Week six in lockdown. Today is Saturday, I think? Things have definitely reached an all-time lock-down low. I would not have believed it, if anyone said two months ago, that I would be sat in my kitchen in early May, having my hair cut by a wife who is using pinking shears for the first time, to cut hair for the first time and with the only claims to competency being that she has studiously absorbed the contents of a YouTube video on hairstyling, coupled with the provenance of an 85-year-old mother who still cuts hair for a living! I suppose in the bigger picture of what is going on, this is not really an issue, plus the fact we are not safeguarding George Clooney’s locks for an ocean of concerned female admirers.
Such COVID 2020 tales will no doubt be told with great affection for years to come. No doubt the pinking shears will be upgraded to a ‘chain saw’ as time passes and the need for embellishment, even after this weird year is needed to re in-force the story, for people who were not a part of COVID-19 in 2020.
It is now strange to think that just before COVID-19, I was putting together a piece for the Elevation blog, ironically themed around DIY. As enforced interest in DIY cooking, house jobs, and even hairstyling have seen a massive surge in the last two months, it was my observations around the addicted discretionary DIY enthusiast that I was about to my blog around – I seem now to be appealing to a much wider audience.
The reason that I picked on the DIY enthusiast, was because I was getting to think that the DIY mentality stretches far beyond the realms of painting, plumbing or wiring. I was specifically thinking about the DIY Financial planner and fund manager.
The National Sunday press remains obsessed with producing column after column about the latest ‘hot tip’ investment funds aimed at the enthusiastic DIY private investor. These tips can read like the running for the Cheltenham Gold cup. Comments on the latest big winners but no surprise perhaps, less coverage, on the not so hot ‘Dog with flea’ tips are endless.
My fundamental concern with DIY financial planning is not that the market exists –( although the thought of no competition has its attractions!), it is the dangers of it being made appealing and attractive to people who are not equipped, for a number of reasons, to reach the necessary outcomes through the shortfalls that can come with Do It yourself.
The DIY investment market in the UK is large – probably larger than it safely should be. One of the largest DIY investment platforms heads retail sales of investment funds in the UK. People who buy funds themselves, do so, hopefully knowing that, if anything goes wrong, for example, the failure of a fund, they have considered the risks with full facts, and live with that decision.
Since the Retail Distribution Review (RDR) in 2013, which was a piece of legislation designed in part to increase the professional standards of financial advice and products, the number of registered Professional Financial Advisers has plummeted. Sometimes it feels that there are less IFAs now than currently people in a pub. An unintended consequence of good regulation. The cost of firms continuing to be regulated and provide investors with adequate protection has soared, meaning that those firms who did not get through the 2013 hurdle, ran for the hills because of cost to trade. Quite simply, it is a known fact that there is insufficient advice supply to meet investor demand. It follows therefore that there are probably a lot of people in the DIY camp that probably not suited to the DIY market.
During these long days and weeks of enforced contemplation, ‘rubbish TV ‘shows have become a godsend. Personally, I love ‘Escape to the Chateau. If you have not seen it, it is loosely based around DIY, involving Dick & Angel Strawbridge with their two children Dorothy and Arthur. They decided to escape the British rat race and sink their fortune into buying a beautiful Chateau in France. The series follows their ‘DIY’ journey and the complete renovation of the Chateau and grounds. Of course, the reality is that in this case the term ’DIY’ is used loosely. You would need to be a Michelin Star Builder, electrician, plumber, Chef and in this case Vicar – to pull off the tasks that Dick and Angel have successfully taken on – A whole wing has been rebuilt. The Chateau has been completely rewired. A banquet has been produced out of an Oil drum cooker. The owner has performed wedding ceremonies. All in the name of DIY! Fact is that Dick is not a DIY enthusiast – he is, and the credits show it- an ex-Army Royal Engineer! Dick builds bridges for fun! He is a professional!
So, let us pause there. As we contemplate chores for the long May bank holiday weekend, let us reflect first on our level of talent, amount of money that we are prepared to waste in patching up a probable bad first job, or perhaps the health of our relationships, when our toys are ejected out of their cot! Should we be looking to build an extension – or should we settle for painting the windows?
I will give a recent example. I have just completed, a brick ‘edging’ to mark off a lawn from some trees. Simple enough job I thought. It was meant to be as straight as the A5 through Towcester the cost was planned to be equivalent to the price of a Mars Bar. The time to complete the project was a day. Result? Curvier than a roundabout in Milton Keynes. The cost came in about the same as the Government Furlough scheme, and it took more time to build than the Shard, without glass!
What was more unexpected, was the praise that was lavished on me by my wife. Based on my personal critique, I expected to be asked to start again or perhaps think about getting a professional in, or maybe asked if I was drunk when I built it, or perhaps reminded that Phil next door did a better job with his effort. But no, Just annoying praise!
Of course, on reflection, I see now that this was a cunning technique, acknowledging the incompetence, not to hurt the feelings of a sensitive flower. A strained effort to get through the next phase of lockdown. After all, who in their right mind is going to casually upset the only person that they can come within 2m of for the next 50 years!!
On the other hand – I noted – Angel in last night’s episode, gave Dick only a cursory nod of acknowledgement after he had completely rebuilt the Orangery in a morning.
Experiment proved! The more incompetent you are the more support you need! Unless of course, the outcome is so unbearable. Say you rewiring has electrocuted and killed the cat, or perhaps the retirement fund that you had but lost, means that your intended retirement date has been ‘tweaked ‘from 67 to 150!
So, I guess the parallels between DIY around the home and DIY financial planning can be quite similar.
It is quoted that a good IFA will save or make a client 3%pa in the value of their portfolio. The equation takes account of decision making on a broad base of issues. It could be providing financial clarity around personal or professional decisions that enable early retirement. It could be through ensuring that tax bombs planted are not set off through ignorance. It could be through proactive management of money. Good professionals do this for a living. Whilst there are always people who can build an Orangery as an amateur because they have the talent and resources – and respect to that, there are also less equipped people who are lured to have a go, without a proportionate sense of risk.
I’ll certainly be getting back to my builder after lockdown – just don’t tell Mrs Smith!