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's 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
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' 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's 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' 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.