We have built a business around making it easy for existing clients to refer our firm to others.
That said, we still receive a reasonable level of enquiries from external sources. One aspect of this is online adviser directories.
However, the return on our investment there has been dwindling over the years.
I have devoted quite some time to looking at why this might be, as it accounts for a modest – but nevertheless appreciated – five-figure contribution to our annual fee income.
Divided we fall
The starkest realisation is there is no dominant directory and the two that are most prevalent are commercial offerings.
There is an adage, “If you are not paying for the product, you are the product” and over the last few years there appears to have been a shift from directories providing a useful service to those seeking advice, to highest-bidder “pay-to-play” lead- generation businesses.
Clearly this is not true of all of them but features such as enhanced listings for premium memberships cannot ultimately be in the end client’s best interests.
The same can be said for the trend towards collecting more data to encourage advisers to compete for leads.
It is perverse to me that an adviser claiming expertise in all areas would be rewarded with a greater number of enquiries than a bona fide specialist.
If this specialist dealt exclusively with SSASs or defined benefit transfers, for example, they would have no way of differentiating from the generalist who simply ticks the “pensions” box.
What is more, a study last year by Which? found half of the advisers on one directory did not hold the accreditations they claimed. For the firms charging a fee to list, I would ask what are they doing for that fee if they do not verify each and every firm?
Sorting the wheat from the chaff
Some of my peers have also raised the issue of an inability to identify firms that are independent and restricted, which makes me think about another form of abuse: what stops a restricted firm passing themselves off as independent in addition to being dishonest in other areas above?
I appreciate this is essentially criminal activity, and could be pursued in this way, but surely directories should help address the issue?
The obvious solution is more involvement from professional bodies – in particular, the Personal Finance Society and the Chartered Institute for Securities & Investment.
Both organisations issue statements of professional standing and require minimum standards of advisers. Importantly, both will have the ability to verify qualifications.
The PFS has made good inroads into a directory and allows advisers to provide an evidenced assessment of expertise (though currently only retirement and later life). However, it is poorly publicised at the moment.
For better or worse, individuals most commonly engage with an adviser at times of significant life events and also when receiving annual statements.
I would welcome engagement by professional bodies to improve the visibility of an enhanced directory that seeks to connect individuals needing advice with an appropriate adviser.
Alistair Cunningham is a chartered financial planner at Wingate Financial Planning
He will be joining us at Money Marketing Interactive as a speaker on May 18th.