Internet and Financial Middlemen!

How does it add to GDP? Surely all such products do is reduce transactional costs. And make the market more efficient. There's no 'business' here, apart from that of the software producer of course.

Great and if in the future it turns out to be wrong, will Trevor be held responsible for recommending a "best buy" that turned out to be unsuitable or not the best?

Make money by saving people money! Not a bad way to do

Yes, they call them brokers and they already exist!

Arfie

imo the product selection you can do yourself, is worth whatever it costs you in time and effort - middlemen, in this case, don't add value, they lose it (yours).

It's called disintermediarisation and was widely talked about when product comparison web sites sprung up.

Hi Rob,

Interesting comments you made! Well I wondered about who has access to the net, more than fifty percent have access now in the UK, the figures exponentially increasing.

Information is so easy to find now, really it is cutting out the middle men...in many ways, it is making it a level playing field, people can't pull the wool over our eyes any more.

I think your right about the face to face contact...However, what people are doing, they are going to a financial advisor, getting face to face contact, tehn going on the internet and getting it cheaper.

For example..this applies to white goods also..they go to chat to a sales person, in a local reatail shop, then they go to a respected white goods trusted internet merchanter and save thirty percent.....on their washing machine, or save five percent on their financial insurance direct...........cutting out the broker...eg. the middle man..

Wow! Thats an EXCELLENT name, sometimes you really sound like a Phd holder! take that as a compliment by the way as it was intended

Actually they are incredible, I am sure the internet has its limitations, and it will not totally replace face to face shopping, but it is the "information" that I feel is the key to it.

That is at the heart of financial products, and thats why I feel the internet is the place that will cut out many of the middle men in financial products. Surely this is one of the reasons that there is job losses in this industry? Even you can sell shares online whereas you used to have to go through a broker!

But the Internet offers much better ways of matching buyers to sellers (and thus making it more 'efficient'). Think eBay. Imagine all the local plumbers putting their services up for auction on a local 'net' where customers could bid for their services, and this could factor in time sensitive bids and premiums for urgent jobs and so on. It's all pretty much in its infancy as regards the sales of services, but there are examples of innovation out there, like Amazon

- whose prices are tailored to particular classes of customer.

Fortunately there are not many like this. It's actually called stealing - stealing an advisor's time with no expectation of repaying him in any way.

Also, the internet is not necessarily cheaper than a product bought via an advisor. I know of a product that has a better rate if bought via an IFA than direct.

Rob Graham

I think its more common than that. The thing is, how would anybody know? How would an advisor know if one of his clients went and then checked the internet after a meeting then went ahead and compared prices and found them cheaper on the internet.

When I was looking for mortgages, my first port of call was a broker, I was ringing around different brokers trying to find the best price, then when I went on the net, I found the mortgages cheaper than the brokers..

But the point I was making, is that people will not view it in that way, they will consider it going around trying to find the best purchase! For example if someone is going to buy new car, they may go to check out the car they are interested in, then go and purchase it online.....that is definitely happening.

Well, in certain circumstances it of course is possible...but I'm only talking in general terms, companies like virgin direct, are offering products cheaper, because they are given the cost of the middle men back to the client, the same with Norwich direct, etc.etc.

Well, sometimes the info is easy to find on the internet, sometimes not so easy...you have to be good at lateral thinking.

I had'nt thought of that, but thats true also, this assisted them get a sale. But now thats all gone, even the amount of commision they are earning is becomming common knowledge due to the internet.

Personally I've always run a mile when confronted

Eg. you think what are they hiding?

and "Few things in finance are complicated, if they are,

Yes but due to the fact they can do so many more online this inevitably has resulted in job losses.

Yes, because I automatically think I'm being sold a poor product. This came up recently in relation to extracting a lump sum from your pension. It sounded innovative, but the web site didn't give any useful information. It turns out that they're using a standard feature of personal pensions, available to everyone, to extract 25% tax free cash, but only if you're 50 or over and making it sound mysterious, complex and sophisticated.

Fair enough - I haven't taken a lot of notice of this, because there's always blood on the floor in financial circles during market downturns anyway.

Daytona

In article , Stephen GoldenGun writes

Actually I would say they can offer products cheaper because they only want to deal with 'normal' people and make themselves too expensive for anything out of the ordinary.

The money they save on the middleman goes on advertising instead.

I thought they offered different prices to new customers? They have vouchers don't they? Anyway that hardly matters, the fact is they easily could offer reductions or special offers to particular customers, and it wouldn't be illegal.

I'm not talking about internet businesses, I am talking about the "power of the internet" the information derived fromt he internet..how it is used the changing patterns of marketing etc.

In article , Stephen GoldenGun writes

In your example above you mention people like virgin direct, they offer cheaper products only to 'normal' people, ie: they only want bog standard business thats the same for everyone and will tend to be more expensive for not run of the mill requirements.

Yes I have heard people say such things. But for example..there are companies for problem cases on the internet as well!.

I am not denying that brokers and middlemen are allways going to have a place.

I am questioning the impact that the internet is going to have on the future...

Very interesting point! I suppose the debate I am trying to open up, is the one that tries to answer the question, "what true long term effect will the internet have on business practices in a general way and on products that readily lend themselves to internet selling" specifically products such as financial products, small items that can be sold online, and other information based products, and of course software.