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The Hi-Tech Investor: Sort through the internet for cheap financial advice

Many financial advisers feel threatened by the internet - and with good reason. Net users have easy access to information on prices and performance, and can buy financial products directly off their computers.

Sort is a new financial advice company operating over the internet or phone. It doesn't sell financial products but gives stand-alone advice. Clients can use this information to buy policies or investments directly, or through a discount broker.

Sort charges a flat fee for its advice. Internet users fill in an electronic version of a questionnaire all independent financial advisers (IFAs) have to use, and send it directly to Sort. It will reply within 48 hours.

There are two main services: a financial health check, and product-specific planning such as organising a pension. The general health check, which stops short of recommending products, costs pounds 99. A single product decision costs pounds 79. This is less than most existing IFAs charge, either through commission or as an hourly fee. Clients who want to buy a product can do so through Direct Investor, a discount broker, or they can shop around for a better deal. Direct Investor will rebate 75 to 85 per cent of the commission on any products they sell to Sort clients.


Net an ISA mortgage

ISA mortgages have yet to really take off. A small percentage of home buyers opted for PEP-linked mortgages, where tax-efficient investments in the stock market aimed to pay off an interest-only home loan. The fact that ISAs are relatively new, quite complicated and have lower contribution limits means fewer borrowers opt for them.

NetISA, the internet-only unit trust, has added a mortgage calculator to its website. NetISA is an index-tracking fund, whose investments are managed by Barclays Global Investors. The fund has lower charges than many conventional ISAs. For investors using the fund to pay off a mortgage, this means their monthly contributions will be lower.

NetISA's mortgage calculator works out how much you would have to invest a month to pay off the mortgage, based on the term of the loan and the amount borrowed. It will also compare payments into the NetISA with rival funds. On a pounds 150,000 loan over 25 years, NetISA would need a monthly investment of pounds 212.31, based on a growth rate of 7 per cent.

The NetISA calculator doesn't add in the interest on the mortgage itself.


Stephen Pritchard can be contacted at Hi-tech-investor@dial.pipex.com