Solomons-financial-advisor-wimbledon-blogger

Why I struggle with the “best”

I will come to the point, I loathe the suggestion that something is the best. Whatever is given the title “best” is entirely subjective. Best film, best song, best politician, best car.. or something bearing the words “World’s Best Mum / Dad”… really?…. presented by who? out of a choice of how many? Oh… so no, not really the world’s best, just mine.. (sorry Mum and Dad) it’s simply the thought that hey, you are a great Mum / Dad and it’s the thought behind it, wanting to recognise something good… nobody takes it too seriously, it is harmless. So no problem.

Similarly when the i-phone 7 was launched, “It’s the best i-phone that we have ever created”…. Er… surely one would hope that it was, given that its meant to be an improvement, otherwise please lets simply stick with the one we have (which I will probably do anyway). If you are in the technology industry and not making things better, you will have a very short shelf-life.

The best investment fund

Ok, so I’m being pedantic, sorry… but here comes the point when it relates to financial services. There is no “best fund” there is no “best investment” or “best pension” that is all utter twaddle. There is no “best adviser”, “best buy” no “best firm” no, not even a “best financial plan”. This is nothing more than reductionist nonsense. A good financial adviser (better still a financial planner) is not paid to pick “best”… yes you heard it here.

There is always one fund that is top of the performance list…. on one day over one timeframe, but that was top, not best and it will change, by changing one of many variables. It’s important to me that clients are not told that something is the very best… because that is entirely misleading. What is fair to say is that something is suitable (really/very/highly/ blah blah..) and the “best for you” given X, Y or Z but that’s true today and may not be accurate next year. It is about context. We do our “best” in providing clear advice that isn’t sensationalist and doesn’t exaggerate, we want expectations to be realistic not false. The media and urban myth have already raised expectations well beyond what is realistic… we all want low risk and high returns, but that’s simply not going to happen. Financial advisers are not magicians (who it turns out, are also not magicians but illusionists).

Delusion, denial or simply daft ?

Similarly, this week I also heard the phrase “I over-exaggerated” it was used by the American 4x200m freestyle relay gold medallist Ryan Lochte, (who has now been banned from competitions for 10 months following his behaviour in Rio). In connection with his story, he said that he “over-exaggerated”. Mr Lochte you cannot over-exaggerate; you just do (exaggerate). In any event it wasn’t an exaggeration, it was a lie, something that he appears still unable to admit.

So when you are at a dinner party or a social event and someone is claiming how their portfolio is managed by the best, that they are generating the best returns, don’t get taken in. There is no such thing. No investor enjoys the best returns endlessly. We are all making the best of what we have within the limitations of being human and decidedly ordinary. When it comes to investing or financial services, your unique context and circumstances are the most important relevant details. What was best last week or in 2008, 1995 or even 1066 just isn’t your context today. As for politicians talking about the best education or the best healthcare, well… no, I’ll leave it there… well here.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

70 is the new 60…. well for the State Pension

70 is the new 60….for the State Pension

One wonders what we are doing to future generations. Today I read an article suggesting that the State pension age will inevitably become 70, all due to the fact that more people are living longer. The State pension age used to be 60 for women and 65 for men, this has undergone a period of “equalisation” and will be 65 for both men and women from 2018. As this ideological “hurdle” was achieved some time ago, successive Governments have simply made plans to extend the age at which a State pension is provided. The State pension age will be 66 by 2020 and 67 from 2028.

The reason is really two-fold, cost and longevity. The State pays pensions in various forms, the most obvious being the State pension, which now costs about £110bn a year. Disability pensions costs around £42.2bn and survivors pensions about £1.1bn, amounting to roughly £153.3bn which is about 20% of all Government spending and by far the largest component of Government spending. Details here (click).

Looking ahead

In essence anyone born since 1960 can expect to have to work longer. Given the increasing life expectancy and inherent problems with ageing, care costs are expected to soar, resulting in further dilemmas for Government about how to meet costs…. from a population that is having fewer children.

Episode IV – A New Hope

Consider those that graduated this summer and are just starting out on their careers, born in the early 1990’s they were only just teenagers when the credit crunch occurred the property boom had happened. If you understand my heading (refering to the very first Star Wars movie in 1977) this generation can be forgiven for thinking that the Star Wars films were made sequentially when episode I was actually released in 1999 – they were 7). Student loans are now part of their deductions each month, along with compulsory pensions. I don’t like to be a pessimist, but the generation just starting out have inherited the debts of previous Governments (currently interest payments are around £40bn a year), have little prospect of “getting on the property ladder” and an ageing population that received their State pension many years younger than they will. Any academic results they achieve are met with accusations of “easy exams” and employers seem almost eager to say “we cannot find good enough people”. Not even to mention the problems with the environment. I appreciate that you already know this.

The Breakfast Club

I am reminded of the 1985 film, “The Breakfast Club” written and directed by John Hughes, which recently celebrated its 30th anniversary. This was a group of teenagers held back in detention one Saturday morning and who eventually reveal the stories that brought them there. Vernon, the supervising teacher, representative of a now uncaring, disillusioned, bored older generation loathes the fact that he is also forced to spend his Saturday supervising misfits. He is caught by Carl, the caretaker, fishing through the personnel files hoping to find scandal that he can use against his peers. This results in a conversation between the two, in which he complains about the youth of today and ends with this dialogue.

VERNON: You think about this…when you get old, these kids; when I get old, they’re gonna be runnin’ the country.

CARL: Yeah?

VERNON: Now this is the thought that wakes me up in the middle of the night…That when I get older, these kids are gonna take care of me…

CARL: I wouldn’t count on it!

No… neither would I…. perhaps we all need to think rather more carefully about how we are planing not just our own future, but that of future generations… as Simple Minds remind in the closing title music – Don’t You Forget About Me. Perhaps there could be some redemption… even Darth Vader managed to salvage something with his own offspring.

Dominic Thomas
Solomons IFA