For most IFAs, the use of technology for accessing comparable protection quotes is now an every day ...
For most IFAs, the use of technology for accessing comparable protection quotes is now an every day event. 10 years ago, it was just a pipe dream, but today technology plays a big part in most IFAs' business. And not just for producing quotes. The role of technology is widening to include all areas of the business acquisition and administration process.
So, how do IFAs feel about technology and in what ways are they using it to help them run their business?
Recent research has revealed that on average nearly 68% of IFAs rank the delivery of improved levels of service to clients as the key objective of new technology.
The response to this question was an interesting one. When technology became a big part of our business culture and the internet exploded into our everyday lives, many IFAs we spoke to saw it as an opportunity to generate new business. The swing from business generation to customer service suggests IFAs recognise that their existing customer base is their most valuable asset.
So, apart from comparative quotation services, how are independent intermediaries using technology to deliver improved levels of service to their clients? The research produced three main highlights:
l 58 % of IFAs have a website
l 77% of IFAs expect to submit new business application forms electronically
l 75% of IFAs have a back office administration system.
Given the hype surrounding the internet, the number of IFAs with a website is not surprising, and indeed it will not be long before every IFA has their own site. But it is IFAs' own website strategies that illustrate best the swing from business generation to customer service as the main priority for IFAs. During 2000, there was a significant shift in what IFAs saw as the main purpose of their websites, from 'online trading of financial services' to 'servicing existing clients'.
Customer service
In April, 38% of IFAs felt that online trading of financial services would be the main purpose. This fell to 14.5% in November, whereas servicing existing clients rose from 22.4% to 38.2% over the same period.
The internet presents IFAs with many business opportunities and there is the potential to use websites as business generative tools. But it seems that for now, the majority of IFAs see it as a way of looking after their existing client base. Maybe in the future, as more website building tools become available and costs reduce, we will see a swing back to new business generation as the top priority.
But it is not just client-facing technology over the internet that can help IFAs to improve their client service. One of the newest technological developments to affect the IFA market is the introduction of electronic new business applications. When the first stages of this were launched in May 2000, 52% of IFAs expected to make significant use of these services, with a further 25% expecting to use the service on an occasional basis.
In relation to protection products, these figures continued to rise over the year. In November 2000, 61% of IFAs stated they expected to make significant use of a new business application service for life and health protection products.
By submitting simple life and health protection products electronically, IFAs can reduce cost and save time, both of which help IFAs improve client service.
However, the uptake of such services may not be as quick as the research indicates it could be. Why not? Because most of us are creatures of habit. While we can see the benefits in principle, changing business processes is another matter. The real benefits come when there are special e-products designed exclusively for electronic submission and with a significant financial benefit to match 'the technology dividend'. As these e-products become more widely available, IFAs will be more likely to submit new business electronically.
Time saving
E-products are attractive to IFAs because once they are familiar with the new processes they can reduce the time it takes to service their clients as well as offering enhanced terms for IFAs. New business applications can be submitted directly to the provider with a decision in principle received by the IFA within minutes.
Research shows a high potential demand for these products. 65% of IFAs surveyed in November indicated that their use of electronic new business services for life and health protection products will 'significantly increase' if enhanced electronic-only products are made available.
The industry's first protection e-product, Legal & General's online e-term, was launched in November last year. Unlike other new business services where the IFA submits an application electronically and the provider processes it at a later stage, Legal & General's IFA centre extranet can now be linked directly to quote systems. If a Legal & General quote is selected, an IFA can select the apply button and the quote information will partially populate an application on Legal & General's system.
IFAs and their clients will then be asked a series of questions designed to obtain the information required to underwrite the business. If the application is accepted, cover takes effect immediately and no signature is required by Legal & General.
Products like this can greatly reduce the time it takes an IFA to meet their client's needs, another example of how technology is helping IFAs improve client service.
Help behind the scenes
Technology does more than help IFAs transact business. Back office systems can help IFAs reduce administration costs, keep track of their clients financial affairs and prompt contact with a client relating to their needs.
Most IFAs currently use a packaged system and the number of IFAs with no system at all is gradually decreasing. Over the next few years, we will see this trend continuing with more and more IFAs looking to streamline their business processes in order to deliver higher levels of service to their clients.
So it is clear that technology is already playing a crucial role within the IFA industry, but we have only just scratched the surface. The potential is still enormous and there are some exciting times ahead of us.
The next step for IFAs is to take the individual elements where they use technology and integrate them with each other to form a single technology platform on which to run their business. If your quote system is integrated with your new business system you can pre-populate the application forms with data from the quote screen. Then if your back office system is also integrated to your new business system the client data can be stored auto-matically with no need to re-enter all the details.
Technology is available to help IFAs at every stage of the sales chain, from needs analysis, transaction to client servicing. If all this is integrated IFAs can benefit from additional time sav-ings and efficiencies, freeing up the IFA to advise their clients.
Perhaps the most important issue now is making sure all IFAs have access to the relevant training material needed to take advantage of the latest developments. Having the technology itself is one thing, knowing how best to use it is another. However, service providers are helping IFAs get to grips with technology.
Mark Howard, managing director at Maddison Monetary Management, says: "Technology should be playing a big role in any IFA's business. Those that are not embracing technology are in danger of being left behind by the rest of the field."
The findings of the research show that IFAs have clear views on the benefits of using technology and this understanding is set to accelerate.
Over the next few years, we can expect to see IFAs fully embrace technology in their drive to continuously improve the service they provide to their clients.
Stephen Wynne-Jones is senior product marketing manager at Exchange FS
