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Outside edge – Michael Owen

Some of us hark back to the long hot summers of yesteryear and we remember fondly those glorious Pep/ Isa seasons when IFAs would deliver applications to hotels. Alas, there will be no pictures of helicopters delivering Isa applications this time round.

The Investment Management Association reports Isa sales are down by 40 per cent in January on the same period last year.

We should not be surprised given two very disappointing calendar year equity returns making people more reluctant to invest and the corporate news has been dreadful. Pep and Isa statements are falling thr-ough letterboxes, instilling the same fear into the reader as an Inland Revenue letter.

The industry is presenting a confusing marketing message, with some companies slashing their budgets so far that they are not even at the races. Other companies have started their adverts with: “It&#39s not easy deciding on this year&#39s Isa” – not a typical marketing approach.

Some groups are looking towards bonds and others are sticking by equities and there is no obvious theme.

The IMA is pointing to corporate bonds and UK all companies as being the best sectors while Cofunds rep-orts heavy interest in equity income funds.

Equity income funds have always been a very good home for Isas and, as market returns decline, it is inevitable that funds where income is one of the components of the overall return will prosper.

I believe there is an Isa season and that sales will increase towards April but it will be a vastly watereddown version.

Many professionals are still cautious about the UK market so we can hardly expect investors to return in droves when they are getting the message that returns from equities may move more towards 6-8 per cent a year in future.

We must stress that this is a decent real return and, of course, we will trot out the usual statements that this a good time to be buying equities but this Isa season will see a number of investors sit on the sidelines. We will see the experienced investors who know the value of building up a tax-free pot continue to utilise their allowance. We might just see a market rally before early April and that would help but I won&#39t hold my breath.

All is not lost, though, and IFAs have a superb opportunity to instil confidence in their clients. This is a time to service them and give them added value making sure that the portfolios they have are balanced with the right degree of risk to meet their objectives.

Fund supermarkets are a positive step forward allowing the creation of multi-fund Isas and IFAs have the opportunity to white-label.

There are two aspects of the Isa season that I would quite happily say good riddance to. It made some investors buy at the last minute a standalone-type product such as an Isa rather than really look at their overall financial circumstances properly.

It meant they would often buy at the top and how many investors have we lost forever that bought the likes of Aberdeen Technology/ Inv-esco European?

It also thankfully means a vast reduction in the number of so-called Isa guides. As an industry, we really do shoot ourselves in the foot sometimes and these guides attracted the attention of the FSA eventually. Where in these guides did you ever see mentions of cash mini Isas which are suitable for some people, investment trust Isas, etc?

Isas are still a valuable product and hopefully the good times will return but in the meantime we can still use this period very profitably for the benefit of our clients.

Michael Owen is joint managing director of PlanInvest


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