Tomorrows Investor Project
Two thirds of the adult UK population have some sort of retirement savings: a traditional pension, a defined contribution plan like an ISA, an investment in a mutual fund, or a life insurance policy. Many people are unaware of the fact, but these accumulated savings are in fact investments – investments held in some of the biggest companies in the world.
This is a relatively new situation. As recently as the 1960s, corporations were controlled by handfuls of wealthy individuals –like Rockefeller and Carnegie in the United States. Now, taken together, average men and women own corporate Britain. As David Pitt-Watson noted in his 2007 journal article on the subject: “The largest shareholder in Britain is not the Queen, still less Richard Branson. It is the BT Pension Scheme, with over £30 billion of assets, a scheme that acts as fiduciary for 350,000 people”.
In theory, this should have brought about a democratisation of the marketplace. Yet, as a whole, people are largely unaware of the rights and responsibilities that come with ownership.
This allows institutions to put their own interests ahead of those of the people they represent. Trading and short-term share-price movements are emphasised ahead of ownership obligations and disciplines. Corporate managers hold onto unneeded cash, or invest in dubious acquisitions, enlarging their dominion when they should be returning funds to owners through share buybacks or dividends.
Tomorrow’s Investor is a new RSA project looking at democracy and accountability in the investment system. It asks whether ordinary investor should be more involved with their investments, and, if so, how they might go about being more involved. This is the first stage of a prolonged engagement with these issues, ones of profound importance for our economic system.
The RSA is marking the official launch of Tomorrow’s Investor with a public debate. Paul Myners and David Pitt-Watson will be part of an expert panel asking whether investors should take more control over their holdings.
We are also hosting a deliberative forum, where twenty people – picked to be a representative sample of the British population – have the chance to talk about how they see their role in the investment system, discussing if their interests would be better served by being more involved with their investments.
Before the forum, the investors were asked to investigate where their investments are held – and, just as importantly, who holds them. At present, equities are held by a huge variety of intermediaries: mutual funds, pensions schemes and insurance companies, each of whom further devolve responsibility to investment funds. For some observers, this system is better described as “managerial capitalism”; the system, meant to bring value to the shareholder, is run instead for the benefit of the intermediaries.
As in other areas – most notably environmentalism – the project here is to map the links in complex chains, bringing people closer to their true responsibilities. This, we hope, will foster engagement and collaboration, replacing the simplistic anti-business rhetoric that all too often dominates public forums.
In September, we are planning to present the final analysis of the Investor’s Forum to a group of experts. Their discussion will be fed into the final report, which will be released towards the beginning of October.
The RSA is collaborating on this project with Tomorrow’s Company, the independent business-led think-and-do tank which was launched in 1996 from the RSA’s Tomorrow’s Company inquiry. Following their 2004 publication “Restoring Trust”, Tomorrow’s Company are now looking at the future of ownership. The linked themes of the work strands will look at the investment system from opposite, complementary angles.
This is a relatively new situation. As recently as the 1960s, corporations were controlled by handfuls of wealthy individuals –like Rockefeller and Carnegie in the United States. Now, taken together, average men and women own corporate Britain. As David Pitt-Watson noted in his 2007 journal article on the subject: “The largest shareholder in Britain is not the Queen, still less Richard Branson. It is the BT Pension Scheme, with over £30 billion of assets, a scheme that acts as fiduciary for 350,000 people”.
In theory, this should have brought about a democratisation of the marketplace. Yet, as a whole, people are largely unaware of the rights and responsibilities that come with ownership.
This allows institutions to put their own interests ahead of those of the people they represent. Trading and short-term share-price movements are emphasised ahead of ownership obligations and disciplines. Corporate managers hold onto unneeded cash, or invest in dubious acquisitions, enlarging their dominion when they should be returning funds to owners through share buybacks or dividends.
Tomorrow’s Investor is a new RSA project looking at democracy and accountability in the investment system. It asks whether ordinary investor should be more involved with their investments, and, if so, how they might go about being more involved. This is the first stage of a prolonged engagement with these issues, ones of profound importance for our economic system.
The RSA is marking the official launch of Tomorrow’s Investor with a public debate. Paul Myners and David Pitt-Watson will be part of an expert panel asking whether investors should take more control over their holdings.
We are also hosting a deliberative forum, where twenty people – picked to be a representative sample of the British population – have the chance to talk about how they see their role in the investment system, discussing if their interests would be better served by being more involved with their investments.
Before the forum, the investors were asked to investigate where their investments are held – and, just as importantly, who holds them. At present, equities are held by a huge variety of intermediaries: mutual funds, pensions schemes and insurance companies, each of whom further devolve responsibility to investment funds. For some observers, this system is better described as “managerial capitalism”; the system, meant to bring value to the shareholder, is run instead for the benefit of the intermediaries.
As in other areas – most notably environmentalism – the project here is to map the links in complex chains, bringing people closer to their true responsibilities. This, we hope, will foster engagement and collaboration, replacing the simplistic anti-business rhetoric that all too often dominates public forums.
In September, we are planning to present the final analysis of the Investor’s Forum to a group of experts. Their discussion will be fed into the final report, which will be released towards the beginning of October.
The RSA is collaborating on this project with Tomorrow’s Company, the independent business-led think-and-do tank which was launched in 1996 from the RSA’s Tomorrow’s Company inquiry. Following their 2004 publication “Restoring Trust”, Tomorrow’s Company are now looking at the future of ownership. The linked themes of the work strands will look at the investment system from opposite, complementary angles.
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