We have a problem!

When I was at school I was pretty good at Maths and I was told by my teachers that I should become an Actuary and work in the city. I was told the investment firms take the brightest minds, make them work very hard and in return, reward them very handsomely. It was all about money, status and power. This sounded particularly appealing especially for a guy saddled with debts from going through university in London.

For the past 12 years I have worked in the City, more than half of that in a medium sized fund management company. We invested people’s savings in equities (shares), property and bonds to earn them a better return than they might get from the bank. I could definitely say that we felt pretty good about our work and our role in society… until 2008… when things changed.

Over the past 4 years the image of the city has gone from intelligent, hard working, wealthy and often envied to being portrayed as greedy, crooked and immoral. That’s a big change to deal with psychologically and for me and many of my peers it’s been a hard reality to face.

Whilst some of these negative feelings maybe justified not just towards bankers, but also for politicians and corporates and the media; some of these feelings are quite unjustified. In general, most of the people I have worked with over the years are decent people, who work very hard, make many personal sacrifices and are quite conscious of their responsibility in managing their customers’ life savings.

There is no doubt that many people have lost a lot of money in recent times, markets have been unpredictable, banks are unstable, funds didn’t do what they said on the tin and its no surprise that the average person finds it hard to know who to trust and where to put their savings.

I want to change that.  I feel I owe it to the industry and the city that has given me so much. I know I can’t do it alone, in fact I don’t think any single company can either.  It will need us to work together across the city to rebuild society’s trust in our industry again.  It will need ideas … lots of ideas from all those that really care about the industry, the city and business.

Here’s one small idea that might make a difference – a change that might help us educate, inform and reduce information asymmetries to build a deeper contract with society (and our clients) and take a small step to rebuilding trust in the financial system:

Diagnosis:

Information is immensely powerful. The people that have information (experts in any industry) often use it to profit from those who don’t have it and who want it (consumers).

Now most people (and also organisations) act in their own best interests; most people respond to incentives; most people will be more inclined to do something if everyone around them is doing it.

So this information asymmetry gives power in the hands of a few, power corrupts, especially if incentives encourage it and everyone else is doing it – whether journalists (that need a story), car salesmen or insurance salesmen (looking for commission), doctors, estate agents or fund managers.

One solution:

We could use the internet’s power to shift valuable information from those who have it to those that want it (possibly with the kind of impact that the insurance market has seen, reducing premiums but increasing trust). Let’s educate the consumer about money, savings and investment.

For example, we could educate customers that “Day to day changes in markets are fairly random”; “the longer you hold on to your investments the better the chance of meeting your investment objectives”; “good things really do come to those who wait”; “fund managers/banks also benefit if customers to keep their money invested with them for as long as possible”. This in turn could encourage longer term contracts between fund managers and investors.

What ideas do you have?

To get involved take a look at the Future of Fund Management 2020 Challenge www.miteshsheth.com/challenge/

 

Where is the knowledge we have lost in information?

Today I found myself remembering teachers from my past that have inspired me, encouraged me and ignited my imagination. I miss that feeling… This got me thinking. Who are my teachers today? And how can I jump start my learning again?

When we’re at school/university it’s clear what we’re learning and who is teaching us – it’s a very deliberate and organised process. But once we’re out in the big wide world learning is far less structured, less organised and depends very much on what we do/seek, how curious and keen to learn we are.

One might feel we are learning all the time in this global information age, as we are bombarded by information & we have access to news as it happens all around the world. But are we really learning, are we growing, if so what are we learning? TS Elliot put it well – “Where is the wisdom we have lost in knowledge, where is the knowledge we have lost in information?”.

Some might feel we are just floating with the tide, wedded to the same routines and habits every day, making the same mistakes again and again. When we’ve had too much, we escape into a film, a novel or on holiday. What little we learn is absorbed passively from the TV, newspapers and the internet. We learn many lessons passively: look after yourself; you can’t trust anyone; live for the moment; fulfill your dreams; spend your way to happiness; your success is defined by what your possess. It’s not surprising that we live in a society plagued with worry, depression & stress.

One thing is for sure, if we want to change the situation, we have to change our behaviour; and if we want to change our behaviour, we have to change our thinking.

I once read that “A good teacher is like a candle – it consumes itself to light the way for others. ” but we rarely see this in our modern times.

However, if you look carefully you’ll find great teachers all around you. Throughout our adult life we come into contact with many mentors and guides that give us their time, support and encouragement, pushing us to stretch our boundaries.

We need to surround ourselves with such people that challenge us, make us think, question and grow. All the world is a laboratory to the inquiring mind.

It’s no surprise that our learning grinds to a halt as we grow older, as we get busy with ‘life-admin’, we stop asking questions, and think we know enough.

Whatever age we are, whatever stage we’re at, we can reaffirm our commitment to learning, strive to open our minds, be curious, be inquisitive and be devoted to the pursuit of knowledge. There is so much to learn still about ourselves, about each other, about human relationships, about life and about the world.

What are we waiting for?

Future of Fund Management 2020 Challenge

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  • Do you work in asset management or work in a company that sells, promotes, advises, consults and or supports clients who investment in funds?
  • Does it bother that your friends don’t save enough, don’t invest enough, don’t know enough about the importance of saving for their future?
  • Does it worry you that your generation is likely to live longer, work longer and will likely get far less pension support from your employers or the government than previous generations?
  • Do you get annoyed with the use of jargon to make things more complex than they need to be?
  • Are you concerned about the future of your industry and the future that you will inherit?
  • Do you worry that today’s leaders may not have the incentive to bring about the radical changes necessary to get the industry trusted again?
  • Would you like to do something about it?

If your answer is yes to the questions above then you should take part in the “Future of Fund Management” challenge.

“Future of Fund Management” 2020 Challenge – Create an informative, education, fun and memorable ‘You Tube’ video, infographic or animation targeted at young people to answer one/more of the following questions:

  • Why should I save for my future now?
  • Should I buy a pension?
  • Where should I invest my savings?
  • How do I decide where to invest my money?
  • ABC of pensions & investment

If you’re interested in taking part, as an individual or as a team, simply reply to this post or send me an email ([email protected]) with your expression of interest.

If you’re company would like to help, support or sponsor this challenge get in touch.

Best of luck!