View more on these topics

Experience is the net beater

The internet gives the knowledge for DIY investing but cannot offer expertise.

Technology is shaping all aspects of life, none more so than in the financial services industry. Every day, new websites are emerging, offering new products, better rates, more information and improved service – or so they say.

Marketers and technophiles are converting the empowered consumer, the do-it-yourself financial wizard who no longer needs an IFA&#39s help to manage his financial affairs. But is the technophiles&#39 view of the empowered financial consumer the end of the IFA? Perhaps not as easily as they make it seem.

It is true the amount of financial information available to the average consumer is unprecedented. Websites such as iii, webgator, moneyworld and motleyfool all offer services that give consumers the information to make their own financial decisions without the need of IFAs. The use of these sites is growing, with 1.1 million now regularly visiting iii for instance. These sites are here to stay and they could potentially pose a threat.

Interactive investor recently conducted an online survey asking the question: Are financial advisers worth their sweet FA? Seventy per cent of respondents said they were better off without them while 30 per cent said they still relied on their financial adviser.

The percentages should probably be taken with a pinch of salt. Most of the people who are using sites such as iii are financially savvy and were never likely to use IFAs. However, internet penetration is only at about 25 per cent of the UK population and there is a higher percentage of financially soph- isticated consumers in the present online population than in the population as a whole. The number of less financially adept consumers going online will increase and these people are not likely to leave finances up to their own judgements and the recommendations of faceless websites. They will continue to rely on IFAs for a simple reason – experience.

The internet allows anyone to acquire as much knowledge as an expert in their field. A student can know as much factually as a teacher or the average consumer can know as much about the financial world as an IFA. However, the importance of the teacher and the IFA is in the experience each brings to the table. No consumer can accrue the years of financial experience an IFA can offer. This experience will increasingly be the commodity that consumers will buy from IFAs – the value of a proven track record.

We all want control over our own affairs, and the internet offers that. But most people will still want to have access to expert advice. IFAs will increasingly be relied upon for their advice such as which stocks, credit cards, bonds are the best buys or when is the right time to invest. But the consumer will increasingly take that information and complete the transaction themselves.

This changing role puts the onus on the IFA to develop their knowledge and especially their experience in a way that says to the consumer: “We can add value and experience to your decisions, allowing you to transact with greater confidence.” Things are likely to become more fee-oriented and less commission-based.

They can also meet the challenge of websites such as Etrade, iii and motleyfool by using the web themselves. In the travel industry, the role of the travel agent is similar to the IFA. Both have traditionally been the broker of information and point of transaction in their respective industries. Travel agents have met the challenge of online travel services by going online themselves. This is proving effective as consumers are already aware of and trust their brand names, making it harder for internet start-ups to succeed.

It is clear there is a segment of financially aware consumers who will not use IFAs dueto the availability of information on the web. However, they do not necessarily represent the masses. As more people move to the web and begin conducting their finances online, most will be unwilling to complete transactions without consulting their trusted financial adviser.

Dominic Kemps, Principal consultant,Brann Consulting


Fidelity nurses healthcare

Fidelity Investments new Healthcare fund is a Luxemburg-domiciled Sicav and is a sub fund of a range of Fidelity funds.Healthcare is aimed at experienced investors who are looking to invest in the general healthcare market and who are prepared to put up with medium to high levels of risk.The fund will invest in companies around […]

FSCP denies confusion on tied and IFA figures

The Financial Services Consumer Panel&#39s latest report has been slammed by industry experts for inconsistencies.The FSCP 1999 Annual Survey of Consumers illustrates the market share split between tied and independent advisers.On page 53, it says only 22 per cent of respondents sought advice from IFAs for pensions but on page 86 it says the figure […]

IFAs ignore Pru merger at their cost

IFAs believe Prudential has nailed its stakeholder colours firmly to the mast with the news that its Prudential Retail division, including its tied salesforce, is merging with Prudential Group Pensions.The move has sparked speculation that it could spell the end of the Pru&#39s traditional tied salesforce as it becomes increasingly driven by its direct and […]

IFAP plans directory of IFA net sites

IFA Promotion and the Financial Information Net Directory website are joining forces to provide a customer directory of IFA websites.Customers can search for IFA websites and gain direct access to the sites.All IFAP members with a website will automatically get a standard entry on the site. IFAP is also offering members a 33 per cent […]

Brexit Commentary from Natixis Global Asset Management

By David F Lafferty, CFA, SVP – Chief Market Strategist Thursday’s historic Leave vote in the UK will have both immediate and long-term consequences for the global economy and financial markets. The initial flight-to-quality reaction across asset classes has been exacerbated by the market’s misplaced confidence in a Remain victory leading up to the vote. Stock markets […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm