Industry executives believe that within five years, 19 percent of mutual fund sales will be conducted over the Internet, according to a newly-released survey by Andersen Consulting of New York and the Life Office Management Association of Atlanta, Ga.
The findings are based on a survey of 200 financial services executives worldwide.
Industry executives also expect that 17 percent of retirement product sales (annuities and IRAs) and 17 percent of sales of insurance protection products (term and whole-life insurance) will be over the Internet by 2005, the study found.
The executives, however, said they did not expect Internet sales to cannibalize sales from other distribution channels. Rather, they said that online distribution will improve customer relationships for financial planners, broker/dealers and career agents. Seventy-five percent characterized the Internet as an effective tool to reach the mass market, and 66 percent expect the Internet will lower distribution costs.
If online mutual fund and insurance product sales reach these levels, it would be a major shift, said Thomas Donaldson, president and CEO of the Life Office Management Association. Mutual fund sales executives and insurance agents, in particular, incorrectly view these products as too complex to sell over the Internet, Donaldson said.