First past the post

When it comes to technology stakes, where would you place yourself: leading by several lengths, stuck in the pack, or perhaps one of the non-runners? For many IFAs, the fear of being left behind in the e-commerce race has been replaced by a weary cynicism, as each new generation of technology fails to live up to the hype. 'Wait and see how it all turns out,' has for too long been the smart strategy.

So how are IFAs really using technology in 2002? We conducted a survey to understand how technology can help IFAs to write protection business. The results provide an ideal opportunity for you to benchmark your e-business strategy against the average IFA.

In 2002, 889 IFAs responded to the survey. The size of the sample and its broad distribution suggest a highly representative response. This is in contrast to the many surveys conducted by IT providers, based on the views of a handful of early adopters.

The primary focus of the research was how IFAs use technology for dealing with their clients. A simple indicator is how frequently an IFA is contacted by clients via email (see graph 1 on page 32). In 2002, 35% of respondents said this often happened, compared to 26% in 2001 ' clearly a significant increase. This result is consistent with wider internet tracking surveys which suggest there are now over 16 million internet users aged 16 and over in the UK, of which seven out of 10 are ABC1s. Whatever an IFA's target market, the majority will now be online, which explains why over 99% of IFAs now have an internet connection.

Researching online

But what happens beyond the exchange of email? The survey found nine out of 10 IFAs do protection research and quotes online, using financial portals and extranet services on provider websites, compared to only five out of 10 who use a CD-ROM for this purpose.

It is not hard to see why the CD-ROM is declining in popularity. Greater sophistication of portal and provider extranet services incentivises IFAs to use this channel. Five out of 10 IFAs submit new protection business online (see graph 2 on page 32).

Another factor is convenience. If it is irritating to manage numerous passwords for different provider systems, then it is even more tiresome to manage a large stock of CD-ROMs, with the uncertainty about whether you are using the most up-to-date version. Many IFAs also find provider CD-ROMS can conflict with each other.

Another important finding is when IFAs use technology, they do so in their own offices. Only 5%-6% of IFAs say they use online or CD-ROM-based tools at their client's home. Few IFAs would want to risk causing offence by plugging into a phone line at a client's home, while remote working using mobile devices still suffers from poor service and low connection speeds. We remain a long way from the third generation mobile technology revolution that promises reliable and affordable remote working.

What is more telling is that so few advisers are prepared to use a provider CD-ROM on a laptop in front of the client. The advantage of a CD-ROM is that it can be used anywhere with greater reliability. The survey found little evidence of IFAs using laptops at the client's home for more conventional purposes, with only 12% of IFAs using on-screen fact-find forms and as few as 25% demonstrating Power-point presentations.

Reasons for this could be lack of confidence in the tools available, or a fear of exposing a lack of IT competence. Or is it because IFAs like to focus on what they do best ' communicating face-to-face with their clients without the distraction of technological devices?

The importance of portals

From the provider's point of view, the ultimate measure of success for any new technology is how far it displaces other channels. There is no doubt financial portals are now universally the preferred IFA route for carrying out comparison quotes. An interesting finding from this research is that portals are now the first choice of channel for single company protection quotes. This is significant, as it has often been said advisers will conduct comparison quotes using a portal in order to identify a preferred provider, but will then use other channels to refine the quote, notably telephone or CD-ROM.

The survey found that 58% of IFAs now consider portals to be their first choice for obtaining single company quotes, followed by phone 15% and email 12% (see table 1). Interestingly, the second choice of channel indicates a tie between the phone and provider extranet services, both accounting for 27% of second choices. All this evidence suggests in the near future, providers will increasingly shift from supporting CD-ROM-based services to portal and extranet services.

The survey asked IFAs which processes relating to protection business they are most keen to carry out online, beyond research and quotes (see table 4). Most popular is the ability to submit new business. In second place, is the ability to track pipeline new business 22%, followed by being able to review existing policy details. Clearly IFAs are starting to think about how technology can be used at different stages of the business process.

Inevitably, this leads to the question of back-office systems. While 80% of respondents are using some form of back office technology, relatively few have a fully integrated automated administration system. As yet, there does not appear to be a clear market leader in this sector. The remaining 20% of advisers who say they have no back-office system at all are presumably still using paper-based systems.

The major challenge for the future will be enabling IFAs to integrate their back office systems with provider extranet services. By doing so, IFAs will be able to maximise the benefits of technology ' for example, by enabling automatic population of data from the client database into provider systems. Imagine only ever having to input a client's details once throughout the lifetime of a relationship.

The survey also looked at what type of internet connection IFAs were using (see graph 3). Perhaps the most telling result in the whole survey is that 99% of respondents were able to answer the question ' not so very long ago, one might have expected 'don't know' to be the most popular response. In fact, just under half of all IFAs now use some form of high speed connection to the internet from their office, whether it is ISDN or broadband (ADSL).

Other research has consistently found a major issue affecting IFAs' motivation to adopt new technology is speed. And rightly so. IFAs want to spend the maximum time advising their clients, not watching an egg-timer symbol. But it is interesting the number of advisers who complain about speed are still using dial-up internet access. This survey found 52% of IFAs are using 56K modems or lower. Clearly this is inadequate for the type of e-commerce functionality now available to IFAs. Broadband technology is increasingly available throughout the UK at an affordable rate. IFAs looking to use this method of connection will need to reassure themselves their service provider can offer the resilience they need for a business critical function. You can always retain your modem as a failsafe.

More than any other profession, IFAs are savvy enough to know that a technology strategy has got to make sense in terms of the underlying business strategy. But if you are serious about writing protection business, then you should be thinking about how technology can help you do it more effectively.

Richard Davies is head of e-business and media at Swiss Life (UK)