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Online advice cannot tackle complex issues

If you take everything you read in the press at face value, you will often only see a story from the acutest of angles. Sensationalist headlines, backed up by an edited, out of context quote from an industry commentator or, worse, an unnamed “insider”, combine to paint either the bleakest or most optimistic of pictures.

Anyone interested in how the financial services industry will look after the RDR will know this first hand, with predictions ranging from the review having little or no effect on adviser numbers and business volumes, to more than half the industry shutting up shop and consumer choice being damaged irretrievably.

Similarly, the number of providers in the life insurance sector is depicted as either shrinking faster than Fernando Torres’ market value, with established players like Friends Provident and Axa merging under the Resolution banner and big names such as Aegon pondering their future involvement or it is depicted as prospering, following new entrants such as PruProtect and Fortis.

The fact is that no one really knows how the land will lie after the RDR is implemented, just as no one saw the credit crunch coming, no one would have predicted a Conservative/Lib Dem coalition and no one knew that Bruce Willis was actually a ghost in The Sixth Sense until it was revealed.

Likewise, it remains to be seen which providers stay active in the market, which will merge and which will exit.

What is indisputable is that IFAs and mortgage brokers need to up their game if they are to survive. This point was, somewhat ineloquently, made by LibDem Treasury spokesman Lord Newby who said last week: “The traditional model of the IFA looks to me like a doomed species. I think there will be a drift away from old fashioned financial advice.” This was his cheery prediction, pointing at the changing buying habits of consumers and their demand for free, electronic advice as the reason.

Online advice is an inevitability and anyone who believes otherwise needs to set down their quill pen, turn up their gas light and open their eyes to the 21st century.

However, Newby’s assertion that people will not “want to go through the appalling business of laying out all their details and taking an hour to go through everything” is not just ineloquent, it is wrong.

What online advice is never going to be able to accurately cope with is complex financial planning, as distinct from fairly simple transactional advice. For these situations, a full review of a person’s past, present and future finances is far from a wasted hour – it is fundamental to good advice.

Advisers must not fear the growing volume of direct-to-consumer sales, they must find ways to complement it.

Phil Jeynes is head of new business at LifeQuote, Direct Life and Pension Services


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Keith Churchouse 5th October 2010 at 4:46 pm

    As many of you will know, I believe that both face to face and online financial advice can live together in the future and this is why we have spent many years developing an additional service. is designed to meet this anticipated gap in the new ‘online’ advice market.

    It will be interesting to see who follows our trail as we draw towards and past the end of 2012.

    Keith Churchouse
    Churchouse Financial Planning Limited.

  2. I think that you’ll need to define “complex financial planning” and “fairly simple transactional advice” before I can decide whether I agree with you.

    I’ve spent the last 30 odd years developing increasingly sophisticated advice systems that certainly deal with complex inter-related matters and produce options, alternatives and best results for the client from them. Many of those results are just too complex or lengthy for a human to reasonably or accurately produce them.

    What they don’t do is to understand the motives and ambitions of the people involved; that requires people skills.

    The ideal scenario has always been a skilled adviser with the right advice and assessment tools.

    The danger now is that combination may be becoming too expensive for many of the people who need the service.

    Online advice can provide much of the information element that will be needed by these people and, perhaps, they will be able to find any missing advice element at an affordable cost.

    In the USA, some lawyers have been ‘unbundling’ their services so that clients can pick and mix from a menu of services that their practices offer. Such options as use of the law library, help in drafting documents and advocacy can all be used while the client does the other work that they feel capable of carrying out, sometimes with online resources.

    Perhaps that will start to happen here.

  3. Keith Churchouse 6th October 2010 at 10:04 am

    As many of you will know, I beleive taht online financial advice is possible and a way forward as a compliment to the existing face to face structure.

    As times and demographics change, certainly post RDR, there will be need for online advice.

    We have been working on an online facility for many years now, and has been successful in raising the profile of this type of delivery.


    Keith Churchouse

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