Three steps to financial heaven on the Web

There are three reasons why it is worth using the Internet to source financial products, but not all websites score three out of three.

If it's cheaper, more convenient and a good research tool, it's a winner. But if you are not getting a better deal, find it would be more helpful to talk to somebody, and you're struggling with too much or too little information, then it's either time to give up or get smart.

No single financial site is providing everything from best value to best information yet, but the informed consumer has the freedom to mix and match.

Although it's still early days in the development of financial products websites in the Republic, enough players have emerged to be able to mine information and compare "best quotes" to some extent.

The most basic level of financial products website is the shopfront site. This type of website provides the same level of service and information as a stand of leaflets or brochures.

There are descriptions of products or services offered by the company and contact details are provided. However, it is not possible on these basic sites to get quotes, send applications or make enquiries.

The next level is the execution-only, transactional approach, which offers a minimum service, with rock-bottom commission on sales. So far there is only a small number of genuine discount investment sites in the Irish market.

LABrokers.ie and discountinvesmentsireland.com lead the market in their niches with the lowest commission, charging only 0.5 per cent on lump-sum investments. The industry average is 3.5 per cent. Finance2u.com charges 2 per cent commission on lump-sum investments up to £20,000 and 1.5 per cent on amounts greater than that.

These sites are passing on the operational savings of taking in business online, which is most welcome. But you may have to go elsewhere to seek information about the product you are buying and work out which one you want. Discount sites can find the cheapest quote but they do not offer financial advice, and price is only one factor be taken into consideration in investments and insurance. Although the technology is in place for digital signatures, the market has not reached that stage and contracts via the Internet still have to resort to snail mail and the pen for the final lap.

Mr John Geraghty of LABrokers.ie believes the insurance industry has some way to go in e-commerce. "We can put sales, marketing data and application forms on our sites but the problem is that we cannot yet complete the sales process electronically." Lump sum investments, term assurance, pensions, mortgages, motor, home and travel insurance and loans are the main items available on the Web.

Finance2u provides the most comprehensive range of products on one site, along with advanced product comparisons and background information. The site acts as a platform to search for quotes and is linked to a number of product providers and advisers.

Of course all the main financial institutions have an Internet presence and many sell their products directly to customers. The insurance companies are somewhat hampered by an unwillingness to upset the broker market, but that whole distribution framework will be restructured as e-commerce changes roles and relationships.

The more comprehensive advice-based financial site is just an extension of the traditional broker/financial adviser service. The Web broker builds up a relationship with the client, retains their details for repeat business and may or may not pass on savings through discounts or low commission.