Putting our money where their mouth is? We’re not there yet!

Last night I had the chance to listen to the Lord Mayor’s lecture – organised by Gresham College which is a few yards from where I live. If this had happened last year, I would not have been invited or attended, but the pandemic meant I – like thousands of others -could listen to an hour’s worth of lecture and panel debate from an impressive cast that included the Lord Mayor and Mark Carney.

I’m really glad I could listen and indeed you too can “be at the lecture by catch up”.  Just follow the link in the caption to the image below. It will be brilliant to listen to when you do your hour of exercise today

https://www.crowdcast.io/e/gresham-2021-lord-mayor Follow this link to an hour’s worth of thought provocation

Thought provocation

One of the most provoking thoughts in the discussion was the contention that we are moving to a world where no important decision can be taken by businesses or individuals without considering its impact on the climate.

“Signing up to 2050 net zero, sounds hard but delivering on it will be a lot tougher”

Said Liv Garfield, CEO of Severn Trent Water

When you hear it from the Lord Mayor, a leading global banker , the CEO of one of our most carbon intensive private companies as well as a green activist all talking about immediate action on making our money matter, it makes you realise that we are not heading for change, change is here.

I was provoked to think about what my next big financial decision will be. It will be to follow one of four investment pathways with money in my workplace pensions. Yesterday saw the launch of investment pathways and the launch of the Money Advice Service’s long term investment pathways for savers like me.

The tool is well designed and easy to use, within a few seconds of inputting my details , I could see the results of my search for providers that could help me, they included my own provider – Legal & General.

The first thing that struck me was that I was going to be paying nearly twice as much to stay with L&G as to move to Interactive investor and the second thing was that I was going to need more information before I believed that extra money would be offering me sufficient value to stay where I was.

So I decided to find out what I was buying into with these three options; firstly my current provider

I value L&G because it makes my money matter but there is nothing here about making my money matter and while the words are meaningful to an investment expert , they have no emotional hold over me at all. I hope to still be upright on the planet in 2050, I would be hard pressed to consider how my investment would help the planet to be there for me to stand on in 30 years.

Having looked at L&G, I went to the cheapest provider on the page – Interactive Investor and looked at “more information”.

This made no sense to me. The text talks of what will happen as we approach 2020, but we’ve just kissed 2020 a not so fond goodbye! Not one sentence of this information convinced me that I was buying into the vision of Jack Bogle and I had no sense that my money was going to be managed for the good of the planet, or even my good!

Having looked at my provider and a cheap provider, I turned to Hargreaves Lansdown who are “reassuringly expensive”. Surely – being more than twice as expensive as Interactive Investor, I would get some sense of what they were doing to help me and the planet.

This is much more informative than the other information but – unless there’s an ecological explanation for “natural yield”, this is just financial economics. For over £200 per month, I’d expect more ambition than was on offer here, though at least I got to the end of the explanation with a clear call for action. Of course I came down the investment pathways route because I didn’t want to take advice, so the call to action was not the one I expected!

The three providers I had looked at seemed to have no interest in making my money but I was not discouraged. There was Pension Bee, who offer my L&G Future World fund and a Fossil Free Fund. I looked forward to being excited – I was dissapointed.

I wasn’t getting a natural yield of 3% but a “sustainable” withdrawal rate of 4% but what would be happening to my money over the next 30 years. I know the people at Pension Bee, they do give a damn – why didn’t it sound that way?

Moving on to Standard Life, whose parent Phoenix has just made a net zero climate pledge

I don’t know what by “global reach” but it doesn’t sound like it’s combatting global warning and the impact of global reach appears to be frequent changes in value of my fund (upwards please). Why is this risky? To me the risk is that the planet burns beneath my feet when I am 90 – how is that risk being managed?

On to Aviva , who inform me

These guys are trying to sell me “derivatives” as a means to reduce risk, though my perception of derivatives is still soiled by the 2008 financial crisis where derivatives were used to package risk into little parcels sold as CDIs and CDOs – which blew the financial system up and led to ten years of austerity. Aviva are another company with ambitious climate change targets – what evidence is there of that here?

What choice is this?

This beauty parade of providers is not being organised by some fly-by-night lead generation organisation. It’s being organised by the Government’s Money and Advice Service. The same Government which is organising COPS 26 and that was telling me last night that “Green is Good”.

We cannot go on building engines of choice that do not include statements on the implications of those choices for the climate. When last night I was told by the CEO of the Green Finance Institute , the former Governor of the Bank of England, the CEO of Severn Trent and the Lord Mayor of the City of London that every financial decision I took had to be taken with proper consideration for the planet, I agreed!

The choices placed in front of me in this search were expertly presented in terms of compliance, but they missed the bigger picture , they failed to tell me anything about the environmental, social and governmental good that my money would deliver between now and when I die. That is a key consideration for Government, the City,  for providers and for me but it is still being ignored by the Government’s Money Advice Service.

This is a shame – infact it is shameful.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to Putting our money where their mouth is? We’re not there yet!

  1. John Mather says:

    Challenging assumptions often leads to innovative outcomes.

    For example why do you assume 30 years of retirement?

    We know what causes death and the habits that need to change to “cure” this disease and self proclaimed objective of 30 years.

    What if you are now middle aged?

    A further challenge to funding rarely considered is the number of tax payers supporting State benefits. At outset there were approximately 40 young tax payers for every pensioner now there are four.

  2. Tim Simpson says:

    Hello Henry, While pleased to read Jo Combo’s assessment of the DIY Comparison tool, it was somewhat daunting to read your expert assessment. Since you find your test result doubtful, what would it be for someone from a different trade e.g. car mechanic. Perhaps they would opt for ‘less gets more’. Who wouldn’t? Someone you ‘cross swords with’ as I do frequently, are SJP. However in the same postbox as yours above came their Weekly Wealth Check referring to an LV= survey of 4000 adults [you may already know this] in December 2020. LV apparently found that more than 154,000 people aged 55–64 have been pushed into early retirement by COVID-19. I doubt that this figure takes into account those staff in the two large shopping chains that have recently collapsed. In the light of the BHS farrago, will there be any surprise if it’s revealed that there is an employer’s shortfall in their pension funds. It took a Select Committee to help BHS staff and, unfortunately, the SC Chairman was Deselected before he was able to secure a further payment. Last Sunday’s Telegraph pointed to the risk that those staff within Sir Philip Green’s empire may need to seek their redundancy payment from the taxpayer. I do wonder if Robert Maxwell is alive and well and running correspondence courses. Kind regards. Tim Simpson

  3. How could these providers have such tin ears? Where is their imagination – to see the world from their customer’s perspective? And more importantly, to lead rather than copy and paste from the past.

  4. Andy Hayes says:

    Thank you for reading these, Henry, so I don’t have to!

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