On Monday, 5 March, a £3m National Lottery prize was declared expired and some unfortunate punter in...
On Monday, 5 March, a £3m National Lottery prize was declared expired and some unfortunate punter in the Hemel Hempstead area missed out. To us mere non-millionaires, £3m is a lot to throw away. Yet there is still £16bn lying around unclaimed by IFAs.
It may require a little more effort than a telephone call to Camelot to claim. But to ignore it, now that is just plain stupid.
Investors in the 21st century know what's what. They see through advertising tricks and promises. Irrespective of logo, pedigree or size of the local branch, they want to get the best.
Rather than the annual feeding frenzy that is the industry's self-imposed Isa season, this year's new money investor is rather sanguine and certainly will not be pushed into a decision just because 5 April looms.
Perhaps they were burned by last year's dot.com gold rush. Perhaps the economy has turned down and they do not have the cash to spare. Or perhaps they have finally realised that investment can take place any time, dependent on their rather than our circumstances.
Industry new money sales appear to be 30% down and many broker and IFA companies report flat activity. There is some Pep transfer activity and Isa transfers are coming in, mainly out of trackers for the first time. But this is still a trickle, not a rush.
With overall sales activity lower than expected, IFAs have a welcome opportunity to steal the march on the big boys, product providers and even, dare I say it, banks.
Tessa rollover, estimated jackpot £16bn. All you have to do is find the right ticket with the winning numbers and claim your prize.
OK, so the majority of Tessa rollover products are cash only and do not pay commission. But we do not just recommend on what commission products pay, do we? Customers have to roll over their Tessa money within six months of maturity. Savings institutions subscribing to the Banking Code of Practice have to pay them a decent, equivalent rate of interest if the customer does nothing.
But all evidence from the banking institutions is that customer apathy is non-existent. One competitor colleague at a leading ex-building society claimed that customers are taking action within two weeks of maturing. So they do read their junk mail after all.
And even if investors do nothing, there is nothing to stop you from making the most of their cash. Completely legally, of course, if you do it with investors' permission.
More than just a Tessa
The thing to remember with Tessa customers is that they are rich. A very large number invested the full £9,000, and a lot of people simply would not have had that amount of cash lying around five or more years ago.
They are also knowledgeable. In the main, they invested in Tessas because of the tax advantages, realising that if they chose well, they would get the best return on the market.
Few realised that what was a market-leading rate then might not be market leading in the intervening years. Institutions change objective, or may need to change their relative rates for a variety of reasons. But it's the investor who often has to keep track.
Importantly, Tessa investors make heavy use of other financial products. So getting to them with your offer of help on finding a better Tessa-only Isa could lead to a mutually beneficial relationship for years to come.
l 43% of Tessa customers are in the hallowed AB brackets. And the C1 sector makes up a further 31%.
l 57% of them are over 55. The average age for taking out a Tessa was one of the highest among ordinary savings products. 50 against just 28 for an ordinary account.
l These investors do not feel they had the best of treatments along the way with Tessas. Rates were cut in half and a lot of the current rollover marketing material from major players leaves a lot to be desired.
l Tessa investors know equities. Many are considering upgrading some or all of their chunk of cash to something with a bit more stock market in it. And once they have moved their maturing money, they do not have to leave it in an interest-bearing account.
l Older investors always have more other investments for you to consider. Many will have reduced their mortgage and increased their earnings, thus leaving you with a higher disposable income consideration.
On the face of it, Tessa rollovers appear dull and not necessarily worthy of your time or effort. But like they say, never look a gift horse in the mouth. And if you play the lottery and live in Hemel Hempstead, always check your ticket before the deadline expires. You have been warned.
Alison Savage is head of marketing & business development, Professional
Adviser Services, HSBC
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