The chairman suggests that advisers go out and make more friends
The chairman of the insignificantly-sized investment company SmallBlue Planet may be convinced that Plato is a Greek washing-up liquid but after a few glasses of Karigianis, his ideas can start to bear a passing resemblance to those of the ancient philosopher.
Take last week, when we were sitting in the Hedge & Walton discussing a recent survey that had discovered two-thirds of IFAs are a bit miffed with the way they are portrayed in the media. 'Of course perception is everything in this business,' said the chairman. 'Reality is more of a peripheral consideration. After all, why do you think Chris Fishwick got so much grief during last year's split-cap unpleasantness?'
'It wasn't simply because he was split-kapitan of the largest split-cap U-boat?' I asked.
'Don't be ridiculous,' snorted the chairman. 'Most journalists wouldn't know a split capital trust if it lost 98% before their very eyes. They simply don't understand them so they don't write about them.'
'You could have fooled me,' I said. 'I'm pretty sure I've spotted an article or two on the subject.'
'That's precisely my point,' replied the chairman. 'But you only think you did. Journalists had to fill pages and pages with stories about splits but they didn't understand splits. What they do understand, however, are ginormous bonuses and aerial photographs of sprawling houses and that's why they went after Fishwick. The fact he looks like John Prescott was just a bonus.'
'Controversial,' I said. 'But in general I think I see what you mean.'
'Very gracious of you,' nodded the chairman. 'I suppose it's all tied up with the lack of collective memory everybody connected with financial services seems to have.'
'That's true,' I said. 'For instance, how much do investors really associate Barings with Nick Leeson any more? OK, so once in a while the occasional cross-dressing manager might lead to a change of name and the death of a hugely respected brand but even that doesn't appear to matter after a few years.'
'Hasn't that whole affair resurfaced in the courts?' asked the chairman.
'Indeed it has but I thought we'd leave it for another time,' I said. 'But I do think you're right about this industry amnesia. No doubt in a few years' time Aberdeen, or at least the bits that are left of it, will be completely rehabilitated. After all, whatever happens at SmallBlue is always soon forgotten.'
'Precisely,' said the chairman. 'For example, three years ago we switched all our funds to 'value' and 'growth' streams and nobody said a word against us then. What's more, despite the hullabaloo we created at the time, we don't expect anybody to say a word against us now that we've junked the idea and changed our whole range to the new Aggressive Pointy-Tooth designation.'
'Hang on a moment,' I said. 'I know for a fact I said at the time you were just stealing the idea from the likes of Flemings and Schroders, who themselves had just followed the States, the birthplace of every 'new' UK finance idea. I also pointed out that most investment groups had worked out it was perfectly legit to swing between value and growth, depending on how the market's shaping up.
'I'm also certain I questioned the wisdom of sub-contracting to investors not only the sort of fund they're looking for but the decision on growth or value. In fact, the only thing I stopped short of asking was whether, since you were making investors take a key investment decision themselves, you'd be giving them a discount on their management charges.'
'OK, so you might have said something,' said the chairman. 'The point is, short of a really serious gherkin misdemeanour ' and possibly not even then ' it seems the only way you get subjected to long-term abuse in this industry is if you are an IFA.'
'So what would you do to improve the way independent advice is perceived?' I asked.
'Well, two things certainly stand out from that survey,' said the chairman. 'First, with reference to the question 'Compared to five years ago, would you say that overall your clients are more or less knowledgeable than when they first came to see you', the 3% who answered 'less knowledgeable' are letting the side down.
'Second, concerning another statistic that three out of 10 investors get financial advice from friends while two out of 10 get it from financial advisers, the answer seems perfectly obvious: IFAs need to make more friends.'
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