IFAs will increasingly come under pressure from big new entrants to the IFA sector – that is why the Misys/DBS offer made so much sense, says Ivan Martin, chief executive of the Misys Financial Services division.
A few people have contacted me over the last few days congratulating me on my move to America and questioning if this had anything to do with Misys and the UK IFA Sector.
The answer to both questions is no and this is what made the decision to move that much harder. An international role with AIG was just an even more compelling proposition and it was as simple, or difficult, as that.
There is a new battleground opening up in the IFA market. It does not centre on the size of Misys as a supplier of services to IFAs but on the ability of Misys to be a key supporter of the IFA channel at a time of incredible change involving product providers.
This they will undoubtedly do and with people such as Tony Wood and Steve Pearson looking after the networks day to day and Ivan Martin and Patrick Gale driving the technological developments, it is exciting times.
IFAs are increasing in number, with 28,000 registered individuals expected to be offering impartial advice in the UK before the end of the year. In addition, there are over 60,000 individuals in the tied channel with the mix changing as former tied advisers with firms such as Britannic, who are slimming their salesforce, become IFAs. As the advice market gets bigger, the competitive heat is becoming more intense.
Consumers are far from limited these days on where to get advice although the quality of the advice may vary. Misys believes the challenge is to get more people to shop around and consult an IFA for the most suitable financial advice, which could involve a product purchase, rather than stick with their bank or product provider.
In the market for the provision of services to IFAs, it is the IFAs who rule the roost. They decide which network to join, which technology to use, which products to recommend and they are making these decisions in an environment where they are being forced to become more productive in the way they do business.
By moving from paper-based transactions to electronic trading, IFAs will bec-ome even more productive, allowing them to focus more on giving good quality advice and on increasing their volume of business at a time of greater competition.
While technology will deliver major benefits, the major players need to become more effective offline as well. We have to invest even more of our resources, including time and money, into training and development initiatives, compliance services and enhanced res-earch. Quality, timely research will certainly be critical to IFAs in the new world.
Autif research this week shows that the direct side of financial services is much more likely to have sold funds which have underperformed. It also shows that IFAs are by far and away the most likely to sell Standard & Poors' AAAand AA-rated funds while a high proportion of funds sold by tied agents and salesforces are unrated.
Industry leaders have a big challenge. That is to help IFAs reduce their costs through technology and give them the competitive edge to cope with the big new entrants, to provide an environment where the industry can have real end-to-end e-trading, which in turn will help consumers to continue to receive excellent service and choice from their IFA.
Misys, The Exchange and product providers have accepted the challenge – now it is the time of all IFAs.
Andrew Bedford is head of marketing at Misys IFA Services