50 years of Money Management

Unfortunately we do not have any issues of the magazine going back to its launch date; in fact we only have a few copies from one year of its first decade, 1967 when the annual subscription was £2.2 shillings.

And the magazine looked so completely different in the 60s as to be unrecognisable from what it has become today. At launch, the magazine was called The Unitholder, was a 20 page booklet with a part time editor, and covered mainly unit trusts. The unit linked life industry was still in its infancy, Abbey Life having launched in 1961 and Hambro Life still to come in 1971.

It is surprising, though, looking back through the archived copies of the magazine, how the subjects that are occupying the collected minds of today’s markets were also prevalent 50 years ago.

Take, for example, a comment in the September 1967 issue about the role of banks in personal finance: “Bank managers are now in a rather invidious position when a customer asks for independent advice....Lloyds and Westminster may stoutly maintain that their managers are instructed to bend over backwards to be impartial…but there are limits to altruism”.

The 70s

Although the magazine format continued to be booklet size for most of its first decade, it had changed to an A4 format by January 1970. It continued to be called The Unitholder right up to March 1970 when it suddenly acquired a sub line as part of its title and became The Unitholder, the journal of money management.

Then, in October 1970, the name changed again, this time to Money Management and Unitholder. The broader reach reflected in the new title was entirely apposite, considering the turmoil that was to engulf the personal finance industry, and the country, over the coming decade.

For example, we had the three day week in 1974; the secondary banking collapse of 1973–75; the collapse of the FT30 index (the main index at the time) to 146 in 1974; inflation rose to 26.9% in 1975 and several life assurance companies went bust.

Nation Life was the first to go in 1974, followed by London Indemnity & General, part of Jessel Securities, Vavasseur Life, and Slater Walker Insurance, part of Slater Walker Securities, went in 1977, as did Capital Annuity, part of London & Counties in 1978.

Building Societies were not immune; the New Cross Society had to be taken over by Woolwich while there was a £7m fraud at Grays Society, uncovered in 1978.

The April 1970 issue included an interview with Jim Slater of the then Slater Walker group, who was quoted as saying that “Investment banking is basically merchant banking, but your money is where your mouth is.”

As an indication of how much the unit linked life offices were beginning to take over the personal finance world, the October 1970 issue carried an article questioning whether the method of paying commission to insurance salesmen “is in the best interests of the policyholders.” The article said that “every agent ought to make it absolutely clear to the client that he is receiving commission and to quantify the possible amount”.

In the April 1974 issue I came across what appears to be the magazine’s first attempt at a with profits survey. It bears little resemblance to the sophisticated and comprehensive surveys of today’s magazine, and for some strange reason gave results only for periods of 15 and 35 years.

There was no added value in showing which offices were top, for example, but just scanning the 15 year table showed Equitable Life as having the highest payout for £10 pm premium although a footnote accompanies its payout saying that the results were based on an annual premium of £120, which would have given them an unfair advantage.

In the July 75 issue it was reported that figures from the Linked Life Assurance Group and the Association of Unit Trust Managers show that there were more unit linked policies in issue than individual unit trust holdings.

One of the striking things about looking back at issues published so long ago is to see the adverts that used to adorn the pages of MM from companies long since vanished into the ether, mainly through takeovers.

For example, the first eight pages of the November 77 issue had ads for Midland Bank unit trusts; unit linked life policies from Imperial Life of Canada; an advert for a ‘business efficiency idea’ from City of Westminster Assurance, boasting that its lines were open from 9am to 6pm; an advert for the Target Trust Group; a health policy from Crusader; a mortgage plan from NPI; and unit trusts from Crescent Life Assurance.

Annuity rates have also crashed through the floor: in our May 1977 issue, the best provider of immediate level annuities for a 65 year old male was FS Assurance, with a yield of 17.6%. For a 75 year old it was 22.8%!

The April 1978 issue reported, en passant, the forthcoming introduction of state earnings related pensions (SERPs) on 6 April 1978. A regular pensions column covering this, ostensibly written by someone called Ellen Gee, was in fact written by a pensions guru at L&G…

June 1978 was the first issue to which I contributed as a staff writer, having joined in May that year. However, there were still no bylines for internal writers – only external contributors, so I’m not sure which article I wrote back then!

In August 1978 we were commenting on the effect of Brussels on the British insurance market, saying that the vested interests of other Common Market insurers had proved difficult to combat.

In June 1979 I wrote about the four-years-and-a-day life policies linked to building societies, popular in their day for paying 14% pa net to basic rate taxpayers.

The 80s

The 80s began with some controversial changes. In April 1981 we looked at the new rules agreed by the Unit Trust Association and the Department of Trade that would require unit trust groups to make disclosures about their assets and liabilities of any portfolio changes.

A year later we were discussing the idea of teaching personal finance in schools; April 1982 saw this debate once again brought to the fore after the conclusions of the Cockcroft Report in January of that year, which showed poor mathematics skills in children and an inability to understand concepts such as inflation.

In October 1983 we discussed the best home computers and the benefits of owning one; the Commodore 64 was a top performer in our list with a market leading 64 kilobytes at a bargain price of £299.

November 1983 saw the debate continuing about the end of final salary pension schemes, and Nottingham Building Society was coy about the results of Britain’s first home banking system – an innovation at the time. A world without instantly accessible banking now is hard to imagine.

In 1984 I left Money Management to become the founding editor of Pensions Management magazine, now sadly no longer published. It was a time of great innovation and the first of the weekly ‘pinks’ came into the market – Money Marketing - the brainchild of Roger Anderson, now at Headline Money.

In the summer of 1985 the idea of disclosing commission made some waves within the industry. Those attending the BIBA conference were concerned about the difference in treatment between IFAs and tied agents, who would not have to declare commission in some circumstances.

In November 1985 the magazine had a makeover, and it acquired the big double red MM that has graced the covers ever since, becoming a lasting symbol of the publication.

In 1986 we introduced our first ever Financial Planner of the Year awards, which has been run in association with the IFP almost ever since, and has become the only IFA awards to truly recognise professional excellence.

1986 CTT was replaced by IHT. Considered quite a penal system at the time, it was even mooted that, with a general election just two years away, the new tax might not even last. And with the Big Bang approaching, the October issue looked at the excitement and fear surrounding the forthcoming restructure of the Stock Exchange.

In December 1986 I returned to take up the editorship of Money Management, my first issue being January 1987, until my last issue, the April 2012 issue and our 50th anniversary issue.

In January 1988 the decision was made to change the name of the magazine and drop the word Unitholder from the masthead. Money Management Magazine was born.

In 1988 MIRAS was withdrawn for new borrowers, Chancellor Lawson’s six month advance notice causing a huge spike in house prices.

Change in the industry continued for the rest of the decade, the Financial Services Act being probably the greatest, finally implemented in 1988 after two years of debate and consultation.

The decade finished with a long awaited implementation of the UCITS Directive in October 1989 and as Margaret Thatcher made the announcement that she would step down after the next election, the theme of change seemed set to stay through into the 90s.

The 90s

May 1990 marked 10 years since we started to produce our with profits endowment policies on the same basis that is still used today, albeit with a higher premium level to reflect changing conditions. At that time, many with profits policies were offering excellent returns, especially Equitable Life.

John Major announced his first Budget, we discussed the newly set up FSA, which had a membership fee of £99, and Michael Platt made history when he became the first ever Pensions Ombudsman in November.

August 1992 revealed that, six years on from the Financial Services Act, more than half of consumers still did not understand what a tied agent was, despite 20 years of lobbying. We put forward the benefits of personal computers, which were widely regarded as an unnecessary gimmick, and the Maastricht Treaty collapsed, throwing the pensions industry into disarray.

In the summer of 1994 much discussion was taking place on the subject of advisers transferring to a fee basis and there was a lot of commotion about proposals to raise the State retirement age for women, both issues that remain contentious some 18 years later.

In 1995 we looked at the pros and cons of technology funds in the January issue and with profits funds started to be seen in a more negative light. Emerging markets were starting to emerge, albeit it as a sideline risky venture.

In the November issue we looked at the raft of life offices that had closed or been taken over due to falling sales and rising costs of maintaining expensive direct salesforces. There was also the admin burden of printing new literature because of a compliance obligation to disclose own charges.

We also commented on the new way of selling insurance direct to the consumer, courtesy of Virgin Direct and Marks & Spencer. One commentator quoted in the article gave his tips for insurers that he felt would survive and thrive in the future. He picked Standard Life and Equitable Life.

1997 was a year of major change, which saw a new Labour Government come to power and the implementation of the Pensions Act. Networks were growing rapidly in both size and popularity according to an MM investigation and ethical funds remained a question mark to investors as we revealed that some funds would sacrifice performance to be green.

In the autumn of 1999 we wondered whether a direct salesforce would have a place in the new millennium and networks seemed increasingly complicated.

1999 began with a warning for IFAs to get on the technology bandwagon; we looked at the benefits of ecommerce and how it would be essential in the not too distant future. We discovered that the gains to be made from technology did not extend to funds in the asset class after a “total failure” of the UK stock market on the last day of the tax year due to a breakdown of dotcom investments.

And the December 1999 issue, Money Management pointed out that the new millennium did not, in fact, start until 1 January 2001, but no one was paying attention because they were too worried about the prospect of the millennium bug. This was supposed to cause meltdown to the world’s computer systems because they were not designed to go beyond the year ‘99. In the end it was a non event and no planes fell out of the sky.

In December 2000 we commented on the collapse of Equitable Life, the oldest mutual insurer in the world.

The naughties and beyond

In the February 2001 issue we published a supplement on the new stakeholder pensions scheme. The introduction of these schemes led to a widespread reduction in pension charges across the board.

As the decade progressed the debate between commission and fees rolled on as the FSA called for an end to polarisation and proposed a tighter fee based definition of IFAs. Three years after the advent of the ISA, we weighed up the progress of the savings vehicle and found ourselves confused by the introduction of S2P that was due for implementation in April.

April 2003 saw what we described as the horror of with profits continue; after 30 years of results we were less than optimistic about what the future held for policyholders and a year later we investigated how the Iraqi war had made people think more carefully about the ethics behind their investments.

2005 brought major changes to the industry’s exams that were widely welcomed and the introduction of child trust funds, a savings incentive that was widely welcomed yet, unbeknown by the industry at the time, was doomed to a short lifespan.

In 2006, following a judicial review application, we wrote of how the odds are stacked against IFAs when it comes to the FOS’s decision making process. With A-day upon us we published a definitive guide to the new regime of so called pensions simplification, and the age at which a pension could be taken was increased from 50 to 55.

Alternative annuities were the new trend in 2007; already popular in the States, only 13% of advisers claimed to have a “reasonable understanding” of the flexible annuities according to our June edition.

In July of that year we mentioned our concerns about the increased amount of sub prime lending and I was awarded an OBE for services to personal finance journalism and the personal finance industry.

In September 2008 my comment piece broke the story that the notorious LAUTRO 12 offices had turned into 19 – offices that were “using inappropriate charges which were liable to redress”. In the end the FSA won the tribunal hearing, and to this date the names of those 19 offices are still not known.

In November 2008 we published our first with profits survey to include the newly available FSA Form 59 data, which the regulator introduced to oblige closed with profits offices to disclose past results – based exclusively on Money Management’s own survey criteria, a real coup for the magazinw.

As the date for implementation of RDR drew ever closer, in 2009 we examined the level 4 qualification and the implications for advisers. Property investments saw a rally in the summer and the Conservative party suggested that the FSA should be scrapped and replaced with a consumer protection agency.

In January 2010 we broke the story about the appallingly low interest rates paid by SIPPs on bank accounts, which story made the national press.

In June 2010 SIPPs were still in the news, with our first ever survey on family SIPPs. In December we carried an article on the controversial subject of vanishing funds –badly performing funds that simply ‘disappeared’ by being subsumed into other, more successful funds.

March 2011 we explored the brave new world of the use of social media in personal finance, which indirectly led to our winning our 50th award (out of 51 so far) for best use of social media.

In March 2012 we continued with our trend setting of new research by publishing a brand new survey on pension charges, splitting the commission free plans from those inclusive of commission, which also made the national press.

Conclusion

Throughout its 50 year history Money Management has met many challenges but still retains a loyal readership despite the impact of free online information. It has pioneered its own research and in so doing has changed regulations, highlighted wrongdoing, and fearlessly campaigned for the concept of independent advice - for the simple reason that we believe it to be best for the consumer.

Many challenges lie ahead, the biggest immediate one being the introduction of the rules under RDR from January 2013. I believe that, compared to 50 years ago, the industry has come a long way and that advisers are now far more professional than they ever were. Many poor practices, and poor policies, have gone, although there are still problems remaining from products sold decades ago that have yet to come to maturity.

I hope that you will continue to read and enjoy Money Management under its new editor as it continues to adapt and report on personal finance - the profession, as I believe it will certainly become over the next year.