View more on these topics

Extra special

These are interesting times for IFAs everywhere.

The conclusion of the consultation period for CP121 is less than a month away. It is likely that, within a year, many IFAs will have migrated to RI status within distributor firms.

In the last three months, we have read a lot in Money Marketing about what this could mean for IFAs but what about providers?

I believe that the impending change in structure creates real opportunities for providers to push ahead with their internet-based strat-egies which will create real business advantages in the brave new depolarised world.

To date, there has been little pressure on IFAs to start using the internet or portals to process new business applications. Only investment bond applications have been deployed and processed in significant numbers, with many IFAs preferring to stick to the paper-based approach.

In the world of CP121, distributor firms will sacrifice a level of independence as many of them will become owned by a consortium of providers as multi-tied operations in all but name.

This change in ownership, hastened by the removal of the better than best stipulation, means that canny providers will be able to demand that their chosen technology platform is the one adopted in their sphere of influence.

To achieve this control, some providers are taking stakes in existing portals, as we have seen with Scottish Widows, Friends Provident and Norwich Union&#39s joint equity holding of Assuresoft and Skandia&#39s takeover of Bankhall, owner of IFAengine.

More providers are likely to be investing in extranets to ensure they offer the ability to transact, process and service customer applications securely online. Providers will want to ensure their extranet services are capable of supporting the intermediary community well. Their intention will be to own as many customers as possible via the internet.

Assuming that distributor firms will form relationships with several providers, creating multi-tie relationships, individual provider Company X will want to get as much of a share of that distributor firm&#39s business as possible.

Company X will do this not only by offering a best of breed product set but also by making its extranet as slick and efficient as possible.

Part of this slickness will include a seamless handing-off to other providers within the multitie relationship (and, in some cases, beyond it to niche product providers), where Company X&#39s product range is clearly not the best for an individual customer.

If this connection is seamless, Company X could easily retain ownership of the customer as the primary host while white-labelling Company Y&#39s products and paying them a share of the profit. This sounds like a great scenario for the provider but it presents technical, logistical and management hurdles.

The most critical challenge is to enable interoperability between providers. Existing portals may have a role here to provide the software “glue” as the information hub between providers.

Some providers still have a good deal of work to do to make their extranets fit to support the new electronic world. A study we commissioned in February among 12 leading life and pension providers found that only three offered online quotations and transactional capability across all their product range.

Half of the providers offered the ability to transact business online for all or most of their products. A further five let IFAs instead print off their application forms which could then be completed manually and posted.

Access and navigation around sites was also found to be cumbersome. There were basic problems such as the failure to provide a password within two weeks, the inability to allow saving of customer data midway through the application process (for later completion) or reuse of data already gathered at quotation stage all suggest a need to pay closer attention to what the user really needs when processing new business online.

But much of this work is no longer a huge challenge. Using the right toolkits, it is now possible to be ready to transact business electronically within 30 days, including time to design and build product application components for electronic applications and then deploy them on to an extranet.

For those that have previously deployed PACs in other channels such as IFA portals, redeployment to an extranet should take just a few weeks. These toolkits also provide the ability to store and reuse data effectively.

For those that do deploy electronic applications on their extranets, there are immediate cost benefits. For example, one major IFA company, Towry Law, has seen error rates on new business applications fall from 40 per cent to 9 per cent. It cuts admin overhead and time involved at both ends and ensures that new business comes on to the books much faster than was possible in the paper-based world.

Where will all this leave today&#39s IFA or RI? The answer is probably in better shape. The adviser&#39s role will continue to be one of penetrating what the customer really needs, sifting through the market to find the best products and then processing the application as quickly, efficiently and cheaply as possible.

The proliferation of standards-based technology and deployment of internet-based channels for processing and servicing applications will create more time for advisers to do what they do best – advise.


Fiona Price gives her view on staff changes

I have not been moved to write a letter to Money Marketing before. Indeed, in the 20 years I have been a member of the IFA community, I have held the paper in high regard and co-operated on many articles.Now, however, I am appalled and saddened by what I can only call your trigger-happy reporting […]

VAT among the pigeons

Continuing this week with the much misunderstood subject of VAT and financial services, I would like to delve into the murky waters of introducer commission.Last week, I examined the rules for exemption from VAT in respect of intermediary services in connection with financial services products such as insurance and collectives. As I said, the rules […]

R&SA adds three funds to Lifestyle bond

Royal & Sun Alliance UK Life is adding three corporate bond funds to its Lifestyle investment bond.The funds – the high income, extra income and maximum income – will be offered from May 1 and give IFAs the ability to select the individual funds or mix together a blend of the three.To mark the launch, […]

Extranet service from Focus Solutions

Software provider Focus Solutions is targeting product providers with its latest extranet service, allowing them to take new business electronically.Skandia is the first provider to take the service, which uses Focus Solutions&#39 goal:technology product to capture and build the client data for life, pensions and investment products.Focus Solutions market propositions director Nigel Smith says “The […]


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