Midweek Money: A pitch for the fans

We buy the scarf, the shirt and the bobble hat in support of our favourite football team - so why not choose the financial services they recommend?
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For many of us, football is a religion. We attend our team's weekend and weekday "services" with fanatical regularity.

Stuart Biddle, professor of exercise and sports psychology at Loughborough University, explains the phenomenon: "People [have] a tribe mentality. They like to identify with a team, or an area, a region, a town, and sport is a good way of doing that, particularly if the side is successful. It gives people a sense of belonging, a social identity."

As part of our support, we buy our team's football shirts, scarves, mugs, bobble hats and other paraphernalia. But this, it appears, is not enough. Financial services firms, and the clubs themselves, want more. They want us to purchase everything - pensions, insurance, credit cards, savings accounts - from their nominated companies.

Leeds United is one of the latest teams to cosy up to an insurance company. It recently joined forces with Allied Dunbar to offer a full range of financial services to 100,000 fans in the UK. Its affinity products have so far generated pounds 250,000 in profit this year. Part of the deal involves perks, such as free match tickets, to fans who discuss financial products with club representatives.

Jeff Wagland, external affairs director at Allied Dunbar, says: "These products are things that Leeds fans could get through Allied Dunbar advisers anyway, if they wanted to."

Allied Dunbar's Adaptable Pension Plan, sold through Leeds United, offers a facility to stop and start contributions at any time, plus disability waiver. Its charging structure is front-end-loaded, giving bad transfer and paid-up values at the beginning of the plan but above- average maturity values at the end.

Charles Levett-Scrivener, product services director of Towry Law, a firm of independent financial advisers, says: "Normally that is looked upon as a bad thing. I would suspect with football fans that it is.

"We did this survey earlier in the year. At the end of year one, Allied Dunbar's transfer value, based on pounds 100 per month contributions, was pounds 371, compared to the average of pounds 671. Standard Life offered pounds 1,090, and Scottish Mutual pounds 1,122. At five years, Allied Dunbar's would be pounds 5,270, the average would be pounds 5,845, and Standard Life would be pounds 6,440."

Paid-up values follow a similar pattern, and no free switches between funds are offered.

The club is working as an appointed representative for the life company, so there is no product option, but the allegation that fans get a bad deal is refuted.

Adam Pearson, commercial director of Leeds United, says: "To say that affinity [products] give you incentives from the club, and help the club but give the fan a poorer rate, is totally wrong... Supporters are not daft; if the deal is not right they will not purchase it."

Tony Tierney, managing director of Rangers Financial Services, agrees. "There may be a warmer reception from the fans, as there is an affinity for the club. But they still have to be satisfied that what is being presented to them is something that they want to have."

In both cases, the club uses money from its financial services business to boost the playing team.

There is no denying, however, that interest rates on some associated savings accounts are lower than on comparable accounts elsewhere. Egg, for example, is offering 8 per cent gross on an instant-access account.

The highest value for a football-related savings account, the Derby County account with Bank of Scotland, pays 6.5 per cent gross. The lowest is only 2.4 per cent gross through the Coventry City account with Market Harborough.

Warren Perry, senior investment manager of Whitechurch Securities, another financial advice firm, says: "Newcastle offer financial services products, and they have got such a phenomenal following, so loyal, that anything to do with the club is almost a `need-to-have' product, as opposed to a `want-to-have' product. [But] people do need to shop around."

Pensions is a main area of concern. Unlike building society accounts, pensions are difficult to compare. The other problem is that the margins are much higher in pensions. Allied Dunbar and Standard Life both offer pensions through clubs, and Legal & General is in talks with a number of clubs about offering its financial products, including pensions and Individual Savings Accounts from April next year.

Justin Modray, investment adviser at Chase de Vere, says: "Think carefully before you take out a club product, and ask yourself whether you are compromising your investment, especially with a pension. It is a massive investment for the whole of your life. With a savings account, if you feel you are getting a bad deal, you can easily go elsewhere."

However, fans themselves appear to be happy with the situation, as long as it gives them a better team and better facilities. John Macmillan, general secretary of Glasgow Rangers Supporters Association, says: "If supporters want to do their homework and get some advice, then they may find that they get a better deal elsewhere. But it would be up to each individual to look at that."