In relation to the debate over warnings over future performance, I believe they are pointless.
“Mr Client, ignore the growth history; yes, I’m well aware that you have nothing else to go on. Why do you not look at our insane illustrations that show negative growth instead?”
Inflation-adjusted growth rates are an absolute joke. They would only be useful if the growth of every other asset in the world was also inflation-adjusted, that is cash deposit rates – 1 per cent minus 2.5 per cent inflation.
Cash deposits should carry an official warning that states: “Over the medium/long term, it is highly unlikely that your interest rate will match inflation. As such the value of your savings are most likely to fall in real value. It would appear that there are no charges on your account, however, there is a significant margin between the return your bank achieves on your cash and the return that they give to you.” FCA, I dare you to get that one past your friends at the bank.
As for charges, it is as it has always been; no one minds higher charges if you get higher results. We are moving to a culture that will only measure price. The skill must be to provide a guide of £ performance per £ of cost. But then even that is historical, as is real life.
Paul Scott
Director,
Scott Financial,
Hartley Wintney,
Hampshire
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