Is 2007 the year of online financial planning?

I watched the television last week to see Bill Gates talking to a newscaster about the launch of Microsoft's new software, the ‘Vista’ platform. This clearly is going to offer us all a new ‘vista’ on the future of how we use both technology and our computers to improve our work, lives and finances.

He continued to talk about the future and the possibilities and applications that could be applied and are clearly being considered. These included electronic work tablets for school children, to allow them to store and use more information within the next 10 years. Excellent and exciting propositions.

What does this mean for our profession? Technology is affecting us all and over the last few years I have watched developments and initiatives both in terms of products and services available to us as IFAs and to the general public. So, is 2007 the year for our industry to move forward for online financial advice?

For our own work, the computer systems that now are available, to streamline what was historically a paper-bound practice, are amazing. Whether it is electronic recording of client information and records or genuinely producing the ‘paperless office’, what we know now can only improve with the new and improving initiatives available. However, the cost of this software seems to be ever more expensive and we have questioned whether the value added is outweighed by the invoices out.

Moving to the bigger picture, how can we use this technology to be intelligently and compliantly employed to offset the initial costs and to start to generate true income into the business? The whole point of this is to improve business and the business strategy.

There are various initiatives available, an example of which is FinanceCube.net, an online valuation service that can be employed by an IFA to offer to their clients either as an additional service or an additional fee-generating product.

Our clients are sometimes (and often) more computer ‘savvy’ than we are and following a recent newsletter we sent out, the response has been staggering. I am concerned to say that one of my clients called to enquire about the service and was clearly more ‘au fait’ with technology than I am…at the age of 79!

Other developments are the direct fee-based client offerings such as www.advicemadesimple.com and www.pensionsmadesimple.com. Both are IFA online services for the UK.

Is the market ready to partly break away from the ‘face-to-face’ scenario that it has used for so many years? Many IFAs have suggested that the general public prefers the personal touch and I agree, but with the innovations that we see around us and as suggested at the start of this blog, it appears contrary to their use of the web.

Is the market about to split to an extent, with part maintaining the personal contact that is the lifeblood of our industry and part preferring to use the internet and technology to transact their financial planning? Personally, I still use a travel agent to book my holidays, but haven’t been to my bank for sometime, preferring to manoeuvre my overdraft online rather than ‘face-to-face’. Converted, not entirely, but I am getting there.

Statistics in 2004 showed how business generation via the internet was changing how businesses offered services:

Products/services brought or carried out via the internet as % of transactions:

Source: e-benchmakers

The government’s plan to arrange free financial advice will, I am sure, involve some form of electronic delivery to the public. IFAs have seen how they have embraced technology with the use of technology in the six-monthly reporting requirements (RMAR). It will also be interesting to see if the NPSS is online and ‘paperless’ to keep operating costs to a minimum. These are all initiatives to drive costs down and savings up. This can only be a good thing in the long term.

I am sure that the innovations for genuine online financial advice will come thick and fast in 2007 and I, for one, welcome them. It would be a shame for our community to ignore the opportunities that are available to increase business online and even better if we could show the industry and the state the real electronic way forward in financial advice and closing the savings gap.

Keith Churchouse is director of Churchouse Financial Planning and owner of www.investmentmadesimple.com.

The views expressed are those of the author and not those of the company he represents.