The History of Financial Advice

Lead Research Organisation: University of Southampton
Department Name: School of Humanities

Abstract

'The History of Financial Advice' provides the first thorough study of a genre of writing that has amassed a huge readership, and had major social and economic effects, but which has remained largely neglected by cultural and economic historians and by literary critics. As Lendol Calder writes in the recent Oxford Handbook of the History of Consumption (2012), 'the print culture that helped people make sense of money through financial advice', still 'awaits its historian', despite the fact that 'concerns about money - how to get it, how to save it, how to invest, multiply and spend it - have likely sold more books in the last two hundred years than any other subject after religion'.

The project charts the history of personal financial advice literature as it has developed in Britain and the United States, ranging from the private letters and domestic advice manuals of the eighteenth century to the emergence of financial journalism and investment advice in the nineteenth century to the proliferation of popular financial novels, lifestyle guides and blogs in the late twentieth and early twenty-first centuries. Drawing on approaches to the study of rhetoric and narrative central to literary and cultural studies, the project investigates how works of financial advice have succeeded in appealing to the desires and fantasies of their readers, despite a lack of evidence for the efficacy of the investment strategies such works propound. Making use of the strand of social science known as 'Cultural Economy', the project also considers how financial advice has shaped public perceptions of, and activities in, financial markets, such that the genre has actively made and remade the very markets about which it advises.

The project team will make a major contribution to the scholarship on popular interactions with finance by researching and writing the first comprehensive study of the history of financial advice in Britain and the United States, beginning in the Financial Revolution of the early eighteenth century and moving through to the present. Members of the team will share this research with fellow researchers at prominent international conferences in the fields of cultural, economic and business history. The project team will also build on established relationships with representatives of the financial services industry, as well as financial regulators, educators, charities and policy makers, to share ideas in workshops, provide training sessions and collaborate in the development of initiatives in financial literacy, regulatory policy and professional practice. As part of the project, the team will collect, catalogue and annotate an archive of financial advice literature. Acquisition of the archive will be funded by the UK's first dedicated library of financial writing, run by Didasko the financial education charity, which will also provide a permanent home for the collection, where it will be available for consultation by students, academics, industry trainees and the general public, aided by a purpose-written guide produced by the project team. The key findings of the research will also be made readily and widely accessible to the public through the production of a short film to the made available online, with the working title 'What Three Centuries of Financial Advice Can Teach You'.

'The History of Financial Advice' will both mark a landmark in scholarship and achieve a major impact on the ways in which financial 'insiders' and 'outsiders' alike think about and participate in markets.

Planned Impact

What the cultural commentator Randy Martin calls 'the financialization of daily life' means that increasing numbers of citizens have little choice but to act as personal portfolio managers. They are now responsible for assessing risks and seeking optimal strategies across an array of asset classes and liabilities, from investments, property and pensions to credit cards, mortgages and student debt, as the traditional structures of the welfare state (in the UK) and corporate welfare (in the US) are being eroded and privatised. Understandably, many such individuals turn to forms of popular financial advice in navigating their complex personal finances. In the absence of resources that would provide them with a clear understanding of the history of financial advice, its rhetorical forms and modes of address, and its social and economic effects, however, members of the public are likely to be ill-equipped adequately to assess and interpret the advice they consume. By the same token, financial professionals, policy makers, regulators, educators and journalists lack the detailed historical research into the changing social, economic and cultural functioning of financial advice that would help them to contextualize and evaluate their own practices and recommendations. In the wake of the global financial crisis, calls for the financial services industry and those concerned with it to attend to the 'culture' of finance have grown progressively louder; financial advice is an aspect of that culture that demands, especially urgently, to be more systematically researched and better understood, and 'The History of Financial Advice' meets this demand.

The project will benefit members of the general public by improving their understanding of the historical and present-day forms and functions of financial advice, enabling them to be more astute, knowledgeable and discerning consumers of such advice. The quality of public debate about financial advice will be significantly enriched by the establishment of an archive of financial advice literature - available for public consultation and fully annotated - at the UK's only dedicated library of financial writing, the Library of Mistakes in Edinburgh; through the production of a short online-distributed film, with the working title 'What Three Centuries of Financial Advice Can Teach You'; and by means of social media, a project blog and other online outlets and regional and national press, television and radio.

Through a workshop organised by the Finance Foundation, the project will benefit financial policy makers, regulators and practitioners by assisting them to better grasp how financial advice has shaped popular perceptions of, and activities in, financial markets, and the social and economic consequences that have stemmed from such non-professional or 'vernacular' engagement.

Finally, the project will work with the UK's leading financial education and enterprise charity Young Enterprise to improve financial literary education (now a compulsory part of the National Curriculum), by developing new teaching materials drawn from the project's research findings.

Publications

10 25 50
 
Description We have traced the genre of financial advice, from its emergence in eighteenth-century London to its explosion across multiple platforms and media in the present. We have explored it as a genre that mediates between expert economic knowledge and popular or "vernacular" understandings of the financial market place.

We have three primary insights:
Firstly, we have demonstrated the ways in which investment advice allows its readers to fashion a sense of an economic self, to picture themselves as confident, capable, and decisive risk-takers in very different contexts.
Secondly, we have explored how amateur investors have been trained to use the technologies and principles of investment professionals: to be expert "chart readers," able to predict the direction of the market through near-mystical attunement to its price fluctuations or to be "value investors", able to decipher the truths revealed in balance sheets and corporate reports. We have also explored how both approaches responded to attacks from academic finance theory in the form of modern portfolio theory and the efficient market hypothesis. Finally, we have examined the ways in which the woman investor is imagined and addressed by financial advice and have traced an alternative tradition of financial advice targeted specifically at female readers.
Exploitation Route Our insights into the shaping of the financial self is now being sought after by other financial professionals: we are presenting to the Chartered Insurance Institute and Chartered Institute for Securities & Investment in May of this year.
Sectors Financial Services, and Management Consultancy

 
Description We ran a Teacher-Scholar programme on teaching financial advice in contemporary classrooms. Teachers from a range of educational backgrounds and disciplines participated in an online four week online course and a one day workshop. These teachers then worked with the grant team in writing a portfolio of lesson plans that are now in the process of being validated by Young Education, the nation's leading charity for financial advice. We have compiled an archive of Financial Advice books that is now being hosted by the Library of Mistakes in Edinburgh. We launched this library at a series of events in Edinburgh in December 2018 and it has been taken up a series of finance professionals and written about in the financial press, including a one page article in the Financial Times 'The best financial advice hasn't changed in 300 years' published in January 2019.
First Year Of Impact 2017
Sector Education,Financial Services, and Management Consultancy
Impact Types Cultural,Societal

 
Description ESRC Impact Acceleration Account (University of Southampton)
Amount £8,993 (GBP)
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 01/2017 
End 05/2017
 
Description Article for specialist magazine The Economic Review 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Schools
Results and Impact The article was titled 'The South Sea Bubble: what are bubbles and how do they arise'. The article explains to an A level standard student about financial crises such as bubbles.
Year(s) Of Engagement Activity 2018
URL https://www.hoddereducation.co.uk/subjects/economics/products/16-18/economic-review-magazine-volume-...
 
Description Article in The Financial Times 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Media (as a channel to the public)
Results and Impact As a result of our presentation at the Library of Mistakes the financial advice journalist Merryn Somerset Webb wrote an article in the Financial Times about our project.
https://www.ft.com/content/e853778c-0f4d-11e9-a3aa-118c761d2745
Year(s) Of Engagement Activity 2019
URL https://www.ft.com/content/e853778c-0f4d-11e9-a3aa-118c761d2745
 
Description Collaboration with the Library of Mistakes 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Professional Practitioners
Results and Impact We launched our archive of Financial Advice at the Library of Mistakes with an evening presentation which is supported by 'Finder's Guide' and a video lecture hosted on the library's website.
Year(s) Of Engagement Activity 2018
 
Description Presentation to Finance Advice Professionals 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Professional Practitioners
Results and Impact Approximately 50 people attended a day workshop at Edinburgh's Future's Institute to listen to a presentation on the history and practices of financial advice. The majority of these attendants were involved in the financial advice industry.
Year(s) Of Engagement Activity 2018