Investors need a new range of savings products
BOTH stockbrokers have good reasons to cheer Bloxham's decision to sell its 15,000-strong private client business to Davy.
Bloxham exits a business that has attracted unwelcome headlines and Davy gets a significant number of private clients at a time when few investors are entering the market to replace those who die or go bust.
The move makes sense for Bloxham and Davy but it is bad news for the rest of us. The level of competition in the Irish financial services sector is frighteningly small these days and it is just about to get smaller.
The UK is like a different world. There, a plethora of low-cost and tax-efficient savings products offer real alternatives to the useless pensions on offer here and the high-cost alternatives such as the private client business. We could do a lot worse than transpose many of the tax-driven British saving products such as PEPs, ISAs and TESSAs to these shores.
This would require some effort but it is the only realistic option if the Government wants to offer Irish residents cheap ways to save with products that offer real liquidity.
The financial services sector here has had ample time to lobby for decent products suitable for ordinary people over the last decade but preferred to focus instead on selling their customers shares in Hungarian shopping malls and other dud offerings that could be wrapped into pensions.
The shrinking investment opportunities at home and the disintegration of so many private-sector pensions have created an urgent need for new savings devices. The fact that government pensions are not affected and the State now owns the banks makes it unlikely that we will see reform in this area in the short term.
Access to decent and flexible savings products is necessary in the medium term to ensure that people begin to save again and have some opportunity to hedge against the rampant inflation building up inside the system.