The death of the Isa season should not be the disaster much of the industry is proclaiming it to be ...
The death of the Isa season should not be the disaster much of the industry is proclaiming it to be ' at least not for the intermediary sector. The Isa net sales figures for January 2003 were almost half those recorded in January 2002 and, of course, the figures in 2002 were already a long way down from the year before that.
While everyone is feeling a little battered by the continuing storm that is the equity bear market, it is worth remembering. The figures are still in positive territory, unlike those of the equity markets themselves. The £157m of net sales in January is not a small number, it is just smaller than the industry has been accustomed to. As the statistics for January show, repurchases have been on an upward trend as intermediaries look to move their clients out of underperforming portfolios and into more attractive prospects.
These figures are also just for investment funds. While these have been the bread and butter of the industry, for advisers they are just a small part of an overall financial planning service. The figures also do not include sales in the plethora of alternative products, which have been launched over the past year. Just look at how many protected/structured products have been on offer lately. Some say sales of these products, many of which have offered, or are being looked at, by mainstream investment houses such as Newton, Henderson, Jupiter and Invesco Perpetual, were upwards of £1bn last year.
Other financial advice areas have been growing steadily thanks to lower interest rates. Just look at the increased demand for mortgages, which has already caused intermediary groups like Hargreaves Lansdown to enter the market. Pension sales also continue to flow.
Protection needs continue to exist and, again with lower rates, demand for these products is increasing. Intermediaries who may have shunned these types of sales in the past are also starting to realise the commission levels involved in term assurance and critical illness plans add substantial revenue to their businesses. Renewal commission still exists. While the values may be lower today as a result of the equity market falls, the boom years of 1998 and 1999 continue to provide a steady stream of income.
The third negative year in investment returns will inevitably lead to some belt tightening by investment houses, as well as advisory firms. But many other products offering good sales opportunities, IFAs should not be discouraged by the falling Isa sales. All it has done is underline the importance of treating an advice service as an all-round financial planning business, reliant on not just one aspect of the market for revenue.
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