Leading personal finance expert Merryn Somerset Webb challenged the audience of the latest 7IM event to back shareholder capitalism
The Seven Investment Management (7IM) annual financial planner roadshow kicked off on Thursday 2 February in London. The packed agenda encouraged plenty of discussion between the investment manager and some of its largest financial planning clients. However, it was the event’s keynote presentation day that sparked some of the most enthusiastic debates.
Merryn Somerset Webb, editor of the popular retail finance magazine MoneyWeek, as well as a regular commentator on all matters money-related in the media, challenged the audience of planners to work to help investors and get companies to change.
Somerset Webb pointed out how the last few decades have been brilliant for multinational companies. Globlisation has given them low tariff entry to markets all over the world, to cut the costs of their debt, to hugely reduce their labour bills and to shift profits from country to country to lower their tax bills. This ability to use their worldwide networks to their advantage has led to a situation in which many think that they are more powerful than national governments – hence the constant calls to abolish corporation tax “because we can’t collect it”. Nobody appears to be able to control large multi nationals these days – not governments and not shareholders.
But is this sustainable? Governments across the west, says Somerset Webb are beginning to rediscover the meaning of the world sovereignty. For how much longer will they allow companies to maintain the upper hand when it comes to tax payments? And what of shareholder capitalism as it should be?
Reminding the room of the ‘Tell Sid’ campaign – that launched the British Gas privatisation and the first of many a share sale that sold off a large number of public monopolies and other businesses – Somerset Webb explained how times had changed and that individual shareholders no longer had the ability to “touch and hold’’ their stocks. This left them feeling powerless when they had a clear mandate as the company owners to affect change.
Individuals needed to act since the collective bargaining of institutional investors on individuals’ behalves was not deemed to be effective, and fund managers often failed to understand what was really important for the individual investor as they voted on investors’ behalf.
However, due to the advance of technology shareholders could now be given the chance to intervene. This development could give the end client the ability to vote at company annual general meetings. Technology meanwhile would allow people to vote in line with their conscience and change the status quo.
Any advice for a campaign? Her conversation with fellow journalist Gillian Tett proved useful here: “Look at the verbs”. Few in the room could remember recent successful political campaigns where the slogan hadn’t included a verb. The success of the Leave camp was all about ‘Take Back Control’; while Trump’s campaign team was underpinned by ‘Make America Great Again’. Action is the key.
The London event was the first of the series of nine meetings being held across the country. For more details on these events and others, please contact Jamie.Evans@7im.co.uk or call 020 7760 8777.
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