Cut out the middle man

You could soon be making decisions about investments at the click of a mouse, reports Stephen Pritchard

THERE is something slightly distasteful about discussing financial matters face to face with a stranger, which the success of phone-based firms such as Virgin Direct seems to confirm. Even with advisers being required to disclose the commission they earn on financial products and the clauses on "best advice" in the Financial Services Act, many investors still believe the gap between "financial adviser" and "salesman" is not wide enough to fit a razor blade.

Some financial advice is very good, but "advisers" are often either "tied", selling products from just one company, or influenced by commission. Putting more information into the hands of investors is one way to ensure advice measures up. For example, if companies selling unit trusts put performance statistics on their websites, clients can compare them with other companies' figures.

For the more experienced investor, the internet can cut out the inconvenience of going to an adviser, especially for those who hold a fund or set of funds with a particular investment house. Adding to or shifting money between investments should be easy - make the decision and carry out the transaction. Some houses already offer this and more are bringing it on line.

One very comprehensive site is run by Fidelity Investments. As well as the usual information about the company and its products, its pages contain details on fund prices. Fidelity's WebXpress allows customers to view details of their funds, check their values and deal on line. There are clever graphics, too: for example, the system displays investment holdings by industry sector as a pie chart on screen.

Last month, the company added a "top-up" facility on line for its Peps and unit trusts. Anyone who has money with Fidelity can add to his or her investments using the website and a Delta or Switch card. The only limit is the money available in the current account and, for Peps, the ceiling on investments.

Richard Wastcoat, Fidelity's executive director, says the logical conclusion is to let new customers take out new investments over the internet. The main hurdle is an Inland Revenue demand for a written signature for a new Pep.

Mr Wastcoat believes pressure is growing on financial services companies, on both sides of the Atlantic, to let investors manage their money when and where they please. Clients, he says, want more than just "static data", such as unit prices.

Not everyone wants to be so involved in their finances. Mr Wastcoat believes it is younger investors who take a hands-on approach. For investors who prefer a conventional adviser, many have set up on the internet, as individuals or via umbrella groups such as DBS.

But advisers maintain that the internet is a shop window, rather than a counter. Brian Spence, managing director of Ethical Financial, points out that some 1,500 people visit its website weekly, but it is hard to know how many mouse clicks translate into business.

He believes clients still prefer to see an adviser face to face. "The nature of our business is that it is personal," he says. "People who come to us want an IFA to review their finances." Spence sees the internet more as a means of communication between client and adviser than a sales tool.

But not everyone wants a long-term relationship with an adviser, as the success of direct financial products reveals. Instead, there could be a separate market for one-off help with finding a good deal, especially in busy areas such as life assurance or mortgages. Something similar already exists in the US, where tax advisers offer opinions via e-mail for a small fee.

It is not hard to imagine paying an insurance or pension specialist pounds 15 or 20 to trawl through the direct market and unearth the five best deals. It cuts out the commission - and possible bias - of traditional brokers, saves a lot of time, yet leaves the final choice of policy with the client. It's not here yet but it could come sooner than some might like.

q Fidelity (UK site): www. fidelity.co.uk; Fidelity (international site): www. fid-intl.com.

Ethical Financial: www.ethical financial.co.uk.

DBS: www.dbsfinman.com.

Lists of financial advisers are available via MoneyWorld: www.moneyworld.co.uk; and MoneyWeb: www.moneyweb. co.uk.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?