Deja vu – do we learn nothing from history?
April 2025
With so much interesting news around, I run the risk of simply adding column inches commenting about what is going on in the world. I shall try to add my own slant by considering how the geopolitical situation may affect how financial advice is provided in the UK.
The war in Ukraine and Europe’s recent determiniations to tackle the situation, bring to mind two scenes from Yes, Minister that were written almost 50 years ago. The Salami Tactics scenario is exactly what is suspected may happen if the deal with Russia is too accommodating. The Red Hot Button deals with the mechanism of using weaponry, but also warns that British troops could hold back an opposition for 3 days. This is why the American backstop is considered to be necessary.
The Ukraine-Russia conflict has caused various food shortages and increased oil prices in the world markets.
Just recently, European Governments have pledged to increase their spending on defence. This has led to a review of Government spending in different departments. The Spring Statement is due in the next couple of days and will already be history by the time this article goes to press. This is going to show where money is being taken from to pay for the increased “defence” spending.
The Government is stuck between a rock and a hard place. It has allowed itself to get trapped by promises made in the election manifesto last year. Winston Churchill once said to a woman berating him for changing his position, “When the facts change, I change my mind. What do you do, madam?” When Prime Minister Harold Macmillan was asked what was the greatest challenge for a statesman, he replied: ‘Events, dear boy, events’. As President Kennedy liked to say: “Good judgement is usually the result of experience. And experience is frequently the result of bad judgement”. The Government needs to be willing to be honest enough to change its course.
Today, we have had aan announcement about MPs pay rise or how to calculate them. Again, Yes Minister covers this horribly accurately. Particularly, since ministers are being asked to look for savings in their departments.
One of the consequences of the increase in “defence” spending has led to a call to review how spending on arms has been re-assigned from being a responsible investment no-go idea to be thought to be a moral need to defend our country against possible aggression in future.
Ths move within the responsible/sustainable investment strategy is very interesting and brings us onto the conversations that we should be having with clients. Many advisers are barely giving lip-service to sustainable investment. There are simply asking clients at the end of their risk questionnaire a brief question about whether they want to consider ESG investment. Many advisers are frightened of the subject as they feel that they do not know enough about to advise on it. Therefore, they avoid it. The chances are that some tree-hugger that wants sustainable investment knows more than they do. Since many advisers need to be seen as the font of all knowledge, this is not a good look for them.
What is not understood is that ESG investment covers moral and ethical, even religious beliefs. Thus, Sharia funds have become available. It is an interesting ethical argument being put now that the defence of the realm has become a moral duty. Those munitions have been shunned within ethical investment because they destroy the infrastructure of cities and kill people. Suddenly, they are now going to be our defence against people with whom we do not agree. If used, they will still do all that. Does doing that to people who are described as enemies make them morally correct? Some politicians have blamed the lack of investment in these companies on “woke” investors rather than considering whether the Governement should have been putting in money all these years into our Armed Forces and the equipment. I guess that we have little control over public money being put in, but individual investors should have the rights to choose where there peronal investments are made.
Spike Milligan said that after the war he was involved in many hapoy reunions. Some of these involved German troops. At one of those events, “An officer present, Noel Burdett, hearing Teske and me stating that we must have actually fired at each other that day in the war, said, “Your survival indicates you must both be bloody awful shots.” Later Hans Teske dispelled the belief that Germans had no sense of humour by inscribing my menu “Dear Spike, sorry I missed you on February 26, 1943.”
These are typical of how world events can affect our client investment strategies and we need to be willing to be agile and responsive to protect the interests of our investing clients.
As we start Q2 of the 21st century, we live in war torn and not economically torn times. That couple with climate change makes our lives all the more tense.
I met an adviser the other day. He had cancer at age 42 that was so advanced that he was given a short time to live and even received the last rites. He had gone through radio and chemo therapies and nothing had worked. As a last resort, somebody asked whether he would be a guinea pig for a new immuno therapy study/course. This worked for him and he is now 8 years on and in remission. He is literally living proof of the value of income protection, critical illness cover and terminal illness cover. He has been able to claim on each of these insurances and now lives happily mortgage-free.
He has had problems getting jobs due to his age, gender, race and the lack of a client bank. It is sad that, in our society of equality, diversity and inclusion, all of these elements have been used agianst him. But that is another story.