Product providers must develop a web-based multi-channel distribution model to capitalise on direct online sales as relationships with advisers become increasingly unstable, says 1st The Exchange.
In a white paper on changes to the UK advisory market, it warns that relationships with IFAs will be “seriously under threat” if commission is abandoned under the retail distribution review.
It says: “Using a web-based distribution model, the astute provider will capitalise on lower-end sales opportunities of direct internet customers and use good e-commerce to manage the more advanced needs of distributors and their higher-end fee-based clients.”
Managing director David Child says the secret to survival for many distributors will be in their ability to strip out unnecessary costs and provide efficient, streamlined services to online buyers. He says: “Huge potential exists for those organisations able to migrate to or launch parallel web-based distribution channels servicing a new and expanding target market.
“It is clear the FSA shares this desire with its comments on the new guided sales principles which would encourage customers to go through an automated process which then prompts them to decide what they want and helps them to buy a product.”
Informed Choice joint managing director Martin Bamford says online sales will become more popular as consumers become increasingly web-savvy.
Bamford says: “I think this is a sensible solution and one that will ensure the lower end of the market, which could otherwise be excluded, will be serviced. Providers have the resources in place to capitalise on this opportunity and I believe they should take it forward.”