Well now, the IA has just put out its stats for tax year end (TYE) 2015/16 and it’s not nice reading. The full release is here but this table which I nabbed from the release tells quite a story.
2014/15 was generally reckoned to be a relatively sucky year for the ISA season, which has always been a core business period for most platforms and fund managers. Indeed, even platforms who serve advisers still create an ISA in a box type campaigns. We point and laugh, but they do it anyway.
(NOTE TO SELF: PRODUCT IDEA: Schrodinger’s ISA in a box! your money exists in potentia inside a box with an ISA written on it, and you don’t get to know if it’s real or not until you open it. Disruptive or what? Some fund manager will probably buy this.)
But even 2014/15 looks like a birthday present compared to the ISA long-term savings and investments (i.e. not cash) sector in 15/16. Q1, according to the IA, saw a net outflow of £573m, and the crucial 1 March, 5 April season saw £237m net inflow, with £177m of that coming in the last 4 days of the tax year.
So there is still an ISA season, but a fraction of what it was.
I should mention here that IA stats aren’t the end of the world! its platform figures are based on just five platforms, Cofunds, Fidelity, HL, OMW and Transact. But there’s enough variation in business model there to give a reasonable degree of confidence that we’re not missing much.
So what gives? Is all the money flowing into pensions? Here’s what the IA release has to say:
FUND PLATFORM PRODUCT SALES
For the five fund platforms that provide data to The Investment Association! net sales for March 2016 were £479 million…Personal Pensions had the highest net sales at £430 million, followed by ISAs (£314 million), Insurance Bonds (-£23 million), and Unwrapped (-£242 million)…For the same five fund platforms, funds under management as at the end of March 2016 were £200 billion, compared with £194 billion a year earlier.
Now, that’s pretty interesting. Pension freedoms are still generating higher redemptions than usual in many places, but PPs (which include SIPPs for these platforms) still booted ISAs in the baws with all the relish of! dunno, something that has a lot of relish. A burger, maybe?
It would be hard not to think that a good chunk of that £242m that disappeared out of GIAs was recycled into pensions, presumably amidst the now-departed pensions fire sale.
So what do we learn? Advisers are pretty insensitive to ISA use-it-or-lose-it marketing; anyone doing a financial plan for someone accumulating wealth who’s wondering? hmmm, have my clients used their ISA allowance up? probably should be updating their CV. But a genuine tax relief scare is enough to get real money moving around, at least on the face of it.
Over in D2C world! remember that Cofunds, Fidelity and of course HL all have big direct books, these figures confirm what a number of D2C platform providers have been telling us that getting new ISA investments in at the moment is like? dunno, something that’s really difficult. German grammar?
When we’re talking about LISAs, WISAs and other new ISAs, we tend to describe them as wildly popular. Actually, the only popular ISA is a cash ISA. All these new propositions have a long way to go before they disturb the patterned behaviour of treating pensions as what they are; the most favoured mainstream tax planning vehicle.
Similarly, robos and others who think that by getting an ISA to market, they’ll participate in a glorious sort of feeding frenzy where everyone gets a share, should read these figures with a sense of foreboding.
