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Automatic for the people

If there was any doubt that the 1 per cent world is well and truly with us, it is confirmed by the news that Scottish Amicable has withdrawn indemnity commission from stakeholder products.

This demonstrates all too clearly the harsh financial environment that IFAs are now facing. While regulators keep increasing the compliance burden, the Government is dictating margins for product pricing, making it impossible for providers to maintain historic commission rates.

If IFAs are to continue to prosper, they clearly need to find new ways of attracting customers. These must place less of a time burden on them than conventional face-to-face advice. Increasingly, the most successful IFAs are likely to be those who can effect-ively farm business from their existing relationships rather than constantly hunting for new clients.

It is nothing new to suggest an annual Isa campaign is an ideal way to move in this direction. But by linking campaigns to a web presence, advisers have the opportunity to invite clients to deal in an automated way, thus attracting new business without needing a face to face process.

Nevertheless, I am sure most will want to offer this as an option for clients who prefer to deal in person.

An IFA who has already taken this step is Tony Gough of New Forest Financial, who has built Skandia&#39s My Multifundshop service into his website at

As a sole trader, Gough has recognised that giving clients the choice between the traditional advice process and selecting their own product online has considerable benefits for his business.

Those customers who choose to buy online benefit from a significant product enhancement – New Forest Financial only takes 0.25 per cent, with the balance being used to increase the client&#39s investment.

I am very impressed with what Skandia have achieved with My Multifundshop. Before using the service IFAs have to sign a special agreement with Skandia, which in the case of network members has to be countersigned by the network.

Having done this, the service provides a simple five-step process to create a Multifundshop offering within the IFA&#39s own web presence. The service can be heavily customised to follow the colour scheme of the adviser firm and their own logos can be included.

A separate set of pages are created to deal with Isa, Pep transfer and other lump-sum investments but these will all link back to the adviser&#39s site.

There is no limit to the number of My Multifundshop sites an IFA can create, so this is ideal for setting up joint ventures. These might be a joint-branded presence with local solicitors or accountants to target their clients.

Another option would be a campaign targeted at the employees of a corporate client, possibly via the employer&#39s intranet (a web service within an organisation to deliver information to its employees).

Alternatively, IFAs might be able to partner with local newspapers or even radio stations to provide joint-branded content to their web presence. Publishers and broadcasters are frequently keen to provide special services to their audience – the chance to integrate web-based services with the back up of face-to-face advice if needed could prove attractive to them.

Equally, as there is no limit to the number of sites an adviser can build using the tool, IFAs can create both full cost advice and discount brokerages presences, if they have such differential offerings, as an increasing number of firms do.

The website creation process has five stages. First, the adviser identifies the product they want to work with and chooses the commission shape required. Cases set up via this service automatically qualify for the additional 0.5 per cent increase on initial commission which Skandia offer on electronic cases.

Next, the adviser selects the range of funds they want to offer over the service. This can be either the 240 funds offered by Skandia via their various investment fund links on the online product, a limited list of favoured funds which the adviser wants to recommend or a series of portfolios designed to meet different attitudes to risk.

The USelect desktop package also offered by Skandia can be used to assist in the creation of such portfolios. For maintenance purposes, the service identifies to advisers when their portfolios were last updated.

The next stage is to choose your colour scheme and upload any logos you want to include. In addition, you can enter your own additional text to explain the products being offered. Alternatively, a series of standard texts are included for those who want to use them instead.

Skandia do offer the ability for clients to get fund valuations and even give switching instructions online. However, it is at this stage it is up to the adviser to decide if they want to include these facilities on the site they are creating.

Finally, you enter details of who will be responsible for the compliance sign-off of the site. This is a stage that cannot be circumvented and is probably a worthwhile protection.

The site is then created by Skandia&#39s software and links to the site draft emails both to the person who has created it and whoever they have nominated as having compliance responsibility.

Having viewed the site, any necessary changes can be made. To make the site live, the designated compliance offices need to enter their details confirming their sign-off to the site.

If there is a weakness in the service as it currently stands, it is that to apply, consumers still need to print off the application and mail it with a cheque to the adviser. I understand that Skandia plan to extend the functionality to include full online applications later this year.

In the meantime, a management information tool lets the IFA list any clients who have printed off applications but for which Skandia have not received documentation. This could be valuable for tracking down last-minute sales before the end of their tax year.

Overall, this is an easy to use tool that can help advisers add powerful functionality to their websites quickly and effectively.

No look at this issue would be complete without also examining the offering from Fidelity&#39s Fund Network in this area – so I will be looking at their alternative next week.

Ian McKenna is a consultant and director of the Financial Technology Research Centre, which works for a wide range of industry organisations, life offices and technology companies, including Microsoft, Assuresoft and The Exchange. He can be contacted by email at

Tel: 020 7935 2599


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