Apparently, it would be too difficult to figure out whether he had done well or badly over the course of a year. Some might say that the judging process should take the following form:

Q. Did he preside over a £4m loss?

A. Yes!

Q. Should he therefore forfeit some of his pay?

A. Yes!

But of course, this is history – it is his future performance that will be judged. Furthermore, it the decision to invest £4m into Icelandic banks was taken entirely by the council officers. But that does not mean Cllr. Paul Smith is completely blameless – he is indeed presiding over a situation where officers can take decisions, without informing the councillors, that could dramatically change the future financial situation of the council. Perhaps this is normal – but we can still question whether it is right.

However, the question of why the plan was rejected comes down to his assessing his future performance. Is he really that good at covering his tracks that it is impossible for his peers to judge him? Is his official role really that opaque that it is hard to define a firm set of objectives for him to achieve? I have never held a political office, so it is difficult for me to judge really what a councillor can and can’t do, but even I know that there must be both good and bad councillors. Is it really that hard to judge how well councillors in general perform, or is it something specific to Cllr. Paul Smith?

The really sad thing about this is that the committee that rejected his plan is chaired and co-chaired by the Conservatives. How much political capital will he get from this? After all, the introduction of performance related pay to our councillors has a certain “ring” to it that Joe Public could appreciate. I am sure that the decision to reject performance related pay was taken for very good reason. It probably is difficult to judge the performance of councillors, or perhaps Cllr. Paul Smith in particular. However, I can see it now at election time – the headlines on his campaign material could be “Tories reject holding councillors to account”. The explanation of this decision, or future decisions of the council, could easily be achieved if more councillors blogged… Let’s hope they will.

I told the guy that I simply wanted a safe place to save some cash for a rainy day. I currently have a range of investments, covering a wide spectrum of investment classes, including international and national shares, commodities, FX, property, bonds and cash equivalents. Luckily, I have not been hit by the current economic problems, as I chose fairly carefully. In fact, in the some of the shares that I own, I have made nearly 50% in the last 6 months and in other investments, I have not lost or gained very much at all. However, now I want to save some cash for reasons that I will not go into here. But it was explained to this chap. Another thing that I explained to him was that tax was not an issue, as it could be in my wife’s name who does not pay any at the moment, so ISA’s are not necessary.

What was his advice? I should invest in a stocks and shares ISA with the Halifax, which would be fine as I could tune my attitude to risk by choosing anything from “low-medium” to “high” risk. Um, did he not listen to what I said? However, the most ridiculous thing he said was related to the risk ratings of investments.

Apparently, funds of UK bonds are always low-medium risk, whereas individual bonds, individual UK equities and funds of international equities/bonds are medium-high risk and individual international equities are high risk. And that assessment is independent of market conditions at the time of purchase! When challenged on this, he simply repeated the mantra, explaining the Halifax Pyramid Of Investment Risk to me once again, saying that if anyone invested and it made a loss, all they needed to do was wait until the market recovered. He completely did not understand that timing is everything in this game and that if he had given this advice to someone more vulnerable at the wrong time, it would result in heart ache and misery.

The second thing he said to me was that because I was a monthly saver, it didn’t matter if the market went down, as the following month’s purchase would be cheaper as the market had gone down, explaining that I would still make a profit if the market went up again. Again, completely not appreciating the need for timing.

The dodgy advice about what is and isn’t risky was clearly from the Halifax itself – but is the not listening to what I asked for from the Halifax or just that particular adviser? Filling out an online questionnaire resulted in the following:

Q: Compared to other people, how would you describe your typical attitude when making important financial decisions?
A: Very Cautious

Q: I am looking for high investment growth. I am willing to accept the possibility of greater losses to achieve this.
A: I am uncertain

Q: I would prefer small certain gains to large uncertain ones.
A: I am uncertain

Q: I want my investment to be safe even if it means lower returns.
A: I am uncertain

RESULTS OF YOUR ATTITUDE TO RISK
Your answers indicate you have a MEDIUM attitude to risk.

You would be likely to accept moderate risk with your longer term investments for growth or income if this would give you the potential for higher returns. You would probably feel comfortable with an investment that includes a high level of Stock Market linked investments, including some overseas shares. You understand and accept that the value of your investment may go up and down and that on final encashment you could get back less than you have invested.

Um, I thought my attitude to risk was either very cautious or uncertain? So there appears to be at least some institutional bias for me to put my money into shares etc., but perhaps more importantly, the FA probably gets little or no bonus for selling me what I want – a cash savings account. After all, they get “unlimited” earnings if they perform well:

Bonus Scheme
The bonus scheme gives you unlimited earning potential and is made up of several elements that are directly influenced by your personal performance.

And what is worse is that it was explained to me that because he was a FA tied to a bank, he was salaried, and therefore his advice is less likely to be swayed towards the higher commission produce that an IFA might suggest.

So Halifax, this is what I did with your advice when I got home:

To tackle the problems, the EPSRC are having a policy change. I quote (from a document I have been sent by email)

EPSRC is looking to safe guard the peer review system by managing the burden placed upon it by applicants who are repeatedly unsuccessful

In other words, they are going to exclude those that are not in the “in-crowd” of managed programs and large-scale projects from applying in the first place!

This has got to be stopped! The politicisation of our universities since Labour came to power must be reversed.