Web tactics

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Dean Jones investigates the importance of the internet in building new relationships with clients

The IFA world is undergoing one of the most marked transformations of recent years with a combination of regulatory change and the impact of direct-to-consumer providers forcing advisers to reassess their business model. Against the backdrop of one of the most difficult markets in recent years, advisers face an uphill struggle to remain profitable.

A key driver of this change has been the impact of the internet and availability of digital technologies, changing the model for consumer interaction. According to the Office of National Statistics, 42.9 million people in the UK, around 70% of the population, use the internet. This figure will only increase. Driving the demand is consumers using the internet as reference for almost every topic, including financial products and information. According to a Mintel report on web aggregators from November 2008, around a third (35%) of UK adults have bought a financial product online within the past two years.

The same Mintel report shows consumers do not seem to know who to trust. They are showing increasing propensity to go it alone. Nearly two thirds (64%) claim they will deal directly with banks and investment companies if they had £5,000 to invest with only 28% stating that they would go to an independent financial adviser. This means a staggering 68% of consumers do not consider the aid of an IFA for some of the biggest financial decisions that they may make. Consumers turning away from intermediaries is a significant problem for the sector.

Knocking on propspects’ doors

 

Up until five years ago, IFA and protection broker business models were dominated by a referral system with one happy client introducing friends and business contacts to their adviser. This method, along with cold calling of potential clients and knocking on prospects’ doors, formed the basis of many IFAs’ new business streams.

One adviser who has noticed the change in consumer behaviour is Andy Clarke, mortgage adviser at Two Dales Mortgage Company, who has been advising for over 25 years.

Andy recalled: “Gone are the days of ‘the man from the Pru’ knocking on your door. Consumers used to respect and trust the advice from their IFA, although unfortunately, it seems as though this is dying out. Consumers are more wary and are relying on research via the internet.

The thirst for knowledge has led to many sites springing up online to satisfy consumer needs. While some are responsible and provide detailed information on products that can be bought direct, or connect a consumer with an adviser for qualified advice around complex products, others can create confusion by making no distinction between those products which should be advised.

The shift in consumer behaviour creates a challenge for protection intermediaries who for many years have relied on relatively static routes to new business. The question advisers must ask is whether they are in the right place for potential clients to find them, both in terms of location, and in a virtual sense.

Tactical changes

Already, consumer habits are driving advisers to change their tactics, with the advent of social media. This became one of the fastest growing digital trends of 2009 as consumers built networks online. This creates a new environment to engage consumers; a recent survey from paaleads.com discovered that 18% of the respondents planned to source new business through social media in 2010.

One route that these consumers can be connected with advisers who have made the move online is through internet lead generation. Consumers looking for advice online around certain financial products can request a call back from an adviser local to them who can then provide the advice necessary.

Such lead generation  programs are generally paid for per lead, with advisers able to specify exactly the sorts of leads they would like at what price. Conversion rates will vary between providers, but the overall effect is opening doors to customers who are actively looking for advice.

Lead generation may not be a new tactic, but the way in which the leads are sourced has certainly changed, with advisers able to benefit from customers who are likely to be engaged with the product and realise the need for professional advice.

Andy Clarke, who already uses lead generation, commented: “If I were in their shoes (new advisers’), I would predominantly buy leads from a reputable lead provider, as the cold calling days are coming to an end. You need to capitalise on those consumers who are contemplating advice, as many of the others already believe the internet has all the answers”.

Any change to the way the new business is sourced has to deliver from a results perspective. This is where online based tools can come into their own.

Immediate benefits

Web based client relationship management systems bring immediate benefits because advisers can access their lead management programs wherever they are. As soon as a new lead comes in, it can be fed into the program, and monitored throughout up to conversion. From an adviser on the ground’s perspective this provides clarity on which leads are likely to convert, helping prioritisation and workflow. From a management perspective, it provides each adviser’s workload, success rate and allows for more accurate revenue forecasting and tasking of sales forces.

By making the back office side of an IFA’s operations more efficient, more time can be spent on sourcing and advising new clients, which in turn will support overall growth. Ultimately, online tools that support greater transparency can also help IFAs operating in an increasingly regulated environment.

The protection world is starting to embrace these opportunities, but with more and more consumers moving online, this opportunity is only going to increase. Technology and online solutions will help advisers sustain growth and stay ahead of market movements.

Perhaps the key way to view this digital revolution is that it is not that the consumers are looking to bypass the adviser completely, rather the web just becomes another channel to meet and engage with consumers. The internet will not replace face to face contact, it is merely another method of securing it. When this is fully understood, web tactics will become as fundamental a part of the business as a good pair of shoes and a friendly smile were to the ‘man from the Pru’ 25 years ago.

Dean Jones is head of paaleads.com

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