Portals have come a long way very quickly and there is a lot more innovation to come. While new technology does not always work as smoothly as IFAs would hope, the notion of working with the tools available 10 years ago is almost inconceivable.
The scramble for distribution in the retail financial services sector is nowhere more apparent than in the field of the IFA portal and rapidly changing technology will revolutionise the way IFAs do business.
With IFAs constituting the principal channel for retail distribution, the battle for portal dominance is being fought for high stakes. Although most providers say they are firmly committed to e-commerce, there is a lot more that can be done with the technology that already exist. And for a handful of providers, the EasyJet-style embracing of technology is already happening. From a standing start in December 2000, 24 per cent of Legal & General's level term business is now traded online.
With the market in such a state of flux, choice of portal will influence the way an IFA's business develops, so what should an IFA bear in mind when deciding which is the right portal for his firm?
The four main providers – The Exchange, Assureweb/m-link, IFA Engine and IFA Online – all have their fans and their different structures reflect the way the market has developed.
The Exchange, by far the most tried and tested of the systems on offer and with a huge client base, is not attached to any IFA affinity grouping, seeking to define itself in terms of its independence from distribution.
Head of life and health protection Stephen Wynne-Jones says: “The key to a successful portal is a single point of access to all the services that an IFA could want.”
Synaptic Systems' IFA Online is similarly unattached and has gained 6,800 registered users from among the 9,500 RIs using Synaptic's desktop products as well as IFAs not committed to Synaptic.
The Assureweb/m-link portal has evolved from a product provided for its network members but DBS chairman Ken Davy wants to see the portal used by IFAs across the board. One of the main challenges of the new merged portal will be to persuade IFAs that they are not being pulled into a network by the back door.
Assuresoft sales and marketing director Nicola Mitchell says: “Cost, speed of access, market coverage and flexibility are the most important features in an IFA portal.”
IFA Engine, on the other hand, is exclusively available to IFAs using Bankhall's support services. Bankhall wants the portal to complement its other services to attract more clients. IFA Engine managing director David Warnock says: “Our portal is for members only. We can put information on there just for our IFAs, so the portal is more personalised.”
Ease of use is a key factor in deciding which portal to choose, as is cost – and that will in part depend on the operating system the IFA already has in place. IFAs paying a monthly subscription for Synaptic's desktop Product Research Professional and Fund Analyst tools will be able to pre-populate the forms they use on IFA Online, saving the hassle of rekeying data.
Synaptic managing director Selwyn Herring says: “Price doesn't enter the equation, you get what you pay for and the portal has got to do what it says on the can.”
Once in, access to quotes and flexibility of use vary in style but since The Exchange changed from a download and work offline system to its extranet system, actually carrying out quote comparisons is similar although the number of products actually available for comparison varies from portal to portal.
The Exchange claims the greatest range of products with full quotes for 35 product providers. Assureweb has comparative quotations from 15 per cent of product providers, which it says represents 98 per cent of business done in the IFA term market.
But The Exchange's competitors would point out that as its service is a dedicated extranet service, it does not have the flexibility of being accessed over the internet on any computer in the world.
An IFA will want to ensure that the portal he is building his business around is likely to still be in existence in future years. The financial strength of the portal and its viability as a business will be the key to its longevity.
The Exchange has, by a long way, the most users, which is not surprising given its length of time on the market. It has 16,000 users paying £14 a month for its service – the other portals are free of charge to users – and 12,000 users logging on for quotations every week, requesting 35,000 quotations a day. The product providers see quotation numbers as a clear indicator of exposure of their product.
Assureweb has over 3,000 RIs logging on every week but will not disclose how many quotations a day it generates, while IFA Engine has 1,700 weekly users and does around 1,400 quotations a day, although it has not yet been rolled out to all members. IFA Online gets requests for 5,000 quotations a day.
But it is wrong to imagine that the biggest portal will keep getting bigger as this would not be in the interests of the product providers. Legal & General IFA e-commerce account director Paul Measures says: “The portal market reacts to competition. The Exchange has improved its extranet and download offering because of portal competition. It would be within our power to play with commission to make sure no monopoly is created.”
Aside from the meat of the product quotation tools, all the portals have a variety of eye-catching functions, extras and gimmicks to dazzle the IFA. Live newsfeeds, free or low-cost internet services, online exams and compliance records, forms and brochures and connections to fund supermarkets all vary from portal to portal.
In the end, it is finding the functionality you want with a portal that adapts to your own business model and philosophy as well as your in-house systems that is important.
What is certain is that if depolarisation does happen the product providers will be showing a lot more interest in the portals and those with the most adaptable technology will shine through.