John Stepek (2:13)

Is this going to be another rant about gift aid?

Marin Sumsat Webb (2:16)

No, actually.

John Stepek (2:17)

Oh, interesting.

Marin Sumsat Webb (2:19)

But it is true that red squirrels have long shown up pretty much everything that is wrong with the charitable sector. And now web squirrels are going to be emblemic of everything that is wrong with our political system as well.

John Stepek (2:33)

Gosh, they're such great little animals.

Marin Sumsat Webb (2:35)

Right? So let me, let me tell you something about red squirrels before we start. Right? The first thing to say is there aren't very many of them left. There used to be about three and a half million red squirrels in the UK now we're down to well under 300,000 and most of those are in Scotland. So they're slowly going extinct. Not that slowly actually. I mean, pushed right up north by gray squirrels and various other other predators.

John Stepek (2:56)

They're in Dorset as well. You can see them on Brownsea island if you ever go to pools.

Marin Sumsat Webb (3:01)

Red squirrels, it's not very many. I said almost extinct in England, not completely extinct. So there are people who believe there is hope yet for the red squirrel. Now there are a lot of people who either believe there is hope for the red squirrel or would like to think there is hope for the red squirrel. There are. I mean, I don't know how you look at it. I was counting online the other day and I came up with 13 different charities trying to promote the well being of the red squirrel. But a friend of mine who also watches these things tells me they're actually 47. So that's 47 failing institutions. Absolutely failing, because there are fewer and fewer red squirrels every day. Something else I want to tell you about red squirrels, which is that they're really useless. You know how you look at pandas sometimes and think, well, no wonder they're nearly extinct. They are absolutely useless, the red squirrel. And again, I am not an expert on red squirrels, but a quick bit of research has suggested to me that the red squirrel on average loses half of the stuff they hide away to get them through the winter and the spring. Spring is a very tough time for red squirrels because a lot of what they've hidden, they've already eaten and the new nuts and seeds aren't on and go yet. So spring is really tough for red squirrels. Anyway, Red squirrels, they will bury a lot of their acorns, nuts, etc. In something called middens, which are like communal food things in the woods, et cetera, et cetera, where all the red squirrels can go. But then they also have their own private, private places where they hide their, their nuts, et cetera. And they lose a lot of those. So a lot of the stuff, about 25% of what they hide goes to predators. So, you know, gray squirrels, et cetera, et cetera and there. And another 10 or 20% they simply lose because apparently they didn't have very good memories. If you know more about red squirrels than the Internet and you would like to call us and let us know that in fact red squirrels have very good memories, I'm totally up for that. This is just basic.

John Stepek (4:43)

Hold on. So they've actually got a collect, apparently. So basically they pay the Midden tax. But then they hide their own stuff in private bank accounts and forget where

Marin Sumsat Webb (4:52)

they put it, just in case.

John Stepek (4:54)

That is fascinating.

Marin Sumsat Webb (4:55)

So do you see why the red squirrel is kind of a good metaphor for an awful lot of things? Okay, so here we have, here we have an animal that is dedicated to saving, that does it incredibly badly, that loses between 25 and 50% of what they save, that never ever manages to grow the net value of what they say, and also is nearly extinct. Okay, so, and, and, and just to carry on, this is nearly extinct, but has 47 different government supported groups trying to prevent it from going extinct. So hold all those thoughts about the red squirrel in mind and then think to yourself. Imagine that you're part of the government. You're part of a focus group or part of a group, some kind inside government who wants to, wants to change the people, save and invest in the uk and you're sitting around a little, you know, back and forth on how can we do this? And you think, well, let's, let's come up with an animal because there's nothing better than infantilizing populations. We do that all the time. Everything infantilizes now. Let's, let's patronize everyone and treat them like total idiots. Gotcha. Let's do that. Tick number one. What animals should we use? And we'll definitely make it a cartoon to really infantilize the whole thing. Which animals should we use to talk about investing? I mean, maybe we could, we could make it like a lion or something like that, or, you know, something exciting. We don't want to do that because that would suggest somehow that capitalism is predatory. So let's not do that. Let's play something cuter. Something cuter. Something that is known for squirreling stuff away. Oh, I know, let's choose a cartoon red squirrel without stopping to think through that. These are not investors. Unbelievably bad savers. Gradually going extinct and wasting vast amounts of government money already via the gift aid system to try and preserve them when they appear to be unpreservable. And so this is what the government has done. It has spent some time trying to come up with a way to try and get people to invest. And we'll come on to that in a moment because of course that's a wonderful idea, trying to get people to invest. And they have chosen absolutely the worst, the worst possible. I mean, they could have gone for a black hole or something like that. That would have been worse, but not significantly worse than the red squirrel.

John Stepek (7:09)

Famously bad fund managers yes, they could

Marin Sumsat Webb (7:12)

have chosen a famously bad fund manager and John and I will list those later off podcast. But other than famously bad fund managers and black holes, I really can't think of much worse to represent investing, which is an adult activity that we expect to increase our wealth over time, than a cartoon Red Squirrel.

John Stepek (7:32)

Yes, it's not the best educational campaign. And I have to say, I mean, my own view is that if you actually want to get people investing this, you have to get them excited about the returns, which is mostly the one thing that regulators in the government have conspired to make almost impossible to talk about. Even though in an interview with your good self this year, the FCA apparently claimed that there isn't actually any rule that you have to say you can lose money in this investment. Which really surprised me and I also felt was evidence of some backpedaling of some sort.

Marin Sumsat Webb (8:10)

But anyway, well, I think, you know, there's a lot of compliance and regulation and that's what we'll come to that in a minute. But I mean, I suppose what we should say is that it is really important that people do invest. This is important. You know, the, the UK is a very. Has a very strong saving culture, massive saving culture and saving rates in the UK have gone up a lot since the financial crisis. So pre2020 we had a savings rate of about 6 to 7% of incomes and now it's more like 9 to 10%. There were a couple of quarters where it hit 12% in the last couple of years and that's quite unusual globally. So the UK population is sa lot of money. They deleveraged a lot since the financial crisis. This is good news. People have on average, well, the figures say about 16,000 pounds on average. Of course that is a meaningless number because some people will have nothing. Some people have a lot of savings in total in cash savings. In the UK bank of England numbers, we have nearly £2 trillion. So of course, is that too much stuff sitting around in cash? Well, of course it is. And particularly in an economy such as ours that is biased towards inflation and is likely to see considerably more inflation over, over the next however years. We're an inflationary economy and that that is not improving. So does it make sense to have your savings in cash? Of course it doesn't. And you can look at endless research showing the difference in the amount of money you would have if you put your money in equities 10 years ago, if you put your money in cash 10 years ago. So we know it's a good thing. And we also. I don't think we disagree. Tell me if you disagree with me. But I don't think we disagree that this is something that the government should be focused on.

John Stepek (9:38)

I think the government should be focused on it. Yes.

Marin Sumsat Webb (9:41)

Okay, good. And that makes sense. But it makes sense because we want people to be better off, obviously. And also it makes sense because we want people in particular to be better off as they age, because we don't want to eventually have the entire welfare system focused on trying to support people in their retirements because they haven't saved enough along the way. Which, by the way, is not the problem. It used to be because of auto enrolment. But nonetheless, if you're the Chancellor and you're looking at the welfare bill and you're going, oh, God, can't cope with this, you really want people to be investing so that they grow their wealth over time. So this all makes sense. This all makes sense. So let's go back a little to why don't people in the UK invest? Why don't we have the investing culture that they have, for example, in the US And I suppose the answers to that are historical reliance on defined benefit pension schemes.

John Stepek (10:28)

Yeah, in part. Well, yeah, yeah, definitely. I mean, the only thing about. There's a couple things to say. One is that the US is an outlier at the other side of the scale and that they've very much got an investment culture that we don't have. And I think there's a lot of reasons for that. But yeah, I think the other issue that we have isn't just the end of defined benefit pension schemes. It's certainly whenever I was just becoming a financial journalist and probably the few years before that, all that we were hearing about was pension scandal after pension scandal. So there was the endowment mortgages, which actually turned out to be fine. Mostly there was the zero splits, investment trust missile and scandal in the early 2000s, late 90s. There was obviously Maxwell and pensions and basically. And also the, you know, financial advice, certainly right up until the RTR was expensive and also, you know, and in many cases a complete ripoff and bias. Yeah, biased. Exactly. So, I mean, you can see why there's a lot of suspicion of investment culture. And then of course, we also had the property boom. And so, you know, and again, this kind of go back to what I was saying about returns is like, you saw, you know, the tech bubble blowing up and all this, all these scandals associated with equity investment. And meanwhile you had like people just getting rich off buying terrible houses Doing them up in the most shoddy way possible and then flipping them for two or three times the price. And when you think about it, buying a house and flipping it is so much more hassle and so much more complicated than just buying an equity investment fund. So it's all about the returns. It's like, oh, look, I can double my money. And people jump through any kind of hoop to kind of get some of that.

Marin Sumsat Webb (12:21)

I think you're right. I think that is all there. I think there are other things as well. I think that there are tax disincentives in the uk. I mean, it's all very well, we have these, we have our ISIS system, which I think even I agree used to be marvelous and is now too complicated and should be simplified again. And we have our SIP system, which again is pretty straightforward. You know, these are great ways to invest tax efficiently. All good. But then there, there are things that I think are friction. There's stamp duty. And I know that maybe a lot of people don't think about stamp duty, but I think a campaign saying, look, we are getting rid of stamp duty, this tax is going would be very handy.

John Stepek (12:56)

And to be very clear, baby people, this is stamp duty on shares we're talking about. I mean, we ditched stamp duty on property as well. But just I know that everyone instinctively thinks, oh, it's stamp duty on houses but not stamp duty on shares.

Marin Sumsat Webb (13:07)

And this is a wealth tax, obviously, because it's, you know, you invest money and, and you get charged stamp duty as you invest. And that, by the way, happens inside your SIP and inside your ISO. So when we talk about these being tax efficient vehicles, you still pay that transaction tax every time you buy or sell something. So that I think it's a friction that I think an awful lot of people in government think nobody notices and nobody cares about. I think they do. And I think it matters. And I also think even if people weren't aware of it, if you were to make them aware of it and then tell them that you're getting rid of it, that would be a good thing. That would be a good thing.

John Stepek (13:40)

And it raises the cost of capital tax for British companies, London listed companies as well.

Marin Sumsat Webb (13:45)

Absolutely. And I'd also say that the constant rises in capital gains tax are a problem. And you might say, well, maybe this isn't a problem because most people will be investing inside their eyes and very few people use up their ISORE lines. But again, it's optics, optics, optics. We're encouraging you to invest, but if you do, if you do, we'll be texting you like crazy. And the third thing that I would say is that, you know, we have spent so long, and you, you referenced this earlier, John. We've spent so long trying to make people aware of the risks of investing. Everything is so risky. We know, as you know, we, we're a health and safety economy, we live in a health and safety world and we have taken it too far when it comes to investing. We, we spend all our time attempting to remove personal responsibility from absolutely everything. And so it is with investing where we constantly tell people, well, you could lose all your money, you could lose all your money. You could lose all your money. You could lose. But you know, you could lose all your money on a house, you could lose all your money on a car, you could lose all your money on crypto, you could lose all your money on literally anything. Are you likely to use all your money on a well chosen group of dividend paying UK listed stocks? Probably not. Yeah, probably not.

John Stepek (14:58)

Well, it's a very unrealistic kind of approach to it and obviously it's all about backside covering because you don't hear these warnings in crypto because they're unregulated. You don't hear it on wine and all the rest of it because it's unregulated. And so they're able to claim what they want by and large. So I think this is part of the problem where, yeah, you know, having a kind of a regulator that is focused on the downside rather than the upside. And I mean, to be fair, that's partly what Rachel Reeves was getting at when she was kind of, you know, talking to the FCA about we want more focus on growth or, you know, that sort of thing. But then of course, obviously that manifests itself in the most mistaken of ways.

Marin Sumsat Webb (15:39)

Absolutely. And so, I mean, there's a lot of talk about this and there's talk in the, you know, there is this shift inside the advice industry that you can now give targeted advice, et cetera. So there's a little bit more of a shift towards thinking about advice in, in terms of everyone requiring the same kind of advice as opposed to everyone being unique. There are shifts all over the place, but nonetheless, the advertising for investing is very anodyne because people feel like it has to be. And it may be that the fca, as you say, did suggest to me at a conference we were speaking at the other day that perhaps some management companies could let up a little. They're taking it all a little bit too seriously. But I would love to see a world where you could actually walk into the Tube and see ads for shares. Actual ads. Look, I'm a great mining company. There's a great mining company. You should buy shares in this, you know.

John Stepek (16:24)

Yes, absolutely.

Marin Sumsat Webb (16:26)

You should buy shares in this. You might make some money. Not. You could buy shares in this, you'll probably lose all your money. But you should buy shares in this, you might make some money. That would be great money and very. Well, it'd be great. You know, let's not worry about the past, let's think about the future. I would love to see a vibe shift, a full vibe shift in the marketing of investing. And I don't think. I don't think that that vibe shifts comes via a squirrel and the background is pink. What is that? Subliminal advertising for the ft. That's not fair. We want subliminal advertising too. Subliminal. I can't say that word. We want that too. I mean, I think we should write a complaint. A complaint to the government saying you're effectively advertising the ft. This stuff should be orange, not pink. That's our color, right?

John Stepek (17:07)

Yes, yes.

Marin Sumsat Webb (17:08)

Anyway, you will not. You will see it on taxis in Manchester, you will see it on billboards all over the place. And as the year goes on, you will see it in more places, you will see it on the telly, etc. And one thing not to get upset about, and I'm pleased about this, is that the 50 million pound cost is being covered by the sponsors, who are, I think, Aviva Barclay, Schrodis, JP Morgan and Robinhood uk, Although various other organizations dropped out because it was too expensive. And I'll tell you something, it is too expensive.

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Marin Sumsat Webb (18:59)

Right, John, there was something else you wanted to talk about today. I've got everything I wanted to get out of my system. Out of my system. Oh.

John Stepek (19:05)

I mean this is, this is relatively minor by contrast. Actually, the other thing I would want say that the reason that we don't invest much in the UK is also because they keep fiddling with the rules. So it's not surprising. Fiddle, fiddle, fiddle, fiddle, fiddle.

Marin Sumsat Webb (19:19)

And they make it complicated. It's supposed to be simple. Make it simple. People either make money or lose money. Make it easier.

John Stepek (19:26)

Yeah. Why would you trust the pension system when the government fiddles with it all the time and then is also currently trying to tell you where, or trying to push through rules that allow it to mandate where your money goes? I do think there's a, there's a wider confidence issue that is actually quite. That's entirely related to political risk and reasonably so. But I think that's. Yeah, that's a sort of discussion for another time.

Marin Sumsat Webb (19:50)

But John, let me ask you a question. Let me ask you a question before we get onto the thing. Who do you trust? What do you trust? Is there an institution left in the UK that you, that you trust, that you think to yourself, that's okay, this institution said this and I believe them because.

John Stepek (20:05)

Yeah.

Marin Sumsat Webb (20:07)

Anything left on that list for you? Anything?

John Stepek (20:10)

I think this is, that's a really good question. And you could probably, you probably have to list, you'd probably have to list all the institutions because I'm sure there's something I've forgotten about that, mate. Trust. But I mean, not really. I think I sort of blame nudging culture in some ways. I feel that every organization now has a narrative that it feels it needs to push and stay in control of. And I think that's massively over exaggerated. You know, as somebody who works in the media, I don't think that power or the power of narrative is anywhere near as strong as everyone, kids.

Marin Sumsat Webb (20:46)

I'm saying that because we're really bad at protecting our own.

John Stepek (20:49)

Well, this is what I mean. See, if we had the Power, you know, I mean, a lot of things would be different around here, I can tell you that for nothing.

Marin Sumsat Webb (20:55)

Too right, too right. Listen, let's put that out there as a question for listeners. Email into us and tell us, is there an institution left in the UK that you trust, that you trust? Not absolutely. You can't trust anything absolutely. But you, when you hear from them, you think, yeah, that'll be great.

John Stepek (21:12)

That's right. That's an interesting question.

Marin Sumsat Webb (21:15)

Let's think about it a bit more. John, there was something you wanted to say and I keep in mind.

John Stepek (21:18)

No, no, it's just this sort of leads on from our chat about NEST the other week. Steve Webb over at pensions consultancy lcp. So Steve Webb used to be the pensions minister in the uk and actually, rare example, a politician who had both the experience to do the job and actually did a good job of doing the job, I think that's fair to say. So they put a report about defined contribution pensions, so basically auto enrollment and they. So the headline takeaway is basically that because of the drive towards master trusts, so basically having one overseer for all of the pensions that go to your employers. So your employer will approach basically like nest. So they get the scheme from Nest and then NEST oversees multiple companies pension funds. Effectively more than half of DC assets under management are overseen by about the net sum of 50 trustees. So 50 people who are sort of like, you know, setting and keeping an eye on policy. And the reason the LCP are raising this is not because they're particularly criticizing the individuals around like that. They're just making the point that the bigger that these trusts get, and that's the direction they travel, the further away the end. Well, a, the employer themselves, but also the employee gets from any kind of accountability, and I think we kind of discussed that is actually a problem. And it also kind of solidified for me that the weight of responsibility for making sure that there is an accountability channel should be on the providers because they are the ones who currently have all the power. And so they are the ones that should have the responsibility for actually addressing the imbalance that's kind of created by that. I mean, it does come back to, at the end of the day, what you need to do as an individual is to make sure that you know what's in your pension fund that your employers put you in and then examine your opportunities you have for putting it in different things. Because obviously most providers will give you various options. But beyond that, we probably do need to have a conversation about, well, how do we make this accountability line very strong and perhaps kind of voting on allocation issues. That sort of thing is kind of.

Marin Sumsat Webb (23:45)

You mentioned, as we discussed the other day. I mean, I wonder, John, if obviously I thoroughly disapprove of the Savvy scroll campaign. And I wonder if we aren't doing this wrong in that we're encouraging people to invest without making them aware of the fact that they already invest. And so an information campaign around what your auto enrollment pension actually is and what it means and what your rights are around it and how you can challenge or not challenge the investments, but just a pure information campaign. Hey, look, you're at work. Hooray. Well done. You're kind of unusual these days, but you've got a job now. You have that job and you have this pension. This is what it is. This is what you are doing already. This is how you are participating. This doesn't require a squirrel, but it does require an information campaign. And I would really approve of it of that. Would really approve of that.

John Stepek (24:42)

I think that's a good idea.

Marin Sumsat Webb (24:43)

Yeah. So let's. I don't know who we email about that, but someone.

John Stepek (24:48)

Maybe we should just keep talking about it.

Marin Sumsat Webb (24:50)

Let's do that instead. Well, we endlessly talk about it. Yeah. The other thing, actually. Yeah. That I'm just thinking about while we're thinking about this is if you really want to encourage people to invest, one of the things you really should not be doing is removing the power of the shareholder. And I don't know if you've seen this muttering about removing individual shareholder rights to vote on remuneration and to have a physical agm. Now, there's no under conversation. I mean, this is an outrage.

John Stepek (25:13)

I did. I didn't realize this sort in the newspaper. I must read some of those one day.

Marin Sumsat Webb (25:18)

Yes. So if you want people to invest, you don't want to take away some of their rights along the way anyway. So. Anything else or should we leave it there? Different information campaigns. Jolly good, but make it a different one.

John Stepek (25:28)

I think we put the world to rights there. And remember, squirrels are evil. That's. That's the takeaway, isn't it? Is that not the takeaway?

Marin Sumsat Webb (25:37)

No, no, no, no. The takeaway is that the red squirrel is emblematic of pretty much everything. That along with the UK state.

John Stepek (25:44)

Do you know what it is? Like the panda. Then we should give them to countries that we don't like. Said their ambassador in the US. Hey, hey, Donald Trump. Here's a red squirrel. His hair's a wee bit like yours.

Marin Sumsat Webb (26:00)

They're to send send China repairs and charge them a million dollars a year to keep them.

John Stepek (26:06)

The difference is they'll actually make

Marin Sumsat Webb (26:11)

John it's absolutely brilliant. You should have been a diplomat.

John Stepek (26:14)

Absolutely.

Marin Sumsat Webb (26:19)

Thanks for listening to this week's Marin Talks yous Money. If you like our show, rate, review and subscribe wherever you listen to podcasts. Also, be sure to follow me and Jon on X or Twitter erinsw and jonsteffek. This episode was produced by Sam Asiadi and Roses Andam. Questions and comments in the show and and all our shows are always welcome. Our show email is merrimoneyloomburg.net.