Now It’s All About You

One of the major themes of retail investing in the last 50 years or so has been a transfer of control from institutions to individuals. Back in the good ol’ days, talking to individuals about investing in financial assets would have elicited a blank, vacant expression. Company pension plan? Sure. Saving for a house? I know what that means. Financial adviser/asset manager investing my money for me? Sounds familiar.

But as soon as you start introducing the concept of the individual doing the actual investing, they would be lost.

This is despite the fact that individual ownership was a muuuuch higher proportion of total UK stock market ownership in the Swinging Sixties. Because ownership was highly concentrated, with only about 3% of the population owning 50% of the market. This assertion of mass individual ownership also neglects the fact that this % has been reduced largely by institutional inflows rather than individual outflows.

So it seems that your grandad was unlikely to own stocks when he was your age (assuming you’re not grandad-age right now). And who can blame him?

The financial roadmap was clear. Easy. Pretty unfuckupable.

Take pensions as an example: just work and your pension is taken care of. Literally, just show up to work. Then collect a nice annual payment in retirement. Simple.

Even if your nan was some type of young, aspiring FIRE enthusiast, acting on this enthusiasm was very difficult. Where would you get the information from? The local library probably had 0-1 books on personal finance and a few on investing. Even if you could acquire the information – how are you going to implement it? They didn’t have this thing we have now called, younger readers hold on to your hats, the internet. I can’t imagine it would have been particularly easy to saunter down to the London Stock Exchange and start bidding for oil futures or find, vet, and employ a broker to execute trades for you. And even if she were able to do this somehow, her investment options were pretty limited:

“What do you want to buy, Miss, British American Tobacco or Lloyds Bank?”

Now, of course, things are a little different. A baby-faced 18-year-old interested in investing can access books, courses, excellent blogs, average blogs, government websites, free helplines, reddit, twitter, youtube, discord, etc. All at the price of exactly £0 or very close to £0. Their friends/older siblings/cousins are also more likely to be informed and thus able to give appropriate advice.

Combine this informational abundance with tech-enabled upstarts (and established firms) supplying products that give access to a whole plethora of financial products available at low cost with easy-to-use platforms that require minimal set-up time and initial investment amounts.

And it’s not just the keen investor who is better off. On average, the average person is more aware of the possibility of investing in your average set of financial products – 75% of young people in the UK have invested or are considering investing. A fair amount will know that learning about, and actually doing, investing is important. Many will know the basics. A non-negligible group will be well-informed.

As they should be. In today’s environment – you have to be. No one is going to think about your financial future aside from you.


This comes with its benefits.

Fellow control freaks will enjoy the jurisdiction that you have over your investments. Think bonds are a waste of time? Sack them off. Think active management is BS? No actively managed funds for you. Think…you get the idea. You control when you invest, how much you invest, what platform to use, and what to invest in. It’s your money and you and only you ultimately decide how to use it. This makes learning about personal finance and investing easier – because you now have SITG.

Yes, ok, fine, this is somewhat circular: it’s only good to learn about personal finance and investing because you have to learn about it and you only learn about it because you have to. But I still think this information is useful unconditional on the amount of investing you actually end up doing yourself. Personally. It’s helpful to have this in the locker when vetting financial advisers and asset managers, for example.

Finally, this transition to individuals forced institutions to provide better products and services for individuals. Retail investing has never been cheaper, easier, or more multifarious. Ever.

Not benefits

According to Uncle Ben (think Spiderman (2002 Tobey Maguire edition), not rice), with great power comes great responsibility.

Y.O.U control how your money is invested so it’s Y.O.U.R fault if this money evaporates as a result of a bad investment. Snake oil salesman, charletons, scammers, get-rich-quick-scheme-peddlars, celebrities, even, fuck me, INSTRAGRAM INFLUENCERS are trying to con you. All the time. 24/7/365.

Because now everyone can make a (bad) investment at any time. Hence, everyone is able to get scammed at any time. So scammers operate at all times.

I blame technology. Think about a scammer back in the good ol’ days – how would they operate? Hang around at gentlemen’s clubs and try to silver-tongue rich old guys into poor investments/ponzi schemes?

Just consider the introduction of email. Now a scammer could operate from home and at massive scale. For example, they could run the classic stock prediction email scam, in which the scammer emails 5,000 people that stock X will increase and 5,000 people that stock X will decrease. Take the successful 5,000 group and repeat again and again until you have a cohort of let’s say about 100 who think you’ve made 6 correct predictions in a row. Get these people to give you money to invest and then leg it.

These mistakes can take an emotional toll. It’s not fun losing money, particularly when you check your portfolio balance overly regularly. But it’s not just the losing that has these non-financial costs. The vast amount of choices available to retail investors today can be highly intimidating. There is in some ways too much choice – research has shown that we are better off with 2-5 choices rather than thousands. Then there’s the time cost of learning – if you’re not a freak that actually enjoys it, it can be a bit of a slog.

Unfortunately, though, it’s a slog that must be slogged. You don’t really have a choice: apathy costs you. Big time. Not learning about personal finance and investing at all will lead to unpleasant outcomes like an inadequate pension, no savings, real-value erosion due to inflation, a mounting pile of debt, etc. Learning a little can be just as dangerous – these are the typical victims of scam artists. Even learning a good amount can still get you into trouble; this typically leads to overconfidence which leads to improper risk management, over-trading (frequency-wise), and over-investing (value-wise).

Summing up the benefits and the not benefits and the bit before

A good proportion of people probably would have preferred the old system. It was certainly much simpler and accompanied by fewer of the costs that come with what we have today.

But we can’t go back in time. The Genie is very much out of the bottle. We have to adapt to what we have today.

Those who like a bit more control and/or are weird and actually enjoy learning about and implementing this material will enjoy the emphasis on the individual that we have today. To these people, the freedom to construct your own bespoke financial structure is a tantalising prospect.

Some won’t like the complexity that this control is accompanied by. But the existence of vast possibilities does not mean you have to execute these options. Your investments can still be simple.

The real change is that completely outsourcing your investing is becoming an increasingly unattractive option. I wouldn’t recommend simply channeling all funds to a “trusted” fund/asset manager or hiring an adviser (unless you have high net worth, are close to retirement, or are dealing with a particularly complex financial situation).

But even if you do decide to go down this path, you must have at least a basic understanding of personal finance and investing. Otherwise you will be extremely susceptible to a good pitch and won’t have the ability to properly vet or monitor your funds.