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Weekend reading: FCA tackles asset managers in new report, but investors are doing it for themselves

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Good reads from around the Web.

This week saw the Financial Conduct Authority (FCA) publish the interim findings of its deep dive into the asset management industry and how it treats its customers.

With the report weighing in at 200-pages, I’ve only been able to superficially skim it so far for myself.

But pundits and campaigners seem pleased.

Andy Agathangelou, founding chair of the Transparency Task Force group, says:

“There’s not been a chance for a detailed analysis yet but their opening comments are extremely significant […]

They are even talking about the idea of introducing an all-in fee to make it easy for investors to see what is being taken from the fund. Wow, this would be a seriously progressive approach to costs disclosure and is exactly the kind of costs regime that is needed.

Let’s hope this helps avoid the ‘patchwork quilt of protocols’ that trade bodies seem to prefer over market-wide regulation.”

You can read Mr Agathangelou’s comments in full at The Evidence-Based Investor.

The mainstream press has also begun digging into the report.

Citywire flags up the finding that so-called ‘Best Buy’ and ‘Rated’ funds touted by distribution platforms typically fail to beat the market:

“…although funds on ‘buy’ lists did better than non-recommended funds, in common with the vast majority of funds they did not perform better than stock market indices, such as the FTSE All Share, once charges were taken into account.”

And in a separate article it homes in on talk of that all-in-one fee:

UK fund managers don’t compete with each other on price, which means investors end up overpaying on fund charges, the City watchdog has concluded

Following a damning review [the FCA] found that actively managed funds do not beat the stock market after charges.

It also concluded that the stated investment objectives and fee breakdowns for funds are unclear to investors.

The regulator is proposing asset managers introduce an all-in fee to improve the disclosure of costs that investors incur.

ThisIsMoney has published the most comprehensive recap of the report’s findings. Handy for those of us who won’t get paid to wade through the 200 pages!

Shrink in the wash

Here at Monevator Towers, we can only welcome the FCA looking into the egregious profits earned in aggregate by the financial services sector.

Remember, active management is in practical terms worse than a zero-sum game. The only group that benefits from its dominance are the managers themselves.

That’s not to say there is no role for financial professionals in the money matters of the person in the street. Some active investing will always be necessary to keep the market efficient (though most private investors can dispense with it) and financial planning has a place.

A right-sized industry would undoubtedly be far smaller than today’s, though. Which means we can probably expect it to fight the FCA on any radical changes.

Revolutionary Summit

Indeed, that’s the wet blanket I’d throw on this report. (I always have a supply of wet blankets to hand…)

You may remember how RDR was supposed to revolutionize retail investing. It definitely made positive changes (getting rid of trail commission, for instance) but one can argue that many of the insidious costs of investing just migrated elsewhere.

Post-RDR, savvy Monevator readers who’d read up on index investing have perhaps found it harder to keep their costs at rock-bottom lows. I suspect the ill-informed masses were previously subsidizing cost-conscious passive investors to a greater extent.

A selfish quibble? Maybe, but the bigger point is that the sharks will always keep swimming when there’s this much money at stake. Self-education is the best defense, not regulation that tries to keep pace with them.

And that is the really big revolution of the past decade.

I mean, consider the Evidence-based Investing Conference that took place in New York last week. It seems that every writer and fund manager that we feature in Weekend Reading was there. (Sometimes it’s a drag being anonymous…)

Here’s a wrap:

  • The bps and pieces blog has summarized the day via a stream of Tweets.
  • For those in a hurry – hey, that FCA report won’t read itself – the Blog of Newfound Research offers four key takeaways.

Investors have wised-up to the most egregious nonsense peddled by the asset management industry, and the Internet makes that knowledge available to all.

It’s great that the FCA is wising up too. But most of us will keep doing it for ourselves.

Have a great weekend!

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

  • LemonFool: The new forum for Motley Fool refugees – LemonFool
  • How does diversification actually work? – Retirement Researcher
  • Are you on track for retirement? – AARP
  • Now that’s what I call Financial Independence: 6 – The Escape Artist
  • The difference between a statistic and a fact – Morgan Housel
  • Can a divided America heal? [Video]TED

Product of the week: Santander is continuing to whittle away everything that made its 123 account a winner. The interest rate paid on cash savings has already been halved, and now it’s making its credit card less attractive, reports ThisIsMoney. Cashback is to be limited to £9 a month from February, while those paying interest on their credit card debt (don’t let this be you) will see the rate charged hiked from 12.7% to 15.9%.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1

Passive investing

  • Swedroe: Another angle on factor diversification – ETF.com

Active investing

  • Bond rout sends 30-year US Treasury yields above 3% [Search result]FT
  • Stock-picking pros beat the indexers [Sort of]Bloomberg
  • The low-volatility trade is over – Bloomberg
  • UK property stocks’ rollercoaster ride [Search result]FT
  • Steve Eisman says European banks are the next big short – The Guardian
  • Then again, computers are the new hedge fund stars – Dealbook

A word from a broker

Other stuff worth reading

  • Is Trump now bursting the bond bubble? – ThisIsMoney
  • Rising bond yields may mean it’s time to fix your mortgage – Guardian
  • Student loans: The lie the government sold millions [Search result]FT
  • Map of UK’s most economically vibrant regions [Interactive]ThisIsMoney
  • It’s Hammond’s first Autumn Statement this week – II & FT [Search result]
  • Why the chancellor must not cut stamp duty – Guardian
  • In uncertain times, focus on what you can control – New York Times
  • India renders its high value banknotes worthless – The Economist
  • No politician can promise to bring jobs back – Guardian [The Guardian!]
  • Extract from Michael Lewis’ new book [On Kahneman et al]Vanity Fair
  • Ray Dalio warns globalisation is in retreat [Search result]FT
  • Science agrees with Warren Buffett: We should all read more – CNBC

Book of the week: A friend of mine recently emigrated to America. Now he’s trying to understand what he’s got himself into. Research took him to a list by the New York Times of books that may help one to understand Trump’s victory. The Unwinding traces the alleged decline through pen portraits of the famous architects – or opponents – of the fall, while Hillbilly Elegy focuses on a rural culture in crisis. Listen, Liberal argues that left-wing thinking has disappeared up its own firmament, echoing my own suspicions. Given my views on Brexit, The Populist Explosion strikes a chord, too. But then perhaps the lesson of the past six months is we should read the books that don’t appeal to us, and try to better understand?

Like these links? Subscribe to get them every week!

  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []
{ 38 comments… add one }
  • 1 Retirement Investing Today November 19, 2016, 12:01 pm

    Some recent work by Grant Thornton calculated “that someone entrusting £100,000 for 10 years to a UK financial adviser or investment manager would pay an average 2.56% annually for financial planning services and financial product expenses.”

    If I anecdotally think about my 9 year DIY journey in contrast. To date investment return, after expenses and withholding taxes, has been 6.7%. Expenses have probably averaged 0.4% (they’re 0.25% today). It’s a bit of a guesstimate but let’s add 0.1% for withholding taxes. Summing these gives an average annual investment return of 7.2%. Subtract inflation of 2.6% and I’ve achieved a real return 4.6%.

    So go DIY and I’m today surrendering 5.4% of my real return in expenses. Use a financial planner and active products and you could be surrendering 55.6%. That’s going to make a big difference to YOUR wealth over a lifetime.

  • 2 John from UK Value Investor November 19, 2016, 1:22 pm

    As far as I can see the Trump/Brexit thing is primarily a reaction to globalisation (not a novel idea, I know).

    Foreign workers come in and undercut local workers and jobs are sent abroad to cheaper overseas workers. Real wages for the majority of workers in developed countries have been stagnant for many years while overseas workers have seen their earnings increase significantly. Unsurprisingly, developed economy workers are miffed.

    I think globalisation is a good thing, but the pace of chance is perhaps a bit too high. And our sluggish post-crisis economies are the straw that broke the camel’s back (or the match that lit the fire).

  • 3 old_eyes November 19, 2016, 1:34 pm

    @Investor – thanks for the usual collection of excellent reads from various sources. Working my way through them, but I jumped to the Morgan Housel item as I am interested in the difference between a statistic and a fact. Unfortunately, the author appears to be unfamiliar with either statistics or facts and I had to comment (as his site does not have comments all of you get my thoughts!).

    I can kind of see what he is driving at, in that if you get a number without any evidence of where it came from and how it was produced it is a bit tricky to assess its reliability, but a little bit of context does not turn it into a fact and opinion is never fact by assertion.

    “Millennials live paycheck to paycheck? Statistic. No generation saves money in their 20s? More factual.” – No sorry not a fact an opinion. Both are unsubstantiated opinions. That no generation saves money in their 20’s is immediately incorrect by simple inspection as we know that people have been in the past putting down deposits on houses and carsin their 20’s, and probably still are although it may have got more difficult. I saved for both house deposit and car deposit in my 20’s, as did many friends and colleagues.

    What would be useful to know for an intelligent discussion is what percentage of income people in their 20’s save today, how it compares with other age groups and the population mean and median, and most importantly how are those statistics changing over time.

    Perhaps his weird argument will have some impact on his readers if they truly do not understand how statistics work and what a fact looks like (a disturbing thought in itself as we have to assume that his column is targeting a more educated group likely to be interested in investing and how markets work), but if he causes them to stop and think it can only lead to the conclusion that he is talking nonsense!

    Sorry for the rant! In this post-fact world we are supposed to be living in I am particularly sensitive to logic-free arguments at the moment 😉

  • 4 Gregory November 19, 2016, 4:10 pm

    @John – every era in history has winners and losers. Like in the markets.

  • 5 hosimpson November 19, 2016, 4:46 pm

    Am I on track for retirement? Sort of, maybe. I’ve given up on calculators now and am going by a simpler metric: I’ll need a million (inflation adjusted) if I want o retire before 50. £1,000,000. Nice round number, that. A rather big one, too.

  • 6 CCG November 19, 2016, 5:12 pm

    I can definitely recommend The Unwinding. Read it about 3 years ago when it was a Kindle Daily Deal (which it was again a couple of days ago). Having read it Trump’s victory came as no surprise whatsoever. It’s a good, and sobering read.

  • 7 TonyP November 19, 2016, 5:41 pm

    Lemon Fool appears to contain no fewer than 50 (yes, fifty) sub forums, isn’t that rather too many?

    A bit like constructing a portfolio with 50 different funds or investments in it.

  • 8 FI Warrior November 19, 2016, 5:47 pm

    I met a colleague today and asked her about her plans as a European here now. She’s going back to her ancestral island in the Med to retire early, the plan is to be out within 2 years to beat the rush in case things turn really nasty fast. She has several degrees including a medical Phd and MBA, so is very well paid, but the last straw after daily vilification in even mainstream newspapers for months now, (fully condoned if not encouraged by the legal authorities) was her children being registered as foreign in nursery school.

    Their family are invested and well diversified, the holdup now is only building a house to full self-sufficiency back home, solar panels, a borehole well for water, a smallholding for self raised food. The island in question is well-known as beautiful in the tourist world, yet a place there doesn’t cost much and the quality of life will be incomparably better once everything is set up right. She has been here a quarter of a century but her family suffered during the nazi occupation of her country during the war and doesn’t want to wait to find out if they have to walk around in yellow armbands with an F on them.

    Her kids will still be educated to fluency in English by going to university in Holland which is actually cheaper. I asked why they couldn’t just all get UK passports and she said they would still be as unacceptable as who they were in the first place, it being harder to disguise your face than paperwork, names and accents. Ironically, the easiest place for her to get a good job and life right now is Germany; how things change.

  • 9 Tyro November 19, 2016, 7:56 pm

    For my money, John the UK Value Investor has hit the nail on the head: “Real wages for the majority of workers in developed countries have been stagnant for many years while overseas workers have seen their earnings increase significantly.” This is how global poverty has reduced markedly over the last 30 years (see link below) – effectively we have undergone and seem still to be undergoing a large redistribution of wealth from from the global ‘West’ (and ‘North’) to the global ‘East’ (and ‘South’). Considering only China, changes in the living conditions of hundreds of millions of people have improved beyond anything we could have imagined in, say, the early ’80s. Perhaps the redistribution currently in progress is moving on from ‘large’ to seismic. Future events will show. Meanwhile, most of those of us in developed countries where real wages are in long-term stagnation or decline feel ever more resentment at our lot. (Possibly how people in the other countries – whose standards of living are now rising – have felt for the last 500 years or so?) I don’t really have any solutions to offer for the increasing political and sociological pathologies these structural shifts and dislocations are bringing about, but I expect a lot of political turbulence in the coming decades.


  • 10 The Investor November 19, 2016, 9:05 pm

    @TonyP — LemonFool is effectively trying to recreate the old boards on the Motley Fool, and everyone has their favourites. I expect over time they’ll either get a sufficiently large audience or there’ll be some rationalization. For now it’s probably wise for them to set-up any board that has some reasonable requests for it, rather than arbitrarily cherry pick.

    @all — We’re on Brexit/Trump again? I don’t blame you — it’s massively important — but I thought we’d be doing rapacious fund management companies this week. 🙂 I’ll probably absent myself from the discussion this time and give everyone a break. 🙂 (I just did a three-hour political late lunch with real-life friends, fear not.)

  • 11 Richard November 19, 2016, 10:40 pm

    @FI Warior – I guess the key question is did she always plan to retire in her homeland or has she recently changed her mind? Did her nursery suddenly start registering EU students as foreign off the back of the refurrendum or did it start at some other point? Was this a government requirement or was the school acting on its own? Is this contrary to what other EU states do?
    It is of course very sad that she feels this way! Germany may look good right now, but let’s wait for the outcome of their elections next year…..

  • 12 FI Warrior November 19, 2016, 11:16 pm

    @Richard – http://www.independent.co.uk/news/education/education-news/government-u-turn-scraps-plans-controversial-nationalityschool-census-for-2-5-year-olds-a7422831.html

    Anyone can do due diligence if they have an internet connection and phone if they want to research something.

    I personally would not wait to find out the navel-gazing answers to the questions you ask if my own children were concerned, I would see them safe before asking academic questions later. ”Why worry if you’ve done nothing wrong?” Ask the Jews, Armenians and Tutsis how that worked out for them. If you’ve over reacted, then there’s no harm done, you can laugh about it while all safe and alive.

  • 13 John from UK Value Investor November 20, 2016, 12:10 am

    @TI – sorry for bringing up Trump/Brexit; not sure what came over me.

    As for fund fees, perhaps something like the health warning on cigarettes should come into force, i.e. a large, obvious, mandated all-in-fee disclosure as the most prominent statistic wherever any performance statistics are published.

    Personally I have a dream of starting a mutually owned not for profit fund management firm like Vanguard, as it seems to have worked well for them and their investors. Just need to find at least £10m as seed funding!

  • 14 Richard November 20, 2016, 12:31 am

    @FI warrior – Indeed, but it is often quicker and easier to directly ask the person making an un-referenced comment to provide further information or evidence on that comment. In fact I did spend some time looking for information and didn’t turn up that article or anything related to it.

  • 15 MarkT November 20, 2016, 1:04 am

    @FI Warrior. What a bizarre post, totally over the top. I’ve never heard one person ever suggest your view of what may happen. What you have posted is just scaremongering and quite frankly a bit silly. The latest figures for immigration suggest more people than ever are coming even after the brexit vote so confidence in British people remains high despite your rather negative viewpoint.

  • 16 The Investor November 20, 2016, 10:40 am

    @MarkT — I had lunch with several perfectly intelligent people yesterday where the main topic was entirely the prospects of whether something along those lines would happen. (For the most part not going so far as the worst case scenarios that @FIW cites, admittedly, but say a sort of apartheid era South Africa / pre-Rosa Parks US / petty right-wing South American regime level of somewhat tyrannical right-wing authoritarian government.)

    None of us thought it was *most* likely — or even likely.

    But “may happen”? Certainly.

    Personally I’d guess the chances have moved from 0-1% ten years ago to about 3-5% after Brexit, and a little above 5% after Trump.

    I didn’t swerve this blog into six months of political debating and sometimes angry confrontation with my own readership simply because a party I didn’t vote for won an election and is now changing income tax by +/- 3%, or raising/cutting Jobseeker’s Allowance by a fiver.

    This is different. This is forces winning power by pitting citizen against citizen, outright lies, and fear. This is a man who played race for all he could winning the White House, and a former fringe politician from the UK upending our place in the world entirely and then shaking hands with the President Elect in his billionaire tower.

    I truly hope those who happily chortled at good old Nigel denigrating the EU in his job in the EU parliament after Brexit or who thought it was a wheeze when the tabloids condemned those snooty judges as “the enemies of the people” — or who shrugged when the Government suddenly announced it was going to take a register of the places of birth of employees at every company — and who can’t wait to get their lovely blue passports back, I hope they don’t have any reason to feel anything but vindicated in 5-10 years.

    Truly, that’s my hope. I think it’s the most likely outcome, and I’m rooting for it. And when I write the sort of political articles I’ve written since Brexit, it’s because I hope people with my views keeping our side of the argument alive makes the worst case scenario less likely.

    It’s my modest contribution to trying to make sure you turn out to be correct.

    So hopefully some sort of pressure valve will be released, and the ill-effects already caused will be offset by some sort of upside.

    E.g. Xenophobia or racism or general unpleasantness has increased short-term, but then inward migration does fall (if only because we’ve crashed our currency, LOL) and so the pressures on schools/services or the unpleasant feelings being suffered by racists are diminished and we reach a comfortable status quo again.

    But the difficulty for anyone who knows his/her history and who is constitutionally ill-suited to authoritarian right-wing extremism is that what is happening now is indistinguishable from what would happen in the first stages of much, much worse.

    To repeat myself — because I’ve discovered since Brexit that many people (not you, I’ve no idea 🙂 ) have a massive difficulty with probabilities and nuance — do I think it’s probable?

    No, I think it’s unlikely. And so I am for instance buying shares in London property companies that are trading 30% below their net asset value because of Brexit, on the grounds that ultimately life will indeed go on broadly unchanged.

    Do I think the 5% terrible scenario “may happen” and that the events since early summer here and abroad (and soon in France, most likely) have made it more rather than less likely?

    100%. Yes.

  • 17 Neverland November 20, 2016, 11:23 am


    Sterling has fallen against various baskets of currencies between 15% and 20% sine the U.K. referendum and now sits at multi-decade lows against most major currencies, a 35 year low against the USD and a lowest ever level against the Euro

    This would not indicate a great deal of confidence in the prospects for the UK economy or the”British people” as you laughably indicate

    Indeed the U.K. has now fallen from being the fifth largest economy in the worl to sixth behind, appropriately, France

  • 18 Tyro November 20, 2016, 11:32 am

    @Mark T: I can tell you that since the referendum every single academic I have met who is a non-UK EU citizen working in a British university has said they will look for another job outside the UK. And I am already writing references to foreign universities for some of them, so at least some of those people clearly *are* already applying for jobs abroad. I wouldn’t be surprised at all to hear this was going on in other professions too – after all these are highly qualified people, perhaps with international reputations in their specialisms, in fields where the labour market is international. Why would they want to stay here, where they are about to lose rights, and where they are made to feel unwelcome? I hope we are not going to suffer a brain drain in the next 2-3 years, but the signs aren’t good. If we do the NHS will be in real trouble as such a high proportion of its medics are from EU states.

  • 19 Tyro November 20, 2016, 11:33 am

    PS: Apologies to TI for getting back to Brexit, just couldn’t let Mark T’s comment go unchallenged! I’ll try to think of a comment about asset manager charges (says penitently).

  • 20 The Investor November 20, 2016, 11:49 am

    The other thing I would note for those who describe all this as “Liberal hand-wringing” is it takes about three seconds of Googling to find numerous alt-right bloggers and columnists treating the latest developments to a good fist-pumping. So clearly they think things are moving nicely in their direction.

    @Tyro @UKVI — Well, no apologies necessary, I guess we’re not exhausted yet…

  • 21 zxspectrum48k November 20, 2016, 12:21 pm

    For the passive parts of my portfolio, it’s nice to have the lowest fees but the bottom-line is that I want the fund to track the index as closely as possible on a total return basis. So I view the tracking error as the “fee”, irrespective of what the stated TER is. I find that variations in tracking error are often much larger than the variations in fees.

    With regard to Brexit, there is no doubt that it’s had a negative impact on our foreign employees. Our two most recent additions are from Pakistan and Libya. While they’ve had no issues in London, I’ve was taken aback to see both suffer from aggressive verbal abuse in the street while we were at our back-office in SE England (a rather affluent town). Both can handle it (one grew up in a brutal dictatorship; he remembers US aircraft dropping bombs in the next street) but it’s hardly encouraging them to stay with their families, plus they are concerned over visas etc. As an employer, I just want to hire smart, most motivated people; I don’t want to be restricted to a lower quality selection of British citizens. Moreover, when I see my employees, both who lived in truly terrible countries, but still the motivation to make it to Ivy League unis, taking abuse from some moronic English white thugs, my sympathy for those who “want to take back control” drops fairly close to zero.

  • 22 Neverland November 20, 2016, 1:53 pm


    “I don’t want to be restricted to a lower quality selection of British citizens”
    having or showing an attitude of patronizing superiority

    Since each of those “lower quality” of British citizens have votes don’t be surprised if they use them to your detriment. Their sympathy for your “free trade-open borders” economy is already below zero

  • 23 Jim McG November 20, 2016, 1:54 pm

    Another shout out for The Unwinding, a great book that I remember more for relating stories about how debt was grinding down the ordinary people in the States. Another eye-opener on the American rustbelt is Dreamland, which is about the growing epidemic of working (and non-working) Americans to opiate based pain killers. Well worth reading before the doc prescribes you Tramadol for your aching back.

  • 24 weenie November 20, 2016, 1:56 pm

    @Tyro “…every single academic I have met who is a non-UK EU citizen working in a British university has said they will look for another job outside the UK…”

    Obviously, I don’t know the academics you have spoken to, but could this be a little similar to all those celebrities who said they would leave the US if Trump won the election? It’ll be interesting to see who (if any) actually leaves.

  • 25 Pete November 20, 2016, 2:12 pm

    @ John from UK Value Investor
    I’m in for two grand. Now all you have to do is find another 4,999 like me and you’re up and running! How about crowd-funding it?

  • 26 Richard November 20, 2016, 2:39 pm

    @MarkT – that was exactly my thoughts, this friend is overreacting. Though I refrained from saying it as I wanted to understand this registration thing (it had slipped me by). One thing to note here is how the press appear to distort things in their reporting. The addition of country of birth was added to the census before the EU vote. Doesn’t make it right, but if you believe the way it is reported you would think a new xenophobic government just came up with it. The previous, EU friendly government came up with it. So if the vote had gone the other way, would people be Leaving the country still?

    Peoples emotions are riding high, there is a lot of uncertainty, and the way the press report things, I don’t blame them for ‘over-reacting’. As others say, we must be vigilant so that we look back and say ‘yes they were over-reacting’. But at the end of the day, people must do what they believe is best for them and their families.


  • 27 Richard November 20, 2016, 3:11 pm

    @Tyro @Weenie – this is interesting. I have always seen academia as being a highly mobile job. Are you talking about permanent university employees (lecturers and professors) or more the PhD and post-doctorals level? In my experience the later have always been a bit ‘fickle’ in their loyalty to one country, and the lack of job security only makes that more so. If the former, moving to a like-for-like job that doesn’t really improve their prospects then I would be more concerned as those jobs are hard enough to get in the first place.
    I suppose a key guide is has the number of applications from overseas dropped or has the quality dropped? That may be a better guide than those who are leaving, as it is hard to say whether they would have left anyway even without Brexit.

  • 28 Tyro November 20, 2016, 5:32 pm

    @ Weenie: Well, probably some of those who’ve said they’ll leave will end up staying, either because as time goes by feelings may not run as high and they’ll reconsider or because their job hunt doesn’t turn up a job that they want (and bearing in mind that even when you’ve decided to move on, finding another good post might take a couple of years or more: it’s not the kind of job market that operates in terms of weeks or even months). And the election of Trump might mean that some who were thinking about moving to the US will be having second thoughts. But, as my earlier post said, some of those I spoke to are definitely already applying for posts outside the UK. I really do expect there to be a fair few leaving, though I doubt that every single one who initially said they would, will.

    @Richard: the people I referred to are people in good-quality permanent posts, lectureships and upwards, not PhDs or postdocs or researchers on temporary contracts. Some have children in schools here and/or have bought their homes, so they are actively countenancing quite a lot of personal upheaval …. but still feel they want to leave.

    @ Richard and Weenie and everyone else: coincidentally I came across this after posting, on the BBC Website. It seems to be just about the sciences, but of course much the same applies to the social sciences and humanities as well:

    “Prof Ottoline Leyser, representing the Royal Society, told the committee there were 31,000 non-UK EU citizens working in research in academia in the UK. She said she believed that these people were “all feeling very anxious and unwelcome”. Professor Philip Nelson of Research Councils UK told the committee: “the biggest risks to the research base in the UK are around the people involved”. The committee said it had received written examples of researchers considering rejecting UK job offers because of the uncertainty around the EU referendum result. It said that Dr Sarah Main of the Campaign for Science and Engineering (CaSE) effectively summarised much of their evidence.
    She said: “It is not really a question of us allowing talented scientists and engineers to come here; it is about us fighting for them to come here…. There is an international competitive market for these fantastically talented people.”


  • 29 arty November 21, 2016, 1:22 am

    Tyro, the key words there are “She said she believed”.
    That whole paragraph is nothing more than anecdotes – the issue is whether it turns into actual evidence of people leaving or not coming (in greater numbers than previously – people are always turning jobs down, moving from one country to another for various reasons, etc).
    I’m not arguing it one way or the other, but I don’t see much evidence here.

  • 30 Tyro November 21, 2016, 11:17 am

    @ arty: Agreed. And it will take quite some time before the data comes through, that is if it’s being collected in any serious form. But I think there’s already some evidence – actual numbers – of student applications (from the EU) being down by around 10%, though I can’t remember where I read this. Obviously there’s no direct read-across from students to academics, but it’s an indication that Brexit is making our universities less attractive. Anyway, that’s my last word on this ….

  • 31 The Investor November 21, 2016, 11:19 am

    Promising at first glance, re: science, though so often it all turns out to be recycled money 2-3 days later.

    Theresa May has begun speaking to the CBI’s annual conference, where she is setting out her aim to put a post-Brexit UK at the “cutting edge”.

    In her speech to business leaders, Mr May will pledge an extra £2bn a year in funding for scientific research and development by 2020.

    A new fund to back areas such as robotics and biotechnology and help commercialise new discoveries.


    Of course I preferred it when market forces are/were doing the work rather than government picking winners.

    p.s. I believe by “Mr May” they mean “Mrs May”.

  • 32 old_eyes November 21, 2016, 12:17 pm

    @ The Investor –
    “Of course I preferred it when market forces are/were doing the work rather than government picking winners.”

    Every developed economy has public funding involved in innovation because the market doesn’t fund sufficiently for international competitiveness. It is too risky and often too long term for the appetite of most sources of private investment. Do you argue that we, uniquely, should leave it all up to the market?

    So if you are going to have public investment there has to be some method for allocating the funds because there is not enough to support every innovation. The rational apporach is not to pick the winners – that is doomed beacuse of the risk – but to pick the races that we enter. We can do that by asking questions like – does the global market look attractive in the long term?, does the UK have the capacity and capability to compete?, is the timing right? and so on. that approach gives us the best chance of getting behind ideas that might fly and might create significant commercial outcomes.

    Politicians like to try and pick winners, because then they are supporting a specific company in a specific location (someone’s constituency) and that can often be made to look good. The people in the various arms length bodies that hand out public funding for R&D don’t try to pick winners, but to support a portfolio of projects in growing markets where the UK can succeed. They appear to be no more successful than VC’s but certainly no worse, and by supporting some ideas that look riskier than those that the private sector are happy with they increase the diversity of our national portfolio. And we all know how important diversification is 😉

  • 33 The Investor November 21, 2016, 12:35 pm

    @old_eyes — It’s a workday, so just briefly of course public money is involved in most innovation somewhere along the line (especially with respect to university funding and pure science). With more than 40% of economic output going through the State’s hands, that’s not a big surprise. But ultimately the companies that really move the dial were not the creatures of politicians, as I’m sure we’d both agree. They are the companies that have the best combination of product/people/innovation/luck at the right time.

    As you say:

    Politicians like to try and pick winners, because then they are supporting a specific company in a specific location (someone’s constituency) and that can often be made to look good.

    Which as I know you surely realize is my point. Political money is skewed money. So it will tend to support, say, projects that create jobs or that politicians can understand — or better yet that they can sell to the public.

    One of the downsides to a post-Brexit new consensus on immigration will be if/when it restricts the flow of smart young people into London. Brexit supporters say “we can have a better system where clever people get visas when they have jobs to come to”. I am concerned with clever people who want to set up companies — i.e. who don’t have jobs — going to Berlin or Barcelona instead. London/the UK benefited hugely in the wake of the financial crisis from thousands of clever Spaniards / Germans / Italians / Bosians / whoever coming here to set up companies (the Silicon Roundabout etc). Only a handful of these will become big companies, but those will be the companies that matter. As for Government, despite jumping onto that bandwagon, it hasn’t been able to even sort out proper broadband in London yet.

    The history of first-generation immigrants creating the world’s great companies is storied, especially in US tech, and we were finally getting some of that going here in the UK.

    So I’m saying it’s good that May is creating a £2bn fund because we need offsets to the damage that Brexit may do. But I’d rather London had just kept sucking clever people in, and money had kept looking for winners.

    Earlier in my professional life I watched government money/funds repeatedly try to support (/prop-up) tech companies in the provinces, particularly in the North / North East, which had some great lobbyists etc. Virtually all the big players in this particular sector / region eventually went bust. They might have anyway, but it was a waste of money and a waste of people’s energy/time/life when they could have been innovating at the new companies that did prosper.

    Some people (not you particularly 🙂 ) have mistaken my post-Brexit political stance for some kind of excessive leftism. I believe in redistribution because we’re all human and markets can be brutal, and I’m pragmatic that some government involvement in the economy/innovation is inevitable. But given the choice, I’d always favour market forces.

    (Note: I just lightly edited the above to make the Visa point clearer. Oh, and I said “innovation” instead of immigration. I shouldn’t reply to comments when on a deadline! 🙂 ).

  • 34 Factor November 21, 2016, 1:35 pm


    If one facet of the eventual new equilibrium, post real Brexit, is net out-migration having caused the UK population to fall below its current level, and if I am still around to see it, I shall be rejoicing.

  • 35 John from UK Value Investor November 21, 2016, 2:19 pm

    @Pete – Unfortunately I don’t think it’s legal to crowdsource funds for a collective fund (unit trust etc). You can do it for launch costs, which is what The People’s Trust are doing, but not the actual capital to be invested. I don’t want to go on about it in Monevator’s comments, so I’ll write a blog at some point to try to crowdsource some ideas.

  • 36 Naeclue November 23, 2016, 3:59 pm

    Regarding the movement of academics, they will to an extent follow the money. UK universities receive a substantial amount of research funding from the EU (far more than the UK contributes). What happens to this funding is fairly crucial. To give one example, before the Brexit vote I met an academic at Cambridge who was hoping to get EU funding for work she wanted to do into early humans/neanderthals. This would result in some PhD and postdoc positions. I don’t know what has happened to that bid, but if whoever runs the budget say something like “Fine, but do it in Barcelona”, then it would not surprise me if the person I was talking to followed the money to Barcelona. No great loss some may think, but the consequences for our universities could be dire if replicated across the board.

    For another anecdote, I live next door to a German family. She used to work in the City but is taking time off at present for children. He works in venture capital, essentially finding finance for what are now called “Technology Startups”. My understanding is that most of the finance again comes from the EU pension funds, etc. Living in London, he is not particularly perturbed by xenophobia, but again if the preference from either his clients in the EU or the “Startupers” is to migrate more towards say Berlin, that is where he will (reluctantly) go.

  • 37 Naeclue November 23, 2016, 4:05 pm

    @Investor, I just read your comment on Technology companies, etc. This is precisely the field my neighbor is in, although he (and his team) investigates companies and ideas then finds funding for them rather than implements the ideas himself.

  • 38 Naeclue November 23, 2016, 4:24 pm

    @Investor, you mentioned government money being used to prop up technology companies, etc. I would just like to say that this was not wholly unsuccessful. The company I first worked for was a technology company that had a heavy investment from what was then the National Entereprise Board. That company became very successful, eventually being taken over by BAE.

    However, most startups will fail and the government needs to be prepared for that. I can see no reason why the government should not provide funds for this sort of activity, but it needs to be at arms length and free from short term political concerns over say unemployment from letting firms fail.

    Alternatively, once free of EU rules, they could beef up the VCT system to allow investment in areas currently off-limits, such as slightly larger companies, or by giving larger tax reliefs for more risky types of VCT that invest in startups.

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