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Panel servitude

There is an ever growing trend in the independent sector for IFAs not only

to deliver but to demonstrate clearly that theyare truly independent. This

is being achieved with the help of highly functional product research tools

that enable IFAs toformulate client-focused product recommendations.

Consumers are more than ever looking to their IFA to prove both the

quality and independence of their advice. A number of leading IFA firms

have recognised that the use of panels is not tenable or even acceptable to

many clients.

Can IFAs recommend a product from a restricted panel of approved contracts

and still be considered truly independent? In the past, it could be argued

that the thousands of products in the marketplace meant that a detailed

knowledge of a smaller range of products was better than a very sketchy

knowledge of the total marketplace.

But new technology has blown this argument out of the water. Highly

functional research solutions give IFAs the ability to analyse the entire

marketplace quickly and accurately, tailoring products to specific client

needs while maintaining compliance with increasing regulatory requirements.

A critical distinction between the two methodologies is the starting

point. A panel is based on the researcher&#39s criteria whereas a truly

independent approach is focused on tailoring solutions exactly to the

stated needs of the individual client.

To this can be added the commission factor. The perception among many

consumers – and certainly the press – is that IFAs choose panel providers

because of a number of subjective factors including higher levels of

commission. This is why client-based advice, rather than product-based

advice is of paramount importance. Using existing technology, IFAs and

their clients can select the criteria which shape the list of the most

suitable products. Commission is then an irrelevance in the process.

One of the most complex areas of an IFA&#39s life is product research. A

leading compliance firm recently produced results showing that IFAs spend

only 15 per cent of their time with their clients. Using new technology,

IFAs can proactively involve clients to enhance the decision-making

process, adding further value and removing uncertainty.

Client-centred software provides a detailed audit trail and comprehensive

reasons-why reports, drastically reducing administrative time and

headaches. IFAs can then dedicate their time more efficiently to enhancing

client relationships rather than being researchers and report writers.

The plethora of financial websites is allowing consumers to carry out

their own research. While power is now deemed to be in the hands of

consumers, in reality, the internet is currently only providing information

and price rather than knowledgeand detailed financial awareness.

But access to comparative financial product information will cause many

consumers to demand justification of their IFA&#39s claims of true


The use of panels will further place power in the hands of only a few life

offices, squeezing out the more specialist and niche product providers

which offer vital services to clients.

If two product providers on a panel merge, will this further restrict the

choice offered to clients? Or will the IFA include also-ran providers,

which they would not normally include, just to make up numbers?

In conclusion, there are valid reasons for IFAs which currently use panels

to embrace technology as a way of ending their reliance on them. Perhaps

most important, the consumer is already demanding it. Alerted by the almost

constantly negative coverage in the media and empowered by the internet and

access to financial information, consumers are asserting their right to

have optimum choice.

We believe there will be a fundamental shift from product-oriented sales

to comprehensive financial planning advice. Today&#39s technology allows the

recommendation of a specific product, its purchase and associated

administration to be carried out in a fully compliant and efficient way.

The IFA&#39s role then changes to offer clients a full range of

lifestyle-led, forward-looking financial planning products which is

unquestionably truly independent.


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