Talk the talk

Frank O’Brien, incoming president of accountancy body ACCA Ireland, talks to David Clerkin.

Tell me about the “Introduction to Investment” series of booklets you’ve written, please. What do the booklets aim to achieve?

The series, which was commissioned by the Irish Association of Pension Funds, was designed to give readers a coherent overview of investment. The handbooks take the reader from the basics of investment, through pension funds and onto the philosophies and processes of investment managers.

What’s your view on general levels of awareness of investment products and strategies? Do people know enough about investment? Where are the gaps in knowledge?

People are confused and intimidated by the jargon. In fact, investment is a relatively straightforward process.

Investment is about risk and reward. Diversification controls risk (“don’t put all your eggs in one basket”). Investors must have realistic expectations. Focus on value - the stream of returns the underlying investment will generate - not on price. Make informed judgements.

What do you think will happen when the SSIA scheme unwinds - will people continue to save or will they go on a spending spree? What should they do with their lump sums?

I’d like to think that the bulk of the money will be re-invested. At least part of it should be used to repay borrowings, as I think the long-term downtrend in interest rates is over.

Property has been seen as a way to make easy money in recent years. What do you think?

Property has benefited spectacularly from low interest rates and a strong economy.

It is usually wrong to project the recent experience into the future. If and when the market goes down, many investors will discover the pain of over-borrowing.

Are people borrowing too much and investing too little?

Unfortunately, yes in both cases. This is particularly worrying if, as I believe, interest rates are about to turn up.

What do you say to people who have no pension arrangements in place?

Please, please do something about it. It’s not too late to start.

What impact do you hope to have as ACCA President? What do you hope to have changed by the time your term ends?

I’d like to play my part in restoring the standing of the accountancy profession after the financial scandals of recent years. ACCA is playing a leading role in developing the new International Accounting Standards which will be implemented next year.

What are the major issues facing the accountancy profession at present? What are the main challenges on the ACCA’s agenda right now?

The seamless introduction of the new International Accounting Standards is a major challenge. More broadly, ACCA has a significant role to play in developing a robust corporate governance framework that promotes compliance without dampening initiative and competitiveness.