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This year&#39s model

A little over a year ago, I wrote an article in which I interviewed Alex Docherty, managing director of DBS member AD Associates. He said if IFAs did not bec ome computer-literate and computer-aware, they would be left behind. What a difference a year makes. Computer literacy is taken as a given. Now the debate is how to get the most out of new business models such as portals.

Customers expect more than ever before. In the old days – a year or so ago – they knew they were paying for a service. When IFAs helped them deal with complicated personal pensions, inheritance tax or death claims, they knew they were getting advice – best advice. It was an added-value service.

But the customer&#39s power as a dec ision-maker is increasing. They are surfing the net to res earch and source policies. Channels of delivery are opening up. Interactive TV, personal digital assistants and mobile phones send insurance and investment advice to customers. They are not prepared to wait for brochures and mail-outs when they can get up-to-date information on the web.


On the surface, it looks as though the added value of the IFA is dying. The buzzword in the industry is disintermediation. If customers can search the vast array of policies offered on the web for themselves, why should they buy them from an IFA?

Opportunity for re-intermediation

But customers have to spend time and money accessing a myriad of individual websites. They are also on their own in terms of choice as advice is obviously not available. In addition, surfing the net is only available to those who are computer-literate.

So customers have not completely lost faith in the value of their IFA but they do want proof they are dealing with a professional who can acc ess, collate, assess and advise on the best policies available.

The growth of portals

Leading insurance companies are recognising this need and setting up portals. In addition, they realise that customers are no longer content with one size fits all and want policies tailored to their own particular circumstances.

So what is a portal? It is a website which acts as a central point of contact for consumers who want to research and buy financial products. The portal may be run by the product owner or an intermediary selling the goods or services of other companies, as well as its own.

Many financial services organisations are forming strategic alliances or partnership networks, often with former competitors, to sell products and services beyond their core competencies.

Such organisations often have two areas of expertise: developing and selling financial products. As they have such a large customer base and are experienced at selling, why should they not use these resources to sell not just their own products but any financial product which meets the customer&#39s requirements?

If a financial organisation has developed a best-in-class product, it makes sense to push that product, even if it is via portals run by competitor organisations. More financial institutions are taking advantage of this to reach as many potential customers as possible.

But why should companies sell the products and services of other companies as well as their own? Increasingly, a company&#39s relationship with its consumers is as important as the individual products being sold – if not more. Electronic customer relationship management software enab les them to get closer to their cust omers.

These financial services organisations can monitor what products and services are accessed, bought or declined. It gives them details of the customer&#39s experience of the portal as well as knowledge gained from other portals.

All this information means that financial services organisations with portals can offer customers a personalised service – products and services tailored to their particular needs.

This should lead to far more detailed, long-term and lucrative relationships. By the service proving indispensable, the customer will return time and again. Thisis why UK companies such as the Prudential and CGNU and Euro pean organisations such as Axa (France)and Zurich (Switz erland) are emb racing the portal model.

It is a growing trend. More than two-fifths (42 per cent) of respondents in the UK financial services sector are already offering portal services, acc ording to Collaborating with Trading Partners in the Digital Economy: An Executive Summary, a report from Cranfield University School of Man agement and Microsoft.

This is reflected in a Data monitor report which notes that offering a portal or gateway with a range of integ rated services will be an essential component of e-business str ategy for leading financial services organisations with str ong brands.

Companies without strong brands, how ever, will probably choose to distribute only their own products or become product pro viders to portals with stronger brands.

Seize the day

The IFA network DBS has already recognised the importance of get-ting the broadest range of information to its members. It offers its members free access to Assure Web, a portal built by ins urance specialist Assure Soft, based on a Microsoft platform. This offers access to information and services relating to all aspects of the life, pension and investment market.

IFAs download product information from bro chures in Adobe Acro bat format and access presentations and marketing material from different insurance companies. They complete application forms online, obtain quotations and communicate by structured email.

Information from product pro viders is presented in a consistent format, which makes it easy for IFAs to compare and contrast offerings and making recommendations to customers.

Product providers benefiting from a fast and efficient channel to market and reduced costs through the use of online rather than printed documents.

The future

It is likely that the portal trend will continue, offering a major benefit for IFAs. Brand identity, backed up by the widest channels of delivery, will prove of increasing importance to new entrants trying to break into the market.

New, untried companies will have to fight for business through improved customer service and personalisation, particularly as they are competing against established bricks and mortar product providers with strong brand identities.

Providing visible added value will be key to competing against the direct internet model. When a customer asks for proof that you are giving best advice, provide a print-out of your searches – and then explain your recommendations.

It is something that the customer cannot get from solely acc essing the internet. The IFA is dead. Long live the IFA.


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