The internet can cut costs and offers IFAs a shop window of opportunity.
According to the London School of Economics, the use of online business services could save the average IFA firm up to £37,000 a year. With such a saving, the historical proposition that an IFA was forced to pay a premium for access to the industry's only online “common trading platform” could have appeared justifiable. But times change and with new competition providing wider choice for the IFA, the ability to shop around and select the best electronic commerce services at the best price is a welcome reality.
Despite this, if you tell someone qualified in all aspects of financial planning they can now have something for free which they have always had to pay for, most will be sceptical. Ironically though, when you apply this same logic to the hordes of home internet users, it is interesting to note the scepticism was quickly overcome as it became clear the “catch” was minimal, if at all.
In the big wide web world of the consumer, we have seen a huge take-up of free internet service providers such as Freeserve, free internet off-peak call services such as BT surftime, and a whole host of free products and services from software to music downloads.
Not surprising then that the introduction of new IFA portals has spurred a rush of competitive positioning and price models in the race to secure new users and loyalty. All good news for the IFA as monopolistic price tariffs are edged out and replaced by much more reasonable propositions but who are the real winners and losers? And where, if at all, is the catch?
The answer is that the winners will be the IFAs and product providers who use the new technology to its best advantage and the losers will be those either too slow or not informed enough to know what the best options are and who end up paying over the odds, whether financially or simply through loss of opportunity.
For the intermediary, online portals should be accessible at minimal cost as they provide a vital means of distribution for the product provider, considerably reducing admin and marketing costs and providing significant benefits to the IFA, with streamlined access to key information to help them look after clients.
One initiative which has helped fulfil thisdouble whammy is the introduction of specialist IFA website building services, providing online communication services for IFAs to keep their clients fully informed and offer high- level services at very low cost.
A personalised website acts as the IFA's shop window. Its own brand will be right up front and the site can be integrated with other online solutions to provide IFAs with the opportunity to undertake transactions direct with their clients, 24 hours a day, seven days a week.
The intermediary who is aware of the sig-nificant benefits to their business will choose wisely and should always look to pick a system which offers them functional benefits at mini-mal cost. It is vital to invest in appropriate hardware, training and support.
Henri Mayoux of Chester IFA Cranbrook Financial Services is clear how he wants to use technology: “We want to use IT for client servicing, such as fast delivery of essential documents. You can spend far too much time in the car, which you don't need to do, when you can offer much better service over the internet.”
Rosemary Heaversedge, of Shropshire-based Independent Financial and Mortgage Services, feels her website will enhance her business over time. She sees immediate savings through using email. “You can forget traditional mailshots. We get a much better response, much cheaper through email and you can also do follow-up mailings much easier using this tool.” In addition to assist-ing client recruitment, Rose-mary also believes her website “enhances my credibility”.
IFAs also need to monitor and review the progress of their clients' products and together with a good client management system, many are already seeing the benefits of online policy servicing, which will ultimately allow IFAs to be in control of their business at all times.
The fundamental benefit of the new breedof free online services is that they really should not have a “catch” at all. If properly resourcedand competitively priced, both the product pro-vider and intermediary should be provided with real opportunities to cut costs at the heart ofthe business process.
The emphasis here has to be on delivery and if the industry is determined that its new services will not be “just another Alta Vista style” vapour-ware promotion, then the responsibility for this lies not just with theportals but also with their partners, product providers, to provide the commitment andsupport. Intermediaries have to seize the opportunity and use the services wisely.
Nicola Mitchell, Sales & marketing director,AssureSoft