It frustrates me that consumers are so valued as shoppers, yet so underserved when it comes to putting money to work in other ways. From the moment we are born, we are marketed to thousands of times a day, “trained” as consumers through hundreds of billions of pounds in advertising, yet are left to our own devices when it comes to investing.
Like it or not, we vote with our wallets. With £400bn spent globally and £19bn spent in the UK each year on media placements designed to impact the choices we make, we as consumers have strong insights into products, brands and companies and, as a result, have power and influence. So why aren’t consumers taking “voting with their wallets” one step further as investors in the companies they know and love?
Today is the London Stock Exchange’s (LSE) biggest annual fundraising event, Charity Trading Day, where all equity trading fees are donated to partners such as Unicef UK. As the children’s charity’s first business mentor, I’m spending this morning on the LSE floor to kick it off: a place that typically mystifies the average consumer. I’d like to see this change.
I get it. Your average person considers the Ivory Towers of the LSE to be far removed from their field of expertise. For those with any money to invest, it’s a challenge. Where do I put my capital? Who can look after it best? Surely not me when there are people out there who do this for a living?
If we all waited until we fully understood the language and practices of the market, we might never invest.
In my case, equities hold a special place in my heart. At five, I began reading my father the share prices on the way to school. I started investing at 18 when I ploughed my student loans into the stock market, and at 22 my love affair with the financial markets was cemented via a job in the City. And at 29 I IPO’d.
Take Pizza Express. It was the one restaurant chain that always accommodated my request for no cheese (I’m allergic to dairy), was always busy, and I loved everything that Peter Boizot (the founder) said. I figured it was just the sort of company I should invest in when I started out… so I did.
While I’m less frivolous and do more homework before investing now, it occurs to me that using that sort of consumer knowledge as a starting point is a great way to build confidence. We can then build literacy over time.
The classic diversification theory, which actively encourages investment through mutual funds, is sensible to balance out the risk of just holding individual equities, but completely outsourcing where you invest shouldn’t be the rule. So what to do?
US companies are leading the way; unsurprisingly, in my opinion, given that I think it’s in the DNA of North Americans to be investors and speculators versus the typically more risk-averse Brits.
Last month Stockpile launched in supermarket chain Kmart. It essentially allows you to pick up a gift card for stock in fixed denominations for recognisable brands. It’s democratising finance; giving everyone access to the stock market. A fan of Apple? Instead of buying a $50 gift card for iTunes downloads, give someone the gift of a shareholding instead. As founder Avi Lele rightly says, giving someone stock is making an investment in their future rather than just providing them with more “stuff.”
Engaging consumers in ways other than just spending led Jane Barratt to found Goldbean. A data driven tech platform, it analyses your credit card transaction history and tells you who you tend to spend money with and whether you should think about investing in that company’s stock.
Just because you spend money with a company doesn’t necessarily make it a good investment, but those that rank well and are appropriate investments for the consumer’s risk level are put forward by Goldbean as recommendations. Brilliant.
Even if you only build a virtual portfolio, any step towards financial empowerment is a positive one. People who traditionally have been overly trusting of advisers or who think that investing may not be for them can rethink their role in the economy and get more insight into their spending.
Mutual funds mean we outsource our influence over companies to fund managers, who may or may not share our views or insight. I’m not against advice – but I am against not using our power as consumers in meaningful ways. Anything that promotes saving and investing over “just spending” is a very good thing too. So instead of buying socks or chocolates for loved ones this Christmas, perhaps buy some stock and encourage others to “get their share” in this very important part of our economy.