June 2017

OPINION: An industry for the many

Fiona_RintoulPerhaps it’s because there’s an election on here in the UK, but I’m tired of seeing propaganda about inheritance tax. A full-page advert by the wealth management division of leading Swiss bank in a recent weekend edition of the Financial Times rather summed up the mood.

The advert showed a picture of four slightly scary-looking blonde children standing in front of some hideous wallpaper. Above the kiddies, who all seemed to have murder in their little sparkling eyes, ran the caption: “Loving parents leave their wealth to grateful children. If only it were that simple.”

If only, eh? I’m sure that schoolteachers, firefighters, police officers, nurses, cleaners, car mechanics and hairdressers from Birmingham to Bucharest long for things to be that simple.

Whoever created the ad should take up novel writing. There’s so much that isn’t overtly stated. The reader is left to work out what’s really being said: “You have an enormous estate, don’t you? We can help you to avoid paying tax on it.” Whether you are loving or not. And whether your children are grateful or not. 

In my experience, inheriting money rarely makes people grateful. Instead, it makes them nasty and conniving such that they fall out. Indeed, the German word ‘Erbfeind’, meaning sworn enemy, contains a hint of this quasi-inevitability. One meaning of ‘Erbe’ is inheritance.

I’ve always cleaved to the view that people ought not to expect to inherit from their parents. If I had a pound for every time I’ve told my father to spend his money, I’d be a rich woman and he wouldn’t need to worry about leaving me anything – which I trust he doesn’t. But for some, inheritance planning, as it is euphemistically called, and other tax-related skulduggery verge on being an obsession. In an outlook on the UK general election on June 8, for example, Alex Davies, CEO of the Wealth Club, a service for high-net-worth and sophisticated investors, says that his clients “are in a difficult position as they have little option but to vote for the party that squeezes them least financially, rather than benefits them most in June’s general election”.

Really? People have no option but to vote according to their bank balance? Never mind Brexit, climate change or the precarious global security situation. What’s this going to cost me?

There are all kinds of problems with this fixation with not paying tax. It begs the question: What is the finance for? It’s sometimes hard to escape the conclusion that it’s for the privileged few. If that is the case, why would the rest of us support it?

The actor Helen Mirren recently told graduates at Tulane University’s Commencement in New Orleans, Louisiana, that they should all be feminists, because when women are given respect, life improves for everyone. She is right. In the same way, everyone should want a finance industry that serves everyone.

It might be OK to salivate over high-net-worth individuals if the industry did serve everyone well, but it does not. A response to the consultation on the operation of the European Supervisory Authorities (ESAs) from Better Finance highlights ways in which the ESAs have failed to protect consumers and accuses the ESAs’ stakeholder groups of not fulfilling their legal duty to “allow persons that are neither well-funded nor industry representatives to take part fully in the debate on financial regulation”.

If we want a finance industry that serves the many, not the few, to borrow a phrase from UK Labour politician Jeremy Corbyn, this must change.

Fiona Rintoul is editorial director at Funds Europe

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