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Those of us who thought that headlines which claimed 'e-commerce in the grey market is expanding fast' were just more dotcom hype have now had anecdotal and statistical evidence to prove otherwise. The increasing use of the internet by folk as they move into and through retirement is real and important.
The imagination should not be filled with images of octogenarians busily tapping away in chatrooms like their teenage grandchildren but rather as assiduous seekers of information and assistance. This enables and empowers them to have informed discussions directly with providers of goods and services and they are potentially open to the idea of e-commerce transactions.
For the purpose of the real world, e-commerce in financial services is an interaction involving the internet, e-mail, post and telephone. It is still rare for a transaction to be completed on the internet or by just e-mail and internet. Despite this, we should not underestimate the importance of integrating these new technologies if we are to provide attractive services, information and advice to this key market. The integration must ensure that information and statistics are consistent - adding to understanding rather than confusion.
So why is it that the older generation is in the vanguard of advances in new technology usage? Having questioned a considerable number of them over the past couple of years, we have concluded that it is as a result of the happy coincidence of two changes that occur in people's lives as they approach retirement.
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First and most important is the quite practical one of having a lot more spare time to do all those things you have put off. Learning how to work the "damned computer" seems to be a high priority. A source of cheap flights and holidays to compare with Saga is an immediate payback.
They quickly see the vast amount of information available. Also they are using the internet at times of day when it works quickly, not just from teatime onwards when millions of American users clog the system. So time and inclination to learn how to use technology is there.
The second part of the coincidence relates to the changes in financial circumstances as people move towards the end of their working lives:
Firstly, their earning life is coming to an end and the flexibility to correct and make up for mistakes in investment decisions, or the neglect of financial planning, is disappearing fast.
Secondly, except for those benefiting from final salary pension schemes, the responsibility for their future incomes becomes a very personal one.
This decreasing flexibility and increasing responsibility concentrates the mind and it becomes a priority to spend the time you now have in finding out as much as possible about how much money you have, what you can do with it and how you can plan for your needs.
Therefore, this group of retiring or soon to retire people who are happy to use internet technology are also likely to be information-hungry about their financial situation and options.
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As a result we get telephone calls or e-mails from potential clients who have read our web site, have probably already asked for brochures, compared them and have technical and specific questions to pursue. We can view this in two ways:
concern at the level of difficult questions and much higher standards of advice and service that will be required by such clients;
sigh with contentment that at long last we have clients who are wishing to buy from us rather than being sold to, who are anxious to hear the wisdom that we can impart concerning their financial planning and investment and participate in the services that we are able to offer.
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The most important thing for us to remember is that for every one of these new types of relationships that proves difficult and awkward, there will be 99 that prove fulfilling and rewarding as you will have enabled and empowered a person who is entering or in retirement to take control and understand their financial situation better than they have been able to previously. Such relationships are capable of being long-term and rewarding but will require the adviser to both provide products at something close to the lowest cost and to justify their reward by the real added value they are making to the process.
Right now, this group is only an important minority of the grey market but it is growing quickly. And, as we have seen from statistical evidence of usage, it is likely to grow more quickly than other groups in the coming months. If we are ready to provide the right services to these people, financial advisers and their clients will benefit.
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How can e-commerce help today?
Life assurance - an accurate guide to the cost of life and critical illness insurance - limited dealing
Annuities - an indication of current rates
Investment funds/shares - prices and dealing facilities
Your policies - many companies now allow you to monitor your investments, give instructions for withdrawals, etc
Helpful information and guidance covering all financial services.
Stuart Bayliss, Director, Annuity Direct
Tel: 020 7684 5000
Published with kind permission of Planned Savings (August/September 2001)
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