Do you ever feel that just about the whole of the financial services sector (and anything related) is just ripping you off?
[Of course, anyone who's in the area will not agree. They will be benefitting from the employment opportunities, and possibly revenue.]
By this I include:
Financial advisers
Tax inspectors
Government advisers etc.
Insurance companies
Bank staff
Examples: We have been encouraged to invest in ISAs, which we are told are tax efficient. Yet most ISAs manage to change their rates after a while, so that whereas one year you thought you were getting (say) 5%, then in subsequent years you may get 0.05% or less. There is no requirement for the banks and providers to tell you this, other than on request. It is usually possible to optimise this each year or at the end of "maturity periods", but the effort of doing so is not inconsiderable, so I suspect that many will lose the equivalent of at least a month's interest, and some may not notice at all and lose a lot more. Older people, who may be the only ones rich enough to actually invest in these schemes, are quite likely not to read the small print, and "lose" a considerable amount over time due to the way interest is handled. [Of course they may not actually lose, but the value of their savings will be reduced due to inflation.]
Foilowing Thatcher we have also been encouraged to become share holders. Some people are lucky, and do really well, but I suspect that most people will either do badly, or if they are lucky will simply track the market. There is of course tax to pay on dividends (unless invested in ISAs), though with luck any capital gains can be managed to be within tax allowances - unless of course you are seriously rich, in which of course you will have to pay tax. I have heard however, that some of the clever ones manage to avoid paying much at all. [I'm not that rich, so I don't know how to do this ...]
In the event that share holders do invest in ISAs, rather than directly on the stock market, then the ISA provider will take a cut. Thus instead of paying the tax man, one pays the ISA provider. It is not impossible for this to cost more than simply agreeing to pay the tax!
During my lifetime I have noticed a lot of schemes involving tax where reducing a tax levy by one scheme simply puts a similar amount of money in the hands of someone else. Arguably I might rather pay tax, where at least notionally the money goes to support infrastructure.
There is obviously some need for banks, without which we are told we can't function as an efficient economy. However, my suspicion is that there are far too many people involved in the financial services sector. At an individual level some of them are "simply doing their job", but given that it supports quite a lot of people, all of whom have to be paid, and also then regulators etc. who have to check what they do, etc., then there are a whole lot of people who are arguably not very productive taking a perhaps not insubstantial cut from the work that some of the rest of the population do. On the other hand we may take pride in the fact that some of the wide boys in the City are not fleecing our own people, but managing to make a living by doing deals with people elsewhere in the world, which is obviously good for the UK economy.
Or have I got it all wrong?
[Of course, anyone who's in the area will not agree. They will be benefitting from the employment opportunities, and possibly revenue.]
By this I include:
Financial advisers
Tax inspectors
Government advisers etc.
Insurance companies
Bank staff
Examples: We have been encouraged to invest in ISAs, which we are told are tax efficient. Yet most ISAs manage to change their rates after a while, so that whereas one year you thought you were getting (say) 5%, then in subsequent years you may get 0.05% or less. There is no requirement for the banks and providers to tell you this, other than on request. It is usually possible to optimise this each year or at the end of "maturity periods", but the effort of doing so is not inconsiderable, so I suspect that many will lose the equivalent of at least a month's interest, and some may not notice at all and lose a lot more. Older people, who may be the only ones rich enough to actually invest in these schemes, are quite likely not to read the small print, and "lose" a considerable amount over time due to the way interest is handled. [Of course they may not actually lose, but the value of their savings will be reduced due to inflation.]
Foilowing Thatcher we have also been encouraged to become share holders. Some people are lucky, and do really well, but I suspect that most people will either do badly, or if they are lucky will simply track the market. There is of course tax to pay on dividends (unless invested in ISAs), though with luck any capital gains can be managed to be within tax allowances - unless of course you are seriously rich, in which of course you will have to pay tax. I have heard however, that some of the clever ones manage to avoid paying much at all. [I'm not that rich, so I don't know how to do this ...]
In the event that share holders do invest in ISAs, rather than directly on the stock market, then the ISA provider will take a cut. Thus instead of paying the tax man, one pays the ISA provider. It is not impossible for this to cost more than simply agreeing to pay the tax!
During my lifetime I have noticed a lot of schemes involving tax where reducing a tax levy by one scheme simply puts a similar amount of money in the hands of someone else. Arguably I might rather pay tax, where at least notionally the money goes to support infrastructure.
There is obviously some need for banks, without which we are told we can't function as an efficient economy. However, my suspicion is that there are far too many people involved in the financial services sector. At an individual level some of them are "simply doing their job", but given that it supports quite a lot of people, all of whom have to be paid, and also then regulators etc. who have to check what they do, etc., then there are a whole lot of people who are arguably not very productive taking a perhaps not insubstantial cut from the work that some of the rest of the population do. On the other hand we may take pride in the fact that some of the wide boys in the City are not fleecing our own people, but managing to make a living by doing deals with people elsewhere in the world, which is obviously good for the UK economy.
Or have I got it all wrong?
I honestly can never remember but am more than happy to have a lengthy discussion of how funeral music has an link to the wider values and aspirations of society, whether Beethoven ever saw the sea or even whether the phase vocoder in CDP is a more useful tool than the equivalent in GRM tools 
Comment