According to the advertising agency MMS, fund managers have cut their Individual Savings Account advertising by 80% from levels spent in 2000. Many believe it is due to more stringent past performance information that must be supplied on any literature. The biggest drop in advertising spend has been from Scottish Widows from £6.7m down to £113,000.
Our View
The year 2000 was the last year of decent stock market performance before the falls set in. If sales are up on the back of decent performance then advertising for more is likely to be cost effective. Since 2000, the performance of markets has hit fund managers’ sales and this could be the reason for advertising fall out. The removal of the dividend tax credit for ISA’s will also have had an impact on sales. Our view is that advertising will pick up when the stock market does.