In which I finally realise why I can't be rude to cabin crew.
Like many people when I pay good money I expect good service. Unlike many people though when I don’t get it I do make a fuss.
When my wife and I were newly married, I shocked my mother-in-law by making a fuss in a restaurant over our drinks not being up to scratch. My M-i-L remarked that she had never seen me like that as I was usually so laid back. It was in a Turkish restaurant and perhaps I had been agitated by the over exposure of not particularly appealing abdomen during the belly dancing act or perhaps by the service being exposed as inadequate. So if a restaurant, the whole purpose of which is to provide its customers with an enjoyable experience, can't provide good service then what hope is there for other businesses?
When I go to a DIY store I'm not expecting, nor do I in the least bit care for, a particularly good service. I just want some picture hooks, for example, which will allow me to hang up a picture in the house thereby earning me the right to watch the afternoon football without interruption from my wife.
As for the camaraderie I might share with the shop assistant as he and I venture down the aisles on a joint mission to find the exact specification of picture hook, or the bon homie of the checkout assistant as I'm charged far too much for a tiny piece of metal, frankly I can usually do without it, (more on that topic in future blogs when I explain why I'm not against self-service checkouts.) What I want is the right item, fairly priced and quickly sold. When I'm being served food though my expectations are very different. Except that is when I eat on an airplane. But why would that be?
I thought it might be because I have some sympathy for cabin crew who must have to deal with some rather odious passengers expecting Michelin service on a Tupperware budget. Then I thought perhaps it’s because for many cabin crew the rewards don’t actually come from the work involved in the job, nor particularly from the pay from the job but from the perks associated with the job. It must be difficult to be motivated day-to-day when the rewards for a job are two or three steps detached from the daily grind, but to be honest I never really thought about that either.
Then I recently heard again (on a plane of all places) the great 1976 classic “I’m Mandy Fly Me” by 10cc (probably the best thing to ever come out of Stockport), in which Lol Creme sings about the stewardess rescuing him from the plane crash as sharks are approaching, and giving him the kiss of life. That’s it! Of course. The reason why I can’t be rude to cabin crew is that we all might die a horrible death together. Now, I’m not suggesting that if I’m nice to the crew they might prefer to give me the kiss of life as opposed to any other passenger, and even if they did I’m not banking on it being like the scene from Dr. No No No No as in the song. Perhaps standards have changed since 1976 and I shouldn’t expect such excellent service from cabin crew.
But it is difficult to be rude to someone if in a matter of minutes your plane might be heading sharply down to the ocean and you have to hurriedly prepare to become tinned shark food.
Saturday 21 August 2010
Saturday 7 August 2010
The Big Society: Cheryl Cole for Government?
Enjoyable lunch recently with business contacts at Locanda Locatelli; some business talk and some general chat about the state of the country and whether we have a broken society, whether there is enough engagement by the public into the community and whether Mrs. Thatcher set the ball rolling for a more self-centred view of an individual's role in the community. Some general agreement that Blair did little to change the trend initiated by Mrs.T, so its interesting to note David Cameron's emphasis on Big Society and engagement by the public.
Sounds good to me and the example often cited is the Swedish model of running schools where groups of parents can band together to set up a new school. What more could we want in the UK? Unfortunately I suspect that model only works when accompanied by a pre-existing community psyche. I can't believe that in pushy-parent Britain such schools would have the same ideals. What's more, with the trend towards outsourcing, huge companies like Capita and Serco are already sniffing around the opportunities for providing outsourcing services to these Big Society schools. Surely, their involvement doesn’t help the impression that these are going to be cuddly parent-led community schools?
The discussion then moves on to public engagement during the last general election and the excitement caused by the creation of a coalition government. Of my two lunch guests, one grew up in the UK but now lives in Dubai. He frets about British citizens overseas not being allowed to vote (as is the case after 15 years abroad). My other guest is Danish and even having lived in the UK for many years and being married to a British national, he is not entitled to vote in the general election which seeing as pays taxes here leaves him feeling cheated. The beautifully British compromise to this disenfranchisement is that he is entitled to vote in elections that have no great relevance and change little in our daily lives; yes, he can vote in local elections and European elections.
I suggest to him things aren't all bad as he can surely vote in the X-Factor contest. And let’s admit that if we review the stats this has a much higher level of public engagement than even the general election. Is that what it is going to take to get the Big Society working? If so, perhaps David Cameron needs to bring Cheryl Cole into the government.
Sounds good to me and the example often cited is the Swedish model of running schools where groups of parents can band together to set up a new school. What more could we want in the UK? Unfortunately I suspect that model only works when accompanied by a pre-existing community psyche. I can't believe that in pushy-parent Britain such schools would have the same ideals. What's more, with the trend towards outsourcing, huge companies like Capita and Serco are already sniffing around the opportunities for providing outsourcing services to these Big Society schools. Surely, their involvement doesn’t help the impression that these are going to be cuddly parent-led community schools?
The discussion then moves on to public engagement during the last general election and the excitement caused by the creation of a coalition government. Of my two lunch guests, one grew up in the UK but now lives in Dubai. He frets about British citizens overseas not being allowed to vote (as is the case after 15 years abroad). My other guest is Danish and even having lived in the UK for many years and being married to a British national, he is not entitled to vote in the general election which seeing as pays taxes here leaves him feeling cheated. The beautifully British compromise to this disenfranchisement is that he is entitled to vote in elections that have no great relevance and change little in our daily lives; yes, he can vote in local elections and European elections.
I suggest to him things aren't all bad as he can surely vote in the X-Factor contest. And let’s admit that if we review the stats this has a much higher level of public engagement than even the general election. Is that what it is going to take to get the Big Society working? If so, perhaps David Cameron needs to bring Cheryl Cole into the government.
Squids in from stock picking
Who can you trust to manage your pension?
Another World Cup over and we can now thankfully go back to four more years of misery and bitterness about England s latest catastrophic attempt to recapture the trophy since whenever it was. For the neutral spectator though there were moments of excitement from the prominence of hitherto low key performers such as Thomas Mueller, Asamoah Gyan, Diego Forlan and of course Paul the Octopus, who accurately predicted the results of a number of games during the tournament.
A strong individual performance on the World Cup stage doubtless increases the value of the performer and those individuals can probably look forward to tempting offers from suitors keen to benefit from their skills. All of them of course except Paul the Octopus, which is a shame as there are probably no end of fund management groups who could benefit from Paul s predictive skills.
But let's face it, that s a ridiculous suggestion. When funds produce a poor performance in a period, the managers will usually talk about performance over the long term. Unfortunately, Paul despite his predictive skills probably hasn't foreseen that he can t have a long term perspective on anything. Infact his outlook is distinctly short term and probably involves being sliced and deep fried in batter to satisfy the momentary whim of some peckish office worker.
I know what you re going to say. Here he goes again criticising fund managers. He s obsessed. Well I can assure you I'm not obsessed, and I definitely do not have any obsessive compulsive type disorder. I ve checked. Many, many, many times infact. And the only reason I wash my hands so often is that when you travel frequently on the Waterloo and City line all you can think about for the rest of the day is the rapidly multiplying fauna growing quietly on the palms of your hands where you ve touched the travelator handrail or, heaven forbid, another person. Thank goodness that more and more buildings are providing alcohol gels at Reception.
Importance of Fund Managers
So, I m not obsessive but everywhere I look various news stories lead back to the importance of fund managers; not just their importance to the City but their importance in all of our lives.
For example, this month the self-styled Public Sector Pensions Commission, which is funded by the Institute of Directors and a number of think-tanks (no relation to Paul the Octopus and his water-filled think-tank), including the Institute of Economic Affairs and Policy Exchange, issued a report (1) discussing the issue of public sector pensions. In the short term they propose some minor tinkering including public sector employees paying an extra 2% of salary, but their long term proposal includes the switch for public sector employees into funded defined contribution schemes.
Difficult to argue with when people are living longer and the liabilities for the taxpayer are unlimited and unfunded, and of course the IoD represents companies which would rather pay less tax. But if there are to be funded schemes then who will run them? Of course it will be existing fund management groups, to whom a higher percentage of the population will then look for delivering strong performances to fund their pensions.
As far as delivering strong performance is concerned, another interesting publication this month was a report called Exploiting Uncertainty in Investment Markets by Create Research (2) but funded by Citi Group. If you can get past the rose-tinted view of the fund management industry and the business school style of writing with phrases such as "The credit crisis is in the rear view mirror" then it is well worth a read. The report predicts that the share of indexed funds out of total global assets will rise from around 15% to 25%. That means that funds which are currently actively managed may move to a passive index model. One fund manager was unsurprised, being quoted as saying that "Most of our clients no longer subscribe to the idea that active managers deliver excess returns". As well as reducing volatility for the investor this passive approach should also reduce fees. But will it? It s been a fairly open secret in the City that many funds claiming to be active are largely passive (so called closet trackers) but by claiming to be active they can charge higher fees to their investors, supposedly for the expertise they provide in cleverly picking the right stocks.
Closet Trackers
To back this up, in June 2010, the Financial Times, using data provided by Morningstar, the business news and data provider, used a metric and identified 19 funds that were highlighted as potential closet trackers. The list included funds run by well known names such as Standard Life, Royal London and Santander. Some of the funds were found to have a very close correlation with the FTSE All-Share over three and five years despite having charges almost double those of a typical passive fund. The loser, of course, is the investor, although if you are invested unknowingly in one of these funds through your pension you are none the wiser, and you rely on your pension trustees to not be hoodwinked by such funds.
It's no wonder then that more and more people choose to manage their own investments; the SIPP industry for example has grown rapidly in the last few years, driven by the public s growing distrust of professional investors and also by the ease of online SIPP accounts. Infact, half a million of us choose to use SIPPs for our pension provision and those SIPP accounts contain over £50 billion of assets.
When we consider how successful some fund managers are at stock picking let s not mention the proverbial monkey throwing darts at a dart board because that anecdote always upsets fund managers. But perhaps we are all better off if funds just invest passively? And, frankly if a monkey is so talented that he can throw darts and select stocks for high alpha then he deserves a fund manager's salary.
In search of better performance
Stories of monkeys or school children or pensioners running active funds that perform better than fund managers appear frequently. We all think we can pick stocks better than the professionals in the same way that we could all manage the England football team better than the incumbent England manager. The sad truth, however, is that most of us probably can't. Even if most private investors withdrew their Ocado applications last week realising they were investing in a company which not only has never made a profit but also which without the fundraising was heading towards insolvency faster than a shopping trolley towards a display of stacked baked bean tins, it may be that the fund managers who did invest know better. Time will tell.
So if we're better off not entrusting the UK s pensions management to individuals like me who manage our pension portfolio on a wet Sunday afternoon, we had better ensure that the Government and its agencies make the fund management industry work more effectively, efficiently and fairly. That isn t going to be easy but its probably preferable to trying to find our very own cephalopod mollusc with paranormal powers to choose our stocks.
(1) http://www.public-sector-pensions-commission.org.uk/wp-content/themes/pspc/images/Public-Sector-Pensions-Commission-Report.pdf
(2) http://www.create-research.co.uk/pubRes/pubResearch.html
(c) Ash Mehta 2010
This article first appeared in Aimzine, www.aimzine.co.uk
Another World Cup over and we can now thankfully go back to four more years of misery and bitterness about England s latest catastrophic attempt to recapture the trophy since whenever it was. For the neutral spectator though there were moments of excitement from the prominence of hitherto low key performers such as Thomas Mueller, Asamoah Gyan, Diego Forlan and of course Paul the Octopus, who accurately predicted the results of a number of games during the tournament.
A strong individual performance on the World Cup stage doubtless increases the value of the performer and those individuals can probably look forward to tempting offers from suitors keen to benefit from their skills. All of them of course except Paul the Octopus, which is a shame as there are probably no end of fund management groups who could benefit from Paul s predictive skills.
But let's face it, that s a ridiculous suggestion. When funds produce a poor performance in a period, the managers will usually talk about performance over the long term. Unfortunately, Paul despite his predictive skills probably hasn't foreseen that he can t have a long term perspective on anything. Infact his outlook is distinctly short term and probably involves being sliced and deep fried in batter to satisfy the momentary whim of some peckish office worker.
I know what you re going to say. Here he goes again criticising fund managers. He s obsessed. Well I can assure you I'm not obsessed, and I definitely do not have any obsessive compulsive type disorder. I ve checked. Many, many, many times infact. And the only reason I wash my hands so often is that when you travel frequently on the Waterloo and City line all you can think about for the rest of the day is the rapidly multiplying fauna growing quietly on the palms of your hands where you ve touched the travelator handrail or, heaven forbid, another person. Thank goodness that more and more buildings are providing alcohol gels at Reception.
Importance of Fund Managers
So, I m not obsessive but everywhere I look various news stories lead back to the importance of fund managers; not just their importance to the City but their importance in all of our lives.
For example, this month the self-styled Public Sector Pensions Commission, which is funded by the Institute of Directors and a number of think-tanks (no relation to Paul the Octopus and his water-filled think-tank), including the Institute of Economic Affairs and Policy Exchange, issued a report (1) discussing the issue of public sector pensions. In the short term they propose some minor tinkering including public sector employees paying an extra 2% of salary, but their long term proposal includes the switch for public sector employees into funded defined contribution schemes.
Difficult to argue with when people are living longer and the liabilities for the taxpayer are unlimited and unfunded, and of course the IoD represents companies which would rather pay less tax. But if there are to be funded schemes then who will run them? Of course it will be existing fund management groups, to whom a higher percentage of the population will then look for delivering strong performances to fund their pensions.
As far as delivering strong performance is concerned, another interesting publication this month was a report called Exploiting Uncertainty in Investment Markets by Create Research (2) but funded by Citi Group. If you can get past the rose-tinted view of the fund management industry and the business school style of writing with phrases such as "The credit crisis is in the rear view mirror" then it is well worth a read. The report predicts that the share of indexed funds out of total global assets will rise from around 15% to 25%. That means that funds which are currently actively managed may move to a passive index model. One fund manager was unsurprised, being quoted as saying that "Most of our clients no longer subscribe to the idea that active managers deliver excess returns". As well as reducing volatility for the investor this passive approach should also reduce fees. But will it? It s been a fairly open secret in the City that many funds claiming to be active are largely passive (so called closet trackers) but by claiming to be active they can charge higher fees to their investors, supposedly for the expertise they provide in cleverly picking the right stocks.
Closet Trackers
To back this up, in June 2010, the Financial Times, using data provided by Morningstar, the business news and data provider, used a metric and identified 19 funds that were highlighted as potential closet trackers. The list included funds run by well known names such as Standard Life, Royal London and Santander. Some of the funds were found to have a very close correlation with the FTSE All-Share over three and five years despite having charges almost double those of a typical passive fund. The loser, of course, is the investor, although if you are invested unknowingly in one of these funds through your pension you are none the wiser, and you rely on your pension trustees to not be hoodwinked by such funds.
It's no wonder then that more and more people choose to manage their own investments; the SIPP industry for example has grown rapidly in the last few years, driven by the public s growing distrust of professional investors and also by the ease of online SIPP accounts. Infact, half a million of us choose to use SIPPs for our pension provision and those SIPP accounts contain over £50 billion of assets.
When we consider how successful some fund managers are at stock picking let s not mention the proverbial monkey throwing darts at a dart board because that anecdote always upsets fund managers. But perhaps we are all better off if funds just invest passively? And, frankly if a monkey is so talented that he can throw darts and select stocks for high alpha then he deserves a fund manager's salary.
In search of better performance
Stories of monkeys or school children or pensioners running active funds that perform better than fund managers appear frequently. We all think we can pick stocks better than the professionals in the same way that we could all manage the England football team better than the incumbent England manager. The sad truth, however, is that most of us probably can't. Even if most private investors withdrew their Ocado applications last week realising they were investing in a company which not only has never made a profit but also which without the fundraising was heading towards insolvency faster than a shopping trolley towards a display of stacked baked bean tins, it may be that the fund managers who did invest know better. Time will tell.
So if we're better off not entrusting the UK s pensions management to individuals like me who manage our pension portfolio on a wet Sunday afternoon, we had better ensure that the Government and its agencies make the fund management industry work more effectively, efficiently and fairly. That isn t going to be easy but its probably preferable to trying to find our very own cephalopod mollusc with paranormal powers to choose our stocks.
(1) http://www.public-sector-pensions-commission.org.uk/wp-content/themes/pspc/images/Public-Sector-Pensions-Commission-Report.pdf
(2) http://www.create-research.co.uk/pubRes/pubResearch.html
(c) Ash Mehta 2010
This article first appeared in Aimzine, www.aimzine.co.uk
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