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Moore&#39s code

Financial ads on commercial radio make me laugh. The companies who run them seem to specialise in employing people who can speak at the speed of lightning. Eminem, the controversial rapper, could learn a thing or to from the actors who spit out that financial health warning at the end: “The value of units gurble burble flurble…” Erm. Right.

For print and television it is easy. It comes under the heading “small print”. You just stick it at the bottom in the smallest lettering possible. People can then concentrate on the glorious performance of the world-beating fund which is top quartile over the past X months.For X, use the most appropriate time period.

That health warning, which no one ever reads, and could only hear if they are possessed of ears Superman would be jealous of, is coming home to roost now. The value of units is falling all over the place. Anyone who has a fund who has not lost money recently is, well, pretty damn lucky.

And lo and behold, Isa sales have been rather less than impressive. This is the time fund managers swallow their pride and tell the City that, oh, profits are going to be a bit dicey because our sales have fallen by 40, 50 – even 60 – per cent this year.

Companies, with their PR people in overdrive, are desperately trying to put a positive gloss of “but they went up a lot last year, honest” on figures that are completely awful.

And yet this year is a much better time to buy than last year. Markets are much lower than this time last year, units are cheaper. Marketing guys, get your brains into gear – buying opportunity.

But the public is not biting. The punters are putting their money in cash, if they are saving it at all. So what does this tell us?

What they have clearly not taken on board is the message that Isas, as any self-respecting IFA should have been telling their clients for years, are a long-term investment. That over long periods of time equities outperform, but that, yes, units do fall as well rise. That some people do get very rich very quickly by playing the stockmarket but that many more people get very poor even faster. Much better to find a good IFA who can find you a good fund, and take a long-term view.

I have nothing against carpetbagging per se. Even after all the demutualisations, the remaining mutuals, amazingly, badly need a kick and if the Government really wanted to protect them they have had ample opportunity to act.

What is really appalling, however, is the carpetbagger website I recently saw punting a dodgy technology float as the next get rich quick opportunity. No. Bad move, stupid move. But some fund managers are just as guilty as the idiot who ran that web site.

“Buy into our Tech fund, its in the top quartile, don&#39t you know.” “Look at our special sits fund, it&#39s beaten all its competitors.” Then there are all those lovely looking graphs showing how your £1,000 would have turned into £5,981 over the desired time period, conveniently forgetting that the fund has had its icky spots.

The recent Isa figures are worrying, especially when the premise of unit trusts is fundamentally sound. Equity investment is a good idea as long as you understand the risks and take a long-term view. Fingers crossed, I have no reason, so far, to believe the current bear market will turn into a Wall Street crash style situation, or turn into the kind of horrific meltdown we have seen on the Nikkei.

The danger is that the recent troubles will scare off a generation of people from a valuable way of saving. They are being pushed into the arms of alternatives offering “guarantees” like with-profits which has not, so far, done enough to prove it has put its house in order for me, at least, to feel terribly comfortable with this prospect.

The point is that fund managers, and IFAs who specialise in selling their products, ought to think carefully when they start designing their marketing plans when the next bull run comes along.

If the public were properly educated about equity investment, they would take problems like the current downturn, in their stride and fund managers and IFAs would see their earnings taking a smoo-ther path.

By all means tell the world how great you, just be sensible. Sadly, the fund management industry seems wedded to the “come with us, get rich quick” sales technique.

James Moore is insurance correspondent at The Times

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