Funds, sweepstakes and the seduction of the media

Gill Cardy

The content for this column is usually driven by news content from the previous week: an event I have attended, a conversation I have had, a presentation I have been too, a regulatory briefing I have attended or a consultation paper I have read.

But the words you read today, on the day you should be demolishing your Christmas tree, were written before I had even set up my own tree. Unless I am especially prescient, this makes it hard for me to know what comment on which piece of news will seem especially timely.

I do, however, know for certain that the media will have been filled with reviews of 2013 and outlooks for 2014 from trade associations, product providers, professional bodies, compliance experts, economic forecasters and more. The consumer press will have been full of fund tips and forecasts for 2014, features on which as an adviser I eventually declined to comment.

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The final straw was the journalist who told me I could not mention a particular fund as someone else had already chosen it and I would need to ‘tip’ something else.

Quite apart from the fact that I ever got myself inveigled into playing the game of ‘tipping’ a good fund for the coming year when I would do nothing of the sort with my clients, the idea of just ‘tipping’ a fund because no one had mentioned it seemed even more counterproductive, or even dangerous.

The allure of press coverage is seductive: the name check in weekend broadsheets, the reassurance for your clients that their adviser is consulted by professional financial journalists and even the pride of your mum when she sees your name and your photo in print.

But however seductive the call of the media, should advisers be complicit in promulgating the idea that selecting funds for your portfolio to meet your long-term financial planning objectives is the same as picking which horse you want to follow in your company’s Grand National sweepstake?

I know that recommending mainstream funds or low-cost trackers for long-term asset allocated investment strategies does not sound very sexy, and it probably does not help with advertising sales either.

However when investment returns are lower the propensity for everyone to look for higher returns and lower risk grows exponentially. So would it not be more responsible for advisers to work to rule and refuse to comment on articles which claim to educate investors, but which do the polar opposite?

Gill Cardy is network development director of ValidPath