”March 2000: Isa mailing list for sale – 100,000 wonderful cross-selling opportunities.”
”March 2003: Isa mailing list for sale – 100,000 very high maintenance unhappy clients.”
What a difference three years makes. We are now at a key turning point in investor psychology and there are a number of harsh truths that we need to face up to.
The mailing lists made up of so many people who have taken out Isas in previous years that should have provided future new business are likely to become a very onerous cost if drastic action is not taken.
We will all be very popular with the Post Office due to the amount of postage that we will be spending on these people.
We will also be pretty popular with a number of stationery and printing companies as we continue to order brightly coloured direct marketing packs which will be heading straight for the kitchen waste bin at a speed not seen for many years.
The future will be different from the past. The market for Isa investment each year peaked dramatically in the technology explosion and we will not see this phenomenon again for a decade. We have reached an inflexion point in investor behaviour and a generation of savers will behave differently in the future to the way that they have in the past. Why is this?
Isas are supposed to do two things. First, to go up in value and second, to help beat the taxman in some way.
Clearly, the first of these objectives has not been achieved and, with the Government determined to take away the 10 per cent tax credit next year, the tax advantages are being gradually diminished.
The period 1998-2000 swept up many thousands of investors who bought Isas because of the potential of a big capital sum being delivered to them at the end. They were the same sort of investors who have been pursuing the buy-to-let market over the last three years. They have no long-term belief in Isas and do not see the last few days of a tax year as a signal to galvanise themselves into cutting coupons and sending off cheques.
We should collectively decide now that the fund management industry can save itself many thousands of pounds if we do not bother to mail them for new business any more.
Using a technology Isa mailing list for potential future sales will be as relevant as mailing a list of building society savers who were given a series of windfall shares and then expect them to become owners of other equities.
For intermediaries and fund management companies, it is always very painful to make the big strategic decisions, especially when so much money has been spent building up mailing lists.
What this year's Isa season has shown us is that Isas will continue to be bought by long-term equity investors and those who are saving for a specific long-term financial need, such as a daughter's wedding, retirement or university education fees.
These lifestyle issues have not gone away and the financial services industry has historically been very good at providing product solutions for identifiable financial needs. We are back there again as we were in the late 1980s and early 1990s.
This means that the way that companies market Isas to intermediaries and to their clients will have to change.
Out will go the glitzy mailshot. In will come easy-to-use point-of-sale marketing aids making the long-term case for equity investment and saving for the future.
We are back to face-to-face sales again and, most important, Isas will be sold month in month out through the year as tax planning solutions. We will not have the year-end crescendo.
This will be bad news for all those hotel chains which have rented out rooms to fund management companies in order to provide collection points for those few hardy investors who want to hand over their Isa application form on the last day.
Ian Chimes is managing director of Credit Suisse Asset Management Funds