To the inaugural portfolio institutional Awards evening where, after 18 months on this beat, the yawning chasm between the parallel universes of institutional and retail investment was fi nally made clear to me in the choice of speaker.
Thus, while the most recent retail awards bash I attended was hosted by Paul Daniels, diminutive magician and husband of The Lovely Debbie McGee™, the organisers from this parish had lined up Robert Shiller, professor of economics at Yale University, whose keynote address set out to identify morality and purpose in the fi nancial profession. Short speech then, some of the less generous of you may be thinking but, as it happens, the professor had really quite a lot to say on the subject. He argued that, despite what cynics might suggest, fi nancial innovation over the last two decades does extend beyond the invention of the cashpoint and illustrated this view with benefi t corporations, which stand somewhere between not-for-profi t and profi tmaking businesses. Shiller also highlighted social impact bonds, which target and pay out in the event of good outcomes – his example being a Ministry of Justice bond that will pay should there be a reduction in reoff enders from a certain prison – and crowdfunding, which is essentially what would happen if Wikipedia did investing. No, honestly, I have checked and all those ideas do exist. But then the professor started speculating on how fi nance could really make a diff erence in the future, with ideas such as tax-deductible but non-profi t shares that would pay a dividend to your chosen charity or ‘trills’, which would be shares in trillionths of a country’s GDP. He also suggested taking advantage of ‘ temporal construal theory’ – the behavioural fi nance concept that people tend to be more prepared to act generously in the future than they are in the present – so that, for example, a country’s population might agree taxes would automatically increase should income inequality rise by a certain amount by a certain point in time. All of which at the very least goes to show that I would in all probability have done a better job of condensing down into a handful of paragraphs Daniels’ trick involving a tenner inside a walnut inside a lemon. As such, those wanting to fi nd out more about Shiller’s ideas may like to track down his book. This is not called ‘Hippynomics’, which I thought was a good line even if nobody else at my table did, but ‘Finance and the Good Society’, which entirely coincidentally was the title of the keynote address. During the rather good dinner that followed, I was reassured to fi nd the common ground between the institutional and retail investment worlds reasserting itself as some impressively engaging and thoughtful scheme trustees bemoaned their consultants’ shortcomings in the realms of asset allocation, stock selection and, interestingly, innovation and imagination. Regardless of where they may be operating, the possibility of investors being completely happy with their advisers would appear to be beyond even the conjecture of Shiller or the conjuring of Daniels.
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