There’s a phrase which sums up the attitude that seems to prevail in certain quarters; “I’ll be gone, you’ll be gone”. And just when the report into the HBOS collapse is due, and the FCA is saying the statute of limitations means it’s now too late for the people responsible, the phrase really rings true.
This “I’ll be gone, you’ll be gone” attitude has always been present. Yet through regulation and personal accountability it has largely been eradicated at the advice end of the spectrum. The new senior manager’s regime is long overdue, but perhaps accountability further up the line will begin to see some cultural shifts in the way people handle other people’s money.
But apart from clients and the face-to-face adviser, this idea that we’re dealing with other people’s money seems to be forgotten quite quickly. Even one step removed, people lose sight of the fact that they’re dealing with Mr and Mrs Smith’s life savings, hopes and dreams. Instead it becomes part of a target, the AUM and the attaching bonus. Asset managers don’t want to be bothered with Mr and Mrs Smith’s dreams. They simply need to invest the money well enough to prevent it going elsewhere. They’ve got a shiny new car to buy, a mortgage to pay, and school fees to meet, and the combined savings of Mr and Mrs Smiths are what’s funding it. And it makes me angry.
I was having a conversation with a discretionary fund manager recently who said that they needed to be discretionary to avoid spending too much time dealing with their clients. Their model factored in one solitary annual meeting, and between times they hoped the phone didn’t ring. They were targeted on keeping the money they’d got under management, while looking for new money – servicing the clients of the old money was an unwelcome distraction. Urgghhh.
But when it comes to their own money, it’s a different story. I happen to have clients whose job involves managing other people’s money, often at arm’s length. But they wouldn’t invest their own money that way, and they are also the most demanding when it comes to client service – one meeting a year? You must be joking.
The attitude of “I’ll be gone, you’ll be gone” needs to be stamped out of the financial services sector, from top to bottom. And if I cannot benefit from the statute of limitations, then level the playing field and remove it for everyone else too. That way it won’t be just Fred the Shred who has to pay for his folly.