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Gain a net advantage

With the number of people in Europe using the internet predicted to grow

from 10 million in 1995 to 327 million in 2003, according to research group

International Data Corporation, and with 11 million computers bought in the

last quarter of 1999 alone, there is no doubt we are moving towards

internet access for all. At least, for those who want it.

Previous generations had a different mentality to finances. They built a

close relationship with their local bank manager, credit cards were

virtually non-existent, savings were fundamental to being able to afford

luxury items and the only debt incurred by most people would have been

their house.

Today, with financial institutions heavily marketing their wares and the

temptation to borrow more and more, the internet is being used more widely

for online banking, share dealing and applying for a homeloan.

The online phenomenon will have a significant impact on the traditional

IFA. The consumer view that IFAs are not as independent as they claim to

be, coupled with the misconstrued perception of misselling, means that an

IFA can often be the last person sought for advice.

This is where the internet comes into its own, being seen as another way

to gain access to impartial advice.

The risks for IFAs who adopt an ostrich syndrome towards the internet are

high. By adopting technology and embracing the fact that consumers are

increasingly wanting to choose for themselves, they can add more value to

clients than before.

IFAs should use technology to bring speed to every transaction. They can

use the web to great effect to provide accurate, timely quotations, while

still delivering best advice. This will raise clients&#39 confidence in the

IFA and lead to solid business.

The view that the internet is the remit of techie anoraks is false.

According to Fletcher Research, the average internet user is an ABC1

36-year-old male earning an average of 33,000 a year – making them the

perfect target for personal financial services.

Those who are technically aware are doing their online banking at 3am and

using the web for the majority of their shopping and information needs.

Also becoming increasingly dominant are silver surfers – those who are

probably retired and have the time to make the most of the internet. The

other market that is key is those of us who are too busy to find the time

to sort out our finances during normal working hours and do not want to

waste our Satur- day mornings traipsing up and down the local high street

going from lender to lender.

This leaves the way open for the web to be the driving force in the

personal finance arena. Jupiter Communications reported in September 1999

that the online brokerage market is set to lead the growth of the financial

services sector with projected assets of $3 trillion by 2003. It also

estimated that more than 1.1 million mortgages are expected to be sold

online by 2003. While these figures reflect the US market, there is no

doubt the trend is there – and where the US leads, the UK follows.

This is especially apparent now that the UK mortgage market comprises so

many different products and additional features. The new era of flexible

mortgages makes it especially important to be able to compare products in

more areas than just interest rate. It also gives the opportunity for IFAs

to provide a range of options since flexibility allows the ability to

easily move around investments, savings, spending, loans and earnings.

The benefits for IFAs who embrace the internet for the mortgage process

are compelling. An online mortgage application can speed up the service

tremendously, eradicating time- consuming paperwork and bureaucracy,

leaving time for increased customer service and the opportunity for

cross-selling other products.

Rather than working through individual lenders&#39 websites, the logic is to

go to a one-stop shop where the minefield of product offerings is

simplified and relevant product comparisons can be made simply and quickly.

Critical to these comparisons is the independence of the site.

Fletcher Research has already confirmed that 10 per cent of mortgages are

bought online, with a further 17 per cent of net users saying they will buy

online in the future. Consumers are using the internet to research personal

finance information, ensuring that online mortgages are set to be big

business, even more so than personal loans, current accounts, pensions and

life insurance, particularly when a plethora of products need careful

comparison.

Empowerment is one of those words that is bandied around by marketeers but

what online mortgage offerings are doing is demystifying the whole process

and ensuring that consumer choice is paramount.

When you are competing for consumers, it is obvious that you must reach

them on their terms, whether that is through digital TV, the internet, WAP

phones or more traditional means. It is a crowded market and IFAs cannot

afford to ignore new technology. IFAs who fully embrace the opportunities

this gives them will be the winners.

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