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A new start now &#39its&#39 over

Last week, after a consultation exercise with our members, the AITC

decided to stop its consumer advertising programme but to increase

subscriptions by around £3m a year to fund a high-level programme of

IFA support, consumer education and PR activities.

Given that I had recommended that we should continue the consumer

advertising programme for the next four or five years, the reader might

wonder why I am delighted with the outcome.

The reason is simple. Because the outcome is as good as we could possibly

have hoped for. Yes, in an ideal world, I would have liked all 310 of our

members to support a continuation of consumer advertising but that was

always the longest of long shots. Nonetheless, as director general it is my

job to recommend whatever I consider to be the best strategy for the

industry, not to duck the issue and only recommend easy things that

everybody will go along with.

Three years ago, when I first proposed the “its” campaign, it was vital to

get the initiative off the ground.

To kickstart marketing in an industry that was widely regarded as heading

for the knacker&#39s yard we were right to operate with the support of around

two-thirds of our membership. Between them, they have provided around

£25m for the “its” campaign.

There have been enormously positive consequences of this activity.

Public awareness and consideration, particularly among the more

financially confident mainstream audience, has been increased and their

understanding of the attractions of investment trusts improved.

IFAs are now starting to come to the party. This is a gradual process and

I am keenly aware that we need to raise our game to provide the same levels

of service that IFAs have come to expect from our open-ended cousins.

Sales figures are up. In the last tax year, investment trust Isa sales

were up by around 35 per cent. This compares with a fall in gross unit

trust sales over the same period. Something is happening out there.

Discounts have come down. From a recent peak of 16 per cent, they now

stand at below 10 per cent. Over £5bn of shareholder value has been


The most important drivers may be performance and share buybacks but if

the marketing efforts have been responsible for even a 10th of this

narrowing of discounts, then the £25m spent has been a fantastic

investment for shareholders.

Marketing is now firmly on the agenda for boards and managers and this may

prove to be the most important and lasting legacy of the “its” campaign.

Yet, despite these successes, we have decided to stop consumer

advertising. Why?

The answer lies in the nature of trade associations. We have 310 members

in all shapes and sizes with all sorts of objectives, shareholder profiles,

opportunities and problems. One size will never fit all.

Also, despite the fact that we were able to take a pragmatic approach when

the campaign started, by allowing some members to opt out of paying for it,

the tensions of that position will inevitably become unbearable over time.

This is because those who pay gradually become more and more resentful of

the “free-rider” effect. Those who are not paying because they genuinely

believe that to do so is not the best use of their shareholders&#39 funds

naturally resent being labelled as “free-riders.”

That is why in March it was obvious that we either had to all go on

together or to call a halt to the advertising. Asking the industry to back

a continuation, which meant that support had to rise from around 65 per

cent to 100 per cent, was always going to be a long shot.

The task was not made any easier by the fact that the success to date of

the campaign is inevitably hard to quantify, making it easy for people to

say there&#39s no proof that it is working so we will not back it. This was

compounded by a great deal of criticism within the industry of the creative


But this criticism was generally neither objective nor well informed. In

fact, the work was successful in being disruptive and thus in getting

noticed – hard to achieve when we are faced with perhaps 1,000 advertising

messages each day.

Once people had noticed it, the evidence is that it worked effectively in

communicating its key messages.

While I would not claim a “perfect 10”, I make no apologies for the

advertising itself. It has worked and shareholders across the industry are

richer as a result.

Overall the association should be proud that 85 per cent of members who

responded to our consultation have backed a doubling of our subscription

income to maintain promotional activities.

For us at the AITC there is plenty to do. We are going to hire another IFA

consultant to provide education, training and marketing support to some of

the IFAs whose requests for help have overwhelmed our resources.

We will embark on a major development of our website. In time, IFAs will

find our site offering a comprehensive resource for everything they want to

know as well providing links to all the members and offering quick and easy

ways to deal.

We will continue with our PR and consumer informa-tion work to raise the

profile of investment trusts among consumers and to remove the suspicion of

new things, making them easier for IFAs to use to meet clients&#39 needs.

We had a huge agenda three years ago which entailed the leadership of a

programme of substantial change by the industry as a whole. The industry

is far healthier as a result. But the job is not complete.

I am looking forward to working with my colleagues at the AITC, with my

members and the whole industry to ensure that we succeed in taking our

progress to the next level over the next couple of years. It will continue

to be an exciting ride.



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