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Reinventing the will

What holds people back from buying financial services products?

Often it is fear of buying the wrong thing or it can be simply not knowing

that a product is available.

IFAs have for many years filled the market need for someone to say “this

is right for you”, giving them the confidence to buy, safe in knowledge

that it is a good buy and right for them. Many IFAs have made a good living

from providing this much needed service but technology is going to change

the game rapidly.

What is advice? It is the application of a set of rules. If any piece of

advice can be justified to a client with a reasons-why letter from an IFA,

then, by definition, it can be automated. Some of the early automation we

saw were in the insurance industry where salespeople use fact-finds on

their laptops to reach conclusions on product selection and then use rules

again to take the underwriting decision and put people on cover at the

point of sale. A one-stop shop for the customer, achieved by using

experience captured in a set of often complex rules.

This combination of easy access to immediate decisions, enabling an easy

and confident purchase in the comfort of the home at a time to suit the

customer set the expectation in the market. With electronic access now

available to much of the population through the internet, digital TV and,

increasingly, WAP phones, the time and location of a purchase is in the

control of the buyer.

For sizeable investments or purchases, the buyer often looks for advice.

But the place the buyer is now looking for that advice is via the

electronic channels at the time and place dictated by the buyer&#39s


Some new dotcom organisations have emerged both here and in the US which

charge for financial advice and then point people to the places to buy the

recommended products. This service is delivered on the internet and

provides the convenience and access required but is not currently a very

fulfilling experience for the client.

What the financial services industry is just waking up to is the

realisation that provision of independent advice on complex issues free of

charge has the potential to grow the whole market for these products.

In addition, the provision of advice by default means an enormous amount

of customer lifestyle and financial information is collected. This is a

great way to build a substantial database of people who want to buy and

also to give confidence to people who might not otherwise have considered

buying. It does not matter if people buy a competitor&#39s product because the

very act of being given the independent advice will create a level of

stickiness to bring the person back to the site and it will grow the

market. It also builds a level of trust for the advising brand.

There are a small number of choices for financial services organisations

who want to take the internet advice route. They range from building an

in-house advice engine and all the support that goes with the advice

business, to outsourcing the provision of the advice to an electronic IFA,

to maybe even joint ventures to provide a complete service that can be sold

to many organisations.

But the big change that will happen is that clients will not pay for this

service, so the business model between the financial services organisations

and the IFAs will need to change fundamentally.

There will also be the obvious debate about who owns the client and who

retains that valuable asset – the client details. In the short term, the

advice area to the private banking type of client will still exist due to

the nature of the relationship. But the part of the market which has most

often gone to an IFA to get advice in the past on complex issues will start

to find that this advice is increasingly available to them directly via

their electronic channels. A lucrative and increasingly large slice of an

IFA&#39s business is likely to disappear rapidly.

Many financial services companies are now starting position themselves as

infomediaries, people who can provide wide-ranging information and advice

to help people chose between many products electronically, effectively

removing the need for the IFA in its current form. So, the challenge is

there to the IFA marketplace to reinvent, reposition or team up. To do

nothing is not an option and whatever you decide to do, do it quickly.


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