The second opinion

Most people who ask me for a second opinion are not looking for a new answer. They are looking for permission to understand the old one.

The request usually arrives in a particular tone. Apologetic, slightly embarrassed, often prefaced with "this is probably fine, but". Behind it is a folder, physical or otherwise, containing the accumulated financial decisions of a life lived in several countries: a pension from a job in Dubai that ended in 2011, an offshore bond sold by someone very charming in a hotel lobby in 2009, a portfolio in London that has been "under review" at the bank for so long that the review has acquired its own anniversaries, a property fund in a currency the owner no longer earns.

None of it is necessarily wrong. Most of it was sensible when it was done. The problem is almost never a single bad decision. The problem is that the decisions were made in different years, in different countries, by different advisers, for a person who was, in each case, slightly different too. The folder is not a plan. It is an archaeological site.

So the first thing a good second opinion does is dig, and the first thing it usually finds is that nobody, including the owner, can say in one plain sentence what each arrangement is for.

I have come to think that this sentence is the whole job. Not the sentence about performance, which anyone can produce and which rarely changes anything, but the sentence that begins "this exists in order to" and ends with something a reasonable adult would recognise as a purpose. A pension exists in order to pay for the years after work. A bond exists in order to hold money for a known future use. A portfolio exists in order to grow, or to produce income, or to be left alone. When the sentence can be written, the arrangement can be judged. When it cannot, no amount of analysis will rescue it, because there is nothing to measure it against.

The second thing a good second opinion does is add up the costs, all of them, in one place. This sounds trivial. It is not. Costs in cross-border arrangements have a talent for hiding in plain sight, in the gap between what a product says and what it does, in the exit charge mentioned on page forty, in the currency conversion that happens twice when once would do, in the adviser fee that is paid on top of the platform fee that is paid on top of the fund fee. Each is defensible alone. Together they are a quiet tax on a life, levied every year, compounding in the wrong direction. Putting them on a single page is often the most useful thing I do for a family, and the least technically demanding.

The third thing is to ask what has changed. The person who bought the bond in 2009 was thirty-four, single, and planning to be back in Britain by forty. The person reading my letter is fifty-one, married to someone with a different passport, and has two children at school in Bangkok and no intention of going anywhere. The bond has not changed. Everything around it has. A surprising amount of my work consists of pointing out, kindly, that an arrangement is still serving a person who no longer exists.

What a second opinion is not, or should not be, is a pitch. I say this because the phrase has been borrowed by people whose second opinion always, by some coincidence, turns out to be that you should move everything to them. A review that ends in a transfer is not necessarily wrong, but a review that always ends in a transfer is not a review. The honest version has to be able to conclude: this is fine, leave it alone, here is the one sentence that explains why. I have written that letter many times and I regard it as among the most valuable things I produce, precisely because it costs the recipient nothing further.

There is a reason doctors invented the term. A second opinion in medicine is not an insult to the first doctor. It is an acknowledgement that the stakes are high, that the patient is entitled to understand what is being proposed, and that a fresh pair of eyes, with no stake in the earlier diagnosis, sees differently. I have never understood why people who would not hesitate to ask for one about a knee feel sheepish about asking for one about three decades of savings.

The embarrassment, I think, comes from a belief that they ought to have understood all of this already, and that asking is a confession. It is not. The arrangements were designed, in many cases, not to be understood. The person who sold the bond in the hotel lobby did not explain the exit charges because explaining them was not in his interest. Not understanding is not a failure of intelligence. It is the predictable result of a system that profits from the gap.

So when someone sends me the folder, apologetically, I try to say the same thing each time. There is nothing to apologise for. Let us find out what each of these is for, what each of them costs, and who they were built for. Then we will know whether the person reading this still wants them. Quite often the answer is yes, with two changes. Occasionally it is no. In either case the folder stops being a source of low, constant unease and becomes what it should have been all along: a set of decisions the owner can explain, over dinner, in one sentence each.

That is the permission people are actually asking for. Not permission to change. Permission to understand.