Who's to blame?

It came as something of a surprise to discover just how many of these 'protest camps' have sprung up across Europe in order to facilitate a public expression of anger, anxiety and frustration with our national finances. The one outside St. Paul's Cathedral expects to stick around until Christmas, which clearly must involve some considerable self-sacrifice on the part of the participants. I would imagine that it must take a peculiarly spiritual model of righteous indignation to put up with prolonged contact with cold pavements. Just thinking about it makes me want to grab for a tube of Raljex.

Of course, a very great deal of the focus of these initiatives is to apportion blame - usually in one particular direction. Though it is something of a challenge to feel any real empathy for the world's banking community, neverless I did experience a brief twinge of admiration for one banker who emerged from his inner sanctum in order to engage with the protesters, and wisely brought a loud-hailer in order to compete with the baying and screaming. The UK's financial media has occupied itself briefly this week with the blame game - do we have the bankers in our sights, the economists or the politicians?

One is almost inclined to conclude that a financial mess the size of this one is altogether too big a responsibility to allocate to any one of the usual suspects, and it would be simplistic in the extreme to attempt to do so. Governments, of course, are always keen to take the credit for good economic news, and equally quick to attribute any Bad Stuff to the 'global situation'. Clearly, any sentient being would recognise the intellectual bankruptcy of such an approach, and it is more reasonable to conclude that we are, where we are, due to a combination of poor regulation, unprincipled government and wanton opportunism on the part of banking institutions.

Which brings me back to a consideration of my clients. Unlike our governments, and treasury ministers, I don't purport to have a crystal ball, so I don't attempt to second-guess the markets. Also, unlike (a number of) our beloved leaders, I encourage my clients to spend within their means. And, significantly unlike certain Chancellors of the Exchequer that I might mention, I advise my clients to maintain financial reserves in an accessible, liquid form.

So, how have such clients fared in the midst of all of this upheaval, and financial uncertainty? Interestingly, those that do actually listen to advice are doing just fine. Investment portfolios have exhibited the kinds of behaviour that you'd expect - but overall, they're heading in the right direction. Where clients have made, and are continuing to make, adequate financial provision for themselves, they're pretty much on target. We have not needed to resort to nailbiting levels of risk to make up for shortfalls in personal provision. We've not had to open the locked Panic Room in order to access some kind of special, whizzy financial-product which claims to contravene all known investment models.

And those clients who don't listen to advice are exactly where they always were. They'll always be in catch-up mode. They'll never have quite enough for their needs or plans. They'll almost inevitably find themselves having to reach for higher risk, unnecessarily complex products - you know, the kinds of product which were a major cause of the problems in the first place.

Kevin Moss, 21/10/2011