Economics on The Street

The Rules of ‘Financial Planning According to Lola

1. Financial Planning is a shit phrase – it’s just a dreary attempt to dress up the bleedin’ obvious.

2. There are only four things that ‘financial planners’ can do for you:
a. Get you into debt.
b. Get you insured.
c. Get you invested.
d. Talk sense into you. That is to try and get you to think a bit strategically.

3. There is absolutely nothing at all clever or complicated about ‘financial planning’

4. The ‘complications’ arise solely from
a. Ludicrous regulations
b. Byzantine tax laws
c. Intentionally stupidly complex and expensive products created in the main by banks to be easy for their apparatchiks to sell.
d. Massive economic, monetary and fiscal failure of government leading to inflation and the stealthy destruction of your wealth.

5. The ‘professional exams’ that the Professional Institutions want you to take, and the FSA think that taking will make you more ‘professional’, almost solely require regurgitating in parrot fashion all the useless stuff in (4) above. None of them test your common sense.

6. The ‘Professional Institutions’ love stuff like ‘Royal Charters’ because it gives them a monopoly and empowers them to charge [fees] taxes for membership ‘benefits’.

7. So, for the avoidance of doubt this is how ‘Financial Planning’ really works:

a. Debt: i.e. Mortgages. Key question? “Are you sure you want to get into debt like this?” Key rider. “Having researched the market for the best deal / lender we can find that fits your criteria we have come across XYZ which looks to be, on balance, and if you are absolutely determined to buy this house that you really cannot afford, and despite all my warnings about house prices and the surveyors report that condemns it utterly, the least worst option”. “Yes. We want that house. It’ll be a great investment”. “(deep sigh) - OK, shall I fill in the forms for you?”

b. Insurance. (Assuming that you don’t work for the State). "Look, it’ll cost you peanuts to buy some basic life and critical illness cover to make sure that if something happens to you or Mrs Client things will be OK financially”. “Oh, you’d rather spend that on a new BMW, Big Macs, holidays to Spain and spoiling your kids rotten.” “Fair enough”.

c. Getting you to save/invest. “Look, supposing that you do not die and the state won’t look after you how are you going to live if you don’t save a bit now?” “Well, I suppose that drinking yourself to death is one answer.”

d. Talking Some Sense into you. “Thank you Mr Adviser. I was so pleased with how you looked after my mum and her money.” “Yes, well, that’s what we do, and your mum was a very prudent lady, she saved”. ”I Know I know. Do you know she was very pleased to be able to leave as much as she did because you’d organised it so she didn’t lose any capital? In fact her capital seems to have increased over her retirement. That’s a fantastic inheritance y’know – I can buy the 60ft yacht I’ve always wanted now”. “Erm, Mr Jones, your mum did try and suggest that you might like to keep these investments for your old age. It’s very easy just to reassign them to you. And she did also say that she sort of hoped that it’d be family money that’d go to your children, as well as the small trust funds she set up”. “Oh did she say that?” “Yes” “Oh….[thinks]…no, I’ve always wanted that 60 footer…..I know that’s what she’d have wanted”