Advice Squad

Two years ago, the Government called the personal investment industry to account. It introduced new regulations requiring investment advisers to provide current and prospective customers with documents explaining the key features of their products.

One company saw the shake-up in the market as a golden opportunity to offer its information services to independent financial advisers (IFAs) and fund managers, who had to deal with masses of extra paperwork which the new regulations demanded.

Following discussions with Schroder Unit Trusts, Keydata came up with a multimedia solution that would be available at the point of sale or contact. It has developed a CD-Rom containing key features documents and other relevant information. Updated monthly, it is free to all of the UK’s 20,000 IFAs.

According to Keydata’s business development director Hugo Huggett, the early talks with Schroder about the use of new media led to an initial product, which simply offered key features documents on CD-Rom. Then, in January, the company launched a new CD-Rom, which provides IFAs with sales and presentation tools for use at point of sale.

Huggett says: “There are 1,700 unit trusts, mostly average performers. Traditionally, small IFAs haven’t had access to anything electronic to help them decide what to offer clients. They’ve only had direct marketing brochures [printed the previous summer] and visits from sales people. The whole process is very outdated and not very dynamic,” he adds. “The general public now expects more personalised advice.”

Fund managers have taken to the product. Huggett says: “We have nine of the ten largest fund managers using this service. A traditional key features document can be 25 pages long and lists all the possible options. And often there are 25 funds to choose from. It can be confusing.

“Companies can now outsource to us all their key features information, which they have already checked for compliance. We distribute the material on the CD-Rom and various Websites (the fund manager’s own and others). We hold the templates for all the variations, and we update the fact-sheets every month.”

A significant advantage of Keydata’s CD-Rom is that it enables financial advisers to personalise figures for customers before printing anything, says Bridget Cleverly, marketing director at Schroder Unit Trusts. “It has allowed us to cut down on the amount of paper we use because IFAs are able to print off a lot of the pages themselves that previously we had to send them.”

Huggett believes the CD-Rom’s flexibility and ease of use are important to both IFAs and fund managers. “IFAs need to look professional. They can produce a document for you and you wouldn’t know they were using a free CD-Rom,” he says.

“Fund managers need to be able to capitalise on ‘star’ funds at any given point and the CD enables this.”

In addition to the documentation, each month’s CD-Rom offers videotaped interviews with fund managers and key figures in the investment world. “The keynote video interview on the CD-Rom is paid for by Keydata. Other videos are paid-for advertising,” explains Huggett.

“We have a deal with CNBC to use its studios and crew to film interviews. In return, CNBC gets to interview these people too.”

The videos provide lower profile funds with a public image, says Huggett. “We did some surveys last autumn asking what IFAs would do with the CD-Rom. Many said that they’d definitely use the video presentations with clients.

“Schroder, for example, is not known by the public. The presentation helps create the ‘comfort factor’.”

Chris Langston, a financial adviser with CJL Probate & Financial, is enthusiastic about how the CD-Rom benefits his business. “It’s a cracking idea. I always keep the disk in my briefcase and use it in front of clients to show the fund managers’ and performance statistics.

“I can print off the application forms and fund sheets directly from the CD. It is cost-effective. Although the same information is available on some Websites, the CD-Rom saves money as I don’t have to connect to a telephone line.”

Keydata’s products are increasingly used by Bob Bracher, a financial adviser at Charter Heaven. “Right from the beginning, we were impressed with it. But like any piece of new software, we didn’t use it much at first.

“It is something we find very useful occasionally – and we will be using it more.”

Bracher says the initial attraction was the prospect of streamlining paperwork. “Initially we used it simply to store less paper in the office. It’s the alternative to going into a fund manager’s Website, which costs money and time. And you can’t always get on the Web. Then, you have to wait while the logo is loaded.

“Also, if you’re on a Website obtaining information and you are distracted, you have to decide whether to leave it running while you go away or not. With a disk it’s costing you nothing.”

According to Huggett, Keydata plans to build an online data server and intranet to link fund management companies to its system.

It launched the product using a CD-Rom rather than the Internet as few IFAs have access to the Net. “However hard we try to find IFAs who use the Internet for business purposes, we can’t find them, although this should change very quickly,” Huggett says.

Cleverly expects Schroder’s involvement with Keydata to continue along its current path, but says: “We’re expecting Keydata to give us a bit more feedback on the research that it has done into the IFAs that are using the CD-Rom.”

Meanwhile, Bracher says the product can only improve as more funds come on board. “The scope of funds available on Keydata is probably not wide enough at the moment.”

Huggett says Keydata’s products provide IFAs with a wider knowledge and awareness of the market. “In the past, they have sold on the basis of relationships with particular fund managers. This product encourages them to look at everything and be properly independent.”