For reasons I cannot now remember, every passenger on the train had a reason for committing the murder – and on the night in question, they all took turns to thrust the knife into their hapless victim.It seems to me that the traditional first-quarter Isa season has suffered a similar fate, albeit without the knife. Don’t get me wrong, I am sure that many advisers, are making sure their clients use their allowance before the end of the tax year. But what has died is the Isa season as a sort of public event, involving much high-profile advertising, huge mass mailings, special supplements in the newspapers and the mushrooming of temporary collection points for last-minute applications. And just like on the Orient Express,it was a whole bunch of different factors, not just one, which combined to finish it off. First, it goes without saying that the effects of the 2000-2002 bear market are still taking their toll on investor confidence. This phenomenon has,I think, been much misunderstood. Many people think of private investors as a naturally bullish lot, happy to pour money into more or less any investment which attracts their attention, except for brief periods during stockmarket crashes and for a little while afterwards while memories are particularly fresh and painful. Those who take this view believe that now the worst horror stories are going back a good couple of years, the punters will very soon be showing a real interest again. Especially as far as direct investment is concerned, this analysis is completely wrong. The very large majority of private investors are sceptical, bearish people who spend almost all of their lives wanting as little to do with investing as poss-ible. Only after five years of the hottest runaway bull market in the history of markets do they reluctantly and grudgingly accept that, OK, maybe a few quid in a tech fund would not be such a bad idea. Then, of course, they lose 70 per cent of their money and default back to their normal jaundiced cynicism. The second big brake on the old-style Isa season has been the outcomes of the strategic musings about distribution, largely triggered off by the arrival of depolarisation, which have been rife on the manufacturing side of the industry. To cut a long story short, virtually every serious unit trust and Oeic manufacturer has now decided that looking after troublesome, expensive, high-maintenance direct investors simply is not what they do. If they could find a way of politely getting rid of the direct investors they already have, then they would but, failing that, they certainly do not want any more. The third factor, which would be a pretty effective Isa season killer even on its own, is the relatively recent introduction of the FSA’s new rules on financial promotions. Replying to an article I wrote on this subject a little while ago, the head of the FSA’s financial promotions department, Nausicaa Delfas, protested that her only aim was to ensure that advertising should be “balanced”. Ms Delfas seems oblivious to the oxymoron in this concept. “Balanced advertising” is one of those terms like “dry rain” or “cold heat” – it can be one or the other but it cannot be both. If we are obliged to spend as much time and money in our advertising on drawing attention to the drawbacks of our products as to their advantages, then we will not produce “balanced advertising” – we will produce none at all. I that suppose among our list of suspects, we also have to include the dwindling general level of enthusiasm for Isas themselves as a tax-saving vehicle. This is not my specialist subject so I would not like to say how much of this reflects the real impact of Treasury tinkering and how much it just mirrors boredom setting in to the point that few people involved can manage to maintain their enthusiasm. And finally, our fifth guilty party is, undoubtedly, an eventual and argu-ably overdue realisation that a lot of the things which many of us used to do in the Isa season were always jolly silly. C-list and even D-list fund managers blowing hundreds of thousands of pounds on short-lived poster campaigns promoting their names to a passing audience of millions of unin-terested high-street shoppers, newspaper supplements where you could almost smell the desperation of journalists trying to find enough to say to provide some sort of surroundings for dozens of grim little off-the-page ads as well as invariably unsuccessful cold mailings to the so-called and very largely illusory “emerging Isa market” of younger, less affluent investors. All these activities, and many more, reflected more a sort of collective hysteria on the part of Isa providers than a measured response to a real opportunity. It is difficult to mourn the passing of all that – especially in a situation where, very slowly, a new and much more sensible and sustainable marketing and communications model is beginning to emerge in the retail fund industry. One of the reasons that we can tell it is more sensible and sustainable is because it is much more like the model which exists in other consumer markets, where there is a clear division of labour between manufacturer and distributor, and a clear understanding of the roles each should be playing. No, all in all, the death of the old-style Isa season is a development to be applauded rather than deplored. Like many people involved in it in its heyday, although, I cannot in all honesty deny that it did used to be rather fun.
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