Once again, we have seen a varied range of views on the funding and contents of various Isa guides which were produced last season.
I feel strongly that the arena of discounters and other mass-distribution IFAs, represent one of the few success stories in an industry sector often beleaguered by the press and market activity.
Furthermore, they should be recognised both for the enormous contribution they have made to the effective distribution of investment products and, in the vast majority of cases, the enormous level of integrity which applies to the standard of literature and methods by which they are funded.
Jason Hollands, under his apparently preferred title of UK number one financial pundit, has intimated there is some form of underhand practice involved in the funding methods for insert magazines and other mass-distribution sales material. It is unfortunate that he has seen fit to tar himself from head to foot with his own brush, however, after it was recently reported that his own organisation also received funding from a financial institution to produce a magazine.
In fact, there is no unusual precedent being set by Best Invest in this manner of funding. There just has to be an acceptance that the IFA's role is to distribute a range of high-quality products and abide by regulations concerning the mode of selection and the allowable levels of funding.
In my experience, discounters exercise extreme caution when selecting suitable providers. Indeed, the magazines of those such as the Isa Shop and With Profits Bond Shop, are regularly used by advice-based IFAs due to their enormous breadth of information.
I also strongly believe that the marketing flair and methods of working databases, developed by companies such as Willis Owen and Hargreaves Lansdown, are invaluable as our market develops.
The idea that fund managers are running around with paper bags of cash to be featured in these magazines is wholly inaccurate. Payments that are made, of course, have to be relevant to advertising rates for the publications concerned. But all these activities are strictly monitored.
There is no question of fund management groups making any side payments or of any brokers producing these magazines at a profit. They involve substantial cash input from the advisers and it is merely the scale of these marketing operations which produces numbers which confuse many of those who commentate on the issues.
If six million magazines have been produced and distributed in broadsheet newspapers, the expenditure inv- olved is enormous. However, we in the field accept that many outside our business may not appreciate the enormous costs and logistical efforts involved in structuring such a marketing campaign.
I feel that an ill informed condemnation of the techniques employed is dangerous. Equally dangerous is any suggestion that mainstream discounters will ever consider including funds merely on the basis that they are prepared to advertise in a publication.
As is so often the case in our industry, such comments woefully underestimate the understanding of the investing public. The massive increase in the activities of the personal finance press has created a new breed of private investor who has no interest in getting advice from IFAs. If our involvement with these clients is not to be lost, we must cater for them in a sophisticated manner, both in terms of funds selected and sales infrastructure, whether it is internet or correspondence-based.
The commitments that this sector of our industry makes to the general public are, in my view, way above that of any other sector. According to Autif's recent releases, discounters are now the biggest distribution route for Isas. We are a valuable asset to the investment fund managers as a cost-effective distribution route – with the possible exception of this year – as well as an invaluable central point of information and provider of keenly priced investment contracts for the knowledgeable fractions of the general public.
As a result of this year's poor trading conditions, I feel sure that next year there will be a whole different discussion on how Isa guides will be funded. Of course, if we are not making money for the investment houses concerned, there will be far more reticence on their behalf to part with advertising revenue.
This will inevitably see a bigger element of the business risk moving on to IFAs' shoulders on a scale which, for many within standard practice, would be deemed unacceptable.
These are people within our industry who are forward-thinking, pushing the boundaries of marketing techniques and client after-sale service to new limits. They must not be criticised but cherished.
I could suggest that many more members of the public may have been adversely affected by so-called “pundits” in the national press, than Isa guides. In my experience, they are far more likely to be influenced by editorial than they would be by funds included within an insert magazine.
Let us just try to ensure this sector of our industry remains as compliant and successful as it has so far.