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A suitability lesson for Coutts from 1957

by Dylan Lobo on Jun 09, 2014 at 12:31

A suitability lesson for Coutts from 1957

The regulatory team at Coutts has certainly got its work cut out over the next few months.

Last week chief executive Michael Morley told Wealth Manager it would be analysing every single investment dating back to 1957 as it issued a suitability alert to its clients.

So what exactly was a suitable investment in the year Harold Macmillan took over as prime minster from Sir Anthony Eden?  The year the UK ceded control of the gold coast and Boeing 707 flew for the first time?

This 1957 cartoon made by members of the New York Stock Exchange highlights the dilemmas investors faced in those days.

The cartoon’s hero is  Fred Finchley, who mulls what to do after his boss gives him a $60 a month pay rise. Should he keep the money in a bean can where any wandering groundhog could eat is his hard earned rise is one of his immediate concerns.

Fred is married with two children and wants to be able to get the cash working for him so he can enjoy the finer things in life with is family.

While this is pro the US stockmarket and Fred may not necessarily have been the Queens’ banker’s typical client in 1957, it gives a fascinating insight into the relatively uncomplicated investment needs of 57 years ago.

2 comments so far. Why not have your say?

Philip Milton

Jun 09, 2014 at 16:52

Isn't all this absolutely stupid. Being frank, if the risks were 'higher' than customers anticipated then over an extended period of time this means the returns would have been greater. Perhaps it's a precursor for Coutts to be suing customers for the excess returns....

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Jun 10, 2014 at 16:11

This article is complete utter nonsense although it's lovely occasionally to take a trip down memory lane. I do it all the time.

Banks NEVER managed money in 1957. Stop there, some did. They were called MERCHANT BANKS but still needed expertise & execution from stockbroking firms. MB's like Robert Lonsdale, SG Warburg, Rea Bros, NM Rothschild, Messrs Kleinwort & Benson relied on stockbrokers for their investment credentials.

Risk & suitability in those days was called COMMON SENSE. Nobody would buy a small cap for a widower but everybody occasionally liked a flutter. The system worked superbly well because EVERY transaction was relationship based. if a broker consistently gave dubious advice, lost money there were always plenty of others in the "old" market that would be prepared to job it back.

The idea that SUITABILITY can be traced in paper format back to 1957 through Coutts is laughable. I know this because some of my ex-clients were Manager within Coutts & Co and they relied exclusively on word of mouth from their private brokers.

Is it any wonder that some experienced brokers are so anti all this RISK, SUITABILITY, box-ticking culture?

Just what is to be gained here? Mr Morley clearly needs a lesson in the history of the markets, which by the way were once FREE MARKETS that relied on pure unadulterated FREE ENTERPRISE. Oh dear!

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How is regulation feeding the outsourcing trend?

on Jul 24, 2014 at 10:59

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