Sunday, 19 October 2008

Something must be done

It is beyond the wit of any man to work out the morality of the Daily Mail. Just when you think you have it, they do something that surprises you completely. However, one over-riding theme is for a sense of moral outrage to emerge whenever something bad happens, and this outrage is often blamed upon the government. The implicit message is "something must be done", or maybe "something else should have been done", but the paper often lacks the courage of its strong convictions and would not support a government that actually did any of the things it might recommend.

An example: today's Mail has found us a couple of millionaires to take pity on. While they drive a Porsche and live in a big house, these are people like us Dear Reader. They sold up their caravan park for a massive profit but then placed their money in a corporate offshore account run by an Icelandic bank. The chances of them seeing all their money again appear rather slim.

"There are hundreds if not thousands thousands of people in our position," the couple claim, before blaming their predicament on the government and asking for a bail-out. It's Gordon Brown's fault these people lacked the financial acumen to know where to safely deposit their money, apparently. I struggle with this one, but partly because there is an element of truth to it.

It is not true that wealthy people should sue the government for their own stupidity and greed. If people bury their head in the sand, understand as little as possible about finances and pass all responsibility for it onto someone else, then it is difficult to believe their claims that the government is at fault for their predicament. If I refused to take any driving lessons and then crashed my car, few would agree that Gordon Brown was to blame for the smoking wreck that I had created.

However, I would like to start playing the blame game. But it is not the government I would point the finger at, but at financial advisors. I have yet to find a financial advisor who has come through the recent crisis well. Examples of such poor advice are legion, I split with my financial advisor after a succession of illiterate advice, which included recommending investing in commercial property just as the sector crashed, investing my pension in shares just as the credit crunch hit, and then arguing with me ferociously when I decided to sell my equity holdings at the top of the market.

But normal people aren't to know better than their advisor, are they? People are told to 'speak to their advisor' before making financial decisions, but what if their advisor talks rubbish? Sue them? Possibly, but the number of disclaimers now makes this very difficult. And you can't sue someone for stupidity. The only real insurance is to know a fair amount about finance, to actually engage in it and think about what it is about.

Finances are boring until the point you lose your life savings. And is this something that the government could help with? Providing financial education and advice, and advising people to be much better informed about their financial choices? Maybe so.

‘The ultimate result of shielding man from the effects of folly is to people the world with fools.’ Herbert Spencer

No comments: