Most purported financial journalism is just advertising, held together on the page with reheated topics and lazy copy.
And an awful lot of that lazy copy (or “financial porn”) is designed to titillate, to sow seeds of doubt, or to get the reader to take action of some sort. Invariably these urges - if acted upon - do more harm than good.
Then, sometimes, you read something that is not so much financial porn as plain baffling. So it was with a recent article from Mark Dampier of Hargreaves Lansdown. For the record, I think this brand is fabulous; not so much for what they do but how they do it: the marketing, website and whole “customer experience” is second to none.
Mr Dampier’s article began by saying how investors have had an uneasy ride since the financial crisis of 2007-9.
To which I thought: “Say what?!” Watch this BAFTA nominated video to find out why: it only runs for a few minutes (though you may think it feels longer).
What should you take out from this?
In essence, when it comes to financial services. do not take things at face value: challenge; question; interrogate. If you do not wish to do this yourself then get a financial planner to do it for you.
Because the surest way to get diverted off your financial plan is to be influenced by external factors that do not have your interests at heart.
In financial services the desire to over-complicate seems endemic. Junior ISAs, for example: designed to be for the parents, guardians, parole officers etc of children under 18, Junior ISAs are staple media fodder yet pretty much redundant for the vast majority of people.
Why? Because parents have their own adult ISA allowance of £15,000 each for each and every tax year.
If parents want to save for their kids' future the adult ISA allowances will be more than enough for nearly everyone; how many couples with young children will be salting away £30,000 a year from taxed earnings, before putting even more aside for the nippers?
"Not many" is the obvious rhetorical answer.
Yet Junior ISAs continue to be a source of fascinatation for the financial media totally out of proportion to their actual utility. Nobody with a brain should go near them. This short video explains why.
As ever, do not watch this short clip thinking you will be given chapter and verse. I cannot do that in a timely fashion and - if I could - I would be straying into giving advice. Which is uber-naughty.
Enjoy. I hope to hear from you and thanks for your time.
"K.I.S.S" - Keep It Simple, Stupid. If only: the language of financial advice seems perpetually caught in a fog of obfuscation, double meanings and jargon.
Why though? It does NOT have to be this way. Solid financial planning is NOT rocket science. Rocket science is rocket science, as this clip demonstrates.
For investors, the take-out from the Cass report is to remember to “K.I.S.S.”, to keep it simple.
Unfortunately, many people and institutions in financial services seem keen to perpetuate the myth that dispensing financial advice is akin to rocket science.
This, dear reader, is complete and utter horrocks.
Proper financial planning has four simple constituents.
Everything else is just noise: lazy copy emailed in to wedge between the insurance company adverts.
1) Have A Plan
Think about what you want from your life. Then have an educated guess at what this lifestyle will cost, for the rest of your days. Finally, work out how you are going to fund this (petrifyingly enormous) amount. In other words, work out your “Number”.
2) Stick To Plain Vanilla
Boring, mainstream financial products: for most people, that is all they need to use to achieve their life goals. Think ISAs, collective funds, personal pensions. Really, that is probably all you need. If you speak to an adviser who blinds you with rocket science about some "can't fail" product or investment, remember what Mr Einstein said: "If you can't explain it simply, you don't understand it well enough."
And, for my sake, punch such an adviser on the nose: When these "can't fail" products do fail, it is Muggins here who picks up the bill.
3) Keep An Eye On Costs
As the Cass research shows, there is little to gain from trying to identify the next star manager. But there is lots to lose, in terms of cost, missing market gains, poor stock decisions and so forth. Make sure your adviser has a stated, methodological investment philosophy. And make sure your adviser invests his money where he wants you to stick yours.
4) Stick To The Plan
This is the toughie. A place where emotions enter stage left and reason scarpers stage right. Where there will always be reasons to save less, to spend more: you needed that gadget, this holiday, those Global kitchen knives (highly recommend these beauties, BTW).
As well, there will be nasty periods when your investments plummet in value - guaranteed. You will wobble, maybe lose your resolve and consider scrapping your plan, vowing never to enter “the markets” again.
In terms of your long-term financial health the biggest enemy can often be you. Or rather, your reaction to events. We help our clients to stay on course, "on plan". After all, it's not rocket science.
In our view, educated investors are happier investors.
In this post we outline our approach to investing client money. It will help you understand what we do (and why) with your investments.
To start, please watch the documentary below (not our work in any way). This is split into eight bite size segments. Grab your phone, tablet, PC or laptop and watch these as and when you can. You will learn an awful lot about the beliefs that underpin the advice we give to all of our clients.
Our "Statement of Independent Investment Principles (SIIP)" expands on the above and shows simulated performance for our range of Model Portfolios. For the record, past performance really is no guarantee of likely future returns.
Gold is doing what it generally does best: quietly disappointing people.
Yet three or four years ago articles espousing the wonders of gold as an investment were commonplace. Presently, however, such glowing testimonials are hard to find. Why?
Gold does not produce anything of value nor does it provide a stream of income. You buy it and hope another mug will eventually come along and offer you more for it. This is the "Greater Fool" investment approach (see also the "Dot.Com Boom" of the late 1990s).
So what is the appeal?
Gold is touted as a great way (often seemingly the only way) to protect your wealth against inflation. Over the last 30 years inflation has been relatively benign. The metal would not have needed to exert itself much to retain its value in real terms.
In that 30 year time span there were periods when gold did spectacularly well. Which means - to achieve an average of 1% a year - there were also periods when it did spectacularly badly. By the time the hacks and the rent-a-gobs in the financial press were talking gold up as an investment the gains were gone: yesterday's return gives nothing to today's investor.
So why the love?
In 1984 you could just have easily bought an index linked gilt and held it to maturity; that would have guaranteed you an inflation busting return. But index linked gilts are not exciting, whereas gold has an allure, a literal as well as physical lustre, for some speculators investors.
30 years may sound like a very long time: in investment terms it is just a long time. Time enough for an asset class to assert itself. What has gold done?
