Category: Analysis & comment

Our relationship began almost twenty years ago, when I was in my impressionable twenties. I was young, free and, erm, approximately single. It began almost by accident.  I was working for an American firm, I had shares in the company, there was a public markets event which I took part in and the next thing I knew I’d begun a long distance relationship.

It wasn’t ever a particularly passionate, intimate relationship.  In fact I got much more involved with another member of the same family, in London, in a brief fling that left me hurt, scarred and financially damaged.  But somehow the long distance relationship continued.  Occasional phone calls usually with me asking for something. A few letters – an annual ritual, for the most part.

I considered splitting up earlier this year.  I was trying to buy a house and I needed some help, some support.  I picked up the phone, and I made my feelings clear.  I had worked out what I wanted and I asked for it. I was told No, not if I wanted to stay in London.   When I realised I couldn’t rely on the relationship, and in fact got more support from other relationships in the UK, I almost broke it off.  But somehow I just reduced my involvement even further and kept going through the motions.

The phone calls had now become only occasional events, and were always about money.  I can’t remember the last letter I received.

So imagine my surprise when I got a letter, last week.  With the familiar postmark.  When I opened it, I couldn’t quite believe my eyes – what I was reading.  No personal greeting, even.  Just cold, impersonal prose.  Not even an ‘it’s not you, it’s me’.   Just complete clarity that our past relationship (!) is over, and a request for me to remove my stuff by the end of the month.   If possible.

I’ve never been dumped before, let alone this way.  Thank God there wasn’t a request for money.

The letter’s below – judge for yourself.

Continue reading “I’ve just been fired by Goldman Sachs” →

Picture the scene.  You’re an entrepreneur / widow / recent inheritor / recent divorcee or similar.  You don’t work in financial services.  You find yourself receiving a lump sum of cash – more than you have any immediate plans for – and, as surely as a carcass on the African plains attracts vultures, you end up talking to a private banker or an independent financial adviser.

If this scene is familiar to you, then I think this blog post is the most important blog post you will find on my blog.

The charming, well-dressed and thoroughly presentable financial professional makes arguments along the following lines:

• I am a very experienced financial professional.  You can tell from the quality of the tea and biscuits, my dress code, and perhaps my accent – suggesting that at least my parents and grandparents had a lot of money.
• You are a talented and clever person.  Either because you created value some of which you have just ‘cashed out’, or because you married a very talented/rich person who sadly(/happily?) is no longer with us and/or you.
• You realise that leaving your money in cash gets it nowhere, before tax.
• You understand that all the rich people do not just leave their wealth in cash but instead have their money ‘invested’.  I invite you to believe that this has helped them to protect, maintain and increase their wealth.
• There are a lot of clever things you can do about tax.  [For the purposes of this blog post I am not going to expand on this further].
• You do not have the time and/or expertise to manage your money yourself. Picking stocks is gambling, complicated and your money can be at risk.
• I and my firm manage money for a living (therein lies a clue which I don’t want you to dwell on, and heaven forbid don’t ask what I do with my own money).
• In fact at my firm we can do various particular things for you:
  • We have many clever analysts. I can introduce you to some and ensure you have ready access to them whenever you want it.
  • We have economies of scale which allows us to negotiate better rates than you or our lesser rivals can get.
  • We can invest in overseas investments.
  • We have access to special investments  that aren’t generally available. These include investment products made by some of the most famous and successful financial services firms of all time, who do not deal with mere mortals such as you.
  • We, or some of our most trusted friends, can structure special products which turn base metals into gold eliminate all risk and practically guarantee fantastic returns.
  • We can look after whatever tax filings you need in whatever jurisdictions / etc your tax planning / divorce court / similar lands you in.
  • We will review your finances carefully against your objectives and give you professional, bespoke advice – a complete financial strategy, along with all the help you need to execute it.
• Fees? Well, since you ask, yes there are some fees but they are very modest. Essentially only just 1% of all that money we manage for you, along perhaps with occasional incidental expenses.

I invite comments about how well I have captured the thrust of a typical IFA/wealth manager’s pitch.  I have quite a bit of experience of being on the receiving end here and think I have captured the key pitch; indeed, I would even say that it does sound quite compelling.

I myself took the bait about 15 years ago. I have had a pot of money managed by a private bank since around 2000.  I did so as part of a ‘test and learn’ strategy in which I put various pots of money to work in various places – some went to private banks, some I managed myself, some went into structures I found with an IFA. I tracked all of it quite carefully with some professional investment-tracking software (alas that is no longer on the market).  Since 2013 I have been more rigorous and have done full month-end tracking which I post on this blog, but I have most of my portfolio tracked pretty accurately (albeit updated sporadically, not monthly) since around 2000.

Continue reading “Warning: private banking injures your wealth” →