, and the emphasis on selling practice rather than advice, is a mistake. By way of example, if a lawyer recommends a client to see me in my office because he needs independent investment advice, I should be able to assume he knows who it is he is coming to see and that he will not want to read through the four pages of the agreement that we will both eventually sign until we have established that he does indeed need my help.

Unfortunately, unless I hand over my business card and the agreement, pointing out my firm&#39s regulatory status, my actions will be deemed non-compliant, even if the whole situation is made clear in a more natural way during the course of the meeting, which may last between twoto three hours.

Surely, it would be more sensible if these procedures, especially handing over the business card, were left to the end? Why has this state of affairs come about?

I believe it is because there is another aspect of our activities that has changed over the last 40 years – and changed for the worse. Regulation is focused heavily on the life insurance market, especially its sales and distribution channels – and with good reason.

The ability of the life industry to demonstrate that its honorary membership of the Magic Circle is fully justified leaves everyone as awestruck as ever. Now you see it, now you don&#39t. Yes, the life industry can make investors&#39 capital and savings disappear with a sleight of hand that David Copperfield and his ilk could only dream of. Via such devices as capital units, with-profits funds and MVAs, the ind-ustry has extracted such vast sums that it makes Robert Maxwell appear the epitome of benign philanthropy.

As the recent outcry over excess commission testifies, it has no shame. Its concentration on making sure that charging structures can only be understood by students of Einstein – while at the same time paying lip service to clarity – should be the subject of a royal commission, except that I would not want to give the industry that much time to prepare.

The life industry should not be allowed to offer anything other than protection cover. Investment products should be kept separate.

Another of the early lessons I was taught in the investment world is that investors only have two options – equity or debt. There are no others.

Anything else is either a mixture or a derivative of these two. You do not need life insurance additions to complicate the issue. You cannot reduce risk by sleight of hand, only by careful asset allocation and time.

With-profits funds are the investment equivalent of placing your harvest of fruit in a large jug in a windowless room and asking a troop of monkeys to look after it for you.

You do not know if, when, how much or how often they are dipping in to take a bite.

Why do so many so-called investment people continue to believe you can get a quart out of a pint pot? Mine is a quart of Director&#39s.

Bob Young is managing director of Wilcox Young Personal Wealth Management

With-profits funds are the investment equivalent of placing your fruit in a large jug and asking a troop of monkeys to look after it for you

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