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The online phenomenon will have a significant impact on the traditional

IFA. Not all consumers understand the value of independent advice and the

legacy of pension misselling has been a damper on business.

This is where the internet comes into its own as it is seen as another way

to gain access to significant impartial advice and, by using chat forums,

to enhance financial awareness and immediate best advice.

There are significant dangers for IFAs who adopt an ostrich attitude

towards the internet. However, if they embrace the technology and recognise

that many consumers increasingly want to choose for themselves, they can

add more value to their client portfolios.

High-street lenders still see IFAs as fundamental to their business model

as they face increasing competetion in the e-market. The use of internet

business-to-business solutions can bring useful speed and cost savings to

the process. Mergers and Barclays&#39 branch closures reflect the clicks

influence. IFAs that fail to embrace a clicks and mortar philosophy will

inevitably face an erosion of their customer base.

IFAs should use technology to ensure they know their customer and

appreciate their individual needs. They can use the web to great effect for

providing accurate, timely comparative products and quotations while still

delivering their core best advice benefits. This will result in the

perception of customer confidence in their adviser and ultimately lead to

solid business. Perhaps above all, in this increasingly impatient financial

customer world, the IFA must be able to process business transactions for

their customers online and fast.

Surveys suggest the average internet user is male, 36 years old, earns an

average of £33,000 a year and is ABC1, making a perfect target for personal

finance services.

There are other potential clients for IFAs. These include the Silver

Surfers, the retired who have the time to make the most of the internet,

and others who are too busy to find the time during “normal” working hours

to sort out our finances. Many rebel at wasting Saturday mornings traipsing

up and down the local high street going from lender to lender.

The web is set to be the driving force in the personal finance arena.

Jupiter Communications reported last September 1999 that the online

brokerage market was predicted to lead the growth of the financial services

sector with projected assets of $3trillion by 2003. Coupled with this,

Jupiter estimates that over 1.1 million mortgages are expected to originate

online by 2003. These figures reflect the US market but there is no doubt

that the trend is already impacting on the UK.

This has become especially apparent now that the UK mortgage market is

increasingly comprising such a wide range of different products and

additional features. The new era of flexible mortgages, for example, makes

it especially important to be able to compare products in more areas than

just interest rates. It also gives the opportunity for the IFA to provide a

range of options since flexibility enables easy movement between

investments, savings, spending, loans and earnings.

The benefits for the intermediaries who embrace the internet for the

mortgage process are compelling. An online mortgage application can speed

up the service tremendously, eradicating time-consuming paperwork and

bureaucracy, leaving time for increased customer service and the

opportunity for cross-selling other products.

Rather than working through the many websites of individual lenders, it is

logical to go to a one-stop shop where the minefield of product offerings

is simplified and relevant product comparisons can be made simply and

quickly. The independence of such sites will be critical for comparisons.

Online mortgage sites such as E-loan, Charcoal On-Line, Moneyextra and

Netmortgage have their core business in the remortgage market, picking up

customers that are net-savvy and mortgage-savvy.

Intermediaries can use these sites as their own information sources on the

net for those who still want handholding.

Fletcher Research has already confirmed that 10 per cent of mortgages are

bought online, with a further 17 per cent of net users saying they will buy

online in the future. This may still seem relatively small but consumers

are actively using the internet to research personal finance information

now.

This will ensure that online mortgages are set to be big business, even

more so than personal loans, current accounts, pension and life insurance.

Online mortgage offerings are demystifying the whole process and ensuring

that consumer choice is paramount. When IFAs are competing for consumers,

they must reach them on their terms, whether that is by digital TV, the

internet, WAP phones or more traditional means. It is a crowded market and

IFAs cannot afford to ignore new technology. IFAs that fully embrace the

opportunities will be the winners.

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