Invest to change the world! #plsainvest20

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Investment has a PR problem. We do not aspire to be investors (no matter what Sid said). Indeed we (as in those who don’t normally go to investment conferences) think investment people arrogant, aloof and often downright crooked. A handfull of people who prey on gullibility speak more for investment than the PLSA.

I went to one session which focussed on “engagement”, it was in the DC stream but the speakers – who included Jupiter’s Edward Bonham-Carter never mentioned getting the people saving for retirement involved. There remains a legacy belief that members save, trustees invest and that ordinary folk should sit back and enjoy the ride.

At another session, where cost and charges were under discussion, we were shown new ways of getting data delivered to our doorstep. The CTI template is I am sure very useful, but the discussion left me uncomfortable –

Translating data provided to trustees into information that is meaningful for members is a tough job. Well it is till some genius comes along and makes sense of it all like this!

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Too much inter-mediation?

For pension savers, there are at least five stages of intermediation between them and their investment.

Their money comes from payroll or their bank via a remotely triggered message. We rarely physically determine the timing of our investment (or of selling out of the market). People who sent instructions to sell when the FTSE was at 7000, may not have have traded till it was below 6000. Pension Savers have little control over the price they get for their money. Compare this will online banking or gaming.

Between money coming from bank or payroll and it being invested it may be passed through the hands of platform managers, IFAs and investment consultants, before being passed from fund to fund. Eventually it will purchase units but not before a lot of brokers and traders have taken spreads the size of which are totally beyond the control of the saver.

This dispiriting journey means that ordinary people have neither control or interest in the way they are invested. They are imprisoned behind walls of intermediation that make their investments a stranger to them. On line portals tell them their money is there, but people struggle to get to it.


Can data set us free?

Listening to Edward Bonham-Carter , it occurred to me that he may never have considered Jupiter’s funds , subject to any kind of scrutiny – let alone accountability – to what he called it’s ‘beneficiaries”.

The word “beneficiaries” is telling, it comes from a world where Latin is a second language – where “paternalism” and “ad valorems” have still their place. Savers are served by trustees who are served by fund managers who are served by great thinkers like Edward Bonham Carter.

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Edward Bonham-Carter

But while this approach works well for “wealth management” where Ed might well be a dinner party guest, it is absolutely hopeless in getting ordinary people interested in investment. Listening to him was like looking at the “cattening the curve” diagram without the cats.

You may think that I am arguing way for fund managers to talk to savers and you may be right, but not in the way you may think I’m going.

Let me give an example; Tumelo is a firm that takes data from a fund that tells them what the fund’s invested in. It then “cattens” the data (my word) so that it becomes useful to ordinary people.

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The Tumelo app makes investment information interesting

How Tumelo goes about making investment interesting is by showing people that by exercising their fingers they can make a difference to how their investments work for the planet, society and good governance. Aggregating lots of individual votes into one clear message , can make a difference to the asset owner’s vote on issues as various as executive pay to the management of an investment’s carbon footprint.

It could be argued that Agewage is doing much the same when it comes to value for money. We take data and help savers take decisions by engaging them with score. Infact Tumelo and AgeWage could work together to a common purpose.

Data can set us free to change the world – and if fund managers won’t listen – to change fund managers.


Open finance means better governance

We are about to see another round of IGC reports that nobody will read (except me). Savers into workplace pensions will remain as distant from ideas like sustainable investing and getting value for money, as they have been for the last five years of reports.

I am sorry to say that reporting mechanisms like AgeWage have been studiously avoided by most Independent Governance Committees. I suspect Tumelo will be no more on IGC’s minds than they’ll be on the minds of the Trustees of the conference I’ve just attended.

But GDPR has meant that if people want data that is held by others on their behalf, they have a right to it in machine-readable format. That means that the data talked about in this article is available to savers and their representatives on demand.

The question is whether the IGCs , trustees and all the intermediaries that come between savers and their money will make it easy for Tumelos and AgeWages to help, or not.

The open finance initiative is designed to get data flowing, data that can turn dry data into living data like those cats enlivened the graph on the spread of Coronavirus.


Turning us on to investment

The transfer of pension risk away from employers and trustees and directly to savers, has not been mirrored by a transfer of data and useful information.

The cost and charges disclosures are pretty well meaningless to ordinary savers. Some savers don’t even know their money is invested , let alone where it is invested.

Small wonder then that benevolent paternalism still reigns within institutional investment circles.

But the capacity of ordinary people to use data to understand things is changing. It’s changing  because people have the hardware to see things in a way that suits, the software that makes data real and access to data through initiatives like open finance.

The sooner pentechs like AgeWage and Tumelo get together with institutional people like Edward Bonham-Carter the better. For this to happen the gulf between asset managers and fintechs is gong to have to be bridged. Hopefully blogs like mine will help that happen.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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