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F&C sales closure turns up the heat

The closure of F&C&#39s IFA salesforce will stoke fears that the retail fund industry is facing meltdown.

F&C&#39s drive to attract more IFA business began in earnest about four years ago with a small team of eight. In a bull market or even in a less savage bear one, the strategy might well have paid off. As it is, F&C will focus on direct sales of investment trusts and maintain some IFA relationships.

Perhaps F&C&#39s most interesting initiative was its with-prospects fund which was clearly intended to take a slice of the with-profits bond market. It represented one of the more interesting alternatives but it may demonstrate that replacing with-profits with any investment-linked product may take more patience and resources. Some of those with bonds were natural building society savers rather than owners of stocks and shares.

The real fight for market share between various players, whether traditional with-profits, Sandler&#39s new-style version and various fund-managed alternatives, will probably only become visible when stockmarkets improve. Times are very tough for investors and the companies that serve them.

The sheer scale of the drop in new business is becoming apparent and much of that pain will be felt among fund man-agers and investment IFAs in particular.

The F&C move is bad news and it will be followed by more bad news. But as the international situation hopefully stabilises, the outlook should become better. Those which have kept on promoting their brands will eventually see a return on that investment but probably not from the Isa season just passed. Those offering equity-based investments face a massive challenge in winning back customers. But it is a challenge that they will have to accept.

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