Mrs Jones of Baldock, Hertfordshire had been a building society investor all her life. Now aged 67, she had expected that her state pension and her savings would need to be boosted for a better retirement.
In March 2000, Mrs Jones had £21,000 in the building society and she decided that the exciting new world of the Internet was a new dawn of technology.
She knew that many of her neighbours were now on the internet so she put £7,000 in to a technology Isa. A year later, although worried by the drop in the value of the previous year's Isa, she ret-urned again and invested in a European equity Isa with a different company.
She does not intend to invest in an Isa in the 2001/ 2002 Isa season.
Hundreds of thousands of investors like Mrs Jones are lost to the fund management industry for the next five years at least. Their experience of stock markets has been pain-ful beyond belief. She continues to receive mailshots and Isa guides as she is on the mailing list of a number of discount brokers. She immediately throws them in the bin.
What does Mrs Jones story tell us about this Isa season?
The most obvious conclusion is that there will be dramatically fewer investors available to allocate their £7,000 of deadline-driven savings to Isas. The market that we as fund management companies are fighting over is dramatically smaller to the 2000 and 2001 available market.
In addition, investors have become dramatically more risk-averse and are seeking cash Isas, guarantees and corporate bond funds.
We know that the more financially sophisticated client is very unwilling to surrender a tax break and equally spur-red to action by a deadline. Sales of these more cautious Isas will pick up over the coming weeks.
How does this leave the fund management company that has no guaranteed products, no cash Isas and no market-leading position in corporate bonds?
Our only option is to go down the education route of reminding investors of the old story of “buying low and selling high”.
In reality, there is still tremendous caution among the investing public as we all pray that we do not experience the unthinkable – a third successive year of negative returns from the stockmarket. The truth is that fierce competition is now on to attract a much smaller number of total investors than in previous years and the ones we are targeting are the most financially literate clients in a generation.
What does this mean for fund management groups?
Any casual read through the trade papers shows the lesson has been learnt. Whether it is our own company linking up with ABN Amro and SG Asset Management on the 3 in 1 Isa road-show or numerous other groups getting together and carrying out mini Isa conferences around the country, we have all chosen the IFA route to distribute our Isas.
The massive spend in direct advertising and direct mail is a year 2000 story.
Mrs Jones is not interested in our stockmarket fund mailers. Her independent fin-ancial adviser, however, is very interested.
Attendances at these roadshows have in many cases been at record levels as IFAs look for investment background and a deeper understanding of the funds that they are planning to recommend.
Reviewing the early season sales figures from Cofunds and talking to intermediaries across the country on our roadshow, the winners are likely to be the grey-haired experienced managers who have managed money in volatile markets and have years of experience under their belts.
The early betting indicates that each way bets may be worthwhile on Nigel Thomas, Bill Mott and Anthony Bolton.
These are not the names that Mrs Jones would recognise from her March 2000 Isa mailshots.
Ian Chimes is managing director of Credit Suisse Asset Management