Be your own adviser

Consumers will soon have the same information as the middle men, says Stephen Pritchard

FINANCIAL advisers and insurance brokers are coming under threat from the internet. Their business will be eroded over the next few years because it is much simpler and cheaper to sell over the net.

Independent financial advisers could find themselves particularly badly hit, as typically they are small firms without the resources to create their own electronic commerce operations.

IFAs already make substantial use of electronic information and subscribe to giant databases that offer comprehensive information on available products. When you ask a financial adviser for a quote for a life insurance policy, the chances are the results will come from a database.

This information will soon be available to anyone with access to the internet. One of the database providers, The Exchange, is developing a public website together with Microsoft. The system will work as a stand- alone page, or in conjunction with Microsoft Money 98, the financial planning software.

Internet users will be able to use The Exchange to explore insurance and investment products, obtain quotes and even take out policies, either directly or through an independent adviser. As well as its own information, which covers 90 per cent of insurance companies, The Exchange will host web pages for its member IFAs, so site visitors will be able to click for advice.

When the service goes live this autumn, it will be extended to include mortgages and personal loans as well as pensions and insurance. Profiling software from Microsoft running on the website lets visitors manage their investment portfolios as well as other savings and debts.

If users tell The Exchange which credit cards, personal loans or savings accounts they hold, it will automatically display the latest interest rates when they visit. The site will provide finance news, and this too can be personalised: house hunters, for example, can opt to receive information on mortgages only. The Exchange also works together with Microsoft Money 98's financial planning tools. One of the reasons for Microsoft's interest was to provide accurate and up-to-date information to its software users.

As a stand-alone package, Money 98 gives suggestions on the most suitable sort of investment, but it cannot provide information on interest rates or returns on the market. A direct link over the web to The Exchange fills the gap. The site will also provide updates when Budget changes come into force.

Paul Lindsey, managing director of The Exchange, hopes the site will raise awareness of financial planning and advice. For consumers, it should take some of the inconvenience and complexity out of financial planning and buying financial products. When you carry out a life insurance search on the Exchange, you will be given current prices and the option of connecting to the insurer's website to deal direct, or to contact an IFA for further advice.

Microsoft agrees that there is a point when human assistance is invaluable. "We want to be able to help people, via the website, to understand the value of their investments," says Gareth Arnold, Microsoft product manager responsible for Money 98. "As you move into more complex areas, such as critical illness cover, you need good advice."

With the looming introduction of new financial products such as the Individual Savings Account (ISA), fast access to this help and advice will be all the more vital.