When asked to comment on the Isa season, my first reaction was what Isa season? IMA figures for the first three months of last year showed net Isa sales were down by 36 per cent on the same period for the previous year and I expect figures for this year to be down further. It is difficult to attract investors into the marketplace when the FTSE 100 has registered a 24 per cent fall in 2002 and is over 40 per cent off its all-time high.
The investing public now look more favourably at receiving Inland Revenue envelopes rather than Pep or Isa statements. The problems for those of us marketing Isas are obvious. This millennium has only seen a bear market, so we have to work hard to encourage investors to return to the markets, even though prices are much more attractive now.
The industry has scored too many own-goals by selling Isas on the back of past performance and those magic words “tax-free”. All the razzmatazz, including Isa guides, helicopters delivering applications and groups sucking people into funds at the top, mean that many investors have had their fingers badly burned.
Don't get me wrong, because we enjoyed Isa seasons as well, but we never fell for opportunistic marketing launches from some technology funds or Aberdeen's amazing attempt to combine its technology and corporate bond funds in one package.
I do not think the star fund manager culture is helping either because the public do not want to read about mega deals while they are nursing big paper losses.
There are, however, some positive aspects. Supermarkets are a welcome addition to the Isa world and, if the markets show signs of recovery in the first few weeks of this year, some hardened investors will be tempted again. It has been a relatively good year for corporate bond and equity income-type Isas and that should continue.
Indeed, marketing expenditure for many groups is probably going to be confined to those two sectors although we will have to take care not to put people into funds just because they are easier to sell.
There shouldn't be an Isa season, in my view, but collectively we need to focus on issues which will help generate more sales over the entire year. First, there needs to be some education, so clients think long term and avoid the glamour funds. Let us go back to basics and look at mainstream UK funds for our Isa choices.
I am amazed at just how few groups emphasise the possibility of phasing one's Isa investment. Hand on heart, no one can say that today is a good time to buy a lump sum Isa, so why not phase the investment?
To answer my own criticism of the star fund manager concept, I can see a case for performance-related fees, so that the public can see fund management groups being rewarded for outperformance and being penalised for underperformance.
The Isa product itself needs to be examined. At a time when the savings gap is becoming a major issue, why do we persist in having mini and maxi Isas? Probably the best Isa presently is going to be one invested half in cash and half in markets and having the flexibility to move between the two but that is not allowed.
I agree with the Pep and Isa Managers' Association, which has called on the Government to retain the 10 per cent dividend tax credit on Peps and Isas in 2004. One could also criticise the decision to deny access to property funds in Isas. I think we will see Isas in the first quarter largely being sold in the areas of fixed interest and equity income but structured products will also be popular for investors, who now have far less appetite for risk. There may just be an Isa season but I wouldn't hold your breath.
Michael Owen is joint managing director of Plan Invest Group