Sixty Seconds On Distribution

Will the Internet become the single most important distribution channel? Much will depend on where you are coming from and contributors’ views differ widely. Some product providers distribute exclusively through independent intermediaries, others use direct sales forces, ‘off the page’ direct mail or telephone sales to promote their products. Intermediaries have a vested interest in promoting the benefits of faceto-face advice. But almost all will use the Internet is some way.
The need for advice
No – the Internet will not become the single most important distribution channel. But I’d hate to be called dogmatic, so apparently I’ve 60 seconds to explain what Basil Fawlty once referred to as his wife’s specialist subject, ‘the bleedin’ obvious’.
There may be those flicking through this esteemed organ whose view of my response will be “well, he would say that wouldn’t he” but I know, dear reader, that you are not of that common herd. So let’s explore this issue.
I could pull the usual trick of challenging the questioner to define their terms as they are pretty vague – ‘most important’? ‘distribution channel’? – or argue that each industry is different and while it is the silverbullet panacea for some, it isn’t for others. But that is to dodge the bullet.
Instead, I wish to make the case for advice. Not product selling but that most precious of things, the ability to speak to someone who is an expert in a subject and who will look out for your interests. It is interesting that in a society often characterised as being ‘pop tart’ – I want it now, with an added dash of instant celebrity – the search for authenticity grows stronger. In the world of instant access to information (or is it just data?), the desire for insight increases. That is why advice is so prized, so frequently sought out, and so often recommended.
The Internet has many wonderful uses and these will continue to multiply. But the desire to speak to someone who has in-depth knowledge will, in my view, continue to grow. Research result after research result all show that independent financial advisers are the most trusted of all the players in retail financial services. This is because their clients have the reassurance of knowing a professional, working to a strict code of ethics – let alone under the scrutiny of the gold-standard regulator – is acting as their agent. A good IFA declutters both his clients’ needs and wants and the competing solutions that are pushed out by providers. It is interesting to ponder whether face-to-face independent advice could ever be delivered over the Internet. I do not see this as a huge problem. As human beings we do like to see those we deal with when discussing issues as important as our finances. Technology to allow this to happen in real time exists. But then would it be right to call this a ‘distribution channel’? Surely only in the same way that the telephone is a distribution channel, or perhaps even a meeting room is a distribution channel. The Internet is a useful way of peering into a world-sized warehouse. As a distribution channel it comes with all the advantages and drawbacks this metaphor suggests.
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