It is unusual for me to review a website produced by an IFA firm on these pages. However, stakeholder is about to drive life offices into writing business on which they cannot break even for many years. Maybe it is time for IFAs also to consider ways of operating that may historically have seemed alien to them in order to ensure they do not run the risk of doing a great deal of work for limited return.
Few advisers have operated on the basis of outsourcing specialist areas to professional colleagues while retaining control of the client. However, as the marketplace becomes ever more complex, an increasing number of firms may find this an attractive option.
That is clearly what InvestID is hoping for with the launch of its IDIFA.com service. The Derby-based company is a member of the M&E network which operates a deeply discounted execution-only service via its website.
In addition to targeting other members of the IFA community, it believes the service will be attractive to accountants, solicitors and other professionals who may not have their own advice arms.
Its proposition to IFAs is that it has negotiated higher than average commission in respect of stakeholder business. All payments are by way of fund-based trail commission, with the IFA retaining all but 15 per cent of such payments.
By placing business via InvestID, IFAs can then take advantage of a series of links into life office extranets that client firms and their scheme members can access from hypertext links from the advisers' own websites.
Presently, Axa Sun Life, Clerical Medical, Friends Provident, Legal & General, Norwich Union, Scottish Equitable, Scottish Mutual, Scottish Widows and Standard Life have created links to the service. By offering such functionality designed to appear from within the introducing adviser's website, the aim is to create dependency on the IFA from the employer.
For advisers who currently have no web presence, the company is promoting the services of Adviserweb, one of the increasing number of firms which are offering a basis site to IFAs for free, and its sister company IFA Systems, which offers a range of packages similar to The Exchange's Adviser Web Builder and AssureWeb's IFA Window Professional Plus services.
All stakeholder plans established in this way are set up free of initial commission and it is suggested the originating adviser charges a fee for the initial advice to the employer. The adviser having agreed the scheme with the client firm, IDIFA then takes over the scheme establishment.
However, InvestID does not have any authorised staff and all members joining schemes from the site are on an execution-only basis.
The presentation of the IDIFA elements that link from the site is brand neutral so as not to conflict with the IFA's branding. This is a good idea but it all looks a little too much like the Inland Revenue style for my liking.
The IDIFA site identifies the attractive income stream that an adviser could achieve from operating 20 schemes with a total of 500 members over a period of years (this is projected as £172,224 over a five-year period).
The aim is that the day-to-day running of the stakeholder scheme will be done by InvestID while the introducing IFA then has the time to cross-sell other services to scheme members.
This service also aims to generate leads for participating IFAs through the existence of a Find an IFA facility for employers. All such leads will be passed to local IFAs using the business-to-business service.
Equally, IDIFA says it will try to matchmake between non-IFA professionals wanting to offer a stakeholder service and its IFA users.
It has been interesting to watch virtually all the major players in the pension market develop similar extranet services. One of the most common reactions I hear from IFAs is that they would prefer such functionality delivered into their own websites rather than using the life office's own branding. In practice, this means thousands of IFAs want such links at a time when provider resources are more stretched than ever.
Inevitably, this will mean the bigger IFAs will be given priority. However, smaller advisers may need to link to services like this if they do not want to get into a very long queue.
Business established via IDIFA may present some issues for network members but these are probably ones which the network community generally needs to be facing up to as it is inevitable that a wide range of e-commerce platforms will be offering specialist terms to advisers in the months and years ahead.
It would be unfortunate if network membership was to constrain advisers' ability to take advantage of such offerings and I would imagine that networks would not want to limit choice in this way.
I suspect that I would have a more enthusiastic impression of this website had the actual presentation been more interactive. Potential stakeholder scheme members are directed to a page containing each of the FSA decision trees, allowing the employee to identify which tree is appropriate for their needs.
At the end of this page, the user is currently invited to choose a stakeholder provider. This confused me slightly as I would imagine that the IFA would already have agreed the actual scheme provider with the employer.
However, from the end of this month, I understand that different screens for employers and employees will be presented, removing this option in the latter case.
I believe it would be better to create a far more interactive site that took users through each stage of the decision trees question by question.
If this was also done in a way that required the employee to apply for and receive an identifier in advance, this would raise the opportunity to build some audit trail facilities behind the service to record the answers given and create a compliance record for the future.
This is clearly an early version of the service that the company is looking to develop and, as such, I should probably not judge it too harshly. At this stage, it really gives more of a flavour of the concept IDIFA is looking to offer.
Fresh thinking in our market should always be encouraged. It will be interesting to see how this and other competing services develop over the next months.