Your Money: Direct route may not be the best

"Direct" is de rigueur in the world of finance at the moment.

But while its associations with low-cost, straightforward products that are easy to access over the phone are to be welcomed, I have some qualms.

Last week saw three noteworthy moves in the trend. Richard Branson's Virgin Direct is launching into what it calls the "dreary and discredited" business of life insurance. Direct Line has started advertising a PEP, and unit trust firm Save & Prosper has launched a pension plan under its Direct banner.

All appear to offer better-than-average deals - better, that is, than all too many of the financial products companies have traditionally foisted down consumers' necks. But don't be fooled that direct necessarily means cheapest or best.

With PEPs, for example, if you have pounds 3,000 you want to invest in one go, you can get a lower-cost version of Virgin's Growth PEP or Direct Line's new PEP from Legal & General (0800 116622). The lower costs on L&G's Index-tracking PEP should translate into a better return, given that the investment differences are marginal.

If you want to save monthly, Virgin and Direct Line have extra charges. HSBC, parent bank of both Midland and First Direct, charges nothing extra for virtually the same PEP, called HSBC Footsie (0171-955 5050).

Even Virgin concedes its life insurance isn't the cheapest.It is also key to remember with life insurance that while one company might be cheaper for some people, for others it won't be. One short cut to comparing direct rates against those of traditional life insurers is a free service called Policy Portfolio (01483 306090) offered by financial adviser Premier Investments. Premier will send out the rates from a range of companies. Only those that earn the adviser commission are included. But because Premier rebates some of its commission, it may beat the likes of Virgin.

Once you get into the more complicated realm of pensions and policies, such as Virgin's new Survival Plan, which pay out for certain serious health conditions, deciding which is best becomes that much harder. That is where good, professional advice that is not tied to a particular company's products could be invaluable.

The danger with many of these new direct services is that people may not be advised as well as they could be and may miss out. The temptation will simply be to trust a strong brand such as Virgin, and this is made more likely by the convenience of the services.

By comparison, good financial advisers are hard to find. Which means, surely, there is a market opportunity going begging for a good-value, consumer-friendly Independent Financial Adviser Direct service.

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