By Pravin Jeyaraj There is a tremendous scope for independent financial advisers to move online, ac...
By Pravin Jeyaraj
There is a tremendous scope for independent financial advisers to move online, according to Philip Holingdale, director of technology company Screenpages.
Speaking at a recent conference, Holingdale said doing business over the web is "far cheaper than traditional offline methods."
In particular, there is the potential for trading at any time. He said: "Just imagine, while you are sitting here, you could also be selling products.
"Most intermediaries have brochure-type websites, and some have moved onto online calculators and quote engines."
However, Holingdale added there seems to be many obstacles in an IFA's path to the internet, including net-phobic corporate culture, lack of customer acceptance and lack of investment. The internet could also conflict with other trading channels.
"For example, if insurers can sell directly online, why do they need IFAs? And if a sale is made online, should you pay the sales team?" he said.
Research agency Forrester recently published a report which shows that many UK intermediaries will be forced to alter their business to compete with open finance.
Benjamin Ensor, an analyst for Forrester, said: "Open finance will be fronted by a new type of player that aggregates customer-account information and offers a comprehensive range of best-of-breed products. They threaten IFAs because as well as offering advice and best-of-breed product choice, they know their customers, actively offer advice, link recommendations directly to transactions and package dynamic solutions."
According to the report, the internet threatens at least six of the seven elements to the service offered by IFAs. The first four, product information, choice, discounts and simplified process, have already become commodities online. Advice and long-term planning could be next, Ensor said. Only the reassurance brought by an individual adviser's intimacy with a customer's financial affairs cannot readily be automated.
Ensor said: "Most IFA firms are too small to compete in online financial services. They have the strong customer relationships but lack IT resources. Small scale and low brand awareness mean that IFA firms must partner to compete for online customers."
Holingdale said the arrival of the stakeholder pension will be good opportunity to trade online. Statistics show that nearly 50% of businesses are unaware of their obligations, while 60% of consumers prefer to seek advice through an IFA or accountant. With only four months to get ready and low commission margins, some providers are offering internet-only products.
There are several other e-commerce initiatives that have been launched this year that could be of use to IFAs, either with or without a website.
Technology firm 1st Software has launched an online client reporting system which enables clients to obtain portfolio valuations and pension illustrations via a broker's own website.
The data can be hosted on an IFA's own web server. The IFA can then provide a username and pin for the client to access client data.
According to the Warwick-based software house, the system will benefit those clients for whom out-of-office hours access is important because they do not have time during the day.
Rory Curran, managing director at 1st Software, said: "Giving clients 24 hour access to information is a major breakthrough. IFAs can offer more value and see off the perceived threat from general financial information provid-ers."
IFA Systems provides an online factfind that can be implemented into an intermediary's existing website, so that clients can provide all their relevant details without taking time out to meet face to face.
The Tep Exchange is an electronic exchange that uses internet technology to create online supermarkets for the buying and selling of endowment policies.
It is designed to enable IFAs to obtain instant quotes for the value of their clients' policies.
There are also the fund supermarkets, such as Fidelity's FundsNetwork, which allow intermediaries to white label the site so clients can buy and sell funds online.
Friends Provident's m-link e-trading system, comprising of a software package on CD-Rom, is supported by its website www.m-link.co.uk.
The service enables IFAs to obtain comparative quotes for bonds, term assurance, personal pensions, free-standing AVCs, executive pensions, critical illness cover, life assurance and mortgage endowment products.
Holingdale said more and more companies are promoting themselves through affiliations with other sites.
For example, a proportion of visitors to Inter-Alliance arrives via a link on the Freeserve site and the two companies share commission if those visitors make a purchase.
Holingdale said: "The great thing about the web is that it creates a level playing field and you can look as big as your competitors."
l 1st Software is joining forces with Investment Week to offer intermediaries the chance to win a free software and services package worth £10,000. The aim of the competition is, in 2001, to help the winning IFA to create a model office demonstrating the value of a defined technology strategy.
1st Software's contribution will be a year long software and consultancy programme and it is looking for service-driven IFAs who believe that technology is the key to successful client management and business profitability.
To enter, just submit a 500 word response detailing the advantages that your business would gain from utilising technology in client servicing, office administration and new revenue opportunities.
The progress of the winner will then be monitored througho
Introducing the Architas education series for clients.
What made financial headlines over the weekend?
Developed by industry-wide group
Joined in 2002
'Educate clients' children'