Nostalgia alive and well 

With so much to trigger anxiety and stress at the present time, it is a relief (for those of us of a certain age) to learn that the 1980s are very much still with us.

Remember all those wonderful cultural artefacts of the 80s?  Shoulder pads.  Jelly shoes.  Big hair.  Shell-Suits.  Leg-warmers!  Who can fail to recollect the significant anatomical damage inflicted on bare feet by Micro Machines?  The joy of encountering Ghetto-Blasters  at maximum output, apparently surgically-welded onto human beings?  And don't get me started on the food...Sloppy Joes.  Chicken Kiev.  Vol au Vents...

Just in case you were beginning to succumb to that warm, nostalgic glow, perhaps it's time to break the spell.

I'm talking about 1980s financial sales practices.  Today, one of my most intelligent clients rang me.  He sounded a little ashamed, and perhaps with good reason.  He'd got yanked into his High Street Bank last week for a 'free financial review'.  Immediately, my ears pricked up - this sounded so familiar.  During the twenty-minute meeting, the bank representative noted that my friend had £20,000 on deposit.  In a display of cutting edge opportunism, he asked "Got any plans for that?".  It turns out that my friend had - the money was needed for a project in eighteen months time.

"Great!" responded the Banker, enthusiastically - "I know just the place for that!"

And, without a further ado, he recommended a Stocks & Shares ISA.  As you do.

I guess I don't need to go into great detail regarding my client's remorse.  Of course, he had already made a significant investment into ISAs in the current tax-year, but the Banker never asked anything about that.  And he (the client) seemed to appreciate that an eighteen month timeline for an equity investment was a little salty for most middle-of-the-road investors.  There was so much wrong with this sales practice, that it suggests that regulation has had precious little spiritual impact on the mindset of the banks.

But that's not the end of this particular crime.  Realising his error, but not understanding that he did have cancellation rights (mainly because they had not been supplied to him), my client phoned up the bank to ask for his money back.  After a little prevarication, he was told that the only solution would be to transfer the new ISA into his existing one.  I can see why that approach might appeal to someone wishing to cover their tracks, but it merely compounds the original error in terms of inappropriate asset-classes, making the whole thing 'someone else's problem'.

Talk about turning the clock back!  If any observer was wondering whether or not all this eye-wateringly expensive regulation had actually made any difference at all, this throwback to the bad old days might suggest that, for certain categories of institution, the answer is 'not much'.  Yup, sometimes nostalgia isn't all it was cracked up to be.

There are a few lessons here:

  • If the banks are this shameless when it comes to preying on professional people, just imagine how unrestrained they must be with everyone else?
  • The antidote to this kind of unsavoury saga is not to have other kinds of salesmen, even independent ones, always ready to re-house monies on deposit.  Instead, what's needed are financial-planners with the disciplines and tools to help empower clients to extract the most benefit from their financial provisions; and,
  • Even during COVID, people have money to invest, and need reliable, carefully-considered, independent financial advice.

 

Kevin Moss, 19/01/2021