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Multi purpose

Ninety-two per cent of IFAs say they intend to retain their independent status within the depolarised market. This is one of the main findings of The Exchange’s 2005 technology index, which surveyed 300 IFAs via the Exweb portal. The figure shows that the independent sector is here to stay.

The nature of impar- tial advice provided to consumers is far too valuable to be lost and this was never the intention of the FSA in ending polarisation.

What the FSA was try- ing to achieve was the creation of a new breed of adviser which could offer sound financial advice to consumers with simpler financial affairs who did not need the level of soph-istication that a whole of market adviser provides. This advice needed to be affordable and accessible.

Since depolarisation was introduced in January, we have seen firms vying for a slice of what has become known as the multi-tie market. But these multi-tie operations are not being crea-ted by hordes of IFAs giving up their independent status. There will certainly be some fallout from the IFA sector but, as our survey suggests, this is likely to be small. Rather, we are seeing multi-tied advisers emerge from three avenues.

We are already seeing some of the bigger IFA organisations setting up multi-tie operations in addition to their IFA divisions, enabling them to offer multi-tie advice which complements their whole of market advice and expands their client base.

Multi-tie advice will also come from banks, which may look to gap-fill their product range with prod-ucts from other providers and turn their previously tied salesforce into multi-tied advisers.

The third route to multi-tie comes from the mortgage sector, where brokers can take advantage of their newly regulated status and the depolarisation rules by selling related life or health insurance products from a select panel of providers.

From a technology perspective, depolarisation is likely to lead to an inc-rease in the use of e-commerce services within multi-tied and whole of market firms. Our index supports this, with 56 per cent of respondents saying depolarisa- tion will increase the use of electronic transactions within the industry.

This is because the e-commerce services which have proved so successful in the independent sector are equally relevant to the multi-tie sector and can offer significant benefits to companies looking to establish multi-tie organisations.

The principal reason why the FSA has abolished polarisation is to extend the provision of high-quality financial advice to a wider range of consumers. In order to offer high service levels, multi-tie organisations must put in place streamlined business processes which are cost-effective and as efficient as possible. To do this, they must make the best use of technology.

For IFA firms, there is the added advantage that they can use the existing technology services that their advisers are familiar with for their multi-tie operation. For all multi-tie firms, technology can help them manage a flexible panel of providers, quickly and easily changing providers if necessary to suit their business needs and switching from panel to whole of market access, if required.

Portal services can help multi-tie businesses produce company-specific and comparative quotes for panel providers and submit new business app- lications electronically to each provider. Further efficiencies can be created by integrating these portal services with advisers’ client admin system to enable straight-through processing by facilitating the autom- atic transfer of client data into quotes and application forms. Advisers can also link directly to panel prov-ider extranets via the portal, giving them a choice of how to submit business.

The fact that the way the technology works is now closely aligned with the way intermediaries want it to work means they are increasingly realising the benefits that e-commerce can deliver.

According to the index, 51 per cent of advisers cite time savings as the greatest benefit and the core driver for adopting and using technology. Improved custo- mer service is identified by 22 per cent and 18 per cent mention reduced cost to their business.

However, it is important to note that the development of e-commerce services is very much an evolutionary process and that there are still areas for improvement.

Forty-three per cent of advisers say technology must deliver better electronic application services over the next 12 months to encourage them to make better use of it, with 22 per cent looking for greater transfer of data between applications.

These points are being addressed by technology providers and the role of technology within adviser businesses is set to grow significantly over the next few years, regardless of whether they are multi-tied or whole of market IFAs.

This technology has the potential to help advisers speed up the sales process, reduce admin costs and ultimately deliver high-quality service to clients.David ChildManaging director,

The Exchange


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