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Advisers surprised by Isa sales drop

IFAs have voiced their surprise at last week’s IMA statistics, which revealed net sales of Isas in the 2011-12 tax year almost halved on the previous year.

Net sales for the full tax year of about £2.1bn were reported, compared with net sales of more than £4bn for the previous two tax years.

Net retail sales of just £6m were reported during the first quarter of the year.

Chelsea Financial Services managing director Darius McDermott says: “Sales were at a lower level, but ours were nothing like 50 per cent down; we were down about 15 per cent on new business.”

Dennehy Weller & Co managing director Brian Dennehy questioned whether the figures are accurate.

“It is surprising. Our numbers were up 20 per cent on the previous year,” he says.

“One presumes the numbers are accurate, but are there any flaws in the IMA stats?

“What if money comes out of an unwrapped product and into an Isa, do they pick that up? Are the numbers foolproof?”

The IMA confirmed that transfers made from one fund group to another are accounted for, as are transfers from one fund to another within the same fund group.

Tom Stevenson, an investment director at Fidelity Worldwide Investment, says their experience has mirrored that of the industry.

“It is probably a continued response to last year’s volatility in the markets. August to October really unsettled investors and it takes time to get over extreme volatility,” he says.

However, Stevenson points out that while the two previous tax years were strong in terms of Isa sales, the five years prior to that all saw negative net sales for Isas. “In that context, it’s not too bad a result,” he says.

Graham Bentley, the head of proposition at Skandia, says a slowdown in sales was to be expected.

“Our numbers are lower than last year, but have held up quite well. Nobody is screaming out about their numbers. It is hardly surprising given what a tough year it has been for customers.”

Many clients invest at the start of the tax year, Bentley says, so the second half of this year could reveal an uptick in sales.

McDermott says investors have been taking advantage of the recent market dip. “In April our sales were up over 5 per cent on last year, which was also a strong month – it’s been off the scale,” he says.

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