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The new media is the message

Most people in financial services would accept that, like it or not,

e-commerce is goingto have a dramatic effect on the future of the industry.

Personally, I have long believed that, by the time they are adults,

today&#39s five year old will find it inconceivable to ask another human being

for financial advice.

They will have grown up totally at ease with technology and finding their

way around a computer interface will beas easy as riding a bike.

By this time, the interfaces will be nothing like the grey boxes that sit

on a desk in the corner today. We are increasingly in the age of the two-PC

home and in another 20 years microchips will exist in every room and in

virtually everything we own.

By this stage the life management software that will be a part of

tomorrow&#39s adults everyday lives will predict all their financial

requirements based upon intelligent data mining techniques based on

previous spending and other patterns and notify users of their requirements

before they even realise they have them. But this is many years away and in

the meantime there are a wealth of opportunities using e-commerce to

deliver lower cost products to more informed consumers.

One of the key questions is how quickly will people start to buy online

and what will the role for advisers.

Recent research published by Citigate Technology on behalf of Focus

Business Solutions, the software company providing electronic new business

tools to many of the leading IFA e-commerce initiatives including

AssureWeb, Synaptic and the Exchange, gives some interesting indications.

Like most such studies you can put varying interpretations on the study.

The research concentrated on the views of an important sector of today&#39s

financial service market, young professionals aged between 25 and 35. Five

hundred people in this category were interviewed in an attempt to identify

how likely they were to use new channels such as the internet and digital

television to buy financial services. It also examined general consumer

attitudes towards financial products.

Rather worryingly, financial advisers only just beat friends and relatives

as a source of financial advice, with 36 per cent of respondents saying

they would take professional advice compared with 29 per cent who would

talk to the latter and nearly two-thirds of all respondents saying they

found financial products hard to understand.

Those in the industry who take issue with the role of the national

personal finance press may take some comfort from the fact that only 6 per

cent of respondents cited this as their preferred source of information.

A clear indication that the industry still needs to work on its consumer

perception is given by the fact that only 51 per cent of those questioned

felt it was possible to get impartial advice from an industry professional

and while 35 per cent felt the ability to identify their needs was the

greatest benefit of professional advice and 31 per cent cited filling in

the forms for them as the major contribution from a professional.

Less than a quarter felt that face-to-face advice was the greatest benefit.

By comparison, over three quarters of respondents felt the internet should

make it easier to understand financial products and 59 per cent said they

would buy more financial products if they were easierto understand.

My own view has long been that new media will increasingly be used by

consumers to begin their financial shopping but will still seek some advice

in making their purchase.

This is borne out by the fact that, when asked to say which product they

would be most likely to buy online, only 10 per cent identified a mortgage

or financial product while books or a holiday scored 44 per cent and 46 per

cent respectively.

Nearly half the respondents said they would never buy a mortgage over a

new media platform.

This survey indicates that, among young professionals at least, people are

increasingly planning to use new media.

On the other hand, such services will not yet completely replace

traditional distribution and there is time for the marketplace to rise to

the e-commerce challenge. There is, however, clearly no room for



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