The internet plays an ever more important role for intermediaries and it is a development that should aid rather than undermine face-to-face advice
Since its launch in 1991, the World Wide Web and the technology associated with the use of it, has become the mainstay of an intermediary's business.
The web has helped to deliver streamlined, cost-efficient services and stringent compliance procedures, as well as enabling the development of sophisticated online investment tools.
So, what are online investment services and how do they help intermediaries do their job? Most intermediaries are busy and want to spend their time identifying new clients, giving financial advice and generating new business rather than managing client demands for basic data and reports.
In their dealings with product providers, advisers welcome having such administrative tasks taken off their hands, but only if doing so does not undermine their customer relationship.
One of the main problems for intermediaries is the complexity and time-consuming nature of investments and pension products and the ever growing presence of specialist providers and investment companies.
Because of this, intermediaries have become increasingly accustomed to the conveniences of the internet, while at the same time intense competition between product providers, together with technological developments, has created opportunities in the provision of a whole range of online services.
These developments allow intermediaries to access back office systems on a real-time basis. And they now benefit from a host of online investment services, which help to carry out large amounts of administration quickly and efficiently, such as transactional facilities with the ability to fully interrogate client data, carrying out historical evaluations and purchases online.
Advisers want flexible products and place great importance on the ease and convenience with which they are able to transact their business. Consequently, there is a real opportunity for product providers to differentiate their offerings through their online investment services, with a combination of strong products and servicing levels.
Intermediary extranets have also become a valuable tool, with many providers developing specific micro-sites for advisers. These sites are e-commerce solutions providing a range of transaction, advisory and communication tools via a secure platform. They have a range of online services from basic static information to a comprehensive offering. They can be categorised into three areas:
Information - in order for intermediaries to be well-informed, so they can advise their clients, they require the latest up-to-date information on the various product providers, product ranges, pricing and performance.
Many product providers offer email communication or email back services where the intermediary can choose to receive email or SMS message notification to their mobile phone about the latest information, such as prices, fund fact sheets, investment strategy, market commentary and expert opinion.
Webcasts of usually no more than three to five minute video clips are a valuable service. These enable intermediaries to watch interviews with investment managers and to gain an insight into their current view on the markets. This reinforces the relationship between the intermediary and product provider.
E-newsletters, events calendars, press centres, latest news and highlights are also helping advisers gain an overview of a product provider. Online education or virtual learning centres offer the intermediary in-depth knowledge into products, services and markets.
Sales Support - to help intermediaries in their sales process, easy to view online services such as quick reference cards, fund facts and fundamentals are geared to giving product knowledge at the press of a button, while "reason why letters" offer the adviser the ability to copy and paste ready-to-send reasons to assist in the selling of specific products and services. All the intermediary has to do is top and tail the proposed letter. These services form part of a document download centre.
Online Tools - technology now allows intermediaries to benefit from a variety of online tools such as a risk assessor/profiler or product selector. The intermediary answers a series of onscreen questions which look at high, moderate or low-risk investments, currency and whether it is a long, medium or short-term investment. Depending on the answers given, a profile will be identified and an appropriate investment product selected.
Other tools include a personalised charting tool, which allows an intermediary to enter a date range and select a number of funds to compare historic performances against various benchmarks over that time period.
An online illustration or e-quotation tool allows the adviser to complete a simple onscreen form and select from a number of pre-defined paragraphs to build a quotation. The intermediary enters their client's details and completes a multiple choice questionnaire to build a personalised proposal for the client, which can be saved and printed.
Online application forms are available from several product providers, which enable the intermediary to complete an online form and then save and print a formatted document for the client to sign. This saves time because fields can be pre-populated on a laptop with the client present.
Online calculators covering tax and financial planning, and retirement and college planning are also useful. As are a host of online comparison tools, such as hedge fund comparisons. Some product providers also offer a fund comparison tool, which compares more than 2,400 funds and a variety of benchmarks. Online policy and new business tracking allows intermediaries to easily keep an eye on of their clients' new business proposals.
It is even possible to invest directly online. Intermediaries can purchase new investments or top-up existing policies via their debit card with the transaction processed and authorised instantly. Money can also be switched between funds.
Fund supermarket websites also provide a wide range of choice and access to a variety of mutual funds from different fund families. It is, therefore, a convenient way of investing in collective investment funds.
Utilising a fund supermarket simplifies the traditional process of constructing a portfolio of funds from different fund management companies. It removes the complicated and time-consuming process of completing separate application forms, making separate payments and receiving separate statements.
Supermarkets aimed at advisers also help to make the fund purchasing process more time-effective, and assists in the fund selection process. Fund supermarket providers have developed a range of resources to meet these aims, such as investment research and analysis tools, e-forms, fund finder tools, chart tools, teleconferences and interactive market commentary. These sites generally feature a literature library, fund charges, commissions, regulatory and compliance information and contacts. Many of the tools aim to create a more time-effective environment, such as Cofunds' Consolidation Assistant tool, which logs the clients' investments and generates transfer application forms, transfer authorities and accompanying documents ready for printing and signing.
Wrap accounts are also a way to administer investments. Wraps use secure internet systems to enable intermediaries to streamline portfolio administration significantly.
Online valuations have become a valuable tool and once an intermediary has registered with a product provider, access to a 24-hour online valuation service with a full list of their clients and their investment portfolios can usually be accessed.
Also, a full range of on-demand reports are usually available, where advisers can select and view business by clients or product. Each client's valuation, transaction statement and contract note can be accessed in this system.
Additionally, secure messaging has come of age and allows communication to be confidentially sent between provider and intermediary. Authorisation of transactions can also take place via this service.
Online investment services will never replace the face-to-face personal relationship but rather, enhance the service offering. Intermediaries now expect a sophisticated online investment service from product providers in order to make their jobs more efficient and as such, if providers do not keep up with technological advances, then not only will they not be able to differentiate their offering, but ultimately the intermediary will seek out those competitors who do.
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