Many IFAs I have spoken to recently have asked me about the likely impact of new distribution channels on their business.
The experience in the US, that I believe will translate to the UK, is that new channels to market actually increase business for IFAs.
But there is no room for complacency. There is too much competition and sophisticated customer relationship management (CRM) tools that challenge the intimate relationship that IFAs have always had with their clients.
IFAs need to be focusing on expanding the range of services they offer so that their existing clients do not have to go elsewhere for any of their financial needs. This will prevent IFAs from losing their existing customer base to new competitors.
With many of these new operations selling a complete range of products, if an IFA's client has to go elsewhere to buy general insurance, there is a chance, however small, that they could be tempted to use the same service for their mortgage, pension or investment needs.
The general insurance market is a good example of this. Apart from specialists, most IFAs have not been keen to operate in this market because they do not write large enough volumes of business to make it financially viable and because of the additional compliance burden. The fact that the General Insurance Standards Council requires that its members can only deal with intermediaries who are also GISC members does not help the IFAs' cause.
We are heading towards a position where an IFA may need to be authorised by the FSA, the Mortgage Code Compliance Board and the GISC.
We must at all costs avoid the compliance overload that could result from this alphabet soup of regulators.
What IFAs need to be looking at are ways to offer general insurance services without taking time away from their core business.
According to research carried out for Exchange FS by PriceWaterhouseCoopers, dealing with general insurance can account for a staggering 30 per cent of an IFA's workload.
However, there will soon be ways around this for IFAs. Exchange FS will be offering a number of general insurance options to provide significant support to IFAs in this area. In the near future, IFAs will be able to meet their clients' general insurance needs in ways that suit their business needs.
First, IFAs need quick, easy access to general insurance quotes. If their portal offered a fully transactional general insurance service, IFAs would be able to offer their clients immediate cover without changing their business processes or creating extra paperwork.
IFAs may also have a need to offer a comparative general insurance service to their customers via their own website. This reduces the IFA's involvement in the process to the bare minimum but still results in getting commission and the ability to provide a high level of customer service while retaining customer loyalty.
Finally, IFAs may want to reduce their involvement in the process while still meeting their clients' needs.
In this instance, IFAs need to act as an insurance introducer by simply passing their customer's details to a third party who will process the customer's application on their behalf. This option has the added benefit of not requiring GISC membership.
The key to this is choice. IFAs need to be able to pick from a range of options that help them develop their business in line with their individual business plans.
Jim Gaskin is corporate development director at Exchange FS.