3 years ago, the financial regulators took a decision to ban commission payments on the sales of pensions and investments.
On the face of it, this was a great idea because there was little doubt that the commission arrangements allowed for all manner of sharp practices to take place.
The banks (never shy about a bit of that themselves) were horrified. Without all that easy commission on the table, how would they continue to sell their wares. The answer, of course, was that they wouldn’t. So cue a mass exit of banks (who probably found that LIBOR-rigging was much more profitable anyway) from the retail financial services market.
Great news. Cowboys rousted out and everyone’s happy, right?


Because the result of this massive drop in adviser (aka salesman) numbers was that many people now found they couldn’t get any advice at all – or, if they could, they simply couldn’t afford it – and since buying a savings or pension product is hardly a purchase to get the pulse racing, people just didn’t bother. These people began to be known as the ‘financially excluded’ and, seeing what was happening to them, the Government began to realise that, sometimes, even weak advice can be better than no advice.

So, the talk now is of bringing commission back – a mere three years after it was shown the door.

Good thing or bad thing?

Well, as for the banks, they will be back selling some people unsuitable products – of course they will. That’s just what they do. But, alongside that, they will also be selling a lot more people products that actually serve them well.

This, then, is the dilemma that legislators have. If the price of nine people being insured, saving money, funding pensions etc, is one person being sold an unsuitable product, is that worth accepting?

Well, even though it is painful to contemplate the grasping fingers of avaricious banks (which will already be twitching with excitement), given that the one person would, on discovering their banks chicanery, have access to redress via the Financial Ombudsman Service, I would have to say yes, it probably is worth it.

Yesterday found me embroiled in a lengthy debate with an investment analyst. Now, let me say, straight off, such chats never amount to my favourite conversations – simply because the combination of his role and my views sets us, inevitably, on a collision course right from the off.

That said, yesterdays adversary is as friendly and affable a chap as I have encountered in his field so I guess, if I had to have this particular dialogue, better it be with him than any other.

Still, after the best part of an hour, we had managed to find scarcely a scrap of common ground – but the call ended in good spirits anyway.

I have no doubt that my adversary utterly believed in the opinions he was holding forth. There is not, for one moment, a thought in my head that his enthusiasm was feigned in any way. No. His conviction is, I am sure, absolute  – yet this is in spite of him being unable to offer one shred of evidence to support his views.

Only on later reflection did it occur to me that this must be how Richard Dawkins would feel after a lengthy discourse with Archbishop Justin Welby.

How, I wondered, could he cling so doggedly to this belief that investment analysts add genuine value in the process of fund selection in the face of, well, zero hard facts that prove it so?

Of course, the behavioural psychologists have the answer.

That belief system is his whole career. To abandon it would be to abandon his entire professional life. To abandon, in effect, himself. Even to question it as anything other than an unassailable truth would produce in him a cognitive dissonance with which few men could comfortably exist.




RBS head of credit, Andrew Roberts, says “China has set off a major correction and it’s going to snowball”

Neptune’s chief economist and chief investment officer, James Dowey, however, begs to differ. His view is “I believe the market’s gloom and doom is over the top”

Well they can’t both be right.

So, which one is the raving idiot? Well, neither of them. They probably each know an awful lot about investment markets.

But which one thinks he knows more than he does? Well, I’m guessing that will be both of them  – because overconfidence is just what investment ‘experts’ do.

Daniel Kahneman once observed:
“People and firms reward the providers of dangerously misleading information more than they reward truth tellers”

Which, if like me, you are one of those people telling the truth, is a real bitch


Here’s Gary Potter from F&C trying his best to explain away his teams investment decisions in Asia.

Say what you will about Gary, he’s got creative genius – that much can’t be denied.

‘We weren’t wrong, we were early’ – I LOVE it

All I can say is look out Mrs Potter because if Gary ever has an affair, he’ll be saying ‘If I’d done this when I was single, it’d all be okay. See darling, I wasn’t wrong, I was just late’

I have some sympathy. Two weeks ago, I bet Newcastle would win 2-0. Okay, they were thumped 5-1 but my bet was right. It was just a week early

Let’s get serious for a moment. For the record, Gary, being early – in this situation – IS being wrong and no amount of brass-necked, brave-facing of the matter is going to change that.

Fund managers eh? What will they come up with next?


What a pointless piece of ‘research’ this really is. Hasn’t JLT got anything better to do with it’s time?

Unless you can identify, in advance, which will be tomorrows poor performing funds (and let me be emphatic here – you CAN’T), what use is knowing that some funds will under-perform others.

In terms of value, I put this right up there with the news that ‘choosing some lottery numbers will result in a big win’.


The regulator needs to get ahead of this – and sooner rather than later for once please.

I know they are reluctant but it’s time to step up, show some b*lls and start down the path of product licensing.

 As Nick correctly observes, there is a huge array of products whose structures have been shown, over many years, to be broadly reliable and I suspect that most sensible advisers are able to satisfy the vast majority of their clients’ needs from within this universe.

 So, it’s about time the FCA drew some lines of demarcation between products that fit into this category and those of a thoroughly less well tested variety. The former can be given some form of ‘kitemark’ and the rest can be given an ‘enter at your own peril – because the FSCS won’t help you in here’ warning stamped boldly across the front of the brochure.

 Personally, I am inclined to think that advisers who are stretching their hands down into the more ‘doubtful’ investment buckets are doing so because they or their clients (or both) suffer from excessive greed. Otherwise, why even go there?

 I have no problem with people wanting to dabble in such madness but they ought to know that it’s their money and (for the advisers) their business that’s at risk.

What I do have a (massive) problem with however, is the morally offensive expectation that other, more principled, advisers should, via their FSCS levies, pick up the tab for these excesses.

 As Peter Lynch once remarked “Never invest in any idea you can’t illustrate with a crayon”.

So, finally, finally, FINALLY, I have got around to studying the Defaqto report on ‘Investment Solutions’ (it only came out in March but, here at Park, we don’t like to rush into these things) – and what a hot little number it is too.

First up is the inference that advisers ongoing charges for their investment propositions are coming in at 1% per annum – even on their ‘Risk Rated Multi Asset’ models.


What in God’s name can they be doing to warrant that?

Still, the picture (if Defaqto is to be believed) gets immeasurably worse if you’re one of those luckless clients palmed out to a discretionary fund management service (DFM). Here, the numbers being tossed about are up to an, eye-watering, 3.0% per annum (so, when I said back there ‘immeasurably worse’, that was actually a fib. It’s 2% worse –  see, completely measurable).

I guess we know where all the yachts are then, don’t we – and they’re sure not in the hands of the clients.

Lucky then, that the charging structures under many DFMs are so opaque and incomprehensible that no client will possibly fathom out how much they are being taken for. Murkier than a, recently stirred up, pool of water outside the Chernobyl power station (but with less three-headed fish).

Astoundingly, as the portfolios get larger, the use of DFMs increases!! That blows away the notion that, with more wealth, comes more smarts.

And incredulity reaches new peaks on hearing that, of advisers building their own single asset fund portfolios, only 20% are using passive funds. What are the other 80% doing? Oh, yes, that’ll be it, losing their clients bucketloads of cash.

Finally, the joyous ‘train of gravy’ that is the Multi-Asset Multi-Manager fund (making investment professionals rich for decades). Ongoing fees up to 2.5% per annum on these little money spinners. It’s one hell of an ask to deliver that type of outperformance year in, year out. Do ANY of them achieve it?

It’s a rare day that these kind of ‘survey-based’ reports produce anything in me other than a long stretch and the beginnings of a yawn but this one is dynamite and a copy should be on the desk of every investing man and woman throughout the land.

That won’t happen of course but, if you want to get your hands on one, come whisper in my ear and I’ll point you in the right direction. I am sure those lovely people at Defaqto will be more than happy to let you have a copy