The news that Axa is establishing a website to advise customers on its own and competitor products has fuel led speculation that it is planning to reposition itself as an online multi-tie.
The move has prompted experts such as Financial Tech nology Centre director Ian McKenna to predict that Axa's strategy could be the thin end of the wedge and that 2001 will be the year of the online multi-tie becoming part of the financial scene.
This has already happened in the US although IFAs are sceptical how online advice could develop in the UK.
Advisory & Brokerage Services managing director Gareth Marr says: “Online advice can work but only in a number of focused channels, as it has done in the States. There could be a scenario in the future where A&B look at offering something along these lines.”
From this spring, the Axa portal, internally named eAxa, will advise on and sell Axa Sun Life, Axa Assurance and PPP Healthcare's range of life and pension products plus the Woolwich's Open Plan account and a share-dealing service rumoured to be Barclays Stockbrokers.
In the longer term, the site aims to be selling products from companies operating outside Axa's own market sectors as well as products from its direct competitors. From day one, eAxa will provide regulated financial advice. The plan will extend throughout Europe with similar sites planned for the French, German and Belgian markets.
From launch, eAxa will target an e-friendly audience and the development will run alongside similar plans across Europe.
McKenna says: “I would be surprised if we did not see a number of other players doing the same. This is the sort of solution which is ideal for a multi-tied operation. The costs and charges are lower, which has to be good news for consumers.
“It has been predicted that this would happen for a while as it is inevitable things would go in this direction. It is a highly efficient way of providing low-cost advice to people with relatively simple financial situations.”
Hargreaves Lansdown head of e-commerce Mark Row-lands says: “From a distribution point of view, this is definitely the thin end of the wedge. More and more players who do not have a significant penetration in the IFA channel will be involved in a desperate bun fight for direct distribution through the internet, direct mail, call centres and digital TV.”
So, what players could follow Axa down the online multi-tie route? IFAs believe some of the likely contenders might include Prudential, Abbey Nat ional or Scottish Widows.
Scottish Widows head of e-marketing Bob Gibson says: “Everyone could take this route but we have no plans at the moment although we will be offering stakeholder online. It will be interesting to see how this works in practice and which competitors will want to support the portal.”
If Axa does start a wave of similar announcements from other big players, this will have massive repercussions on the work patterns of the average IFA over the next few years.
Axa is not willing to release details on how online financial advice will be delivered but it could involve a call-centre set-up, with teams of FPCqualified individuals responding to email queries.
But however it chooses to offer professional advice online, it will certainly alter the playing field on which financial services competes with other professions for new recruits.
McKenna says: “In five years, there will be more IFAs in call centres than there will be on the road. This poten tially opens up an opportunity to start recruiting more people.
“A lot of graduates are not happy with the idea of 'selling' financial products but if you offer them roles in call centres where the provider has to offer an attractive package and better conditions, we might be able to bring in some much needed new talent.”
So, Axa's move ought not to be viewed as yet another instalment in the “death of the IFA” story in which the internet is seen as a driving force.
When Axa's service goes live, it is likely that online advice will form part of the mix-and-match approach to financial planning across different markets. The move may also show IFAs the way their skills can be exported to a wider audience more efficiently through their own websites.
When Axa revealed the new direct strategy, it was at pains to point out to any IFAs who fear their channel will be side-stepped that it is looking to have a range of distribution channels to cater for a variety of customers and that the IFA channel will always be needed.
McKenna says: “Axa's strategy could also work in a pure IFA environment and is the perfect example of what every IFA who wants to stay in business should be doing.”
Rowlands says: “The challenge to the IFA community is how to respond to what the likes of Axa are planning. IFAs need to understand what proposition they are offering their customers and what value the internet can add. It may not be offering online advice but could mean making savings by providing downloadable information.”
Marr says: “What online advice misses out on is the soft facts which emerge in face-to-face advice, which leads to other questions which give holistic financial planning. The high-net-worth market req uires this for all-round planning and I am happy to compete with life offices on giving financial advice.”